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Governance

Cargotec’s governance and management are based on the Finnish Limited Liability Companies Act and Securities Markets Act, the rules and guidelines of Nasdaq Helsinki Ltd, as well as the company’s Articles of Association and Code of Conduct. Cargotec complies with the Finnish Corporate Governance Code of 2015, available on the Securities Market Association’s website at www.cgfinland.fi.

Cargotec’s Shareholders’ meeting is convened by the Board of Directors and held in the company’s domicile, Helsinki, Finland.

The Annual General meeting (AGM) is held annually within three months of the closing of the financial period, on a day designated by the Board. An extraordinary Shareholders’ meeting in respect of specific matters shall be held when considered necessary by the Board, or when requested in writing by a company auditor or by shareholders representing at least 10 percent of all the issued shares of the company.

The issues decided on by the AGM include the adoption of the financial statements, distribution of profit, granting of release from liability to the members of the Board of Directors and to the CEO, the election of and remuneration payable to the members of the Board and auditor. The Shareholders’ meeting also has the right to amend the Articles of Association, and make decisions and authorise the Board of Directors to make decisions on the acquisition of treasury shares, on share issues and on option programmes.

Notice of the Shareholders’ meeting is published as a stock exchange release and on Cargotec’s website. This notice includes the agenda for the meeting, proposals made by the Board and the Board Committees to the meeting and instructions regarding registration and attendance. The names of candidates for the Board of Directors are published in connection with the notice of the Shareholders’ meeting, if the candidates have given their consent to their election and the proposal has been made by the Board Nomination and Compensation Committee, or if the proposal is supported by shareholders representing at least ten percent of the total voting rights of the company. The names of any candidates appointed after the notice has been issued will be published separately if the aforementioned conditions are met. Furthermore, the Board Audit and Risk Management Committee’s proposal for the auditor will be published in a similar manner.

It is the company’s aim that all members of the Board and the CEO be present at the Shareholders’ meeting, and that a candidate standing for the Board for the first time attend the Shareholders’ meeting deciding on the election, unless he or she has a substantive reason to be absent.

Shareholders' rights

Shareholders' meeting

Shareholders have the right to attend the Shareholders’ meeting if they have been entered into the register of shareholders at least eight working days before the meeting and if they have declared to the company their intention to attend in the manner specified in the notice of the Shareholders’ meeting. Holders of nominee-registered shares can also attend the Shareholders’ meeting by registering themselves in the register of shareholders on a temporary basis. A shareholder can attend the Shareholders’ meeting either in person, or via a representative authorised by the shareholder.

Shareholders have the right to raise issues under the purview of the Shareholders’ meeting for consideration by the Meeting, if they so request in a written notification to the Board in good time for the matter to be included in the notice of the Shareholders’ meeting. The date, by which Cargotec’s Board of Directors must be notified of matters to be considered at the Shareholders’ meeting, is published annually on the company website. With regard to the AGM 2017, held on 21 March 2017, the deadline was 10 January 2017.

In the Shareholders’ meeting, all shareholders have the right to raise questions and propose resolutions regarding issues on the agenda.

Cargotec has two share classes, each with different voting rights. In the Shareholders’ meeting, each class A share carries one vote, as does each set of ten class B shares, with the provision that each shareholder is entitled to at least one vote.

Dividend

Shareholders registered in Cargotec’s shareholder register on the record date of the dividend payment are entitled to dividend. In dividend distribution, class B shares earn a higher dividend than class A shares. The difference between dividends paid on the two classes of shares is a minimum of one (1) cent and a maximum of two and a half (2.5) cents.

Annual General Meeting 2017

The Annual General Meeting (AGM) of Cargotec Corporation was held on Tuesday, 21 March 2017 at 1. p.m. Grand Marina Congress Centers address Katajanokanlaituri 6, Helsinki, Finland. 

Important dates 2017

 
Notice of meeting published, registration begins 8 Feb 2017
Annual report 2016 published week 7
Record date of the AGM 9 Mar 2017
Registration closes 16 Mar 2017
AGM 21 Mar 2017 at 1 p.m.
Dividend record date 23 Mar 2017
Dividend payment date 30 Mar 2017

Meeting venue

Marina Congress Center is located in Katajanokka, address Katajanokanlaituri 6, FIN-00160 Helsinki Finland. There is a limited chargeable parking in the area. The nearest tram stop for tram number 4 is within 50 meters of Marina Congress Center.

Cargotec’s Board of Directors includes a minimum of six and a maximum of twelve members. Board members are elected by the AGM for a term of office that expires at the end of the first AGM following their election. The Board elects the Chairman and Vice Chairman from among its members. The majority of Board members shall be independent of the company and significant shareholders. The Board’s composition shall support the overall goal of implementing Cargotec´s strategy.

According to the Board’s diversity principles defined in 2016, board diversity is not a static concept but evolves over time and reflects the operations strategy and the future needs of the company. The diversity factors include work experience in our strategic business areas and of the cultures in which we operate, as well as educational background, age and gender. Both genders shall be represented in Cargotec’s board. The company’s goal is to have a more balanced representation of genders on the Board.

Duties

The Board confirms Cargotec’s strategy and will monitor its implementation. As stipulated in the Finnish Limited Liability Companies Act and the Articles of Association, the Board is responsible for the management and proper organisation of the company’s operations as well as representing the company. The Board has compiled a written charter for its work that defines its main duties and operating principles. The Board’s responsibilities include approving the company’s annual, half-year and interim financial statements and ensuring that the supervision of accounting and the control of the company’s financial matters is properly organised. The Board decides on significant loans, acquisitions and investments and approves the annual and long-term business plans and budgets as well as risk management principles. The Board approves the long- and short-term incentive programmes and their outcome. The Board appoints Cargotec’s CEO and determines the related terms of employment. As defined in the Board annual plan, the Board has theme meetings in which issues associated with one business area at a time or other current theme are discussed.

Self-assessment and independence review

The Board reviews its own performance and procedures once a year through internal self-assessment. Moreover, the Board conducts an annual assessment of the independence of its members. According to the assessment conducted in March 2017, the members of the Board are independent of the company and, with the exception of Ilkka Herlin and Peter Immonen, also independent of significant shareholders in the company.

Committees

The Board has set up two committees to improve the efficiency of board work: the Audit and Risk Management Committee and the Nomination and Compensation Committee. The Board nominates the members and Chairman of the Committees from among its members and confirms the Committees’ charters. The Committees have no autonomous decision-making power, but prepare issues which will be resolved by the Board.

The Audit and Risk Management Committee’s duty is to supervise the financial reporting executed by the management, and to monitor the financial statement and interim reporting process. In accordance with its charter, the committee supervises the adequacy and appropriateness of the company’s internal control, internal audit and risk management, the development of operative and strategic risks and risk management, and handles Corporte Audit plans and reports. Furthermore, the committee prepares a proposal to the Annual General Meeting regarding the election and fees of the external auditor, defines and monitors the nonaudit services performed by the auditing firm to ensure the auditor’s independence, and supervises the statutory audit of financial statements and consolidated financial statements. The committee also reviews the Corporate governance statement.

The committee consists of a minimum of three Board members. The CEO, CFO and director of Corporate Audit as well as representatives of the auditing firm attend the meetings. The directors of Finance, Treasury, Taxes, Corporate Audit and Risk Management report to the committee on a regular basis. If the matters to be dealt with so require, the committee convenes without the presence of the company’s management. The committee conducts annual internal self assessments to review its own performance.

In its organising meeting on 21 March 2017 the Board elected Teuvo Salminen as chairman of the committee, while Ilkka Herlin and Kaisa Olkkonen were elected as members of the committee. Committee members are independent of the company and, with the exception of Ilkka Herlin, independent of major shareholders.

The Nomination and Compensation Committee prepares a proposal to Cargotec’s Annual General Meeting concerning the composition and remuneration of the Board of Directors. The committee prepares a proposal to the Board regarding the appointment of the CEO and the terms of employment, and prepares the nomination and remuneration issues of other top management members as needed before Board approval. The committee handles and prepares Cargotec’s pay strategy and the long- and short-term incentive programmes and follows their outcome and functionality.

The Nomination and Compensation Committee consists of a minimum of three Board members. The Committee convenes as needed but at least three times a year. The CEO attends the committee meetings, except when he is the subject of discussion.

In its organising meeting on 21 March 2017, the Board elected Ilkka Herlin as chairman of the Nomination and Compensation Committee, while Jorma Eloranta, Tapio Hakakari and Peter Immonen were elected as members of the Committee. Committee members are independent of the company.

Ilkka Herlin

born 1959, Finnish,
D.Ph. D.Sc. (Tech) h.c.,
D.Sc. (Agr & For) h.c.

Member and Chairman of the Board 2005–

Chairman of Nomination and Compensation Committee

Member of Audit and Risk Management Committee

Independent of the company. 


Significant shareholder (Wipunen varainhallinta oy) 
Not independent of significant shareholders (Member of the Board of Mariatorp Oy).

Chairman of the Board, Wipunen varainhallinta oy 2005– 
Managing Director, Security Trading Oy 1987–2000
Member of the Board, KONE Corporation 1990–2000

Chairman of the Board
Finnish-Chinese Trade Association 2009–2017
 

Member of the Board
Foundation for a Living Baltic Sea; also co-founder, Chairman 2008–2017, member  2017
WIP Asset Management Ltd 2005–, Chairman 2000–2005 
Mariatorp Oy 2015–
Finnish Foundation for Share Promotion 2005–2011
John Nurminen Foundation 2005–2008

Other
Chairman of the Advisory Board, Aleksanteri Institute 2017, Vice Chairman 2011–2017

Tapio Hakakari

born 1953, Finnish, LL.M.

Member of the Board 2005– and Vice Chairman 2009–
Member of Nomination and Compensation Committee.

Independent of the company and significant shareholders

Interim President and CEO, Cargotec Corporation 10/2012–2/2013
Director, Secretary to the Board, KONE Corporation 1998–2006
Director Administration, KCI Konecranes Plc 1994–1998
Employed by KONE Corporation 1983–1994

Chairman of the Board:
Consti Yhtiöt Oy 2015–
Enfo Oyj 2007–2017
Opteam Yhtiot Oy 2013–2017, member 2011–2017
Esperi Care Oy 2006–2010

Member of the Board:
Hollming Oy 2008–2015
Etteplan Oyj 2004–2014
Martela Oyj 2003–2013
Havator Holding Oy 2007–2010

Teuvo Salminen

born 1954, Finnish, M.Sc. (Econ.), Authorised Public Accountant examination 1983

Member of the Board 2010–
Chairman of Audit and Risk Management Committee

Independent of the company and significant shareholders

Advisor, CapMan Plc 2010–2011
Employed by Pöyry Plc 1985–2009:
Group Executive Vice President, Deputy to the President and CEO 1999–2009
Head of Infrastructure & Environment Business Group 1998–2000
Head of Construction Business Group 1997–1998
Chief Financial Officer 1988–1999
Manager of Finance and Accounting 1985–1988

Chairman of the Board:
Havator Oy 2010–

Vice Chairman of the Board:
Pöyry Plc 2016–, member 2015–
Glaston Corporation 2014–, member 2010–
CapMan Plc 2005–2013, member 2001–2005

Member of the Board:
Evli Bank Plc 2010–
3Step It Group Oy 2016–
Holiday Club Resorts Oy 2015–, chairman 2008–2015
Tieto Corporation 2010–2016
YIT Corporation 2001–2009 and 2014–2016

Kimmo Alkio

born 1963, Finnish, BBA, EMBA

Member of the Board 2016–

Independent of the company and largest shareholders

President and CEO, F-Secure Corporation 2006–2011
Vice President, Nokia Networks 2005–2006
Chief Operating Officer, F-Secure Corporation 2000–2005
Various international management positions, Digital Equipment Corporation 1987–2000

Member of the Board:
Federation of Finnish Technology Industries 2013–, Chairman of its IT sector Digi.fi

Jorma Eloranta

b. 1951, Finnish, 
M.Sc. (Tech), 

D.Sc. (Tech.) h.c.

Member of the Board of Directors 2013–
Member of the Nomination and Compensation Committee

Independent of the company and largest shareholders

President and CEO, Metso Corporation 2004–2011 
President and CEO, Kvaerner Masa-Yards Inc. 2001–2003 
President and CEO, Patria Industries Group 1997–2000 
Deputy Chief Executive, Finvest Group and Jaakko Pöyry Group 1996 
President, Finvest Ltd 1985–1995

Chairman of the Board:
Neste Corporation 2012–, Vice Chairman 2011
Stora Enso Oyj 2017–, Vice Chairman 2016–2017
Uponor Corporation 2014–, Vice Chairman 2012–2014, member 2005–
Directors’ Institute of Finland – Hallitusammattilaiset ry 2013–,
member 2012–
Suominen Corporation 2011–2017
 

Vice Chairman of the Board:
The Finnish Fair Foundation 2013–, member 2012– 

Peter Immonen

born 1959, Finnish, M.Sc. (Econ.)

Member of the Board 2005–

Member of Nomination and Compensation Committee

Independent of the company
Dependent of significant shareholders (Member of the Board of Wipunen varainhallinta oy and Mariatorp Oy).

Chairman of the Board 1995–2001 and 2005–, 
managing director 2002–2005, WIP Asset Management Oy

Deputy Chairman of the Board: 
Foundation for a Living Baltic Sea 2008–2016

Member of the Board:
Mariatorp Oy 2015–
Wipunen varainhallinta oy 2005–
Dasos Capital Oy 2010–
Finsilva Oyj 2015–
Finnish Shareholders Association 1988–2013

Teresa Kemppi-Vasama

Born 1970, M.Pol.Sc. (social psychology), MBA

Member of the Board 2017–

Independent of the company and largest shareholders

Executive Chairman of the Board, Kemppi Oy 2014–
Manager, BD & MI, Kemppi Oy 2009–2014
CEO, Lomapilke Oy 2010–
CEO, Chairman of the Board, Auro Invest Oy 2007–
Various positions at Finnish Red Cross 1997–2009
Consultant, Accenture 1996–1997

Chairman of the Board:
Kemppi-Yhtiöt Oy 2012–

Member of the Board:
Kemppi Group Oy 2012–
Kemppi-Kiinteistöt Oy 2012–

Other:
Chairman of the Executive Committee, Association for Finnish Work 2015–

Johanna Lamminen

Born 1966, D. Sc. (Tech.), MBA

Member of the Board 2017–

Independent of the company and largest shareholders

CEO, Gasum Ltd 2014–
Executive Vice President and deputy to CEO, Gasum Ltd 2013–2014
CEO, Danske Bank Finland 2012–2013
CFO, Danske Bank Finland 2011–2012
CFO, deputy to CEO, Evli Bank Plc, Finland 2005–2011
CFO, SSH Communication Security Corporation, Finland 1999–2005
Director, Finnetcom Oy, Finland 1996–1999

Chairman of the Board:
Skangas AS 2014–

Member of the Board:
Tieto Plc 2016–
Evli Bank Plc 2015–
Chemical Industry Association 2014–
Finnish Foundation for Technology Promotion 2014–

Kaisa Olkkonen

born 1964, LL.M

Member of the Board 2016–
Member of the Audit and Risk Management Committee 2016–

Independent of the company and largest shareholders

CEO, SSH Communications Security Oyj 2017–
Employed by Nokia Corporation:
Vice President, Government Relations 2012–2016
Vice President, EU Representative Office, Corporate Relations and Responsibility 2010-2012
Vice President, Legal and IP, Services 2008–2010
Vice President, Legal, Multimedia (Finland) 2004–2007
Various leadership positions at Nokia Mobile Phones 1999–2004

Chairman of the Board:
SSH Communications Security Oyj 2016

Member of the Board:
Enfo Oyj 2016–
John Nurminen Foundation 2017–
Finland-China Trade Association, Finland 2012–2016
Finnish Centre for New Enterprises, Finland 2012–2016
Digital Europe (the European ICT sector trade association) 2012–2016

Advisor:
Morelex Oy 2014–
3D Bear Oy 2016–

Other:
Chair, Business Europe Internal Market Committee
Chair, Advisory Board of International Chamber of Commerce (ICC), Finland
Vice Chair, Digital Economy Commission of the International Chamber of Commerce (ICC) 2012–2016

Heikki Soljama

born 1954, M.Sc. (Power electronics)

Member of the Board 2016–

Independent of the company and largest shareholders

Employed by ABB Group 1980–2015:
Group Senior Vice President, ABB Ltd. Switzerland 2010–2015
Group Senior Vice President, ABB China Ltd. 2006–2010
Group Senior Vice President, ABB Oy, Finland 2003–2005
COE Manager, Cruise and Ferry, ABB Oy, Finland, 1995–2003

CEO

The Board appoints Cargotec’s CEO and determines the related terms of employment. The CEO is responsible for ensuring that the targets, plans, guidelines and goals set by the Board are carried out within Cargotec. According to the Finnish Limited Liability Companies Act, the CEO ensures that the accounting practices of the company comply with the law and that financial matters are handled in a reliable manner. The employment terms of the CEO are defined in a written employment contract.

Cargotec's CEO is Mika Vehviläinen, (b. 1961), M.Sc., Master of Science (Economics).

Executive Board

Supporting the CEO in his duties, the Executive Board is responsible for business development and the Company’s operational activities in accordance with targets set by the Board of Directors and the CEO. The Executive Board also defines operative principles and procedures in accordance with guidelines set by the Board. The Executive Board convenes every month and whenever necessary and concentrates on the strategic issues of the group and the business areas. On the agenda there are regular reports and questions concerning the development of the financials, governance, human resources, corporate responsibility and development projects.

The CEO acts as Chairman of the Executive Board. The Executive Board convenes every month and whenever necessary.

The members of the Executive Board are

Mika Vehviläinen, CEO,
Mikko Puolakka, Executive Vice President, CFO,
Mikael Laine, Senior Vice President, Strategy, 
Mikko Pelkonen, Senior Vice President, Human Resources,

and business area Presidents

Antti Kaunonen 
(Kalmar),
Roland Sundén (Hiab) and
Michel van Roozendaal (MacGregor).

Outi Aaltonen, Senior Vice President, General Counsel, acts as Secretary to the Executive Board.

Extended Executive Board

In addition to the Executive Board members, the Extended Executive Board  includes Outi Aaltonen, Senior Vice President, General Counsel, Stephen Foster, Senior Vice President, Corporate Audit, Leena Lie, Senior Vice President, Communications, and Soili Mäkinen, Chief Information Officer.

Mika Vehviläinen

CEO

b. 1961, Finnish, M. Sc. (Econ.)

Employed by Cargotec and Chairman of the Executive Board 2013–

Prior work experience:
President and CEO, Finnair Plc 2010–2013
COO, Nokia Siemens Networks 2007–2009
Employed by Nokia, holding different positions 1991–2007

Key positions of trust:

Vice Chairman of the Board:
Elisa Corporation 2014–, member 2012–
Vacon Plc 2010–2014, member 2009

Mikko Puolakka

Executive Vice President, CFO

b. 1969, Finnish, M.Sc. (Econ)

Employed by Cargotec and member of the Executive Board 2016–

Prior work experience: 
CFO, Outotec Oyj 2010–2016
CFO, Elcoteq SE 2007–2010
Director Finance Europe, Elcoteq SE 2004–2007
Manager Finance, Elcoteq AG 2001–2003
Operations Controller, Huhtamaki Oyj 1999–2001
Manager Finance, Leaf Poland Sp. Z.o.o. 1997–1999
Various treasury positions in Huhtamaki in Switzerland and Finland 1995–1997

Key positions of trust:

Member of the Board of Directors, Okmetic Oyj 2012–2016

Mikael Laine

Senior Vice President, Strategy

b. 1964, Finnish, M.Sc. (Econ.)

Employed by Cargotec and member of the Executive Board 2014–

Prior work experience:
President & CEO, Moventas Group 2012–2013
SVP, Business Development and Corporate Functions, Moventas Group 2008–2012
CEO, YAP Solutions Oy 2005–2008
CFO, Senior Vice President, deputy CEO, TeliaSonera Corporation /TeliaSonera Finland 2003–2005
Employed by Sonera Oyj holding different positions 1996–2002
CFO, Oy Mikrolog Ltd 1995–1996

Key positions of trust:

Member of the Board, Aspo Plc 2016–

Mikko Pelkonen

Senior Vice President, Human Resources

b. 1970, Finnish, B.A.

Employed by Cargotec and member of the Executive Board 2013

Prior work experience:
Vice President of Human Resources, Nokia Siemens Networks, Mobile Broadband 2012–2013, Network Systems 2009–2012, Greater China 2006–2009
Head of Human Resources, Nokia Networks, North America 2004–2006
Employed by Nokia, holding different HR positions 1997–2004

Antti Kaunonen

President, Kalmar

b. 1959, Finnish, Doctor of Technology (Dr.Tech) 

Employed by Cargotec 2015–
Member of the Executive Board 2016–

Prior work experience:
Voith, Germany 2007–2015
Metso (Neles, Valmet and Kajaani), Finland and China 1986–2007
Tampere University of Technology, Finland, Professor 1998–2007 (part time)
Tampere University of Technology, Finland 1983–86

Key positions of trust

Board member, Foundation of the Tampere University of Technology 2014–

Special honors
Honorary doctorate from Petrozavodsk State University, Russia on 14 September, 2005

Roland Sundén

President, Hiab

b. 1953, Swedish, M.Sc. (Mech. Eng.)

Employed by Cargotec and member of the Executive Board 2014–

Prior work experience:
Founder and Managing Director, CoCreate BV 2012–
CEO, LM Wind Power 2006–2012
President, Agricultural Division, Case New Holland (CNH) Global N.V. 2003–2006
Executive Vice President, Volvo Construction Equipment 2000–2003
President and CEO, Volvo Bus North America 1998–2000
Employed by Volvo holding different positions1985–1997

Michel van Roozendaal

President, MacGregor

b. 1963, Dutch citizen, M. Sc. (Aerospace Eng.), MBA 

Employed by Cargotec and member of the Executive Board 2015–

Prior work experience:
Vice President and General Manager, Ingersoll Rand, Thermo King Division, Global Marine, Rail and Bus Businesses (Belgium) 2013 – 2015
Vice President, Ingersoll Rand, Services, Contracting and Aftermarket, EMEIA (Belgium) 2010 – 2012
Managing Director, United Technologies Fire & Security (Netherlands) 2007 – 2009
President, Europe, Danaher Motion (Germany) 2004 – 2006
Vice President, North Europe Region, Johnson Controls (Belgium) 2000 – 2004
Several positions in Honeywell 1991 – 2000

Cargotec Extended Board Outi Aaltonen

Outi Aaltonen

Senior Vice President, General Counsel

Cargotec Extended Board Stephen Foster

Stephen Foster

Senior Vice President, Audit & Assurance

Cargotec Extended Board Leena Lie

Leena Lie

Senior Vice President, Communications

Cargotec Extended Board Soili Mäkinen

Soili Mäkinen

Chief Information Officer

Decision-making procedure

The Annual General Meeting (AGM) decides on the remuneration of members of the Board of Directors, on the basis of a proposal made by the Board’s Nomination and Compensation Committee (NCC). In determining such remuneration, the Committee takes account of the Board members’ responsibilities and obligations towards the company. Furthermore, the Committee compares the Board of Director’s remuneration packages to those paid by other companies of the same size operating in a comparable business environment.
 
Cargotec’s compensation and benefits policy is applied in determining the total remuneration of the CEO and the Executive Board. The policy is approved by the Board of Directors. Based on a proposal by the NCC, the Board of Directors decides on the annual base salary, short-term incentive programmes and benefits of the CEO and the Executive Board. In addition, the Board of Directors decides on long-term incentive programmes and on the target group and allocation of such programmes based on a proposal by the NCC.

Remuneration at Cargotec is characterised by five key principles:

  1. We align total compensation funding with our strategic and business plans – Our compensation and benefitsprogrammes reinforce the link between rewards and achievement of business results. Programmes are funded on the basis of business affordability to justify the spending of compensation euros.
  2. We reinforce a high-performing culture – We pay for performance and behaviours that reinforce the underlying shared performance culture value. Cargotec has a standard approach for managing performance on a global basis to reward top performers and support low performers.
  3. We promote pay for performance differentiation – Our compensation programmes enable robust differentiation based on individual performance contributions to business results. As individual and company performance goals are met and exceeded, our programmes offer incentives that position actual cash compensation at competitive levels.
  4. Our goal is to balance shareholder and employee needs – Our compensation and benefits programmes are designed to optimise the needs of both shareholders and employees.
  5. We enhance our ability to attract, retain, and motivate a diverse group of talented individuals – Our compensation and benefits programmes are flexible and fair and are understood and valued by employees.

Board of Directors

The Board members receive from the company only remuneration related to their Board and Committee memberships and Board work. Board members are not included in Cargotec’s short-term or long-term incentive programmes. Of the total annual remuneration, 30 percent is paid in Cargotec’s class B shares and the rest in cash. The shares are purchased at market price on a quarterly basis. Board members must keep the shares they have obtained as annual remuneration under their ownership for at least two years from the day they obtained them.

CEO and the Executive Board

The total remuneration structure of the CEO and the Executive Board comprises a fixed base salary including fringe benefits and incentive plans, for which both short- and long-term targets have been defined. The variable salary component consists of a share-based incentive programme linked to the company’s long-term targets, as well as short-term incentive programme. Relevant market practices are closely followed when defining the remuneration elements.

Cargotec Executive Board remuneration consists of the following elements:

​Remuneration element ​Description
Base salary Fixed salary including taxable fringe benefits
​Short-term Incentives (STI) ​Performance targets:
• Financial, 60% weight (2016 cash flow and EBIT)
• Strategic individual targets, 40% weight
• Threshold, target and maximum performance levels defined
Target (maximum) incentive level as a % of annual base salary:
• President and CEO: 60% (120%)
• Business Area President: 50% (100%)
• Other Executive Board member: 40% (80%)
Long-term Incentives (LTI)   ​LTI programme includes a three-year earning period, performance measurement in two phases. Performance targets:
• Phase 1: 2016 ROCE
• Phase 2: Cargotec 3/2016–3/2019 Total Shareholder Return
• Threshold, target and maximum performance levels defined
Target (maximum) incentive level as a % of annual base salary:
• CEO: 120% (360%)
• Business Area President: 80% (240%)
• Other Executive Board member: 80% (240%)
Phase 1 threshold financial performance level needs to be reached for any share reward.
Phase 2 of the programme determines earning multiplier for the Phase 1 achievement. The LTI reward vests and is delivered in shares after Phase 2, in the spring 2019. No restriction period after the shares have been delivered. No share delivery if a termination notice has been delivered by either party prior to the share delivery.
Share ownership recommendation: One-year gross base salary, the recommendation is to be fulfilled through refraining from transferring shares received under the Cargotec share-based incentive programmes.
Claw-back provision: The Board may decide to cut or cancel rewards and recover already delivered rewards from the participant in case of misconduct.
Restricted shares  Additional restricted share grants may be allocated for selected Executive Board members. Gross reward, before deduction for the applicable taxes and employment related expenses, is in the range of 20–100% of annual base salary.
Threshold level for financial performance is set by the Board. One-year earning period is followed by one-year restriction period.
 Pension  CEO is entitled to a supplemental defined contribution pension benefit. According to the pension agreement, the CEO is entitled to retire between age 60-65. One-time payment of EUR 700,000 has been paid in full in 2016 to insurance company administering the CEO's pension benefit. There are no additional costs for Cargotec in relation to the CEO's supplemental pension.
​Other Finnish members of the Executive Board are entitled to a statutory pension. Their retirement age is determined in line with the statutory pension scheme. For the Finnish members of the Executive Board, the statutory retirement age is 63 years in accordance with the legislation in 2016 (new legislation from January 2017 onwards increases the statutory retirement age).
Hiab and MacGregor Business Area Presidents have supplemental defined contribution pension plans, following the local market practice in Belgium and the Netherlands.
Severance pay  The members of the Executive Board have a period of notice of 6 months and are entitled to compensation, for termination of employment, corresponding to 6 to 12 months’ salary.

Additional information

Board of Directors

Based on the decision of the AGM of 21 March 2017, the Board’s annual remunerations are as follows:

Chairman: EUR 85,000
Vice Chairman: EUR 60,000
Chairman of the Audit and Risk Management Committee: EUR 60,000
Other Board members: EUR 45,000

In addition, a fee of EUR 1,000 is paid for attendance of meetings of the Board and its committees.


Remuneration paid to Board members in 2016 is shown in the following table:

​Member of the Board Remuneration for
Board membership and
Board work, EUR*​
Number of class
B shares obtained 
as remuneration**​
​Ilkka Herlin, Chairman 101,240 721​
​Tapio Hakakari, Vice Chairman 69,240 495
Kimmo Alkio, member1 36,667​ 169​​
​Jorma Eloranta, member 53,000 ​359
​Peter Immonen, member ​53,000 ​359
​Antti Lagerroos, member2 ​11,000 203
​Kaisa Olkkonen, member1 44,667​​ 169​
​Teuvo Salminen, member ​70,000 ​495
​Anja McAlister (Silvennoinen), member2 12,000 203
​Heikki Soljama, member1 38,667 169​​
Total 489,481 ​3,342

* Including annual remuneration and meeting attendance fees
** Value included in remuneration for Board membership and Board work
1 as of 22 March 2016, 2 until 22 March 2016

CEO and the Executive Board

For the financial period 2016, the base salary of Cargotec’s CEO Mika Vehviläinen was EUR 686,168 including fringe benefits. In addition, he received a short-term incentive payout of EUR 559,707 (payout is based on 2015 performance) and long-term incentive payout of EUR 443,674 (restricted shares programme).

The CEO is covered by Cargotec’s short-term incentive programme and share-based incentive programmes. The remuneration paid to the CEO and the Executive Board members in 2016 is stated in the following table:

Remuneration paid during 2016, EUR ​CEO Mika Vehviläinen​ Other members of
Executive Board*​
​Base salary including fringe benefits ​686,168 1,971,142
​Short-term incentives (based on 2015 performance) ​559,707​ 1,100,095​
​Long-term incentives (restricted shares, taxable gross amount) 443,674 676,391
​Long-term incentives (2010 B options, taxable gross amount) 0 3,656​​
Total 1,689,549 3,751,284

* Mikael Laine, Mikko Pelkonen, Mikko Puolakka (as of 1 May 2016), Eeva Sipilä (until 31 July 2016), Antti Kaunonen (as of 1 July 2016), Olli Isotalo (until 30 June 2016), Roland Sundén, Michel van Roozendaal. Summary table does not include termination benefits of EUR 474,601 (payments related to short- and long-term incentives).


The following table summarises the actual number of class B shares delivered (net, after deduction of taxes and employment-related expenses) to the CEO and other members of the Executive Board in 2016:

​Actual number of shares delivered in 2016 CEO Mika Vehviläinen​ Other members of
Executive Board
​2014–2016 restricted shares programme; 2015 earning
period, 2016 restriction period; class B shares
8,097 13,174


The following table summarises Cargotec 2010 B options exercised by the CEO and other members of the Executive Board in 2016:

​Options exercised in 2016 CEO Mika Vehviläinen​ Other members of
Executive Board​
​2016 opening / closing balance: 2010 B options 0 / 0​ 640 / 0


The following table summarises the gross value in Euros of long-term incentives granted to the CEO and other members of the Executive Board in 2016:

​Gross LTI value granted in 2016, EUR ​CEO Mika Vehviläinen ​Other members of Executive Board
​2016 share-based incentive programme; earning period 2016-2019, on target performance (gross in euros, before deduction of taxes and employment related expenses) 792,000 1,275,504
​2014-2016 restricted shares programme; earning period 2016 (gross in euros, before deduction of taxes and employment-related expenses) 264,000​ 437,739​​​
Total 1,056,000 1,713,243

Cargotec applies the insider guidelines of Nasdaq Helsinki Ltd, in addition to which Cargotec’s Board has approved internal insider regulations that are based on the stock exchange guidelines.

Insider registers

Persons who have access to all Cargotec inside information when performing their duties are registered permanently. The members of the Board of Directors, the CEO and the other members of the Extended Executive Board​, the Executive Assistant to the CEO and the officer maintaining the insider registers​ are included in the permanent insider list​.​ ​Persons who, on the basis of an employment or other contract, work for the company and obtain insider information associated with a specific project, are entered in the company’s project-specific insider register, which is established when necessary.

​Managers ​

Cargotec maintains a list of its' Managers and their closely associated persons. Cargotec’s Managers include the members of the Board of Directors, the CEO and the other members of the Executive Board. The Managers and their closely associated persons are obliged to notify Cargotec and the Finnish Financial Supervisory Authority of every transaction conducted on their own account relating to Cargotec’s financial instruments. Cargotec will publish each notification in the form of a stock exchange release. 

Trading rules

Trading in Cargotec financial instruments is prohibited
(i) if a person possesses inside information,
(ii) regarding permanent insiders and their dependent children, during a period of 30 days prior to the publication of Cargotec’s annual or interim reports (closed window),
(iii) regarding persons having access to full Cargotec financials, especially persons engaged with preparing Cargotec’s annual or interim reports, and their dependent children, during a period of 30 days prior to the publication of such report, or
(iv) regarding project-specific insiders, for the duration of the project until the project is published or otherwise terminated.

​Insider management

The General Counsel of Cargotec is responsible for the overall insider management in Cargotec, including necessary training. Corporate Legal is responsible for maintaining the list of Managers and the insider lists and informing the insiders on their insider status and of closed windows. Corporate Communications is responsible for disclosing the ​transactions of the ​Managers​ and their closely associated persons​.

Closed windows 2017

Report Publication date Closed window
Financial statements 2016 8 Feb 2017 9 Jan - 8 Feb 2017
Interim report Q1 26 Apr 2017 27 Mar - 26 Apr 2017
Half year repert Q2 20 Jul 2017 20 Jun - 20 Jul 2017
Interim report Q3 27 Oct 2017 20 Sep - 20 Oct 2017

Internal control and risk management

The objective of Cargotec’s internal control is to ensure  that its operations are efficient and profitable, that risk management is adequate and appropriate, and that financial and other information produced is reliable. Cargotec’s internal control is based on the company’s Code of Conduct and internal controls. With respect to the financial reporting process, these are supported by Cargotec’s policies and guidelines, as well as its internal financial reporting process and communication.

Cargotec’s internal control policy, which is approved by the Board of Directors, specifies the applicable control principles, procedures and responsibilities. Similarly to other Cargotec operations, responsibility for internal control is divided into three tiers. The line management is principally responsible for internal control. This is backed by corporate support functions, which define instructions applicable across the company and supervise risk management. Internal and external audits form the third tier, their task being to ensure that the first two tiers function effectively. 

Cargotec’s Corporate Audit is an independent and objective assurance and consulting function that operates separately from the operative organisation and reports to the Board Audit and Risk Management Committee and,  administratively, to the CEO. Corporate Audit takes account of the major risks identified in the company’s risk map when developing the audit plan and monitors the mitigation of selected risks. The audits of the operations of subsidiaries and business units assess the effectiveness of internal control and risk management, as well as compliance with operating principles and guidelines. Furthermore, Corporate Audit audits and assesses financial reporting processes and compliance with the related control measures in Cargotec units. It regularly reports on its findings and audit activities to the company management and the Board Audit and Risk Management Committee.

At Cargotec, risk management forms part of the internal control operations. Approved by the Board of Directors and based on Cargotec’s values, the risk management policy specifies the objectives and principles of the risk management as well as the responsibilities involved. A core principle is continuous, systematic and preventive action taken to identify risks, define the company’s risk appetite, assess and handle risks and, if they materialise, deal with them effectively. The CEO and the Executive Board are responsible for the methods, implementation and supervision of risk management, and report on these to the Board of Directors.

Cargotec’s risk management is spread across units and corporate support functions that assign responsibility for risk management and that are in charge of identifying, managing and reporting risks. Financial risks are managed centrally by the Corporate Treasury, and reported on for corporate management and the Board of Directors on a regular basis.

Main risks identified in 2016

Market development, corporate restructuring, and supply chain interruption were the main market-related areas where risks were identified for Cargotec in 2016. Operational risks were related to legal, ethical code of conduct and contract risks, as well as information security and product liability. Employee, customer and third-party health, safety and environmental risks are carefully considered and continuously monitored as top priorities in Cargotec’s risk evaluation and management processes.

Risk management

Cargotec's risk management aims at anticipating risks involved in operations and managing them in the appropriate manner. The purpose of this is to support the values, strategy and goals, and the continuity of operations.

Cargotec’s global operations require comprehensive risk management. Cargotec defines a risk as any internal or external threat or uncertainty which may prevent or jeopardise operations and the achievement of company objectives.

At Cargotec, risk management is part of internal control operations. The key principle is continuous, systematic and preventive action taken to identify risks, define the company’s risk appetite, assess and manage risks and, should they materialise, deal with them effectively.

Responsibilities

The objectives and principles of risk management are defined in the Cargotec risk management policy approved by the Board of Directors. Cargotec’s risk management is spread across units and corporate support functions that assign responsibility for risk management and which are in charge of identifying, managing and reporting risks.

The Board of Directors is responsible for ensuring sufficient risk management and control. The Board is also responsible for defining Cargotec’s risk appetite, that is, the level of risk accepted, on an overall basis. The Board shall receive relevant and timely reporting on risks and risk management as defined in the risk management policy, and it can mandate the Audit and Risk Management Committee of the Board to assist in the practical oversight role.

The President and CEO and the Executive Board are responsible for the methods, implementation and supervision of risk management, and report on these to the Board of Directors.

As far as it is possible and practical, risk management is conducted within business units and support functions as part of day-to-day processes. Identification, assessment, treatment planning and reporting are part of Cargotec’s planning and decision-making processes. Follow-up of risks and risk management actions forms part of the management and follow-up of the company’s operations as a whole. Each Cargotec employee is responsible for identifying, assessing and managing risks in his or her area of responsibility, and for reporting any significant risks to the relevant managers.

The role of the corporate risk management function is to develop and coordinate the overall risk management framework and process. This function supports the businesses in implementing risk management and performs certain specified tasks, such as the coordination of global insurance programmes.

Additional information

Strategy and values for tax

Creating optimum shareholder and customer value is the underlying principle guiding Cargotec’s operations. Cargotec aims to keep a keen eye on growth, profitability and cash flow, while simultaneously ensuring strong position as a technology forerunner and market leader.

To align with Cargotec's business strategy Cargotec’s tax strategy is to support business operations through sustainable tax management by identifying and delivering simple, flexible, cost- and tax-efficient solutions for Cargotec business to increase shareholder value and guarantee appropriate taxes to be paid on time in each country of operations.

Cargotec Tax Department works actively to identify and manage business, technical and reputational risks concerning tax issues early enough to create a stable platform for business operations. Cargotec’s businesses are engaged in tax matters already in the planning phase to ensure alignment and appropriate compliance of tax rules and regulations. Cargotec Tax Department communicates transparently to improve engagement and understanding of tax matters. 

Tax values

Accountability
Cargotec Tax Department has defined its processes and agreed accountabilities and responsibilities of tax matters with business operations to safeguard that all tax issues are managed in line with existing regulations. 

Performance
Cargotec Tax Department works together with Cargotec’s business areas to create solutions that support achievement of business targets and takes shareholder value into account as a whole.

Cooperation
Cargotec Tax Department respects existing regulation set to listed companies and supports the needs of business operations following the Cargotec governance rules.

Honesty
Cargotec’s tax management is based on transparent communication and identifying Cargotec's obligations and rights. Cargotec Tax Department makes all reasonable efforts to comply with the existing rules. Tax evasion is forbidden.

Additional information

The statutory external audit for the financial period includes auditing of accounting records, financial statements, and administration. In addition to the auditor’s report issued annually, the auditors report to the Board on their audit findings on a regular basis. Cargotec’s financial period is the calendar year.

According to the Articles of Association, the company has at least one and a maximum of three auditors. The auditors must be public accountants authorised by the Central Chamber of Commerce. They are elected annually by the AGM and their assignment expires at the end of the first AGM following the election. PricewaterhouseCoopers Oy has acted as Cargotec’s auditor since the beginning of the company’s first financial period, 1 June 2005. The latest competitive bidding round for corporate audit services was arranged by the Board Audit and Risk Management Committee in autumn 2011.

The AGM of 21 March 2017 elected Authorised Public Accountants Tomi Hyryläinen and PricewaterhouseCoopers Oy as Cargotec’s auditors, in accordance with a proposal by the Audit and Risk Management Committee. PricewaterhouseCoopers nominated Authorised Public Accountant Ylva Eriksson as its principal auditor. Auditors’ fees are compensated against an invoice approved by the company.


Auditors' fees, MEUR

​2016​2015​2014​2013​2012
​Audit fees ​2.6 ​2.6 ​2.6 ​2.4 ​1.9
​Non-audit fees ​1.4 ​2.4 ​2.3 ​3.1 ​1.9

Additional information