Rules of procedure
1. General
The company's Board of Directors acts in accordance with the Articles of Association of Stockmann plc and the legislation in force. The operations of the Board of Directors are regulated especially by the Companies Act (624/2006), the Securities Markets Act (495/1989) and the stipulations, instructions and recommendations given by the authorities and the Helsinki Stock Exchange.
2. Composition and election of the Board
Under the Articles of Association, the company's Board of Directors has a minimum of five and a maximum of nine members. The term of office of a member of the Board of Directors shall commence from the Annual General Meeting at which the director was elected and end at the close of the next Annual General Meeting.
Anyone elected as member of the Board must be competent to carry out the task and have the time necessary to fulfill it. The majority of members must be independent of the company and at least two must also be independent of the company's main shareholders within the definition of independence given in the Finnish Corporate Governance Code approved by Securities Market Association.
Candidates for membership of the Board of Directors are informed in an invitation to a shareholders' meeting if company shareholders that have at least 10% of the votes due to the shares they hold are in favour of their membership, and if the candidates themselves have given their consent to being elected.
A first-time candidate for membership of the Board must participate in the shareholder's meeting at which the election takes place unless there are good reasons for his/her absence.
3. Responsibilities of the Board of Directors
Under the Finnish Companies Act, it is the task of the Board to attend to the company's administration and organization of its operations. The Board must also ensure that there is due monitoring of bookkeeping and financial administration.
It is the task of the Board to promote the interests of the company and all its shareholders. The members of the Board shall not represent any parties that proposed their membership.
In order to carry out its tasks the Board shall:
- convene the shareholder's meeting
- supervise and monitor the company's active management
- appoint and dismiss the CEO
- approve the CEO's contract and other benefits
- approve the salary and other benefits of the Directors in the Group's Management Committee
- approve the company's risk management principles
- endorse the company's long-term strategic and financial objectives
- approve the budget
- take decisions on important single investments with regard to both company acquisitions and property transactions.
The Board adheres to the Guidelines for Insiders by NASDAQ Helsinki Ltd, the Central Chambre of Commerce of Finland and the Confederation of Finnish Industries EK and undertakes to act in accordance with this and the company's own code for insiders. In addition, each member of the Board has an obligation to keep confidential any information he or she is privy to regarding the company or any other matter in his/her capacity as Board member.
4. Responsibilities of the Chairman
The Board of Directors shall elect from amongst its number a chairman and vice-chairman for one year at a time.
The Chairman of the Board shall:
- convene meetings of the Board of Directors
- approve Board Meeting agendas as prepared by the CEO
- ensure that minutes are taken of every Board Meeting
- contact, when necessary, the CEO and members of the Board between meetings
- ensure that the work of the Board is in compliance with these rules of procedure
5. The Board's decision-making procedure
The Board of Directors shall constitute a quorum when more than half its members are present. Decisions are made when carried by a majority. In the event of a tie the Chairman has the casting vote. However, if there is a tie in the election of the Chairman the result shall be decided by drawing lots.
Under the Companies Act, a member of the Board is prevented from involvement in the discussion of any agreement where it is one between him/her and the company. Neither may he/she take part in the discussion of any matter that concerns an agreement between the company and a third party, where he /she is likely to have an essential interest in the matter and when this might be at odds with the interests of the company. A member of the Board should always consider him/herself disqualified from participating when a conflict of interest is thought objectively to exist, nevertheless always bearing in mind his/her obligation to take a position on company matters and ensuring that the interests of the company are satisfied.
6. Board Meetings
The Board shall convene on a previously agreed date normally between 8 and 11 times a year and, if necessary, hold extraordinary meetings, which may include meetings over the telephone. Board Meetings will on occasion be held in connection with getting acquainted with the company's units both in Finland and abroad. At least one Board Meeting will be held each year to discuss strategy and at which, among other things, the company's long-term strategic objectives will be confirmed.
Invitations to a Board Meeting and essential materials will be sent to members of the Board one week before the said meeting. Minutes will be taken of Board Meetings and signed by the Chairman, the person chosen at the meeting to examine them, and the person acting as secretary.
Of the company's active management, the following shall regularly attend the Board Meeting: the CEO, the CFO and the director for legal affairs acting as secretary at the meeting, all of whom are not members of the Board. Two staff representatives also attend, also not members of the Board. One of these is elected by Stockmann's Group Council and the other by the association representing Stockmann's senior salaried employees.
The Board shall advise the number of Board Meetings to be held in any one term and the general attendance of Board members expressed as an average percentage.
7. Evaluating the work of the Board
The Board of Directors evaluates its performance every year. The purpose of this is to examine how the work of the Board has been carried out over the year and to act as a basis for any further evaluation of the methods and practices of the Board, its composition and the possible election of new members.
8. Board committees
The Board has appointed from amongst its number an Audit Committee and a Compensation Committee, whose rules of procedure the Board endorses. The Board is responsible for the tasks delegated to the Committees, and the Board makes collective decisions in this area. The Audit Committee and the Compensation Committee reports to the Board every year.
9. Remuneration of the Members of the Board of Directors
The remuneration of the Members of the Board is the responsibility of Stockmann' shareholders' Nomination Board. Board members' remuneration is decided at the shareholder's meeting.
