Governance

GRI report

Governance

The company’s corporate governance is also described in the Corporate governance section of the Kemira 2013 report.

G4-34: Governance structure of the report

For information on Kemira's governance structure and committees, please see Corporate governance.

G4-36: Executive-level positions with responsibility for economic, environmental and social topics

Senior Vice President, Communications & Corporate Responsibility, reports to the Managing Director.

Director, Corporate Responsibility, reports to the Senior Vice President, Communications & Corporate Reponsibility.

G4-37: Processes for consultation betwen stakeholders and the highest governance body

Kemira Oyj’s corporate governance is based on the Articles of Association, the Finnish Companies Act and NASDAQ OMX Helsinki Ltd’s rules and regulations on listed companies. These rules regulate the procedures regarding when and how listed companies disclose information to the market. All information that is likely to materially influence the valuation of a listed company must be published in such a manner that the information reaches all market participants simultaneously.

Furthermore, Kemira complies with the Finnish Corporate Governance Code which is publicly available at http://cgfinland.fi/en/
 
Kemira Oyj’s general operating principles, mutual responsibilities and lines of responsibility are defined by the Kemira Code of Conduct. Kemira’s values and ethical principles underpin the company’s corporate governance and the way in which the company interacts with its main stakeholders.

Kemira’s shareholders' meeting is held at least once a year. Shareholders have a right to demand a matter that falls within the competence of the general meeting by virtue of the Limited Liability Companies Act to be included in the agenda as well the right to review fiscal information for the past year and bring up questions or matters regardingly.

In 2013 Kemira’s Investor Relations held approximately 35 roadshow days and almost 250 individual meetings with portfolio managers and other representatives in several different countries. The Head of Investor Relations reports to the Chief Financial Officer.

G4-38: Composition of the highest governance body and its committees

Please read more on the composition of the highest governance body and its committees in the section Board of Directors.

G4-39: Position of the Chairman of the Board

Please read more about the Chair of the highest governance body and his duties in the section Board of Directors.

G4-40: Processes for determining the composition, qualifications, and expertise of the highest governance body

Kemira complies with the Finnish Corporate Governance Code which is publicly available at www.cgfinland.fi (see chapter 3: Board)

The Annual General Meeting (AGM) makes decisions on matters within its competence under the Companies Act and the Articles of Association on the discharge of Board members and the Managing Director and his Deputy from liability, the election of the Chairman, Vice Chairman and other members of the Board of Directors and their emoluments, and the election of the auditor and the auditor’s fees.

The Nomination Board, consisting of shareholders or the representatives of shareholders, prepares annually a proposal for the next AGM concerning the composition and remuneration of the Board of Directors.

G4-41: Processes in place to avoid conflicts of interest

Kemira’s Board of Directors’ tasks and duties are defined in the section Board of Directors.

The Finnish Corporate Governance Code defines the evaluation of the independence of the Board of Directors and obliges the directors to provide the Board with sufficient information that allows the Board to evaluate their qualifications and independence, and notify the Board of any changes in such information.

The related parties, transactions and disclosure of related parties and transactions are defined in the Kemira Group Related Party Policy (approved by the Management Board).
Related party information is disclosed in the Consolidated Financial Statements as required by the International Financial Reporting Standards (IFRS).

All Board members are independent of the company. The Board members are also independent of significant shareholders of the company except for the Vice Chairman Jari Paasikivi. Jari Paasikivi is the CEO of Oras Invest Oy, which is the owner of over 10% of Kemira Oyj’s shares.

As stated in the company’s Code of Conduct, all Kemira employees, as well as the Board of Directors, must recognize and avoid conflicts of interest and must always disclose any potential or actual conflict of interest situation to their supervisor in accordance with applicable Kemira policies.

Kemira Oyj and the Kemira pension fund Neliapila own 4,037% of the shares of the energy production company Pohjolan Voima. Pohjolan Voima is the major owner of another energy production company Teollisuuden Voima Oy, where Kemira has a direct minority ownership share of about 1%.

G4-42: Executive-level roles in setting purposes, values, and strategy

The Managing Director is responsible for managing and developing the company in accordance with the instructions and regulations issued by the Board of Directors, ensuring that the company’s interests are served by the subsidiaries and associated companies under its ownership, and puts the decisions taken by the Board of Directors into effect. The Managing Director reports to the Board on financial affairs, the business environment and other significant issues.

The Management Board is responsible for securing the long-term strategic development of the company. The Management Board also approves the Company’s Policies.

The Board of Directors approves the company’s values, strategy and organization. The Board of Directors approves the most important Policies, such as the Code of Conduct. The Board approves the interim reports and financial statements as well as the corporate responsibility report.

G4-43: Measures taken to develop and enhance the highest  governance body's collective knowledge of economic, environmental and social topics

The knowledge of economic, environmental and social topics is enhanced through various presentations and discussions as well as review of, for example, the EHSQ report, interim report and corporate responsibility report.

G4-44: Processes and actions taken with regard to highest governance body's performance

The Board of Directors conducts an internal self-assessment annually. Action plans are created based on the results. The results are presented to the Nomination Board

G4-45: Highest governance body's role in the identification and management of economic, environmental and social impacts, risks, and opportunities

The risks and opportunities are included in the Kemira's strategy, as approved by the Board of Directors. The review of the strategy is a continuous process. The Board of Directors meet once a month. Early warning signals are presented to the Board of Directors once a month, covering information on the markets relevant to the company.

G4-46: Highest governance body's role in reviewing the effectiveness of the organization's risk mangement processes

Internal audit reviews the results of the risk assessment processes on a yearly basis for audit planning purposes. The risk management process is evaluated by internal audit every three years. According to Kemira’s Enterprise Risk Management process, the Board of Directors review the risk management process through its Audit Committee annually, Management Board and segment management semiannually and RBU/function/region management quarterly.

G4-47: Frequency of the highest governance body's review of economic, environmental and socal impacts, risks, and opportunities

The tasks and duties of the highest governance body can be found under Board of Directors.

In 2013, the Board of Directors met 16 times. The average attendance rate at the meetings was 97.6%.

G4-48: Highest committee or position that formally reviews and approves the sustainability report

Defining Kemira’s corporate responsibility material topics and focus areas is based on our stakeholders’ concerns and expectations, and on assessing the impacts of our operations on the environment and society. The material topics are either a source of value creation or a business risk for Kemira.

Kemira sets improvement targets for each defined corporate responsibility focus area. The target setting is designed together with the respective members of Kemira’s Management Board responsible for individual corporate responsibility focus areas.

Kemira’s corporate responsibility targets are approved by the Kemira Management Board. Corporate responsibility targets are discussed annually with the Kemira Board of Directors. Performance againts corporate responsibility targets is reported quarterly in Kemira’s interim reports by the Kemira Board of Directors.

Kemira’s corporate responsibility report is approved by the Kemira Board of Directors and assured by an external partner.

G4-49: Process for communicating critical concerns to the highest governance body

More information on the process for communicating critical concerns to the highest governance body can be found in the section Shareholders' meeting.

See also disclosure G4-58 for the internal and external mechanisms for reporting concerns about unethical or unlawful behavior, and matters related to organizational integrity.

G4-50: Nature and total number of critical concerns that were communicated to the highest governance body and the mechanisms used to address them

The following critical concerns are reported to the Boad of Directors:

Litigations, if relevant to the Board of Directors, see chapter "Litigation" in Note 30: Commitments and contingent liabilities.

Cases of discrimination are described under the indicator HR3: Total number of incidents of discrimination and corrective actions taken, and cases of corruption under SO5: Confirmed incidents of corruption and actions taken. There were 4 cases of violations against the Code of Conduct reported  to the Audit Committee. The Committee reports to the Board on each meeting.

G4-51: Executive-level compensations

Based on the decisions of the 2013 Annual General Meeting, Board members are entitled to a yearly fee and a fee per meeting.

The fees are as follows:

Fees payable for each Board meeting and its committees are:

The meeting fees are to be paid in cash.

Travel expenses are paid according to Kemira's travel policy.

In addition, the Annual General Meeting decided that the annual fee should be paid as a combination of the company's shares and cash in such a manner that 40% of the annual fee is paid with the company's shares owned by the company or, if not possible, shares purchased from the market, and 60% is paid in cash. The shares will be transferred to the members of the Board of Directors and, if necessary, acquired directly on behalf of the members of the Board of Directors within two weeks from the release of Kemira's interim report January 1–March 31, 2013.

The Board of Directors determines the salaries of the Managing Director and other Group Management Board members, other remuneration, and employment terms.
Management compensation consists of a monthly salary, fringe benefits and performance based incentives. A twelve-month period of notice applies to both sides for the Managing Director. In addition to the salary of the notice period, the Managing Director is not entitled to a separate severance pay. The Group Management Board does not have a separate supplementary pension scheme. The performance based incentives consist of a cash bonus plan and a share based plan.

The annual cash bonus is determined by the achievement of the Group and personal performance targets for each financial year. The maximum bonus for the Managing Director is 60% of the annual gross salary for the same period and 50–70% for other Group Management Board members. In 2013, Group performance targets were Group EBIT and cash flow and personal performance targets including social and economic objectives, depending on the role. All Group Management Board members had a People and Talent Development target in addition of the operative and financial targets.

In February 2012, Kemira Board of Directors decided to establish a new share-based incentive plan that follows the already terminated 2009–2011 plan aimed at the company's strategic management for the years 2012–2014, as part of the company's incentive and commitment schemes. The delivery of share rewards within the plan is subject to the achievement of the performance targets set by the Board of Directors, which include both internal and external performance targets. The internal target setting is divided into three one-year performance periods: 2012, 2013 and 2014. Payment depends on achievement of the set intrinsic value targets calculated from the development of EBITDA and the development of the net debt. The program also includes a three-year external goal, which is tied to the relative total shareholder return (TSR) performance during 2012–2014. As a guiding principle, reward will only be paid based on excellent performance.

The value of the aggregate reward paid out in the course of the three-year plan may not exceed 120% of the CEO's and 100% of the other participants' gross salary for the same period. The applicable taxes will be deducted from the gross earning and the remaining net value is delivered to the participants in Kemira shares.

Shares earned through the plan must be held for a minimum of two years following each payment. In addition, the participants must retain fifty per cent of the shares obtained under the plan until their ownership of Kemira shares based on shares obtained through the share-based incentive programs of Kemira has reached a share ownership level which in value equals at least their gross annual salary for as long as they remain participants in the plan.

The shares transferable under the plan comprise treasury shares or Kemira Oyj shares available in public trading.

In addition to the share-based incentive plan aimed at the company’s strategic management, Kemira has a share-based incentive plan aimed at other key personnel, in which the strategic management will not participate.

G4-52: Process for determining remuneration

The Annual General Meeting decides on remuneration for Board members.

The Board of Directors determines the salaries of the Managing Director and other Group Management Board members, other remuneration, and employment terms.

The Group Performance targets in the annual cash bonus as well as the the targets in the share-based plan for the strategic management are determined for each financial year separately by the Board of Directors.

The Board of Directors may use external, independent remuneration consultants when needed. Consultants have been used for example for defining the incentive plan.

G4-53: Process for seeking stakeholder views regarding remuneration

Shareholders represent one of Kemira’s three key stakeholder groups in addition to customers and employees, and shareholders’ views regarding remuneration are taken into account in Kemira Oyj’s shareholders’ meeting, Annual General Meeting (AGM), which is the company’s highest decision-making body. The AGM makes decisions on matters within its competence under the Companies Act and the Articles of Association, including the election of the Chairman, Vice Chairman and other members of the Board of Directors and their emoluments, and the election of the auditor and the auditor’s fees. Process for determining remuneration