Vaisala Oyj : Corporate Governance Statement 2021

Observations for a better world

Corporate Governance Statement 2021

CORPORATE GOVERNANCE STATEMENT 2021

Corporate Governance Statement 2021

Vaisala's general governance principles

Vaisala's corporate governance is based on and complies with the laws of Finland and Vaisala's Articles of Association. Consolidated financial statements and other financial reports are prepared according to the International Financial Reporting Standards (IFRS), approved by the EU. The company complies with the rules, regulations, and guidelines for listed companies issued by Nasdaq Helsinki Ltd and Finnish Supervisory Authority as well as Finnish Corporate Governance Code 2020 published by the Securities Market Association.

Vaisala Board of Directors has approved this Corporate Governance Statement in its meeting on February 17, 2022. Deloitte Oy, audit firm, the company's auditor, has verified that the statement has been issued and that the general description of internal audit and risk management systems associated with the financial reporting process conforms to the same in financial statements.

Governing bodies

The General Meeting, the Board of Directors, and the President and CEO, assisted by the Management Group, are responsible for the governance of the Vaisala Corporation.

General meeting

The General Meeting is the supreme decision-making body of Vaisala, in which all the shareholders of the company can participate in the supervision and control of the company and exercise their right to vote, speak, and ask questions. The Annual General Meeting is held once

a year before the end of June on a date determined by the Board of Directors. It decides on the matters stipulated in the Finnish Limited

Liability Companies Act and the Articles of Association. The decisions are mainly made with simple majority of votes.

The Chair of the Board of Directors, members of the Board of Directors, and the President and CEO are present at the Annual General Meeting. The auditor is present at the Annual General Meeting. Board member candidates are present at the Annual General Meeting where they are elected. If the above-mentioned person or persons fail to attend the Annual General Meeting, Vaisala notifies the General Meeting of such non-attendance. The members of the Management Group participate in the Annual General Meeting, if possible.

Participation in the General Meeting requires that the shareholder is registered in Vaisala's shareholder register, maintained by Euroclear

Deviation from the recommendations of the Corporate Governance Code and explanation for the deviation

The term of the members of Vaisala's Board of Directors deviates from the Recommendation 6 of Corporate Governance Code, which recommends a term of one year. The term of Vaisala's member of the Board of Directors is determined in accordance with its Articles of Association. Under the Articles of Association, a member's term is three years, beginning at the close of the General Meeting in which the member is elected and ending at the close of the third subsequent Annual General Meeting.

A longer term of office of the Board members is justified by the long-term development of Vaisala's business as well as by the nature of the business. The practice has worked well, and Vaisala's shareholders are committed to it.

			General Meeting
External audit		Board of Directors
Internal		Audit			Remuneration and
audit		Committee			HR Committee
									Financial
							Risk		and internal
		President and CEO		manage-		control
			ment
		Management Group

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CORPORATE GOVERNANCE STATEMENT 2021

Finland Ltd, on the record date of the meeting and that they register for the meeting by the date mentioned in the meeting notice.

Shareholders are entitled to have an issue placed on the agenda of the Annual General Meeting, provided that the issue can be decided upon by the Annual General Meeting according to the Limited Liability Companies Act. The request must be submitted in writing to the Board of Directors early enough that the issue can be included in the meeting notice. On its website, the company announces the date by which the shareholder must notify the Board of Directors of an issue to be added to the agenda of the Annual General Meeting. The date is available by the end of the previous financial year.

Vaisala publishes a notice of the Annual General Meeting no more than two months before the record date and no less than three weeks before the meeting on the company's website or in any other way that may be decided by the Board of Directors, or Vaisala may deliver it directly to shareholders when required by law. In addition, Vaisala publishes a meeting notice as a stock exchange release after the Board of Directors has decided on the convening of the Annual General Meeting. Agenda of the Annual General Meeting, proposals on decisions, and meeting documents are available on the company's website at least three weeks prior to the meeting. Documents of the Annual General Meeting will be held on the company's website for at least five years from the time of the meeting. Minutes of the meeting will be published on the company's website within two weeks of the meeting.

Due to the COVID-19 pandemic, the Annual General Meeting 2021 was held on March 30, 2021, in accordance with the temporary legislative act approved by the Finnish Parliament on October 2, 2020, and in a manner that the shareholders, auditor, and members of Board of Directors were not present. Shareholders both voted and were allowed to ask questions in advance.

Board of Directors

Competence, composition, and election

The Board of Directors is responsible for the administration and the proper organization of the operations of the company. The Board acts in accordance with the Articles of Association and the applicable

legislation as well as the instructions and recommendations of the Financial Supervisory Authority and Nasdaq Helsinki Ltd. In accordance with the Articles of Association, Vaisala Corporation Board of Directors comprises at least four and maximum eight members. The Annual General Meeting elects all Board members.

The Board of Directors elects a Chair and a Vice Chair from among its members. Under the Articles of Association, the term of the Board members is three years. The term begins at the close of the General Meeting in which the member is elected and ends at the close of the third subsequent Annual General Meeting following the member's election.

Selection criteria, diversity, and the independence of the members The primary goal in Board member election is to gather capability, expertise, and experience from various technologies, international relations, global business, and strategically significant industries to the Board of Directors. The Board should be considered as a whole that is capable of managing its tasks and duties in the best possible way.

The goal of the election of the members of the Board of Directors is to ensure that the Board supports the development of the company's current and future business. In addition, the Board should consist of members of both men and women, and the members should have the chance to allocate a sufficient amount of time to managing their tasks. The goal is that there is at least 25% representation of both men and women in the Board of Directors.

Vaisala complies with the Finnish Corporate Governance Code 2020 in evaluation of the independence of the members of the Board. The majority of the members of the Board must be independent of the company, and at least two members in this majority must be independent of the company's major shareholders. The Board evaluates the independence of the members annually based on an overall evaluation. This evaluation of a member takes into account information and analysis provided by the member themself.

Vaisala Board of Directors in 2021 represents adequate expertise and experience as well as diversity on the established goals. All members of the Board in 2021 were independent of the company and of the company's major shareholders.

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Meetings, duties, and decision-making

The Board of Directors convenes at least eight times a year and if otherwise needed. The President and CEO and the Chief Financial Officer also attend Board meetings. The other members of the Management Group attend Board meetings as required on the invitation of the Board of Directors. The Board of Directors may, on the basis of the Chair's decision, establish working groups from among its members in individual cases to prepare the matters allocated for it in order to ensure the effective organization of the Board of Directors' work.

The Board of Directors operates in accordance with an approved written charter, published on the company's website. Meetings may, if necessary, be held as conference calls, video meetings, or e-mail meetings. Minutes of the meetings are compiled in English, with annually running numbering. The General Counsel acts as the Secretary of the Board of Directors.

A member of the Board of Directors is not allowed to participate if they are biased in that issue between themself and the company or between the company and a third party when there is a possibility to achieve essential advantage to themself, which may conflict with the company's interest.

The members of the Board of Directors are bound by obligations related to commercial and trade secrets as well as by the restrictions and requirements of the Market Abuse Regulation (EU) N:o 596/2014 (MAR) and the restrictions and obligations of Vaisala's Insider Policy. In their decision-making and other activities, the Board and its members must act in accordance with the interest of the company and all its shareholders as well as in accordance with the principles of due care and data protection.

The Board will have a quorum when more than half of the members are present. Decisions are made on a simple majority basis, and when the votes are even, the Chair has the casting vote. When the votes for the election of the Chair are even, the Chair is elected by drawing lots.

The President and CEO is responsible for the execution of the Board of Directors' decisions, oversees their implementation, and reports to the Board on deficiencies or problems observed during the execution.

CORPORATE GOVERNANCE STATEMENT 2021

Main responsibilities of the Board of Directors are

• to decide on the election and dismissal of the President and CEO
• to decide on the employment terms of the President and CEO
• to decide on the election and dismissal of the members of the Management Group and their job descriptions based on the President and CEO's proposition
• to ensure that the company has organized internal control of

accounting and financial management as well as to monitor the effectiveness of supervision

• to determine the company's strategy and oversee its implementation and to approve the strategic plans of the business areas
• to determine the company's long-term targets and to monitor their implementation and to accept business areas' long-term targets
• to assess the company's and its business areas' annual action plans
• to approve the company and its business areas' financial targets
• to make the business decisions, the value of which exceeds the approval limit of the President and CEO according to the Approval Policy, such as business reorganizations, acquisitions and dives- titures, major contracts and liabilities, investments, and financing arrangements
• to review and approve the company's most important policies and instructions, such as Approval Policy, Treasury Policy, Disclosure Policy, Dividend Policy, Risk Management Policy, Insider Policy, Code of Conduct, and Anti-Corruption Policy
• to decide on management remuneration and incentive systems

Members of the Board of Directors in 2021

During January 1-March 30, 2021, the Board of Directors comprised eight members. The Chair of the Board of Directors was Raimo Voipio, the Vice Chair was Ville Voipio, and the members were Petri Castrén, Antti Jääskeläinen, Petra Lundström, Jukka Rinnevaara, Kaarina Ståhlberg, and Tuomas Syrjänen. The Board of Directors' secretary was General Counsel Katriina Vainio.

Composition of the Board of Directors Dec 31, 2021

		End of					Shareholding
Member	Member since	term	Born	Education	Nationality	Main occupation	Dec 31, 2021
Ville Voipio,	2015						397,136	(A share)
Chair	Chair since 2021	2024	1974	D.Sc. (Tech.)	Finnish	CTO, Si-Tecno Oy	96,712 (K share)
Raimo Voipio	1989						570,992	(A share)
Vice Chair	Chair in 1994-2021	2023	1955	M.Sc. (Eng.)	Finnish	Board professional	454,296 (K share)
				LL.M., MBA (University
Petri Castrén	2017	2022	1962	of Connecticut)	Finnish	CFO, Kemira Oyj	3,275	(A share)
				M.Sc. (Eng.),		Executive Vice
				M.Sc. (Econ.), MBA		President,
Antti Jääskeläinen	2020	2023	1972	(INSEAD, France)	Finnish	UPM Raflatac	874	(A share)
						Vice President, Nuclear
						Services, Fortum
Petra Lundström	2014	2024	1966	M.Sc. (Tech. Physics)	Finnish	Power and Heat Oy	6,675	(A share)
						President and CEO,
Jukka Rinnevaara	2019	2023	1961	M.Sc. (Econ.)	Finnish	Teleste Corporation	1,594	(A share)
				LL.M (Helsinki and		General Counsel and
Kaarina Ståhlberg	2016	2022	1966	Columbia Universities)	Finnish	M&A, Posti Group Oyj	6,075	(A share)
						Program Director - AI
Tuomas Syrjänen	2019	2022	1976	M.Sc. (El. Eng.)	Finnish	Renewal, Futurice Oy	2,944	(A share)
							989,565 (A share)
							551,008	(K share)
Total							1,540,573 (total)

Shareholdings include also shares held by the Board of Directors' controlled organizations.

In accordance with the recommendation 10, all Board members are independent of the company and of significant shareholders of the company

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CORPORATE GOVERNANCE STATEMENT 2021

The Annual General Meeting held on March 30, 2021, confirmed that the number of Board members is eight. All members of the Board were re-elected. Ville Voipio was elected as Chair of the Board and Raimo Voipio as Vice Chair of the Board. The Board of Directors' secretary is General Counsel Katriina Vainio.

Attendance in Board meetings 2021

	Attendance/	Attendance
Member	Number of meetings	%
Ville Voipio
(Chair as of March 30, 2021)	17/17	100
Raimo Voipio
(Chair until March 30, 2021)	17/17	100
Petri Castrén	17/17	100
Antti Jääskeläinen	17/17	100
Petra Lundström	17/17	100
Jukka Rinnevaara	17/17	100
Kaarina Ståhlberg	17/17	100
Tuomas Syrjänen	17/17	100

Board committees

The Board of Directors has two permanent committees: Audit Committee as well as Remuneration and HR Committee. The members and Chairs of the Committees are appointed annually from among the members of the Board of Directors in accordance with the charter of the respective committee.

Audit Committee

The Audit Committee assists the Board of Directors in supervising the company's accounting and asset management, risk management, as

well as in organizing internal controls and external and internal audits. The Audit Committee manages its tasks in accordance with the charter approved by the Board of Directors, the Securities Market Association's Finnish Corporate Governance Code, as well as the applicable laws and regulations. The Audit Committee's charter is published as part of the charter of the Board of Directors on the company's website. The Audit Committee reports regularly about its meetings to the Board of Directors.

The Audit Committee comprises at least three members, appointed annually by the Board of Directors from among its members. The members of the committee must be independent of the company, and at least one member must also be independent of significant shareholders of the company. A member of the Audit Committee may not participate in the company's or its group company's daily management. Members of the Audit Committee have sufficient expertise and experience in matters forming part of the Audit Committee's duties and of the mandatory tasks related to audit.

Remuneration and HR Committee

The Remuneration and HR Committee is responsible for preparing human resources matters pertaining to the compensation of the President and CEO as well as top management, evaluation of the performance of the President and CEO and the Management Group, and to remuneration and incentive plans. The Remuneration and HR Committee prepares Remuneration Policy for governing bodies and Remuneration Report. Additionally, the Remuneration Committee oversees the performance evaluation and successor planning of top management. The Remuneration and HR Committee's charter is available as part of the charter of the Board of Directors on the company's website. The Remuneration and HR Committee reports regularly about its meetings to the Board of Directors.

The Remuneration and HR Committee comprises at least three members, appointed annually by the Board of Directors from among its members. The majority of the members of the committee must be independent of the company.

Committee members and their attendance in committee meetings in 2021

		Attendance/
		Number of	Attendance
Committee	Member	meetings	%
Audit	Kaarina Ståhlberg
Committee	(Chair)	5/5	100
	Petri Castrén	5/5	100
	Antti Jääskeläinen	5/5	100
	Raimo Voipio (as of
	March 30, 2021)	4/4	100
	Ville Voipio (until
	March 30, 2021)	1/1	100
Remunera-	Ville Voipio (Chair)	5/5	100
tion and HR
Petra Lundström	5/5	100
Committee
Jukka Rinnevaara	5/5	100
	Tuomas Syrjänen
	(as of March 30, 2021)	3/3	100

All members of the Audit Committee as well as the Remuneration and HR Committee are independent of both the company and its significant shareholders.

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