METSÄ BOARD Annual review 2024
Internal control, internal audit and risk management Effective business requires operations to be monitored continuously and effectively. Metsä Board’s internal management and control procedure is based on the Companies Act, other laws and regulations applicable to listed companies, the Articles of Association, the rules and recommendations of the Helsinki Stock Exchange, the recommendations of the Good Corporate Governance Code, and the Compa- ny’s own approved policies and principles. The effectiveness of internal control is assessed by the Company’s Internal Audit function. Internal control is implemented throughout the organi- sation. Internal control methods include internal guidelines and reporting systems that support controls. External control is the responsibility of Metsä Board’s auditor and the competent authorities. Metsä Board’s internal control, risk management and internal audit principles, operational objectives, and responsibilities are described below. Internal control and risk mana- gement for sustainability reporting is described in the Sustainability Report included in the Com- pany’s Annual Review in the Risk management and internal control for sustainability reporting section. Internal control At Metsä Board, internal control includes finan- cial reporting, sustainability reporting and other operational controls. Internal control is carried out by the Board of Directors and the acting management, as well as the entire staff. Internal control aims to ensure the achievement of the Company’s goals and objectives, the economi- cal, appropriate and efficient use of resources, the reliability and accuracy of financial and other management information and sustainability data, compliance with external regulations and internal procedures, adequate safeguarding of operations, data and assets, and adequate and properly organised manual and IT systems to support operations. Internal control is divided into (i) preventive control such as establishing the Company’s values, general operating and business prin- ciples, (ii) day-to-day control such as directing and monitoring activities, including operating systems and work instructions, and (iii) ex-post control such as management assessments and reviews, and comparisons and verifications to
Deputy to the CEO The Board of Directors may appoint a deputy to the CEO. The Deputy CEO shall be responsible for the CEO’s duties in the event of the CEO’s absence. There is currently no deputy to the CEO. Corporate Management Team In Metsä Board’s operational management, the CEO is assisted by the Corporate Management Team, which consists of Mika Joukio, CEO, Markku Leskelä (Development), Jussi Noponen (Sales and Supply Chain), Harri Pihlajaniemi (Production and Technology), Henri Sederholm (Finance) and Camilla Wikström (Human Resources), who all report to the CEO. Laura Remes was appointed as the Company’s Busi- ness Development Director and a member of the Corporate Management Team on 4 October 2024. She will start in her position later in 2025. In the future, the area of responsibility of Markku Leskelä, who is responsible for Metsä Board’s development, will include product development and responsibility when Remes takes up her new position. The tasks and responsibilities of the Corpo- rate Management Team include investment planning, the development and preparation of the Company’s strategic guidelines, the allocation of resources, the supervision of day-to-day operations, and the preparation of several matters for the Board of Directors. As a rule, the Corporate Management Team meets at least once a month at the invitation of the CEO, and whenever necessary. The members of the Corporate Management Team are responsible for the operation of their own area of responsibility. The functions are supported by centralised support functions, most of which are shared with Metsä Group’s other companies. Support functions are based on separate market-based service agreements. The members of the Corporate Management Team have written employment or service contracts. With the exception of the Managing Director, they have no pension arrangements other than the statutory pension scheme. The period of notice for members of the Corporate Management Team is six months on either side.
Internal auditing Internal auditing is an independent and objective assessment, assurance and consulting activity. Internal auditing assists the Board of Directors in its supervisory role and supports Metsä Board and its management in achieving the Company’s objectives by providing a systematic approach to assessing and improving the effectiveness of risk management, control, governance and management processes. Metsä Board’s internal auditing is carried out by Metsä Group’s internal audit unit. Audit work is carried out in compliance with the internal audit guidelines approved by the Audit Commit- tee. The internal audit function reports to the Audit Committee on operations and to Metsä Group’s President and CEO on administration. Internal auditing draws up a six-monthly action plan which is approved by the Audit Committee. Auditing is risk-based and focuses on the Company’s activities and units that are considered to be key to achieving the objectives set for operations. In cooperation with the audit function, internal auditing sees to the coordi- nation of plans to ensure adequate coverage of auditing and avoid overlapping work. Similarly, cooperation is carried out with Metsä Group’s other assurance functions such as internal controls, risk management and compliance. The audit’s results are compiled in an audit report, which is shared with Metsä Board’s CEO and CFO, the management of the audited entity, General Counsel and the persons in charge. The audit reports are submitted to Metsä Group’s President and CEO, CFO, General Counsel, audi- tor and to other Group management if required for information purposes. Internal auditing provides the Audit Committee with a six-monthly summary report on the audits carried out, the main findings and recommendations, and the management action plans and their implementation. The Chair of the Audit Committee and the Audit Director also meet regularly without the presence of management.
ensure the achievement of objectives and to monitor compliance with agreed operating and control principles. The Company’s corporate culture, management style and approach to control together form the basis of the overall internal control framework. Monitoring of the financial reporting process, credit control and authorisation rights Metsä Board’s financial organisations of the different functions and central administration are responsible for financial reporting. The units report their financial figures each month. The units’ controller functions check their units’ monthly performance and submit a perfor- mance report to central administration. The fun- ctions’ profitability development and business risks and opportunities are discussed at monthly meetings attended by the Company’s and each function’s management. The result is reported to the Board and Corporate Management Team monthly. Credit control in Metsä Board has been centralised to the Company’s Credit Committee, which convenes at least quarterly. Credit cont- rollers monitor the trend in trade receivables in each sales company under the supervision of the Metsä Group’s Director, Credit Management. Counterparty-specific credit limits are set within the boundaries of the credit policy confirmed by the Board in cooperation with centralised credit control, sales and financial management. The development of credit risks is regularly reported to the Board of Directors. Authorisation rights concerning expenses, significant contracts and investments have been specified progressively for different organisation levels according to the decision-making authority policy confirmed by the Board and the authority separately granted by the CEO and other management personnel. Investment follow-up is carried out by the Company Group’s financial administration in accordance with the investment policy confirmed by the Board. After pre-approval, investments are handled by the functions’ Management Teams and the Corporate Management Team within the framework of the annual investment plan. The most significant investments are separately submitted to the Board for approval. Investment follow-up reports are compiled quarterly.
Audit Committee member
Number of meetings Attendance rate (%)
Raija-Leena Hankonen-Nybom (Chair) Hannu Anttila (until 26 March 2024) Leena Craelius (as of 26 March 2024)
5/5 1/1 4/4 5/5 4/5 5/5
100 100 100 100
Business operations and value creation 2 This is Metsä Board 4 CEO’s review 6
Mari Kiviniemi Jukka Moisio Juha Vanhainen
80
100
Strategy and financial targets
Nomination and HR Committee The task of the Nomination and HR Committee is to assist the Board of Directors in matters related to the appointment and remuneration of the Company’s CEO, any Deputy CEO and senior management, and prepare matters related to the incentive schemes for management and employees. The committee also prepares a proposal for the Annual General Meeting on the number of Board members, Board composition and Board members’ remuneration. The com- mittee also recommends, prepares and presents the appointment of the CEO (and any Deputy CEO) for the Board’s approval, as well as their salary and compensation. The committee also prepares and provides recommendations to the Board and the CEO concerning matters related to the remuneration and incentive schemes of management and employees.
The committee consists of five Board members. It convenes regularly, at least four times a year. The Chair of the committee presents the committee’s proposals to the Board. The tasks and responsibilities of the Nomination and HR Committee are specified in the committee’s rules of procedure, which by the Board of Directors has approved ( https://www. metsagroup.com/globalassets/metsa-board/ documents/investors/corporate-governance/en/ general/metsa-board-nomination-and-hr-com- mittee-charter.pdf ). The board members listed in the table below have acted as members of the Nomination and HR Committee since the 2024 Annual General Meeting. The Nomination and HR Committee met four times during 2024. All members attended all meetings (100% attendance in 2023 and 2022 as well).
8
Value creation
Financial development 10 Key figures 12
Report of the Board of Directors
20 20 37 70 89 96
• Sustainability statement
General information
E – Environment
S – Social responsibility
G – Governance
Annexes to the Sustainability statement
98 Consolidated financial statements 102 Notes to the consolidated financial statements 150 Parent company financial statements 153 Notes to the parent company financial statements 166 The Board’s proposal to the Annual General Meeting for the distribution of funds 167 Auditor’s Report 171 Sustainability statement assurance report 173 Shares and shareholders 177 Ten years in figures 178 Taxes 179 Production capacities 181 Calculation of key ratios and comparable performance measures Corporate governance 183 Corporate governance statement 190 • Board of Directors of Metsä Board 194 • Corporate Management Team of Metsä Board
Members of the Nomination and HR Committee
Number of meetings Attendance rate (%)
Ilkka Hämälä (Chair)
4/4 4/4 4/4 4/4
100 100 100 100
Erja Hyrsky
Jussi Linnaranta Mikko Mäkimattila
Chief Executive Officer Chief Executive Officer Mika Joukio (born in 1964), M.Sc. (Eng.), MBA, is responsible for the daily management of the Company’s administration in accordance with the guidelines and instructions provided by the Board. The CEO manages the Company’s daily business and is responsible for controlling and steering the businesses. The CEO has a written CEO contract approved by the Board of Directors. The Board of Directors supervises the CEO’s performance and provides a performance evaluation once a year. The CEO is covered by the Employees Pensions Act, which provides for a pension compensation based on service years and earnings. In the Finnish earnings-related pension system, basic
salary, remuneration and taxable fringe benefits are included in earned income, whereas income from options and share-based incentive sche- mes for management are not. The Company has commissioned an extra pension insurance policy for the CEO, entitling the CEO to retire at the age of 62. The Board of Directors appoints and dismisses the CEO. The Board of Directors may discharge the CEO without a specific reason. The CEO can also resign from their position. The mutual period of notice is six months. However, the Board may decide to discharge the CEO wit- hout a notice period. If the Board terminates the CEO’s contract, the CEO is entitled to discharge compensation equal to their 12-month salary.
196 Remuneration report 201 Investor relations and investor information
186
187
Corporate governance statement | METSÄ BOARD ANNUAL REVIEW 2024
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