Corporate Governance
General
F-Secure applies principles of sound corporate governance and high ethical standards, complying with the Finnish Companies Act, Securities Market Act and other regulations on the administration of public companies issued by the authorities.
The company complies as explained below the Corporate Governance recommendations for public listed companies published in December 2003 by HEX Plc, the Central Chamber of Commerce of Finland and the Confederation of Finnish Industry and Employers.
Annual General Meeting of Shareholders
F-Secure Corporation's highest governing body is the Annual General Meeting
of Shareholders. The Annual General Meeting (AGM) shall be held within a period
from the end of the financial year as proposed by the Board of Directors and as
defined by the law. The AGM shall confirm remunerations to the Board members and
auditors, decide the number of members on the Board of Directors, appoint Board
members, approve the financial statement and balance sheet, determine the amount
of dividends and select the auditors and other issues as described in Article of
Associations of F-Secure Corporation and in Finnish Companies Act.
Articles of Association
Decisions of the latest AGM
Board of Directors
The Board of Directors of F-Secure Corporation shall contain a minimum of 3 and a maximum of 7 permanent members and one deputy member. The Board members will select a chairman and secretary for the Board among its members. The term of the Board members is one year and the term ends at the end of the first annual shareholders' meeting following the election of the Board members. The number of terms of the Board members is not restricted. The distribution of the tasks or areas of responsibility of the Board members is not specified.
The operation of the Board of Directors is governed by the Companies Act, the Articles of Association of F Secure Corporation and decisions at the annual shareholders' meeting. The Board of Directors represents all shareholders. The Board of Directors shall always put the interests of the company above the interests of any particular shareholders. The aim of the Board of Directors is to guide the company's business in such a way that it will in the long term generate the best possible return to its shareholders. The Board's tasks include matters that have a far-reaching impact on the operations of the Group. These include confirming the strategic guidelines, the annual budget, investments and operational plans. The Board of Directors shall evaluate its procedures annually.
During 2005 the board has had 13 meetings and average attendance has been close to 100%. The Annual General Meeting of F-Secure Corporation held on March 22, 2006 confirmed the number of Board members to be four (4) members and one deputy member. The following members of the Board were re-elected for the period ending at the close of the next Annual General Meeting: Mrs Sari Baldauf, Mr. Pertti Ervi, Mr. Risto Siilasmaa, Mr. Alexis Sozonoff and deputy member Mr. Ari Hyppönen. In its assembly meeting, F-Secure's Board of Directors elected Mr. Pertti Ervi to chair the Board.
The 2006 Annual General Meeting decided that the annual compensation for the member is 20,000 EUR and 10,000 stock options (2005 B - series) and for the chairman 30,000 EUR and 15,000 stock options (2005 B -series). Members of the board that are employed by the Group will not be compensated. Travelling expenses will be paid according to the company's travel policy.
Mr Risto Siilasmaa acts as the Chairman of the Board of Directors. Pertti Ervi has consulted the Group companies The group has paid EUR 42,566 to Pertti Ervi for the consultancy during 2005. Mr Risto Siilasmaa is the major shareholder of the Company. Other members are independent from the shareholders.
The Board considers that consultancy work and granted options are not that
significant to endanger the independency of the Board.
Board of Directors
Rules of Procedure of the Board of Directors
CEO
The Board of Director shall appoint the CEO and decide upon his/her remuneration and other benefits. CEO's duties include managing the business according to the instructions issued by the Board of Directors, present the matters to be dealt with in the Board of Directors' meeting, implement the matters resolved by the Board of Directors and other issues determined in the Companies Act. The Board of Directors confirms the salary and other benefits of the CEO. The CEO's retirement age and the determination of his/her pension conform to the standard rules specified by Finland's Employee Pension Act (TEL). The period of notice for the CEO is twelve (12) months both ways and there are no separate compensations for dismissal.
Executive Team
F-Secure's Executive Team assists the CEO in the management and development
of the Group.
The CEO appoints the executive team
members and decides upon the terms and conditions of their employment. According
to the "grandfather" principle (one over one) used in the Group, the Board of
Directors approves these decisions.
At present the corporate executive team consists of seven persons and
assembles regularly once a month and separately as needed. The CEO acts as the
chairman and the company's legal counsel as the secretary at the meetings.
Executive Team
Auditors and Internal Controls
F-Secure Corporation's auditor is Ernst & Young Oy, a firm of Authorized Public Accountants. The auditor's term of service is one year. Mr Tomi Englund, Authorized Public Accountant, acts as principal auditor, and is responsible for the direction and coordination of the audit work. The auditor will report to the Board of Directors at least once a year. During 2005, the group paid totally EUR 79,757 for auditing activities and EUR 49,254 for other services.
The Group Financial Management and Security Team are responsible for the internal control and instructions. Regular audits will be performed in the different business units as well as in the subsidiaries. The purpose is to ensure the compliance to the consistent administration, accounting practices and the information security in the Group.
Risk Management
The responsibility for the company's risk management lies with the Board of Directors. The Board of Directors approve and follow up the reporting procedures, and monitor the adequacy, appropriateness and effectiveness of the company's administrative processes.
Monthly financial reporting that covers the entire Group is used to monitor
how well financial targets are being met. The reports include actual figures,
plans and up-to-date forecasts.
The company has sought to manage the risks relating to its
business operations by developing its operating processes and control systems.
The company's legal unit is assisting sales operations by writing and reviewing
contracts and T&Cs.
F-Secure doesn't provide financing outside industry standard payment terms. Invoicing is mainly done in Euros. There is exchange rate risk with some currencies. In order to minimize the impact of the fluctuation of the exchange rates the goal is to hedge the estimated cash flow of these currencies for a period of six months.
The investment policy for cash reserves is conservative. Cash is mainly invested in short-term funds and other low risk investments.
F-Secure's critical IT systems are reviewed externally to ensure their security. Company monitors systems constantly internally as well.
Insider Regulations and Silent Period
The company follows the insider regulations of the Helsinki Stock Exchange. Insiders are divided into three categories: (1) permanent insiders including the members of the Board, the auditors, and the Group's executive team, (2) permanent company-specific non-public insiders including persons who by virtue of their position or tasks learn inside information on a regular basis, and, (3) project based insiders.
Permanent public insiders and permanent company specific insiders are not entitled to trade shares, options or other securities 21 days prior to publication of interim financial statements or company accounts.
The Group has a Silent Period of 21 days before each quarterly financial report announcement. During the Silent Period the Group will not arrange meetings or conference calls with the investor community.
