Corporate governance at Ponsse Plc (“the company” or “Ponsse”) is based on Finnish legislation, Ponsse’s Articles of Association and policies set by the company’s administrative bodies. In addition, the company complies with the Financial Supervisory Authority’s guidelines and regulations. Ponsse has prepared Corporate governance statement pursuant to the Corporate Governance Code 2020 issued by the Securities Market Association.

Ponsse’s governing bodies

Ponsse Plc’s business operations are the responsibility of the Annual General Meeting and the Board of Directors, as well as the Management Team chaired by the President and CEO.

Annual General Meeting

The company’s highest decision-making body is the Annual General Meeting, at which the shareholders may participate in the supervision, decision-making, and control of the company and exercise their right to speak and vote. The Annual General Meeting is held once a year on a date determined by the company’s Board of Directors, however, before the end of June. Meetings are held in Vieremä, Iisalmi or Kajaani. In 2023, the Annual General Meeting was held in Vieremä on 12 April.

The most important matters to be decided at the Annual General Meeting include:

• the adoption of the financial statements
• the use of the profit shown on the balance sheet
• the election of the members of the Board of Directors and the decision on their
• remuneration
• discharging the members of the Board of Directors and the President and CEO from liability
• the election of the external auditor and the decision on the external auditor’s compensation

The Annual General Meeting is convened by the company’s Board of Directors. A notice of the Annual General Meeting is published on Ponsse’s website and, at the discretion of the Board, in a broad-circulation newspaper, no earlier than three (3) months and no later than twenty-one (21) days before the Annual General Meeting.  The agenda and other documents related to the Annual General Meeting are made available on the company’s website no later than twenty-one (21) days before the Annual General Meeting.

Ponsse’s website contains more detailed information about the rights of shareholders to have a matter of concern to them dealt with at the Annual General Meeting, the rights of shareholders to participate in the Annual General Meeting, and other issues related to the Annual General Meeting.

An extraordinary general meeting is convened if the Board of Directors deems it necessary, or if it is required by the external auditor or shareholders who collectively hold at least one tenth of all shares.

Board of Directors

Tasks

The Board of Directors is the company’s mandatory body, and its members are elected at the Annual General Meeting. The Board of Directors has general powers, including the appropriate arrangement of the company’s governance and operations, as well as arranging the monitoring of accounting and asset management. In addition to internal governance, the Board of Directors is responsible for the disclosure policy and representing the company. The right to represent the company is set out in more detail in the company’s Articles of Association.

In addition, key tasks of the Board of Directors include:

• approving the company’s long-term strategy and targets
• approving the annual plan and budget
• appointing, and if necessary, dismissing, the President and CEO
• confirming the appointments of members of the Management Team
• monitoring and evaluating the performance of the President and CEO and deciding on their remuneration and benefits
• deciding on the remuneration and benefits of the members of the Management Team  
• ensuring that the supervision of the accounting and financial matters is properly organised, and ensuring proper preparation of the interim and annual financial statements
• ensuring the adequacy of planning, information and control systems for monitoring results and managing risks in operations
• approving related-party transactions that are not part of the company’s ordinary course of business or are not implemented on arm’s-length terms
• making proposals for and convening general meetings of shareholders
• deciding on other matters not belonging to day-to-day operations, such as major investments, acquisitions and divestitures, and major joint ventures and loan agreements.

Activities

The Board of Directors convenes regularly approximately ten times a year and at the invitation of the Chair as often as is required for the proper handling of the company’s affairs. The Board of Directors constitutes a quorum when more than half its members are present at the meeting. The President and CEO has the right to attend meetings and exercise their right to speak, unless otherwise decided on by the Board of Directors. The President and CEO or another member of the company’s management may be invited to the meetings.

In addition to being governed by legislation and the company’s own Articles of Association, the work and activities of the Board of Directors are also governed by the Board’s rules of procedure, which describe, among other things, the duties and meeting practices of the Board of Directors.

The Board of Directors aims to regularly evaluate its own activities and working methods. This assessment can be carried out either as an internal self-assessment or by an external evaluator. The assessment focuses on any problems that may have arisen in the activities of the Board related to matters such as the composition of the Board, the effectiveness of the Board’s activities, and the Board’s activities as a group. The Board of Directors conducted a self-assessment in January 2023.

Board members

According to Ponsse’s Articles of Association, the Board of Directors must have at least five and at most eight members. The members of the Board of Directors are elected at the Annual General Meeting for a term that ends at the end of the Annual General Meeting of the following calendar year. The Board of Directors is elected annually to allow shareholders to regularly evaluate the activities of the Board of Directors and its members.

Proposals for board composition and remuneration are prepared by the shareholders who represent more than fifty (50) per cent of the company’s shares and votes. New Board members will be provided with an induction regarding their tasks to the appropriate extent, considering their background and experience. The Board of Directors elects the Chair and Vice Chair from among its members.

In 2023, the Board of Directors consisted of the following members: Jarmo Vidgren (Chair); Mammu Kaario (Vice Chair); Terhi Koipijärvi (from 12 April 2023); Matti Kylävainio; Ilpo Marjamaa; Juha Vanhainen; Janne Vidgren (until 12 April 2023); Juha Vidgren (until 12 April 2023); and Jukka Vidgren.

The Board convened 11 times in 2023. The Board of Directors focused on operations in an extremely challenging market situation and the withdrawal of operations from Russia, and on the profitability challenges related to the Ponsse Latin America subsidiary.

Election criteria for Board members, and diversity in the Board of Directors

The elected members of the Board of Directors must have the competence required for the position and the opportunity to allocate a sufficient amount of time for Board work. The members must be willing to dedicate themselves to Ponsse, and they must conform to the company’s values.  The provisions of the Limited Liability Companies Act apply to the general eligibility criteria. No special eligibility criteria such as an upper age limit have been set in the Articles of Association for the members.

Overall, the members of the Board of Directors are required to have sufficiently diverse expertise and the ability to carry out their tasks effectively. Key factors include that their education and experience supplement those of other members. When considering the number of members, there is a focus on Ponsse’s operational goals and resulting requirements: the number of members must be relative to the company’s size, line of business, market position and development stage. In addition, the shareholders’ opinions must be addressed.

Diversity in the Board of Directors promotes an open culture of discussion and the ability to adopt an open approach to innovative ideas. Diversity is supported by the consideration of age and gender distribution, educational background, and work and international experience. It benefits the company as a whole that individuals whose skills, backgrounds and views differ are appointed as members of the Board. This ensures the development of business and responsibility, as well as good corporate governance. The company’s long-term goal is to increase diversity in the Board of Directors even further.

During the 2023 financial period, both genders were represented in Ponsse’s Board of Directors, as in previous years. The seven-member Board had two female members, as Terhi Koipijärvi was elected as a new Board member at the 2023 Annual General Meeting. Her appointment of strengthened the Board’s competence in the field of corporate responsibility. Educational and work backgrounds covered finance, legal affairs, technology, internationalisation, strategy, and sales and marketing. The Board members also worked broadly in other positions of trust. A presentation of the Board members is also available on the company’s website.

Independence of Board members

According to Recommendation 10 of the Corporate Governance Code, a majority of the members of the Board of Directors must be independent of the company, and at least two independent members of the Board of Directors must also be independent of the company’s major shareholders.

All Board members elected at the 2023 Annual General Meeting were independent of the company, with the exception of Jarmo Vidgren. Jarmo Vidgren was employed by the company from 1 January to 31 May 2020. During 2023, he also worked as a consultant for the company.

Five Board members are independent of the company’s major shareholders, namely Mammu Kaario, Terhi Kylävainio, Matti Kylävainio, Ilpo Marjamaa and Juha Vanhainen.  Jarmo Vidgren and Jukka Vidgren are major shareholders of the company.

Mammu Kaario and Jukka Vidgren have served on the Board without interruption for periods of 14 years and 13 years respectively. Based on the Board of Directors’ overall assessment, the independence of the Board members has not been at risk due to this long-term membership, and no other factors have been identified that would compromise their independence.

The Board of Directors assesses the independence of the members in accordance with Recommendation 10 of the Corporate Governance Code. To carry out the assessment, Board members must provide the Board of Directors with sufficient information for evaluation purposes, report any changes in their circumstances affecting the assessment of their independence, and present their own view of their independence. Any changes in the independence assessment are published on the company’s website. Each candidate for the Board must provide sufficient information on and estimates of their independence for the major shareholders who prepare the proposal for the composition of the next Board of Directors.

Committees

The Board of Directors has considered it unnecessary to set up board committees given the number of members of the Board of Directors and their effective performance. The Board of Directors has been able to properly carry out the duties that would otherwise be assigned to an audit committee or a remuneration committee.

President and CEO

The Board of Directors appoints and, if necessary, dismisses the President and CEO. Since 1 June 2008, the President and CEO of the company has been Juho Nummela. 

The President and CEO carries out the company’s daily governance tasks in accordance with Finnish law, corporate governance rules and the instructions issued by the Board of Directors. The President and CEO is responsible for ensuring that the company’s accounting complies with the law, and that its asset management has been arranged reliably. In addition to these tasks, the President and CEO:

• is responsible for the operational management of the company’s business operations
• provides the Board of Directors and the members of the Board with the information necessary for carrying out their duties
• acts as rapporteur at Board meetings
• is responsible for the implementation of decisions taken by the Board of Directors.

The contract signed between the President and CEO and the company may be terminated by either party. The period of notice is six (6) months. If the company terminates the contract, the company will pay a remuneration equalling 12 months’ salary in addition to the salary and other benefits that have been determined for the period of notice. The President and CEO is within the scope of the performance bonus scheme, with a performance bonus based on the performance targets approved by the Board. More information about the remuneration of the President and CEO is available in Ponsse Plc’s remuneration report.

Insider management

Ponsse adheres to the insider guidelines of Nasdaq Helsinki Ltd (insider guidelines for the stock exchange) and the Market Abuse Regulation (“MAR”). The company’s Board of Directors has also confirmed Ponsse insider guidelines, which supplement the stock exchange insider guidelines, and which apply to all employees of Ponsse Group, as well as to the members of the Management Team and the Board of Directors.

The coordination and control of insider affairs are among the responsibilities of the Chief Financial Officer.

Ponsse’s members of the Board of Directors, the President and CEO, members of the Management Team (“Managers”), and their closely associated persons as defined in MAR have a duty to report any transaction involving Ponsse’s financial instruments. The company maintains a list of Managers and their closely associated persons (individuals and legal entities). The Managers and their closely associated persons are obligated to notify Ponsse and the Finnish Financial Supervisory Authority of every transaction conducted on their own account related to Ponsse’s financial instruments (in excess of EUR 5,000 annually, without netting). Ponsse discloses each such transaction as a stock exchange release.

Ponsse’s Managers are prohibited to trade in Ponsse’s financial instruments during a 30-day period immediately prior to the publication of Ponsse’s interim reports or financial statements (“closed window”). The said trading restriction also applies to all such persons who have continuous access to the company’s financial reporting systems.  All these persons have been personally informed about the trading restriction and the related obligations.

Ponsse has identified individuals who have continuous access to all insider information about Ponsse as a result of their position or work (“permanent insider”).  Permanent insiders include the members of the Board of Directors, the President and CEO, the Deputy CEO, the CFO, the internal auditor, the secretary of the Board of Directors, and the executive assistant.

Project-specific insider lists include those who have access to insider information in conjunction with a certain project. They are under the trading restriction until the termination of the project and/or disclosure of the inside information. Affected persons are always separately informed of their inclusion in project-specific insider lists.

Related-party transactions

Related-party transactions are regulated by the Finnish Companies Act, the Finnish Securities Markets Act and the Corporate Governance Code 2020, as well as IAS 24 Related Party Disclosures.  In accordance with the Finnish Companies Act, the Board of Directors is responsible for the monitoring and assessment of related-party transactions.

Ponsse’s finance department monitors related-party transactions. All transactions outside the scope of the company’s ordinary business are reported to the Board of Directors. A related-party transaction is published in a stock exchange release when required by the applicable regulations. Individual related-party transactions are disclosed by means of stock exchange releases if the regulations so require. Ponsse discloses information regarding related-party transactions on an annual basis as part of the notes to the company’s consolidated financial statements.