Corporate governance 2016
Nordic Morning Plc is a Finnish public limited company that is 100 percent owned by the Finnish state. Its corporate governance system complies with the laws of Finland, government resolutions on state ownership policy, Nordic Morning’s Articles of Association and, where applicable, the Corporate Governance Code 2015 for Finnish listed companies.
The Nordic Morning Group comprises the parent company, Nordic Morning Plc, and its subsidiaries.
The Corporate Governance Statement is issued separately from the Board of Directors’ report on operations. The Corporate Governance Statement is approved by the company’s Board of Directors.
Responsibility for the Nordic Morning Group’s governance and operations rests with Nordic Morning Plc’s governing bodies, which consist of the General Meeting of Shareholders, the Board of Directors, and the CEO. Group management in accordance with the policies defined by the Board of Directors is the responsibility of the Group Management Team, which directs, guides, develops and supervises the operations of the Group companies. The management of the subsidiaries is under the control of the vice presidents responsible for the business areas. Nordic Morning Plc directs and implements the Group’s financial administration, HR and information management and communications strategies.
General Meeting of Shareholders
Nordic Morning Plc’s supreme decision-making body is the General Meeting of Shareholders. The General Meeting makes decisions on the matters specified in the Limited Liability Companies Act and the Articles of Association. The General Meeting decides on the acceptance of the financial statements and consolidated financial statements, the distribution of dividends, discharging the members of the Board of Directors and the CEO from liability, the number of members on the Board of Directors, and the compensation payable to the members of the Board of Directors and the auditor. The General Meeting elects the Chairman, Vice-Chairman and members of the Board of Directors and the company’s auditor.
The General Meeting is convened at least once a year. The Annual General Meeting is held before the end of May. The Board of Directors is responsible for convening the General Meeting in accordance with the Articles of Association and the Limited Liability Companies Act.
Board of Directors
The Board of Directors is responsible for the company’s strategic development as well as supervising and guiding the company’s business operations and management. Pursuant to the Limited Liability Companies Act, the duties of the Board of Directors include representing the company and ensuring that the company’s management, assets and business operations are appropriately organized and supervised.
The Board of Directors has rules of procedure that are reviewed annually. The Board of Directors meets according to a pre-agreed annual plan and meeting schedule.
The Board’s key functions are:
• ensuring that the company is appropriately managed and that its operations are appropriately organized
• ensuring that accounting, financial management and risk management are appropriately organized
• the strategic development and steering of business operations and operating segments
• approving the Group’s values and significant operating policies
• approving the annual operating plan and budget
• approving the consolidated financial statements, parent company financial statements and the annual report
• processing interim reports
• appointing and dismissing the CEO
• approving the organizational structure and the structure of the compensation system
• setting annual performance targets for the company and its management and monitoring the achievement of targets
• convening the General Meeting
• establishing committees and deciding on their members and rules of procedure
• deciding on significant investments, divestments and restructuring measures
• deciding on significant property transactions and financing measures
• assessing the independence of the members of the Board of Directors
The Board of Directors has approved the most significant operating guidelines and policies pertaining to the entire Group, the purpose of which is to ensure that the Group’s business is carried out appropriately.
To support the development of its activities, the Board of Directors evaluates its activities annually. The Board also assesses the independence of its members from the company and its shareholders annually.
The Annual General Meeting elects four to eight members to the Board of Directors for a term of one year. The General Meeting also elects the Chairman and Vice-Chairman of the Board of Directors. The members of the Board of Directors must be suitable for their task and the election of Board members complies with the Finnish Government Resolution regarding the equal representation of the sexes. The term of the members of the Board of Directors expires at the end of the Annual General Meeting that first follows their election.
In 2016, the Board of the Directors consisted of Per Sjödell (Chairman), Jukka Ruuska (Vice-Chairman), and members Maritta Iso-Aho, Anni Ronkainen, Petri Vihervuori and Anne Årneby. In 2016, the Board of Directors convened 12 times. The average attendance rate was 95 percent.
|Board of Directors||Born||Nationality||Education||Occupation||Member since||Attendance at Board meetings||Attendance at Audit and Structure Committee meetings|
|Mr. Per Sjödell, Chairman (from March 31, 2016)||1972||Swedish||MBA||Founder of Red City PR||2016||10/10||2/2|
|Mr. Jukka Ruuska, Deputy Chairman (from March 31, 2016)||1961||Finnish||LLM, MBA||CEO of the Asiakastieto Group||2016||8/10||2/2|
|Ms. Maritta Iso-Aho||1964||Finnish||eMBA, MSc (Admin)||Executive Vice President, Communication and Responsibility, Alko Inc||2012||13/13||1/1|
|Ms. Anni Ronkainen||1966||Finnish||MSc (Econ)||EVP, Chief Digital Officer at Kesko||2015||12/13||-|
|Mr. Petri Vihervuori||1971||Finnish||M.A.||Senior Financial Counselor, Ownership Streering Department, Finnish Prime Minister's Office||2011||13/13||3/3|
|Ms. Anne Årneby||1963||Swedish||MBA||Chief Marketing and Communication Officer at Bisnode||2015||12/13||-|
|Mr. Jussi Lystimäki (until March 31, 2016)||1972||Finnish||VP Europe, Schibsted Media Group||2011||3/3||1/1|
|Ms. Carina Brorman (until March 31, 2016)||1958||Swedish||BA (Econ)||Reputation Managemeng Strategist||2009||3/3||1/1|
The Board of Directors assesses that all of its members are independent of the company. All members except Petri Vihervuori are independent of the company’s sole shareholder, the Finnish State. The members of the Board of Directors did not own any shares or share-based rights in the parent company or other Group companies.
The Board committees assist the Board by preparing the business to be handled by the Board. In 2016, the Board had one permanent committee, the Audit and Structure Committee.
Audit and Structure Committee
The members of the Audit and Structure Committee are appointed by the Board of Directors. In accordance with its rules of procedure, the Committee assists the Board by monitoring the financial situation and performing supervisory tasks, directing reporting practices and internal audit functions, supervising risk management and overseeing auditing. In addition, the Audit and Structure Committee monitors the development of the Group’s structure and key business areas. The Committee also prepares matters relating to executive appointments, the terms and conditions of corporate executives’ contracts, their salaries, compensation systems and principles of compensation.
In 2016, the Audit and Structure Committee consisted of three members: Per Sjödell (Chairman), Jukka Ruuska and Petri Vihervuori. The Committee met three times with an attendance rate of 100 percent.
The Board of Directors appoints the CEO, who is responsible for managing and developing the Group’s operations in accordance with the provisions and guidelines laid down in the Limited Liability Companies Act and the Articles of Association and as issued by the Board. The CEO is responsible for ensuring the legality of the accounting and the reliable organization of asset management. The CEO prepares the matters discussed in Board meetings and reports to the Board on his duties.
Since August 8, 2005, the CEO of Nordic Morning Plc has been Timo Lepistö, LL.M., born in 1959.
Group Management Team
The Board of Directors appoints the Group Management Team, which supports the CEO in his duties.
The members of the Group Management Team report to the CEO and their duties include assisting the CEO in the preparation of strategy, business plans and other significant matters. The Group Management Team monitors the development of the Group’s business and performance and takes any measures needed to rectify poor performance. The members of the Group Management Team are responsible for risk management and reporting in their respective areas of responsibility. The Group Management Team meets regularly according to a pre-agreed annual plan and meeting schedule, led by the CEO.
The Group Management Team comprises the Chief Financial Officer, the Human Resources Director, the Vice President for Communications, the Vice Presidents in charge of the business areas and the representatives of the most significant subsidiaries.
In 2016, the Group Management Team consisted of Timo Lepistö, CEO; Annika Linna, VP, Communications; Kati Niemelä, CFO; Annika Parkkonen, VP, HR; Heikki Autio, VP, Campaigns & Dialogue; Mattias Falkendal, VP, Visibility & Service Design and Data & Insight; Päivi Hietanen, Managing Director, Edita Publishing Ltd; and Christian Sahlgren, Managing Director, Sitrus Agency AB.
|Group Management Team||Position ad responsibility area||Born||Education||Member since|
|Mr. Timo Lepistö||CEO of Nordic Morning||1959||LLM||2005|
|Ms. Annika Linna||Vice President, Communications, Nordic Morning||1967||MSc||2009|
|Ms. Kati Niemelä||CFO, Nordic Morning||1966||MSc (Econ)||2005|
|Ms. Annika Parkkonen||Vice President, HR, Nordic Morning||1971||M.Sos.Sc||2012|
|Mr. Heikki Autio||Vice President, Campaigns & Dialogue business area; Managing Director, Edita Prima Ltd||1965||MSc (Eng)||2011|
|Mr. Mattias Falkendal||Vice Presiden, Visibility & Service Design business area||1970||MSc (Econ)||2015|
|Ms. Päivi Hietanen||Managing Director, Edita Publishing Ltd||1962||MSc||2014|
|Mr. Christian Sahlgren||Managing Direcor, Sitrus Agency AB||1972||BSc (Econ)||2012|
In 2016, the Group CEO and other members of the Group Management Team did not own any shares or share-based rights in the parent company or other Group companies.
The purpose of internal control and risk management is to ensure that the company’s operations are efficient and profitable, that the supply of information is reliable, and that regulations and policies are observed. Internal auditors are responsible for helping the Board and the CEO to assess the appropriateness and effectiveness of the Group’s processes and systems, the efficiency and adequacy of internal control, and the accuracy and adequacy of the accounting and reporting. In the Nordic Morning Group, internal auditing goals are decided upon annually by the Board by means of, for example, risk assessments. Practical implementation is entrusted to an independent external firm of authorized public accountants.
The internal audit reports to the Board of Directors or the Audit and Structure Committee. Internal audit assessments are distributed to Nordic Morning Plc’s Board of Directors, Audit and Structure Committee, auditors, CEO and Group Management Team. The CEO, together with other executives, is responsible for ensuring that any actions required on account of observations made by internal auditors are duly initiated in accordance with the Board of Directors’ instructions.
Taking into consideration the size of the company and its level of internal control in 2016, the Board of Directors decided that no separate assignment concerning internal auditing would be made during the year.
The authorized public accountant firm elected by the Annual General Meeting to audit the parent company, Nordic Morning Plc, audits the entire Group with regard to accounting, financial statements, and administration each financial year. In addition to the audit report issued in connection with the company’s financial statements, the auditors also regularly report on their findings to the board and the board’s Audit and Structure Committee.
Nordic Morning Plc’s Auditor is KPMG Oy, with Minna Riihimäki, APA, acting as the auditor in charge in 2016.
The total fees paid to the auditor for auditing and other services amounted to EUR 188 000.
The Board of Directors is responsible for the appropriate organization of risk management.
Risk management is an inseparable part of strategic planning and operational goal setting. Risk management is based on an organization-wide approach to identifying, assessing, managing, and monitoring material risks. The CEO and other executives ensure that risk management is a continuous, integral part of the Group’s day-to-day management and operations. The Group Management Team regularly discusses risk management in its meetings. The CEO and other executives identify and monitor risks, develop and coordinate risk management activities, and update the Group’s risk profile.
The management reports to the Board on risks by business area. Unless there is a need for ad-hoc reporting, the CEO reports to the Board on risk management annually in conjunction with budgeting. The Board of Directors deals with the most significant risks and evaluates the efficiency of risk management at least once a year. The external audit monitors risk management as part of the regular auditing program.
The Board of Directors, assisted by the Audit and Structure Committee, is responsible for the organization of internal control. The CEO manages the implementation of control and reports on it regularly to the Board.
Internal control is an integral part of the company’s governance and its management system. The internal control of operations is based on supervision and control systems built into the management system. The action plan and the regular reporting based on the action plan are, in addition to monthly financial reports, key practices that support management and internal control. Internal control is not a separate process. As part of the company’s functions, it covers all of the company’s operating principles, guidelines and systems. The monitoring of policies and instructions is carried out by centralized support functions such as financial management, human resource management and information management, as well as by the external and internal audit.
The objective of internal control aimed at reliable financial reporting is to ensure that the reporting is reliable and complies with generally accepted principles, applicable legislation and regulations governing the preparation of financial statements. The company uses centralized financial and cash management. Financial reporting is based on financial processes, in which dangerous combinations of duties are avoided, and on internal policies such as approval authorizations, the investment policy, the financing policy and the currency policy. The achievement of financial targets and balance sheet management are monitored through monthly Group-wide reports. Interim financial statements are drawn up quarterly. A semi-annual review is drawn up together with the interim financial statements for the first half-year.
Nordic Morning releases annual corporate responsibility reports as part of annual reports. The report is prepared according to the GRI (Global Reporting Initiative) guidelines. The corporate responsibility program is based on the triple bottom line: people, profit and planet. The program is firmly integrated within Nordic Morning’s business strategy and supported by our values: renewal, respect and responsibility. The ultimate goal of Nordic Morning’s Board of Directors, the Board Committees and the Group Management Team is to operate our business in a responsible way.
CR aspects are re-evaluated annually. Nordic Morning aim to be pioneer in developing communications, developing good leadership, attracting and retaining employees and in enhancing environmental responsibility. Goals are set annually and followed regularly.
Compensation of board members
The Annual General Meeting decides on the compensation of Board members annually. Members of the Board and its committees are remunerated financially. Members of the Board are not entitled to incentive systems based on shares or share derivatives.
Compensation of the CEO and corporate executives
The compensation of the CEO and members of the Group Management Team consists of a fixed monthly salary, standard benefits and a performance-based incentive based on annually decided criteria that must be met for the incentive to be paid. Nordic Morning Plc does not use incentive systems based on shares or share derivatives.
The Board of Directors of Nordic Morning Plc decides the terms and conditions of the contracts of the CEO and members of the Group Management Team. Every year the Board sets targets, based on the budget and operating plans, that must be met for incentive to be paid, and decides on the compensation of the CEO and members of the Group Management Team. As regards others than the CEO and members of the Group Management Team, the Board decides on the principles of compensation.
The CEO is entitled to a performance-based incentive, which is no more than 40 percent of their annual taxable earnings. The members of the Group Management Team are entitled to a performance-based incentive, which is no more than 30 percent of their annual taxable earnings. The short-term performance-based incentive is tied to the operating profit and to personal targets.
The CEO and members of the Group Management Team were included in the long-term “incentive bank” system during 2013-15. The incentive bank system was used to reward the Group’s key personnel for reaching the targets approved annually by the Board. The long-term performance-based incentive was tied to the long-term gross profit and operating profit of the Group. Under the system, the maximum annual incentive may not exceed 40 percent of the CEO’s annual taxable earnings or 30 percent of the annual taxable earnings of other key personnel. The incentives accumulated in the system are to be withdrawn in stages over a two-year period starting from 2016.
Furthermore, the business areas can apply incentive systems based on sales. These systems do not overlap with the Group’s annual performance-based incentive system. Since October 2013, Nordic Morning has cooperated with Innova Oy in the development of the short-term performance-based incentive program.
Upon termination of their contracts, the CEO and other members of the Group Management Team will be entitled to the salary paid for the period of notice as well as benefits. The period of notice for terminating the CEO’s employment is six months when notice is served by the employer and four months when notice is served by the CEO. The period of notice for terminating the employment of other members of the Group Management Team is between six and 12 months when notice is served by the employer and between three and six months when notice is served by the corporate executive in question. Upon termination of employment by the employer, the CEO will be entitled to compensation equivalent to six months’ salary in addition to the salary paid for the period of notice, and other members of the Group Management Team will be entitled to compensation equivalent to up to six months’ salary in addition to the salary paid for the period of notice. Upon resignation, the corporate executive in question will only be entitled to the salary paid for the period of notice as well as benefits.
The CEO’s retirement age is 62. With the exception of the CEO and the Chief Financial Officer, Nordic Morning Plc does not provide supplementary pension insurance. The supplementary pension plans of the CEO and the Chief Financial Officer are based on contributions, and they include vested rights. For the other members of the Group Management Team, the legislation or prevailing practice of the country in question is applied.
|Compensation in 2016 / salaries and fees||EUR 1,000|
|Mr. Per Sjödell, Chairman (from March 31, 2016)||51|
|Mr. Jukka Ruuska, Deputy Chairman (from March 31, 2016)||27|
|Ms. Maritta Iso-Aho||31|
|Ms. Anni Ronkainen||31|
|Mr. Petri Vihervuori||32|
|Ms. Anne Årneby||35|
|Mr. Jussi Lystimäki (until March 31, 2016)||14|
|Ms. Carina Brorman (until March 31, 2016)||13|
|Mr. Timo Lepistö, CEO of Nordic Morning||508|
|Other mangement team members||997|
|The annual payment for the defined contribution plan supplementary pension|
|Mr. Timo Lepistö, CEO, Nordic Morning||71|
|Ms. Kati Niemelä, CFO, Nordic Morning||21|
Related party transactions
The related party transactions of the members of the Group’s Board of Directors, the members of the Group Management Team and the Managing Directors of Group companies are surveyed annually. In the event of business transactions with related parties, Nordic Morning ensures that any potential conflicts of interest are appropriately taken into consideration in decision-making. In the event that business transactions with related parties are material from the company’s perspective and they deviate from the ordinary course of business or ordinary market terms, Nordic Morning will provide an explanation of the decision-making procedure concerning the related party transaction in the company’s Corporate Governance Statement.
The groups related parties also include the parent company, subsidiaries and associated companies. Sales of goods and services conducted with a related party are based on market prices. Related party transactions are reported in the notes to the parent company’s financial statements.