- Companies most frequently depart from recommendations on Board committees Helsinki, October 16, 2009 - NASDAQ OMX Helsinki (the Exchange) today publishes a review of Exchange listed companies' compliance with the Finnish Corporate Governance Code. According to the review, listed companies comply well with the Code, and all companies have now fully disclosed on their websites the information required by the Code, which entered into force on January 1, 2009. The Exchange supervises the compliance of listed companies with the renewed Corporate Governance Code. In the first review in spring 2009, the Exchange found that the majority of the companies published insufficient information on their websites. Most often, there were insufficiencies in the information concerning the service contract of the managing director and the working practices of the Board of Directors. Following contacts by the Exchange, all listed companies have now supplied the required information. ”I am happy to note how seriously Finnish listed companies take Corporate Governance and recommendations on Corporate Governance. Although individual pieces of information were initially missing, there were only few serious deficiencies. Typically, the information absent from the website concerned the managing director's period of notice or the auditors' fees, for instance. In general, the information disclosed was comprehensive and clearly presented, but above all the information about internal control, risk management and internal audit was often very brief”, says Janne Seppänen, Head of Surveillance at NASDAQ OMX Helsinki. The Corporate Governance Code has been prepared in accordance with the principle of Comply or Explain. This means that the company shall comply with all recommendations of the Code. A company may, however, depart from an individual recommendation, but in that case, it must account for such a departure and provide an explanation for doing so. 75 listed companies comply with the entire Code, and 50 companies state that they depart from individual recommendations. Large cap companies are more likely to depart from individual recommendations (58% of Large cap companies state that they depart from some recommendation). Most frequently, companies depart from recommendations concerning the Board of Directors. Large cap companies typically depart from recommendations on Board committees, whereas Small cap companies depart from recommendations on the independence of Board members. Large variations in CEO remuneration and fees paid to auditors In connection with the review, the Exchange also examined the remuneration and fees paid to managing directors and auditors for the preceding financial year. The average managing director's salary in a Large cap company amounted to 1.1 million euros (ranging from 170.000 euros to 3.2 million euros), in a Mid cap company to 450.000 euro (170.000 to 860.000 euro) and in a Small cap company to 220.000 euro (0 to 700.000 euro). Some Small Cap managing directors had not received any salary at all as a consequence of the company's negative financial performance. Companies paid their auditors more or less the same for non-audit services as for actual auditing services. The auditors' fees of Small and Mid cap companies averaged 100.000 and 280.000 euros, respectively, whereas the auditors' fees of Large cap companies averaged 1.95 million euros per year and went as high as 19.5 million euro. The Exchange also reviewed the composition of the Boards of Directors. According to the Corporate Governance Code, the Board composition should be versatile: both genders should be represented on the Board, for instance. This requirement, however, applies first from the first annual general meeting held after January 1, 2010. Currently, the clear majority of listed companies meet the goal of this recommendation, but the goal is particularly challenging for Small cap companies, only half of which have female board members. The Finnish Corporate Governance Code The aim of the Corporate Governance Code is to harmonize the disclosure practices of listed companies as well as the information given to shareholders and other investors. It also improves the transparency of administrative bodies, management remuneration and remuneration systems and the use of the company's website as the primary information channel. On their website, the company shall disclose in a separate report a so-called Corporate Governance Statement that shall describe the company's governance system. The main changes compared to the previous Corporate Governance Recommendation for Listed Companies issued in 2003 relate to management remuneration, risk management, board composition, communication with shareholders and the report on corporate governance. Furthermore, the company shall disclose a salary and remuneration report. On their website, the company shall describe the principles and decision-making process concerning the remuneration policy covering the managing director and other executives, e.g. the division of the salaries and fees into a fixed and variable part, as well as the main information on how the variable parts of the salary and fees are defined, on share and share-related remuneration schemes and additional pension schemes. For further information on the Finnish Corporate Governance Code and the Review by the Exchange, please visit www.nasdaqomx.com and the Securities Market Association's web pages www.cgfinland.fi. 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