The Board of Directors established an Audit Committee and a People and Remuneration Committee from among its members at its meeting held on 22 March 2023.
The Board elected Timo Karppinen as Chair of the Audit Committee, and Roland Neuwald and Sari Pohjonen were elected as the other members of the committee.
The Board elected Stefan Björkman as Chair of the People and Remuneration Committee, and Sari Pohjonen, Tracy Stone and Harriet Williams were elected as the other members of the committee.
Audit Committee’s rules of procedure
1. Role and duties of the Audit Committee
The duty of the Audit Committee is to assist the Board of Directors and to improve the efficiency of Board work by preparing matters within the competence of the Board of Directors. The Board of Directors remains responsible for the duties it assigns to the Audit Committee. The Committee has no autonomous decision-making power, and the decisions within its competence are taken collectively by the Board. The Committee shall report to the Board on the matters addressed and measures taken at least four times a year. The Committee makes proposals to the Board for decision making as appropriate.
The main duties of the Audit Committee are:
- to monitor the statutory auditing and reporting process of the financial statements and consolidated financial statements as well as overseeing their accuracy and scope;
- to review the report of the company’s financial and tax position quarterly prior to approval by the company’s Board of Directors;
- to supervise the financial reporting process;
- to monitor the efficiency of Stockmann’s internal control, internal audit and risk management systems and to monitor the Group’s risks as well as the quality and scope of risk management;
- to approve the internal audit guidelines and review the internal audit plans and reports;
- to review the description of the main features of the internal control and risk management systems in relation to the financial reporting process, which is included in the company’s Corporate Governance Statement, and the related policies and principles;
- to evaluate the independence and work of the statutory auditor and propose a resolution on the election of the auditor and auditor’s fee;
- to approve, in accordance with the principles approved by the Board of Directors, or authorise the CFO in advance to approve all non-audit services provided by the auditor, which are not forbidden services, including the area covered by them and the estimated fees payable;
- to evaluate compliance with laws, regulations and company policies and monitor significant litigations of Group companies;
- to monitor the transactions of the company ‘s management and their related parties and any related conflicts of interest; and
- to execute any other duties bestowed upon it by the Board.
2. Composition and term of the Audit Committee
At its first meeting following the Annual General Meeting, the Board of Directors elects three members to the Audit Committee from among its members and appoints one of them as Chair of the Committee. The members are elected for a term of one year, concluding at the close of the Annual General Meeting following their election.
The Audit Committee is composed of at least three Board members who are independent of the company. In addition, at least one member must be independent of any major shareholders. The members must have sufficient expertise with respect to the Audit Committee’s area of responsibility, and at least one member must have expertise in the accounting function, bookkeeping or auditing, in particular.
The Audit Committee shall convene at least four (4) times a year. The Audit Committee is convened by the Chair. A meeting of the Audit Committee has a quorum if the Chair and at least one other member is present. The Audit Committee meetings are attended by the Chief Financial Officer (CFO), the Chief Legal Officer (CLO) and, if necessary, the auditor. The Chief Financial Officer (CFO) serves as the secretary of the meetings. The members of the company’s Board of Directors and the CEO are entitled to attend meetings of the Committee. An internal auditor or other expert employed by the Stockmann Group or an external expert may also be invited to attend meetings in connection with processing of matters.
The Audit Committee prepares an annual meeting schedule, including the main matters on the agenda.
The aim is to distribute the meeting material three working days prior to a meeting. However, material concerning financial statements and interim reports shall be distributed at least 24 hours before a meeting.
Minutes of the Audit Committee’s meetings are drawn up without delay and signed by the Chair and the secretary. The Committee’s meeting minutes are distributed to all members of the Board of Directors. In addition, the Committee Chair reports separately to the Board on the key observations and measures taken by the Committee at least four times a year.
The Audit Committee shall meet with the auditors and internal auditors as well as other internal experts as appropriate. The Audit Committee may use external experts, if necessary.
4. Assessment of the Committee’s work
The Audit Committee performs a self-assessment of its work once a year. The Committee Chair shall report the results to the Board of Directors.
5. Adoption of the rules of procedure
These rules of procedure were approved at the Board of Directors meeting held on 28 April 2022.
People and Remuneration Committee’s rules of procedure
1. Role and duties of the People and Remuneration Committee
The People and Remuneration Committee assists the Board of Directors in matters concerning the remuneration of the company’s CEO and other senior management, the evaluation of performance, appointments and succession planning. The Committee also assists the Board in the preparation and assessment of the Group’s remuneration principles and personnel principles. On the basis of the authorisation granted by the Board of Directors, the Committee assesses and confirms the achievement of the short-term incentive pay targets and approves the payment of incentives to the CEO and other senior management.
2. Main tasks of the People and Remuneration Committee:
The Committee prepares the following matters for the Board of Directors:
- key principles and practices associated with the company’s remuneration
- remuneration of Stockmann’s CEO and other terms and conditions of the CEO agreement, and the remuneration and other terms of the employment relationships of the management
- incentive and commitment schemes for the CEO and the management
- evaluation of the performance of the CEO and the management
- appointment of the CEO and the management
- succession planning and management development for the CEO and the management
- presentation of the governing bodies’ remuneration policy to the General Meeting
- annual remuneration reporting in accordance with the recommendations of the Finnish Corporate Governance Code for listed companies valid at any given time.
The activities of the People and Remuneration Committee are described in the company’s Corporate Governance Statement that is issued annually.
3. Members of the People and Remuneration Committee
The People and Remuneration Committee consists of at least three members, who shall elect a Chair for the Committee. In addition to the members of the Committee, the Group’s CEO also participates in the meetings of the Committee.
4. Adoption of the rules of procedure
These rules of procedure were approved at the Board of Directors meeting held on 11 February 2021. The rules of procedure shall be reviewed annually at the organisational meeting of the Board of Directors held after the Annual General Meeting.
The rules of procedure of the shareholders’ Nomination Board
On 23 March 2017, the Stockmann Annual General Meeting approved the Board of Directors’ proposal to establish a permanent shareholders’ Nomination Board. The purpose of the Nomination Board is to draft proposals on the election and remuneration of the members of the Board of Directors for the next Annual General Meeting and, when needed, for extraordinary general meetings.
1. Purpose of the Nomination Board
The shareholders’ Nomination Board of Stockmann plc (hereafter “Company”) is a corporate body of the Company’s shareholders, and its purpose is to draft proposals on the election and remuneration of the members of the Board of Directors for the Annual General Meeting. The main duty of the Nomination Board is to ensure that the Board of Directors and its members have sufficient expertise, competence and experience to meet the Company’s needs.
The Nomination Board operates in accordance with valid legislation and other applicable provisions, such as stock exchange rules and the Finnish Corporate Governance Code for Finnish listed companies.
2. Appointment of the members and the composition of the Nomination Board
Representatives appointed by the four largest shareholders will be selected as members of the Nomination Board, in addition to which the Nomination Board includes the Chair of the Board of Directors as an expert member.
The four shareholders who, according to the shareholder register kept by Euroclear Finland Ltd, have the largest shares of the votes conferred by all of the Company’s shares on the first working day of the September preceding the Annual General Meeting are entitled to appoint the members who represent shareholders. If a shareholder does not want to use its appointment right, it will be transferred to the next largest shareholder which would not otherwise have this appointment right.
If a shareholder that has diversified its holdings into several funds, for example, and is required to take these holdings into account under the Securities Markets Act when announcing changes to its holdings, or whose holdings are nominee-registered, submits a written request to the Company’s Board of Directors by the last working day of August, the shares of such a shareholder that have been entered into several funds or nominee-registered will be taken into account together with any directly registered shares of the same shareholder when calculating the shares of votes that confer a nomination right. A sufficient account of the right of holding concerning nominee-registered shares or of an obligation under the Securities Markets Act to take holdings into account must be appended to the request.
Based on the shareholdings thus determined, the Chair of the Board of Directors will request the four largest shareholders each to appoint one member to the Nomination Board.
The Nomination Board is convened by the Chair of the Board of Directors and it will select a chair from among its members. When the members of the Nomination Board have been appointed, the Company will announce the composition in a company announcement.
The Nomination Board is established and will operate until the Annual General Meeting decides otherwise. The members of the Nomination Board are appointed annually and their term ends when new members have been appointed.
A member appointed by a shareholder must resign from the Nomination Board if the shareholder in question divests more than half of its shareholding entitling it to its appointment right as of the first working day of September and, as a result, is no longer among the Company’s ten largest shareholders. The Nomination Board may appoint a new member to fill a seat that has become vacant prematurely and if the Nomination Board’s membership decreases to less than three during the term of its members, the Nomination Board must decide on appointing new members. The Nomination Board must offer, in the order of number of votes held, vacant seats to Company shareholders that have not appointed a member to the Nomination Board. The order of amount votes held is determined in accordance with the holding information in the Company’s shareholders’ register on the appointment proposal date.
3. Duties of the Nomination Board
The duties of the Nomination Board are as follows
- preparing the proposals to the Annual General Meeting regarding members of the Board of Directors;
- preparing the proposals to the Annual General Meeting regarding the remuneration matters of the members of the Board of Directors;
- identifying successor candidates for the members of the Board of Directors; and
- presenting the proposals to the Annual General Meeting on the members of the Board of Directors and their remuneration.
The members of the Nomination Board are not remunerated for their membership. The Nomination Board members’ travel expenses are compensated in accordance with the Company’s travel regulations.
The Nomination Board is quorate when more than half of its members are in attendance. The Nomination Board may not make a decision if all of its members have not been provided an opportunity to participate in discussing the matter or attend a meeting.
The Nomination Board’s decisions must be unanimous. If unanimity is not achieved, the members may make their own proposals to the Annual General Meeting, either alone or together with other members of the Nomination Board.
Minutes must be kept of all Nomination Board decisions. The minutes must be date and numbered and stored in a reliable manner. The Chair and at least one Nomination Board member must sign the minutes.
5. Duties of the Chair of the Nomination Board
The Chair of the Nomination Board must steer the activities of the Nomination Board so that it efficiently achieves its goals and takes into account the expectations of the shareholders and the Company’s interests. The Chair of the Nomination Board
a) convenes the meetings of the Nomination Board, drafts the agenda and prepares the materials for the meetings and chairs them;
b) ensures that the meetings planned for the Nomination Board are held according to an agreed schedule; and
c) convenes extraordinary meetings as needed and in any case within 14 days of a request made by a Nomination Board member.
6. Drafting a proposal on the composition of the Board of Directors
The Nomination Board drafts proposals on the composition of the Board of Directors to the Company’s Annual General Meeting. However, Company shareholders may nevertheless make their own proposals directly to the Annual General Meeting in accordance with the Limited Liability Companies Act.
When drafting a proposal on the composition of the Board of Directors, the Nomination Board must take into account the requirements of the Company’s valid Corporate Governance Code and the results of the annual evaluation of the Board of Directors’ activities conducted in accordance with the Code. The Nomination Board may also use an outside specialist to identify and evaluate suitable candidates, the cost of which must be approved by the Company.
7. Qualifications of the members of the Board of Directors
The Company’s Board of Directors must have sufficient expertise, competence and experience in matters that are relevant to the Company’s sector and business operations. The Board of Directors must collectively have sufficient competence and qualifications in especially the following:
a) matters that are relevant to the Company’s sector and business operations;
b) management of a limited liability company of similar size;
c) corporate and financial administration;
d) strategy and mergers and acquisitions;
e) internal control and risk management; and
f) Corporate Governance.
8. Proposals to the Annual General Meeting
The Nomination Board must submit its proposal to the Company’s Board of Directors no later than the last working day of the January preceding the Annual General Meeting. Proposals made to extraordinary general meetings must be submitted to the Company’s Board of Directors so that they can be included in the notice of the general meeting.
The Nomination Board’s proposals will be announced in a company announcement and included in the notice of the general meeting. The Nomination Board may also make and justify its proposal and give an account of its activities to the Annual General Meeting.
The members of the Nomination Board and the shareholders that they represent must keep confidential any information regarding proposals to be made to the Annual General Meeting until the Nomination Board has made its final proposals and the Company has announced them.
The obligation of secrecy of the members of the Nomination Board and of the shareholders they represent also covers any confidential information received through the Nomination Board’s activities and will be in force until the Company has announced the information in question. The provisions of the Securities Market Act will be applied to any insider information received by members of the Nomination Board.
10. Amending the rules of procedure
The Nomination Board must annually review the contents of these rules of procedure and propose any amendments to the number of Nomination Board members or the selection process, for example, to the Annual General Meeting for its approval. The Nomination Board is authorised to make updates and changes of a technical nature to the rules of procedure as needed.