The Board Committees

The Board of Directors appoints members of the Audit and Risk Committee and the Nomination and Remuneration Committee from amongst its members. Each committee shall have at least three members. The members shall have the expertise and experience required by the duties of the respective committee.

Members are appointed for a one-year term of office expiring at the end of the first Annual General Meeting following the election. All the members of the Board of Directors have the right to attend the committee meetings. The Chairman of the committee reports on the committee’s work to the Board of Directors regularly after each meeting, and the committee meeting materials and minutes are available to all members of the Board of Directors. The Board of Directors has approved written charters for the committees; the charters are reviewed regularly and updated as needed.

Audit and Risk Committee

The Audit and Risk Committee assists the Board of Directors in matters relating to financial reporting and control in accordance with the duties specified for audit committees in the Finnish Corporate Governance Code. The Board of Directors regularly determines the role and duties of the Audit and Risk Committee in a written charter. The committee monitors the Group’s reporting process of financial statements and the efficiency of the internal controls, internal audit and risk management systems. In addition, the committee monitors and assesses the legal compliance and the business ethics compliance.

Pursuant to the Finnish Corporate Governance Code, the members of the Audit and Risk Committee shall have the qualifications necessary to perform the responsibilities of the committee, and at least one of the members shall have expertise specifically in accounting, bookkeeping or auditing. The members shall be independent of the company, and at least one member shall be independent of the company’s significant shareholders.

The external auditors, Chief Financial Officer, Head of Internal Audit, Corporate Controller, and General Counsel, as secretary to the committee, attend the committee meetings on a regular basis. Other senior executives attend the meetings as invited by the committee.

The Audit and Risk Committee carries out a self assessment of its work and approves the internal audit charter and the internal audit plan and its budget. The committee evaluates the independence of the external auditors, reviews the external auditor’s audit plan and meets with them regularly to discuss the audit plan, audit reports and findings.

Main duties of the Audit and Risk Committee

• Monitoring the financial position of the company
• Supervising the financial reporting process
• Monitoring the reporting process of financial statements
• Monitoring the statutory audit of the financial statements and consolidated financial statements
• Preparing for the Board of Directors the proposal for resolution on the election of the auditor
• Evaluating the independence of the statutory auditor or audit firm, particularly the provision of related services to the company to be audited and pre-approval of non-audit services
• Monitoring the efficiency of the company’s internal control, internal audit, compliance and risk management systems
• Reviewing the description in the company’s Corporate Governance Statement of the main features of the internal control and risk management systems in relation to the financial reporting process
• Reviewing annually the Group risk policy and risk exposures
• Approving the internal audit charter, the annual audir plan, the budget of the internal audit function, and reviewing the internal audir reports
• Monitoring and assessing legal compliance and business ethics compliance

Audit and Risk Committee in 2018

After the Annual General Meeting on 28 March 2018, the Board of Directors elected from amongst its members Kim Ignatius as the Chairman and Heinz-Werner Binzel, Essimari Kairisto and Veli-Matti Reinikkala as members of the Audit and Risk Committee. Until the Annual General Meeting on the committee comprised Kim Ignatius as the Chairman, and Heinz-Werner Binzel, Anja Mc Alister and Veli-Matti Reinikkala as members.

The members are all independent of the company and of its significant shareholders.

Audit and Risk Committee in 2017

In 2017, the members of the Audit and Risk Committee were Kim Ignatius as Chairman and Heinz-Werner Binzel, Anja Mc Alister and Veli-Matti Reinikkala. Until the AGM 2017 the members were Kim Ignatius as Chairman, Minoo Akhtarzand, Heinz-Werner Binzel and Jyrki Talvitie.

The members are all independent of the company and of its significant shareholders. In 2017 the Audit ans Risk Committee met 5 times and the participation rate was 95%.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee assists the Board of Directors in issues related to nomination and remuneration of the company’s management. The committee has a written charter in which its duties have been defined. Pursuant to the Finnish Corporate Governance Code, the majority of the members of a remuneration committee shall be independent of the company.

The regular participants at the committee meetings are the President and CEO, Senior Vice President of Strategy, People and Performance, and General Counsel as Secretary to the Committee.

The Nomination and Remuneration Committee conducts annually a self-evaluation of its work.

Main duties of the Nomination and Remuneration Committee

• Preparing nomination and remuneration issues and proposals to the Board of Directors concerning the President and CEO, the executives reporting directly to the President and CEO as well as the Fortum Executive Management
• Reviewing and preparing succession plans for the President and CEO
• Evaluating the performance and the remuneration of the President and CEO, the executives reporting directly to the President and CEO as well as the Fortum Executive Management
• Preparing for the Board of Directors recommendations on the Group’s and its management’s pay structures and bonuses and incentive systems
• Monitoring the functioning of the bonus systems to ensure that the management’s bonus systems will advance the achievement of the company’s strategic objectives and that they are based on performance
• Monitoring, planning and promoting competence development in the Group based on strategic target setting

Nomination and Remuneration Committee in 2018

After the Annual General Meeting on 28 March 2018, the Board of Directors elected from amongst its members Matti Lievonen as the Chairman and Eva Hamilton, Klaus-Dieter Maubach and Anja McAlister as members of the Nomination and Remuneration Committee. Until the Annual General Meeting, the committee comprised Sari Baldauf as the Chairman and Eva Hamilton, Tapio Kuula and Veli-Matti Reinikkala as members.

The members are all independent of the company and of its significant shareholders.

Nomination and Remuneration Committee in 2017

In 2017, the members of the Nomination and Remuneration Committee were Matti Lievonen as Chairman and Sari Baldauf, Eva Hamilton, and Tapio Kuula (until 7 November 2017). Until the AGM 2017, the members were Sari Baldauf (Chairman), Eva Hamilton and Tapio Kuula.

The members were all independent of the company, with the exception of Tapio Kuula and of its significant shareholders.

In 2017, the Nomination and Remuneration Committee met 4 times and the participation rate was 93%.