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Corporate Governance

 
 

Corporate Governance

Pohjolan Voima Oyj is a non-listed public limited liability company. According to its Articles of Association, Pohjolan Voima supplies electricity and heat for its shareholders at cost according to the so-called Mankala principle, i.e. Pohjolan Voima delivers the energy it has produced or obtained to its shareholders in proportion to their ownership of each series of shares, and each shareholder of the series of shares in question is responsible to the company for the annual overheads and fixed costs defined in more detail in the Articles of Association.

Pohjolan Voima's governance is based on the Companies Act and its corporate documents. The corporate documents give more detailed stipulations on the Group's governance. In addition, the Group's corporate governance is guided, when applicable, by the Finnish Corporate Governance Code. As an unlisted public limited company Pohjolan Voima is under no obligation to follow the Corporate Governance Code.

Pohjolan Voima's General Meeting of Shareholders issues directives to the Board of Directors regarding the composition of the Boards of Directors of the subsidiaries and, if necessary, certain decisions by the subsidiaries. The parent company's Board of Directors and the Corporate Executive Team discuss the main principles of the Group's operations. The parent company participates in the management and supervision of its subsidiaries through its representatives appointed to the governing bodies of these companies. The Group's subsidiaries and associated companies have their own governing bodies as well as some committees and corporate documents.

Teollisuuden Voima Oyj is a joint venture partially owned by Pohjolan Voima Oyj on the basis of the rules concerning quorum and authority and the right to appoint Members of the Board contained in the Articles of Association and other corporate documents of Teollisuuden Voima Oyj.

General Meeting of Shareholders

The General Meeting of Shareholders is the highest decision-making body in the company. The General Meeting of Shareholders decides on statutory matters. It also elects the members of the Board of Directors, in accordance with the procedure specified in the corporate documents, and issues binding directives to the Board of Directors regarding the elections of the Board members of the Group companies and any significant investments. The Annual General Meeting was held on 20 March 2018.

Board of Directors

The Board of Directors is responsible for managing the company and arranging its operations appropriately in accordance with legislation, the corporate documents and any decisions taken in the General Meeting of Shareholders. The Board of Directors supervises the operations and management of Pohjolan Voima, and decides on the Group's significant investments and borrowing. The Board of Directors discusses and approves, for example, the business code of conduct and the policies defining corporate responsibility and risk management of Pohjolan Voima. The Board of Directors annually assesses its own activities. The working order drawn up by the Board of Directors defines more closely its principal tasks and procedures.

The members of the Board of Directors are elected annually at the General Meeting of Shareholders. According to the Articles of Association, the Board consists of a minimum of five and a maximum of 13 ordinary members. Personal deputies can be elected to the Board members.

In the Annual General Meeting of 2018, nine members and their personal deputies were elected to the Board of Directors. Tapio Korpeinen, Seppo Parvi, Anders Renvall, Jukka Hakkila, Tapani Sointu, Esa Kaikkonen, Rami Vuola, Heikki Liukas and Patrick Wackström were elected as Board Members.

The procedure for the election and organisation of the Board is specified in detail in the corporate documents. The Chairman of the Board of Directors is appointed by the company's largest shareholder and the Deputy Chairman is appointed by the second largest shareholder. The President & CEO is not a member of the Board of Directors.

In 2017, the remuneration paid to members of the Board and the debuties totalled EUR 462,000.

The Board of Directors convened 15 times in 2017. On average, 87 percent of the members were present at the meetings.

Committees of the Board of Directors

To enhance effectiveness in the handling of matters within the responsibility of the Board of Directors, the Board has established an Audit and Finance Committee and a Renumeration and Nomination Committee, assissting and reporting to the Board of Directors and consisting of at least three members of the Board. The Board of Directors nominates the members of the committees, appoints their chairman and approves each Commmittee's charter.

The Renumeration and Nomination Committee discusses the nomination and remuneration of the Management, and may prepare the election and remuneration of the Members of the Board of Directors to the General Meeting of the Shareholders.

After the Annual General Meeting of 2017 the Board of Directors elected Tapio Korpeinen as the Chair of the Renumeration and Nomination Committee and Seppo Parvi and Anders Renvall as other members of the Committee. The Renumeration and Nomination Committee held eight meetings in 2017. The attendance percentage at the meetings was 96 percent.

The Audit and Finance Committee provides assistance to the Board in processing and preparing matters that are the responsibility of the Board concerning financing, financial reporting, monitoring and auditing.

After the Annual General Meeting of 2017 the Board of Directors elected Tapani Sointu as the Chair of the Audit and Finance Committee and Rami Vuola and Jukka Hakkila as other members of the Committee. The Committee held twelve meetings in 2017. The attendance percentage at the meetings was 97 percent.

In addition to the two Committees referred to above, the Board of Directors can nominate Committees or Steering Groups to assist the Board of Directors and the Executive Team. The Board of Directors approves each Steering Group's Charter.

President & CEO and Corporate Executive Team

Ilkka Tykkyläinen serves as the company's President & CEO as of 15 August 2018. Tykkyläinen took over this position from Lauri Virkkunen, who retired. In operational management, the President & CEO is supported by the Corporate Executive Team, which discusses the main principles related to the operations of the Group and the parent company. In 2017, in addition to the President & CEO, the Corporate Excecutive Team comprised of Petri Hurri, Minna Laakso (CFO from October 2017), Minna Korkeaoja (CFO until October 2017), Riitta Larnimaa, Marko Nylund, Tiina Nyström and Pertti Pietinen.

Remuneration

The Renumeration and Nomination Committee approves the company's remuneration systems.The incentive bonuses of the Corporate Executive Team are based on a long-range remuneration system and on the criteria determined in it. The incentive scheme does not include any shares or share derivatives.

Auditing and auditor

The principal task of statutory auditing is to verify that the financial statements give correct and sufficient information on the Group's results and financial position. The Annual General Meeting annually appoints one regular auditor, which shall be an audit firm approved by the Central Chamber of Commerce.

The Annual General Meeting of 2017 elected PricewaterhouseCoopers Oy, authorised public accountants, as the regular auditor. Jouko Malinen, authorised public accountant, was chosen as the auditor in charge.

Internal control, risk management and internal auditing

The Board of Directors and the management are responsible for the companys's internal control and risk management system. The purpose of internal control and risk management is to ensure the efficiency and effectivity of the operations, the reliability of information, as well as compliance with the regulations and operating principles. Pohjolan Voima's governance and internal control system are based on the Articles of Assiciation, Shareholders's Agreement as well as the Code of Conduct and other company policies, approved by the Board of Directors.

Risk management is a continuous process of analysing and manating threats and opportunities faced by the company in its efforts to achieve its goals, and to ensure the continuity of the business. The key principles of risk management are defined in the Pohjolan Voima Group Risk Management policy. Subsidiaries and Group functions are responsible for their own risk management and associated reporting. The management reporting on the comprehensive risk circumstances to the Board is linked to the strategy and long-term planning process. The Board of Directors oversees the reporting on risk exposures, risk management activities and results related to the company's strategy and operations.

The operating principles of Pohjolan Voima internal audit have been defined in the audit charter approved by the Board of Directors. Internal audit assits the company in achieving its objectives by providing a systematic approach to evaluate and improve governance processes, risk management and internal control. Internal audit reports functionally under the Audit and Finance Commitee and reports summaries of its plans and findings to the Pohjolan Voima's Board of Directors.