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 and business unit level strategies
- 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 and a Personnel and Remuneration Committee.
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 of the Board for the General Meeting is prepared by the Personnel and Remuneration Committee. 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. The Board of Directors appoints a Chairman and a Deputy Chairman from among its members. 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, 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. Nokian Tyres' Board has 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 Company 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 General Meeting on the members to be appointed to the Board of Directors and the remuneration to be paid to the Board members. In addition, the 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 will as of 1 January 2020 include the preparation of remuneration policy and 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.
The committee receives access to the information regarding factors affecting the assessment of the independence of new member candidates and the results from the assessment of the Board’s work.
After the Annual General Meeting 2020, the Board of Directors of Nokian Tyres plc held an organizing meeting in which Kari Jordan (Chairman), Veronica Lindholm and Jukka Hienonen were selected as members of the Personnel and Remuneration Committee. All committee members are independent of the Company and of all major shareholders in the company.
In 2019, the members of the Personnel and Remuneration Committee were Kari Jordan (Chairman), Veronica Lindholm, and Petteri Walldén. The committee assembled 5 times in 2019.
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, and risk management 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 will handle 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.
After the Annual General Meeting 2020, the Board of Directors of Nokian Tyres plc held an organizing meeting in which Raimo Lind (Chairman), Heikki Allonen, Inka Mero and Pekka Vauramo were selected as members of the Audit Committee. All committee members are independent of the company and of all major shareholders in the company.
In 2019, the members of the Audit Committee were Raimo Lind (Chairman), Heikki Allonen, Inka Mero, and Pekka Vauramo. The Company’s chief auditor participates in the committee’s meetings. The committee assembled 5 times in 2019.