Board of Directors

The Board of Directors has overall responsibility for the appropriate administrative and operational organization of Affecto Plc and its subsidiaries. The Board ratifies the principles that govern company strategy, organization, accounts and financial management. The Board also appoints the group's Chief Executive Officer.

The shareholders of Affecto Plc elect the Board of Directors annually at the Annual General Meeting. The Board consists of three to seven members. The term of office of the Board members ends at the conclusion of the first Annual General Meeting which is convened after the election.

The Board convenes regularly at least 11 times a year, and whenever required. At the beginning of each year the Board agrees in advance the thematic issues for discussion at the Board meetings, in addition to the requirements of normal financial supervision. In 2010, the Board convened a total of 20 times, and average attendance level was at 90 per cent.

The Chairman of the Board of Directors receives a monthly remuneration of 3 200 Euros, Vice-Chairman 2 500 Euros and a member 1 800 Euros as decided in the Annual General Meeting. A fee of 250 eur is paid for participation in Committee meetings, save for meetings of the Nomination Committee. Additionally, reasonable travel costs have been paid.

Board members

All members are independent from the company. Lehmusto, Soanjärvi and Wahlström are independent both from the company and its owners.

The shareholding of the board members are presentedin the Insiders page .

Duties of the Board of Directors

The Board has drafted its own rules of procedure, with the principal duties defined as follows:

• Take responsibility for duties which the Companies Act, the articles of association or some other instance has bindingly decreed on the Board of Directors
• Ratify the strategy
• Ratify the company’s management system on the submission of the CEO
• Ratify the annual action plan and monitor its enforcement
• Ratify the procedures for company internal control and risk management and monitor their implementation
• Interim reports, financial statements and annual report – processing, approval and communication
• Ratify group finance policy
• Propose the dividend policy to the General Meeting
• Decide on company and business acquisitions and sales
• Decide on significant individual investments and contingent liabilities
• Ratify group incentive scheme and policy
• Appoint and release from duties company senior management and decide on their employment terms and bonuses on the basis of proposals made by the Nominations and compensation committee
• Establishment of subsidiaries
• Supervise and develop the company’s corporate governance procedures
• Evaluate and develop the operation of the Board of Directors
• Evaluate the work of the CEO and feedback on it

Committees of the Board

Audit Committee

The task of the Audit Committee, which is appointed by the Board, is to supervise the efficiency of the company's accounting and financial reporting system as well as to monitor the company's audit functions. The committee is also charged with the supervision of matters and practices relating to sound corporate governance and, where necessary, propose to the Board any required measures to develop corporate governance.

The audit committee shall comprise of three to five board members. The members will be nominated annually. The members of the audit committee shall be independent of the company and at least one member shall be independent of significant shareholders. The members shall have the qualifications necessary to perform the responsibilities of the audit committee, and at least one member shall have expertise specifically in accounting, bookkeeping or auditing.

The Committee convened 4 times in 2010, attendance level was 92 %.

Committee members: Tuija Soanjärvi, Heikki Lehmusto and Jukka Ruuska.

Duties of the Audit Committee:

• To monitor the company's financial position
• To supervise the financial reporting process
• To monitor the reporting process of financial statements (annual reports, interim reports)
• To evaluate the sufficiency, efficiency and appropriateness of internal control and risk management systems
• To review the plans and reports of the internal audit function
• To evaluate compliance with laws and regulations
• To prepare the proposal for resolution on the election of the auditor and to evaluate the independence of the statutory auditor
• To contact the auditor and to review the reports that the auditor prepares for the audit committee
• To evaluate advisory services provided by the auditor
• To monitor the statutory audit of the financial statements and consolidated financial statements
• To review the description of the main features of the internal control and risk management systems pertaining to the financial reporting process, which is included in the company's corporate governance statement

Nominations and Compensation Committee

The company has a nomination and compensation committee which is in charge of planning the procedures for remunerating employees as well as appointing the top management.

The Committee convened 4 times in 2010, attendance level was 100%.

Committee members: Aaro Cantell, Jukka Ruuska and Lars Wahlström.

The committee’s rules of procedure determine its duties as follows:

• Preparation of matters pertaining to the appointment of the managing director and the other executives as well as the identification of their possible successors
• Preparation of matters pertaining to the remuneration and other financial benefits of the managing director and other executives
• Preparation of matters pertaining to the remuneration schemes of the company
• Evaluation of the remuneration of the managing director and the other executives as well as seeing to it that the remuneration schemes are appropriate
• Answering questions related to the remuneration statement at the General Meeting

NOMINATION COMMITTEE

Based on the Board of Directors' proposal, the Annual General Meeting of 2011 resolved to appoint a shareholders' Nomination Committee to prepare proposals concerning members of the Board of Directors and their remuneration for the following Annual General Meeting.

The Nomination Committee would consist of the representatives of the three largest shareholders and the Chairman of the Board of Directors, acting as an expert member, if he/she is not appointed representative of a shareholder. The members representing the shareholders would be appointed by the three shareholders whose share of ownership of the shares of the company is largest on 31 October preceding the Annual General Meeting. Should a shareholder not wish to use its right to nominate, this right would be passed on to the next largest shareholder who does not already have a right to nominate a representative. The largest shareholders would be determined on the basis of the ownership information registered in the book-entry system. However, holdings by a shareholder, who under the Finnish Securities Markets Act has the obligation to disclose changes in shareholdings (flagging obligation), may be combined provided that the owner presents a written request to that effect to the Board of Directors of the company no later than three business days prior to 31 October preceding the Annual General Meeting.

The Nomination Committee would be convened by the Chairman of the Board of Directors, and the Committee would appoint a chairman among its members.

The Nomination Committee should give its proposal to the Board of Directors of the company by 20 January preceding the Annual General Meeting.

Updated: 14 October 2011