Governing Bodies of Vaisala
Governing Bodies of Vaisala
The General Meeting, the Board of Directors and President and CEO, assisted by the Management Group, are responsible for the operations of the Vaisala Corporation.
Management Group
President and CEO
Vaisala’s President and CEO is appointed by the Board of Directors. The President and CEO is responsible for the everyday management of the company in accordance with the guidelines and instructions given by the Board of Directors, and informs the Board of Directors of the development of the Company’s business and financial situation. The President and CEO is responsible for ensuring that the company’s accounting is legally compliant and that its financial affairs have been arranged in a reliable manner.
Management Group
The President and CEO is the Chairman of the Management Group. The Management Group comprises six members. The Management Group meets once a month to assist the President and CEO in developing the strategy, implementing the strategy, managing operational business, as well as preparing matters handled by the Board. The Management Group draws up annual operational and financial plans as well as goals related to these plans, monitors the implementation of the plans and prepares major investments and acquisitions. The President and CEO is responsible for the decisions taken by the Management Group. Members of the Management Group are responsible for implementing the decisions in their own areas of responsibility. Members of Vaisala’s Management Group are heads of business areas, the Chief Financial Officer, the Executive Vice President of Operations and Human Resources. General Counsel acts a secretary to the Management Group.
Vaisala Annual Review 2016
Members of the Management Group
Composition and Election of the Board of Directors
Composition and Election of the Board of Directors
Vaisala’s Board of Directors is responsible for the administration and the proper organization of the operations of the Company. The Board acts in accordance with Vaisala’s Articles of Association and the applicable legislation as well as the instructions and recommendations of the Financial Supervisory Authority and Nasdaq Helsinki Ltd. In accordance with Vaisala’s Articles of Association, the Company’s Board of Directors comprises at least four and maximum eight members. All Board members are elected by the Annual General Meeting. The Board of Directors elects a Chairman and a Vice Chairman from among its members. Under the Articles of Association, the term of the Board members is three years. The term begins at the close of the Annual General Meeting at which the member is elected, and ends at the close of the third subsequent Annual General Meeting following the member’s election.
Vaisala Annual Review 2016
Members of the Board of Directors
Diversity Principles of the Board
Selection Criteria, Diversity and the Independence of the Members of the Board of Directors
The primary goal in Board member election is to gather to the Board of Directors capability, know-how and experience from various technologies, international relations, global business and strategically significant industries. The Board should be considered as a whole that is capable of managing its tasks and duties in the best possible way. The goal of the election of the members of the Board of Directors is to ensure that the Board supports the development of the Company’s current and future business. In addition, the Board should consist of members of both genders and the members should have the chance to allocate a sufficient amount of time to managing their tasks. The goal is that at least 25% of Board members are always men and women.
The majority of the Board members must be independent of the Company and at least two members in this majority must be independent of the Company’s major shareholders. The Board of Directors evaluates the independence of the members annually based on individual evaluation. This evaluation of independence of the member takes into account information and analysis provided by the member himself/herself.
The Board of Directors self-evaluates its operations, way of working as well as fulfillment of the diversity goals annually.
The members of the Board of Directors are bound by obligations related to commercial and trade secrets as well as by the restrictions and requirements of the Market Abuse Regulation (EU) N:o 596/2014 (MAR). The Board and its members must in their decision-making and other activities act in accordance with the interest of the Company and all its shareholders, and in accordance with the principle of due care. After election, new Board members will be familiarized with Vaisala’s operations. This includes presentations by the top management and induction with the Company’s operations, in which the newly elected Board members are given information on the Company’s business, strategy and long-term goals as well as on significant economic, accounting and risk management.
Vaisala Annual Review 2016
Rules of Procedure of the Board
Vaisala’s Board of Directors convenes at least eight times each year and if otherwise needed. The Group President and CEO and the Chief Financial Officer also attend Board meetings. The other members of the Management Group attend Board meetings as required on the invitation of the Board of Directors. The Board of Directors may, on the basis of the Chairman’s decision, establish working groups from among its members in individual cases in order to prepare the matters allocated for it in order to ensure the effective organization of the Board of Directors’ work.
Vaisala’s Board of Directors operates in accordance with an approved charter. The meetings may, if necessary, be held as conference calls or e-mail meetings. Minutes of the meeting are compiled for each meeting, with yearly running numbering. Vaisala’s General Counsel acts as the Secretary of the Board of Directors.
The Board will have a quorum when more than half of members are present. Decisions are made on a simple majority basis, and when the votes are even, the Chairman has the casting vote. When the votes for election of the Chairman are even, the Chairman is elected by drawing lots. The President and CEO is responsible for the execution of the Board of Directors’ decisions and reports to the Board on deficiencies or problems observed during the execution.
Regular meetings include:
- financial statements meeting,
- meeting prior to the Annual General Meeting,
- Board’s organizing meeting,
- Interim Report meetings (2 times),
- Half Year Financial Report meeting,
- business review and strategy meeting, and
- action plan, budget and incentive matters meetings.
Main responsibilities of the Board of Directors are
- To decide on the election and dismissal of the President and CEO.
- To decide on the employment terms of the President and CEO.
- To ensure that the company has organized internal control of accounting and financial management as well as to monitor the effectiveness of supervision.
- To determine the company's strategy and oversee its implementation, and to approve the strategic plans of the business areas.
- To determine the company's long-term objectives and to monitor their implementation, and to accept long-term goals of the business areas.
- To assess the company's and its business areas’ annual action plans.
- To approve the company's and its business areas’ annual financial targets.
- To make the most important business decisions such as approve acquisitions, divestitures, major contracts and liabilities, investments and financing arrangements.
- To set approval limits for investments and commitments, which cannot be exceeded without Board of Directors approval.
- To handle and approve the financial statement release, financial statement and the Board of Directors' Report and Corporate Governance Statement.
- To make a dividend proposal to the Annual General Meeting.
- To handle and approve Interim Reports and Half Year Financial Report.
- To monitor the evaluation and management of risks related to company's strategy and business operations.
- To decide on management remuneration and incentive systems.
The responsibilities of the members of the Board of Directors when performing their duties is to always act with due care and in good faith while using their judgment, based on sufficient information, in a manner they reasonable believe to promote the interests of the Company.
The President and CEO and members of the Management Group, as instructed by the President and CEO, represent the Company in relation to shareholders, investors, the media and other stakeholders. The Board members usually direct thirdparty enquiries to the President and CEO. The Board of Directors is represented by the Chairman of the Board of Directors.
Duties of the Chairman of the Board
Duties of the Chairman of the Board of Directors include chairing the Board’s meeting and managing the Board’s work so that it can fulfill its duties.
Chairman of the Board of Directors shall
- ensure that the meetings are held according to schedule,
- ensure that the Board of Directors is convened for the extraordinary meetings, if necessary,
- ensure that the presentations and supporting materials are delivered to the Board members within the agreed time and early enough prior to the meeting,
- approve the agenda prepared by the President and CEO,
- take care of the documentation of the meetings and of the decisions made, keep in contact with President and CEO and monitor the company’s business performance, and
- be in charge of evaluating the work done by the Board of Directors.
Board Committees
The Board of Directors has two permanent committees: an Audit Committee and a Remunerations and HR Committee. The members of the Committees are appointed annually from among the members of the Board of Directors in accordance with the charter of the respective Committee. The Board of Directors may establish Committees for duties assigned by the Board. The Board of Directors confirm the charter for the Committees. The Committees assist the Board of Directors by preparing matters that are within the scope of responsibilities of the Board. The Committees are not decision-making or executive organs; instead, the Board of Directors is responsible for the tasks it has assigned to the Committees, unless it has been stated otherwise in the Committees’ rules. The Committees keep minutes of their meetings; the minutes are available to the members of the Board of Directors. The Secretary of the Board of Directors acts as the secretary of the Committees.
Vaisala Annual Review 2016
Audit Committee
The Audit Committee assists the Board of Directors in supervising the company’s accounting and asset management, risk management as well as in organizing external and internal audit. The Audit Committee manages its tasks in accordance with the rules approved by the Board of Directors, the Securities Market Association’s Finnish Corporate Governance Code and the applicable laws and regulations.
The Audit Committee comprises three members, appointed annually by the Board of Directors among its members. The members of the Committee must be independent of the Company and at least one member must also be independent of significant shareholders of the Company. Member of the Audit Committee may not participate in the Company’s or its group company’s daily management. The Committee convenes at least five times a year. The President and CEO and the Chief Financial Officer also attend the Committee meetings. The other responsible Vaisala employees attend the Committee meetings as required on the invitation of the Committee.
The Audit Committee deals with the following key issues
- To monitor and evaluate the financial reporting and the forecast processes,
- To accept Vaisala accounting and calculation principles, as well as their changes,
- To handle the Interim Reports, the Half Year Financial Report, the financial statement release and financial statements,
- To assess compliance with laws and regulations,
- To review the Corporate Governance Statement,
- To approve the goodwill testing,
- To approve the essential management's estimates included in the financial statements, Half Year Financial Reports and Interim Reports,
- To monitor and evaluate the efficiency of the company's internal control and audit, risk management and quality auditing,
- To approve the audit plan and its cost estimate,
- To approve the internal auditing plan and cost estimate,
- To approve the company's treasury policy and to monitor its financing position,
- To monitor the company's tax situation,
- To monitor the audit,
- To monitor the internal audit,
- To monitor and evaluate the independence of the statutory auditor or audit firm, and particularly in relation to the provision of non-auditing services to the Company,
- To prepare a decision proposal on the election of the auditor, and
- To monitor the Company's Code of Conduct.
Vaisala Annual Review 2016
Members of the Audit Committee
Remuneration and HR Committee
The Remuneration and HR Committee is responsible for preparing human resources matters pertaining to the compensation of the President and CEO, and the members of the Management Group, evaluation of the performance of the President and CEO and the members of the Management Group, Group compensation policies and practices. The Remuneration and HR Committee comprises three members, appointed annually by the Board of Directors among its members. The majority of the members of the Committee must be independent of the Company. The Committee convenes at least two times a year. President and CEO, Senior Vice President, Human resources and the Chief Financial Officer also attend the Committee meetings, except when the agenda includes items relating to them. The other responsible Vaisala employees attend the Committee meetings as required on the invitation of the Committee.
The Remuneration and HR Committee deals with the following key issues
- To prepare remuneration and other financial benefits of the President and CEO,
- To prepare remuneration and other financial benefits of the management,
- To prepare the matters relating to the company's bonus plans,
- To evaluate the remuneration of the President and CEO and other management and to ensure the appropriateness of the bonus plans,
- To monitor the development of the employees, and
- To monitor employee well-being, health and development of security.
Vaisala Annual Review 2016
Members of the Remuneration and HR Committee
Remuneration
The Annual General Meeting decides on the remuneration of the Chairman, Vice Chairman and Board members as well as on the remuneration of the Auditor.
The objective of remuneration at Vaisala is to encourage employees as individuals and as team members to achieve the financial and operational targets set. In determining the remuneration, Vaisala takes into account its financial performance, remuneration levels for similar positions among peer companies and external references. All Vaisala employees are included in a bonus plan that promotes the development of net sales, operating result and cash flow.
Vaisala’s remuneration package for key executives includes a competitive salary and employee benefits according to local market practices as well as bonuses based on predefined annual performance indicators. The bonus plans promote development of net sales, operating result and cash flow. The key executives also belong to long-term share-based incentive plans, which are based on the development of the Company’s profitability.
Vaisala's Board of Directors approves the company's bonus plans and their target groups annually. The Board of Directors also decides on the compensation of the President and CEO Remuneration and approves the compensation of the direct reports of the President and CEO.
Remuneration of the Board of Directors
The Annual General Meeting held on March 28, 2017 decided that the annual fee payable to the Board members for the term until the close of the Annual General Meeting in 2087 is: the Chairman of the Board of Directors EUR 45,000 and each Board member EUR 35,000. Approximately 40 percent of the annual remuneration will be paid in Vaisala Corporation’s A shares acquired from the market and the rest in cash. In addition, the Annual General Meeting decided that the compensation per attended meeting for the Chairman of the Audit Committee is EUR 1,500 and EUR 1,000 for each member of the Audit Committee for the term until the close of the Annual General Meeting in 2018. The compensation per attended meeting for the Chairman and each member of the Remuneration and HR Committee and any other committee established by the Board of Directors is EUR 1,000 for the term until the close of the Annual General Meeting in 2018.
Remuneration of the Board of Directors, accrual basis
| EUR 1,000 | 2016 | 2015 |
|---|---|---|
| Petra Lundström | 41 | 40 |
| Yrjö Neuvo | 40 | 40 |
| Mikko Niinivaara | 44 | 40 |
| Kaarina Ståhlberg (since April 5, 2016) | 34 | |
| Maija Torkko (until April 5, 2016) | 11 | 48 |
| Pertti Torstila | 35 | 35 |
| Mikko Voipio (until March 31, 2015 | 9 | |
| Raimo Voipio | 50 | 50 |
| Ville Voipio (since March 31, 2015) | 35 | 26 |
| Total | 290 | 288 |
Shareholdings of the Board of Directors, December 31, 2016
| Number of shares | A shares * | K shares | Total |
|---|---|---|---|
| Petra Lundström | 600 | - | 600 |
| Yrjö Neuvo | 34,240 | 18,664 | 52,904 |
| Mikko Niinivaara | 1,800 | - | 1,800 |
| Kaarina Ståhlberg | 1,500 | - | 1,500 |
| Pertti Torstila | 1,800 | - | 1,800 |
| Raimo Voipio | 255,580 | 227,148 | 482,728 |
| Ville Voipio | 196,943 | 48,356 | 245,299 |
| Total | 492,463 | 294,168 | 786,631 |
* The shareholdings include also shares held by the Board of Directors' interest parties and controlled organizations.
Remuneration of Vaisala’s Management
President and CEO
The Board of Directors of Vaisala Corporation decides on the remuneration of Vaisala's President and CEO. The overall compensation consists of a monthly salary, fringe benefits, a pension plan and a performance bonus as well as the Share-Based Incentive Plans 2014, 2015 and 2016. The maximum annual bonus is limited to 72 percent of the President and CEO's annual salary. The President and CEO belongs to a voluntary pension plan, which defines the retirement age as 62 years.
The notice period is 6 months for the employee and 12 months for the employer. Severance pay and conditions of other severance compensations are equal to the respective salary
Management Group
Vaisala's Board of Directors approves the compensation of the direct reports of the President and CEO.
The overall compensation of the Management Group members consists of a monthly salary, fringe benefits, pension plan and a performance bonus as well as the Share-Based Incentive Plans 2014, 2015 and 2016. The maximum annual bonus is limited to 60 percent of the annual salary. The Management Group members belong to a voluntary pension plan, which defines the optional retirement age as 62 years.
Remuneration of the President and CEO, accural basis
|
EUR 1,000 |
2016 | 2015 |
|---|---|---|
| Salary | 494 | 491 |
| Bonuses | 178 | 298 |
| Share-based payment | 315 | 126 |
| Obligatory pension | 135 | 99 |
| Voluntary pension | 116 | 116 |
| Total | 1,238 | 1,131 |
Remuneration of the Management Group, excluding President and CEO, accural basis
|
EUR 1,000 |
2016 | 2015 |
|---|---|---|
| Salary | 1,129 | 1,231 |
| Bonuses | 355 | 375 |
| Share-based payment | 846 | 272 |
| Obligatory pension | 275 | 244 |
| Voluntary pension | 195 | 178 |
| Total | 2,800 | 2,300 |
Share-based Incentive Plans
On February 6, 2013, Vaisala’s Board of Directors resolved for the Group key employees a share-based incentive plan that was based on the development of Group's profitability in calendar year 2013. No reward was paid based on this plan as the profitability targets were not met.
On February 10, 2014, Vaisala’s Board of Directors resolved for the Group key employees a share-based incentive plan that was based on the development of Group's profitability in calendar year 2014. The reward will be paid partly in Vaisala's series A shares and partly in cash in spring 2017. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. The maximum amount of this plan originally corresponded to 160,000 shares. No reward will be paid if a key employee's employment or service ends before the reward payment date. The expenses of this share-based incentive plan are accrued over the term of the plan from May 2014 to March 2017.
The cost of the proportion of share reward corresponds to the value of Vaisala’s A share closing price of EUR 23.69 on the effective date of the incentive plan, and the cash proportion is valued at the closing price of the share on December 31, 2016. This share-based incentive plan was directed to approximately 20 persons on December 31, 2016. The maximum reward payable on the basis of this share-based plan totals to 43,412 Vaisala’s A shares, including the cash portion.
On December 18, 2014, Vaisala’s Board of Directors resolved for the Group key employees a share-based incentive plan that was based on the development of Group's profitability in calendar year 2015. The reward will be paid partly in Vaisala's series A shares and partly in cash in spring 2018. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. The maximum amount of this plan originally corresponded to 160,000 shares. No reward will be paid if a key employee's employment or service ends before the reward payment date. The expenses of this share-based incentive plan are accrued over the term of the plan from May 2015 to March 2018. The cost of the proportion of share reward corresponds to the value of Vaisala’s A share closing price of EUR 24.16 on the effective date of the incentive plan, and the cash proportion is valued at the closing price of the share on December 31, 2016. This share-based incentive plan was directed to approximately 30 persons on December 31, 2016. The maximum reward payable on the basis of this share-based plan totals to 101,791 Vaisala’s A shares, including the cash portion.
On December 16, 2015, Vaisala’s Board of Directors resolved for the Group key employees a share-based incentive plan that was based on the development of Group's profitability in calendar year 2016. The reward will be paid partly in Vaisala's series A shares and partly in cash in spring 2019. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. The maximum amount of this plan originally corresponded to 200,000 shares. No reward will be paid if a key employee's employment or service ends before the reward payment date. The expenses of this share-based incentive plan are accrued over the term of the plan from May 2016 to March 2019. The cost of the proportion of share reward corresponds to the value of Vaisala’s A share closing price of EUR 23.13 on the effective date of the incentive plan, and the cash proportion is valued at the closing price of the share on December 31, 2016. This share-based incentive plan was directed to approximately 30 persons on December 31, 2016. The maximum reward payable on the basis of this share-based plan totals to 95,060 Vaisala’s A shares, including the cash portion.
On February 10, 2016, Vaisala’ Board of Directors resolved for a share-based incentive plan, in which the earning criteria is uninterrupted employment of certain Group employees for a defined number of years. The reward will be paid partly in Vaisala's A shares and partly in cash in three equal installments during the term of the plan. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. The maximum amount of this plan originally corresponded to 9,000 shares. No reward will be paid if a key employee's employment or service ends before the reward payment date. The expenses of this share-based incentive plan are accrued over the term of the plan from May 2016 to March 2018. The cost of the proportion of share reward corresponds to the value of Vaisala A share closing price of EUR 23.13 on the effective date of the incentive plan, and the cash proportion is valued at the closing price of the share on December 31, 2016. The maximum reward payable on the basis of this share-based plan totals to 6,000 Vaisala A shares, including the cash portion.
On December 15, 2016, Vaisala’s Board of Directors resolved for the Group key employees a share-based incentive plan that is based on the development of Group’s profitability in calendar year 2017. The reward will be paid partly in Vaisala’s series A shares and partly in cash in spring 2020. The cash proportion will cover taxes and tax-related costs arising from the reward to a key employee. No reward will be paid if a key employee’s employment or service ends before the reward payment date. The maximum amount of this plan corresponding to 200,000 shares will be paid depending on the number of entitled persons at the end of the vesting period. The expenses of this sharebased incentive plan are accrued over the term of the plan from May 2017 to March 2020.
Expenses for the share-based incentive plans
| EUR million | 2013 | 2014 | 2015 | 2016 |
|---|---|---|---|---|
| Share-based incentive plan 2013 | - | - | - | - |
| Share-based incentive plan 2014 | 0.2 | 0.3 | 0.6 | |
| Share-based incentive plan 2015 | 0.5 | 1.1 | ||
| Share-based incentive plans 2016 | 0.7 |
Vaisala Annual Review 2016
Insiders
The Market Abuse Regulation (“MAR”) entered into force July 3, 2016. Following MAR regulation, Vaisala has no longer public insiders and the Company maintains no company specific insider register but only project-specific insider lists. 30-day closed window before publishing interim reports and financial statement release applies to the managers defined by Vaisala. Closed window ends following the publication day. Closed window also applies to the persons engaged in preparation of interim reports and financial statement report. Managers subject to transaction notification obligations comprise of Vaisala’s Board of Directors, President and CEO as well as members of the Vaisala Management Group.
Vaisala Legal Department is responsible for Vaisala insider management, training, and creation and maintenance of project and event specific insider lists. The decision on the delay of public disclosure of inside information is made by the President and CEO, CFO and/or General Counsel, two together, based on an evaluation of the conditions set out in MAR being met. When the Company makes the decision on delay of disclosure, a project or event based insider list regarding the inside information will be established. Persons, to whom project or event specific inside information is disclosed, are entered into the project or event specific insider list.
Vaisala Annual Review 2016