Corporate Governance Policy

Corporate governance within the Telekom Slovenije Group is based on the principles and guidelines of the Corporate Governance Policy of Telekom Slovenije, d. d., valid since December 2011. In performing their tasks, the Management Board and Supervisory Board took into account the interests of stakeholders and forms of mutual cooperation, the policy of linking the parent company and subsidiaries, and the commitments, powers and responsibilities of the two aforementioned bodies. The latter derive from valid legislation and are also defined in the rules of procedure of the Management Board and the Supervisory Board, and the Articles of Association of Telekom Slovenije, d. d. In April 2014 the Supervisory Board approved new rules of procedure of the Management Board (additional information at: http://www.telekom.si/en/company/organisation/ management-board.pdf)

The Corporate Governance Policy and the other documents listed above are accessible at the website www.telekom.si/en, on the sub-page Presentation, organisation and governance, under the tab Corporate governance (http://www.telekom.si/en/company/corporate-governance).

General Meeting of Shareholders16

Work of the General Meeting of Shareholders

The shareholders of Telekom Slovenije met at the 25th General Meeting of Shareholders held on 30 May 2014. A total of 698,876 shares (40.08% of 1,743,820 shares with voting rights) were represented which, according to Article 40 of the Company’s Articles of Association, is a sufficient level of attendance for a second convening. Attendance increased to 724,858 shares or 41.57% of all shares with voting rights for the third item on the agenda.

Shareholders adopted the following decisions:

  • the proposed use of distributable profit for the 2013 financial year was approved, and official approval conferred on the Management Board and Supervisory Board for 2013;
  • the audit firm KPMG Slovenija, d. o. o. was appointed to audit Telekom Slovenije’s financial statements for the 2014 financial year.

No challenges were announced.

Exercise of shareholders’ rights

Shareholders exercise their rights at the General Meeting in the manner set out in the Companies Act (ZGD- 1) and Telekom Slovenije, d. d.’s Articles of Association. The convening of the General Meeting of Shareholders and other important matters related thereto are set out in the Articles of Association.

The corporate governance system of Telekom Slovenije and its communication strategy for shareholders and the Company’s other stakeholders ensure the equal treatment of shareholders, and facilitate the consistent exercise of their rights. Internal acts define the protection of the confidentiality of trade secrets and inside information, while mechanisms have also been established to prevent the leakage of inside information. The convening of the General Meeting of Shareholders and all materials, including the agenda and proposed resolutions, were published on the Company’s website at http://www.telekom.si/en/investor-relations/shareholders-meeting and on the stock exchange’s electronic notification system at http://seonet.ljse.si.The convening of the General Meeting of Shareholders was also published on the website of Agency of the Republic of Slovenia for Public Legal Records and Related Services. Both counter-proposals of shareholders were also published on the same websites. The timely publication of materials for the General Meeting of Shareholders and proper procedures for the convening of the General Meeting of Shareholders enabled shareholders to actively exercise their rights. The resolutions of the General Meeting of Shareholders, documentation from previous meeting and recordings of General Meetings, which can also be viewed live, are published on the Company’s website at http://www.telekom.si/en/investorrelations/shareholders-meeting.

Shareholders may address their proposals and suggestions to the Company via the Investor relations email at ir@ telekom.si. There were no such suggestions received in 2014.

 

Supervisory Board in 2014

Work of the Supervisory Board

In the scope of its powers and in line with the principles of corporate governance, the Supervisory Board was regularly briefed on the operations of Telekom Slovenije and the Telekom Slovenije Group. It met at 14 regular sessions and four correspondence sessions.

Members of the Supervisory Board regularly discussed strategically important activities and proposals by the Management Board, and actively responded to those proposals and provided their opinions. The work of the Supervisory Board is presented in more detail in the Report of the Supervisory Board.

Significant activities of the Supervisory Board:

  • it was briefed on the progress of significant projects at the Company and on the operations of Group companies;
  • sit adopted the Strategic Business Plan of the Telekom Slovenije Group for the period 2015 to 2019;,
  • it gave its consent to the appointment of managing directors of subsidiaries;
  • it approved the sale of the participating interest in Gibtelecom;
  • it approved the settlement reached with Simobil;
  • it approved the consolidation of the markets in Macedonia and Bosnia and Herzegovina; and
  • regularly monitored the sale of the majority stake in the Company.

Composition of the Supervisory Board1717

The Supervisory Board of Telekom Slovenije comprises nine members, six of whom are shareholder representatives and three of whom are employee representatives. Shareholder representatives were appointed based on the proposal of owners and selected via public tender, while employee representatives were elected by the Works Council. Members of the Supervisory Board must possess the appropriate expertise and competences to perform their supervisory tasks. All members of the Supervisory Board submitted statements of compliance with the criteria of independence for 2014 in accordance with the Corporate Governance Code (the statements are published on the Company’s website at: http://www.telekom.si/o-podjetju/upravljanje-druzbe/izjave-2013.pdf).

The composition of the Supervisory Board changed several times during the 2014 financial year. At the beginning of April, Milan Richter resigned from the Supervisory Board, while Martin Gorišek resigned at the end of April. In May the Works Council elected Primož Per and Samo Podgornik to replace Mr Richter and Mr Gorišek as employee representatives on the Supervisory Board. The replacement employee representatives were elected to the Supervisory Board for the remainder of the current term of office, which expires on 14 November 2017.

The Supervisory Board comprised the following members as at 31 December 2014:

Shareholder representatives:

  1. Borut Jamnik, President
    • holds a bachelor’s degree in mathematical engineering;
    • President of the Management Board of Modra zavarovalnica, d. d.;
    • President of the Management Board of PDP, d. d.;
    • President of the Slovenian Directors’ Association.
  2. Adolf Zupan, MSc, Vice-President
    • holds a bachelor’s degree in law and master’s degree in science;
    • member of the Supervisory Board of Drava d. d., Ptuj.
  3. Matej Golob Matzele, member
    • holds a bachelor’s degree in economics;
    • Executive Director at Abanka Vipa, d. d.;
    • President of the Supervisory Board of Aleasing, d. o. o.
  4. Dr. Marko Hočevar, član
    • holds a bachelor’s degree and doctorate in economics;
    • full professor of accounting and auditing at the University of Ljubljana’s Faculty of Economics;
    • member of the Supervisory Board of the Slovenian Press Agency.
  5. Tomaž Berločnik, MSc, member
    • holds a bachelor’s degree in mechanical engineering and a master’s degree in economics;
    • President of the Management Board of Petrol, d. d.;
    • Supervisor at IGES, d. o. o.;
    • member of the Supervisory Board of Geoplin, d. o. o., Ljubljana.
  6. Bernarda Babič, MSc, member
    • hold a master’s degree in business policy and organisation, with a major in banking;
    • President of the Supervisory Board of VGP Novo mesto, d. d.

Employee representatives:

  1. Dean Žigon, Vice-President
    • Sales Manager;
    • employed in the Sales Sector, Sales Department - Private users
    • President of the SINEKS trade union.
  2. Samo Podgornik, member
    • electrical and electronic engineer;
    • employed in the Network Access Sector;
    • President of the Nova Gorica chapter of Telekom Slovenije’s trade union;
    • member of the Works Council..
  3. Primož Per, member
    • master’s degree in technical security engineering;
    • employed in Office of the Management Board, Human Resource Department;
    • member of the Works Council.

Composition and function of Supervisory Board committees18

The Supervisory Board has four committees that discussed individual areas of expertise in accordance with their respective competences and tasks defined in the Company’s Corporate Governance Policy. Presented below are the most important areas addressed by committees, and the composition of those committees at the end of 2014.

The Audit Committee functioned in accordance with the Companies Act, the Rules of Procedure of Telekom Slovenije, d. d.’s Audit Committee and the recommendations for the Audit Committee. The Audit Committee met at 13 sessions in 2014, one of which was a correspondent session.

The committee’s members were as follows as at 31 December 2014:

  • Bernarda Babič, MSc (chairperson),
  • Marko Hočevar, PhD,
  • Matej Golob Matzele,
  • Dean Žigon, and,
  • Barbara Nose (external committee member).

The committee discussed the following topics at its meetings:

  • the annual report of the Telekom Slovenije Group for 2013, and quarterly business reports of Telekom Slovenije and the Telekom Slovenije Group in 2014,
  • post-audit letter to the management,
  • proposal for the selection of an auditor for 2014,
  • internal audit reports and half-yearly reports on the work of the Internal Audit Service,
  • quarterly risk management reports,
  • management of claims and exposure to subsidiaries,
  • monitoring of costs and supplier management,
  • the anonymous reporting system,
  • compliance monitoring,
  • assessment of the independence of the external and internal audit functions, and
  • management of risks in the area of marketing.

The Audit Committee performed a self-assessment in March 2014, the results of which it presented at a session of the Supervisory Board.

Two sessions were attended by the certified auditor of KPMG, while representatives of Telekom Slovenije’s Internal Audit Service were regularly invited to sessions.

Members of the Audit Committee participated in both sessions of the Committee to Monitor Strategic Projects and the Drafting of the Strategic Plan. The Audit Committee worked with the Technical Committee when the subjects of IT auditing and security were discussed.

The Technical Committee met at six sessions. The most important topics of discussion included procedures relating to auction of frequencies, the progress of the consolidation of the business support system (BSS), IT auditing and security.

The committee’s members were as follows as at 31 December 2014:

  • Tomaž Berločnik, MSc (chairman),
  • Borut Jamnik,
  • Samo Podgornik.

The Human Resource Committee met at 11 sessions, one of which was a correspondent session. The following important topics were discussed at sessions: the definition of objectives and criteria for members of the Management Board for 2014, procedures for the appointment of members of the Management Board whose terms of office expired in 2014 and the procedures for the appointment of candidates for management functions at Group subsidiaries. In procedures linked to the appointment of Management Board members, the committee worked with an external human resource agency that searches for and selects management staff.

The committee’s members were as follows as at 31 December 2014:

  • Adolf Zupan, MSc (chairman)
  • Borut Jamnik,
  • Primož Per.

The Committee to Monitor Strategic Projects and the Drafting of the Strategic Plan met at two meetings, where it discussed in detail Telekom Slovenije’s Strategic Business Plan for the period 2015 to 2019. All members of the Supervisory Board were invited to both sessions.

The committee’s members were as follows as at 31 December 2014:

  • Adolf Zupan, MSc (chairman)
  • Marko Hočevar, PhD,
  • Matej Golob Matzele,
  • Dean Žigon.

Remuneration of Supervisory Board members

Shareholders adopted a resolution at the 24th General Meeting by which it reversed the resolution of the 20th General Meeting of Shareholders of 31 August 2011 and redefined remuneration of Supervisory Board members. Supervisory Board members are entitled to attendance fees, basic payment for performing their functions and additional payments for participation in Supervisory Board committees. The amount of payments were fixed by resolution. Also defined were the maximum annual amounts of and eligibility criteria for the reimbursement of transportation expenses, daily allowances and costs of overnight stays. The amounts of payments made to members of the Supervisory Board are given in the Financial Report.

 

Management Board19

Work of the Management Board

Telekom Slovenije’s Management Board manages transactions and represents the Company independently, and is liable for its own actions in that regard. It makes decisions that are in line with the Company’s strategic objectives and in the interest of shareholders. The Management Board met and made decisions at 79 regular and 29 correspondence sessions in 2014. It drew up the Strategic Business Plan for the period 2015 to 2019, completed the sale of the participating interest in Gibtelecom and actively implemented consolidation activities on the Macedonian market. It also participated in the sale of the majority stake in Telekom Slovenije in the scope of its powers. The focus of its work included:

  • business process re-engineering,
  • the continued optimisation of costs,
  • activities to strengthen sales, and
  • the development of new services and networks at Group companies.

Composition of the Management Board

Members of the Management Board are appointed for a term of office of four years, which begins on the day of appointment. They are appointed by the Supervisory Board, taking into account the relevance of their expertise and managerial competences.

Telekom Slovenije is managed by a five-member Management Board, comprising the following members:

  1. Rudolf Skobe, MSc (President)
    • holds a master’s degree in management and organisation, and a bachelor’s degree in electrical engineering;
    • employed by Telekom Slovenije and Group companies since 1996. Worked as Director of Sales and Marketing since 2004, then served as Managing Director of SiOL and Managing Director of Planet, which was merged with Najdi.si and renamed TSmedia;
    • began his term of office on 1 September 2012.
  2. Tomaž Seljak, MSc, Vice-President of the Management Board
    • holds a master’s degree and a bachelor’s degree in electrical engineering;
    • employed for 17 years at the Company in positions of responsibility relating to the network, most recently as Director of the Network Access Sector;
    • mandat je nastopil 1. 5. 2014.
    • began his term of office on 1 May 2014.
  3. Zoran Janko (member)
    • holds a bachelor’s degree in economics;
    • was head of finance, accounting and controlling at Mobitel from 1996. Assumed the position of Mobitel’s Chief Executive Officer in March 2010, and following the merger of Telekom Slovenije and Mobitel became the head of the procurement and logistics sector;
    • began his term of office on 27 October 2011.
  4. Mateja Božič, MSc (member)
    • holds a master’s degree in management and organisation, and a bachelor’s degree in construction;
    • is an experienced internal auditor;
    • served in several positions of responsibility and management positions at Petrol, Kapitalska družba pokojninskega in invalidskega zavarovanja and Zavarovalnica Triglav;
    • began her term of office on 1 January 2013.
  5. Vesna Lednik, (member and Worker Director)
    • 22 years of work experience, the last 15 years in management positions at the Company;
    • began her term of office on 23 April 2014.
    • Darja Senica served as member of the Management Board and Workers Director until 7 April 2014.

Remuneration of the Management Board

The composition and amount of earnings of the Management Board are set out in members’ employment contracts and are in line with the Act Governing the Earnings of Management Staff at Companies Under the Majority Ownership of the Republic of Slovenia and Self-Governing Local Communities (ZPPOGD). The conditions for profit sharing by the Management Board are governed by the Company’s Articles of Association. The earnings of the Management Board in 2014 are presented in the Financial Report.

Management and governance of subsidiaries20

As parent company, Telekom Slovenije manages and supervises Telekom Slovenije Group companies in accordance with Slovenian law, the applicable laws in the countries of Group companies and the valid acts of the Company and Group. In all business areas, subsidiaries act in accordance with local legislation, business cooperation agreements with Telekom Slovenije and with internal rules and instructions adopted by the management of an individual subsidiary or Management Board of the parent company.

Telekom Slovenije’s Management Board adopted the Corporate Governance Rules of the Telekom Slovenije Group in March 2014. The aforementioned document sets out the rules, criteria and mechanisms for managing and supervising Telekom Slovenije Group companies and is in line with Telekom Slovenije’s Corporate Governance Policy. The management and supervision of the operations of Group companies is based on the following core principles:

  • links with the Group’s strategy;
  • governance via management by objectives, where those objectives derive from the Group’s strategy;
  • clearly defined roles (tasks, competences and responsibilities) of those responsible for the management and supervision of the Group; and
  • simplicity and flexibility (the ability to adapt to changes in the organisation and operations of the Group).

In the scope of those rules, the Management Board of Telekom Slovenije actively monitored and supervised the operations of subsidiaries through membership in their supervisory bodies. The following persons may be appointed as members of a supervisory body: Management Board members, sector directors, and heads of independent departments within the Office of the Management Board, the Assistant to the President of the Management Board and other persons appointed by the Management Board of Telekom Slovenije. As a rule, a member of a supervisory body is the member of the Management Board responsible for a specific subsidiary. The strategic bodies of subsidiaries meet once a month in 2014 to facilitate the regular and timely sharing of information between the Management Board of Telekom Slovenije and the management boards of the subsidiaries.

Composition of management and supervisory bodies at subsidiaries of the Telekom Slovenije Group as at 31 December 2014

Slovenia
 
GVO, d.o.o
Managing Director: Borut Radi
Edo Škufca served as Managing Director until 28 February 2014.
 
AVTENTA, d.o.o.
Managing Director: Vedran Krevatin
Miha Praunseis was appointed Managing Director for a term of office of four years, effective 1 January 2015.
 
TSmedia, d.o.o.
Managing Director: Tomaž Pernovšek, MSc
 
SOLINE, d.o.o.
Managing Director: Klavdij Godnič
 
M-Pay, d.o.o.
Managing Director: Janez Stajnik
Based on the resignation submitted by Dr Dean Korošec, the company’s supervisory board relieved the latter of his position as Managing Director as of 31 January 2014, and appointed Janez Stajnik to take his place, effective 1 February 2014.
 
SETCCE d.o.o.
Managing Director: Aleksej Jerman Blažič
 
Other countries
 
IPKO Telecommunications LLC, Kosovo
Board of Directors: Rudolf Skobe, MSc (President), Bujar Musa (Vice-President), Artan Lahaj, Dr Ciril Kafol and Robert Erzin, MSc
CEO: Robert Erzin, MSc
 
ONE DOOE L Skopje, Macedonia
Managing Director: Dr Ciril Kafol
 
DIGI PLUS MULTIMEDIA DOOE L Skopje, Macedonia
Managing Director: Metodija Mirčev
Janez Marovt resigned from his position as Managing Director, effective 31 May 2014. The general meeting of shareholders appointed Metodija Mirčev as new Managing Director, effective 1 June 2014.
 
Blicnet d. o. o. Banja Luka, Bosnia and Herzegovina
Managing Director: Igor Bohorč, MSc
 
SIO L d. o. o. , Zagreb, Croatia
Managing Director: Janez Marovt
Igor Rojs, MSc has been Managing Director since 1 February 2015.
 
SIO L, d. o. o., Podgorica, Montenegro
Managing Director: Igor Bohorč, MSc
Igor Rojs, MSc has been Managing Director since 1 February 2015.
 
SIOL, d. o. o., Sarajevo, Bosnia and Herzegovina
Managing Director: Igor Bohorč, MSc
Igor Rojs, MSc has been Managing Director since 1 February 2015.
 

Communication with stakeholders

Managing communications with key stakeholders follows the communications strategy, which represents an integral part of the Corporate Governance Policy of the Telekom Slovenije. Telekom Slovenije introduced proactive and two-way communication strategy in 2014. The aforementioned strategy focuses on achieving correct, stable and long-term relations with key stakeholders. It is based on the guiding principles of understanding, openness and objectivity.

Telekom Slovenije also reports on its communications with individual groups of stakeholders in sections that comprehensively address responsibility to employees, investors, shareholders, suppliers, other business partners and the local and wider communities.

Information of a public nature

The new Access to Public Information Act (ZDIJZ) entered into force in 2014 and expanded the range of those responsible for access to public information, including at companies under the controlling influence of the government. Companies under the controlling influence of the government, self-governing communities and other public entities are obliged to ensure access to public information:

  • by facilitating access based on individual requests for access; and
  • by proactively publishing information on their websites.

To that end, the Telekom Slovenije Group appointed two public information officers, set up an internal portal with all information for employees, and established the email address ijz@telekom.si,where all requests for access to public information are received. The Telekom Slovenije Group received four requests for information under the ZDIJZ in 2014. All responses were provided by the legally prescribed deadline. Basic information regarding donation, sponsorship, consultancy and copyright agreements are published regularly on the websites of the parent company and Group companies, which are deemed liable under the ZDIJZ, and regarding payments under such agreements.

Communication with the media21

The parent company is responsible for communication regarding corporate topics relating to the Telekom Slovenije Group, while individual subsidiaries communicate independently regarding other topics, taking into account basic communication principles that apply to the entire Group.

The media is regularly informed about the latest developments in the areas of technology-development, services and sales (the organisation of events, the drafting of press releases, etc.) and about the operations of the Group during regular press conferences that take place every quarter, while the general public is informed about the most important business events via the Ljubljana Stock Exchange’s SEOnet system. Journalists’ questions are answered regularly and in a timely manner, or by no later than the legally prescribed deadlines.

A total of 16,795 articles regarding Telekom Slovenije were recorded in 2014, an increase of 9% on 2013. Positive articles accounted for 72% of the total, neutral articles for 21.9% and negative articles for 6.1%. The majority of articles were on the topic of shares and the stock exchange, the sale of the government’s stake in Telekom Slovenije, and sponsorship of the Premier Football League and athletes who participated in the Olympic Games.

Communication with regulatory and government bodies22

The telecommunications sector is one of the most regulated economic sectors. We ensure consistent compliance with applicable regulations, recommendations and decisions of regulatory bodies, and respond with sound expert arguments, as necessary. Through their expert proposals, the Group also plays an active role in the process of drafting legislation in the field of electronic communications.

In addition to the Agency for Communication Networks and Services of the Republic of Slovenia (AKOS) and similar bodies in countries in which Group companies operate, the competent ministries and other government bodies also play an important, primarily legislative role.

Internal controls related to financial reporting

Risks are managed and internal controls carried out at Telekom Slovenije at all levels. The management of the parent company and Group companies is responsible for the functioning of the internal control system. Internal controls are a part of business processes and systems..

The objectives of internal controls are as follows:

  • to ensure the compliance of operations with the law, other regulations, standards, agreements and the Company’s internal acts;
  • the protection of assets;
  • varovanje premoženja;
  • the efficiency and successfulness of operations; and
  • the achievement of the Company’s strategic objectives.

The internal control system ensures the achievement of objectives and the management of key risks. It is controlled via management supervision, internal audits, the external audit of financial statements and other independent assessments.

Internal auditing

The Internal Audit Service functions in accordance with the standards for the professional practice of internal auditing and the code of professional ethics. Internal auditing is conducted for all group companies. The areas and scope of its work are defined in its annual work plan, which is adopted by the Management Board, subject to the approval of the Supervisory Board’s Audit Committee. The service regularly verifies the implementation of recommendations. The Internal Audit Service reports periodically to the Management Board and Supervisory Board’s Audit Committee on findings and recommendations for improvements.

Audits in 2014 focused on improving the effectiveness of the Telekom Slovenije Group’s risk management system. To that end, the service pursued established objectives relating to improving the effectiveness of governance, the control of procurement and sales processes and the appropriateness of information technology management.

In the scope of its advisory tasks, the service reviewed existing possibilities for reporting irregularities and unlawful acts, and proposed improvements to the process of receiving and handling reports in accordance with best practices and Slovenian guidelines on corporate integrity (whistle-blowing). The Internal Audit Service also participated in other transactions of an advisory nature and in internal assessments for ISO standards.

External auditing

At Telekom Slovenije’s 25th General Meeting of Shareholders, the audit firm KPMG Slovenija, d. o. o. was appointed to audit the financial statements for the 2014 financial year. Audit costs are disclosed in the Financial Report of Telekom Slovenije, d. d.

16 GRI G4-34
17 GRI G4-34
18 GRI G4-34
19 GRI G4-34
20 GRI G4-34
21 GRI G4-26, G4-27
22 GRI G4-26, G4-27