The SanomaWSOY Group is organised into five fully owned divisions: Sanoma Magazines, Sanoma, WSOY, SWelcom and Rautakirja. Rautakirja, in which the Group had a 57% shareholding, was merged into SanomaWSOY on 1 March 2003.
SanomaWSOY’s divisions operate independently within the agreed goals and operational principles. The parent company, SanomaWSOY Corporation, is responsible for strategic control and administration of the Group. The management of the Group and the Group’s businesses is based on a clear organisational structure, defined areas of authority and responsibility, common planning and reporting systems, and Group policies.
SanomaWSOY’s Board of Directors confirms the principles of the Group’s corporate governance, which have been drawn up according to the principles concerning the governance of public companies recommended by the Helsinki Exchanges, the Finnish Central Chamber of Commerce and the Confederation of Finnish Industry and Employers. The valid corporate governance principles can be found on the Group’s website at www.sanomawsoy.fi.
The Group´s administrative bodies are the Board of Directors and the President & Chief Operating Officer (COO). Their duties essentially reflect those laid down by the Finnish Companies Act. SanomaWSOY’s Management Group prepares matters to be discussed at the meetings of the Board of Directors and coordinates the management of the Group. The Management Group is not a formal decision-making body. Matters of principle reviewed and recommended by the Management Group are approved legally by SanomaWSOY’s Board of Directors or those of its subsidiaries, or are implemented by authority of the President & COO.
The Annual General Meeting elects the members of the Board of Directors, the Chairman, and his deputy. The number of Board members can vary between five and eleven. In addition, a maximum of two personnel representatives can be elected to the Board.
The term of office of the Board member begins at the close of the AGM and expires after the third AGM following their election. If a Board member’s seat becomes vacant before the end of this three-year period, a new member is elected for the remainder of the term. The Articles of Association stipulate that no person aged 75, or who will reach the age of 75 during his term in office, can be elected to the Board.
The new principles of corporate governance issued by the Helsinki Exchanges recommend that the term of office of Board members be one year. At SanomaWSOY, the term of office of Board members is three years. The Group believes that the nature of its business activities makes it necessary for Board members to have a longer period to familiarise themselves with and commit themselves to the Group’s operations. The terms of office of Board members have, however, been arranged so that about one-third of the members are elected annually.
The current Board has 10 members. Of these, Kyösti Järvinen, Seppo Kievari and Hannu Syrjänen are vacating their seats at the AGM in 2004, Paavo Hohti, Robert Castrén, Jane Erkko and Robin Langenskiöld at the AGM in 2005, and Sari Baldauf, Jaakko Rauramo and Sakari Tamminen at the AGM in 2006.
The full-time Chairman & CEO of the Board is Jaakko Rauramo. Board members also employed by the Group are Hannu Syrjänen, President & COO, and Seppo Kievari, President of Sanoma Corporation, who will retire on 1 April 2004. Half of the Board members are independent in the manner stipulated in the new principles of corporate governance issued by the Helsinki Exchanges: Sari Baldauf, Robert Castrén, Paavo Hohti, Kyösti Järvinen and Sakari Tamminen.
SanomaWSOY’s Board of Directors is responsible for the overall management of the Group and for organising its administration in accordance with the Finnish Companies Act. The Board appoints SanomaWSOY’s President & COO, his deputy and the parent company executives who sit on SanomaWSOY’s Management Group, approves the nominations of the Presidents of the divisions, their deputies and the Senior Editors-in-Chief of Helsingin Sanomat and Ilta-Sanomat, and decides on the remuneration of senior management.
In 2003, the Board of Directors convened six times. On average, 89% of Board members attended the meetings
Matters to be presented to the Board are prepared, in accordance with the Articles of Association, by the Executive Committee, which consists of Jaakko Rauramo, Chairman & CEO, Paavo Hohti, Vice Chairman, and Hannu Syrjänen, President & COO. The Executive Committee convened five times during the year, and all the Committee members attended all the meetings. The Board is empowered to establish other committees as appropriate. A Compensation Committee and an Audit Committee operated during 2003.
The Compensation Committee prepares matters regarding the management’s remuneration and the Group’s remuneration policy. The Compensation Committee’s members at year’s end were Paavo Hohti (Chairman), Sari Baldauf (Vice Chairman), Jane Erkko and Seppo Kievari. During 2003 the Compensation Committee convened twice, and all its members attended the meetings.
The Audit Committee develops and controls the Group’s financial reporting procedures, the auditors’ work and the reliability of internal control. At the end of 2003, the Audit Committee comprised Kyösti Järvinen (Chairman), Robert Castrén (Vice Chairman), Robin Langenskiöld and Sakari Tamminen. The Committee convened four times during 2003. On average, 94% of its members attended the meetings.
The Board has a full-time Chairman & CEO who is responsible, in cooperation with the President & COO, for preparing the matters brought to the Board of Directors and for chairing Board and Executive Committee meetings. The Chairman & CEO’s specific area of responsibility lies with the Group’s strategic decisions and positions, and strategic HR matters. In addition, he is responsible for handling a broad range of the Group’s external relations together with the President & COO.
The Chairman & CEO does not usually take part in the operational management of the Group. In preagreed cases, however, the Chairman & CEO can participate in operational management, particularly in respect of growth and international expansion projects. In 2003, Jaakko Rauramo served as full-time Chairman & CEO.
The President & COO is independently responsible for the Group’s operations, in line with strategic plans and budgets approved by the Board of Directors and in accordance with general principles approved by the Board of Directors. The President & COO is responsible for day-to-day management of the Group, for the preparation of matters brought to the Board and for presenting these matters to the Board and its Committees. The President & COO also acts as Chairman of both SanomaWSOY’s Management Group and the Boards of Directors of SanomaWSOY’s divisions, unless otherwise agreed. In 2003, Hannu Syrjänen served as President & COO of SanomaWSOY.
The Board of Directors approves the employment terms of the President & COO and the other members of senior management, based on the proposal prepared by the Compensation Committee. The compensation paid to the Board of Directors is subject to approval by the AGM. The members of the Board of Directors are paid the following monthly compensations: EUR 5,000 to the Chairman, EUR 4,500 to the Vice Chairman and EUR 3,500 to members. A sum of EUR 200 is paid for attending the meetings. Of the Board Members, Jaakko Rauramo, Chairman & CEO, Hannu Syrjänen, President & COO, and Seppo Kievari are included in the scope of SanomaWSOY’s warrant system.
Remuneration and other benefits paid to SanomaWSOY’s management in 2003 totalled EUR 8.0 (8.5) million. In this respect, management includes members of the Board of Directors of SanomaWSOY, the President & COO, the Presidents of the Group’s divisions as well as their deputies, if any. This sum only covers the remuneration and benefits paid to the persons for these positions during the financial year.
Jaakko Rauramo, the full-time Chairman & CEO, was paid remuneration, bonuses, and other benefits totalling some EUR 732,600 in 2003 (in 2002 some EUR 903,100, including bonuses relating to the magazine acquisitions in 2001). Rauramo is entitled to retire after the age of 60 on a pension of 60% of his salary when he or the Company so wishes under the provisions of Sanoma Corporation’s pension fund. The contract of employment of the Chairman & CEO is valid for the duration of his term of office, unless otherwise agreed with or decided by the AGM. Rauramo holds 100,000 2001B warrants and 100,000 2001C warrants.
Hannu Syrjänen, President & COO, was paid in total approximately EUR 656,700 in remuneration and benefits in 2003 (some EUR 568,100 in 2002). According to his employment contract, Syrjänen will retire at the age of 60, unless otherwise agreed, and his pension will be approximately 60% of his salary. The period of notice of the President & COO is six months and severance pay in the case of termination corresponds to 18 months’ salary. The severance pay includes a fixed term non-competition clause. Syrjänen holds 50,000 2001A warrants, 50,000 2001B warrants and 50,000 2001C warrants.
The retirement age for the other members of SanomaWSOY’s Management Group is 60 years, and their pension is approximately 60% of their salary. Their period of notice is six months and severance pay in the case of termination corresponds to 12 months’ salary. The severance pay includes a fixed term non-competition clause.
To promote the achievement of challenging financial targets, all SanomaWSOY’s divisions operate incentive systems designed to foster the personnel’s commitment to business goals, and to reward people for good performance and results. In addition to skill-, responsibility- and performance-based salary, the personnel receive one-off bonuses. Divisions also operate short-term incentive systems tied to their particular businesses. The general principles of incentive systems are confirmed by SanomaWSOY’s Board of Directors. The criteria for setting incentives are the previous year’s development, the competitive situation, the lifecycle of the business, action plans, etc. Sanoma and Sanoma Magazines Finland also maintain a personnel fund for profit sharing. Annual payments from this fund are harmonised with the bonus of the short-term incentive scheme. The Group also has a warrant scheme, which is described in more detail in Financials.
SanomaWSOY’s chartered public accountant in charge is PricewaterhouseCoopers Oy.