BOARD OF DIRECTORS

Responsibilities

The Board of Directors is responsible for the organization of the company and the administration of the company’s affairs. The Board regularly assesses the company’s and the group’s financial position and ensure that the company is organized so that accounting, management of funds and the company’s financial conditions in general are controlled in a satisfactory manner. In this role the Board makes and if applicable subsequently supervises the implementation of decisions on inter alia:

  • The group’s strategic direction and key strategic initiatives
  • Major investments
  • The capital structure and dividend policy
  • Appointment and dismissal of the CEO
  • The delegation of authority
  • The development of group policies
  • The overall organization of the group
  • The group’s internal control environment and risk ­management model
  • The core content of the group’s external communication
  • Sustainability and responsible business conduct

Instructions for the work of the Board of Directors are set forth in its rules of procedure, which are reviewed and adopted at least once a year include the rules of procedure detail matters to be addressed at ordinary board meetings and regulate the number of ordinary board meetings, agenda items for ordinary board meetings, the duties of the Chair of the Board and the allocation of responsibilities between the Board and the CEO as well as the CEO’s reporting to the Board. The rules of procedure also include instructions for the work in board committees, inter alia stipulating the committees’ duties, the number of committee meetings, the matters to be addressed at the meetings and how the committees shall report to the Board.

Members and independence

The Board of Directors consists of eight members elected by the Annual General Meeting, serving one-year terms, and three employee representatives (with three deputies) from the Swedish operations. A Finnish employee representative is present at the Board meetings, but without voting rights. Marie Ehrling is Chair of the Board. The other members of the Board, elected by the Annual General Meeting, are Olli-Pekka Kallasvuo (Vice-Chair), Susanna Campbell, Mikko Kosonen, Nina Linander, Martin Lorentzon, Anna Settman and Olaf Swantee.

In accordance with the guidelines of the Swedish Corporate Governance Code, all members elected by the Annual General Meeting 2016 are considered to be independent in relation to the company, to the administration of the company and to major shareholders.

The members of the Board of Directors are presented in more detail, including meeting attendance, remuneration and holdings of Telia Company shares, at the end of this Statement.

Annual work cycle

The work of the Board follows an annual cycle. This enables the Board to appropriately address each of its duties and to keep strategic issues, risk assessment and value creation high on the agenda.

Board meetings are normally held in Stockholm, but the Board has an ambition to hold at least one other meeting elsewhere to be able to discuss local issues more deeply, make specific site visits, etc. In 2016, the Board conducted a study and strategy trip to San Francisco (Palo Alto, Silicon Valley) to meet with key players within the IT-industry.

Inaugural meeting

The annual cycle starts with the inaugural Board meeting which is held immediately after the Annual General Meeting. At this meeting, members of the Committees are appointed and the Board resolves on matters such as signatory powers.

Q1 report meeting

At the next ordinary meeting, the Board approves the interim financial report and reviews the risk report for the first quarter of the year.

Strategy input meeting

At the third ordinary meeting, the Board is updated on and discusses various strategic issues.

Q2 report meeting

The Board convenes to approve the interim financial report and review the risk report for the second quarter of the year.

First strategic planning meeting

An ordinary Board meeting focused on the first step of the strategic planning process by discussing the scope and key assumptions.

Q3 report meeting

An ordinary Board meeting is held to approve the interim financial report and review the risk report for the third quarter of the year and to discuss the second step of the strategic planning process – the strategic options. This meeting is also devoted to the annual evaluation of the Board’s internal work.

Business and financial plan meeting

As the final step of the strategic planning process, an ordinary meeting is held for the Board to approve management’s business and financial plan and to discuss target setting for executive management. This meeting also comprises an annual review of the capital structure and dividend policy.

Q4 report and full-year financial results meeting

Following the end of the calendar year, this ordinary Board meeting focuses on the financial results of the entire year and the fourth-quarter financial report and risk report, also including a final decision on target setting for executive management and the dividend proposal for the year.

Annual and Sustainability Report meeting

This ordinary meeting closes the annual work cycle of the Board of Directors by an approval of the Annual and Sustainability Report.

The Board’s Annual Work Cycle

ORGANIZATION OF THE BOARD WORK

 

In addition, ordinary Board meetings include:

  • An integrated management report by the CEO, comprising:
    • Comments on progress towards the long-term ambitions in terms of customers, shareholders, people and sustainability
    • Financial performance and an operational update covering competitor, commercial, technology, people, and legal issues
    • Updates on strategy issues and on M&A activities, internally as well as industry developments
  • Reports on committee work by the respective Committee Chair
  • A closed session without management being present

Board work in 2016

In 2016, the Board of Directors held 8 ordinary meetings (whereof one inaugural meeting) and 6 extra meetings. In addition to following up on the day-to-day business of the group, the Board of Directors paid special attention to:

  • Strategic options, with specific review of the changing business environment in the telecom industry
  • Assessment of the operations in region Eurasia, focusing both on business and compliance issues
  • Follow-up of major strategic initiatives within the business operations
  • Review of the overall sustainability risks for the group, including decisions on new or updated group policies
  • Continued close monitoring and control of the investigations of the severe corruption and money-laundering allegations related to the investments in Uzbekistan, by the Swedish Prosecution Authority, by the Dutch prosecutor and police authorities, and by the US Department of Justice and the US Securities and Exchange Commission
  • Follow-up and review of the Telia Company’s exit process from Eurasia
  • Divestments of Yoigo and of Sergel Group, as well as other M&A activities
  • Reviewing efficiency initiatives and cost-reduction programs
  • Regulatory developments in the telecom industry
  • Potential acquisitions, joint ventures and increase of ownership in subsidiaries
  • Investments in telecom licenses and frequency permits
  • Follow-up of CAPEX, in particular related to network investments
  • Developments in the associated companies in Turkey and Russia
  • Capital structure of the group
  • Operating model and organizational issues
  • Human Resources issues, in particular succession planning and performance management

Further, the Board of Directors evaluated its internal work during 2016 by self-assessment, based on individually responding to formal surveys and bilateral interviews with the Chair of the Board and the Nomination Committee, the latter to which the result of the evaluation was also reported.

Committees and committee work in 2016

To improve board work efficiency, the Board of Directors has appointed a Remuneration Committee, an Audit Committee and a Sustainability and Ethics Committee. The committees prepare recommendations for the Board.

The Remuneration Committee handles issues regarding salary and other remuneration to the CEO and Group Executive Management, incentive programs that target a broader group of employees and succession planning. The Remuneration Committee has the authority to approve remuneration to the members of Group Executive Management, except for the CEO remuneration which is decided by the entire Board of Directors.

The Audit Committee reviews for example financial statements, accounting, internal controls over financial reporting and auditing. The Audit Committee has the authority to decide on audit scope and audit fees and to approve purchase of other services from the external auditors.

The Sustainability and Ethics Committee primarily reviews the sustainability strategy, the progress of the Sustainability Priority Action Plan and the Ethics and Compliance programs as well as the external sustainability reporting.

Remuneration Committee

Marie Ehrling is Chair of the Remuneration Committee. In 2016, the Committee held 6 meetings. At each Board meeting following a Committee meeting, the Committee Chair reported on key discussion items and brought proposals on decision items. Committee work included, amongst others, the following issues:

  • Structure for target model and financial targets
  • Succession planning
  • Performance management
  • Long-term incentive programs
  • Remuneration to the CEO and Group Executive Management

As part of the Board of Directors’ overall assessment, the Remuneration Committee evaluated its internal work during 2016 by self-assessment.

MEMBERS OF THE BOARD COMMITTEES

Audit Committee

Nina Linander is Chair of the Audit Committee. In 2016, the Committee held 7 meetings. At each Board meeting following a Committee meeting, the Committee Chair reported a summary of the issues raised, decision proposals as well as assessments and reviews performed by the Committee. When identifying risk areas related to financial reporting, the Committee collaborates with the CEO and CFO, the external auditors as well as the internal audit and internal control functions. Information gathered hereby forms the basis when deciding on future focus areas. Committee work in 2016 included, amongst others, the following issues:

  • Overseeing improvements of financial reporting and financial processes, with specific focus on risk identification and assessment of the internal control environment
  • Assessment and review of the quality and integrity of risk management, risk assessment and risk reporting as well as review and follow-up of whistle-blower reports
  • Reviews of the company’s external financial reporting
  • Reviews of important risk areas, e.g. treasury, procurement, taxes, litigation, insurance and IT systems
  • Review of the CAPEX process and quarterly follow-up of CAPEX programs
  • Reviews of significant accounting policies and key sources of estimation uncertainty, e.g. accounting for discontinued operations and assets held for sale, revenue recognition, valuation of pension obligations, and asset valuation, including the annual impairment testing process and setting of significant testing parameters
  • With regards to the external auditors: reviews of audit reports and follow-up of recommended actions, assessment and approval of audit plans, closed sessions without management being present, independence and performance assessment, and submitting a nomination proposal for auditor election to the Nomination Committee
  • With regards to the internal auditors: reviews of audit reports and follow-up of recommended actions, assessment and approval of audit plans, closed sessions without management being present, and performance assessment

As part of the Board of Directors’ overall assessment, the Audit Committee evaluated its internal work during 2016 by self-assessment.

Sustainability and Ethics Committee

Mikko Kosonen is Chair of the Sustainability and Ethics Committee. The Committee held 5 meetings during 2016. At each Board meeting following a Committee meeting, the Committee Chair reported on key discussion items and brought proposals on decision items. Committee work included, amongst others, the following issues:

  • Review of the sustainability strategy
  • Map and review of the status of ongoing ethics, compliance and sustainability initiatives in Telia Company
  • Approval of the sustainability priority action plan and regular follow-up, with special attention on status and actions of the anti-bribery and corruption program, including e.g. corruption risk-assessment by country, instructions and training, whistle-blowing tools, etc.
  • Reviews of sustainability-related risks in the quarterly risk reports
  • Review of Telia Company’s external sustainability reporting

As part of the Board of Directors’ overall assessment, the Sustainability and Ethics Committee evaluated its internal work during 2016 by self-assessment.