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Corporate Governance

INTRODUCTION

Enfo Oyj’s administration and management complies with the company’s Articles of Association, the Finnish Companies Act, and the 2010 Corporate Governance code of Finnish listed companies issued by the Securities Market Association on 1 October 2010, apart from Recommendations 9 (Insider administration) and 18 (Establishing a committee). The code is available on the Securities Market Association’s website at: http://www.cgfinland.fi.

Deviating from corporate governance and taking the scope of operations into account, the company has no committees other than the Nomination Committee of the shareholders (recommendation 14–18) pertaining to recommendation 18b.

The application guidelines for good corporate governance were revised and approved by the Board of Directors of Enfo Oyj on 27 January 2017. Yearly report on the Corporate Governace is part of the Annual Report. Up-to-date information on Corporate Governance and Articles of Association can be found on Investors Relations page at http://www.enfogroup.com/Investor-relations

ANNUAL GENERAL MEETING

The Annual General Meeting constitutes Enfo Oyj’s highest decisionmaking body where shareholders participate in the management and supervision of the company. The company must hold one Annual General Meeting during a single financial period. An Extraordinary General Meeting will be held if required. Shareholders exercise their speaking and voting rights in the Annual General Meeting.

The Annual General Meeting is attended by the Managing Director, the Chairman of the Board of Directors, and a sufficient number of members of the Board. The auditor also attends the Annual General Meeting.

Those who are nominated as members of the Board for the first time must attend the Annual General Meeting where the election is decided on, unless there is a good reason for being absent.

The shareholders have the right to place a matter belonging to the shareholders' general meeting according to the Finnish Limited Liability Companies Act up for discussion at a general meeting. In order to exercise this right at the Annual General Meeting, the shareholders must report their intention to the company's Board of Directors by the last day of January.

Enfo Oyj publishes the notice of the Annual General Meeting, and presents the meeting agenda and any documents presented to the AGM on its website at least three weeks prior to the Annual General Meeting. According to its discretion, the Board of Directors may also publish the notice in a national newspaper. After the meeting, Enfo will publish the decisions made by the Annual General Meeting.

Enfo Oyj’s Annual General Meeting was held on 30 March, 2016.

http://www.enfogroup.com/Investor-relations

THE BOARD OF DIRECTORS

The Board of Directors of Enfo Oyj is responsible for the company’s management and for the appropriate organization of its operations. The Board of Directors steers and supervises the company’s executive management, decides on appointing or dismissing the managing director, reviewing and approving the company’s strategic goals and risk management principles as well as ensuring the functioning of the integrated management system. Good corporate governance also means the Board of Directors ensures the company agrees on the values that will be followed in its operations.

The task of the Board of Directors is to promote the benefits of the company and all of its shareholders. The members of the Board do not represent the parties who put them forward for appointment. 

The shareholders appoint the members of the Board of Directors at the Annual General Meeting. Board of Directors consists of at least five members and seven members at the most. The Board of Directors selects the Chairman of the Board among its members.

When planning the composition of the Board of Directors, the Nomination Committee of the shareholders takes into account the needs and development phases of the company's business operations. The diversity of the Board of Directors is assessed from various viewpoints. Key factors include the expertise and education of members, supplementing other members, and their varied experience in different business fields and managerial positions, as well as the personal properties of each member. The objective is that both genders are represented by at least two members.

The majority of the Board members must be independent of the company. In addition, at least two of the members of the majority must be independent of the company’s major shareholders.

Enfo Oyj’s Board of Directors consists of six members:

Anssi Lehikoinen, Chairman of the Board

  • M.Sc (Technology), PhD
  • Chairman of the Board at Rocsole Oy. Professor of Economics (part-time) at the University of Eastern Finland.
  • Main work experience: CEO of Numcore Oy 2007-2012 and CEO of Rocsole Oy 2012-2014.
  • Member of Enfo Oyj’s Board of Directors since March 30, 2016, Chairman of the Board since March 30, 2017. Holds no shares in Enfo Oyj. Independent of the company, dependent of a significant shareholder.

Lauri Kerman, Member of the Board

  • M.Sc. (Economics), eMBA
  • Managing Director at Osuuskunta KPY
  • Member of the Board of Directors of Enfo Plc, Voimatel Oy, Vetrea Terveys Oy, and Kiinteistö Oy Lentokapteeni.
  • Main work experience: Director of Icecapital Banking, Partner at Iridium Corporate Finance, Portfolio Manager at Ilmarinen Mutual Pension Insurance Company
  • Member of Enfo Oyj’s Board of Directors since March 19, 2014. Holds no shares in Enfo Oyj. Independent of the company, dependent of a significant shareholder.

Timo Kärkkäinen, Member of the Board

  • M.Sc. (Economics)
  • Senior Portfolio Manager at Ilmarinen Mutual Pension Insurance Company. Member of the Board of Directors of Tieyhtiö Valtatie 7 Oy. Main work experience: Pension Fund agent, Group Treasurer and Head of Treasury Operations at Neste Oil Oyj 2005–2010, Fortum Oyj Treasury Manager, Head of Treasury Operations 2000–2005. Finance, electricity pricing and forwarding duties at Imatran Voima Oy 1987–2000.
  • Member of Enfo Oyj’s Board of Directors since March 24, 2011. Holds no shares in Enfo Oyj. Independent of the company and significant shareholders.

Soili Mäkinen, Member of the Board

  • M.Sc. (Economics)
  • CIO at Cargotec Oyj.
  • Main work experience: CIO at MacGREGOR Oy (2004-2006). Since 1993 number of positions in system and project management at MacGREGOR Oy´s IT management.
  • Member of Enfo Oyj’s Board of Directors since March 21, 2013. Holds no shares in Enfo Oyj. Independent of the company and significant shareholders.

Kaisa Olkkonen, Member of the Board

  • Master of Laws, Trained on the Bench
  • CEO, SSH Communications Security Oy, Member of the Board and of the Audit Committee at Cargotec
  • Advisor in Morelex Oy, 3D Bear Oy and Familings Oy
  • Member of Enfo Oyj’s Board of Directors since March 30, 2016. Holds no shares in Enfo Oyj. Independent of the company and significant shareholders.

Mikko Laine, Member of the Board

  • Mikko Laine holds a BBA, MBA. Partner in Broadius Partners Oy with over 10 years' advisory experience. Broadius Partners is an investment bank offering financial advice in corporate acquisitions, divestments, fundraising and other related transactions.
  • Laine also serves as a partner and a member of the board of Finnsweet Oy. Previously Laine has been a partner and a member of the board of Kotihotelli Oy (2006-2015) and of Human Care Network Oy and a member of the board of Pyn Rahastoyhtiö Oy.
  • Member of Enfo Oyj’s Board of Directors since March 30, 2017. Holds no shares in Enfo Oyj. 

In 2016, the Board of Directors convened 14 times, and the overall attendance rate of the Board members was 100%.

Board of Directors produces a yearly written agenda that covers a schedule for meetings and a plan of issues to be addressed in the meetings, including the following:

  • Financial reviews
  • Strategic planning
  • Shareholder affairs
  • Management evaluation and remuneration schemes
  • Assessment of the Board’s performance
  • Business reviews
  • Personnel issues
  • Customer satisfaction
  • Risk management

In addition to the issues listed in the agenda, the Board of Directors of Enfo Oyj addresses and decides on matters that may potentially have a significant impact on the company’s finances, business or operating principles.

The Board of Directors of Enfo Oyj evaluates its own performance once a year.

COMMITTEES

Taking into account the extent of business operations, it has not been deemed necessary to establish committees other than the Nomination Committee. 

At Enfo Oyj’s Annual General Meeting on 30 March 2016, Tapio Hakakari, Pekka Kantanen, Lauri Kerman (secretary) and Tarja Tikkanen (Chairman) were elected to the Nomination Committee.

In 2016, the Nomination Committee convened once, and the overall attendance rate was 100%.

MANAGING DIRECTOR AND OTHER MANAGEMENT

As per the Finnish Companies Act, the Managing Director is responsible for the day-to-day running of the company in compliance with the principles and guidelines devised by the Board of Directors. 

The Board of Directors appoints and discharges the CEO, decides on the financial benefits and other terms and conditions of the CEO's term of office, and supervises the activities of the CEO.

The CEO may, taking the scope and quality of the company's operations into account, only take unusual or far-reaching action with the authorisation of the Board of Directors. The CEO is responsible for the lawfulness of the company's accounting and the reliable organisation of asset management. The Group's Executive Management Team assists the CEO.

The Managing Director of Enfo Oyj is not, and cannot be appointed as, a member or the chairman of the Board of Directors.

M.Sc. (Technology) Arto Herranen has acted as the CEO of Enfo Oyj since the 1 July 2007.

The Executive Team consists of the following members:

Arto Herranen, CEO

Arto Herranen holds a M.Sc. (Technology) and has previously served as the Managing Director of Kuopion Puhelin Oyj and Savon Voima Oyj, a Head of Department at Kuopion Puhelin Oyj, an Account Manager at Oracle Finland Oy, and a Production Director at P.T.A. Group Oy. Chairman of the Executive Management Team of Enfo Oyj since 2007. Holds 2 983 shares in Enfo Oyj.

Lars Aabol, EVP Strategic Account

Lars Aabol has previously served as the Managing Director of Hogia Infra AB, and as a Sales Manager for Framfab. Member of the Executive Management Team of Enfo Oyj since July 1, 2012. Holds 1250 shares in Enfo Oyj.

Mats Eliasson, EVP, Business Solutions

Mats Eliasson has previously acted as SVP, Service and Asset Management of Enfo Sweden, CEO of Framsteg AB, Managing Director of MRO Software AB and as CEO of EBM Business Development AB. Member of the Executive Management of Enfo Oyj since 1st January 2016. Holds 1316 shares in Enfo Oyj.

Christian Homén, CFO

Christian Homén has a master's degree in economics and has previously worked as Director of Finance and Control at Microsoft Corporation. He has also held several financial director positions at Nokia Oyj in such areas as business planning, reporting, controlling and finance. Member of Enfo's management team since February 1, 2015. Holds 888 shares in Enfo Oyj.

Tero Kosunen, EVP, Financial Process Services

Tero Kosunen holds a M.Sc. (Technology) and has previously worked at Oy Danfoss Ab as CFO, business development director and local manager. In addition, Kosunen has worked as IT consultant at Tieto Corporation. Member of the Executive Management Team of Enfo Oyj since October 1, 2011. Holds 1091 shares in Enfo Oyj.

Tero Saksman, EVP, Managed Services

Tero Saksman holds a BBA and has previously served as a controller at Kuopion Puhelin Oyj and Enfo Oyj. In Enfo Oyj’s Information Logistics Services, he has served as a sales director, sales manager and service manager. Member of the Board at Kasve Oy. Member of the Executive Management Team of Enfo Oyj since January 1, 2011. Holds 1316 shares in Enfo Oyj.

Samuli Savo, EVP, Emerging Businesses and Transformation Office

Samuli Savo holds a M.Sc. (Engineering) and has previously worked at Gartner as Digital Lead EMEA High-Tech and Telecoms as well as Consulting Director. Savo has also worked in several managerial positions at Fujitsu, including Head of Offerings, Head of SAP Practice and Director of Services. Member of the Executive Management Team of Enfo Oyj since August 1, 2015. Holds 1091 shares in Enfo Oyj.

Malin Ung, Senior Vice President, HR

Malin Ung has previously acted as the HR Manager of Enfo Sweden, HR Manager at Framsteg AB, Senior HR Consultant at HR Skills Stockholm AB and as a HR Manager at Wise Group. Member of the Executive Management Team of Enfo Oyj since 1st January 2016. Holds 202 shares in Enfo Oyj.

INCENTIVES SCHEME

Functional and competitive rewarding is a significant tool in order to recruit capable managerial employees to the company, which in turn improves the company's financial success and the implementation of good corporate governance. Rewarding supports the fulfilment of objectives set by the company and the company's strategy, as well as long-term results.

Rewarding must be in a correct proportion considering the company's development and long-term value formation. As rewards are tied to performance and profit criteria and their fulfilment is being monitored, there is increasing trust in the functionality of the rewarding scheme.

The Annual General Meeting decides upon the fees paid to the Board of Directors. The monthly fee of the Chairman of the Board of Directors is EUR 2,000 and that of a Board member is EUR 1,000. In addition, the Board members and the Chairman are each paid a total of EUR 600 per meeting in attendance fees. The travel expenses of Board members are compensated for in accordance with the company's travel policy. 

The total rewards paid to the company's CEO and members of the Executive Management Team consist of a fixed monthly salary with fringe benefits, an annual bonus and a share-based long-term incentive scheme. The company does not have any specific pension solutions for the management. The company's Board of Directors decides upon rewards paid to the CEO and members of the Executive Management Team.

The company uses an annual bonus scheme directed at the Group management and key persons. The bonus is either personal or group-specific, and accounts for, at most, 10–60% of a person's annual salary. 

The company's Board of Directors prepares decisions on the annual bonus scheme. In 2016, the annual bonus scheme involves approximately 50 persons. The central determining criteria for the bonus scheme include the operating profit of the Group and each segment, customer satisfaction and certain other personal objectives.

In addition to the annual bonus scheme, the Group uses a long-term incentive scheme directed at the management and key personnel. The share-based incentive scheme contains three one-year earning periods, i.e. calendar years 2014, 2015 and 2016. The company’s Board of Directors decides on the earning criteria for the earning period and their objectives upon the approval of the budget. Any bonus over the 2016 earning period is based on Enfo Group's operating profit. Currently, the scheme’s target group consists of 44 key persons.

In 2016, the company paid a total of EUR 263.032 in salaries and premiums to CEO Arto Herranen, of which the result-based bonuses originating from the 2015 financial period accounted for EUR 0. The period of notice in the executive agreement of Arto Herranen, valid until further notice, is three months if the CEO terminates the agreement. If the company terminates the agreement, the CEO will also receive an amount corresponding to the salary of 12 months.

In 2016, the entire Executive Management Team was paid a total of EUR 1,548,632 in salaries and premiums.

The Group's personnel in Finland, apart from the top management, are members of the personnel fund established in 2006, and its personnel in Sweden are members of a community (vinstandelstiftelse) established in 2014 and corresponding to the Finnish personnel fund.

The incentive bonus scheme for the entire personnel consists of profit-sharing items and result-based bonuses paid to the personnel fund. The company's Board of Directors decides upon the criteria for determining the profit-sharing items and result-based bonuses annually upon the approval of the budget.

The personnel fund invests 50–75% of the paid profit-sharing bonus items in Enfo Oyj's shares. The personnel fund is one of Enfo Oyj’s largest shareholders

OTHER GOVERNANCE

The company's internal audit is based on regular reporting and active work within the Board of Directors.

The objective of risk management is to ensure that the company operates efficiently and profitably, that information is reliable, and regulations and operating principles are complied with. The aim is to identify, assess and monitor any risks related to business operations.

The company has conducted an extensive survey of the probability of threats and risks related to business operations, the impact of the threats and risks actually taking place, and risk management. The risk management plan prepared on the basis of the survey is updated and developed in an active and determined manner in order to control the risks related to business operations. The status of risk management is reported quarterly to the Board of Directors.

The Board of Directors assesses any known risks and uncertainties, and issues reports on them regularly in interim reports, the financial statements bulletin and annual report published by the company.

The Group's financing decisions are performed centrally within the parent company following the investment policy approved by the Board of Directors, and the Board receives a quarterly report on the company's financial standing.

The internal audit requires auditors to check different Group units by walking around. The service is a bought from an external provider. Internal auditors report directly to the Board of Directors.

The company reports information about related-party activities in the Board of Directors' report and notes to the financial statements. Currently, the company has no related-party activities that would be significant or deviate from ordinary business operations.

The auditor has an important position as an auditing body appointed by the shareholders. The Nomination Committee of the shareholders presents a proposal of the auditor to the Annual General Meeting.

The company's auditor is Authorised Public Accountants PricewaterhouseCoopers Oy, with Authorised Public Accountant Pekka Loikkanen as the main auditor. In the period of 1 January – 31 December 2016, the Group paid the auditor a total of EUR 173.062,67 in auditing fees and EUR 251.054,55 in fees not related to auditing.