The Supervisory Board is a governing body of LHV, planning the activities of the group, organising the management of LHV and conducting supervision over the activities of the Management Board. The Supervisory Board determines and regularly reviews LHV's strategy, the general plan of action, risk management principles and the annual budget.
The size of remuneration and its procedure of payment to the members of the Supervisory Board is decided by the General Meeting, considering inter alia the duties of the Supervisory Board and their extent, as well as the participation at the Supervisory Board meetings and the activity of the Supervisory Board. The Supervisory Board members gross remuneration is 1500 euros per each meeting of the Supervisory Board, where the member participates. No separate additional pay or performance pay or bonuses have been established. Based on Supervisory Board Member Andres Viisemann’s activity as the head of pension funds in LHV’s subsidiary AS LHV Varahaldus, LHV is applying the LTI plan, i.e. the option programme.
No significant transactions have been concluded between LHV and its Supervisory Board members, their close relatives or related parties in 2019. Also, there are no such valid contracts from earlier periods.
The Management Board is LHV's managing body, which represents and manages LHV. In fulfilling this task, the Management Board must adhere to the lawful orders of the Supervisory Board of LHV. The Management Board performs the operations required for the management of LHV, adopting the necessary management decisions and organising the daily economic activities of LHV.
The Management Board manages LHV with due care and efficiency, with the aim of increasing the value of the company. Management is governed by the good financial and business practices in the most sustainable way possible.
The Management Board performs all duties arising from LHV's Articles of Association and internal rules, including but not limited to the following:
- is responsible for implementing the strategies established by the Supervisory Board of LHV;
- actively participates in LHV's economic activities, acting in the most economically feasible manner and adopting decisions on reasonable and well-informed basis;
- prepares the items on the agenda of the general meeting, compiles the corresponding materials and drafts the resolutions and necessary projects, and ensures implementation of the resolutions of the general meeting;
- encourages and endorses an open and critical debate within LHV, and ensures that different opinions are reflected during the decision-making process.
The Supervisory Board holds the right to decide the management remuneration principles and wages. The Remuneration Committee reviews the basis of management remuneration on an annual basis. In assessing the activities of the Management Board, the Remuneration Committee must, above all, consider the professional duties of the Management Board member, his or her activities, LHV's financial position, the current status of and the outlook for business operations in comparison with companies operating in the same sector of economy.
Pursuant to the Management Board member's agreement, the Management Board member Madis Toomsalu received EUR 12,000 in monthly remuneration in 2019, with the annual salary thus totalling EUR 144,000.
The Audit Committee serves, above all, as an advisory body for the Supervisory Board in matters related to accounting, audit, risk management, internal control and internal audit, supervision, budgeting and compliance. The Audit Committee must be set up of at least three members. LHV’s Audit Committee members are paid a monthly gross remuneration of EUR 500. No separate additional pay or performance pay or bonuses have been established.
The Audit Committee is charged with the task of monitoring and analysing
- the processing of financial information within the scope required for the preparation of quarterly reports and the Annual Report;
- the efficiency of risk management and internal control;
- the audit of the financial statements or the Consolidated Annual Report, and
- the independence of the audit firm and the authorised auditor representing the audit firm by law, and compliance with the requirements established in the Auditors Activities Act.
The Audit Committee is obliged to make proposals and recommendations to the Supervisory Board with regard to:
- appointment or removal of the audit firm;
- appointment or removal of the internal auditor;
- prevention and elimination of problems and inefficiencies within the organisation, and
- ensuring compliance with legal acts and best professional practice.
The Remuneration Committee is charged with the task of assessing the principles of remuneration within the LHV consolidation group companies, as well as the impact of remuneration-related decisions on adherence to the requirements established for the management of risks, own funds and liquidity. The Remuneration Committee is set up of at least three members of the Supervisory Board of AS LHV Pank. No remuneration is paid to the members of the Remuneration Committee.
The Remuneration Committee:
- conducts supervision over the remuneration of the management board and staff members of companies incorporated in the LHV consolidation group;
- assesses, at least once a year, the implementation of the remuneration principles and makes proposals for the updating of the remuneration principles, where necessary, and
- prepares the draft remuneration decisions for submission to the Supervisory Board.
Risk and Capital Committee
The Risk and Capital Committee, established at AS LHV Pank level, monitors the implementation of the risk management policy and the capital management policy. The Risk and Capital Committee reviews regular risk reports, the processes ensuring capital adequacy and capital plans. The Risk and Capital Committee has to include at least three members, including the Chairman of the Supervisory Board. No remuneration is paid to members of the Risk and Capital Committee.
The jurisdiction of the Risk and Capital Committee includes
- advising the Supervisory and Management Boards on the risk management principles and risk tolerance,
- supervision of the implementation of the risk management principles by the Management Board in accordance with the instructions of the Supervisory Board,
- checking of the accounting of business model and risk management principles in the fees set for clients and, in the event of any deficiencies, submission of an improvement plan to the Supervisory Board,
- checking of the accounting of the likelihood and timing of risk, capital, liquidity and revenues in the principles of remuneration.
The purpose of the Nominating Committee, which has been formed at the level of AS LHV Pank (Bank), is to support the Bank’s Supervisory Board in questions related to the selection process and eligibility requirements. The Committee is comprised of at least three members, who are selected from amongst the members of the Bank’s Supervisory Board. Members of the Nominating Committee do not receive remuneration.
The competence of the Nominating Committee includes, among other things
- Presentation to the Bank's Supervisory Board of candidates for the Bank's Management Board, a description of their duties, and the length of their term of office;
- Assessing the composition, structure and activities of the Bank’s Management Board at least once a year and, if necessary, proposing amendments;
- Continuous monitoring of the decision-making process by the Bank's Management Board;
- Periodically reviewing and taking decisions on the content, format and frequency of the risk information received;
- Where appropriate, ensuring the involvement of risk management, compliance testing, internal audit and other department managers in relevant matters.
In February of 2019, the Management Board, along with the Audit Committee, organised a competition for selecting an auditor to audit the annual reports for 2020–2022. Within the competition, an invitation was sent to the three largest auditing firms and among the two firms that submitted an offer, the decision was made to select KPMG Baltics OÜ, who was appointed to be the auditor of the Group’s companies for the financial years 2020–2022 at the 13 March 2019 annual general meeting of shareholders.
Articles of Association
Best Practice of Corporate Governance
- Report on the Best Practice of Corporate Governance of AS LHV Group in 2019
- Report on the Best Practice of Corporate Governance of AS LHV Group in 2018
- Report on the Best Practice of Corporate Governance of AS LHV Group in 2017
- Report on the Best Practice of Corporate Governance of AS LHV Group in 2016
- Report on the Best Practice of Corporate Governance of AS LHV Group in 2015
- Report on the Best Practice of Corporate Governance of AS LHV Group in 2014
- Report on the Best Practice of Corporate Governance of AS LHV Group in 2013
- Best Practice of Corporate Governance