Sigma adheres to both the Swedish Code of Corporate Governance and the Listing Agreement with Nasdaq OMX Stockholm Stock Exchange. Further on in this report there is a list of points in the Code that have not been adhered to. Governance of the Sigma Group is exercised through the Annual General Meeting, the Board of Directors and managing Director as well as Group management in accordance with the Swedish Companies Act, the Articles of Association and decisions made by the above forums and instances.
ANNUAL GENERAL MEETING
The Annual General Meeting is the highest decision-making body and the forum through which shareholders exercise their influence over the Company. The Annual General Meeting elects the Board of Directors of Sigma AB (publ), a nomination committee that, comprises represents the largest shareholders, proposes representatives for the Board to attendees at the AGM. The AGM also ratifies income statements and balance sheets, decides whether to discharge the Board from liability, and in years when this is scheduled, elects an auditor for four years, and determines guidelines for remuneration to executive management within the Company. Decisions on dividends are made at the AGM on the basis of a recommendation from the Board.
The AGM for the fiscal year, 2008, was held in Malmö on April 28, 2009 and was attended by 33 shareholders representing 46,009,265 shares, which corresponded to approximately 54 percent of the total number of votes and 53 percent of the total number of shares. Compared to the previous year, more shareholders and shares were represented. The AGM decided on all proposals that were on the agenda, including discharging the Board from liability. The full minutes of the AGM are available on the Company’s website.
The next AGM will be held in Malmö on April 28, 2010. See additional information on page 54. The choice of Malmö for the 2010 AGM is justified by the location of the Company and the number of shareholders residing in the region. Proposals to the AGM can be submitted to the Company through CFO, Lars Sundqvist, or Chairman of the Board, Dan Olofsson.
ARTICLES OF ASSOCIATION
The applicable Articles of Association in Sigma AB are adopted by the 2006 AGM. The Company’s headquarters are in Malmö but the Company’s registered address is in Göteborg. In accordance with the Articles of Association, the operation offers consulting and software solutions within the area, information technology, surveys, project work and programming of information within administrative database management, sales of systems solutions, business development of new IT concepts, production of services for electronic commerce in different forms as well as the development of commerce solutions, advertising, etc., based on the Internet and Intranet and operations associated to these.
Shares are issued in two series; Series-A with ten (10) votes per share and Series-B with one (1) vote per share. In general, ownership of shares grants equal rights of the Company’s assets and profits according to the number of shares owned. The Company’s financial year is the calendar year.
Notification of the Annual General Meeting shall be made four to six weeks before the ordinary meeting. For extraordinary meetings, notification shall be made two to six weeks before they take place. Shareholders who wish to participate in the AGM shall apply to the Company in accordance with the notification and they have the right to be represented by no more than two persons. The Board of Directors can decide to hold the AGM in Malmö, Göteborg, or Stockholm. The Board of Directors shall consist of at least three and no more than ten board members. An authorized public accountant or a registered accounting firm shall be appointed as auditor.
The complete Articles of Association can be found on the Company’s website.
BOARD OF DIRECTORS
Up until the time of the AGM the Board consisted of seven permanent board members. At the AGM, five board members were re-elected and two previous board members were elected as deputies. One new board member was elected. The composition of the Board after the 2009 AGM was consequently six permanent members and two deputies. In addition to this, employee organizations are entitled to appoint two representatives to the Board. There has been no formal appointment of representatives, and in 2009 there has not been any additional representative for personnel on the Board as there has been in previous years. The Board of Directors appoints its executive committee at a meeting immediately following the AGM. At the constitutional meeting, a decision is made on the remuneration and audit committees. The list below shows Board Members and their respective shareholdings, attendance at meetings, and the respective independence of owners and the Company. Twelve meetings were held during the year, eight of which were held after the AGM, with those elections that were implemented there. A more detailed presentation of the board members is found on pages 52-53. The Board represents many competences and has a great deal of experience spanning over several generations. At one of the ordinary meetings of the Board during the year, the delegation of responsibilities to the Board and instructions for the Chief Executive Director were established. Chief Financial Officer, Lars Sundqvist, has acted as the Board’s secretary. Other people from the Company also presented reports on separate issues.
Name Elected year Number Series-A shares Number Series-B shares Attendance board meetings Dependent/independent
Dan Olofsson, Chairman of the Board 2001 615,171 23,454,828 12 of 12 Dependent on largest shareholder, Danir AB
Henrietta Hansson 2009 - - 8 of 8 Independent
Konstantin Caliacmanis, Board member 2001 381,000 321,658 11 of 12 Independent
Christina Ramberg, Board member 2001 – – 12 of 12 Independent
Sune Nilsson, Board member 2001 – 505,739 12 of 12 Dependent on the Company *)
Johan Glennmo, Board member 2001 – 6,000 12 of 12 Dependent on largest shareholder, Danir AB
Göran Larsson, deputy board member 2001/2009 – 36,390 9 of 12 Dependent on largest shareholder, Danir AB
Gunder Lilius, deputy board member 2001/2009 – 212,000 11 of 12 Dependent on largest shareholder, Danir AB
*) Sune Nilsson was Chief Executive Director and Board Member until August 31, 2008 and will receive a salary up through August 31, 2010.
The roles and responsibilities of the Board are defined in the Swedish Companies Act. In addition to this, the Board is responsible for establishing general goals and strategies, making decisions on larger investments and organizational issues as well as monitoring the Chief Executive Director to ensure he is fulfilling his obligations. The AGM decided that the Board’s remuneration would be SEK 100,000 for each of the regular board members that do not receive a salary from the Company and SEK 10,000 per deputy for every ordinary meeting he or she attends. It was decided that members of the audit committee would be paid a fee of SEK 30,000 to the chairman and SEK 20,000 to other members on the committee. No fee is paid to the remuneration committee. Gunder Lilius has carried out consulting services for the Company. Details about this are reported in note 36.
CHAIRMAN OF THE BOARD
In addition to presiding over the Board’s meetings, the Chairman of the Board is responsible for keeping in touch with the Chief Executive Director on a regular basis and monitoring the Board’s development, as well as consulting with it on strategic issues. The Chairman of the Board shall, in consultation with the Chief Executive Director, take responsibility of convening the Board’s meetings and arranging the agenda, as well as ensuring that the handling of business is not in contravention of the regulations. Once a year, the Chairman evaluates the work of the Board with each of its members individually.
COMMITTEES AND THE NOMINATION COMMITTEE
During the year, a remuneration committee was appointed consisting of Dan Olofsson and Sune Nilsson. The remuneration committee has met on one occasion during the year. Its task is to establish guidelines for remuneration for corporate management, to establish remuneration and conditions for the Chief Executive Director, and to inform the rest of the Board afterwards.
An audit committee was appointed during the year with Christina Ramberg, Henrietta Hansson and Johan Glennmo. The audit committee has met on two occasions prior to the publication of this Annual Report, and the committee’s chairman has also consulted with representatives for corporate management and auditors.
The task of the audit committee consists of:
■ preparing work with quality assuring the Company’s financial reports
■ attending regular meetings with the Company’ auditor
■ establishing other services besides auditing that may be performed by the Company’ auditor
■ evaluating the audit work and informing the Company’s Board of Directors and nomination committee
■ assisting the nomination committee by providing proposals for auditors and audit fees.
On the basis of ownership of the Company, the Annual General Meeting of 2009 decided to commission the Chairman to convene a nomination committee consisting of the Chairman and a representative of each of the three largest shareholders in terms of votes. Dan Olofsson, Chairman of the Board, Skandia Liv represented by Caroline af Ugglas, Nordea Fonder represented by Thomas Ehlin and Danske Capital represented by Mikael Nordberg were appointed. The nomination committee has held four meetings prior to this year’s AGM up until the printing of this Annual report. The task of the nomination committee is to submit proposals for the Board, Chairman of the Board, fees, and where appropriate, election of auditors. These proposals are presented in the notification of the Annual General Meeting, which is made public in the middle of March. Proposals to the nomination committee can be submitted to the Chairman of the Board, Dan Olofsson, at telephone number +46 (0) 40-665 90 00 or the nomination committee chairperson, Caroline af Ugglas, at telephone +46 (0) 8-788 3350.
BOARD MEETINGS
During the year, a total of 13 meetings have been held, 8 of which were ordinary meetings and 4 extraordinary meetings, and one was the board meeting following the election. Four of the ordinary meetings were teleconferences, during which only interim reports and the press release of unaudited earnings figures were dealt with. In the other four meetings, the Board met and dealt with strategic issues and the ratification of budgets, etc. The extraordinary meetings have generally dealt with decision-making issues regarding the operation, which have been more comprehensive than the Chief Executive Director’s mandate. The Annual General Meeting elected Dan Olofsson as Chairman and the Board appointed representatives in committees according to the above at the Board meeting following the election.
The Company’s auditor takes part in at least one of the ordinary meetings during the year. Attendance at the meetings is very good. On some occasions, a board member has been absent due to illness, and at some of the extraordinary meetings, a member has been absent due to short notice given because of the nature of events. Attendance is reported below per member as well as the elected members’ dependence and independence to the largest shareholder and Company as well as when they were elected to the Board.
AUDIT
At the Annual General Meeting for 2009, the accounting firm, Deloitte AB, was selected as auditor until the ordinary AGM in 2013. Consequently, Deloitte has appointed Jan Nilsson as the auditor in charge of the assignment. In all subsidiaries in Sweden, the accounting firm, Deloitte, has been selected as auditor, with an authorized public accountant who assumes the main responsibility. In several smaller foreign subsidiaries, local auditors have been selected, and they report to Deloitte in Sweden. In several smaller foreign subsidiaries where auditors are not required as per the country’s local requirements, no auditors have been appointed.
CHIEF EXECUTIVE DIRECTOR, GROUP MANAGEMENT AND EXECUTIVE MANAGEMENT AND GOVERNANCE OF THE OPERATION
The Chief Executive Director is appointed by the Board of Directors and presides over the Company in accordance with the guidelines and instructions laid down by the Board. The Chief Executive Director, Håkan Karlsson, has appointed a company/group management with seven people including the Chief Executive Director. Their names are listed below and a more detailed presentation of them can be found on pages 50-51. The Group management meets at several occasions per year for more comprehensive meetings in addition to the ongoing more or less, daily contacts. In 2009, which has been a special year due the prevailing downturn in the business cycle, the Group management has also had weekly meetings regarding the current status of the Group. Those matters that have been dealt with by the Group management included financial follow-up, marketing activities and branding, different proposals regarding acquisitions and establishments, and other strategic questions as well as the achievement of goals. In each business area there is also a management group that focuses on specific issues. Such management groups deal with monthly meetings regarding employees between assignments, getting new assignments and customers and coordinating these tasks.
Sigma’s subsidiaries are governed and guided formally through the Board’s work in order to adhere to formal legislation, requirements and conditions that are placed on a company, as well as through more in-depth overviews of the operation with the management of the subsidiaries. The business area manager and one controller are normally the ones who carry out this in-depth overview of the operations in subsidiaries. Subsidiaries are given annual goals for the operation, which they are governed by. Sigma’s organization is decentralized and have short decision-making channels from all employees to the Chief Executive Director and Group Manager.
Corporate managements’ holdings of shares and call options (only Series-B shares) are allocated as follows:
Name Been a part of corporate management since Number of Series-B shares Number of call options
Håkan Karlsson 2008 15,000 300,000
Lars Sundqvist 2001 35,900 -
Jan Anderson 2004 *) 93,613 -
Göte Berntsson 2001 *) 1,050 -
Carl Vikingsson 2001 *) 4,125 -
Niklas Börjesson 2008 - -
Michael Krantz 2001 *) - -
*) Excluding 2007.
The Chief Executive Director has no substantial shareholdings or partial ownership in companies that have significant business associations with Sigma.
INTERNAL CONTROL REGARDING FINANCIAL REPORTING
The Board of Directors has ultimate responsibility in accordance with the Swedish Companies Act and the Swedish Code for Corporate Governance as well as the listing agreement at the Nasdaq OMX Stockholm Stock Exchange to ensure that the Company has good internal controls. The work regulations for the Board and instructions for the Chief Executive Director for both the Parent Company and subsidiaries constitute a part of the control environment that exists within the Group. The operational overviews described in the section above are also a parts of the Company’s internal control environment. The Board of Directors is updated on how the internal controls are managed through the audit committee. The actual handling of internal controls is delegated to the corporate management and the corporate management is responsible for carrying out such controls. The internal controls are mainly based on instructions of the Chief Executive Directors of both the Parent Company and the repspective subsidiary. In addition, each subsidiary has established certification procedures and similar documents that regulate responsibility and authorization at different levels including the right to act as Company signatory. These documents also regulate the right to enter into various agreements concerning the scope and commitments of the Company. The Parent Company has also issued internal governance documents with accounting principles that apply to the Group, as well as consolidated reporting and detailed instructions regarding financial reporting to the Group’s central consolidation system. All subsidiaries and other reporting units submit monthly accounts that are consolidated. Different forms of internal controls such as reconciliations and analyses are carried out before such reports are submitted. A special control function at the Group level analyzes and processes those reports, and compiles and consolidates them into a collective Group report. In the quarterly accounts, an in-depth overview and analysis with reconciliation is carried out. Certain assessments are made regarding the documentation reported quarterly by the executive management, or when such reports are requested. The Management and the Board deliver the financial reports on a monthly basis. These reports form the basis for the quarterly reports, press releases of unaudited earnings figures and the Annual Report that Sigma publishes in both Swedish and English. The information that is made public through press releases is also published on the Company’s website, www.sigma.se. All policies are published on the Company’s intranet and can be accessed by all employees. Normally, the Chief Executive Director has the right to act as sole signatory for the Company for daily administration, but other types of signatory require two joint signatures. Within the Group, the main principle is that all bank accounts or equivalent shall be signed by two people. No internal audit function exists in Sigma as this is not justified by the scope and risk exposure the Company has as well as the other types of internal controls that were reported on in this section.
RISK MANAGEMENT
The Company’s important risks and management of these risks are reported in the administration report on page 22 of the Annual Report.
COMPREHENSIVE POLICIES
The Board of Directors establishes the Group’s comprehensive policies for the Group. The majority of operative policies are established by the respective subsidiaries within the Group since they work very independently. Central policies for Sigma are; the information and communication policy, equality policy, ethical policy and IT policy.
CALL OPTIONS
As of the beginning of the year, Danir AB has issued a total of 300,000 call options to Håkan Karlsson. These call options will expire in March 2012. Each option corresponds to one share. The call options are structured according to the Black & Scholes model for both option premiums and the exercise price. The call options are issued on existing shares, which is why they do not affect the total number of shares in the Parent Company.
SHAREHOLDING AND OWNERSHIP STRUCTURE
The number of shareholders as of December 31, 2009 amounted to 8,837. Of these, approximately 61 percent (62) were shareholders with 500 shares or less. Funds and insurance companies owned approximately 25 percent (28) of the share capital. Private individuals own approximately 22 percent (22) of the capital. Foreign ownership amounted to 16 percent (14) of the share capital.
CAPITAL STRUCTURE
Since September 28, 2001, Sigma’s Series-B share has been listed on the Nasdaq OMX Stockholm Stock Exchange Small Cap list. The Series-A share is not listed. The number of shares amounts to 86,746,471, of which there are 1,024,124 Series-A shares and 85,722,347 Series-B shares. The ratio value of the share is SEK 1.00.
TRADING OF SHARES AND PRICE DEVELOPMENT
During the year, approximately 22 million shares were traded at a value of around SEK 96 M. The number of shares traded corresponds to approximately 26 percent of the total listed shares, which is less than that of the previous year. The average number of shares traded per day was approximately 89,000, or around SEK 380,000.
Share price development during the year has varied. At the beginning of the year the price was SEK 3.20. It reached its highest level on the last trading day of the year and closed at SEK 5.20. The lowest share price during the year was SEK 3.11 in January 2009. On the last trading day of the year the closing price was SEK 5.15, and as of February 26, 2010, had a closing price of SEK 4.99.
As of November 1, 2009, Sigma has signed a so-called liquidity guarantee with HQ bank. This means that HQ Bank will always provide a bid and offer price for the shares and guarantee that a certain volume of shares are liquid. The purpose behind this is to get a more stable share price and to increase liquidity in shares since there is always a buyer and a seller for the shares.
DIVIDEND POLICY
The Board has not established a dividend policy but annually evaluates the possibility for dividend payments based on the Company’s financial position, cash flow and capital needs. In recent years, Sigma has had a positive cash flow, and by paying out a smaller share of the profits, Sigma’s financial position has strengthened so that the interest-bearing net debt has almost been eliminated.
For 2009, the Board proposes a dividend of SEK 0.25 per share, which is equivalent to a dividend of SEK 22 M. Sigma’s profit/loss after tax for 2009 was SEK 35 M, which corresponded to SEK 0.40 per share. The operating cash flow from current operations amoutned to SEK 75 M. Sigma’s equity/assets ratio at the end of 2009 reached 62 percent, and adjusted for the proposed dividend of 59 percent.
DEVIATIONS FROM THE SWEDISH CODE OF CORPORATE GOVERNANCE
Sigma adheres to the Swedish Code of Corporate Governance, with the exceptions below as explained.
4.1
The composition of the Board must strive for an equal distribution of gender. Two of six Board members are women, which is more than the previous year.
4.2
In accordance with the code, deputy board members shall not be appointed. In Sigma, there are two deputies who have previously been regular Board members and whose competence contribute to the composition of the Board.
9.1
The remuneration committee in Sigma consists of Chairman of the Board, Dan Olofsson, and Board member, Sune Nilsson. In accordance with the code, “Other members in the remuneration committee shall be independent in relation to the Company and corporate management.” Sune Nilsson was previously Chief Executive Director and Group manager for Sigma and has a formal dependent position in the Company until five years from the date of resignation as Chief Executive Director. The Company justifies the deviation wherein Sune Nilsson, with his knowledge and experience is best suited to be included in the remuneration committee and that the formal dependent position does not affect his activities in the committee. Issues regarding Sune Nilsson’s previous severance pay were dealt with by the members of the committee at that time, Dan Olofsson and Göran Larsson.
REVIEW BY THE AUDITOR
This corporate governance report has not been audited by the Company’ auditor.