Board of Directors
Composition, term of office and selection process for the Board of Directors
According to the Articles of Association, Kesko's Board of Directors con-sists of a minimum of five (5) and a maximum of eight (8) members. The General Meeting decides on the number on Board Members, elects all Board members and makes resolution on their remuneration. Related to these items, the Shareholders' Nomination Committee prepares the proposals for the General Meeting. The Board elects the Chair and the Deputy Chair from among its members for the whole term of the Board.
According to the Articles of Association, the term of office of a Board member is one (1) year, so that the term begins at the close of the General Meeting electing the member and expires at the close of the next Annual General Meeting.
Main duties
Kesko's Board of Directors is responsible for the Company's corporate governance and for the proper organisation of its operations. The Board is responsible for the proper organisation of the Company's accounting and financial management controls. The Board of Directors has confirmed a written charter for the Board of Directors' duties, principles of operation, meeting practice and decision-making procedure.
In accordance with the charter, the Board deals with and makes decisions on matters that are financially, operationally or fundamentally significant to the Group. Board members are to attend at least 80% of all Board meetings.
According to the charter, the Board of Directors’ main duties include:
Strategic and financial matters
- decides on the Group strategy and confirms the divisions’ strategies
- confirms the Group’s budget and forecast update, including a capital expenditure plan
- reviews the Group’s most significant risks and uncertainties
- decides on strategically or financially significant individual investments, acquisitions, divestments or arrangements, and commitments
- monitors Kesko Group’s financial situation and financing
- is responsible for the development of shareholder value and approves the dividend policy
Organisational and personnel matters
- appoints and discharges the Company’s President and CEO, approves their managing director’s service contract, and decides on their remuneration and other financial benefits, and makes corresponding decisions for the possible Deputy CEO
- decides on the appointments of the Group Management Board members responsible for lines of business, their remuneration and financial benefits
- decides on the essential structure and organisation of the Group
- ensures the proper operation and supervision of the management system
- decides on management authorisation rules
- decides on the principles of Kesko’s commitment and incentive schemes, the terms and conditions and distribution of shares or options under the remuneration policy in force, and monitors the results of the schemes
Matters related to reporting, financial audit and sustainability reporting assurance
- reviews and adopts the half-year financial reports and interim reports, and the financial statements including the Report by the Board of Directors containing sustainability reporting data, as well as related stock exchange releases
- monitors and assesses the reporting system for Kesko’s financial reporting and financial audit and sustainability reporting and sustainability reporting assurance
- monitors the Company’s financial audit and sustainability reporting assurance
- monitors and assesses the efficiency of Kesko’s internal control, internal audit and risk management systems with regard to financial reporting and financial audit and sustainability reporting and sustainability reporting assurance
- reviews the results presented to the Board by the Board’s Audit Committee on the financial audit and sustainability reporting assurance, the Committee’s opinion on how the financial audit and sustainability reporting assurance have increased reporting reliability, and the view on the Committee’s role during the financial audit and sustainability reporting assurance procedure
- monitors and assesses the independence of the Company’s Auditor and Authorised Sustainability Auditor, and in particular the acceptability of such services offered by the Auditor and Authorised Sustainability Auditor to Kesko that are not related to financial audit or sustainability reporting assurance
- submits proposals to the General Meeting on the Auditor and the Authorised Sustainability Auditor
- reviews Kesko’s Annual Report as necessary
Other duties
- submits Board proposals to the General Meeting on matters such as dividend distribution and authorisations to issue and acquire shares
- monitors and assesses how agreements and other legal acts between the Company and its related parties meet the requirements for operations that are part of ordinary course of business and for under arms-length terms
- confirms Kesko’s values
- approves the K Code of Conduct and other Group policies such as the treasury and investment policy and risk management policy
- approves the Board’s principles concerning diversity
- is responsible for the other statutory duties prescribed to the Board of Directors by the Limited Liability Companies Act or other, and for duties prescribed by the Corporate Governance Code.
Decision-making
The duty of Kesko's Board of Directors is to promote the interests of Kesko and all of its shareholders. In the Company, the Board members do not represent the parties that have proposed their election as Board members. A Board member is disqualified from participating in the handling of any matter between him/her (including entities over which he/she exercises control) and the Company. When a vote is taken, the Board's decision will be the opinion of the majority and if a vote results in a tie, the decision will be the opinion supported by the Chair. If the votes taken at an election of a person end in a tie, the result will be decided by drawing lots.
The Board's assessment on its operations
As part of the development of the Board's work and operations, the Board assesses its operations and working methods regularly, at least once a year. An external party is used for the assessment at least once every three years.
Board of Directors' operations in 2024
In 2024, the Board held eleven (11) meetings. Board meetings regularly discuss a review by the President and CEO on key topical issues, as well as reports by the Chairs of the Board’s Audit Committee and Remuneration Committee on Committee meetings preceding the Board meetings. The Auditor presents their findings to the Board once a year in connection with the review of financial statements.
As in previous years, in 2024 the Board reviewed the financial reports and monitored the Group’s financial situation, approved the most significant capital expenditure, monitored the progress of Group-level projects, and approved the interim reports, the half-year financial report and the financial statements as well as the Report by the Board of Directors prior to their publication.
In 2024, the Board monitored general economic developments, inflation, interest rates and geopolitical crises and tensions, and assessed their impact on the sales and profit of Kesko and K Group. The Board decided, among other things, on updates to Kesko’ strategy and sustainability strategy, on the acquisitions of the Danish building and home improvement trade companies Roslev Trælasthandel A/S, Tømmergaarden A/S and CF Petersen & Søn A/S, on significant store site investments, on investments related to the grocery trade logistics centre in Nurmijärvi, on the issuance of green notes, and on a sustainability-linked loan agreement between Kesko and the Nordic Investment Bank (NIB). In addition, the Board decided on the use of the donation funds approved by the Annual General Meeting, on the establishment of new share plans for compensation purposes and the principles for performance bonuses in 2025, and approved the new K Code of Conduct, and an updated version of the Group’s governance policy and updated charters for the Board and its Committees.
The Board appointed Sami Kiiski (M. Sc., Economics and Business) as the new President of Kesko’s building and technical trade division as of 1 April 2024. Kiiski has been a member of the Group Management Board as of 1 June 2023. The Board appointed Johanna Ali (M.Sc., Economics and Business) as acting President of the car trade division and a member of Group Management Board as of 1 April 2024. She was appointed as President of the division as of 4 June 2024. (Stock exchange releases on 20 March 2024 and 4 June 2024).
The Chair of the Audit Committee reported to the Board on the implementation of the regulation on sustainability reporting (EU Corporate Sustainability Reporting Directive, CSRD) reviewed by the Committee, in Kesko.
The Board carried out a self-assessment regarding Board operations and working practices. The assessment was conducted via discussions between the Board’s Chair and each Board member based on a predetermined discussion agenda. Among other things, the Board members assessed the Company’s strategy, the working practices and composition of the Board and its Committees and development measures, the performance of the Board Chair, Board members and Company management, reporting, risk management and succession planning for Company management. Moreover, the self-assessment concerned, among other things, prerequisites for the efficient utilisation of digitalisation. The Board reviewed a summary of the results of the assessment discussions at its December meeting. In addition to the summary, each Board member received personal feedback. A summary of the assessment results was also provided to the Shareholders’ Nomination Committee.
