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BOARD OF DIRECTORS AND MANAGEMENT

Board of Directors

  • The Board of Directors’ duties and responsibilities are defined primarily by the Articles of Association and the Finnish Limited Liability Companies’ Act. The Board’s duties include:

    • compiling of the Board of Directors’ report, interim reports and financial statements

    • ensuring the proper organization and surveillance of the accounting and asset management

    • the preparation of proposals for the General Meeting and the convocation of the General Meetings

    • the approval and confirmation of strategic guidelines and the principles of risk management the ratification of annual budgets and plans

    • the possible appointment of a full-time Chairman and Executive Vice Chairman of the Board and appointment of a President and CEO, and decisions on the terms and conditions of their employment

    • decisions on the company’s corporate structure

    • decisions on major acquisitions and investments

    • decisions on other matters falling under the Board’s responsibility by law

    The Board has created rules of procedure stipulating the duties of the Board, its Chairman and its Committees. The Board of Directors holds six regular meetings a year and additional meetings as required. The Board of Directors reviews its own performance and procedures once a year.

  • The Annual General Meeting elects five to ten members and no more than three deputy members to the Board of Directors for one year at a time in accordance with KONE Corporation’s Articles of Association. The Board of Directors elects a Chairman and Vice Chairman among its members. The proposals for Board members are prepared at the Nomination and Compensation Committee and under the steering of the Chairman of the Board. During the preparation and in the proposal to the General Meeting of Shareholders attention is paid to the board candidates’ broad and mutually complementary background, experience, expertise, age, gender and views of both KONE’s business and other businesses so that the diversity of the board supports KONE’s business and its future in the best available way.

    The Chairman of the Board of Directors of KONE Corporation is Antti Herlin. Jussi Herlin is the Vice Chairman of the Board. The other members of the Board are Matti Alahuhta, Susan Duinhoven, Iiris Herlin, Ravi Kant, Juhani Kaskeala and Jennifer Xin-Zhe Li. Out of the eight Board Members, five are male and three female.

    Of the Board members, Matti Alahuhta, Susan Duinhoven, Iiris Herlin, Ravi Kant, Juhani Kaskeala and Jennifer Xin-Zhe Li are independent of the Corporation. With the exception of Antti Herlin, Iiris Herlin and Jussi Herlin, the other Board members are independent of the Corporation’s significant shareholders.

    In 2020, the Board of Directors convened 8 times, with an average attendance rate of 99%. Jukka Ala-Mello serves as Secretary to the Board and to its Committees.

    Read more about the members of the Board of Directors

  • The Board of Directors has appointed two committees consisting of its members: the Audit Committee and the Nomination and Compensation Committee. The Board has confirmed rules of procedure for both Committees. The Secretary to the Board acts as the Secretary of both Committees.

    The Audit Committee

    The Audit Committee monitors the Group’s financial situation and supervises reporting related to the financial statements and interim reports. The Audit Committee monitors and assesses the adequacy and appropriateness of KONE’s internal control and risk management, as well as the adherence to rules and regulations. It also monitors and oversees the financial statement and financial reporting process. In addition, the Audit Committee processes the description of the main features of the internal control and risk management systems pertaining to the financial reporting process included in the company’s corporate governance statement. In addition, it deals with the Corporation’s internal audit plans and reports. The Director of Internal Audit reports the internal audit results to the Committee. The Audit Committee evaluates the auditing of the Group’s companies and the appropriateness of the related arrangements and auditing services, and considers the auditors’ reports. Furthermore, the Committee formulates a proposal to the Annual General Meeting regarding the auditors to be selected for the Corporation.

    Members of the Audit Committee:

    Ravi Kant (Chairman), Matti Alahuhta and Jussi Herlin. Ravi Kant and Matti Alahuhta are independent of both the company and of significant shareholders.

    The Audit Committee held 3 meetings in 2020, with an average attendance rate of 83%.

    Kristian Snäll serves as the Head of Internal Audit.

    The Nomination and Compensation Committee

    The Nomination and Compensation Committee prepares proposals to be made to the Annual General Meeting regarding the nomination of Board members and their compensation and makes decisions regarding senior management appointments and compensation. The Committee also decides on the compensation systems to be used.

    Members of the Nomination and Compensation Committee:

    Antti Herlin (Chairman), Matti Alahuhta, Jussi Herlin and Juhani Kaskeala. Matti Alahuhta and Juhani Kaskeala are independent of both the company and of significant shareholders.

    The Nomination and Compensation Committee held 4 meetings in 2020, with an average attendance rate of 100%.

  • The Annual General Meeting 2021 confirmed an annual compensation of EUR 220,000 (2020: 60,000) for the Chairman of the Board, EUR 125,000 (50,000) for the Vice Chairman and EUR 110,000 (45,000) for Board Members. Of the annual remuneration, 40 percent will be paid in class B shares of KONE Corporation and the rest in cash. Compensation is not paid to a board member who is employed by the company.

    Remuneration of Chairman of the Board and Vice Chairman of the Board with separate employment terms

    The Chairman of the Board, Antti Herlin, had a separate employment contract for his role as Full-time Chairman of the Board at KONE until March 2021. The employment-based compensation consisted of a base salary and an annual bonus decided by the Board on the basis of the Group’s financial result. The annual bonus could not exceed 100 percent of his annual base salary. In 2020, Antti Herlin’s base salary was EUR 468,488. In 2020 he was paid a bonus totaling EUR 401,963, which was earned in 2019. In 2020 Antti Herlin earned a bonus totaling EUR 290,462, which will be paid in 2021. The performance criteria for 2020 were tied to Group’s financial performance. From March 2021 onwards, Antti Herlin will continue in his role as Chairman of the Board but no longer with a separate employment contract as a Full-time Chairman.

    The Vice Chairman of the Board, Jussi Herlin, has worked full-time at KONE in the role of Strategy Development Manager until July 2020. The employment-based compensation for Jussi Herlin during his employment consisted of a base salary and an annual bonus based on performance targets in line with KONE’s Global Bonus policy. Jussi Herlin’s employment terms and conditions followed KONE´s normal employment policies and the global remuneration framework. In 2020, Jussi Herlin was paid EUR 55,394.62 in base salary. In 2020, he was paid a bonus totaling EUR 6,581.13 which was earned in 2019. From March 2021 onwards, Jussi Herlin will have a separate employment contract for his role as a Vice Chairman at KONE. The employment-based compensation will consist of a base salary and an annual bonus decided by the Board on the basis of the Group’s financial result. Jussi Herlin’s fixed annual salary is from March 2021 onwards 125,600 euros and the annual bonus may not exceed 100 percent of his annual base salary.

    The full-time Chairman’s and the Vice Chairman’s retirement age and pension are determined in accordance with Finland’s Pensions Act. No separate agreements regarding early retirement or additional pension plan have been made.

    Read more about compensation in the Remuneration Report 2020

    Read more about the general guidelines and framework for the remuneration of the Board of Directors and the President and CEO in the Remuneration Policy

Management

  • KONE Corporation’s Board of Directors appoints the President and CEO and determines the terms and conditions of employment of the President and CEO in a written contract. The Chairman of the Board prepares matters to be considered by the Board together with the Vice Chairman of the Board, the President and CEO and the corporate staff. The Chairman of the Board and the President and CEO are responsible for the execution of the targets, plans, strategies and goals set by the Board of Directors within the KONE Group. The Vice Chairman’s role is to support and to assist the Chairman of the Board. The President and CEO is responsible for operational leadership within the scope of the strategic plans, budgets, operational plans, guidelines and orders approved by KONE Corporation’s Board of Directors. The President and CEO presents operational issues to the Board, and is responsible for implementing the decisions of the Board.

    Antti Herlin serves as the Chairman of the Board and Jussi Herlin as the Vice Chairman. Henrik Ehrnrooth serves as the President and CEO.

  • The Executive Board supports the President and CEO in executing the corporate strategy. The Executive Board follows business developments, initiates actions and defines operating principles and methods in accordance with guidelines handed down by the Board of Directors and the President and CEO. The Executive Board holds regular monthly meetings and additional meetings as required.

    Members of the Executive Board:

    KONE’s Executive Board consists of President and CEO Henrik Ehrnrooth and 13 Members. The other members of Executive Board are Axel Berkling, Hugues Delval, Johannes Frände, Ilkka Hara, Thomas Hinnerskov, William Johnson, Mikko Korte, Maciej Kranz, Pierre Liautaud, Tomio Pihkala, Susanne Skippari, Ken Schmid and Tricia Weener.

    Read more about Executive Board members

  • Chairman and Executive Vice Chairman

    See information under "Compensation and other benefits of the Board of Directors"

    President and CEO

    The President and CEO’s compensation consists of a base salary and an annual short-term incentive determined annually by the Board on the basis of the Corporation’s key targets. The annual short-term incentive may not exceed 100 percent of the recipient’s annual salary.

    Henrik Ehrnrooth’s annual base salary is EUR 750,000. The short-term incentive paid in 2020 was based on the 2019 performance criteria set by the Board in the beginning of the financial year, with focus on the Group financial, strategic and operative targets. The performance achievement for the President and CEO for 2019 was 97% out of maximum, with a reward payout of EUR 727,500. The short-term incentive performance criteria for 2020 were set by the Board in the beginning of the financial year, with a focus on supporting the execution of the Group business performance targets. Based on the achieved performance, the President and CEO earned a bonus payout of EUR 493,500, which equaled 66% out of the maximum reward. The reward will be paid in 2021.

    Henrik Ehrnrooth is included in the share-based incentive plan for the Group’s senior management. The maximum KONE class B shares available for earning for the President and CEO for year 2019 was 37,500 KONE shares. The performance criteria for performance period 2019 were set by the Board in the beginning of 2019, with a focus on sales growth and profitability. In April 2020, on the basis of performance period 2019, Henrik Ehrnrooth received a reward of EUR 3,736,669, which consisted of 32,531 KONE class B shares together with a cash payment to cover taxes and similar charges arising from the receipt of shares. The performance criteria for LTI performance period 2020 were set by the Board in the beginning of 2020, with a continued focus on sales growth and profitability as well as growth of KONE’s digital services. The maximum granted KONE class B shares available for earning for the President and CEO for year 2020 was 30,000 KONE shares. On the basis of the performance of the 2020 incentive plan, Henrik Ehrnrooth will receive a reward of 17,625 KONE class B shares and a cash payment equivalent to the taxes and similar charges that are incurred from the receipt of shares. The reward will be paid in 2021 and the reward shares will be under restriction period until the end of 2022.

    No separate agreement regarding early retirement has been made. Should his employment contract be terminated before retirement, he has the right to the equivalent of 18 months’ salary, which includes the salary for a six month term of notice.

    Read more about the general guidelines and framework for the remuneration of the Board of Directors and the President and CEO in the Remuneration Policy

    See also Remuneration Report 2020

    Executive Board

    The compensation for the members of the Executive Board comprises a base salary and an annual short-term incentive, based on the Group’s annual result and the achievement of personal targets, which can relate to, for example, strategy execution, safety or quality. The annual short-term incentive amount is determined by the Nomination and Compensation Committee and may not exceed 50 percent of the annual salary.

    The members of the Executive Board are included in the share-based incentive plan for senior management. The performance criteria for performance period 2019 were set by the Board in the beginning of 2019, with a focus on sales growth and profitability. In April 2020, on the basis of the incentive plan, the members of the Executive Board received a reward of 172,619 KONE class B shares together with a cash payment equal to the amount required to cover taxes and similar charges arising from the receipt of shares. The performance criteria for LTI performance period 2020 were set by the Board in the beginning of 2020, with a continued focus on sales growth and profitability as well as growth of KONE’s digital services. The corresponding reward accrued from 2020 and due for payment in April 2021 is 83,897 KONE class B shares together with a cash payment equal to the amount of taxes and similar charges. The share-based incentive plan has a vesting period of three years, including the performance period. If the participant’s employment or service contract is terminated during the vesting period, they are either obliged to return the shares already received or lose the entitlement to the shares they have not yet received. As part of the plan for the senior management, a long-term target for their ownership has been set. For the Executive Board members, the long-term ownership target is that the members have an ownership of KONE shares corresponding to at least five years’ annual base salary.

    The total amount of base salary paid to the Executive Board members (excl. President and CEO) was EUR 5.3 million in 2020. The total amount paid to the Executive Board members (excl. President and CEO) based on the annual short-term incentive and the share-based incentive plan was EUR 18.7 million.

    No separate agreement regarding early retirement has been made for the members of the Executive Board. The compensation for the termination of the employment contract prior to retirement is a maximum of 15 months’ salary, which includes the salary for a six-month term of notice.