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CONSISTENT AND TRANSPARENT CORPORATE GOVERNANCE

Corporate Governance at Cramo is based on Finnish law and the Company’s Articles of Association. The Group complies with the rules of Nasdaq Helsinki Ltd and the Finnish Corporate Governance Code. 

Cramo issues Corporate Governance and Remuneration Statements, which are available on the Group’s website along with more detailed information about corporate governance and remuneration:

www.cramo.com > Investors > Corporate Governance

Cramo prepares annual financial statements and interim reports conforming to Finnish law which are published in Finnish and English. The International Financial Reporting Standards (IFRS) were adopted in 2005.

BOARD OF DIRECTORS

Cramo’s Board of Directors has defined its roles and responsibilities in the Working Order of the Board and in the Group’s Operating Principles. If necessary, the Board’s charter is revised and modified annually in conjunction with the first meeting of the Board after the election of its members at the Annual General Meeting.

MEMBERS OF THE BOARD IN 2015

At the Annual General Meeting 2015, the following people were re-elected to the Board of Directors: Ms Helene Biström, Mr Eino Halonen, Mr Erkki Stenberg, Mr Leif Boström, Ms Caroline Sundewall and Mr Raimo Seppänen. Mr Joakim Rubin and Mr Peter Nilsson were elected as new Board members. The Board’s convening meeting elected Ms Biström as Chairman of the Board and Mr Halonen as Deputy Chairman of the Board. Member attendance at the meetings is shown below, and member independence is presented here.

Cramo’s Board members’ attendance at meetings and remuneration received in 2015 on a cash basis

    Board meetings   Audit Committee Remuneration
Committee
 

Name

Position

Attendance
Shares,
EUR

Fees
EUR

Total
Attendance

Fees
EUR


Attendance
Fees
EUR
Total

Helene
Biström


Chairman


9/9


34,993


35,007


70,000

   


4/4


4,000


74,000

Leif
Boström

Member

9/9


17,496


17,504


35,000


5/5


5,000

   


40,000

Eino
Halonen
Deputy
Chairman

8/9


22,483


22,517


45,000


5/5


5,000

   


50,000

Peter
Nilsson1

Member

8/8


17,496


17,504


35,000

   


3/3


3,000


38,000

Joakim
Rubin1

Member

8/8


17,496


17,504


35,000


4/4


4,000

   


39,000

Raimo
Seppänen

Member

9/9


17,496


17,504


35,000

   


4/4


4,000


39,000

Erkki
Stenberg

Member

8/9


17,496


17,504


35,000

   


4/4


4,000


39,000

Caroline
Sundewall
Member
9/9
 


35,000


35,000


5/5


5,000

   


40,000

Victor
Hartwall2

Member

1/1
     


1/1


1,000

   


1,000


Peter
Therman2
External
committee
member
           



1/1



1,000



1,000


Tom
von Weymarn2
External
committee 
member
           



1/1



1,000



1,000

Total    

144,958

 180,042

 325,000

 

 20,000    17,000  362,000
  1. since 31 March 2015
  2. until 30 March 2015

WORK OF THE BOARD IN 2015

Cramo’s Board meets regularly according to a set schedule. In 2015, the Board met nine times. One meeting was held per capsulam (in writing). Two permanent committees, the Audit Committee and the Remuneration Committee, assist the Board. The Board elects the committee members and appoints the committee chairmen. The Board confirms the central duties and operating principles of both committees in a written charter.

AUDIT COMMITTEE

The Audit Committee assists the Board in its supervisory responsibilities in line with the Finnish Corporate Governance Code. At its constitutive meeting on 31 March 2015, Mr Leif Boström was appointed Chairman of the Audit Committee, and Mr Eino Halonen, Ms Caroline Sundewall and Mr Joakim Rubin were elected as members. The Audit Committee met five times in 2015.

REMUNERATION COMMITTEE

The Remuneration Committee is tasked with preparing a proposal to the Board for the President and CEO’s appointment and his/her employment terms, as well as prepares matters pertaining to the Company’s compensation issues for the Board's approval.

At its constitutive meeting on 31 March 2015, Ms Helene Biström was appointed Chairman of the Remuneration Committee and Mr Raimo Seppänen, Mr Erkki Stenberg and Mr Peter Nilsson were elected as members. The Remuneration Committee met four times in 2015.

SHAREHOLDERS’ NOMINATION COMMITTEE

The Annual General Meeting of Shareholders of Cramo Plc resolved to establish a Shareholders’ Nomination Committee for an indefinite period. The committee annually prepares proposals to the Annual General Meeting for the election and remuneration of the Board members. The Shareholders’ Nomination Committee consists of a maximum of four members, of which a maximum of three represent the Company’s largest shareholders, calculated as having the largest number of votes based on all shares in the Company held on the last business day of August preceding the next Annual General Meeting.

The following people were appointed as members of the Shareholders' Nomination Committee: Mr Mikael Moll, Mr Ari Autio, Mr Matti Rusanen and Ms Helene Biström. Mr Moll was elected as the Chairman of the Shareholders' Nomination Committee, which held two meetings in 2015.

PRESIDENT AND CEO

The Managing Director, who also acts as the President and CEO, is in charge of the Company’s day-to-day management in accordance with the Finnish Companies Act and related legislation, instructions and orders given by the Board.

REMUNERATION FOR BOARD SERVICES

In 2015 the General Meeting approved the following annual remuneration for Board services:

  • Chairman of the Board EUR 70,000
  • Deputy Chairman of the Board EUR 45,000
  • Other Board members EUR 35,000

50% of the annual remuneration is paid in Cramo Plc shares, purchased in the market on behalf of the Board members, and 50% is paid in cash. The remuneration may also be paid by transferring the Company’s own shares. In the event a purchase of shares cannot be carried out for reasons related either to the Company or a Board member, the annual remuneration shall be paid entirely in cash. In addition, the remuneration for each committee meeting was EUR 1,000. Reasonable travel expenses were reimbursed as per invoice.

The Board members are not covered by the Company’s stock option scheme, bonus scheme or pension schemes No shares or share-related rights were granted to Board members as remuneration during the financial period except those specified on the page to the left.

REMUNERATION

REMUNERATION PRINCIPLES

Remuneration is part of Cramo’s management system. The objective of remuneration is to attract talented employees and engage them in the company as well as promote the Company’s financial success. Cramo’s remuneration principles are based on the Company’s strategic targets, transparency and fairness. Remuneration is aimed at achieving success in implementing the Company's strategy through must-win battles at the Group, operating company and individual levels. The must-win battles in 2015 were: Deliver Cramo Story, Drive Cramo Performance Management and Win Central European Market.

The Company applies a competitive policy for salaries. In addition to fixed salaries, Cramo offers a short- and long-term incentive scheme for management and key personnel. Some 60 managers and key personnel participate in Cramo’s long-term incentive schemes. In addition, operating companies have local short-term incentive schemes.

Remuneration of the President and CEO

 

Written service contract approved by the Board
  • Compensation package includes a fixed annual base salary
    and a profit-based incentive tied to the Group’s financial targets
    and/or personal targets set by the Board. Remuneration also includes a voluntary pension benefit and fringe benefits such as an accommodation, a car and a phone.
  • In 2015, the maximum bonus paid to the President and CEO was 70% of base salary.
  • The President and CEO participates in all Cramo stock option incentive schemes and share-based incentive plans.
Notice period and retirement age
  • In 2015, the notice period for the service contract was six months, during which time he receives a full salary.
  • In 2015, the retirement age was 63.
  • In 2015, in case the contract is terminated by the employer, there may also be a severance payment of 18 months’ salary.

remuneration paid to the president and ceo and group management team in 2015, eur cash-based¹

Name Fixed annual
base
 salary
Profit-based
incentives
Fringe
benefits
Termination
benefits
Share-based
payment
Post-
employment
benefits
2015
Total
2014
Total
President and CEO

390,530

4,640

92,804

1,139,615

256,728

83,685

1,968,002

679,130

Group management team

1,390,113

28,192

126,093

 

747,728

34,753

2,326,879

 1,918,715

Total

1,780,643

32,832

218,896

1,139,615

1,004,456

118,439

4,294,881

 2,597,845

  1. Cash-based means that the variable parts of remuneration are based on the Company’s 2014 performance and were paid in 2015

short-term and long-term incentive schemes

Element Target group Objective Link to strategy/
performance measures
Realisation in 2015
Short-term incentive:
Variable pay
The Group management team members, managers and key personnel To support the achievement of Cramo’s financial targets by enhancing a strong performance culture. Variable pay is tied to the achievement of financial targets for the Group and operating countries, which are determined by the Board. The targets are set annually, and any compensation is paid once a year after the end of the financial period. The financial targets are based mainly on Economic Profit. Variable pay paid in 2015 (based on 2014 financial performance) amounted to EUR 4,640 for the President and CEO and EUR 28,192 for Group management team members.
Long-term incentive: 2011 stock options About 100 key employees, including Group management team members To support the achievement of the Group’s long-term targets by attracting and retaining people identified as key employees. The value of the reward is determined by Cramo Plc’s share price. The reward supports the maximisation of shareholder value. A total of 625,525 stock options 2011 were exercised in 2015.
Long-term incentive: Performance Share Plan 2012–2015 About 60 managers and key employees, including the Group management team To support the achievement of the Group’s long-term targets by attracting and retaining people identified as key employees. The plan’s reward for the 2015 discretionary period was based
on Cramo Group’s key figure earnings per share (EPS). The maximum reward that could have been paid based on the 2015 discretionary period corresponded to the value of 337,000 Cramo Plc shares.
In 2015, the target achievement level was about 56.25%, leading to a total reward payment of approximately 189,563 Cramo Plc shares, with a part of this to be paid in cash in spring 2018.

Long-term incentive: One Cramo Share Plan

All Cramo employees To encourage all employees to become shareholders in Cramo, to reward employees for their efforts in working towards Cramo’s targets and to strengthen the tie between Cramo shareholders and employees. The monthly saving is 2–5% of each participant’s monthly gross salary, with the total amount of all savings from the plan period not to exceed EUR 4 million. A total of 397 employees in 11 countries joined during the fourth round of the programme, with an average monthly saving of 3.3%. As a result of the first, second and third rounds, employees held a total of 132,569 Cramo Plc shares at the end of 2015 (81,158 in 2014). The total savings was EUR 2.6 million.

 

pension benefits

Directors
  • Finnish pension legislation offers a flexible retirement age ranging from age 63 to 68 without any full pension limits.
  • Directors participate in local pension systems for each operating country which provide a retirement benefit based on years of service and earnings according to the prescribed statutory system.
President and CEO and Group management team
  • The President and CEO and two Group management team members also participate in a contribution-based voluntary pension system.
  • In 2015, the expenses of the voluntary pension system
    were as follows: EUR 83,685 for the President and CEO
    and EUR 34,753 for two members of the Group management team, totalling EUR 118,439.

 

The consolidated financial statements, note 29 on pages 94–98 and on www.cramo.com > Investors > Corporate Governance

INTERNAL CONTROL AND RISK MANAGEMENT REGARDING FINANCIAL REPORTING

Internal control over financial reporting is part of the overall internal control system at Cramo. The Enterprise Risk Management (ERM) framework, tailored to Cramo Group’s business needs, provides the overall framework for the Group’s internal control and risk management. Internal control over financial reporting strives to provide reasonable assurance that the Group’s financial reporting is reliable and that external financial reporting is prepared in accordance with legislation, International Financial Reporting Standards (IFRS) and other requirements set for listed companies.

ROLES AND RESPONSIBILITIES

The Board bears ultimate responsibility for the appropriate arrangement of internal control over financial reporting. The Board supervises and approves annual financial statements and interim reports. The Audit Committee assists the Board of Directors in overseeing the effectiveness of established internal control and risk management principles. In practice, the President and CEO and Operating Country (OpCo) managers are in charge of performing internal control activities for financial reporting. They are supported in this task by the CFO, the Group Finance and Development function and OpCo financial management.

RISK ASSESSMENT, CONTROL AND MONITORING

Cramo has established objectives for reliable financial reporting in order to identify financial reporting risks. Within the risk assessment process, Cramo identifies and analyses risks related to the achievement of strategic, operational and financial objectives as a basis for determining how those risks should be managed. The risks identified are managed through control activities which are set throughout the organisation, at all levels and in all functions.

In order to ensure the effectiveness of internal control regarding financial reporting, monitoring is conducted by the Board, the Audit Committee, the President and CEO, the CFO and the Group Finance and Development function, Internal Audit, the Group management team and OpCo managers and controllers.

GENERAL DEVELOPMENT ACTIVITIES IN 2015

The Group management team continued its work of focusing on customers and driving operational excellence. Delivery precision and fast problem-solving were emphasised at every organisation level in order to strengthen the Cramo brand and corporate culture. Pricing structures and models were analysed and further developed in order to better reflect different service categories and customer expectations.

In addition, the Group management team continued the systematic steering of performance in sales, purchasing, repair and maintenance, depot performance and modular space operations. As part of the Cramo Performance Management Model, the modular space  business processes were assessed in order to reinforce the competitiveness of modular space operations. Processes to win and deliver large and complex customer projects were also assessed.

In order to ensure the effective steering of its business operations, Cramo continued to develop the Group’s control and reporting platform as well as the launch of the One Cramo Enterprise Rental application.

DEVELOPMENT ACTIVITIES RELATED TO FINANCIAL REPORTING IN 2015

In 2015, there was an emphasis on forecasting business performance in all markets. Special attention was paid to performance management related to reporting including pricing and cost control. With regard to cost control, the focus was on improving the direct cost ratio. Group financial management also focused on cash collection, fleet investment management and tax issues.

In order to continuously develop control maturity, the Group Internal Audit function continued to audit the Group’s key operative processes at the Group level and in selected OpCos. In addition, OpCo follow-up reviews were conducted when required. Depot-level internal audits were continued as an ongoing control activity.

PRIORITY AREAS IN 2016

Cramo’s controlling and steering model is aimed at adding value to the business. This is achieved through forward-looking analysis, simplification, prioritisation and participation.

The Group Finance and Development function will further develop analysis methods and tools for assessing customer, product and project profitability. In addition, the Group’s pricing operating models and methods will be assessed. The impact of new and amended IFRS standards on financial reporting and Cramo’s business model will be evaluated. These include, among other things, revenue recognition and leasing standards.

In 2016, the development of internal control will include the monitoring of control activities in selected OpCos and Group functions. The selection of OpCos for review will be risk-based, and the review will be performed by Group financial management, Regional Business controllers and the Group Internal Audit function. Improvement measures will be identified and implemented in order to further advance control maturity. The depot audit programme will continue as a regular control activity.

INSIDER ADMINISTRATION

Cramo observes the Insider Guidelines issued by Nasdaq Helsinki Ltd. Cramo’s internal insider rules are regularly updated and made available to all permanent insiders as well as other employees. Euroclear Finland Ltd maintains an insider register for Cramo’s permanent insiders. Cramo requires that its employees and partners comply with the Insider Guidelines. Coordination and control of insider affairs are included in the responsibilities of the CFO.

EXTERNAL AUDITORS

The Company has a minimum of one and a maximum of two authorised public accountants (APA) or firms of authorised public accountants, chartered by the Central Chamber of Commerce of Finland. Their term of office expires at the end of the Annual General Meeting following their election. If the AGM elects only one auditor, which is not a firm of authorised public accountants chartered by the Central Chamber of Commerce, it must elect one deputy auditor.

At the Annual General Meeting on 31 March 2015, the firm of authorised public accountants KPMG Oy Ab was appointed as Cramo Plc’s auditor for the term ending at the end of the next Annual General Meeting, with APA Mr Toni Aaltonen as the auditor responsible.

TOTAL COMPENSATION FOR EXTERNAL AUDITING

EUR 1,000

2015 2014 Change, %
Audit fees 428 535 -20.0
Tax consultation 57 177 -68.1
Other services 56 138 -59.7
Total 541 851 -36.5