Corporate governance
Uponor Corporation follows the Corporate Governance Recommendation for Listed Companies issued by HEX Plc, the Central Chamber of Commerce and the Confederation of Finnish Industry and Employers. The main principles of the corporate governance are described below. For yearly details please refer to the printed annual report or the electronic annual report.
Pursuant to the provisions of the Finnish Companies Act and the Articles of Association of Uponor Corporation (hereinafter "the Corporation"), the control and management of the Corporation is divided among the shareholders, the Board of Directors and the Chief Executive Officer.
General meetings of shareholders
Board of Directors
Chief Executive Officer
Executive Committee
Board and CEO evaluation
Compensation
Internal control, risk management and internal audit
External audit
The shareholders exercise their rights in general meetings of shareholders, which constitute the Corporation's highest decision-making organ. Under the Companies Act, decisions made by general meetings of shareholders include among other things:
- amendments to the Articles of Association
- adoption of the annual accounts
- distribution of dividends
- share issues
- repurchasing and disposal of the Corporation's shares
- stock plans/stock option plans
- election of members of the Board of Directors and decision on their remuneration
- election of the Corporation's auditor and decision on its fee.
Duties
In accordance with the Finnish Companies Act, the Board of Directors is responsible for the management of the Corporation and the proper organisation of its activities. The Board's main duty is to direct the Corporation's operations in such a way that in the long run the best use of the invested capital is secured, while simultaneously taking the expectations of various stakeholders into account. In addition to its statutory duties, the Board of Directors takes decisions on all other significant issues, such as the Group strategy, dividend policy, budget, major investments including acquisitions, as well as major restructuring plans.
Election and composition
Pursuant to the Articles of Association of the Corporation, the Board of Directors consists of at least five and not more than seven members. Members of the Board of Directors are elected for a term of one year beginning at the end of the general meeting of shareholders at which they were elected and terminating at the end of the next Annual General Meeting. Members of the Board of Directors may be elected or removed only by a resolution adopted by the shareholders in a general meeting.
It is the Corporation's policy to comply with the recommendations issued by the Helsinki Exchanges, the Central Chamber of Commerce and the Confederation of Finnish Industry and Employers (TT) on issues related to directors, their independence and non-executive positions. All directors are required to deal at arm's length with the Corporation and its subsidiaries and to disclose any potential conflicts of interest.
It is in the interests of the Corporation and stakeholders that the directors elected represent expertise from various fields, such as the Corporation's field of business, relevant technologies, finance, human resources, risk management and international sales and marketing.
The Annual General Meeting shall determine the remuneration of the Board members.
The Board elects one member to serve as Chairman, and one as Deputy Chairman, for one year at a time.
Meetings and decision-making
The Board shall convene approximately 12 times a year. Some of the meetings may be held as teleconferences. Two of the meetings should take place at a business unit, a different one each time.
Board Committees
The Board of Directors has decided that the Corporation shall not have a separate Audit Committee but that the Board shall perform this function. The Board shall meet with the external auditor at least twice a year, once without the corporate management. In addition to monitoring the internal and external audit, the duties of the Board as Audit Committee include, for example, reviewing the contents of the Corporation's annual accounts and interim reports, as well as monitoring its internal control and risk management systems.
When necessary, the Board shall establish ad hoc committees to deal with various issues, such as compensation and nominations.
The Chief Executive Officer (CEO), assisted by the Executive Committee, is in charge of the day-to-day management of the Group's affairs. The CEO acts in accordance with the orders and instructions issued by the Board of Directors. It is the duty of the CEO to ensure that the accounting methods used comply with the legislation in force and that financial matters are handled in a reliable manner. The Chief Executive Officer is also the Chairman of the Executive Committee.
Duties
The Executive Committee (ExCom) shall mainly be responsible for formulating and implementing the Group's strategy. Significant operational issues shall be discussed and decided in the ExCom, whereas its members shall be responsible for the day-to-day management of the Group in accordance with their respective fields of responsibility.
The ExCom shall attend to issues such as the Group's strategy and its implementation, budgets, business plans and their implementation, significant organisational changes and any changes in employment conditions affecting large numbers of employees.
Composition
The ExCom consists of the CEO and a number of executives set by the Board of Directors. The CEO acts as the Chairman of the ExCom.
Meetings and decision-making
The ExCom shall convene 10-12 times per year, with informal records being kept of its meetings.
The Board conducts an annual evaluation of the CEO's performance, based on a systematic, separate evaluation form approved by the Board. In addition, the Board conducts a separate evaluation of the performance of its own members and the Chairman.
The Group's compensation system is divided into three elements: basic salary, a result and performance-related bonus system and a long-term incentive programme. Depending on the position of the employee, various combinations may be applied. An individual employee's compensation must be approved by the person who is above the employee's immediate superior.
A Group employee is not entitled to separate remuneration for Board membership within a Group company.
The Board shall determine the CEO's annual compensation, and approve the annual compensation for members of the Executive Committee, based on a proposal drawn up by the CEO.
The Board of Directors and CEO determine the policies that guide the Group's operational performance. As part of internal control, the management is responsible for monitoring compliance with said policies within the Group.
The Group's main risk areas have been identified, with each member of the ExCom being allocated his/her own area of responsibility with regard to the identified risks. These responsibilities include the management and proper organisation of the said areas throughout the Group. Risk management in general is co-ordinated by the Group Risk Manager, also responsible for arranging appropriate insurance coverage and organising Group-wide risk reporting.
Internal audit is independent of daily business operations in order to form the basis for an objective evaluation of the business. The Board approves the annual internal audit plan.
The Annual General Meeting of the Corporation elects the external auditor, which must be a corporation of authorised public accountants accredited by the Central Chamber of Commerce of Finland. Together with the auditor, the corporate management organises the audit of the Group's legal units, in accordance with relevant local legislation. The auditors of the local companies report directly to the legal unit they have audited, submitting a copy of each report to the corporate financial administration, for inclusion in the Corporation's audit log.
The Board shall make a proposal for an external auditor to be elected by the AGM.
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