Board work and committees
The Board is responsible for the Company’s corporate governance and the appropriate organization of its operations pursuant to the Finnish Limited Liability Companies Act and other regulations. The Board holds the general authority in company-related issues, unless other company bodies have the authority under the applicable legislation or the Articles of Association. The policies and key tasks of the Board are defined in the Finnish Limited Liability Companies Act, the Articles of Association, and the Board’s charter. The key tasks include:
• Approving consolidated financial statements, half year reports and interim reports
• Presenting matters to the General Meeting
• Appointing and dismissing the President and CEO
• Organization of financial control.
In addition, as defined in the Board charter, the Board deals with, and decides on, matters of principle as well as issues that carry financial and business significance, such as:
• Group strategy
• The Group’s action, budget, and investment plans
• The Group’s risk management and reporting procedures
• Decisions concerning the structure and organization of the Group
• Significant individual investments, acquisitions, divestments, and reorganizations
• The Group’s insurance and financing policies
• Reward and incentive schemes for the Group’s management
• Appointing Board committees, and
• Monitoring and evaluating the actions of the President and CEO.
The Company has a separate Audit Committee, a Personnel and Remuneration Committee and a Shareholders’ Nomination Board.
The President and CEO of Nokian Tyres is in charge of ensuring that the Board members have the necessary and sufficient information on the Company’s operations. The Board assesses its activities and operating methods by carrying out a self-evaluation once a year. Members of the Board and the President and CEO will not participate in making a decision where the law states that they must be disqualified.
Composition of the Board
According to the Articles of Association of Nokian Tyres, the Board of Directors comprises no fewer than four and no more than nine members. The proposal regarding the composition and remuneration of the Board for the General Meeting is prepared by the Shareholders’ Nomination Board. The number of Board members and the composition of the Board shall be such that the Board is capable of efficiently carrying out its tasks, while taking into account the requirements set by the Company’s operations and its stage of development. The elected Board members must be qualified for the task and able to devote a sufficient amount of time for the Board duties.
Members of the Board are elected at the Annual General Meeting for a one-year term of office that begins after the closing of the Annual General Meeting and ends at the end of the next Annual General Meeting. In 2020, the Board of Directors appointed the Chairman and the Deputy Chairman from among its members. Following the establishment of the Shareholders’ Nomination Board, the Chairman and the Deputy Chairman of the Board of Directors are appointed from among the Board members by the Annual General Meeting upon the proposal by the Shareholders’ Nomination Board. The remuneration payable to the Board members is also decided at the Annual General Meeting.
Independence of the Board members
Pursuant to the recommendation of the Corporate Governance Code 2020, the Board assesses the independence of its members annually. According to the Board’s estimate, all Board members are independent of the Company and its major shareholders.
Committees of the Board
The Board will decide on the committees and their chairpersons and members each year during the constituent meeting. In 2020, the Board had two committees: the Personnel and Remuneration Committee and the Audit Committee. Each committee must include no fewer than three members having the competence and expertise necessary for working in the committee. At least one member of the Audit Committee must have expertise in accounting or auditing. The majority of the members of the Personnel and Remuneration Committee must be independent of the Company. The majority of the members of the Audit Committee must be independent of the Company, and at least one member must be independent of the Company’s major shareholders. The President and CEO and the other members of the Group Management Team cannot act as members of the Personnel and Remuneration Committee.
Personnel and Remuneration Committee
The Personnel and Remuneration Committee prepares a proposal to the Board on the Company’s President and CEO and on the salary and other incentives paid to the President and CEO. The Personnel and Remuneration Committee also prepares a proposal to the Board on the nominations, salaries and other incentives of the Group Management Team members. This Committee also reviews and submits a proposal to the Board on the allocation and criteria of the Nokian Tyres share-based incentive plans, and on the other incentive plans. In addition, the key duties of the Personnel and Remuneration Committee include the preparation of the remuneration policy and the remuneration report for the Board and the President and CEO in accordance with applicable laws and regulations. The committee has no independent decision-making power; collective decisions are made by the Board, which is responsible for carrying out the tasks assigned to the committee.
In 2021, March 30, the Board of Directors elected in its organizing meeting the members of the Board’s Personnel and Remuneration Committee and Audit Committee. The Board of Directors elected Veronica Lindholm as the Chairman and Jukka Hienonen and Pekka Vauramo as members of the Personnel and Remuneration Committee.
In 2020, the members of the Personnel and Remuneration Committee were Kari Jordan (Chairman), Veronica Lindholm, and Petteri Walldén until April 2, 2020, and from there onwards Kari Jordan (Chairman), Veronica Lindholm, and Jukka Hienonen.
The committee assembled 11 times in 2020.
All committee members are independent of the Company and of all major shareholders in the Company.
The Audit Committee assists the Board of Directors in its regulatory duties and reports to the Board. The committee has no independent decision-making power; collective decisions are made by the Board, which is then responsible for carrying out the tasks assigned to the committee.
According to the committee charter, the committee controls that bookkeeping, financial administration, financing, internal control, internal auditing, audit of the accounts, risk management and compliance function are appropriately arranged in the Company. The committee follows and assesses the reporting process for financial statements as well as any significant changes in the recording principles and the items valued in the balance sheet. The committee also processes the general description of the mechanisms of internal auditing and risk management of the financial reporting process, which forms part of the Corporate Governance Statement. The committee follows the statutory auditing of the financial statement and the consolidated financial statements and assesses the independence of the statutory auditor and the offering of services other than auditing services by the auditor. Furthermore, the committee handles the auditor’s report and possible audit minutes as well as the supplementary report presented by the auditor to the committee. The committee prepares the draft resolution on selecting the auditor. In addition, the Audit Committee monitors and assesses how agreements and other legal acts between the Company and its related parties meet the requirements of the ordinary course of business and arm’s length terms in accordance with applicable laws and regulations. The Audit Committee must have the expertise and experience required for its tasks.
In 2021, March 30, the Board of Directors elected in its organizing meeting the members of the Board’s Personnel and Remuneration Committee and Audit Committee. The Board of Directors elected Raimo Lind as the Chairman and Heikki Allonen, Inka Mero and Jouko Pölönen as members of the Audit Committee.
In 2020, the members of the Audit Committee were Raimo Lind (Chairman), Heikki Allonen, Inka Mero and Pekka Vauramo. As a general rule, the Company’s chief auditor participates in the committee’s meetings.
The committee assembled 7 times in 2020.
All committee members are independent of the Company and of all major shareholders in the Company.
Shareholders’ Nomination Board
The Company’s Annual General Meeting 2020 decided to establish a Shareholders’ Nomination Board (the “Nomination Board”) and to approve the Charter of the Nomination Board. The duties of the Nomination Board consist of the preparation of proposals to the General Meeting concerning the number, composition, Chairman and possible Deputy Chairman of the Board and the remuneration of the members of the Board and the Board committees. In addition, the Nomination Board seeks prospective successor candidates for the members of the Board.
The Nomination Board consists of five members of which four members represent the Company’s four largest shareholders who on the first banking day of June each year are the largest shareholders as determined on the basis of the shareholders’ register of the Company maintained by Euroclear Finland Ltd. and wish to nominate a member to the Nomination Board. The fifth member of the Nomination Board is the Company’s Chairman of the Board. Proposals that have been supported by at least three members of the Nomination Board, shall constitute the proposals of the Nomination Board.
The Nomination Board is established to operate until abolished by the decision of the General Meeting. The term of the members of the Nomination Board shall end upon the nomination of the following Nomination Board in accordance with the Charter of the Nomination Board. The members of the Nomination Board are not entitled to remuneration from the Company on the basis of their membership unless otherwise decided by the General Meeting.