S Group

S Group is a Finnish cooperative group of companies. Its key business operations include the supermarket trade, department stores and speciality stores, service station store and fuel sales, the travel industry and hospitality business, the hardware trade and financial services.  In 2018, S Group's retail sales amounted to around EUR 11.5 billion. With its 38,000 employees, S Group was the largest private sector employer in Finland.

S Group = Cooperatives + SOK Corporation

S Group consists of 20 regional cooperatives and SOK Corporation, as well as their subsidiaries. The network of cooperatives extends throughout Finland, and the regional aspect is highlighted in the operations of the cooperatives. The co-op members own the cooperatives, which in turn own SOK Corporation.

SOK Corporation comprises Suomen Osuuskauppojen Keskuskunta (SOK) and its subsidiaries. SOK is a central cooperative that provides expert and support services – such as chain management, product range, procurement and marketing services – for the cooperatives of S Group. SOK is also responsible for the strategic steering of S Group and the development of the business chains.

Key figures

S Group's retail sales excluding taxes (EUR million)

11,523

S Group in total

11,191

Sales: Finland

191

Sales: Estonia

141

Sales: Russia

S Group's retail sales excluding taxes (EUR million) 11,523

Operating result

355

EUR million

Our result improved in 2018, particularly for SOK Corporation and the entire Group's travel industry and hospitality business. In general, S Group's performance has improved, as a result of investments in digital solutions and energy efficiency, among other factors.

Investments

589

EUR million

In 2018, we invested in hotels in particular. Extensive construction and modernisation projects are in progress in different parts of Finland, some of which were completed and some of which started during 2018.

Cooperative activities and co-op membership

Because of the cooperative form of business, the money circulating in the operations of S Group's cooperatives benefits the co-op members and ensures regional well-being and vitality. Earnings from operations are invested for the benefit of the co-op members by developing services and renovating locations, or distributed to the co-op members in the form of various benefits, such as the Bonus and payment method-related benefits.

Number of co-op members

2,398,295

Cash benefits paid to co-op members

372

EUR million

329

Bonus, EUR million

Co-op members are eligible to a Bonus of up to 5% – in other words, they receive money back from purchases at more than 2,000 outlets. In addition to making daily purchases, the monthly bonus amount can be accumulated by staying at hotels and eating out.

9

Interest on the membership fee, EUR million

In addition to the Bonus, co-op members are also eligible to other cash benefits. If the cooperative's financial performance in the previous year is good enough, the cooperative may pay interest on the membership fee paid by its co-op members.

26

Return of surplus, EUR million

The return of surplus is calculated on purchases that co-op members make at the outlets of their own cooperative by the end of the previous year. The return of surplus is paid only by some of the cooperatives.

8

Payment method-related benefit, EUR million

The payment method-related benefit is a cash benefit that is worth taking. By paying your purchases with your S-Etukortti card, you will receive a payment method-related benefit of 0.5% on purchases covered by the benefit.

Personnel and outlets

 

Number of personnel

40,701

S Group in total*

33,169

Regional cooperatives

7,532

SOK Corporation

* Since 2016, the annual report displays the situation on 30 November. The figure includes both active and inactive employment relationships and provides the most detailed information on personnel at an annual level, since the figures collected at the end of the year include seasonal employees.

Outlets

1,841

S Group in total

 

 

Table: Key figures Hide the table

CEO comments

Looking into the future

"2018 was favourable for us. Both our financial result and our sales improved. We provided our co-op members with new services, lower prices and more comprehensive selections.  

The transformation of the retail sector requires a keen eye and agile responses. Competition is tight in all of our business areas, and we must earn our customers' trust every day. Our improved profitability lays a solid foundation for future development. We are ready to face changes and shape the entire sector through our operations. 

The grocery trade, our most significant sector, is undergoing changes. Climate change, global population growth, technological development and consumers' changing needs are challenging traditional food chain operations in entirely new ways. 

Finland is well-positioned to become a leading country in the food sector by developing food production methods and technologies for the future. We want to strengthen this development through our think-and-do tank for the food chain and our food sector fund, as well as providing agricultural producers with training that helps them prepare for the future. 

Climate change is our common concern. Its mitigation requires our joint efforts, and we have no time to lose. The transition also offers new opportunities, and we must know how to seize them. Creating carbon sinks is an important way to remove carbon dioxide emissions from the atmosphere. If we created a marketplace for storing carbon, we would be able to target funds at exactly the right purpose: removing carbon from the atmosphere. 

Why is foresight so important for us? Because cooperatives focus on the long term. We work to ensure that our co-op members continue to have local stores, access to easy shopping and superior benefits."

Taavi Heikkilä, CEO of SOK

Strategy

Superior benefits and convenience from your own store

The purpose of our operations is to provide co-op members with competitive services and benefits in a profitable manner. Our vision is to offer superior benefits and convenience from the co-op members' own store. How will this be achieved?

We must maintain our competitiveness in all our business areas in order to genuinely achieve our vision of superior benefits and convenience for our customers. Our keys to success include competitive customer service, cash rewards to co-op members and good customer encounters both digitally and face-to-face.

The operating environment is changing rapidly in retail and services. Competition is becoming tighter and increasingly international in all sectors. International operators are raising the bar in online commerce, for example.

Supply and demand will meet in new ways through digital services. Customers' needs are become increasingly diverse in Finland. Individuality will be highlighted against the masses. The changes will be challenging, but they will also offer a full range of opportunities for us and our co-op members.

In 2018, we progressed systematically towards our vision, in line with our strategy. We continued to lower grocery prices, and we introduced a high-quality chain, Food Market Herkku, to further improve our offering.

In addition, we developed digital services and tuned up our background operations for better performance. We introduced the ‘Omat ostot' (My purchases) service, which enables our customers to monitor their consumption habits. In addition to fuel, our customers can now pay for car washes using our mobile app, and our hotel guests can download an app that brings together our hotel services.

Profitable operations lay the foundation for renewal and service development in response to customers' changing needs. We work to offer convenience that makes responsible and sustainable choices possible every day. Taking care of people and the environment is one of our key values. This annual review offers many examples of how S Group does just that.

Responsibility programme

We make Finland a better place to live

Here at S Group, we are doing our part to help Finland become an even better place to live. As a major operator, we have a considerable impact on the present and on the legacy we leave for future generations. That is why foresight is important.

Our mission is to produce benefits and services that generate well-being for our owners – in other words, our customers. However, well-being means much more than just economic well-being. Together with our co-op members, we work for the good of society, for the circular economy and against climate change, as well as improving our operating culture, safeguarding human rights and promoting well-being and health.

The core of our responsibility programme, which is named "the Best Place to Live", is a list of one hundred acts that impact our environment and society. They include both small everyday improvements and acts that are groundbreaking even on an international scale.

WHAT DOES S GROUP'S RESPONSIBILITY WORK MEAN IN PRACTICE?

Responsibility work covers a wide range of topics, and touches all of the themes of our Best Place to Live programme. Examples of this include our aim to be Finland's largest employer of young people, the construction of 100 outdoor sports fields for children and young people, the reduction of food loss, energy savings and the increased use of renewable energy, the promotion of human rights in our own and our partners' operations, and encouraging Finns to eat more vegetables.


WHO PARTICIPATES IN RESPONSIBILITY WORK AT S GROUP?

All of our employees in one way or another. Each of us can do our part in making Finland a better place to live. The most important aspect is for everyone to be aware of the links between the responsibility programme and their own job and to find the most meaningful themes in this respect. These could be, for example, reducing food waste, promoting well-being at work or highlighting local products.

In addition, personnel working with customers have opportunities to tell them about our responsibility work and relay customer feedback to the appropriate parties in order to develop the operations.

We want each S Group employee to be able to be proud of their employer.


WHAT WAS PARTICULARLY MEMORABLE FOR YOU ABOUT 2018, THE YEAR OF RESPONSIBILITY?

Above all, 2018 was a year of climate discussions. The debate intensified and went mainstream and also reached people in their homes. I believe that increased awareness helps us fight climate change together.

Last year, we introduced our Big Deal ('Iso Juttu') climate goals, which was a much-awaited and important event. We are aiming for a reduction of one million tonnes in emissions by 2030 in cooperation with our partners.

Because of the intense debate, we must ensure that our goals are sufficient across the board and that we have access to a sufficient selection of methods.

Memorable events also included #NytOnPakko, a protest organised in Helsinki in October. The event attracted around 8,000 people to demand measures to slow down climate change from decision-makers.

Helsinki Pride in the summer was memorable as well, attracting a record number of participants. I also had the honour to witness how Prisma's Boy Meets Girl brand supported the event very visibly.

A great deal is happening in terms of responsibility, and I am happy to be able to focus on themes close to my heart.

Lea Rankinen,

Director, Corporate Responsibility, SOK


For more information about the programme, S Group's responsibility work and managing it, please see this report and visit the Best Place to Live pages

Programme progress

The Best Place to Live programme is running from 2017 to 2020 in its current form. The programme is centred on 100 acts, and the progress of these acts is monitored and reported annually. By the end of 2018, more than 30% of the acts had been completed and more than 50% were progressing as planned. Only a few acts had fallen behind their intended schedule.

   S Group's 100 acts of responsibility, %

Status of the 100 acts on 31 December 2018, %

Status of the 100 acts on 31 December 2018

For more information on each of the 100 acts, please visit the Best Place to Live pages.

Stakeholder engagement

Dialogue with our partners

Rating by the public (on a scale of 1–5)

We engage in active dialogue with various stakeholders. The goal of this dialogue is to provide information about S Group, increase mutual understanding and make use of stakeholders' expertise when developing our operations.

We participate in social discussion openly and proactively. We openly answer any questions and respond to feedback from customers, non-governmental organisations and the media alike.

Our stakeholder cooperation is managed systematically and measured annually. Stakeholders' images of S Group as a responsible operator are studied by means of the Trust and Reputation survey conducted by T-Media, for example. The survey assesses our overall reputation through eight themes: governance, financial administration, management, innovation, interaction, products and services, workplace, and responsibility.

In 2018, the public evaluated our overall reputation and responsibility as good. Our governance was also rated as good, covering openness, transparency and making the right choices.

In April, S Group launched its From Anxiety to Action climate campaign at its Great Climate Debate stakeholder event. Various methods of climate work were discussed at the event, in addition to ways to engage people in fighting climate change. Our Big Deal climate campaign aims to reduce S Group's and our value chain's emissions and inspire our customers to participate in climate work.

In July, we organised discussions about climate change in cooperation with Sitra at the SuomiAreena event in Pori. During our Future Options Day, we discussed climate anxiety, the food of the future, opportunities offered by the circular economy and next-generation concepts of working life, among other topics.

At Sokos Hotel Torni, we held a morning discussion event under the theme ‘Plastic – the enemy or a necessary partner'. This event was part of the preparation of S Group's guidelines on the use of plastic. We wanted to hear our stakeholders' views in order to take them into account in drawing up the guidelines. Speakers at the event included Henna Virkkunen, Member of the European Parliament; Antro Säilä, CEO of the Finnish Packaging Association; Hanna Kosonen, Member of Parliament; and Maija Pohjakallio, Research Group Director at VTT.

In autumn 2018, we organised a round table discussion for Italian stakeholders in Rome, in cooperation with Oxfam. The topics of discussion included human rights risks and their root causes within the supply chain for tinned tomatoes. The event was part of a study conducted by Oxfam for S Group in southern Italy.

Business areas

A diverse range of services and outlets

 

Supermarket trade

Our main business continues to grow.

8 096

sales (EUR million)

46.4%

market share

90

Prisma stores

434

S-market stores

298

Sale stores

112

Alepa stores

6

Food Market Herkku stores

"Our supermarkets continued to be popular in 2018. Lower prices, flexible opening hours and increasingly interesting selections are clearly a winning combination.

Our grocery sales developed favourably in Finland in 2018. This continued growth proves that we are still the market leader in the grocery trade in Finland. S-market is Finland's largest grocery store in terms of sales, while Prisma is the most attractive hypermarket. Our small stores, Alepa in the Helsinki metropolitan area and Sale in different parts of the country, make customers' daily lives easier and ensure the availability of basic services, particularly in small locations.

In 2018, we opened Food Market Herkku, an entirely new chain. Developed in cooperation with customers, Herkku is a shopping oasis for people who love good food and service. We have invested in high quality and an inspiring selection. Herkku immediately attracted international attention: a British retail research agency ranked it among the 16 most interesting new grocery stores in the world.

Prisma continued to make its customers' daily lives easier by offering everything under one roof. In addition to groceries, customers can shop for fashion, home products and entertainment from a wide selection. Prisma is also Finland's leading fashion store, encouraging everyone to be themselves.

The home and entertainment product categories continued to be highly competitive in 2018. In toys, food preparation supplies and tableware, Prisma maintained its market leadership in terms of customer visits. The sales of entertainment electronics continued to develop favourably as well.

Around 20,000 retail professionals work in our more than 1,000 stores. Our employees meet millions of customers each year, and they keep our massive system running. Thank you!

Our logistics centre in Sipoo, the largest investment in our recent history, has finally been taken into full use. Efficient, highly automated logistics play a significant role in lowering prices.

In 2018, S Group's chains were again ranked high in the Sustainable Brand Index, the largest brand study on sustainability in the Nordic countries. Finnish consumers regarded Prisma as the most sustainable operator in its field. Across all sectors, our Kotimaista product line was regarded as the second most sustainable Finnish brand. Our 2019 is off to a good start."

Ilkka Alarotu, 

SVP, SOK Retail chain management

 

Department stores and speciality stores

By focusing on our strengths, we have found the right growth track.

294

sales (EUR million)

20

Sokos stores

38

Emotion stores

8

Pukumies stores

8

other speciality stores

 

"Our mission is to help customers find their own style. Even though online commerce and other digital services are developing rapidly, our countless experiences of face-to-face encounters prove that traditional department stores continue to play an important role.

Last year, the hot summer weather hindered growth, particularly in clothing sales. People wanted to spend time outdoors as much as possible, even in the spring and autumn.

However, we managed to maintain a healthy level of profitability, even though our sales decreased slightly on the previous year. The department store market continues to be challenging, which gives us all the more reason to be satisfied.

Our decision to focus on our strengths – fashion and beauty – has proven to be a good choice in terms of strategy. It has been amazing how Sokos bounced back from a loss-making situation.

The Emotion chain further strengthened its position as the market leader in beauty and cosmetics in 2018. We opened new stores and further developed the concept – this work continues in 2019.

We also made preparations to integrate the M&S brand into the selection of each Sokos store. Today, M&S clothes and accessories are sold at Sokos stores across Finland, as well as online.

International online commerce continues to pose new challenges. During 2019, we will be further developing the Sokos.fi online store, which will serve our customers even better than before. For us, however, the future of bricks-and-mortar stores is also bright. The sector has been transforming from gigantic hypermarkets towards stores that customers find more manageable and convenient for their everyday shopping needs."

Mika Laakso,

Chain Director, SOK Department store and speciality business (Sokos and Emotion)

 

Service station store and fuel sales

We celebrated our 20th anniversary and a good financial performance in 2018.

1,729

sales (EUR million)

58

ABC service station stores

330

Unmanned abc stations

43

Local abc stations

79

ABC CarWash -locations

"We celebrated the 20th anniversary of the ABC chain in 2018, but we are also celebrating our good financial performance. Our sales and financial result improved nicely.

In 2018, we focused on further developing our digital services and restaurants. We renewed ABC Burger and introduced new Chef's Burgers on the à la carte menu. An increasing number of Finns now have an opportunity to enjoy gourmet burgers. In addition, our restaurants cater more extensively for various dietary requirements by offering options for vegans, for example.

We seek to lead the way in digital services in our field. We launched the world's first mobile refuelling service back in 2016, and last spring we introduced the ABC-mobiili app, which brings together our current services and future services in particular.

Towards the end of the year, we added a new feature to the ABC-mobiili app: customers can now use the app to pay for car washes. As well as making their daily lives easier, this supports our growing ABC CarWash network. Mobile payment for car washes will be expanded gradually within our network during 2019. Customers can also use the app to find nearby service stations and browse their information, such as menus.

I am proud of our Finnish ABC stations. Our ownership is 100% Finnish, and many of our employees are local residents. For two years, we have only sold Finnish meat at our restaurants, and our chain is entitled to use the Key Flag Symbol to indicate our Finnish origin.

Biowaste and residues from our Finnish chain of grocery stores are used as raw materials in producing Eko E85 fuel, which we sell. The sales of the Eko E85 fuel increased in 2018 – perhaps this indicates that motorists are more and more interested in environmentally friendly solutions.

The future looks good. I was appointed as Chain Director in late 2018 to continue the story of ABC. I'm looking forward to working with our nearly 4,000 employees. We keep reinventing ourselves, but the customers will still always know what they're going to get when visiting an ABC service station store."

Harri Tuomaala,

Chain Director, SOK Service station store and fuel sales chain management

 

Travel industry and hospitality business

New records, renewal and more environmentally friendly hotels.

798

sales (EUR million)

50

Sokos Hotels

8

Radisson Blu Hotels

3

other hotels

58

Green Key certified hotels

500

restaurants

24.2%

market share in hotels

8.9%

market share in restaurants (2017)

We recorded our all-time best result in 2018. Our financial success is based on hard work and on keeping up with the times.

We have succeeded in our brand and service development work, renewed our chain restaurants and invested in digital development and customer loyalty programmes. All of this has increased customer satisfaction.

The hotel and restaurant sector is highly competitive. In the Helsinki metropolitan area, we modernised the Sokos Hotel President and Sokos Hotel Vaakuna and extended the Hotel Flamingo. We are also building a brand-new hotel in the heart of the rapidly developing Pasila district in Helsinki. In addition, we are modernising and expanding our network of hotels and restaurants in Turku, as well as offering hundreds of new jobs.

We opened 29 new or refurbished chain restaurants in 2018. The trend of quick and easy eating continues at restaurants. We enabled the expansion of the Finnish Fafa's chain into different parts of the country. At the same time, we introduced new locations to international flavours and vegetable-based food. Our legendary Rosso restaurants are also going strong: the chain celebrated its 40th anniversary last year.

S Group's Best Place to Live sustainability programme and its 100 sustainable acts are visible at our hotels and restaurants. All of our hotels are now Green Key certified, meaning that an environmental programme has been determined for each hotel in line with specific standards. Consumers once again selected Sokos Hotels as Finland's most sustainable hotel brand.

We continue our work to create superior customer experiences – through multiple channels. Sokoshotels.fi keeps growing and developing. It is important for us to expand our multichannel approach beyond room reservations into other services provided by our hotels. We released a new Sokos Hotels app for our S-Card customers. In the future, the app will also be made available to co-op members."

Harri Ojanperä,

Chain Director, SOK Travel Industry and Hospitality Chain Management

 

Hardware trade

The hardware trade is undergoing a transition.

135

sales (EUR million)

9

Kodin Terra

11

S-Rauta

"People are no longer looking for only hammers and nails at hardware stores. They are looking for ideas, inspiration and solutions. Our renewed Kodin Terra stores meet this need by providing our customers with by far the easiest shopping experience.

Our Kodin Terra stores were completely refurbished during 2018. Rather than merely fine-tuning, we made major changes. Now these stores encourage our customers to renovate by themselves even more strongly than before – even little and affordable changes go a long way in home improvement.

We are paying special attention to customer service. Our employees provide customers with renovation tips, as well as advice on how to use or install our products. We create an atmosphere that encourages customers to take small steps towards their dream homes.

We also wanted to make our online services easier to use. Kodin Terra's online and bricks-and-mortar stores strongly support one another. In addition to making purchases online, customers can check product availability and location at a specific store."

Sampo Päällysaho,

Vice President, Consumer Goods, SOK Retail chain management

 

S-Bank

Changes support growth.

3.1

million customers

2.2

million Visa cards

11.6

operating result (EUR million)

685

employees

"2018 was a year of major changes for S-Bank, but we were able to grow our business operations considerably, as well as deepening our customer relationships.

What did we actually do? We further developed and shaped S-Bank in order to be an even better partner for our more than 3 million customers. Since the beginning of September, our business operations have focused on two areas in particular: banking and asset management.

In our banking business, our lending increased strongly but in a controlled manner in 2018. Our mortgage portfolio grew by 15.2%, while the market generally grew at a rate of around 2%.

Finns like to use our cards to pay for purchases. Roughly speaking, S-Bank's cards represent around 10% of all purchases made using a debit or credit card in Finland. The number of purchases made using our cards increased by 18% in 2018.

We have made rapid progress in asset management. In September, we introduced Säästäjä, Finland's first microsavings service. Thousands of Finns are already using the service, and we are particularly proud of the fact that more than 30% of the users are saving for the first time in their lives. This is wonderful news, as it is our intention to make saving easy and affordable.

Even though market development was very challenging towards the end of 2018, our assets under management increased by 9.9% and stood at EUR 7.6 billion at the end of the year. The number of unitholders in funds managed by us increased by 19,000 – at a rate that clearly outpaces the markets.

Technological development is an important factor shaping the banking sector and society. Our customers appreciate well-functioning digital services, and according to a study carried out by EPSI Rating, they are clearly more willing to take care of all of their banking digitally than other banks' customers.

For this reason, we want to explore and make use of new technologies, such as mobile devices, machine learning, software robotics and blockchains when they help us serve our customers even better than before. We promote mobile payments, and will offer our customers an opportunity to use MobilePay, an app developed by one of our partners, for making payments and collecting Bonus rewards in all S Group stores and services.

We have also been developing a new version of our highly popular S-mobiili app, which combines retail and banking services in a unique way. The new and improved S-mobiili will be released in early 2019.

Responsibility is an integral part of all our operations, and our customers expect responsibility of us. In the Sustainable Brand Index, the most extensive Nordic brand comparison for sustainable development, our customers selected S-Bank as the most sustainable bank for the sixth consecutive time."

Pekka Ylihurula,

Managing Director, S-Bank

Governance

Supervisory Board, Executive Board and Corporate Management Team

SOK's Supervisory Board 2018

Matti Pikkarainen

(b. 1953)

  • Oulu
  • D. Th.
  • Chairperson 2013–
  • Chairperson of the Supervisory Board of the Osuuskauppa Arina cooperative
  • Member of the Supervisory Board 2004–
  • Outgoing in 2019

Timo Santavuo

(b. 1960)

  • Pori
  • Lawyer, LL.M. with court training
  • First Vice Chairman 2017–
  • Chairman of the Supervisory Board of the Satakunnan Osuuskauppa cooperative
  • Member of the Supervisory Board 2000–
  • Outgoing in 2021

Antti Määttä

(b. 1966)

  • Muurame
  • M.Sc. (B.A.)
  • Second Vice Chairman 2015–
  • Managing Director of the Osuuskauppa Keskimaa cooperative
  • Member of the Supervisory Board 2013–
  • Outgoing in 2019

Jorma Bergholm

(b. 1954)

  • Helsinki
  • Managing director
  • Chairman of the Supervisory Board of the Helsingin Osuuskauppa Elanto cooperative
  • Member of the Supervisory Board 2005–
  • Outgoing in 2020

Pentti Hämäläinen

(b. 1954)

  • Hamina
  • Lawyer
  • Chairman of the Supervisory Board of the Kymen Seudun Osuuskauppa cooperative
  • Member of the Supervisory Board 2008–
  • Outgoing in 2021

Tapio Kankaanpää

(b. 1962)

  • Kuopio
  • Managing Director, M.Sc. (B.A.)
  • Osuuskauppa PeeÄssä cooperative
  • Member of SOK's Executive Board 2018-
  • Outgoing in 2020

Henrik Karvonen

(b. 1972)

  • Kuusamo
  • Managing Director of the Koillismaan Osuuskauppa cooperative
  • Member of the Supervisory Board 2014–
  • Outgoing in 2021

Sinikka Kelhä

(b. 1964)

  • Rauma
  • Lawyer
  • Chairperson of the Supervisory Board of the Osuuskauppa Keula cooperative
  • Member of the Supervisory Board 2017–
  • Outgoing in 2020

Kimmo Koivisto

(b. 1956)

  • Salo
  • Farmer
  • Chairman of the Supervisory Board of the Suur-Seudun Osuuskauppa SSO cooperative
  • Member of the Supervisory Board 2007–
  • Outgoing in 2019

Martti Lokka

(b. 1967)

  • Mikkeli
  • Managing Director, Building Manager
  • Chairman of the Supervisory Board of the Osuuskauppa Suur-Savo cooperative
  • Member of the Supervisory Board 2014–
  • Outgoing in 2021

Matti Manner

(b. 1953)

  • Naantali
  • Lawyer, Law counsellor
  • Chairman of the Executive Board of the Turun Osuuskauppa cooperative
  • Member of the Supervisory Board 2016–
  • Outgoing in 2019

Anne Mäkelä

(b. 1965)

  • Kokkola
  • Lawyer, LL.M. with court training
  • Chairman of the Supervisory Board of the Osuuskauppa KPO cooperative
  • Member of the Supervisory Board 2015–
  • Outgoing in 2020

Hannu Pelkonen

(b. 1967)

  • Sotkamo
  • Managing Director of the Osuuskauppa Maakunta cooperative
  • Member of the Supervisory Board 2015–
  • Outgoing in 2021

Timo Rajala

(b. 1957)

  • Akaa
  • Administrative Director
  • Chairman of the Supervisory Board of the Pirkanmaan Osuuskauppa cooperative
  • Member of the Supervisory Board 2017–
  • Outgoing in 2020

Jarkko Rautaoja

(b. 1964)

  • Heinola
  • M.Sc. (Tech.)
  • Vice Chairman of the Supervisory Board of the Osuuskauppa Hämeenmaa cooperative
  • Member of the Supervisory Board 2017–
  • Outgoing in 2020

Kari Suninen

(b. 1963)

  • Lappeenranta
  • Managing Director
  • Chairman of the Supervisory Board of the Etelä-Karjalan Osuuskauppa cooperative
  • Member of the Supervisory Board 2011-
  • Outgoing in 2021

Matti Timonen

(b. 1956)

  • Nurmes
  • Farmer
  • Chairman of the Supervisory Board of the Jukolan Osuuskauppa cooperative
  • Member of the Supervisory Board 2011–
  • Outgoing in 2020

Elina Varamäki

(b. 1971)

  • Seinäjoki
  • vice principal, docent
  • Chairman of the Supervisory Board of the Etelä-Pohjanmaan Osuuskauppa cooperative
  • Member of the Supervisory Board 2016–
  • Outgoing in 2019

Kristian Westerholm

(b. 1969)

  • Inkoo
  • M.Sc. (Agr.)
  • Chairman of the Supervisory Board of the Varuboden-Osla Handelslag cooperative
  • Member of the Supervisory Board 2016–
  • Outgoing in 2019

Kim Wrange

(b. 1968)

  • Lehmo
  • Licentiate of Science (Econ.), Head Lecturer
  • Chairman of the Supervisory Board of the Pohjois-Karjalan Osuuskauppa cooperative
  • Member of the Supervisory Board 2018–
  • Outgoing in 2019
 

Personnel representatives


Ulla Kivilaakso

(b. 1970)

  • Helsinki
  • Business college graduate, diploma in marketing and communications management (MJD)
  • Marketing Manager
  • SOK Travel industry chain management
  • Member of the Supervisory Board 2011–
  • Outgoing in 2020

Iiris Merimaa

(b. 1962)

  • Helsinki
  • Administrative Assistant
  • SOK Administrative Services and Risk Management
  • Member of the Supervisory Board 2009–
  • Outgoing in 2020

 

SOK's Executive Board 2018

Taavi Heikkilä

(b. 1962)

  • CEO, M.Sc. (B.A.)
  • Member of SOK's Executive Board 2007–2011, 2014–
  • With S Group 1987–
  • Chairman of SOK's Executive Board

Heikki Hämäläinen

(b. 1966)

  • Managing Director, M.Sc. (B.A.)
  • Osuuskauppa Suur-Savo cooperative
  • Member of SOK's Executive Board 2014–
  • With S Group 1990–

Juha Kivelä

(b. 1966)

  • Managing Director, MSc (Econ.)
  • Pohjois-Karjalan Osuuskauppa cooperative
  • Member of SOK's Executive Board 2018–
  • With S Group 1990–

Hannu Krook

(b. 1965)

  • Managing Director, M.Sc. (B.A.)
  • Varuboden-Osla Handelslag cooperative
  • Member of SOK's Executive Board 2016–
  • With S Group 2013–

Veli-Matti Liimatainen

(b. 1969)

  • Managing Director, MSc (Econ.)
  • Helsingin Osuuskauppa Elanto cooperative
  • Member of SOK's Executive Board 2018–
  • With S Group 1995–

Timo Mäki-Ullakko

(b. 1963)

  • Managing Director, M.Sc. (B.A.)
  • Pirkanmaan Osuuskauppa cooperative
  • Member of SOK's Executive Board 2013–
  • With S Group 1987–

Olli Vormisto

(b. 1967)

  • Managing Director, M.Sc. (B.A.)
  • Osuuskauppa Hämeenmaa cooperative
  • Member of SOK's Executive Board 2017–
  • With S Group 1989–

 

 

 

 

Corporate Management Team 2018

Taavi Heikkilä

(s. 1962)

  • CEO, M.Sc. (B.A.)
  • Member of SOK's Executive Board 2007–2011, 2014–
  • With S Group 1987–

Jari Annala

(s. 1964)

  • Executive Vice President, CFO, M.Sc. (B.A.)
  • Finance and Administration
  • With S Group 1989–

Arttu Laine

(s. 1970)

  • Executive Vice President, M.Sc. (B.A.)
  • Chain Management, Procurement and Logistics
  • With S Group 1995–

Susa Nikula

(s. 1970)

  • Executive Vice President, M.A. (Ed.)
  • HR
  • With S Group 1995–

Sebastian Nyström

(s. 1974)

  • Executive Vice President, M.Sc. (Tech.)
  • Strategy
  • With S Group 2015–

Jorma Vehviläinen

(s. 1967)

  • Executive Vice President, M.Sc. (B.A.)
  • SOK Liiketoiminta Oy
  • With S Group 1991–

Veli-Pekka Ääri

(s. 1968)

  • Executive Vice President, M. Soc. Sc.
  • Customer Relations, Communications, Marketing and Digital Services
  • With S Group 2011–

 

 

Management

SOK Corporation's Corporate Governance and Management System

Decision-making and governance at SOK, a Finnish cooperative, are subject to the provisions of the Cooperatives Act and other regulations concerning the operations of its business areas, as well as SOK's Statutes. Its subsidiaries' operations are regulated by the Limited Liability Companies Act, among other regulations. SOK Corporation's operations are also governed by the operating principles, operating policies and investment and approval guidelines confirmed by SOK's Executive Board, as well as the rules of procedure confirmed for its various bodies.

In June 2015, the Securities Market Association approved a Corporate Governance Code for listed companies, which came into effect on 1 January 2016. In accordance with a statement issued by the Finland Chamber of Commerce in 2006, other nationally significant institutions should also adhere to the Code to the extent possible considering their special characteristics. SOK adheres to the Corporate Governance Code to the extent relevant and possible considering its cooperative form of business and special characteristics.

S Group consists of cooperatives and SOK Corporation, which is owned by the cooperatives, and their subsidiaries. The purpose of S Group is to provide co-op members with services and benefits. SOK provides the cooperatives with procurement, expert and support services, as well as being responsible for S Group's strategic steering and the development of business chains.

SOK's governance model

Contrary to the Corporate Governance Code, SOK has a two-level governance model that consists of the Cooperative Meeting, Supervisory Board, Executive Board and CEO in line with the figure below. The company also has a management team, which assists the CEO in operational management.

Hallintoneuvosto

Cooperative Meeting

The members (owners) of SOK exercise their decision-making power at the Cooperative Meeting. The Cooperative Meeting makes decisions concerning issues that fall into its sphere of responsibility in accordance with the Cooperatives Act and SOK's Statutes. Each member cooperative of SOK is entitled to elect a maximum of five representatives to the Cooperative Meeting, all of whom have the right to address the meeting, but only one of whom has the right to vote on behalf of the cooperative. The execution of ownership rights and the voting rights are based on the members' ownership shares and SOK's Statutes.

The task of the Annual Cooperative Meeting is to attend to the matters set out in the law and the Statutes, such as adopting the financial statements, distributing the surplus shown on the balance sheet and releasing the members of the Supervisory Board and Executive Board from liability, as well as the election and remuneration of the Supervisory Board and the auditors. In addition, the Cooperative Meeting attends to other matters listed on the agenda. An Extraordinary Cooperative Meeting can be convened when necessary.

In 2018, the Annual Cooperative Meeting was held on 26 April. The meeting attended to the matters on its statutory agenda. No Extraordinary Cooperative Meetings were held in 2018.

Supervisory Board

The Cooperatives Act does not require the setting up of a Supervisory Board, but a Supervisory Board has been set out in SOK's Statutes as part of SOK Corporation's governance model. The role of the Supervisory Board is to represent the extensive grass-roots membership and to act as a forum in which the cooperative society's joint position on major strategic issues is defined. Its duty is to determine overall policies and safeguard the members' interests. The Supervisory Board confirms the strategy of S Group and SOK Corporation and the key objectives of SOK Corporation at the proposal of the Executive Board and monitors their implementation. Matters concerning actual operational management fall into the sphere of responsibility of SOK's Executive Board and line management.

The Supervisory Board monitors to ensure that the governance of the cooperative society and SOK Corporation complies with the law, the Statutes and the decisions of the Cooperative Meeting and the Supervisory Board, and that such governance is in the cooperative society's best interests. In addition, the Supervisory Board approves and, if necessary, expels members of the cooperative society and appoints and dismisses the Chief Executive Officer and other members of the Executive Board, and also decides on the remuneration of Executive Board members other than those employed by the cooperative society.

Furthermore, the Supervisory Board decides on the principles of cooperation for S Group's operations and on long-term plans.

The Supervisory Board has confirmed rules of procedure for its operations.

The Chair of the Supervisory Board and the two Vice Chairs comprise the Committee of Presiding Officers, which assists the Supervisory Board in carrying out its duties. The Chief Executive Officer attends the meetings of the Committee of Presiding Officers. In addition, the Committee of Presiding Officers decides, for example, on the emoluments of the CEO in accordance with the guidelines provided by the Supervisory Board.

The members of the Committee of Presiding Officers are:

  1. Matti Pikkarainen (b. 1953), DTh, Chair
  2. Lawyer Timo Santavuo (b. 1960), first Vice Chair
  3. Managing Director Antti Määttä (b. 1966), MSc (Econ.), second Vice Chair

The Supervisory Board has 14–27 members, of whom 12–25 are elected by the Cooperative Meeting based on proposals from the cooperatives. A person elected to the Supervisory Board must be a Finnish citizen and member of a cooperative. A person may not be elected as a member of the Supervisory Board if they turn 68 before the term of office. In addition to the members elected by the Cooperative Meeting, the employees of the cooperative society can nominate two members and designated deputies for them from among themselves to the Supervisory Board in accordance with the Act on Personnel Representation in the Administration of Undertakings.

The Supervisory Board had 20 members and 2 employee representatives in 2018. The Supervisory Board convened 6 times during 2018, and its members' attendance rate was 96%.

Based on the Statutes, the Supervisory Board sets up committees as it deems necessary. For the time being, the Supervisory Board has established four committees: the Nomination Committee, Compensation Committee, Audit Committee and Cooperative Committee, all of which have their own rules of procedure.

Nomination Committee

The Nomination Committee prepares matters related to the selection of the CEO and the members of the Executive Board. The Nomination Committee consists of the Chair of the Supervisory Board, the first and second Vice Chairs of the Supervisory Board and two other members elected by the members of the Supervisory Board from among themselves.

In 2018, the Nomination Committee, which prepared proposals for the Supervisory Committee, consisted of the following members of the Supervisory Board:

  1. Matti Pikkarainen, Chair of the Supervisory Board
  2. Timo Santavuo, first Vice Chair of the Supervisory Board
  3. Antti Määttä, second Vice Chair of the Supervisory Board
  4. Jorma Bergholm, member of the Supervisory Board
  5. Anne Mäkelä, member of the Supervisory Board
     

The Nomination Committee convened 6 times during 2018, and its members' attendance rate was 97%. The committee presented its proposal for the composition of the Executive Board on 19 December 2018.

Compensation Committee

The task of the Compensation Committee is to assess and develop the compensation systems and principles of S Group's senior management and to issue recommendations on these and on compensation to the cooperatives' governing bodies. The Compensation Committee also prepares proposals concerning compensation to the members of the Executive Board and the Supervisory Board and their committees, for the relevant governing bodies to decide on. The Compensation Committee consists of the Chair of the Supervisory Board, the first Vice Chair of the Supervisory Board and three other members elected by the members of the Supervisory Board from among themselves.

In 2018, the Nomination Committee, which prepared proposals for the Supervisory Committee, consisted of the following members of the Supervisory Board:

  1. Matti Pikkarainen, Chair of the Supervisory Board
  2. Timo Santavuo, first Vice Chair of the Supervisory Board
  3. Sinikka Kelhä, member of the Supervisory Board
  4. Martti Lokka, member of the Supervisory Board
  5. Jarkko Rautaoja, member of the Supervisory Board
     

The Compensation Committee convened 5 times during 2018, and its members' attendance rate was 100%. The committee presented its proposal for compensation to the members of the Executive Board on 19 December 2018.

Audit Committee

The Audit Committee assists and supports the Supervisory Board in monitoring the Executive Board and the governance of the cooperative society. The Audit committee consists of the second Vice Chair of the Supervisory Board and two or three members elected by the members of the Supervisory Board from among themselves.

In 2018, the Audit Committee consisted of the following members of the Supervisory Board:

  1. Antti Määttä, second Vice Chair of the Supervisory Board
  2. Matti Manner, member of the Supervisory Board
  3. Timo Rajala, member of the Supervisory Board
  4. Kristian Westerholm, member of the Supervisory Board
     

The Audit Committee convened 3 times during 2018, and its members' attendance rate was 100%.

Cooperative Committee

The Cooperative Committee assists the Supervisory Board in ensuring compliance with and the implementation of the principles of cooperative activities within S Group. The Cooperative Committee consists of the first Vice Chair of the Supervisory Board and four other members elected by the members of the Supervisory Board from among themselves.

In 2018, the Cooperative Committee, which prepared proposals for the Supervisory Committee, consisted of the following members of the Supervisory Board:

  1. Timo Santavuo, first Vice Chair of the Supervisory Board
  2. Pentti Hämäläinen, member of the Supervisory Board
  3. Tapio Kankaanpää, member of the Supervisory Board
  4. Kimmo Koivisto, member of the Supervisory Board
  5. Elina Varamäki, member of the Supervisory Board
     

The Cooperative Committee convened 4 times during 2018, and its members' attendance rate was 95%.

Executive Board

Election and composition of the Executive Board

According to SOK's Statutes, the Executive Board consists of the cooperative society's CEO, who serves as Chair of the Executive Board, and 3–8 other members. The Supervisory Board elects the members of the Executive Board for a term of one calendar year based on the Nomination Committee's proposal. When preparing its proposal, the committee evaluates the size and composition of the Executive Board, as well as the competences required of its members from the perspective of the cooperative society's current and changing needs. The purpose of the preparatory work is to ensure that the Executive Board is sufficiently diverse in terms of gender and age distribution and that its members have complementary experience and a diverse range of competences, as well as the qualifications required for the efficient management of the Executive Board's duties. According to the Statutes, a person being elected to the Supervisory Board must be a Finnish citizen and under 68 years of age at the beginning of the term of office. The goal is to ensure sufficient rotation, and sufficient continuity is also considered important in the work of the Executive Board. The composition of the Executive Board deviates from the requirements of the Corporate Governance Code. This is due to SOK's ownership base and S Group's structure, as well as the Executive Board's role in steering the Group's operations, which requires that the owner organisations have sufficient representation on the Board.

Duties of the Executive Board

The Executive Board's key duties and operating principles are defined in its rules of procedure, which the Supervisory Board has confirmed.

The Executive Board represents the cooperative society and attends to its governance and the appropriate organisation of its operations within the framework of SOK Corporation and in compliance with the applicable laws and rules. The Executive Board is responsible for deciding on the competition strategies for S Group's business areas and on the operating plans of SOK and its subsidiaries. The Executive Board is also responsible for preparing certain strategic matters for the Supervisory Board to decide on.

In addition, the Executive Board, on the CEO's proposal, decides on setting up SOK's Corporate Management Team and on appointing its members and on their compensation, with the exception of the CEO. The Executive Board appoints a Nomination Working Group, which prepares a proposal for the composition of the boards of directors of SOK's subsidiaries for the Executive Board to decide on. Rules of procedure have been confirmed for the Executive Board.

Considering its duties and composition, SOK's Executive Board has not deemed it necessary to establish the committees mentioned in the Corporate Governance Code to prepare matters to be discussed by the Executive Board. At SOK, the Supervisory Board has established the necessary committees.

Meetings of the Executive Board

The Executive Board convenes as required and on the Chair's invitation, and forms a quorum when more than half of the members are present, including the Chair or Vice Chair of the Executive Board. The Executive Board evaluates its work and procedures by carrying out a self-assessment annually.

In 2018, SOK's Executive Board had seven members, six of whom were managing directors of cooperatives. In accordance with the cooperative society's statutes, SOK's Chief Executive Officer is the Chair of the Executive Board.

In 2018, SOK's Executive Board consisted of the following members:

  1. Taavi Heikkilä (b. 1962), CEO, MSc (Econ.), Chair
  2. Heikki Hämäläinen (b. 1966), Managing Director, MSc (Econ.)
  3. Juha Kivelä (b. 1966), Managing Director, MSc (Econ.)
  4. Hannu Krook (b. 1965), Managing Director, MSc (Econ.), Vice Chair
  5. Veli-Matti Liimatainen (b. 1969), Managing Director, MSc (Econ.)
  6. Timo Mäki-Ullakko (b. 1963), Managing Director, MSc (Econ.)
  7. Olli Vormisto (b. 1967), Managing Director, MSc (Econ.)
     

Seppo Kuitunen, Executive Vice President, Legal Affairs, served as Secretary to the Executive Board.

Heikki Hämäläinen and Timo Ullakko retired from SOK's Executive Board at the end of 2018. At its meeting on 19 December 2018, the Supervisory Board elected the following new members to the Executive Board: Kim Biskop (b. 1971), MSc (Econ.); Nermin Hairedin (b. 1975), MSc (Econ.); Rita Järventie-Thesleff (b. 1959), DSc (Econ.); and Kimmo Simberg (b. 1959), Commercial Counsellor, Bachelor of Hospitality Management, MBA. The other members of the Executive Board will continue to serve as members. Hannu Krook was elected as Vice Chair for 2019.

The Executive Board convened 11 times during 2018, and its members' attendance rate was 96%. The Chair and Vice Chairs of the Supervisory Board are also entitled to attend the meetings of the Executive Board.

Independence of the members of the Executive Board

The Committee of Presiding Officers evaluates the Executive Board members' independence and the Executive Board's work annually. The Executive Board members' independence is evaluated based on the criteria presented in the Corporate Governance Code.

In accordance with the Statutes, the CEO of the cooperative society serves as Chair of the Executive Board. As of the beginning of 2019, the composition of the Executive Board has also included two independent members from outside S Group. Due to S Group's structure and ownership base, the other members of the Executive Board are managing directors of S Group's cooperatives. In this respect, the composition of the Executive Board deviates from the recommendations of the Corporate Governance Code with regard to independence.

The Executive Board's self-assessment

The Executive Board evaluates its operations and ways of working annually. This evaluation is usually carried out as a self-assessment, and its results are reviewed and discussed annually.

Identified development needs are considered when planning the duties of the Executive Board, and the Nomination Committee of the Supervisory Board takes the results into account when preparing its proposal for the composition of the Executive Board to the Supervisory Board. In addition, the Supervisory Board's Committee of Presiding Officers issues a review of the Executive Board's work annually.

CEO

In accordance with the Cooperatives Act, the cooperative society has a managing director (CEO). The CEO is responsible for the cooperative society's routine management duties in accordance with the instructions and regulations issued by the Executive Board and the Supervisory Board. As the managing director, the CEO is responsible for ensuring that the cooperative society's accounting complies with the applicable laws and that its financial management is appropriately organised. If the CEO is indisposed, a person elected by the Supervisory Board will act on behalf of them.

The CEO also serves as Chair of the Executive Board. This practice, which deviates from the requirements of the Corporate Governance Code, is due to S Group's structure and the fact that the cooperative society also has a Supervisory Board, which monitors the work of the Executive Board and the CEO. In addition, the Supervisory Board elects the CEO and determines the grounds for their remuneration.

CEO Taavi Heikkilä (b. 1962), MSc (Econ.), serves as managing director and Chair of SOK's Executive Board, as referred to in the Cooperatives Act.

SOK's Corporate Management Team

The cooperative society has a Corporate Management Team. The Executive Board decides on the establishment of the Corporate Management Team and the appointment of its members, as well as compensation to Corporate Management Team members who are not members of the Executive Board, based on the CEO's proposal. The duties of SOK's Corporate Management Team include assisting the CEO in the management of SOK Corporation and S Group. The Corporate Management Team coordinates and prepares key proposals made to the Executive Board, for example. Such proposals include business strategies, target levels, operating plans and budgets, as well as major investment projects and divestments of S Group and SOK Corporation. In addition, the Corporate Management Team discusses operational matters concerning all of SOK Corporation's areas of responsibility. In accordance with the statutes of the cooperative society, the Executive Board provides the Corporate Management Team with guidelines, if necessary, and the Corporate Management Team does not have authority based on laws or the cooperative society's statutes. The Corporate Management Team generally convenes twice a month. The retirement age of the members of SOK's Corporate Management Team is determined in accordance with personal executive contracts, and is 63 years.

In 2018, the Corporate Management Team consisted of the following members:

  1. Taavi Heikkilä, CEO, SOK
  2. Arttu Laine, Executive Vice President, S-Group Chain Management, Procurement and Logistics
  3. Jari Annala, Executive Vice President, CFO, SOK Finance and Administration
  4. Susa Nikula, Executive Vice President, SOK Human Resources
  5. Sebastian Nyström, Executive Vice President, SOK Strategy
  6. Jorma Vehviläinen, Senior Vice President, SOK Business
  7. Veli-Pekka Ääri, Executive Vice President, SOK Customer Relationships, Information and Digital Services
     

Seppo Kuitunen, Executive Vice President, Legal Affairs, is Secretary to the Corporate Management Team.

The Corporate Management Team convened 21 times in 2018.

Subsidiaries

Primarily, the Chair of the Board of Directors of a subsidiary is a member of the Corporate Management Team, employed by SOK and responsible for the line of business in question. The CEO is the Chair of SOK Liiketoiminta Oy's Board of Directors. SOK's Executive Board nominates the members of the subsidiaries' Boards of Directors for the subsidiaries' Annual General Meetings to decide on. The members of the Boards of Directors of subsidiaries are primarily elected from among S Group's employees.

The subsidiary's Board elects the company's managing director, but in accordance with the Group's internal guidelines, the election is also subject to approval by SOK's Executive Board. As a rule, the managing directors of subsidiaries do not have seats on the Board of Directors of the company in question. The operations of the subsidiaries are regulated by Group-wide principles and operating policies determined by SOK's Executive Board, among other guidelines.

Chain Management

SOK's chain management units are responsible for developing the business area or chains and the value chain and for preparing matters for SOK's Executive Board to decide on. Key responsibilities include the preparation of the competition strategy of the chains and the development of the chain business idea and chain concept, as well as the preliminary preparation of the chains' annual operating plan. The business chain management units are managed by chain directors, who are included in the area of responsibility of Executive Vice Presidents at the Corporate Management Team level. The business support teams support and assist the chain management functions. They consist of 4–13 representatives, who are managing directors or business area directors of regional cooperatives, as well as representatives of SOK's chain management. An Executive Vice President of SOK serves as the chairperson of the business support teams.

SOK's support and service functions also have their own support teams, which provide assistance and support to the management of the SOK function that is responsible for providing services and developing the support function in question. The support teams include managing directors of regional cooperatives and directors of the responsibility area in question, and a member of SOK's Corporate Management Team who is responsible for the support function in question serves as the chairperson of the team.

The business support teams and service operations support teams are not decision-making bodies by nature, and are part of SOK's management system reform, which was confirmed in 2014. A member of SOK's Corporate Management Team responsible for the business or support functions in question is in charge of selecting the support team members, and SOK's Executive Board is informed of the selection. The management model streamlines the authority and responsibilities of the chains and the service operations.

Internal control and risk management systems

Internal control

Internal control and risk management ensure that the cooperative society operates efficiently, that its financial and other information is reliable and that it complies with the applicable regulations and operating principles. Internal control is an integral part of the cooperative society's management system.

The operating principles of internal control at SOK determine the internal control process applied to the cooperative society and its subsidiaries. Internal control is integrated into the organisation's processes of setting goals and planning operational processes, as well as its implementation, monitoring and reporting processes.

SOK's Executive Board is responsible for organising internal control within the cooperative society.

Internal control assists the Executive Board by regularly assessing the functionality, effectiveness and relevance of internal control practices in various parts of the organisation.

The CEO and the directors of the business areas and business units, as well as the boards of directors and managing directors of the subsidiaries, are responsible for ensuring sufficient internal control within their areas of responsibility.

In November 2016, SOK's Executive Board approved the operating policy for SOK Corporation's internal control and the Compliance policy (which was updated in 2019).

Risk management

SOK's Executive Board has confirmed a risk management policy for identifying and analysing risks across the corporation and for determining risk management measures as part of operational planning. Based on analyses, key risks are identified in terms of the corporation's operations and the achievement of its strategic goals. The Executive Board discusses and decides on these key risks annually. The management of SOK Corporation's subsidiaries and units reviews and determines each unit's most significant risks and the related risk management measures, as well as being responsible for implementing risk management measures.

Precautions have been taken for property, loss-of-profit and liability damage risks related to operations through various measures, such as contingency plans and insurance policies. SOK Corporation's risk management expert organisation steers and develops risk management within S Group and provides support in implementing risk management. SOK's internal audit function assesses the sufficiency and functionality of risk management processes.

Sisäinen tarkastus

SOK:n ja tytäryhtiöiden sisäisen tarkastuksen toiminnot vastaavat yhtymän sisäisen tarkastuksen toteuttamisesta. SOK:n hallitus käsittelee vuosittain sisäisen tarkastuksen vuosisuunnitelman, ja sisäinen tarkastus raportoi säännöllisesti pääjohtajalle, hallitukselle ja hallintoneuvoston tarkastusvaliokunnalle sisäisen tarkastuksen havainnoista.

Auditing

The cooperative society's financial statements, consolidated financial statements and governance are audited by an auditor. The auditor must be a member of a community of Authorised Public Accountants in accordance with the Auditing Act. The cooperative society's Annual Cooperative Meeting elects the auditor.

The Annual Cooperative Meeting elected KPMG Oy Ab, Authorised Public Accountants, as SOK's auditor for 2018, with Jukka Rajala, APA, as the principal auditor.

In 2018, the auditing fees paid by the SOK Corporation companies in Finland, the Baltic countries and Russia for auditing operations amounted to EUR 428,592, and other fees not related to auditing amounted to EUR 380,560.

Related party transactions

SOK Corporation maintains a list of its related parties and monitors and evaluates related party transactions.

In 2018, in accordance with the Corporate Governance Code, there were no significant related party transactions within SOK Corporation that would have deviated from the cooperative society's normal business operations or that would have been conducted on terms other than standard market terms.

Financial reporting

SOK Corporation publishes its financial statements in February and its half-year report in August. Furthermore, reports on the development of S Group's retail sales are published quarterly. SOK Corporation's annual report is published at the Annual Cooperative Meeting in April.

Other disclosures of information

Up-to-date information concerning SOK Corporation and S Group, including press releases, are available on the Group's website at www.s-ryhma.fi.SOK's Communications and Community Relations unit is in charge of producing and updating the information.

Remuneration statement

Order of decision-making on remuneration

The Annual Cooperative Meeting decides on the remuneration of the Chair, Vice Chairs and members of the Supervisory Board, as well as the auditors.

The Supervisory Board decides on remuneration for the members of the Executive Board and the grounds for remuneration for the CEO. The Executive Board members' fees are determined based on a requirement evaluation carried out within S Group and a recommendation issued by the Nomination Committee. The Chair of the Supervisory Board is responsible, in cooperation with the Vice Chairs of the Supervisory Board, for determining the CEO's emoluments, including a performance-based reward system, based on the grounds for remuneration determined by the Supervisory Board.

With regard to the members of the Corporate Management Team, with the exception of the members who are not members of the Executive Board, emoluments and fringe benefits, as well as the grounds for performance-based reward systems and incentive systems, are approved annually by the Executive Board.

Key remuneration principles

Performance-based reward system

All of SOK Corporation's employees in Finland are covered by a bonus scheme. The bonus scheme for the senior management (Corporate Management Team) is based on both short-term and long-term targets. The maximum level of the Corporate Management Team's short-term bonus programme and long-term bonus programme corresponds to three months' salary per year.

For the time being, the Supervisory Board has set up a Compensation Committee responsible for assessing and developing the compensation systems and principles for S Group's senior management and issuing recommendations on compensation to SOK's decision-making bodies.

Supervisory Board

The special compensation for the Chair of the Supervisory Board was EUR 4,000 per month, and the Vice Chairs were each paid compensation of EUR 2,000 per month in 2018. The meeting fee for the Chairs and members of the Supervisory Board in 2018 was EUR 460 for each meeting and per day spent carrying out a specific assignment.

The members of the Supervisory Board's committees were paid a fee of EUR 460 per meeting.

Executive Board

The members of the Executive Board were paid a total of EUR 129,600 in remuneration in 2018. As Chair of the Executive Board, the CEO of SOK does not receive separate remuneration for their work on the Executive Board.

CEO

In 2018, the salary (including fringe benefits) and bonuses paid to SOK's CEO totalled EUR 1,076,294.40. SOK's CEO had a corporate residence as a fringe benefit, and its taxation value is included in the remuneration amount mentioned above. The CEO is covered by an additional defined contribution pension scheme, and their retirement age is 63 years.

Management Team

In 2018, the Corporate Management Team was paid a total of EUR 2,340,627.96 in salaries and bonuses, including fringe benefits.