SOK Corporation's governance and management

S Group's business is organised in nation-wide chains. SOK Corporation, which is owned by the cooperatives, centrally provides the cooperatives with service functions.

SOK operates as the central organisation of the cooperative enterprises and provides them with procurement, expert and support services. SOK is also responsible for the strategic guidance of S Group and the development of the business chains.

SOK is a Finnish cooperative. Its decision-making is subject to the provisions of the Cooperatives Act, other regulations concerning the operations of the business areas, and SOK's Statutes. The operations of the subsidiaries are regulated by the Limited Liability Companies Act, among others, and SOK Corporation's operations are governed by the Corporation-wide principles.

 

SOK's Supervisory Board 2017

Elected on 27 April 2017

The role of SOK's Supervisory Board is to represent the extensive grass-roots co-op membership and to act as a forum on which the Cooperative's joint position on major strategic issues is defined. Its duty is to determine overall policies and to safeguard the members' interests. The Supervisory Board confirms all the main strategic policies of S Group and SOK Corporation based on a proposal from the Executive Board.


Chairman: Matti Pikkarainen, doctor of theology, Oulu

First vice-chairperson: Timo Santavuo, attorney, Pori

Second vice-chairperson Antti Määttä, managing director, Muurame

Jorma Bergholm, managing director, Helsinki

Pentti Hämäläinen, attorney, Hamina

Henrik Karvonen, managing director, Kuusamo   

Sinikka Kelhä, attorney, Rauma                                                    

Kimmo Koivisto, farmer, Pertteli

Martti Lokka, managing director, Otava

Matti Manner, lagman, Turku             

Anne Mäkelä, attorney, Kälviä

Hannu Pelkonen, managing director, Kajaani

Ilkka Pirskanen, director, Joensuu

Timo Rajala, master of law, Akaa

Jarkko Rautaoja, M. Sc. (Tech.), Heinola

Pekka Ritvanen, M.Sc. (Tech.), Kuopio                               

Mervi Sillanpää-Jaatinen, managing director, Lappeenranta

Matti Timonen, farmer, Nurmes

Elina Varamäki, vice principal, Seinäjoki

Kristian Westerholm, agronomist, Inkoo

Personnel representatives:

Ulla Kivilaakso, marketing manager, Helsinki

Iiris Merimaa, administrative assistant, Helsinki

SOK's Executive Board 2017

SOK's Executive Board represents the cooperative society and attends to its administration and the due arrangement of its operations within the framework of SOK Corporation and in compliance with the applicable legislation and rules. The special duty of the Executive Board is to prepare strategic decisions for presentation to the Supervisory Board, as well as to decide upon the operating plans of both SOK and its subsidiaries.


Chairman of the Executive Board,  CEO Taavi Heikkilä, SOK, Helsinki

Managing Director Heikki Hämäläinen, Osuuskauppa Suur-Savo cooperative, Mikkeli

Managing Director Tapio Kankaanpää, Osuuskauppa PeeÄssä cooperative, Kuopio

Managing Director  Hannu Krook, Osuuskauppa Varuboden-Osla cooperative, Kirkkonummi

Managing Director Timo Mäki-Ullakko, Pirkanmaan Osuuskauppa cooperative, Tampere

Managing Director Matti Niemi, Helsingin Osuuskauppa Elanto cooperative, Helsinki

Managing Director Olli Vormisto, Osuuskauppa Hämeenmaa cooperative, Lahti 

 

 

SOK's Corporate Management Team

The duties of SOK's Corporate Management Team include assisting the CEO in the management of SOK Corporation and S Group. The Management Team coordinates and prepares, among other things, key proposals to be made to the Executive Board. In addition, it discusses operational matters concerning all of SOK Corporation's areas of responsibility.

 

Taavi Heikkilä, CEO, SOK

Arttu Laine, Executive Vice President, S-Group Chain Management, Procurement and Logistics

Jari Annala, Senior Vice President, CFO, SOK Finance and Administration

Susa Nikula, Executive Vice President, SOK Human Resourcesve 

Sebastian Nyström, Executive Vice President, SOK Strategy

Jorma Vehviläinen,  Executive Vice President, SOK Consumer Goods

Veli-Pekka Ääri, Executive Vice President, SOK Customer Relationships, Information and Digital Services

 

Corporate Governance

Applicable Rules

SOK is a Finnish cooperative, whose decision-making and administration are subject to the provisions of the Cooperatives Act, other regulations concerning the operations of the business areas, and SOK's Statutes. The new Cooperatives Act became effective on 1 January 2014. Whether there is a need to amend the Statutes will be assessed during the transition period of the Act. The operations of the subsidiaries are regulated, among others, by the Limited Liability Companies Act, and the operations of the entire Corporation are governed by the operating principles, operating policies, as well as the  investment and approval guidelines confirmed by SOK's Executive Board and the rules of procedure confirmed for different bodies.

The Securities Market Association approved a Corporate Governance Code for listed companies (available at http://cgfinland.fi/) in June 2010. According to the Central Chamber of Commerce, 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 for listed companies to the extent that it is a cooperative form of business and that it is relevant considering its special characteristics.

Cooperative Meeting

The Cooperative Meeting is SOK's highest decision-making body.  Each cooperative enterprise is eligible to send 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 enterprise. The exercising of the ownership rights and the right to vote are based on the ownership shares and the Cooperative's Statutes.

The task of the Annual Cooperative Meeting is to attend to the matters defined in the Statutes, such as adoption of the financial statements, disposal of profit/loss, granting of release from liability, and the election and remuneration of the Supervisory Board and the auditors. An Extraordinary Cooperative Meeting can be convened when necessary.

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 administrative model. The role of the Supervisory Board is to represent the extensive grass-roots membership and to act as a forum on which the Cooperative's joint position on major strategic issues is defined. Its duty is to determine overall policies and to safeguard the members' interests. The Supervisory Board confirms all the main strategic policies of S Group and SOK Corporation, based on a proposal from the Executive Board. Matters concerning the actual operational management are handled by the Cooperative's Executive Board and line management.

The Supervisory Board oversees that the administration 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 administration is in the cooperative society's best interests. 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 who are employed by the cooperative society.


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

The Supervisory Board has confirmed rules of procedure.

The chairman of the Supervisory Board and the two vice chairmen 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 takes decisions on, among other things, the CEO's salary and other compensation.

The members of the Committee of Presiding Officers in 2014 were

Chairman Matti Pikkarainen (born 1953), cathedral dean, D. Th.

1st vice-chairperson Maija-Liisa Lindqvist (born 1951), talousneuvos [Finnish honorary title], business college graduate

2nd vice-chairman Kimmo Simberg (born 1959), kauppaneuvos [Finnish honorary title], BA (Hospitality Management), MBA

The Supervisory Board has established four permanent committees: the Nomination Committee, Compensation Committee,

Audit Committee, and Cooperative Committee, which all have their own rules of procedure.

The Cooperative Meeting elects the members of the Supervisory Board on the basis of candidates put forward by the cooperative enterprises. The Supervisory Board has 12–25 members. A person elected to the Supervisory Board must be a Finnish citizen, a member of a cooperative enterprise and under 65 years of age. The Cooperative Meeting decides on the remuneration of the chairman, vice-chairmen, and members of the Supervisory Board as well as of the auditors.

The Supervisory Board had 20 members and two personnel representatives in 2014. The Supervisory Board convened six times.

The special compensation for the chairman of the Supervisory Board in 2014 was EUR 4,000 per month, and each vice chairman was paid a compensation of EUR 1,500 per month. The meeting compensation for the chairmen and members of the Supervisory Board in 2014 was EUR 460 for each meeting and per day spent carrying out a specific assignment.

Executive Board

Election and Composition of the Executive Board

Under SOK's Statutes, the Executive Board is composed of the Cooperative's CEO, acting as chairman, and of a minimum of three and a maximum of eight other members. The Supervisory Board elects the members of the Executive Board for a term of one year on the basis of the Nomination Committee's proposal.  According to the rules, a person elected to the Supervisory Board must be a Finnish citizen and under 65 years of age. The objective is to ensure sufficient rotation, but, on the other hand, continuity is considered important.

In 2014, SOK's Executive Board had seven members, six of whom were managing directors of cooperative enterprises. SOK's Chief Executive Officer Taavi Heikkilä is the Chairman of the Executive Board.

On 19 December 2014, SOK's Supervisory Board elected the following members to the Executive Board for 2015:

Chairman Taavi Heikkilä (born 1962), CEO, M.Sc. (Econ.)

Heikki Hämäläinen (born 1966), managing director, M.Sc. (B.A.)

Esko Jääskeläinen (born 1956), managing director, M. Sc. (Econ.)

Tapio Kankaanpää (born 1962), managing director, M.Sc. (B.A.)

Timo Mäki-Ullakko (born 1963), managing director, M.Sc. (B.A.)

Vice-Chairman Matti Niemi (born 1955), managing director, M.Sc. (B.A.)

Jouko Vehmas (s. 1956), managing director, M.Sc. (Econ.)

Duties of the Executive Board

The Executive Board represents the cooperative society and attends to its administration and the due arrangement of its operations within the framework of SOK Corporation and in compliance with the applicable legislation and rules. The duty of the Executive Board is to prepare strategic decisions for presentation to the Supervisory Board as well as to decide on the operating plans of both SOK and its subsidiaries.

In addition, the Executive Board, upon a proposal from the CEO, decides on setting up SOK's Corporate Management Team and on appointing its members and their compensation. The Executive Board appoints a Nomination Working Group, which prepares a proposal on the composition of the Boards of Directors and Business Area Boards of SOK's subsidiaries for decision by the Executive Board.  Rules of procedure have been confirmed for the Executive Board.

SOK's Executive Board has not established the committees mentioned in the Corporate Governance Code for listed companies because they have been established by the Supervisory Board.

Meetings of the Executive Board

The Executive Board convenes as required and upon the chairman's invitation, and forms a quorum when more than half of the members are present. The Executive Board regularly evaluates its work and procedures by carrying out a self-assessment once a year.

The Executive Board convened 14 times during 2014, and the members' attendance rate was 98 per cent. The members of the Executive Board were paid a total of EUR 115,200 in remuneration in 2014. The CEO does not receive separate remuneration for his work in the Executive Board. The chairmen of the Supervisory Board are also entitled to attend the meetings of the Executive Board.

CEO

Contrary to the recommendation of the Corporate Governance Code for listed companies, the Chief Executive Officer employed by the cooperative society is the chairman of SOK's Executive Board. The CEO holds the position of the chairman of the Executive Board and therefore, according to the Statutes, the Supervisory Board appoints the CEO. The duty of the CEO is to manage the operations of the Executive Board and the cooperative society in accordance with legislation, SOK's Statutes, and the decisions of the governing bodies.

CEO Taavi Heikkilä was chairman of SOK's Executive Board and CEO, as referred to in the Cooperatives Act.  In 2014, SOK's CEO was paid salaries, including fringe benefits, in the total amount of EUR 554,400. SOK's CEO had a corporate residence, as a fringe benefit. The taxation value of the residence is included in the aforementioned remuneration amount.

SOK's Corporate Management Team

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, among other things, key proposals to be made to the Executive Board. These proposals include S Group's and SOK Corporation's business strategies, target levels, operating plans and budgets, as well as major investment projects and disposals. In addition, the Corporate Management Team discusses operational matters concerning all of SOK Corporation's areas of responsibility. The retirement age of the members of SOK's Corporate Management Team is 60-63 years, determined in accordance with personal executive contracts.

At the end of the year, the Corporate Management Team had six members, and it convened 20 times in 2014. In 2014, the Corporate Management Team was paid a total of EUR 1,548,864 in salaries and bonuses. This amount also includes fringe benefits.

Subsidiaries

The position of the chairman of the Board of Directors of a subsidiary is primarily held by a member of the Corporate Management Team employed by SOK and is responsible for the line of business in question. The CEO was the chairman 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 amongst S Group's employees.

The subsidiary's Board elects the company's managing director, but the election is subject to approval by SOK's Executive Board. The managing directors of subsidiaries do not, as a rule, have seats on the Board of Directors of the company in question. The operations of the subsidiaries are guided by the corporation-wide principles and operating policies decided upon by SOK's Executive Board.

Chain Management

SOK's chain management functions are in charge of developing the chains in the business areas and the value chain, as well as preparing matters for the SOK's Executive Board to decide upon. The key responsibilities include the preparation of the competition strategy, the chain's business idea and the annual operating plan. The chain management units are managed by chain directors, who report to Executive Vice Presidents at the Management Team level. The business support teams support and assist the chain management functions. They consist of 4–6 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.

Correspondingly, SOK's support and service functions have their own support teams. They support and assist the management of the SOK function, which is responsible for producing and developing the services in the support function in question. The support teams consist of managing directors of regional cooperatives and directors of the responsibility area in question. The chairman position is held by a member of SOK's Corporate Management Team, who is in charge of the support function in question.

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 confirmed in 2014. The former business area boards have been replaced by the support teams. The support team members are selected by the SOK Corporate Management Team member, who is responsible for the business or support operation in question, and SOK's Executive Board is informed of the selection outcome. The new management model streamlines the relationships of power and responsibility in the chains and service operations.

Management Bonus Scheme

SOK Corporation's entire personnel in Finland are covered by a bonus scheme. SOK's Executive Board decides on the bonus scheme for the management (the Corporate Management Team), and the Supervisory Board's Committee of Presiding Officers decides on the bonus scheme for the CEO. The bonus scheme for the senior management is based on both short-term and long-term objectives. The maximum level of the Corporate Management Team's short and long-term bonuses corresponds, at a maximum, to the monthly salary of three months at an annual level.

The Supervisory Board has set up a permanent Compensation Committee whose task is to assess and develop the compensation systems and principles for S Group's top management and to issue recommendations on compensation to SOK's decision-making bodies.

SOK Group's Remuneration Report (2014)

Audit

The Annual Cooperative Meeting elects an auditor to audit the financial statements and consolidated financial statements as well as the accounting records and administration of the cooperative society. The auditor must have the legally required qualifications.

The Annual Cooperative Meeting elected KPMG Oy Ab, Authorised Public Accountants, as SOK's auditor for 2014, with Raija-Leena Hankonen, APA, as the principal auditor.

In 2014, the auditing fees paid by the SOK Corporation companies in Finland, the Baltic countries, and Russia amounted to EUR 535,892, and other compensation amounted to EUR 86,093.

Internal Control, Internal Audit, and Risk Management

SOK's Executive Board is responsible for duly organising the cooperative's operations and management and for the legality and reliability of the accounting records, financial management, and routine management. In addition, the Chief Executive Officer, SOK's unit directors, and the Boards of Directors of the subsidiaries and their managing directors carry out the management and control of business activities in day-to-day operations within their own areas of responsibility. In February 2012, SOK's Executive Board approved the operating policy for SOK Corporation's internal control.

The Corporation's internal audit is carried out by the internal control functions of SOK and its subsidiaries.  SOK's Executive Board reviews the annual plan for SOK's internal audit every year. The internal audit function regularly reports on the findings of the internal audit to the CEO, Executive Board, and the Supervisory Board's Audit Committee.

SOK's Executive Board has confirmed a risk management policy for identifying and analysing risks across the Corporation and for defining and determining risk management measures as part of operational planning. The key risks in the Corporation's operations and strategic objectives are identified on the basis of the analyses. The management of SOK Corporation's subsidiaries and units reviews and approves each unit's major risks and the defined risk management measures and is responsible for implementing risk management measures.

Precautions have been taken for property, loss-of-profits and liability damage risks of operations through measures, such as contingency plans and insurance. SOK Corporation's risk management expert organisation directs and develops risk management in S Group and provides support for risk management. SOK's internal audit function assesses the sufficiency and functioning of the risk management processes.

Financial Reporting

SOK Corporation publishes its financial statements in February and its interim report for six months in August. Furthermore, the development of S Group's retail sales is covered in quarterly reports. SOK Corporation's Annual Report is published at the Annual Cooperative Meeting in April.

Communications

Up-to-date information and other communications concerning SOK Corporation and S Group are available on the Group's website at www.s-kanava.fi. The SOK Communications and Public Relations unit is in charge of producing and updating the information.

 

 

SOK Corporation's Code of Conduct

SOK Corporation is part of the S Group's network of companies, the purpose of which is to produce services and benefits for the members of the regional cooperatives, that is, co-op members. Our daily operations must meet the ethical expectations set for SOK Corporation by various stakeholders.

We operate with integrity

We keep the promises we make to each other, our customers and other stakeholders. We are accountable for the products and services we sell to our customers and help our customers to solve any problems arising from such products or services.

We are incorruptible

We do not accept nor give goods, food, beverage or travel gifts or other benefits or interests of disproportionate magnitude. We do not let gifts or benefits received influence our decisions. We do not attempt to influence holders of public office or politicians illegally or by otherwise improper means.

We respect and value each other

Our operations are based on equality. Our behaviour towards each other is professional and fair – we do not discriminate against anyone. We value each other's work regardless of the tasks involved. We respect each other's individuality and the diversity of our work communities. We feel responsible for the success and reputation of the entire S Group.

We compete in a fair way

We emphasise our own strengths, not our competitors' weaknesses. We collaborate with our trade associations and the other organisations in our industry to advance our interests and develop our trade within the framework allowed by competition legislation.

 

We communicate openly

Our communications relay news both good and bad. We publish messages promptly and in an understandable form. We are transparent and open. We comply with the principles of privacy protection when processing the data of private persons.

We comply with good corporate governance

We operate according to good governance at all levels of our organisation. We expect everyone working in our management to appreciate the significance of good governance.

We operate according to the valid provisions and agreements

We abide by the legislation governing our line of business and honour the agreements we have undertaken. We work to anticipate future legislative moves and to prepare for them in a controlled manner.

We operate responsibly and expect our partners to do the same

We require long-term and mutually beneficial partnerships. We seek partners whose operations are in harmony with our own values and principles.

Complying with and furthering these principles is the job of every employee of SOK Corporation. Any employee who becomes aware of or suspects a breach of these principles is urged to report their suspicions to their supervisor or, if necessary, the person responsible for corporate security or internal auditing in the employee's own company. Any supplementary rules to this Code of Conduct must be in line with this Code of Conduct.

 

The deployment of the Code of Conduct is the responsibility of the management and supervisors of SOK Corporation.

 

Helsinki, 20 January 2011

SOK's Executive Board