Board of Directors
The Board 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 ensures 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.
The tasks of the Board include, amongst other things, to:
- Establish business objectives and strategy
- Appoint, continuously evaluate and, if required, remove the CEO from office
- Ensure that there are effective systems in place for monitoring and controlling of the group’s operations and financial position compared to its stated objectives
- Ensure that there is satisfactory control of the company’s compliance with laws and other regulations applicable to the company’s operations
- Ensure that policies to govern the company’s and the group’s ethical conduct are adopted
- Ensure that the company’s external disclosure of information is marked by openness and is correct, relevant and reliable, by way of, among other things, adopting a communication policy
Instructions for the work of the Board are set forth in its rules of procedure, which are reviewed and adopted annually. The rules of procedure set out the number of ordinary Board meetings, agenda items and matters to be addressed at ordinary Board meetings, the duties of the Chair of the Board and the allocation of responsibilities between the Board and the CEO, including the CEO’s reporting to the Board. It also includes instructions for the work in Board Committees, inter alia stipulating the Committees’ duties, the number of Committee meetings, matters to be addressed at the meetings and reporting to the Board.
Members and independence
The Board 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, without voting right, is present at the Board meetings. 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.
The Board members are presented in more detail, including meeting attendance, remuneration and holdings of Telia Company shares, at the end of this Statement.
In accordance with the guidelines of the Swedish Corporate Governance Code, all Board members elected by the Annual General Meeting 2017 are considered to be independent in relation to the company, to the administration of the company and to major shareholders.
Annual work cycle
The work of the Board follows an annual cycle, enabling 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, Sweden, but the Board’s ambition is to hold at least one other meeting elsewhere to be able to discuss local issues more deeply, make specific site visits, etc. In 2017, the Board held its annual two-day strategy meeting in Tallinn, Estonia and the board meeting in December was held in Helsinki, Finland.
The annual board cycle starts and ends at the Annual General Meeting. During the year, approximately seven ordinary meetings are held, including the inaugural meeting and a two-day strategy meeting. The meetings address, inter alia:
- Approval of financial reports and review of risk reports
- Approval of management business and financial plan
- Strategy review and evaluation
- Evaluation of corporate governance and policies and approval of updated governance documents
- Capital structure and allocation, including dividend proposal
- Self-assessment of Board work and Board members
- Notice to the Annual General Meeting
- Targets setting for Group Executive Management
- Approval of the Annual and Sustainability Report
In addition, ordinary Board meetings include the following:
- An integrated management report by the CEO commenting on status and progress on high-priority matters
- Updates on progress towards the long-term ambitions in terms of customers, shareholders, people and sustainability
- Financial performance and operational updates regarding 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
The Board’s Annual Work Cycle
Board work in 2017
In 2017, the Board held ten (10) ordinary meetings (whereof one inaugural meeting) and four (4) extra meetings. In addition to following up on the day-to-day business of the group, the Board 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
- Approval of global settlement of the investigations by the US Department of Justice, the US Security and Exchange Commission and the Dutch prosecutor
- Follow-up and review of the Telia Company’s exit process from Eurasia
- Acquisitions of Phonero and Nebula, divestment of Telia Company’s holding in Tcell, MegaFon and its direct holding in Turkcell, 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 evaluated its internal work during 2017 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.
To improve board work efficiency, the Board has appointed a Remuneration Committee and an Audit and Responsible Business Committee. The Committees prepare recommendations for the Board and make proposals on matters that require the Board’s approval. The Committees also continuously give reports to the Board in relation to its work.
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.
Audit and Responsible Business Committee
During 2017, the Board merged the Sustainability and Ethics Committee and the Audit Committee into the new integrated Audit and Responsible Business Committee, for the purpose of integrating reporting and control processes and having one committee with a more comprehensive overview over relevant matters.
The Audit and Responsible Business Committee assists the Board in fulfilling of its responsibility in relation to financial reporting, internal control, internal and external audit, enterprise risk management and the company’s process for monitoring compliance with laws and regulations. It also monitors efficiency and results of the company’s internal compliance and sustainability programs, as well as the whistle-blower system, and the implementation of such programs.
Remuneration Committee work in 2017
Marie Ehrling is Chair of the Remuneration Committee. In 2017, the Committee held five (5) meetings. Committee work included, amongst others, the following issues:
- Structure for target model and financial targets
- Succession planning
- Performance management
- Variable pay and long-term incentive programs
- Remuneration to the CEO and Group Executive Management
Audit and Responsible Business Committee work in 2017
Nina Linander is Chair of the Audit and Responsible Business Committee. In 2017, the Committee held eight (8) meetings. Committee work in 2017 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, sourcing, 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
- Map and review of the status of ongoing ethics, compliance and sustainability initiatives
- Approval and regular follow-up of the responsible business focus area plans, with special attention on status and actions of the anti-bribery and corruption program, including e.g. country-level corruption risk-assessment, instructions and training, whistle-blowing tools, etc.
- Review of whistle-blower cases and follow-up of recommended actions
- Reviews of sustainability-related risks in the quarterly risk reports
- Review of Telia Company’s external sustainability reporting
As part of the Board’s overall assessment, the Remuneration Committee and the Audit and Responsible Business Committee evaluated its internal work during 2017 by self-assessment.
Organization of the board