Corporate governance 2017
Nordic Morning Group 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 Group’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 Group 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 Group Plc’s governing bodies, which consist of the General Meeting of Shareholders, the Board of Directors, and the CEO. Group function Heads; CFO, CHRO, CIO, CSO together with each Business Area Head (Nordic Morning, Edita Prima and Edita Publishing) in accordance with the policies defined by the Board of Directors have the responsibility of the Group’s management, which directs, guides, develops and supervises the operations of the Group companies. The management of the subsidiaries is under the control of the Heads responsible for each business areas. Nordic Morning Group Plc directs and implements the Group’s Action Plan 2018-2020 that covers strategic business development, financial administration, talent development, communications strategies and information management.
General Meeting of Shareholders
Nordic Morning Group 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 2017, the Board of the Directors consisted of Per Sjödell (Chairman), Jukka Ruuska (Deputy Chairman), and members Maritta Iso-Aho, Anni Ronkainen, Petri Vihervuori and Ingrid Jonasson Blank. In 2017, the Board of Directors convened 11 times. The average attendance rate was 98 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||1972||Swedish||MBA||Founder and Chairman of Red City PR SARL||2016||11/11||6/6|
|Mr. Jukka Ruuska, Deputy Chairman||1961||Finnish||LLM, MBA||CEO of the Asiakastieto Group Plc||2016||11/11||6/6|
|Ms. Maritta Iso-Aho||1964||Finnish||eMBA, MSc (Admin)||Executive Vice President, Alko Inc||2012||11/11||-|
|Ms. Anni Ronkainen||1966||Finnish||MSc (Econ)||EVP, Chief Digital Officer at Kesko||2015||11/11||-|
|Mr. Petri Vihervuori||1971||Finnish||M.A.||Senior Financial Counselor, Ownership Streering Department, Finnish Prime Minister's Office||2011||11/11||6/6|
|Ms. Ingrid Jonasson Blank||1962||Swedish||BSc (Econ)||2017||8/8||-|
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 2017, 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 2017, the Audit and Structure Committee consisted of three members: Per Sjödell (Chairman), Jukka Ruuska and Petri Vihervuori. The Committee met six 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 January 12, 2017, the CEO of Nordic Morning Group Plc has been Anne Årneby. At that time, Nordic Morning Group consisted of the parent company, six Finnish and six Swedish subsidiaries. Each company with a specific market position, providing services that complemented the others in the Group.
During Q1 a strategy team, was formed consisting of the Managing Directors for each company and the heads of the Group functions, in total 15 people. In close collaboration with the current clients, a new strategy was developed, drawing from the Group´s history and deep-rooted culture of change and learning. The strategy guides the repackaging of current and future needed capabilities and services to better meet the client needs of today, and the digital business environment of tomorrow.
The strategy team replaced the old Group Management Team structure during the first 6 months and met on a regular basis. The team monitored the development of the Group’s business and performance and took any measures needed to rectify poor performance. The members of the Strategy team are responsible for risk management and reporting in their respective areas of responsibility.
Since end of Q2 2017 the Nordic Morning Group is organized in three business areas, targeting three specific markets. On the Group level a role as Chief Strategy Officer was developed.
• Nordic Morning - Data-driven marketing & service design to drive growth and customer loyalty
• Edita Prima - Services for automated customer communication and sales support material
• Edita Publishing - Learning and problem solving using digital technology and content in new ways
A new budgeting process was developed, based upon Strategic Action Plan and repackaged offerings. Process done bottom-up to secure transparency and ownership.
Thereafter the steering model is that each business area has its own management team meeting twice per month. Every second meeting CEO Anne Årneby and CSO Teemu Takala attends the management meetings for close follow up on Action plan/Budget.
The executives consists of the CEO, the CFO, the CHRO, the CSO and each Business Area Head (Nordic Morning, Edita Prima and Edita Publishing).
The executives report to the CEO and their duties include assisting the CEO in the preparation of strategy, business plans and other significant matters. The executives monitors the development of the Group’s business and performance and takes any measures needed to rectify poor performance. The executives are responsible for risk management and reporting in their respective areas of responsibility.
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 Group Plc’s Board of Directors, Audit and Structure Committee, auditors and CEO. 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 2017, 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 Group 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 Group Plc’s Auditor is KPMG Oy, with Kati Nikunen, APA, acting as the auditor in charge in 2017. The total fees paid to the auditor for auditing and other services amounted to EUR 128 000.
The Board of Directors is responsible for the appropriate organization of risk management. Risk management is the part of the Board of Directors’ annual clock.
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 CEO, CFO, CHRO, CSO together with the Business Area Heads identify and monitor risks, develop and coordinate risk management activities, and update the Group’s risk profile. This is a well-defined part in Nordic Morning Group´s Action Plan.
The executives report 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 Group 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 Group’s business strategy and supported by our values: renewal, respect and responsibility. The ultimate goal of Nordic Morning Group’s Board of Directors, the Board Committees and other executives is to operate our business in a responsible way.
CR aspects are re-evaluated annually. Nordic Morning Group 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
In 2017 the compensation of the Group CEO, Group executives and Business Area management teams consists of a fixed monthly salary and standard benefits. Due to changes in strategy, no short or long-term incentive programs were in effect in 2017. In 2018, the Group will implement a new performance-based incentive program that was approved by the Board in 2017.
The Board of Directors decided to reward the CEO with a one-time bonus due to excellent performance in 2017. The bonus reservation is 59 thousand euros , which is 25 % (max 40 %) of annual taxable earnings.
Nordic Morning Group does not use incentive systems based on shares or share derivatives.
The former CEO and former members of the former Group Management Team were included in a long-term incentive program during 2013-15. The final payments related to this program took place in February. The payout to the former CEO was 14 thousand euros, whilst the other key employees covered by the program got 27 thousand euros in total.
Furthermore, the business areas can apply incentive systems based on sales. These systems do not overlap with the Group’s performance-based incentive system.
The Board of Directors of Nordic Morning Group decides the terms and conditions of the contracts as well as the compensation of the CEO and the Group executives. The Board also decides on the principles of compensation for other key positions.
Upon termination of their contracts, the CEO and other members of the Group executives will be entitled to the salary paid for the period of notice as well as benefits. The period of notice for the CEO when terminating the employment is six months for both parties. The period of notice for terminating the employment of other members of the Group executives is six months when notice is served by the employer and two to three 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 executives will be entitled to compensation equivalent to three 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 65. The supplementary pension plans of the former CEO and former Chief Financial Officer where terminated in 2017.
|Compensation in 2017 / salaries and fees||EUR 1,000|
|Mr. Per Sjödell, Chairman (from March 31, 2016)||68|
|Mr. Jukka Ruuska, Deputy Chairman (from March 31, 2016)||37|
|Ms. Maritta Iso-Aho||28|
|Ms. Anni Ronkainen||28|
|Mr. Petri Vihervuori||31|
|Ms. Ingrid Jonasson Blank||25|
|Ms. Anne Årneby CEO of Nordic Morning Group (since January 12, 2017)||236|
|Mr. Timo Lepistö, CEO of Nordic Morning Group (until January 12, 2017)||234|
|The annual payment for the defined contribution plan supplementary pension|
|Mr. Timo Lepistö, CEO of Nordic Morning||10|
|Ms. Kati Niemelä, CFO of Nordic Morning||30|
Related party transactions
The related party transactions of the members of the Group’s Board of Directors and the Managing Directors of Group companies are surveyed annually. In the event of business transactions with related parties, Nordic Morning Group 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 Group 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.