Operations and appointment of the Board of Directors
The general objective of the Board of Directors is to direct Outokumpu’s business and strategies in a manner that secures a significant and sustained increase in the value of the company for its shareholders and to ensure that the company acts as a reliable and trusted partner towards all its stakeholders. To this end, the members of the Board are expected to act as a resource and to offer their expertise and experience for the benefit of the company. The tasks and responsibilities of the company’s Board of Directors are determined pursuant to the Finnish Companies Act as well as other applicable legislation.
The Board of Directors has the general authority to decide and act in all matters not reserved for other corporate governance bodies by law or under the provisions of the company’s Articles of Association. The general task of the Board of Directors is to organize and oversee the company’s management and operations and it has the duty at all times to act in the best interest of the company.
The Board of Directors has established the rules of procedure that define its tasks and operating principles in the Charter of the Board of Directors. The main duties of the Board of Directors are as follows:
With respect to directing the company’s business and strategies:
- Decide on Outokumpu’s strategy and the long-term targets of the Outokumpu Group (the “Group”) and monitor their implementation;
- Decide on annual business plans and monitor their implementation;
- Decide on annual limits for the Group’s capital expenditure, monitor related implementation, review performance and decide on changes;
- Decide on any major and strategically significant investments and monitor their implementation;
- Decide on any major and strategically important business acquisitions and divestments and monitor their implementation;
- Decide on the Group’s external financing and treasury matters as follows and as further defined in the Board Charter;
- All financing arrangements, which exceed €20 million, or which have a fixed tenor exceeding ten years or which are organized by way of public offerings by any Group company;
- All major guarantees and pledges on behalf of non-Group parties; and all guarantees and pledges on behalf of Group companies which exceed €20 million; by any Group company;
- Any major short-term derivatives or long- term derivatives, or any derivatives not done for hedging or liquidity management purposes; by any Group company;
- Any other significant financing and treasury transactions which are otherwise out of the Group’s normal course of business;
- Decide on any other commitments by any of the Group companies that are out of the ordinary either in terms of value or nature, taking into account the size, structure, and field of the Group’s operations.
With respect to organizing the company’s management and operations:
- Nominate and dismiss the CEO and his/her deputy, if any, monitor his/her performance and decide on the CEO’s terms of service, including incentive schemes, on the basis of a proposal made by the Board’s Remuneration Committee;
- Nominate and dismiss the members of the Outokumpu Leadership Team and to define their areas of responsibility based on a proposal by the Board’s Remuneration Committee;
- Monitor the adequacy and allocation of the Group’s top management resources;
- Decide on any significant changes to the Group’s business organization;
- Decide on the Group’s ethical values and modes of activity;
- Ensure that policies outlining the principles of corporate governance are in place;
- Ensure that policies outlining the principles of managing the company’s insider issues and related party transactions are being observed;
- Ensure that the company has guidelines for any other matters that the Board deems necessary and that fall within the scope of the Board’s duties and authority.
With respect to the preparation of matters to be resolved by the General Meetings of Shareholders:
- Establish a dividend policy and issue a proposal to the Annual General Meeting on dividend distribution;
- Make a proposal to the Annual General Meeting concerning the election of an external auditor and auditing fees;
- Make proposals to the Annual General Meeting concerning the company’s Remuneration Policy and Remuneration Report; and
- Make other proposals to General Meetings of Shareholders..
With respect to internal control and risk management:
- Discuss and approve interim reports and annual accounts;
- Monitor significant risks related to the Group’s operations and the management of such risks;
- Ensure that adequate policies for risk management are in place;
- Monitor financial position, liquidity, and debt maturity structure;
- Monitor the Group’s control environment;
- Monitor and assess how agreements and other legal acts between the company and its related parties meet the requirements of the ordinary course of business and arm’s length terms; and
- Reassess its activities on a regular basis.
In 2022, the Board of Directors assessed its ways of working and performance with support from an external service provider. The assessment results were presented to the Shareholders’ Nomination Board.
According to the company’s Articles of Association, the Board of Directors constitutes a quorum when more than half of its elected members are present. A decision by the Board of Directors shall be the opinion supported by more than half of the members present at a meeting. In the event of a tie, the Chairman shall have the casting vote.
The Annual General Meeting elects the Chairman, Vice Chairman and other members of the Board of Directors for a term expiring at the close of the following Annual General Meeting. The entire Board of Directors is, therefore, elected at each Annual General Meeting. A Board member may be removed from office at any time by a resolution passed by a General Meeting of Shareholders. Proposals to the Annual General Meeting concerning the election of Board members that have been
made known to the Board of Directors prior to the Annual General Meeting will be made public if such a proposal is supported by shareholders holding a minimum of 10% of all the company’s shares and voting rights and the person being proposed has consented to such nomination.
Under the company’s Articles of Association, the Board shall have a minimum of five and a maximum of twelve members. A Board consisting of eight members was elected at the Annual General Meeting 2022. Board meetings will be held as regularly as deemed necessary, but at least five times every year. In 2022, the Board of Directors had 22 meetings, and the attendance rate was 98%.
Diversity principles of the Board of Directors
Diversity of the Board of Directors supports the vision and long-term objectives of the Group. Outokumpu recognizes the importance of a diverse Board, taking age, educational and international background, professional expertise, experience from relevant industrial sectors as well as a well-balanced gender representation into account. The Shareholders’ Nomination Board shall take the diversity principles into consideration when preparing its proposals to the Annual General Meeting and the progress in achieving set objectives shall be disclosed annually. The objective of a well-balanced Board structure in terms of gender representation was achieved in 2022.
The review by the Board of Directors is available in the Financial year section in the Annual report.
Composition and operations of the Board committees
The Board of Directors has set up two permanent committees consisting of Board members and has confirmed the rules of procedure for these committees. Both committees report to the Board of Directors.
The Audit Committee consists of a minimum of three Board members. At least one of the Committee members shall have an appropriate education and special expertise in corporate finance, accounting or auditing. The rules of procedure for and responsibilities of the Audit Committee have been established in the Audit Committee Charter approved by the Board of Directors. The task of the Audit Committee is, in greater detail than is possible for the Board as a whole, to deal with matters relating to financial statements, the company’s financial position, auditing work, internal controls and compliance matters, the scope of internal and external audits, fees paid to the auditors, the Group’s tax position, the Group’s financial policies, monitoring and assessing related party transactions and other procedures for managing Group risks. In addition, the Audit Committee prepares a recommendation to the Board of Directors concerning the election of an external auditor and auditing fees at a General Meeting. The Audit Committee met five times during 2022, and the attendance rate was 100%.
The Audit Committee is chaired by Jyrki Mäki-Kala, and the members of the committee are Päivi Luostarinen, Petter Söderström and Julia Woodhouse.
The Remuneration Committee consists of the Chairman of the Board and a minimum of two additional Board members. The task of the Remuneration Committee is to prepare proposals to the Board concerning the appointment of the company’s top management and principles relating to the compensation they receive as well as the company’s Remuneration Policy and Remuneration Report. The terms of service and benefits of the Leadership Team members other than the CEO, are determined and approved by the Remuneration Committee.
The Committee’s rules of procedure are further defined in the Remuneration Committee Charter, approved by the Board. The Remuneration Committee met eight times during 2022, and the attendance rate was 100%.
The Remuneration Committee is currently chaired by Kari Jordan, and the members of the committee are Heinz Jörg Fuhrmann, Kati ter Horst and Pierre Vareille.
Temporary working groups
To handle specific tasks, the Board of Directors can also set up temporary working groups consisting of Board members. These working groups report to the Board of Directors. No temporary working groups were set up in 2022.
Independence of the Board members
The Board assesses the independence of the Board members and records the outcome in the Board minutes. Since the appointment of the Board on March 31, 2022, of the eight Board members, all were independent of the company and seven independent of significant shareholders.