Corporate governance 2008-2009

Corporate Governance Statement of Vaahto Group Plc Oyj for 2008-2009 Fiscal Year

Applicable regulations

Vaahto Group’s administration is based on the Finnish Companies Act and the Articles of Association of the Group’s parent company, Vaahto Group Plc Oyj.

The company follows the NASDAQ OMX Helsinki Corporate Governance Code 2008 for Finnish listed companies. The governance code issued by the Securities Market Association took effect on January 1, 2009, and it is publicly available, e.g. on the Securities Market Association’s Web site via the address www.cgfinland.fi.

Administration of Vaahto Group

In accordance with the Companies Act, the Group’s business operations and administration are the responsibility of the following bodies: the Annual General Meeting, which elects the members of the Board of Directors of the parent company, and the CEO, appointed by the Board.

Vaahto Group Plc Oyj’s highest decision-making body is the Annual General Meeting, where the shareholders exercise their authority. The Board of Directors is responsible for the company’s administration and appropriate operation. As the parent company of the Group, Vaahto Group Plc Oyj is responsible for the management, strategic planning, financial administration and financing, and human resources management of the Group.

The Group’s business operations are divided into two divisions, Pulp & Paper Machinery and Process Machinery. The activities and results of these are the responsibility of the Group subsidiaries, whose CEOs report to the parent company’s CEO.

Annual General Meeting

The company’s highest decision-making body is the Annual General Meeting. An extraordinary general meeting is arranged when necessary. This is called by the Board of Directors. Shareholders are invited to the Annual General Meeting through a meeting invitation published in a national newspaper selected by the previous Annual General Meeting. The invitation provides the shareholders with the necessary information about the issues to be addressed at the meeting.

The Annual General Meeting must be held no more than six months after the end of the company’s fiscal year. The AGM makes decisions on the issues falling under its mandate as determined by the Companies Act, including the verification of the financial statements, the payment of dividends, the discharge from liability of the Board members and the CEO, and the selection and fees of the Board members and the auditors.

The Annual General Meeting is attended by the CEO and a majority of the Board members. A person running for a position on the Board for the first time attends the AGM that decides on the selection.

Board of Directors

Activities of the Board

The Board of Directors of the parent company, which also acts as that of the Group, is responsible for the Group’s administration and appropriate operation, and it decides on issues that are highly significant in light of the scope of the Group’s operations.

Some of the key responsibilities of the Board are to

  • confirm the Group’s strategy and objectives, monitor their implementation, and commence corrective measures if these should be necessary
  • decide on significant investments as well as acquisitions and real-estate transactions
  • handle and approve the interim management statements, interim reports, and financial statements
  • decide on the Group’s financial policies and financing methods
  • approve the dividend policy and make a proposal to the AGM concerning distribution of dividends
  • be in charge of arrangement of the Group’s risk management and internal monitoring
  • appoint and relieve the CEO, and decide on the terms of the CEO’s employment
  • confirm the Group’s strategy and decide on the central principles governing the Group’s compensation system

The Board of Directors regularly evaluates its own activities and work methods.

Issues are handled at Board meetings in accordance with an agenda prepared for each meeting. The Group’s chief executive officer acts as secretary of the Board. The minutes of each Board meeting are commented upon and accepted at the next meeting.

The Board meets regularly, once a month, and at other times, if necessary. During the 2008–2009 fiscal period, the Board met 15 times. There was 100% attendance by the Board members.

The presenter at Board meetings is the company’s CEO or one of the Group’s personnel authorized by the CEO. The CEO is responsible for providing the Board with sufficient information for assessing the Group’s operations and financial situation. The CEO is also responsible for implementing the Board’s decisions and reports on this to the Board.

The Board members are obliged to provide the Board with sufficient information for assessment of their qualifications and level of independence and to report any changes to this information.

Composition of the Board

According to the Articles of Association, the Board of Directors has a minimum of three and a maximum of six members, whose term of office ends at the end of the first full Annual General Meeting following the election. The Board members are selected by the Annual General Meeting. The chairman and vice-chairman of the Board are selected by the Board from among its members.

The names of candidates proposed for Board positions are published in the invitation to the Annual General Meeting where the candidate is supported by shareholders holding a minimum of 10% of the votes as determined by the number of shares and if the candidate has accepted the candidacy. Names of candidates nominated after publication of the AGM invitation are published separately. A person selected as a Board member must meet the qualifications for the position and have the opportunity to allocate enough time to handle the position.

The AGM of December 15, 2008, confirmed that the Board shall have four members. Seppo Jaatinen, Martti Unkuri, Antti Vaahto, and Mikko Vaahto were selected for the Board. The Board elected Seppo Jaatinen as chairman and Mikko Vaahto as vice-chairman.

Information about Board members

Chairman Seppo Jaatinen, M.Sc. (Econ.), b. 1948
Senior Partner, Foxhill Oy
Member and chairman of the Vaahto Group Plc Oyj Board of Directors since 2000
Previous work experience:
Interpolator Oy CEO and executive vice president
Amer Group Plc’s development director

Vice-Chairman Mikko Vaahto, b. 1963, with vocational qualifications in business and administration
Member of the Vaahto Group Plc Oyj Board of Directors since 1994
Martti Unkuri, M.Sc. (Tech.), b. 1936
Member of the Vaahto Group Plc Oyj Board of Directors since 2000
Previous work experience:
CEO of Rauma Oy

Antti Vaahto, M.Sc. (Econ.), M.Sc. (Tech.), MBA, b. 1947
CEO of Vaahto Group Plc Oyj in 1984–2009
Member of the Vaahto Group Plc Oyj Board of Directors since 1984
Most significant positions of trust:
Mutual insurance company Fennia: member of the board
Insurance company Fennia Life: member of the board

Board member Antti Vaahto is employed by the company and is also a major shareholder. Mikko Vaahto, employed by the company since November 13, 2008, is also a major shareholder of the company. Seppo Jaatinen and Martti Unkuri do not own any of the company’s shares, nor do they have interdependence with the company in any other way.

Compensation of Board members

The compensation for Board members is determined each year by the Annual General Meeting. The Board members have not received shares in the company as compensation. The company currently has no stock option plan.

The Annual General Meeting of December 15, 2008, decided to pay Board members the following attendance fees as annual compensation amounts: 26,000 euros to the CEO and 19,000 euros to each of the members.

The Annual General Meeting of December 14, 2007, decided to pay Board members employed by the company an attendance fee of 450 euros per meeting, and members not employed by the company annual compensation of 19,000 euros for the chairman and 15,000 euros for other members.

In addition, Board members are entitled to a per diem and travel allowance in accordance with the Group’s general travel regulations. No attendance fees are paid to persons employed by Vaahto Group for membership of a subsidiary’s board of directors.

Fees paid to Board members in the 2008–2009 financial year for Board duties:

Seppo Jaatinen, chairman, 23,666 euros

Martti Unkuri, 17,666 euros

Antti Vaahto, 14,466 euros

Mikko Vaahto, 14,466 euros

Board committees

The Board has no committees.

Supervisory Board

The company has no Supervisory Board.

CEO

The Board appoints the parent company’s CEO, who acts as the Group’s president. The CEO is responsible for day-to-day management of the Group in accordance with the Finnish Companies Act, the Articles of Association, and instructions from the Board of Directors. The CEO is neither chairman nor vice-chairman of the Board.

Vaahto Group Plc Oyj’s CEO for fiscal year 2008–2009 was Antti Vaahto until April 30, 2009, and Anssi Klinga after May 1, 2009.

Information about the CEO

Anssi Klinga, M.Sc. (Econ.), b. 1965

CEO of Vaahto Group Plc Oyj since May 1, 2009

Previous work experience:

CFO of Vaahto Group Plc Oyj in 2004–2009

CFO of Eimo Oyj

CFO of Rautaruukki Oyj

CFO of Componenta Oyj

Suomen Unilever Oy’s financial manager.

Business organization

The Group’s operations have been separated into two divisions: Pulp & Paper Machinery and Process Machinery. The activities and results of these are the responsibility of the Group subsidiaries, whose CEOs report to the parent company’s CEO. The company has no separate management team. The CEOs of the subsidiaries and the managers of the profit centers are members of the management of the Group.

Information about the other members of the Group’s management

AP-Tela Oy

CEO Pekka Viitasalo, b. 1955, technician
Japrotek Oy Ab

CEO Tom Tarkkinen, b. 1962, engineer
Stelzer Rührtechnik International GmbH

CEO Christian Kessen, M.Sc. (Tech.), b. 1963
Vaahto Oy

CEO Jyrki Strengell, M.Sc. (Tech.), b. 1960
Vaahto Oy

Business director Tapio Mattila, M.Sc. (Tech.), b. 1960
Vaahto Pulp & Paper Machinery Distribution (Shanghai) Co., Ltd.

CEO Timo Kerola, M.Sc. (Tech.), b. 1960

Compensation of the CEO and other members of the company’s management

The CEO’s salary and other financial benefits are decided by the Board. Compensation for other members of the management is decided upon by the CEO and the chairman of the Board.

The Group currently has no stock option plan.

No special conditions for retirement or pension benefits have been specified for the members of the Group’s management. According to the employment contract of CEO Anssi Klinga, both the company and the CEO are entitled to terminate the contract without any particular reason. In such a case, the period of notice on either side is three months. If the company terminates the contract, the CEO will be paid a sum of money corresponding to the total salary for 12 months in addition to the salary paid during the period of notice.

Salaries and fees paid to the CEO for the 2008–2009 fiscal year:

Anssi Klinga after May 1, 2009                           74,000 euros

Antti Vaahto until April 30, 2009                        5,280 euros

Body responsible for the duties of the audit committee

The company has no audit committee; instead, the duties of the audit committee are attended to by the Board of Directors of the company.

Internal monitoring, risk management, and internal auditing

Internal monitoring:

The Group’s business and administration are primarily monitored and controlled by means of the Group’s management system. The Group has a financial reporting system whose purpose is to provide the Group and profit center management with sufficient information for planning, control, and monitoring of operations.

Risk management:

The objective of the Group’s risk management process is to identify any risks that pose a threat to the business operations, evaluate them, and develop the necessary risk management methods. Business-related risks of material, consequential, and liability losses are covered by appropriate insurance policies.

Internal auditing:

With regard to the nature and scope of its business operations, the Group has not deemed it appropriate to establish a separate internal auditing organization. Rather, its tasks are included in the duties of the business organization.

Insider administration

Vaahto Group Plc Oyj follows the NASDAQ OMX Helsinki Insider Guidelines. The public insider register includes statutory insiders and insiders as determined by the Board of Directors of the company. In accordance with the Securities Markets Act, permanent insiders comprise the company’s Board members, CEO, and auditors. In addition, the company has defined as insiders those members of the company’s top management who regularly receive insider information and are entitled to make decisions concerning developments and business arrangements related to the issuer of shares. Subsidiary-specific insider registers include persons who regularly receive insider information in the course of their duties.

Vaahto Group Plc Oyj’s public and subsidiary-specific insider registers are maintained by the company. The insider register can be seen at the company’s head office.

The company’s insiders are not allowed to trade in shares of the company within the 21 days before publication of a financial statement or interim report.

Audit

In accordance with the Articles of Association, the company’s statutory audit is performed by one or two qualified auditors, who must be auditors or auditing firms certified by Finland’s Central Chamber of Commerce. The auditors’ term ends at the end of the first full Annual General Meeting after the election.

The Board’s proposal for auditor(s) is indicated in the invitation to the Annual General Meeting, or, if an auditor candidate is not known to the Board at the time the invitation is published, the name of the candidate(s) shall be published separately.

The Annual General Meeting of December 15, 2009, selected public auditing firm Ernst & Young Oy as the company’s auditor, with Panu Juonala, CPA, as chief auditor.

Auditors’ fees from the Group in the 2008–2009 fiscal period totaled 115,631 euros, of which audit fees accounted for 85,194 euros, with consulting and other fees accounting for the remaining 30,437 euros.

Information

Each year, the company publishes an annual report and an interim report in both Finnish and English. The interim report is published for the first six months of the fiscal period. For Q1 and for Q1–Q3 of the fiscal period, the company publishes an interim management statement instead of an interim report.

Information about financial statements, interim reports, and interim management statements is published in exchange reports. The annual report is sent by mail to the shareholders of the company and to certain organizations and individuals according to the mailing list maintained by the company. The interim report is distributed in accordance with a separate mailing list. In addition, the annual report and interim report are published on the company’s Web site www.vaahtogroup.fi. The company’s other press releases are also available on the Web site.