Corporate Governance
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The obligations of Efore's decision-making bodies are defined in accordance with Finnish legislation and the principles established by the Board of Directors. Efore's corporate governance complies with the provisions of the Companies Act.
Efore operates in accordance with the listed companies' corporate governance and control recommendation issued by the Helsinki Stock Exchange, the Central Chamber of Commerce, and the Confederation of Finnish Industry and Employers, and with the insider trading instructions issued by the Helsinki Stock Exchange. Group structure Efore Group consists of the parent company, Efore Plc, and its wholly owned subsidiaries, Efore (USA), Inc. in the United States, Efore (Suzhou) Electronics Co. Ltd in China, Efore AS in Estonia, Efore Ltda in Brazil, Efore (UK) Ltd in the United Kingdom, Efore AB in Sweden and Fi-Systems Oy in Finland. The governance and operations of the Group are the responsibility of the parent company's decision-making bodies and authorities, which are the Annual General Meeting, Board of Directors and the President and CEO. The President and CEO is assisted by the Senior Executive Committee. The operations of the subsidiaries are the responsibility of their respective Boards of Directors, which comprise the Group's President and CEO and other representatives of the Group's senior management. The Group's President and CEO is also chairman of the Board of Directors of each of the subsidiaries. The President of each subsidiary reports to the Group's President and CEO. Efore Plc provides the subsidiaries with joint Group services and is also responsible for its strategic planning and finances. The Group's operative organization is based on global functional line organizations and three geographical sales areas, Europe, America, and Asia. Shareholders' meeting The functions of a shareholders' meeting as the company's supreme decision-making authority are defined in the Companies Act and Efore's Articles of Association. In addition to the Annual General Meeting, extraordinary shareholders' meetings may be organized as necessary. At shareholders' meetings, shareholders are able to exercise their right to speak and vote. The Chairman of the Board, Board Members and and the President and CEO were present at the Annual General Meeting held on January 31, 2008. Appointing Board members The Nomination Committee of the Board of Directors prepares a proposal concerning Board members. The Annual General Meeting elects the members of the Board of Directors by simple majority vote for a term of office that ends with the close of the next Annual General Meeting following their election. The Board of Directors elects from amongst its members a Chairman and Deputy Chairman. Board of Directors as of January 31, 2008 As set out in Efore's Articles of Association, the Board of Directors shall have no less than five and no more than ten ordinary members. According to the decision of the Annual General Meeting held on January 31, 2008, the Board consists of six ordinary members. The company's President and CEO is not a member of the Board of Directors. As of January 31, 2008 the composition of the Board of Directors was the following: Chairman Isto Hantila, Vice Chairman Jukka Harju aand Members Timo Syrjälä, Matti Tammivuori, Esa Korvenmaa and Marko Luoma. Information available in Annual Report 2007. Duties and responsibilities of the Board The Board of Directors has general decision-making authority in all company matters that are not stipulated (by law or under the Articles of Association) for the decision or action of another party. The Board is responsible for the governance of the company and for duly organizing its operations. It also approves the corporate strategy, the risk management principles, the Group's corporate values, the operating plan and related annual budget, and decides on major investments. The main duties and operating principles of the Board of Directors are given in a separate working order. This refers to the declaration of a quorum at Board meetings, the writing and approval of minutes, and the preparations needed on matters for decision. The Board of Directors reviews its own working procedures through an annual self-evaluation process. Board fees and other benefits as of January 31, 2008 The Annual General Meeting decides annually on the Board of Directors' fees and on the criteria for reimbursement of Board expenses. By decision of the Annual General Meeting of January 31, 2008 the Chairman of the Board of Directors is paid a fee of EUR 3,500 per month for his Board work and a meeting fee of EUR 1,000 per Board meeting, the Vice Chairman a fee of EUR 1,750 per month and EUR 500 per meeting and Board members EUR 1,750 per month and EUR 500 per meeting. Board members are also reimbursed for travel expenses in accordance with the Finnish Tax Administration's approved maximum limits for travel compensation in each case A fee of EUR 500 per meeting is paid to committee Chairmen and Members for their work on the committees. Board fees and other benefits during the previous fiscal year 2007 Information available in Annual Report 2007. Board committees as of January 31, 2008 The Board of Directors has committees that assist in its work. The committees' working orders set out the duties and operating principles for each committee. The committees report their work to the Board of Directors on a regular basis. As of January 31, 2008 the composition of the Audit Committee was the following: Chairman Timo Syrjälä and the members Isto Hantila and Matti Tammivuori. The main duties of the Audit Committee are to examine the company's finances; oversee compliance with the law and the relevant standards; evaluate the company's internal supervision and risk management; and evaluate the company's internal auditing and its auditors. Decision on the Nomination Comittee will be made later. It was decided to finish the function of the Compensation Comittee.Board committees during the previous fiscal year 2007 Efore's President and CEO The Board of Directors appoints the company's President and CEO and supervises his actions. The main terms and conditions governing the President and CEO's appointment are detailed in written contract. The President and CEO manages and supervises Group business operations within the guidelines and directives issued by the Board of Directors, and ensures that the company's accounting accords with the law and that the financial management system is reliable. Executive, functional and geographical sales area management teams The President and CEO chairs the Executive Management Team and is also assisted by it in his work. The Executive Management Team comprises the chairman, the Vice President of Sales and Marketing, and the Group's CFO and its Vice President, Operations, Vice President, Product Development and Vice President, Technology. The Executive Management Team's main responsibilities include drafting the broad outline of the Group's strategy, monitoring the Group's continuous growth and monitoring and securing a good financial performance. The Team convenes 1-2 times per month. Remuneration system for the President and CEO and the company's other senior management The performance-related pay system for the Group's management is drawn up by the Compensation Committee and then approved by the Efore Plc Board or Directors. The Board-approved upper limits for performance-related pay are in the range 20-60% of annual earnings, depending on the position in question. The criteria used for assessing this are the Group-level performance requirements and those applying to the person's own sphere of responsibility, and other measures of operational activity. Approximately 70 Efore Group personnel are covered by the management performance-related pay system. Governance of insider activity Efore Plc's public insiders are the members of the Board of Directors, the President and CEO, the Deputy to the President and CEO, the company's auditors and the members of the Senior Executive Committee. In addition the company has a company-specific insider register. The insider registers are maintained under the supervision of the President and CEO. Efore Plc complies with the insider trading instructions approved by the Helsinki Stock Exchange, on the basis of which the company's Board of Directors has approved a set of internal guidelines on insider trading. According to these guidelines, investments made by insiders must be long-term investments and trading must always take place at a time when the market's information on factors affecting the share value is as complete as possible. The period closed to trading by insiders is always a minimum of 14 days before publication of interim reports, and 21 days before publication of the financial statements bulletin. Trading can also be prohibited for special reasons outside the closed period, in which case all insiders entered in the register will be informed accordingly. Supervision The Group has financial reporting systems for supervising its business operations and financial management. The Board of Directors has approved the Group's management organization and governing principles, decision-making authority and approval procedures, administrative operating policies, financial planning and reporting, and remuneration principles. Internal auditing is a part of Group's finance administration. The management of the finance administration reports the findings of internal auditing to the President and CEO and the Audit Committee. Efore Plc's principal auditor is responsible for the auditing instructions and for coordinating the audit. The principal auditor and the company management jointly draw up an auditing plan each year. The Group's auditing fees for the fiscal year 2007 totaled EUR 117,000. The fees paid to the auditors for other services totaled EUR 53,000. As required by law, the auditors provide the company's shareholders with an auditors' report at the time of the annual financial statements. The auditors also report their findings to the Audit Committee. Updated February 6, 2008 |