Management Board of Estonian Company. Composition & Charge.

Management Board of Estonian Company. Composition & Charge. This article is from the Corporate Governance Recommendations prepared on the basis of Estonian legislation, structure of shareholders of Issuers acting in Estonia and taking into account the main problems that arise in company management.

Management Board of Estonian Company. Composition & Charge.
These Corporate Governance Recommendations are to be carried out primarily by companies whose shares have been admitted to trading on a regulated market operating in Estonia (“Issuers), except for investment funds registered as public limited companies.

Other companies may also choose to comply with these Corporate Governance Recommendations and shareholders and partners of such companies are encouraged to follow these principles upon organizing their management and management control of the company.

Clause 1

The Management Board shall have more than one (1) member and a Chairman elected by its members.

The Management Board or Supervisory Board shall establish an area of responsibility for each member of the Management Board, defining as clearly as possible the duties and powers of each board member. The principles for co-operation between members of the board shall also be established.

The Chairman of the Supervisory Board shall conclude a contract of service with each member of the board for discharge of their functions.

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Clause 2

The member of the Management Board shall not be at the same time a member of more than two management boards of an Issuer and shall not be the Chairman of the Supervisory Board of another Issuer. A member of the Management Board can be the Chairman of the Supervisory Board in company belonging to same group as the Issuer.

Clause 3

The bases for Management Board remuneration shall be clear and transparent. The Supervisory Board shall discuss and review regularly the bases for Management Board remuneration.

Upon determination of the Management Board remuneration, the Supervisory board shall be guided by evaluation of the work of the Management Board members. Upon evaluation of the work the Management Board members, the Supervisory Board shall above all take into consideration the duties of each member of the Management Board, their activities, the activities of the entire Management Board, the economic condition of the Issuer, the actual state and future prediction and direction of the business in comparison with the same indicators of companies in the same economic sector.

Remuneration of members of the Management Board, including bonus schemes, shall be such that they motivate the member to act in the best interest of the Issuer and refrain from acting in their own or another person’s interest.

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Clause 4

The use of long-term bonus systems (for example options, pension programs) shall be connected with the activities of the Management Board member and shall be based on explicit and comparable pre-determined factors. The factors, which are the basis for determining the bonus scheme shall not be changed retroactively.

The Supervisory Board can limit the bonus scheme granted earlier in exceptional cases not foreseeable at the time of determining the bonus scheme.

Clause 5

The bonus scheme of a Management Board member that is connected with the securities of the Issuer, as well as changes in such bonus schemes shall be approved at the General Meeting of the Issuer. The exercise date for share option shall be determined at the General Meeting of the Issuer.

When granting share options, the Issuer shall comply with the rules and regulations of the Tallinn Stock Exchange.

Clause 6

Severance packages of a Management Board member are connected with their prior work performance and shall not be payable if doing so would harm the interests of the Issuer.

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Clause 7

Basic wages, performance pay, severance packages, other payable benefits and bonus schemes of a Management Board member as well as their essential features (incl. features based on comparison, incentives and risk) shall be published in clear and unambiguous form on website of the Issuer and in the Corporate Governance Recommendations Report. Information published shall be deemed clear and unambiguous if it directly expresses the amount of expense to the Issuer or the amount of foreseeable expense as of the day of disclosure.

The Chairman of the Supervisory Board shall present the essential aspects of the management board remuneration and changes in it to the General Meeting. If the remuneration of some of the Management Board members has occurred on a different base, then the General Meeting shall be presented the differences together with the reasons therefore.