Corporate governance

Corporate Governance of Apetit Plc

The main components in the Apetit Plc chain of control are as follows:

  • Shareholders’ meeting
  • Auditors
  • Supervisory Board
  • Board of Directors
  • CEO
  • Operating organisation

The roles and responsibilities pertaining to each of the components in the chain of control are described in these guidelines. The closest possible cooperation between the components in the chain of control is essential for the success of Apetit Plc and for ensuring growth in shareholder value. The Board of Directors and the operating organisation’s management occupy a critical position and bear the primary responsibility for developing Apetit Plc and increasing the shareholder value.

Group structure

The Apetit Group comprises Apetit Plc and its subsidiaries. The most significant subsidiaries are Apetit Ruoka Oy and Avena Nordic Grain Oy.

Applicable provisions

Apetit Plc is a Finnish public limited company and its decision-making and administration comply with the Limited Liability Companies Act, other statutes which apply to public listed companies, and the company’s Articles of Association. In addition, the company complies with the Guidelines on Insiders issued by NASDAQ OMX Helsinki Ltd, which entered into force on 3 July 2016, and the Finnish Corporate Governance Code for listed companies issued by the Securities Market Association, which entered into force on 1 January 2016 (CG Code). The company deviates from recommendation 5 of the Corporate Governance Code, which concern the Board of Directors.

General meeting

Apetit Plc’s highest decision-making authority is exercised by its shareholders at a general meeting of shareholders, which is convened at the invitation of the company’s Board of Directors. General meetings are either Annual General Meetings or Extraordinary General Meetings.

The Annual General Meeting is held each year before the end of May at a time specified by the Board of Directors. The issues to be dealt with at an Annual General Meeting, as set out in the Articles of Association, are discussed at the meeting, together with any other proposals put to the general meeting. The Annual General Meeting is usually held in March or April.

An Extraordinary General Meeting is convened as necessary in order to deal with a specific proposal that has been put to a general meeting.

Invitation to general meeting

Shareholders are invited to general meetings with an invitation, containing a proposed agenda for the meeting, that is published on the company’s web pages at the earliest two months and at the latest 21 days before the meeting. In addition to this, the invitation and the Board of Directors’ proposals to be put to the general meeting are published in a stock exchange release and, if so decided by the Board of Directors, in at least one national newspaper determined by the Board of Directors. The total number of shares and voting rights on the date of the invitation, the documents to be submitted to the general meeting and other items on the agenda of the general meeting are also given on the company website.

Right to place an item on a general meeting’s agenda

Each shareholder has the right to place an item of concern to the general meeting, as laid down in the Limited Liability Companies Act, on the agenda for discussion at the meeting, provided that the shareholder requests this in sufficient time for the item to be included in the invitation to the meeting. The date by which shareholders must notify such a request to the Board of Directors will be given in good time on the company’s website.

Attending a meeting

In order to attend a general meeting, shareholders must notify the company of their attendance in advance by the date specified in the invitation. A shareholder may attend the shareholders’ meeting in person or may authorise a proxy to attend. A shareholder or proxy may also have an assistant at the meeting. Minutes of the meeting are drawn up and made available to the shareholders on the company website within two weeks of the meeting. In addition, a stock exchange release is issued without delay after the general meeting, stating the decisions made at the general meeting.

Presence of the Board of Directors, CEO and auditor

The CEO, the Chairman of the Board of Directors and a sufficient number of the Board members must be present at a general meeting. In addition, the auditor must be present at the Annual General Meeting.

Decision-making at the general meeting

The company has one series of shares and all shares carry equal voting rights. No single shareholder is entitled to exercise voting rights representing more than one tenth of the votes at any meeting. Upon voting, a proposal supported by more than half of the votes cast usually constitutes the meeting’s decision; in the event of a tie, the decision will be the proposal supported by the chairman. Under the Limited Liability Companies Act, there are, however, various situations (e.g. an amendment to the Articles of Association or a decision on a targeted share issue) in which a decision requires a higher, qualified majority.

The Articles of Association do not include a redemption clause. To the knowledge of the company, there are no shareholder agreements about the use of voting rights or any agreements that limit the conveying of shares.

Supervisory Board

Composition and term

The company has a Supervisory Board, which comprises a minimum of 14 and a maximum of 18 members elected by the general meeting. The term of office of the members of the Supervisory Board ends at the close of the third Annual General Meeting following their election. The Supervisory Board generally convenes three times a year.

Function of the Supervisory Board

Based on the proposals of the Nomination Committee, the Supervisory Board elects the members, chairman and vice chairman of the Board of Directors, and decides on their remuneration. The Supervisory Board is also responsible for supervising the corporate administration, issuing instructions to the Board of Directors, issuing an opinion on the Financial Statements, the Board of Directors’ report and the auditors’ report, and other duties that are prescribed for it in the Limited Liability Companies Act.

Deviation from the Corporate Governance Code

According to recommendation 5 of the Corporate Governance Code, the general meeting shall elect the Board of Directors. Under Apetit Plc’s Articles of Association, however, the Supervisory Board elects the members of the Board and decides on their remuneration, based on the proposals of the Nomination Committee. The company has chosen to deviate from the recommendation because the Supervisory Board, as the body that oversees the company’s Board of Directors, is best placed to assess the composition of the Board of Directors and the attributes required of Board members.

Board of Directors

Procedure for electing the Board of Directors

Proposals for the composition of the Board of Directors and concerning the remuneration to be paid to the members of the Board of Directors are submitted to the Supervisory Board by the Supervisory Board’s Nomination Committee, which is made up of the chairman and deputy chairman of the Supervisory Board, the chairman of the Board of Directors and two shareholder representatives selected by the Annual General Meeting. The Nomination Committee must ask shareholders with significant voting rights for their views concerning the proposals to be submitted to the Supervisory Board.

Composition and term

In accordance with the Articles of Association, Apetit Plc’s Board of Directors consists of a minimum of five and a maximum of seven members. The term of office of the Board of Directors ends at the close of the first Supervisory Board meeting convened following the first Annual General Meeting after the Board’s election. The composition of the Board of Directors must take into account the needs of the company’s operations and the company’s stage of development. A person elected to the Board of Directors must have the competence required for the task and have enough time to spend dealing with the task. The Articles of Association do not limit the number of terms served by members of the Board of Directors nor is the Supervisory Board’s decision-making power in the election of members of the Board of Directors restricted in any other way.

 

Function of the Board of Directors

The general function of the Board of Directors is to direct the operations of the company in such a way that in the long term the amount of added value for the capital invested is maximised, while taking into account the expectations of the different stakeholders at the same time.

For the purpose of performing its functions, the Board of Directors:

  • considers the Corporate Governance Statement’s description of the main aspects of the internal control and risk management systems pertaining to the financial reporting process
  • appoints and releases from duties the CEO and Deputy to the CEO, and decides on the conditions of their terms of service and incentive schemes
  • sets personal targets for the CEO annually and assesses their realisation
  • convenes at least once a year without the operating organisation’s management in attendance
  • holds a meeting with the auditors at least once a year
  • prepares a draft resolution on the choice of auditors for submission to the general meeting
  • assesses its own performance once a year
  • confirms its rules of procedure, which are reviewed annually
  • discusses other matters proposed by the Board of Directors chairman or the CEO for inclusion in the meeting agenda. Members of the Board of Directors are also entitled to have a matter of their choosing discussed by the Board by first notifying the chairman of this.

Based on the proposals presented by the CEO, the Board of Directors

  • confirms the company’s ethical values and operating policies, and supervises their implementation
  • confirms the company’s basic strategy and continuously monitors its validity
  • defines the company’s dividend policy
  • approves the annual operating plan and budget on the basis of the strategy, and supervises their implementation
  • approves the total annual investment and its distribution among the business areas, and decides on large and strategically important investments,
  • acquisitions and divestments
  • confirms the operating guidelines for the company’s internal control, ensuring annually that they are kept up-to-date, and monitors the effectiveness of the internal control
  • confirms the company’s risk management policies and principles and its risk limits
  • reviews quarterly the main risks associated with the company’s operations and the management of these risks
  • approves Interim Reports, the Board of Directors’ report and Financial Statements discussed by the Audit Committee
  • confirms the Group’s organisational structure
  • where necessary, submits proposals to the general meeting concerning the remuneration systems for management and personnel
  • annually monitors issues associated with management successors and draws up the necessary conclusions
  • confirms the decisions of the CEO about the choice of the CEO’s immediate subordinates, their duties, conditions of employment and incentive plans, and
  • monitors the company’s working atmosphere and the way in which personnel cope with their tasks

Duties of the chairman of the Board of Directors

The general duty of the Board chairman is to manage the work of the Board in such a way that its tasks can be carried out as effectively and appropriately as possible. To this end, the chairman

  • ensures that the meetings entered in the Board’s meeting schedule are convened
  • ensures that the minutes of the meeting correspond to the progress of events at the meeting, and that the minutes are signed by all Board members
  • convenes extraordinary meetings of the Board of Directors as necessary
  • is responsible for the planning and efficient running of meetings
  • familiarises new members with the company’s operations
  • ensures that members have a good knowledge of the industry
  • attends to shareholder relations and conveys the wishes of shareholders to the attention of the members of the Board of Directors
  • ensures that the Board of Directors obtains sufficient information for making its decisions
  • monitors the implementation of decisions of the Board of Directors
  • attends to the assessment of the Board of Directors’ performance
  • keeps in touch with the CEO and monitors the company’s operations and its operating environment
  • keeps in touch with Board members between meetings as necessary
  • keeps in touch with the Supervisory Board chairman and presents reports to the Supervisory Board on the implementation of the company’s strategy and on the work of the Board of Directors
  • participates, as a member of the Supervisory Board’s Nomination Committee, in the formulation of proposals concerning the Board of Directors’ election and remuneration
  • is responsible for planning the work of the Board of Directors.
  • If the chairman is prevented from attending to these duties, the vice chairman shall attend to them to the extent separately agreed.

Evaluation of independence

The Board of Directors has carried out an evaluation of the extent to which its members are independent of the company in accordance with recommendation 10 of the Corporate Governance Code. The evaluation determined that the members of the Board, Chairman Veijo Meriläinen and Deputy Chairman Esa Härmälä and Board members Lasse Aho, Annikka Hurme, Seppo Laine and Niko Simula were independent of the company. All members of the Board are also independent of significant shareholders, as referred to in the Corporate Governance Code.

Decision-making

The Board of Directors must always act in the interests of the company and ensure that its actions do not provide an unfair advantage to a shareholder or any other party at the expense of the company or any other shareholder. A member of the Board is disqualified from taking part in the handling of any issue between him/her and the company. When a vote is taken, the majority opinion shall constitute the Board’s decision and, in the event of a tie, the opinion of the chairman shall constitute the Board’s decision. In the event of a tie in personal elections, the election shall be decided by lot.

Meetings of the Board and self-evaluation

The Board convenes about ten times a year. The Board has not allocated its members any specific aspects of the company’s operations for them to oversee. The Board has an Audit Committee with rules of procedure confirmed by the Board. The CEO of Apetit Plc, or another member of the corporate management assigned by the CEO, is responsible for presenting the issues to be dealt with at the Board meeting. According to the Board’s rules of procedure, the CEO is responsible for ensuring that the Board is provided with sufficient information in order for it to be able to assess the operations and financial position of the Group. The CEO also supervises the implementation of Board decisions and reports to the Board on any deficiencies or problems in their implementation. The Board secretary is the company’s corporate counsel. The Board regularly evaluates its performance and working methods by carrying out a self-evaluation once a year. The results of the evaluation are submitted to the Supervisory Board for its information.

The Board’s remuneration and other benefits

The Supervisory Board decides on the Board of Directors’ remuneration and the grounds for expenses compensation every year. The fees for members of the Board are paid as combined cash and share compensation. Paid remunerations are stated on the company website.

CEO and Deputy to the CEO

Apetit Plc has a CEO and a Deputy to the CEO. It is the CEO’s duty to direct the operations of the company according to the instructions and provisions issued by the Board of Directors and to inform the Board about the development of the company’s business operations and financial situation. The CEO is also responsible for the arrangement of the day-to-day management of the company and that the company’s accounts are in compliance with the law and that its financial affairs have been arranged in a reliable manner.

The CEO is primarily responsible for introducing the issues that will be dealt with at the Board meeting and responsible for drawing up the proposals for decisions. In matters the CEO considers appropriate, the CEO may also delegate these tasks to a member of the Group management. The CEO and the Deputy to the CEO are selected by the Board of Directors, which also decides on their salary, performance-related benefits and other conditions of the terms of their service. The CEO’s terms of service have been agreed in writing. The CEO does not have a fixed term of office, but has been appointed for the task until further notice.

CEO’s retirement age
The retirement age for the CEO is 62.

CEO’s salary and terms of service
The salary and fringe benefits paid to the CEO are reported on the company’s website.

The period of notice for the CEO’s service relationship is 6 months. In case of discontinuation of the service relationship, the CEO is entitled to compensation amounting to 12 months’ salary.

Corporate Management

The Apetit Group’s Corporate Management is chaired by the CEO of Apetit Plc. Its members comprise the separately selected members of management. The Corporate Management does not exercise powers based on law or the Articles of Association. The Corporate Management is an advisory body appointed by Apetit Plc’s CEO and has the task of discussing Group-wide development projects and Group-level principles and procedures as necessary. The CEO is responsible for choosing the members of the Corporate Management. Personal details about members of the Corporate Management and their shareholding are reported on the company website.

Management remuneration and incentive plans

The remuneration and incentive plans for management are made up of monetary remuneration, fringe and pension benefits, and performance-related compensation, by which the degree of success for the year is measured. The level of these plans as a whole is compared annually with the general market level.

The Board of Directors of Apetit Plc decides on the principles for the remuneration and incentive plans for the CEO and other members of the management. The Board also confirms annually the indicators to be used for the plans and their level in relation to the targets set. The indicators include key figures connected with annual budgets as well as development targets selected on a function-specific basis. The maximum amount of performance-related compensation corresponds to 60 per cent of the annual salary in the case of the CEO, and 50 per cent of the annual salary for other management. In addition to the CEO, two Corporate Management members have a separate operating-profit-related incentive plan for the period 2015–2017. The maximum compensation for the CEO is an additional 12 months’ salary and for other members an additional 8 months’ salary. The compensation will be paid at the end of the earning period in the form of Apetit Plc’s shares (50%) and cash (50%).

Audit
The primary purpose of the statutory auditing of the accounts is to verify that the Financial Statements provide correct and sufficient information on the Group’s results and financial position for the financial year. Apetit Plc’s financial year is the calendar year.

The auditor is responsible for inspecting the accuracy of the company’s bookkeeping and Financial Statements for the financial year and the Board of Directors’ report, and for issuing an auditors’ report to the general meeting. Under Finnish law, the auditor must also inspect the lawfulness of the company’s administration. The auditors report their observations to the Board of Directors and its Audit Committee at least once a year.

Auditor
In accordance with the Articles of Association, Apetit Plc has a minimum of two and a maximum of three auditors appointed by the Annual General Meeting. An auditor’s term ends at the close of the next Annual General Meeting following the election of the auditor. The auditors must be auditors or audit firms approved by the Central Chamber of Commerce.

Fees paid
The fees paid to the auditors are stated on the company website.

Group reporting and internal control

The achievement of financial targets is monitored by means of monthly reports which cover the entire Group. The reports compare the monthly and cumulative results with the budget, the previous year and regularly updated forecasts. The up-to-date forecasts cover the following 12 months. Data from the monthly reports are regularly reconciled with the accounts. The Group CEO and members of the Corporate Management are issued with the reports, and the Group’s Board of Directors is issued with a summary for the Group and summaries of the data for each segment and business unit.

Internal control has been incorporated into the Group’s business operations. The Board of Directors approves the common guidelines for internal control of the entire Group and assesses at least once a year the state of the internal control. The boards of directors of Group companies are responsible for the highest level of management duties related to the internal control of their respective companies. The operating organisation’s management in each of the Group companies is responsible for the implementation of internal control and risk management in line with the pre-determined principles and operating guidelines, and for reporting on the company’s operations, risk-bearing ability and risk situation in accordance the Group’s management system. Each Group company and business unit has an appointed person responsible for financial matters and for ensuring that legislation and Group guidelines are complied with. Internal Group audits are performed by an external service provider. The Group’s internal audit assesses the efficiency of internal control and identifies and reports on aspects that can be further developed. The internal audit reports its observations to the Parent Company Board of Directors and its Audit Committee. Control audits are also carried out by Group auditors as part of the annual audit programme. The auditors report their observations to the director of the unit inspected, the person in charge of financial matters, the Group’s CFO and the CEO.

Risk management

The Apetit Group has a documented and comprehensive risk management system under which all Group companies and business units regularly identify, assess and report the risks involved in their operations and the adequacy of their control and management methods. The purpose of these risk assessments, which support strategy formulation and decision-making, is to ensure that sufficient measures are taken to control the strategic, operating, financial and hazard risks.

Each year, the Apetit Plc Board of Directors confirms that the Group’s risk management policy and its risk management principles and limits are relevant and up-to-date.

The most significant risks and uncertainties are assessed annually in the Board of Directors’ report. Short-term risks and uncertainties are reported in the Interim Reports and in Financial Statement bulletins.

Governance principles of business units

The governance principles of the business units ensure that the units’ operations comply with decisions that have been taken and that the people in the various units have a clear idea of the responsibilities and powers associated with the tasks in the unit. These same principles are also applied in Apetit Plc’s Group administration and all the subsidiaries.

Directors working in the business units and Group administration must ensure that the operations and decision-making conform to agreed administrative principles. They must also ensure that operations in their business units follow the operating principles approved for them.

Decision-making and responsibility apply at a personal level. The role of the management groups and working groups is to act as bodies that prepare matters for decision-making. The delegation of powers of decision is also at a personal level.

The legal structure of the Group does not correspond to the operational structure of the Group’s business operations. The legal units comprise only the foundation for the broader legal structure of the business operations. The boards of directors of subsidiaries fully owned by the Parent Company are made up of people employed by the Group. One or more members of the Group’s Corporate Management are on the board of the major Group companies

The companies’ activities are based on operating plans and budgets consistent with company strategy, and these are subject to approval by the company Board of Directors. The Apetit Plc Board of Directors approves the companies’ operating plans and annual plans each year. Decision-making by the company’s CEO is based not only on the Limited Liability Companies Act and the company’s Articles of Association, but also the approved operating plan and budget. The applicability of the operational management system to the company’s operating policy is verified in management reviews held twice a year. Monitoring of the targets set is based on the company’s internal reporting, made on a continuous basis.

Apetit Ruoka

Apetit Ruoka Oy develops, produces and markets frozen vegetables, potato products and ready meals, as well as fresh vegetable and fruit products. The company’s main market area is Finland. The company produces services in human resources management, IT, and financial administration for the Group companies.

The role of the human resources unit is to support line management and supervisors in achieving the strategic and operating goals by developing and managing the core processes of personnel administration.

The information technology unit produces IT services for the Group’s business units. The unit is responsible for the Group’s basic information technology and IT infrastructure and for the quality and cost-effectiveness of the IT services produced for the units. The ownership of the business operation systems lies with the business units themselves. In projects concerning these systems, the information technology unit provides support while changes are being made and provides technical and project expertise as well as back-up once a system has been introduced.

The financial administration unit is responsible for the Group’s cash management and payment services and for agreed tasks concerning the invoice processing and invoicing of the Group’s businesses.

Apetit Kala

Apetit Kala Oy’s concept business offers solutions for customers outsourcing their service-sales counters.

Apetit Suomi

Apetit Suomi Oy provides services in environmental administration for the Group’s business units.

The environmental management unit is responsible for handling matters concerning water, waste management and wastewater treatment at the Säkylä industrial estate, for advising and instructing the Group’s companies in questions concerning environmental matters, and for monitoring implementation of the Group’s environmental goals.

 

Avena Nordic Grain

Avena Nordic Grain Oy is active in the trading of grains, oilseeds, pulses and feed raw materials both in Finland and internationally, and develops, produces and markets vegetable oils and protein feeds. It has subsidiaries in Finland, Russia, Estonia, Lithuania, Kazakhstan and Ukraine and representative offices in Russia and Kazakhstan.

Group Administration

Group Administration is responsible for financial management at the Group level and legal services.

The financial management unit is responsible for monthly reporting at the Group level and it produces the Financial Statements, the Annual Report and quarterly Interim Reports. The financial management unit is also responsible for financing and insurance at the Group level, stock exchange releases, guidance on profit forecasting and the annual plan, monitoring the appropriate arrangement of internal control and risk management, and developing internal control and risk management.

The legal service operates as a legal advisor to the business units and is responsible for producing the legal services they need.

Updating Corporate Governance

Information on Apetit Plc’s corporate governance is regularly updated on the company’s web pages at apetitgroup.fi/en/ under Corporate Governance of Apetit Plc.

Updated 18 December 2017