The Board of Directors
It is the general obligation of Tieto’s Board of Directors to safeguard the interests of the company and its shareholders.
Composition and election of Tieto’s Board of Directors
According to Tieto’s Articles of Association, the Board of Directors shall consist of at least six and no more than twelve members. Board members have a term of office of one year, expiring at the closing of the first AGM following the election.
The company has defined as an objective that in addition to professional competence, Tieto’s Board members shall be diversified in terms of gender, occupational and professional background and that the Board as a group shall have sufficient knowledge of and competence in, inter alia, the company’s field of business and markets.
The SNB, which consists of representatives nominated by the company’s largest shareholders, prepares a proposal on the composition of the Board to be presented to the AGM for its decision. In addition to the Board of Directors having established the aforesaid diversity principles and included them in the Board charter, the company took steps to ensure that the principles were included in the charter of the SNB and taken into account in the candidate search. The ratio of gender diversity of the members elected by the AGM has remained stable since 2012 and been 2:6 (i.e. approximately 33.3% female and 66.7% male members).
In addition to the members proposed by the SNB and elect by the AGM, Tieto’s personnel elects two members and two deputy members to the Board of Directors. The term of office for the personnel representatives is two years. This special appointment procedure is a departure from Recommendation 5 “Election of the Board of Directors” of the Corporate Governance Code 2015. Personnel representation is based on the Finnish Act on Personnel Representation in the Administration of Undertakings and was originally agreed between Tieto Corporation and the personnel of the Group by way of a Personnel Representation Cooperation Agreement in 2001.
The objectives of personnel representation are, inter alia, to provide opportunities for the personnel to influence and affect the organization, to improve communication and decision making within the Group, to increase mutual trust and confidence between corporate management and the personnel as well as to increase and develop the feeling of security among the personnel. The personnel representatives, however, are not entitled to participate in the handling of matters that concern the appointment or dismissal of corporate management, the contractual terms of the management, the terms of employment of staff or matters related to industrial actions.
|Board of Directors as at 31 December 2016|
|1948||Finnish||BSc. (Econ.)||Professional Board member|
|1958||Swedish||MSc. (Eng.)||Entrepreneur, investor and Board member|
|Harri-Pekka Kaukonen||1963||Finnish||DSc. (Tech.)||Professional Board member|
|Johanna Lamminen||1966||Finnish||DSc. (Tech.), MBA||CEO, Gasum Ltd|
|Sari Pajari||1968||Finnish||MSc. (Eng.)||SVP, Supply Chain and Business Development,
Metsä Board Oyj
|Endre Rangnes||1959||Norwegian||BBA (Econ.)||Professional Board member|
|Jonas Synnergren||1977||Swedish||MSc. (Econ.)||Partner, Cevian Capital AB|
|Lars Wollung||1961||Swedish||MSc. (Econ.), MSc. (Engineering)||Professional Board member|
|1955||Finnish||MSc. (Econ.)||Test Engineer|
|1967||Swedish||MSc. (Electrical Engineering)||Senior Project Manager|
|Independency and attendance at Board and its Committees’ meetings in 2016|
|Member since||Independent||Board||Audit & Risk Committee||Remuneration Committee|
|Harri-Pekka Kaukonen 1)||2016||Yes||9/9||-||5/5|
|Johanna Lamminen 1)||2016||Yes||8/9||6/6||-|
|Eva Lindqvist 2)||2010||Yes||1/1||1/1||-|
|Teuvo Salminen 2)||2010||Yes||1/1||1/1||-|
|1) Board member as from 22 March 2016.|
|2) Board member until 22 March 2016.|
All Board members of Tieto are independent of the company and seven out of eight members are independent of the company’s significant shareholders. The independence of the members is evaluated at the Board’s constitutive meeting. The Board members shall inform the Board if any changes in these circumstances occur, in which case their independence will be re-evaluated.
More detailed background information regarding the Board members, such as working experience, past and present positions of trust and the Remuneration Statement, is presented on the company’s website at www.tieto.com/investors.
Tasks of Tieto’s Board
The main duties and working principles of the Board have been defined in a written charter. Additionally, the work of the Board is based on an annual action plan.
More specifically, the Board:
- approves the company’s values, strategy and organizational structure
- defines the company’s dividend policy
- approves the company’s annual plan and budget and supervises their implementation
- monitors management succession issues, appoints and discharges the President and CEO
- decides on the President and CEO’s compensation, sets annual targets and evaluates their accomplishment
- decides on the compensation of the President and CEO’s immediate subordinates
- addresses the major risks and their management at least once a year
- reviews and approves interim reports, annual reports and financial statements
- reviews and approves the company’s key policies
- is accountable for guiding the organization’s strategy on environmental and social topics
- meets the company’s auditors at least once a year without the company’s management
- appoints the members and Chairmen of the Board’s committees and defines their charters
- reviews assessments of its committees as well as the President and CEO
- evaluates its own activities.
Work of Tieto’s Board
The Board has scheduled meetings every one to two months. Besides the Board members, the meetings are attended by the President and CEO, Chief Financial Officer (CFO) and General Counsel, who acts as secretary of the meetings. In addition to the scheduled meetings, the Chairman shall convene the Board whenever needed as well as at the request of any of its members or the President and CEO.
Matters to be handled are prepared by the Board committees and the President and CEO. The Board receives information on the company’s financial performance monthly and more detailed financial reports quarterly. Any material related to issues to be handled by the Board is provided four days prior to the meeting. Other case-specific materials are delivered at the management’s initiative or the Board’s request. Board members shall be informed about all significant company events immediately.
Work of Tieto’s Board in 2016
- The Board convened 10 times in 2016 and the average attendance was 97.4%.
- The Board met once during the year without the management present.
- The Board held one joint meeting with the auditors.
- The Board met the auditors once without the presence of the management.
Assessment of the Board
The performance of Tieto’s Board is assessed annually; the latest assessment was carried out together with an external consultant in late 2016. Assessments review the Board’s knowledge of the company’s operations and management as well as its understanding of the field of business. Additionally, the effectiveness of the Board work is evaluated. The SNB is informed of the results, which are also taken into consideration when the Board draws up its next annual plan.
Tieto’s Board is assisted by two permanent committees that prepare matters for which the Board is responsible. The Board defines the charters of the committees and decides on their composition. The entire Board remains responsible for the duties assigned to the committees.
Remuneration Committee (RC)
The RC comprises at least three non-executive directors elected by the Board. The majority of the members shall be independent of the company. The head of Human Resources (HR) acts as secretary of the meetings.
In 2016, all committee members were non-executive directors who were independent of the company and of significant shareholders. Based on the Board’s decision, the RC was composed of:
- Markku Pohjola (Chairman)
- Harri-Pekka Kaukonen
- Sari Pajari
- Endre Rangnes
The committee meets regularly and at least twice a year. The Chairman of the committee reports to the Board when applicable. The main tasks of the committee are to:
- monitor the targets of the compensation schemes, implementation of the compensation schemes, performance assessment and compensation determination
- ensure that the targets set for earning the bonuses defined in the compensation scheme are met
- prepare a proposal for the Deputy Chairman of the Board
- prepare a proposal on the committees (members and Chairmen, and the duties and responsibilities of the committees)
- monitor corporate governance
- prepare a compensation proposal concerning the President and CEO and his immediate subordinates, and the principles of personnel compensation
- prepare for the Board option schemes and other share-based incentive schemes
- evaluate the performance of the President and CEO
- prepare the assessment of the Leadership Team
- prepare a proposal on the Board’s charter.
Work of Tieto’s RC in 2016
- The committee convened seven times in 2016 and the attendance was 100%.
- The main issues considered by the Remuneration Committee were approving the short-term incentive (STI) results for 2015, reviewing the remuneration for the Leadership Team, following up progress on 2016 bonus performance criteria, and approving the Long-Term Incentive Programme (LTI) 2016 nominations. The remuneration committee approved the STI framework for 2017 and the Long-Term Incentive programme for 2017-2019.
Audit and Risk Committee (ARC)
The ARC comprises at least three non-executive directors who are independent of the company and out of whom at least one member shall be independent of the significant shareholders. The Chairman and the members are elected by the Board. At least one committee member must have expertise in accounting, bookkeeping or auditing.Tieto’s Deputy General Counsel acts as secretary of the meetings.
In 2016, all committee members were non-executive directors who were independent of the company and three of them independent of significant shareholders. All members have extensive experience in corporate management and financial issues and therefore have the required expertise.
Based on the Board’s decision, the ARC was composed of
- Kurt Jofs (Chairman)
- Johanna Lamminen
- Jonas Synnergren
- Lars Wollung
The committee convenes regularly at least four times a year and meets the company’s auditors, also without the company’s management present. The Chairman of the committee reports to the Board when applicable. The main tasks of the committee are to:
- review and supervise internal control – particularly the financial reporting process – and risk management issues
- discuss and review the interim and annual reports and the financial statements
- assess compliance with legislation, official regulations and the company’s Code of Conduct
- evaluate the sufficiency of internal control and the internal audit
- examine, assess and approve the internal audit plan
- assess the appropriate coverage of risk management and monitor the efficiency of risk management
- review significant risks and unusual business events
- prepare for the Board's decision a proposal for the AGM on the nomination of external auditors and their compensation
- evaluate the external auditors’ independence, assess the audit plan and examine the audit reports
- monitor the statutory audit and consult with the auditors regarding matters that should be brought to the Board’s attention.
Work of Tieto’s ARC in 2016
- The committee convened seven times in 2016 and average attendance was 97.7%.
- In addition to its regular agenda items, the committee arranged a full-scale tender process regarding the company’s statutory auditor to be appointed by AGM 2017 and focused on monitoring project and delivery management.