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which is no more than 30 percent of
their annual taxable earnings. The short-
term performance-based bonus is tied to
the operating profit and to personal tar-
gets. The ceo and some members of the
Group Management Team were included
in the long-term “bonus bank” incentive
system established to increase long-term
commitment during the period 2007–
2011. According to a decision by the
Board of Directors on February 9, 2010,
the old incentive system was discon-
tinued as per December 31n 2009 and
replaced with a similar new system for
the years 2010–2012. The “bonus bank”
system is used to reward the Group’s
key personnel for reaching the targets
approved annually by the Board. The
long-term performance-based bonus is
tied to the long-term profitable growth
of the Group. Under the system, the
maximum annual bonus may not exceed
40 percent of the ceo’s annual taxable
earnings or 20–30 percent of the annual
taxable earnings of other key person-
nel. The bonuses accumulated in the old
system can be withdrawn in stages over
a three-year period starting from 2010.
The bonuses accumulated in the new sys-
tem can be withdrawn in stages over a
three-year period starting from 2013.
Furthermore, the business areas can
apply bonus systems based on sales or
production or linked to the units’ con-
tributions to the profit margins or
their earnings to facilitate business suc-
cess. These systems do not overlap with
the Group’s annual performance-based
bonus system. Upon termination of
their contracts, the ceo and other mem-
bers of the Group Management Team
will be entitled to the salary paid for the
period of notice as well as benefits. The
period of notice for terminating the ceo’s
employment is six months when notice is
served by the employer and four months
when notice is served by the ceo. The
period of notice for terminating the
employment of other members of the
Group Management Team is between
six and 12 months when notice is served
by the employer and between three
and six months when notice is served
by the corporate executive in question.
Upon termination of employment by
the employer, the ceo will be entitled to
compensation equivalent to six months’
salary in addition to the salary paid for
the period of notice, and other members
of the Group Management Team will be
entitled to compensation equivalent to
up to six months’ salary in addition to
the salary paid for the period of notice.
Upon resignation, the corporate execu-
tive in question will only be entitled to
the salary paid for the period of notice
as well as benefits. The ceo’s retirement
age is 62 years. With the exception of
the ceo and the Chief Financial Officer,
Edita Plc does not provide supplemen-
tary pension insurance. The supplemen-
tary pension plans of the ceo and the
Chief Financial Officer are based on con-
tributions and they include vested rights.
Financial reporting
The achievement of financial targets and
balance sheet management are monitored
through monthly Group-wide reports.
Interim financial statements are drawn up
quarterly. A semi-annual review is drawn
up together with the interim financial
statements for the first half-year.
Risk management
The risk management policy approved by
Edita’s Board of Directors defines the risk
management principles, objectives, and
divisions of responsibility in the Group.
Risk management is based on an organ-
ization-wide approach to identifying,
assessing, managing, and monitoring
material risks. The ceo and other exec-
utives ensure that risk management is a
continuous, integral part of the Group’s
day-to-day operations.
The management reports to the Board
on risks by business area. Unless there is
need for ad-hoc reporting, the manage-
ment reports to the Board on risks on a
quarterly basis. The ceo and other execu-
tives identify and monitor risks, develop
and c-ordinate risk management activ-
ities, and update the Group’s risk pro-
file. The Board of Directors deals with
the most significant risks and evaluates
the efficiency of risk management at least
once a year. The effectiveness of Edita’s
risk management is monitored through
internal and external audits as part of the
regular auditing program.
Auditing
The authorized public accountant firm
elected by the Annual General Meeting
to audit the parent company, Edita Plc,
audits the entire Group with regard to
accounting, financial statements, and
administration each financial year. In
addition to the audit report issued in
connection with the company’s financial
statements, the auditors also regularly
report on their findings to the Board’s
Audit Committee.
Edita’s Auditor is kpmg Oy, with
Minna Riihimäki, apa, acting as the
auditor in charge in 2011.
Internal auditing
The purpose of internal control and risk
management is to ensure that the com-
pany’s operations are efficient and prof-
itable, that the supply of information is
reliable, and that regulations and poli-
cies are observed. Internal auditors are
responsible for helping the Board and
the ceo to assess the appropriateness and
effectiveness of the Group’s processes and
systems, the efficiency and adequacy of
internal control, and the accuracy and
adequacy of accounting and reporting.
In the Edita Group, internal auditing
goals are decided upon annually by the
Board by means of risk assessments, etc.
Practical implementation is entrusted to
an independent external firm of author-
ized public accountants. Internal audit
reports are distributed to Edita Plc’s
Board of Directors, Audit Committee,
auditors, ceo, and Group Management
Team.
The ceo, together with other execu-
tives, is responsible for ensuring that any
actions required on account of observa-
tions made by internal auditors are duly
initiated. Edita’s internal auditing was
performed by bdo oy, in 2011.
•
edita’s year 2011
33