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.
Cramo prepares annual financial statements and interim reports conforming to Finnish law and to the Internal Financial Reporting Standards (IFRS), which are published in Finnish and English.
Board of Directors
The roles and responsibilities of Cramo’s Board of Directors have been defined in the Charter of the Board and in the Group’s Operating Principles. If necessary, the Board’s charter is revised and amended annually in conjunction with the first meeting of the Board after the election of its members at the Annual General Meeting. Cramo’s Board of Directors is composed taking into account diversity matters, such as gender, age, educational background and experience.
Composition of Board of Directors in 2018
At the Annual General Meeting 2018, the following people were re-elected to the Board of Directors: Mr Veli-Matti Reinikkala, Mr Perttu Louhiluoto, Mr Peter Nilsson, Mr Joakim Rubin, Ms Caroline Sundewall and Mr Raimo Seppänen. Ms AnnaCarin Grandin was elected as a new board member. The Board’s convening meeting elected Mr Reinikkala as Chairman of the Board and Mr Louhiluoto as Deputy Chairman of the Board. Member attendance at the meetings is shown below, and member independence is presented here.
The Board's work in 2018
The Board of Directors convenes according to a predetermined schedule as well as when considered necessary. In 2018, the Board held twelve meetings. Three permanent committees – the Audit Committee, the Remuneration Committee and M&A Committee – assist the Board. The Board elects the committee members and appoints the committee chairmen. The Board specifies the key duties and operating principles of each committee in a written charter.
The Audit Committee assists the Board in its supervisory responsibilities in line with the Finnish Corporate Governance Code. At the Board’s constitutive meeting on 28 March 2018, Mr Joakim Rubin was appointed Chairman of the Audit Committee, and Ms AnnaCarin Grandin, Mr Perttu Louhiluoto and Ms Caroline Sundewall were elected as members. The Audit Committee held eight meetings.
The Remuneration Committee is tasked with preparing a proposal to the Board for the President and CEO’s appointment and his/her employment terms, and with preparing matters pertaining to the company’s compensation issues for the Board’s approval.
At the Board’s constitutive meeting on 28 March 2018, Mr Veli-Matti Reinikkala was appointed Chairman of the Remuneration Committee and Mr Peter Nilsson and Mr Raimo Seppänen were elected as members. The Remuneration Committee met three times.
In 2018 the Board of Directors of Cramo Plc resolved to establish a new board committee called the M&A Committee, the purpose of which is to support the management on potential M&A activities and the development and implementation of the company’s strategy work.
At the Board’s constitutive meeting on 28 March 2018, Mr Veli-Matti Reinikkala was appointed Chairman of the M&A Committee and Mr Joakim Rubin and Mr Perttu Louhiluoto were elected as members. The M&A Committee met four times.
Shareholders’ Nomination Committee
The Shareholders’ Nomination Committee, established by the General Meeting of Shareholders, annually prepares proposals to the Annual General Meeting for the election and remuneration of the members of the Board of Directors. The Nomination Committee consists of a maximum of four members, of whom a maximum of three represent the company’s largest shareholders who hold the largest number of votes calculated based on the total number of shares in the company on the last business day of August preceding the next Annual General Meeting.
The following people were appointed on 26 October 2018 as members of the Shareholders’ Nomination Committee: Mr Fredrik Åtting, Mr Ari Autio, Mr Kalle Saariaho and Mr Veli-Matti Reinikkala. Mr Åtting was elected as the Chairman of the Shareholders’ Nomination Committee. The committee held two meetings.
|Cramo’s board member attendance at meetings and remuneration received in 2018 on a cash basis|
|Board meetings||Audit Committee||Remuneration Committee||M&A Committee|
|Name||Position||Attendance||Fees, EUR||Attendance||Fees, EUR||Attendance||Fees, EUR||Attendance||Fees, EUR||Total|
|Perttu Louhiluoto||Deputy Chairman||11/12||37,500||7/8||5,000||4/4||2,000||44,500|
|Erkki Stenberg 2||Member||1/3||2/2||2,000||2,000|
1 since 28 March 2018
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 of the Board of Directors
In 2018 the General Meeting approved the following annual remuneration for Board services:
- Chairman of the Board EUR 85,000
- Other Board members EUR 37,500
The remuneration is paid in cash and the Board of Directors will adopt a policy on Board member share ownership. The policy shall entail that Board members who do not already have such a holding of Cramo Plc's shares are expected to acquire Cramo Plc's shares for a total market value equal to at least one year’s Board fees before taxes, excluding any Committee compensation, during a four-year period from the start of their directorship. As part of its process, the Nomination Committee will follow up on the Board members’ shareholding annually and assess whether it is in accordance with the policy.
In addition, all Board members are entitled to compensation of EUR 1,000 per attended meeting of the Audit and Remuneration Committees and EUR 500 per attended meeting of the M&A Committee. Furthermore, the Board member elected Chairman of the Audit Committee receives additional compensation of EUR 5,000 per year. Reasonable travel expenses will be refunded upon receipt of invoice.
The Board members are not covered by the company’s long-term incentive schemes, bonus scheme or pension schemes. No shares or share-related rights were granted to Board members as remuneration during the financial period.
Remuneration is part of Cramo’s management system. The aim of a well-designed remuneration scheme is to attract and engage talented employees at the company and to promote the company’s financial success.
The company applies a competitive policy related to salaries. In addition to fixed salaries, Cramo offers short- and long-term incentive schemes for management and its key personnel. 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 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 a company car.||In 2018, the maximum bonus paid to the President and CEO was 70% of base salary. The President and CEO participates in Cramo’s short-term incentive schemes as of 2016, One Cramo Share Plan as of 2015, and share-based incentive plan as of 2016.|
|Notice period and retirement age||The notice period for the service contract is six months, during which time he/she receives a full salary. The retirement age is 65 years.||In case the contract is terminated by the employer, there is a severance payment of 12 months’ salary.|
|Remuneration to the President and CEO and the Group management team on an accrual basis in 2018 EUR|
|Profit-based incentives||Fringe benefits||Termination benefits||Share-based payments||Post-employment benefits||2018 Total||2017 Total|
|President and CEO||223,373||15,730||365,244||157,500||1,455,466||1,256,548|
|Group management team||341,890||90,123||421,427||638,504||229,858||3,212,797||2,869,456|
|Short-term and long-term incentive schemes|
|Element||Target group||Objective||Link to strategy/performance measures||Amount paid in 2018|
|Short-term incentive: Annual bonus schemes||The Group management team members, OpCo managers and key employees, and Group key employees||To support the achievement of Cramo’s financial targets by enhancing a strong performance culture.||Management bonuses are tied to the achievement of financial targets for the Group and operating countries. 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 for 2018 (accrual based) amounted to EUR 223,373 for the President and CEO and EUR 341,890 for the Group management team members.|
|Long-term incentive: Performance Share Plan 2015-2017 and/or 2018||Managers and key employees, including Group management team||To support the achievement of the Group’s long-term goals by attracting and retaining those identified as key employees.||The potential reward from the Plan for the discretionary period 2018 was based on the Cramo Group´s key figure Earnings per Share (EPS). The maximum reward to be paid on the basis of the discretionary period 2018 could have corresponded to the value of 232,500 Cramo Plc shares.||In 2018, the target achievement level was about 73.45%, resulting in a total reward payment of approximately 170,777 Cramo Plc shares, including a part to be paid in cash in spring 2021.|
|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 923 employees have joined the programme. The number of matching shares delivered to employees participating in the Plan was 6,738 Cramo Plc shares in 2018.|
|Directors||Cramo’s executives 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||Only the President and CEO participates in a contribution-based voluntary pension system.||In 2018, the expenses of the voluntary pension system for the President and CEO totaled EUR 157,500.|
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 the 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 has 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 the OpCo (Operating Country) 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 in achieving financial reporting objectives as a basis for determining how those risks should be managed and mitigated. 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.
Related party transactions
Cramo’s related parties include the Board of Directors, the Group management team, their close family members, and entities under the control or significant influence of persons belonging to related parties, subsidiaries or joint ventures. Transactions between the company and related parties are allowed, provided that they promote the purpose of the company and are conducted on acceptable terms and in the interests of the company from the company’s business perspective, as well as in compliance with effective regulations.
Cramo manages inside information and insiders in accordance with the requirements of the Market Abuse Regulation (MAR), the Insider Guidelines of Nasdaq Helsinki Ltd. and Cramo’s Insider Guidelines approved by the Board of Directors. Cramo’s Insider Guidelines include instructions and definitions regarding inside information, trading by insiders, managers’ transactions and a list of managerial persons. Coordination and control of insider affairs are included in the responsibilities of the CFO.
General Data Protection Regulation
The Company is committed to comply with the European Union’s General Data Protection Regulation and other applicable privacy regulations. In 2018, the company implemented enhanced processes to address the new regulatory demands and appointed a data privacy officer to oversee and coordinate privacy-related matters.
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 28 March 2018, the firm of authorised public accountants KPMG Oy Ab was appointed as Cramo Plc’s auditor for the term expiring at the end of the next Annual General Meeting, with APA Mr Toni Aaltonen as the responsible auditor. The firm of authorised public accountants KPMG Oy Ab has served as auditor, with APA Mr Toni Aaltonen as the responsible auditor, since 2014.
|Total compensation for external auditing|
|EUR 1,000||2018||2017||Change, %|
|Certificates and statements||26|