Corporate Governance Statement 2017

This Corporate Governance Statement has been prepared in accordance with the Finnish Corporate Governance Code 2015 and chapter 7, section 7 of the Finnish Securities Markets Act.

Oriola Corporation (hereinafter “Oriola” or “the company”) complies with the provisions of its Articles of Association, the Finnish Companies Act,  the Finnish Securities Markets Act and other similar legislation. The company also complies with the rules and regulations applying to listed companies issued by Nasdaq Helsinki Ltd (Helsinki Exchange)  and the Finnish Financial Supervisory Authority. The company’s head office is located in Espoo, Finland.

Oriola applies the Finnish Corporate Governance Code, with the exception that the company’s Nomination Committee may also have members, who are not members of the company’s Board of Directors. This exception is explained below in the section on the Nomination Committee. The information required by the Finnish Corporate Governance Code is also available on the company’s website www.oriola.com. An unofficial English translation of the Finnish Corporate Governance Code 2015 is in the public domain and available on the Securities Market Association’s website at www.cgfinland.fi.

Oriola prepares its consolidated financial statements and interim reports in accordance with the EU-approved IFRS reporting standards, the Securities Markets Act, applicable Financial Supervisory Authority standards and the rules issued by Nasdaq Helsinki Ltd.  The Report of the Board of Directors and the parent company’s financial statements have been prepared in accordance with the Finnish Accounting Act and the guidelines and statements of the Accounting Board. The auditors’ report covers the Report of the Board of Directors, the consolidated financial statements and the parent company’s financial statements.

Governing structures of Oriola

General meeting of shareholders

The general meeting of shareholders decides on the matters that under the Companies Act and the Articles of Association of Oriola are within its purview. Each shareholder is entitled to attend general meetings.  Each class A share carries 20 votes and each class B share one vote at General Meetings. According to the Articles of Association, no shareholder may vote using an amount of votes that exceeds 1/20 of the total number of votes carried by the shares of different share classes represented at the general meeting. 

The Board of Directors convenes a general meeting of shareholders. The notice of general meeting is published on the company's website or in one daily newspaper in Finland’s capital city no earlier than two months and no later than twenty one days prior to the meeting. Oriola also publishes the notice of general meeting as a stock exchange release. The documents to be submitted to the general meeting and the draft resolutions to the general meeting are also available on the company’s website. The notice of the general meeting contains the proposed agenda for the meeting.  

A shareholder has the right to have matters that under the Companies Act falls within the competence of the general meeting dealt with by the general meeting, if the shareholder so demands in writing to the Board of Directors well in advance of the meeting so that the matter can be included in the notice of general meeting. The demand shall be considered to have arrived in time, when the Board of Directors has been informed about the demand at the latest four weeks in advance of the publication of the notice of the general meeting.

The chairman of the Board of Directors, a sufficient number of members of the Board of Directors and its committees, the President and CEO, and the auditor attend the general meeting. A person proposed for the first time as member of the Board of Directors shall be present at the general meeting that decides on his or her election unless there are well-founded reasons for absence.

The shareholders shall according to law and the articles of association exercise their power of decision at the general meeting. The Annual General Meeting is held by the end of May each year. The duties of the Annual General Meeting include:

  • adoption of the financial statements;
  • use of the profit shown on the balance sheet;
  • election of the members of the Board of Directors and the decision on their fees;
  • discharging from liability for the members of the Board of Directors and the President and CEO;
  • election of the auditor and the decision on compensation, and
  • proposals made by the Board of Directors and shareholders to the Annual General Meeting (e.g. amendments to the Articles of Association, repurchase of the company’s own shares, share issue, giving special authorizations).   

Annual General Meeting 2017

The Annual General Meeting of Oriola, held on 14 March 2017, adopted the financial statements and discharged the members of the Board of Directors and the President and CEO from liability for the financial year ending 31 December 2016. According to the decision of the Annual General Meeting, a dividend of EUR 0.14 per share was paid on the basis of the balance sheet adopted for the financial year ending 31 December 2016.

Authorisations

The Annual General Meeting authorised the Board to decide on a share issue against payment in one or more issues, including the right to issue new shares or to assign treasury shares held by the company. The authorisation covers a combined maximum of 5,650,000 class A shares and 12,500,000 class B shares of the company and includes the right to derogate from the shareholders' pre-emptive subscription right. The authorisation is in force for 18 months following the decision of the Annual General Meeting.

The Board was also authorised to decide on a share issue against payment of class B shares in one or more issues including the right to issue new class B shares or assign class B treasury shares held by the company.  The authorisation covers a combined maximum of 18,000,000 class B shares of the company including the right to derogate from the shareholders’ pre-emptive subscription right. The authorisation is in force for a maximum of 18 months following the decision of the Annual General Meeting. 

The Annual General Meeting authorised the Board to decide on repurchasing up to 18,000,000 of the company’s own class B shares. Shares may be repurchased also in a proportion other than in which shares are owned by the shareholders. The authorisation is in force for a maximum of 18 months following the decision of the Annual General Meeting.

The Annual General Meeting resolved to amend Article 1 of the company's Articles of Association in accordance with the proposal of the Board of Directors as follows: the corporate name of the company is Oriola Oyj, Oriola Abp in Swedish and Oriola Corporation in English.

All decisions of the Annual General Meeting 2017 are available on the company’s website at www.oriola.com.

Board of Directors

The Board of Directors is responsible for the administration of the company and the appropriate organisation of its operations.

The Board of Directors is responsible for managing and supervising the company’s operations in accordance with the law, governmental regulations and the articles of association. The Board also ensures that good corporate governance is complied with throughout the Oriola Group.

The members of the Board of Directors are elected by the general meeting of shareholders. The Board of Directors uses the highest decision making power in the Oriola Group between the general meetings of Shareholders. Pursuant to the articles of association, the Board of Directors consists of no fewer than five and no more than eight members. The term of the members of the Board of Directors expires at the end of the next Annual General Meeting following their election. The chairman of the Board of Directors is elected by the general meeting of shareholders. The vice chairman of the Board is elected by the Board of Directors from among its members.

The Nomination Committee’s recommendation to the Board for the Board’s proposal on the composition and remuneration of the Board is given in the Notice of the Annual General Meeting. The biographical details of the proposed Board members are presented on the company’s website.

The Board of Directors convenes in accordance with a timetable agreed in advance and also convenes as required. In addition to making decisions, the Board of Directors also receives during its meetings current information about the operations, finances and risks of the Group. Board meetings are also attended by the President and CEO, the CFO and the General Counsel (who acts as secretary to the Board). Members of the Group Management Team attend Board meetings at the invitation of the Board. Minutes are kept of all meetings.

Main tasks of the Board of Directors

The main tasks to be dealt with by the Board of Directors are listed in the Board’s rules of procedure. Accordingly, these are among others:

  • approving the company’s strategy;
  • approving financial targets, budgets, major investments and risk management principles;
  • appointment and dismissal of the company’s President and CEO;
  • consideration and decision of all significant matters concerning the operations of the group and the business segments, and
  • approving the charters of the Audit Committee, the Compensation Committee and the Nomination Committee.

Diversity in the Board

The ultimate goal in electing members to the Board of Directors is to ensure that the Board of Directors as a collegium has a competence profile which supports the Oriola’s existing and future business. Diversity supports the overall goal that the Board of Directors has an optimal competence profile to support the company’s business and is viewed as an integral part and a success factor enabling the achievement of Oriola’s strategic goals. Important factors for the diversity of Oriola’s Board of Directors are the mutually complementary expertise of the members, their education and experience in different professional areas and industrial sectors, businesses in various stages of development, leadership experience as well as their personal capacities. The diversity of the Board of Directors is supported by experience in operating environments and industries relevant to the company as well as different cultures and by consideration to the age and gender breakdown of the members.

Oriola’s Board of Directors has approved the diversity policy of the Board of Directors in December 2016. According to the diversity policy of the Board of Directors Oriola’s objective is to maintain an appropriate balance of representation of both genders on the Board of Directors.

The company has upheld the requirements set for diversity in the composition of the Board of Directors. Oriola’s Board of Directors 2017 represents diversity related of nationalities, professional competencies and genders.

Board of Directors 2017-2018

The Annual General Meeting of Oriola held on 14 March 2017 confirmed that the Board of Directors of Oriola shall have seven members and elected the following persons as chairman and members of the Board of Directors:

In its constitutive meeting held later the same day, the Board of Directors elected Eva Nilsson Bågenholm as its Vice Chairman.

Name

Year of birth

Education and independence

Attendance at Board Meetings

Attendance at Committee Meetings

Anssi Vanjoki
(Chairman)

1956

M.Sc. (Economics),
independent member of the Board

22/22

 

Anja Korhonen

1953

M.Sc. (Economics), independent member of the Board

22/22

Audit Committee
7/7

Mariette Kristenson

1977

M.Sc. (Economics), independent member of the Board 

19/22

Compensation   Committee
4/4

Kuisma   Niemelä 

1958

M.Sc.
independent member of the Board 

21/22

Audit Committee
7/7

Eva Nilsson   Bågenholm
(Vice   Chairman) 

1960

Physician,
independent member of the Board 

22/22

Compensation   Committee
4/4

Lena Ridström

1965

M.Sc.   (Economics), independent member of the Board 

21/22

Compensation   Committee
4/4

 

 

 

 

 

Staffan   Simberg

1949

MBA,
independent   member of the Board 

21/22

Audit Committee
7/7

Members of Oriola’s Board of Directors 1 January - 14 March 2017:

Name

Year of birth

Education and independence 

Attendance at Board Meetings

Attendance at Committee Meetings

Matti Rihko

 1962

M.Sc. (Economics),  
M.Sc. (Psychology),
independent member of the Board

4/5

Compensation Committee
1/1 

The Board of Directors has evaluated the independence of its members and determined that all members are independent of the company and its major shareholders. The Board has also conducted an assessment of its activities and working practises.  

In 2017, the Board of Directors of Oriola convened 22 times, 9 of which were conference call meetings and 5 per capsulam meetings.  

Board committees

The Board of Directors has an Audit Committee and a Compensation Committee. In addition, the company has a Nomination Committee. The committees’ charters are confirmed by the Board. The committees are preparatory bodies that submit proposals to the Board on matters within their purview. Minutes are kept of the committees’ meetings. The committees report to the Board at regular intervals. The committees do not have independent decision-making powers. Their task is to submit recommendations to the Board on matters under consideration.

In its constitutive meeting, held after the Annual General Meeting, the Board of Directors appoints, from among its members, the members and chairman of the Audit Committee and the Compensation Committee. The process of appointing the members of the Nomination Committee is presented below in the section on the Nomination Committee.

In addition to the Audit, Compensation and Nomination Committees, the Board of Directors may appoint ad hoc committees for preparing specific matters. Such committees do not have Board-approved charters and the Board does not release information on their term, composition, the number of meetings or the members’ attendance rates.

Audit Committee

The task of the Audit Committee is to enhance the control of the company’s operations and financial reporting. According to the charter, the following in particular shall be addressed and prepared by the Audit Committee:  

  • reviewing the consolidated financial statements and interim reports,  together with the  auditor;
  • reviewing together with the  auditor any deficiencies in the supervision systems observed in control inspections  and any other deficiencies reported by auditors;
  • reviewing any deficiencies in the control system observed in internal audit  and other observations and recommendations made;
  • reviewing the plans of action for the control inspection and internal audit and giving recommendations to company management on focus areas for internal audits, and
  • evaluating the appropriateness of the supervision of company administration and risk management, and reviewing changes in the principles of company accounting and external reporting prior to their introduction.

In addition, the Audit Committee’s duties include preparatory work on the decision on electing the auditor, evaluation of the independence of the  auditor, taking into account particularly the effect of the provision of related services on the independence, and carrying out any other tasks assigned to it by the Board. The Audit Committee has at least three members.

As of 14 March 2017, the Chairman of the Audit Committee is Anja Korhonen and the other members are  Kuisma Niemelä and Staffan Simberg. The members of the Audit Committee are independent of the company and its major shareholders.

Compensation Committee

According to the charter, the Compensation Committee reviews management and personnel remuneration policies and issues related to management appointments, and makes proposals on such matters to the Board of Directors. The Committee’s responsibilities include:

  • reviewing, evaluating and making proposals on the remuneration structure and incentive schemes of management and the personnel of the Oriola Group;
  • monitoring the effectiveness of these systems to ensure that incentive schemes of the management promote achievement of the company’s short term and long term goals;
  • reviewing and preparing other matters relating to the remuneration of management and personnel, and submitting proposals on these to the Board, and
  • considering and preparing appointments of top management to be decided by the Board.

The Compensation Committee has three members. As of 14 March 2017, the Chairman of the Committee is Eva Nilsson Bågenholm and the other members are Mariette Kristenson and Lena Ridström. The members of the Compensation Committee are independent of the company and its major shareholders.

Nomination Committee

The Nomination Committee of Oriola is a body established by the Board of Directors for the purpose of preparing and presenting to the Board a recommendation for the proposal to be put by the Board to the Annual General Meeting concerning the composition and remuneration of the Board. The Board has approved the charter of the Nomination Committee.
 
The Committee members are appointed by the Board of Directors, which also appoints one of the members as Chairman. The term of office for the Committee members’ expire the year following the appointment upon the appointment of the Committee members pursuant to the charter. Members of the Committee need not be members of the Board of Directors. The purpose of this deviation from the Corporate Governance Code is to allow the appointment of major shareholders of the company to the Nomination Committee and thus to ensure that their opinions are heard well before the Annual General Meeting.

Prior to appointing the Committee members, the chairman of the Board arranges a meeting to which the chairman invites the company’s twenty largest shareholders, by votes, registered by 31 August preceding the Annual General Meetings as shareholders in the company’s shareholders register maintained by Euroclear Finland Ltd. The purpose of the meeting is to hear the major shareholders on their views as to the composition of the Committee.
 
Not later than on 1 February preceding the Annual General Meeting, the Committee presents to the Board its recommendation on the proposal to be put before the Annual General Meeting concerning the composition and remuneration of the Board. The Nomination Committee evaluates the independence of the proposed Board members it has recommended. The Committee's recommendation does not affect the Board's independent decision-making authority or its right to put proposals before the General Meeting.
 
The Nomination Committee appointed for the term of office ending at the appointment of the new Committee members’ appointment on 28 September 2017, convened 5 times and the attendance rate of the Committee's members was 96 per cent.
 
On 28 September 2017, the Board of Directors elected the following persons to the Nomination Committee: Peter Immonen, Mikael Aro, Mikko Mursula, Pekka Pajamo and Into Ylppö. Pekka Pajamo was elected as Chairman of the Committee. The members of the Committee are independent of the company.

On 31 January 2018, the Nomination Committee of Oriola Corporation presented to the Board of Directors its recommendation on the proposal to the 2018 Annual General Meeting concerning the composition of the Board of Directors as follows: The number of members of the Board of Directors would be seven. The present members of the Board of Directors Anja Korhonen, Mariette Kristenson, Eva Nilsson Bågenholm, Lena Ridström, Staffan Simberg and Anssi Vanjoki would be re-elected and Juko-Juho Hakala would be elected new member of the Board of Directors. Anssi Vanjoki would be re-elected as Chairman of the Board of Directors. Current member of the Board of Directors Kuisma Niemelä will leave the Board of Directors after the 2018 Annual General Meeting.

President and CEO and deputy to CEO

The Board of Directors appoints and dismisses the President and CEO of Oriola and decides on the terms of his/her employment. In accordance with the Companies Act, the President and CEO is responsible for the day to day executive management of the company in accordance with the instructions and orders given by the Board of Directors. In addition, the President and CEO also ensures that accounts of the company complies with Finnish law and that its financial affairs have been arranged in a reliable manner. The terms and conditions of the President and CEO’s employment are specified in a written service contract approved by the Board.

The Board of Directors appointed Kimmo Virtanen, Executive Vice President, Services Business, M.Sc. (Econ.), born in 1968, as Oriola’s acting President and CEO starting from 18 December 2017. Before the appointment Kimmo Virtanen also acted as the company’s deputy to the CEO. Eero Hautaniemi, M.Sc. (Econ.), born in 1965 left his position as President and CEO of the Company on 18 December 2017.

The new President and CEO of the company is Robert W. Andersson, M.Sc., MBA, born in 1960. Robert W. Andersson will assume the position effective 1 March 2018 at the latest.

Group Management Team

The Group Management Team consists of the President and CEO of Oriola as Chairman and persons appointed by the Board. At the end of year 2017, the Group Management Team consisted of five members, including the acting President and CEO, to whom the other Group Management Team members report.

The Group Management Team meets regularly to address matters concerning the entire Group. The Group Management Team is not a decision-making body. It assists the President and CEO in the implementation of Group strategy and in operational management, and facilitates the group-wide distribution of information concerning the entire Group.

The following persons were members of Oriola’s Group Management Team on December 31, 2017:

  • Kimmo Virtanen, Executive Vice President, Services Business Area and acting President and CEO (as of 18 December 2017);
  • Sari Aitokallio, CFO;
  • Thomas Gawell, Vice President, Healthcare Business Area
  • Jukka Mäkelä, Vice President, Development, and
  • Teija Silver, Vice President, Human Resources

Anders Torell, Vice President, Consumer Business Area started in is position January 2, 2018.

Risk management and internal supervision systems

The internal control and risk management systems related to Oriola’s financial reporting aim to ensure a reasonable certainty of the reliability of the company's financial statements and financial reporting, as well as the company's compliance to legislation and generally approved accounting principles.

Financial reporting

The Board of Directors and the President and CEO have the overall responsibility for organising the internal control and risk management systems pertaining to financial reporting. The President and CEO, the members of the Group Management Team and the heads of the business units are responsible for the accounting and administration of the areas within their spheres of responsibility complying with legislation, the Group's operating principles, and the guidelines and instructions issued by Oriola's Board of Directors. The organising and leading of the financial reporting in the Group has been centralized under the subordination of the CFO.

Oriola Group follows the International Financial Reporting Standards (IFRS) approved for application within the European Union. Instructions and accountancy principles for financial reporting are collected in an accounting manual that is updated as soon as standards change, as well as in the financial department's instructions that are followed in all Group companies. Group accounting is responsible for following and keeping up to date with financial statement standards, upholding the principles concerning financial reporting and distributing information about these to the business units.

Measurement and follow-up

The performance of the Group is monitored in the Group Management Team with monthly reports as well as in the monthly operational reviews of the business segments. The financial situation of the Group is also monitored in the meetings of the Board of Directors. The Audit Committee and the Board of Directors examine the interim reports and financial statements before their publication. Monitoring of the monthly reports also ensures the effectiveness of the internal supervision. Each business segment must ensure effective supervision of its own operations as part of Group-level internal supervision. The business segments and the Group Finance organisation are responsible for the evaluation of the processes covering financial reporting. The evaluations must contain balances and analyses, which are compared with budgets, assessments and various economic indicators.

Internal control

Internal control forms an essential part of the company's governance and management systems. It covers all of the Group's functions and organisational levels. The purpose of internal control is to ensure a sufficient certainty that the company will be able to carry out its strategy. Internal control is not a separate process but a procedural measure covering all Group-wide operating principles, guidelines and systems.

The purpose of Oriola’s internal supervision system is to support the implementation of the Group strategy and to ensure that rules and regulations are observed. The company’s internal supervision is based on a Group structure, in which the Group’s operations are organised into Business Areas and Group functions. Group functions issue Group-level guidelines laying down the operational framework and the persons responsible for the process. The guidelines cover such areas as accounting, reporting, financing,  investments and business principles.

The guidelines aim to ensure that all risks connected to the achievement of the company’s objectives can be identified and prevented. The control measures cover all Group levels and functions. All new instructions and guidelines are published on the company’s internal website and staff members can provide feedback to the management and anonymously report any questionable activities through the company intranet.

Risk management

The Board of Directors of Oriola approves the company’s risk management policy in which the risk management operating model, principles, responsibilities and reporting are specified. The Board guides and supervises the planning and implementation of the risk management. The Board-appointed Audit Committee supervises risk management in the Group.

Oriola has specified the company’s risk management model, principles, organization and process in the Risk management policy. The Group’s risk management seeks to identify, measure and manage risks that may have an adverse or beneficial impact on Oriola’s operations and achievement of the set goals. Additionally the Group has a Code of conduct policy and a Treasury policy covering compliance and financial risks. Oriola’s risks are classified as strategic, operational and financial. Risk assessment and management are key elements in the strategic planning, operations and daily decision making in the company.

Risk management and the most significant risks are described on the company’s website at www.oriola.com. 

Internal audit

Oriola uses an outsourced internal audit function for the purpose of fulfilling its internal audit requirements. The outsourced internal audit function is an independent and objective assurance activity reporting directly to the Audit Committee of the Board of Directors. The internal audit  assignments are carried out on the basis of an Internal Audit Charter approved by the Board of Directors as well as an Internal Audit Plan annually reviewed and approved by the Audit Committee.

External audit

The company has one auditor, which must be a firm of authorised public accountants. The auditor is elected annually by the Annual General Meeting for a term that expires at the end of the next Annual General Meeting following the election. The task of the auditor is to audit the consolidated financial statements, the financial statements of the parent company, the accounting of the Group and the parent company and the administration of the parent company. The company’s auditor submits the auditors’ report to the shareholders in connection with the annual financial statements, as required by law, and submits regular reports on its observations to the Board’s Audit Committee.

The Board of Directors and the Audit Committee are responsible for monitoring the independence of the auditor. For this reason the company has implemented a policy covering the provision of non-audit services by the elected auditors.

The Annual General Meeting of Oriola held on 14 March 2017 re-elected PricewaterhouseCoopers Oy, a firm of authorised public accountants, as the company’s auditor, with Ylva Eriksson, APA, as the principal auditor. The fees for the staturory audit paid to the auditing firm PricewaterhouseCoopers Oy in 2017 totalled EUR 363,137. In addition, EUR 224,798 was paid for other consultation provided to Group companies.

Insider management

Oriola complies with the insider holding guidelines issued by Nasdaq Helsinki Ltd (July 3, 2016) and the Market Abuse Regulation (596/2014, “MAR”). Oriola has issued its insider guidelines (“Guidelines”) which are based on applicable EU and Finnish legislation (especially MAR and the Securities Markets Act 746/2012), the insider guidelines of Nasdaq Helsinki Ltd, and the regulations and guidelines of the European Securities Markets Authority and the Finnish Financial Supervisory Authority.

Members of the company’s Board of Directors, CEO and his deputy, members of the Group Management Team that have operational responsibilities leading a business area of the company as well as CFO and VP, Development and Information Management are considered the management of the company (“Management”). Management and their related parties shall notify all transactions with the company’s securities or financial instruments made on his or her own account to the company and the Finnish Financial Supervisory Authority without delay and three working days from the execution of the transaction at the latest. The Guidelines set trade restrictions prohibiting Management and the persons who participate in the preparation of interim and annual financial statements of Oriola from making transactions with the company’s securities or financial instruments related to them during a closed period of 30 days before a financial report of Oriola is made public (closed period).   

Oriola is obliged to draw up the insider lists and keep them up-to-date. For the time being, Oriola  has determined not to include any persons as permanent insiders. Consequently, all persons with inside information will be included in event-based insider list for relevant insider projects. Oriola instructs the persons entered in the event-based insider list on their obligations and any possible consequences. In addition, Oriola monitors and supervises the proper management of insider issues.

Related parties transactions

Oriola’s related parties include Management, their close family members as well as companies in which the individuals mentioned, alone or jointly with others, exercise control. Oriola assesses and monitors transactions to be made with related parties to ensure that potential conflicts of interest are adequately taken into account in the company’s decision making. Oriola maintains a list of parties that are related to the company.

Management of the company has confirmed for 2017 that neither they nor their related parties have engaged in business transactions with Oriola during the year in question.