Lassila & Tikanoja plc complies with the Corporate Governance Recommendation for Listed Companies by the Helsinki Stock Exchange, the Central Chamber of Commerce of Finland and the Confederation of Finnish Industries EK that entered into force on 1 July 2004.
Business organisation
The business is divided into three divisions: Environmental Services, Property and Office Support Services and Industrial Services. Vice Presidents in charge of each division report to the President and CEO. The company is also engaged in trade in environmental management products.
The business units of Environmental Services and Industrial Services report to the product line directors. Property and Office Support Services has an area organisation with four areas in Finland. Country Managing Directors are responsible for operations in each country outside Finland. Administration, marketing, product development and the management of group-level processes have been centralised.
General Meetings
The Annual General Meeting is the supreme decision-making body of Lassila & Tikanoja plc. The Annual General Meeting decides on the matters stipulated in the Companies Act, such as the acceptance of the financial statements and proposed dividend, the release from liability of members of the Board of Directors and the President and CEO, the election of the members of the Board of Directors and the Auditors, and the compensation paid to them. The Annual General Meeting is held by the end of April. When considered necessary, an Extraordinary General Meeting is convened to handle a specific proposal made to a General Meeting. General meetings are convened by the Board of Directors.
Each share of Lassila & Tikanoja plc entitles to one vote. According to the Articles of Association, at a general meeting of shareholders no shareholder may cast more than one fifth of the total number of votes represented at the meeting.
Advance information
Shareholders are convened to a general meeting by a notice published in one newspaper in the Company’s domicile. The Board of Directors’ proposals and the notice to the meeting are also disclosed in a stock exchange release. The prospective director candidates as well as the proposal for Auditors are disclosed in the notice or in a separate stock exchange release before the general meeting.
Attendance of the Board members and President and CEO in a general meeting
The members of the Board of Directors, President and CEO and prospective directors attend a general meeting, unless there are well founded reasons for the absence.
Board of Directors
Composition and term
In accordance with the Articles of Association, the Board of Directors comprises a minimum of three members and a maximum of seven. The members of the Board of Directors are elected by the Annual General Meeting. The term of the members of the Board of Directors expires at the end of the next Annual General Meeting of Shareholders following his/her election. A person who has attained the age of 70 cannot be elected to the Board of Directors. The Board elects a Chairman and a Vice Chairman from among its members.
The Board of Directors comprises the following persons: Mr Juhani Maijala, Chairman, Mr Juhani Lassila, Vice Chairman, Mr Heikki Bergholm, Mr Eero Hautaniemi, Mr Matti Kavetvuo and Mr Lasse Kurkilahti.
Details of the Directors
The President and CEO is not a member of the Board of Directors but is present at Board meetings.
Duties
The Board of Directors is responsible for the management of the Company and for the proper arrangement of the Company's operations as well as for the proper arrangement and supervision of the Company’s accounting and financial management. The Board of Directors decides upon matters, which, considering the scope and size of the operations of the Company, are of major importance.
The duties of the Board are defined in a written charter adopted by the Board in 2004, which the Board complies in addition to the Articles of Association and the Finnish laws and regulations.
According to the charter, the matters handled by the Board of Directors include:
• to decide on the corporate strategy and to confirm divisional strategies
• to decide on group structure and organisation
• to ensure the operation of the management system
• to handle and adopt interim report, consolidated financial statements and annual report
• to confirm the Company’s operating plan, budget and investment plan
• to decide on strategically or financially significant investments, corporate acquisitions, disposals or other arrangements as well as financing arrangements and contingent liabilities
• to confirm risk management and reporting practice as well as insurance and financing policies
• to nominate and dismiss the President and CEO and monitor and evaluate his work
• to adopt the nominations of the President and CEO’s immediate subordinates
• to decide on the salary, bonuses and other benefits of the CEO and his immediate subordinates as well as other terms of their employment
• to decide on compensation and incentive schemes of the management
• to establish a dividend policy and to be responsible for the development of the shareholder value
• to confirm the Company’s goals
Meeting practice
The Board of Directors meets about 12 times a year. If necessary, the Board holds meetings over the telephone. The Chairman is responsible for convening the Board meetings and for the meeting practice. At the meetings, matters are presented by the President and CEO, who is responsible for ensuring that the Board is provided with sufficient information to assess the operation and financial situation of the Company. He also supervises and reports to the Board on the implementation of the Board’s decisions.
The Board of Directors met 11 times during 2007. The average attendance per cent of the members at the meetings was 98.2.
Performance evaluation
The evaluation of the performance and working methods of the Board is conducted annually as an internal self-evaluation.
Evaluation of independence
The Board has evaluated the independence of its members in accordance with item 18 of the Corporate Governance Recommendation. The evaluation showed that all the members of the Board are independent of the Company and of a significant shareholder.
Committees
The Board has established no committees. The entire Board handles all the matters pertaining to it.
Managing Director
Lassila & Tikanoja plc’s Managing Director, known as the President and CEO, is appointed by the Board of Directors. The President and CEO is responsible for day-to-day operations in keeping with the instructions of the Board of Directors. He is also responsible for the strategy process. The present President and CEO is Jari Sarjo.
Jari Sarjo's biographical details
Other Management
The Group Executives assist the President and CEO in the management of the Company.
Group Executives
Management Team assembles at least twice a year to deal with L&T’s performance, strategy, major development projects and goals for the following year. The Management Team consists of the management and four representatives of the employees.
Compensation
Board of Directors
The General Meeting of Shareholders determines the emoluments payable to the members of the Board of Directors in advance, for one year at a time. In 2008, the following annual fees will be paid: Chairman EUR 46,250, Vice Chairman EUR 30,500 and each member EUR 25,750. The fees are paid so that each member purchases company shares worth of the net amount of the fee (40%) in public trading on NASDAQ OMX.
The members of the Board are not included in the share option plans and they do not have any pension contracts with the Company.
President and CEO and other management
The Board of Directors determines the salary, bonuses and other benefits of the President and CEO and the direct subordinates of the President and CEO. The President and CEO and the Group Executives are included in the share option scheme directed to the key personnel of the Company. The Company also provides an EVA-based compensation scheme, the criteria of which are determined annually in advance by the Board of Directors. Separate emoluments are not paid to the Group Executives for the memberships of Boards of Directors of the subsidiaries.
In 2007, the salaries paid to the President and CEO totalled EUR 887,550, which included salaries and benefits EUR 291,540, a bonus EUR 129,360 and benefits from exercising share option rights EUR 456,650.
A written service contract has been drawn up for the President and CEO. According to the contract, the period of notice is 12 months if the company terminates his employment, and 6 months if the President and CEO terminates the employment. The President and CEO may choose to retire at the age of sixty. The amount of pension is agreed in advance, and an index increase is made to the sum annually. The amount is less than the full amount of pension under the Employees’ Pensions Act. The pension is recognised as a defined benefit liability in the financial statements. In 2007, EUR 27 thousand arising from this agreement was recognised in the income statement.
Internal control, risk management and internal audit
The financial development of the Company is monitored monthly by an operative reporting system covering the whole group. In addition to actual data, the system provides budgets, forecasts and investment reports.
The Company has insurance, financing, and risk management policies confirmed by the Board of Directors.
The Company has no internal audit organisation of its own, which is taken into account when determining the extent and content of the audit.
Insider guidelines
The Board of Directors has taken a decision taken the Group observes the guidelines for insiders issued by the NASDAQ OMX Helsinki Ltd. Additionally, it has given a complementary guideline which is in some respects more stringent.
The insider register is maintained in the SIRE service of Finnish Central Securities Depository Ltd. Persons subject to the declaration requirement are recorded in the public insider register. They comprise the members of the Board of Directors, President and CEO, the Group Executives and the principal auditor. The persons recorded in the company-specific permanent insider register are, due to their positions, the Management Team, legal counsels, executive assistants and persons participating in group accounting, as well as persons preparing stock exchange releases. Separate project-specific sub-registers are kept for extensive or otherwise significant projects. The Chief Financial Officer is the person responsible for insider issues.
Lassila & Tikanoja’s insiders are not permitted to engage in trading with Company shares during the period between the end of the financial period and the disclosure of the result. Insiders must consult the person responsible for insider issues concerning the conformity of any planned trading with the relevant legislation and guidelines.
Insider holdings
Auditing
The statutory audit of the financial statements is carried out by PricewaterhouseCoopers Oy, Authorized Public Accountants, Heikki Lassila, Authorized Public Accountant as Principal Auditor. The extent and content of the audit are determined with due regard to the fact that the Company has no internal audit organisation of its own.
The auditors and the Board agree on the audit plan annually and discuss the audit’s findings. The principal auditor and the auditor manager attend at least one meeting of the Board of Directors annually.
In 2007, the fees paid for statutory auditing to PricewaterhouseCoopers group totalled EUR 160,244. The fees paid to the auditing company and companies belonging to the same group for non-audit services such as tax, IFRS and due diligence services, totalled EUR 128,919.