Corporate Governance
Applicable provisions
Marimekko Corporation is a Finnish public limited company. The Finnish Companies Act, other regulations concerning public listed companies and Marimekko Corporation’s Articles of Association are complied with in its decision-making and administration. Furthermore, Marimekko Corporation complies with the Corporate Governance Recommendation for Listed Companies issued by the Helsinki Stock Exchange, the Central Chamber of Commerce and the Confederation of Finnish Industries. The recommendation came into force on 1 July 2004.
Group structure
The Marimekko Group comprises Marimekko Corporation and its subsidiaries.
General Meeting
Marimekko Corporation’s highest decision-making authority is exercised by the company’s shareholders at the General Meeting. General Meetings are either Annual or Extraordinary General Meetings. According to the Articles of Association, the Annual General Meeting shall be held annually by the end of June on the day set by the Board of Directors. According to the Articles of Association, the Notice of General Meeting shall be given to shareholders by means of an advertisement in at least one daily newspaper which is published in Helsinki and which has been determined by the Board of Directors, not earlier than two (2) months and not later than seventeen (17) days before the meeting. Extraordinary General Meetings are convened when necessary. According to the Companies Act, an Extraordinary General Meeting must be held when the Board of Directors considers it advisable or when shareholders owning at least 1/10 of the shares demand in writing that a meeting be held to deliberate on a specified matter. Shareholders have the right to have items included in the agenda of the General Meeting, provided they demand it in writing from the Board of Directors well in advance, so that the item can be included in the Notice of Meeting. The Notice of Meeting is usually drafted about four (4) weeks before a General Meeting.
The Annual General Meeting deliberates on the matters that are specified as being the business of Annual General Meetings in Section 12 of the Articles of Association, as well as any other possible proposals made to the General Meeting. The company’s Board of Directors prepares an agenda for the meeting. As specified in the Companies Act, the Annual General Meeting takes decisions on matters such as:
- approving the financial statements
- the distribution of profit
- the number of Board members, their election and remuneration
- the number of auditors, their election and remuneration
- amendments to the Articles of Association.
Marimekko Corporation’s Articles of Association do not include a redemption clause. The company is not aware of any shareholder agreements concerning restrictions on the conveyance of the company’s shares. Nor is the company aware of any commitments agreeing on the company’s ownership or the use of voting rights, apart from the agreement signed between Workidea Oy and Muotitila Ltd on 31 October 2007. The contents of the agreement are detailed under Share and Share capital under Flagging notifications 2007.
Shareholders are invited to the General Meeting by means of an advertisement in at least one daily newspaper which is published in Helsinki and which has been determined by the Board of Directors. In addition, the Notice of General Meeting and the Board’s proposals to the General Meeting are published in a stock exchange release and on the company’s website.
Board of Directors
Board members and their term of office
The members of Marimekko Corporation’s Board of Directors are elected at the Annual General Meeting. Their term of office ends at the conclusion of the next Annual General Meeting. Pursuant to the Articles of Association, the Board of Directors shall include a minimum of three (3) and a maximum of five (5) ordinary members. The number of Marimekko Corporation’s Board members is set in proportion to the company’s size. The Articles of Association do not set an upper age limit for Board members, restrict the number of their terms of office or in any other way restrict the General Meeting’s authority in the election of Board members. The Board of Directors elects a Chairman from amongst its members for a period of a year.
Marimekko Corporation’s Annual General Meeting held on 3 April 2008 elected five members to the Board of Directors for a term beginning on 3 April 2008 and ending at the conclusion of the 2009 Annual General Meeting. Tarja Pääkkönen, Ph.D. (Eng.), was re-elected and Ami Hasan, Mika Ihamuotila, Ph.D. (Econ.), Joakim Karske, MA, and Mr Pekka Lundmark, M.Sc. (Eng.), were elected as new members of the Board of Directors. In its organisation meeting held after the Annual General Meeting, the Board of Directors elected Pekka Lundmark as Chairman and Mika Ihamuotila as Vice Chairman of the Board. The members of the Board are introduced under Investors/Administration & Auditors.
Independence evaluation
According to the Corporate Governance Recommendation, the majority of Board members shall be independent of the company. A person without any significant connection to the company besides Board membership is considered independent of the company. In addition, two of the members belonging to the said majority shall be independent of the company’s major shareholders. Of the members of Marimekko Corporation’s Board of Directors, Ami Hasan, Joakim Karske, Pekka Lundmark and Tarja Pääkkönen are independent of the company. Mika Ihamuotila is Marimekko Corporation’s president and CEO. The number of Marimekko shares owned by Board members is reported under Investors/Share information/Shareholders/Insiders.
Duties and responsibilities of the Board of Directors
The Board of Directors is responsible for the company’s administration and the proper organisation of operations. In addition to the duties specified in the Companies Act and the Articles of Association, the operating principles and main duties of the Board of Directors are specified in the written rules of procedure approved by the Board of Directors. The rules of procedure are updated and approved annually in the Board’s organisation meeting held after the Annual General Meeting. All matters that are significant to the company’s business operations and have long-term effects are deliberated on by the Board. According to the rules of procedure, matters to be handled at Board meetings include:
- specifying and ratifying the company’s strategic policies
- deliberating on and approving the annual operating plan and budget
- deliberating on and approving interim reports, the consolidated financial statements and the Board’s report
- expanding and contracting business operations
- deciding on investments and the acquisition and sale of assets that are either strategically or financially significant
- deciding on funding-related contingent liabilities
- approving the Group’s reporting and risk management procedures and audit and supervision systems
- electing the president and the members of the management group and deciding on their remuneration.
Meeting procedures and decision-making
The Board of Directors convenes six times a year on average. In 2007, the Board convened eleven times. The participation rate of Board members in the meetings has been 100%. The Board evaluates its work annually in January, under the direction of the Chairman of the Board.
Committees
Because of the character of the company’s business and the small size of the Board, Marimekko’s Board of Directors has no committees.
President
The Board of Directors elects the company’s president and decides on the terms of the president’s employment, specified in a written president contract. The president is responsible for the Group’s operational management and development in line with the instructions and regulations laid down by the Board of Directors, and for informing the Board of the development of the company’s business and financial situation. Kirsti Paakkanen served as the company’s president from 1991 to the end of January 2008. On 31 October 2007, the Board of Directors appointed Mika Ihamuotila, Ph.D. (Econ.) as the company’s new president, starting on 1 February 2008.
Management group
The company’s business operations have been divided into responsibility areas. The people in charge of them form the company’s management group. The company’s president is the chairman of the management group. The Board of Directors decides on the appointment and remuneration of the members of the management group. The management group has no authority based on law or the Articles of Association. The members of the management group are listed under Investors/Administration and auditors.
Subsidiary administration
The members of the subsidiaries’ Boards of Directors are elected from amongst the Marimekko Group’s top management.
Management’s bonuses and other benefits
In accordance with the Articles of Association, the bonuses of the Board of Directors are set by the Annual General Meeting. In 2007, the Board of Directors was paid a total of EUR 50,000 in annual bonuses. The bonus of the Chairman of the Board amounted to EUR 20,000 and the bonus of each Board member to EUR 15,000 per year. Annual General meeting held on 3 April 2008 decided to remain the bonuses same. The President of the company will not receive any remuneration for his Board membership.
Marimekko Corporation’s Board of Directors decides on the president’s salary and remuneration. In 2007, the salary paid to Marimekko Corporation’s president, Kirsti Paakkanen, for attending to the duties of president amounted to EUR 180,000. The annual salary agreed in the president contract between the company and the new president Mika Ihamuotila, who took up his duties on 1 February 2008, is EUR 294,000. The president is also entitled to an annual bonus corresponding to a maximum of six months’ fixed salary. The principles determining the bonus are confirmed annually by the Board of Directors. The president is entitled to a defined-contribution pension scheme. The president contract does not specify a retirement age. The president’s agreed term of notice is six months, if the president resigns on his own initiative. If the company terminates the contract, the president is entitled to a remuneration corresponding to normal salary of twelve months. The company has no share or equity-derivative bonus systems.
Audit
According to the Articles of Association, the company must have one auditor and, if the auditor is not a public accountant company, one deputy auditor. The auditor and deputy auditor must be authorised by the Central Chamber of Commerce. The auditors are appointed for an indefinite term. PricewaterhouseCoopers Ltd, Authorised Public Accountants, is responsible for the auditing of the Marimekko Group and the Group companies, with Kim Karhu, Authorised Public Accountant, as chief auditor. The Annual General meeting held on 3 April 2008 decided that the auditor´s fee would be paid as per invoice. In the 2007 financial year, the auditors of the Marimekko Group, Nexia Tilintarkastus Oy, were paid a total of EUR 51,400 in fees.
Reporting
The realisation of Marimekko Corporation’s financial objectives is monitored by means of financial reporting covering the entire Group. Sales reports are drafted, as applicable, on a daily, weekly and monthly basis. The consolidated result and balance sheet reports are drafted on a monthly basis.
Internal supervision and risk management
Internal supervision is an integral part of the company’s administration and management. The Board of Directors and the president are responsible for organising the supervision. The Board of Directors supervises and evaluates the sufficiency, appropriateness and effectiveness of the Group’s risk management, supervision and administration process. Business operations and asset management are monitored using the above-mentioned reports. Appropriate insurance policies have been taken out to protect the company against asset, loss-of-profits and liability risks arising from its business operations.
Expansion and diversification of the company’s business operations pose new requirements to internal supervision and risk management. This year Marimekko will focus on the overall organisation, management and development of these processes.
Insider administration
Marimekko Corporation complies with the Helsinki Stock Exchange’s Guidelines for Insiders, effective from 1 January 2006. Marimekko’s insiders with the duty to declare are the members of the Board of Directors, the secretary of the Board, the president, the auditor and the company’s management group. Permanent company-specific insiders include the managing directors of the subsidiaries and other persons who by virtue of their duties are designated as company-specific insiders. The need for project-specific insider registers is evaluated on a case-by-case basis. The company’s insider regulations have been given to all insiders. The Board of Directors confirms the updated insider regulations and the insiders every year.
Marimekko Corporation’s insider regulations prohibit insiders with the duty to declare and permanent company-specific insiders as well as their related parties and their controlled corporations from trading in Marimekko shares during the 30-day period preceding the publication of the company’s interim reports and financial statement information. The person in charge of Group communications and investor relations is responsible for maintaining the company’s insider register and for insider communications. An insider list for the company is maintained in the Finnish Central Securities Depository Ltd’s SIRE register. The up-to-date shareholdings of Marimekko Corporation’s public insiders and their related parties are listed under Investors/Share information/Shareholders/Insiders.
Investor relations
The management of Marimekko Corporation’s investor relations is co-ordinated by the person in charge of Group communications. The Chief Financial Officer is responsible for the content of financial information. Group communications is responsible for the company’s stock exchange releases, investor and analyst meetings and the company’s online investor information.
Marimekko publishes all its investor information in Finnish and English on the company’s Internet site under Investors. The company’s printed Annual Report is published in Finnish and English.