Securitas Annual Report 2007

Report of the Board of Directors – Corporate Governance and Internal Control
Securitas AB is a Swedish public company with its registered office in Stockholm, Sweden. Securitas AB, which has been listed since 1991 on the Stockholm Stock Exchange, now called the OMX Nordic Exchange Stockholm, is governed by the Swedish Companies Act and Swedish stock exchange rules. This report does not form a part of the Annual Accounts and has not been audited.
Securitas Approach to Corporate Governance
Securitas is committed to meeting high standards of Corporate Governance. The ultimate aim of the Corporate Governance is to protect the interests of shareholders’ (and other stakeholders). In order to achieve this Securitas has created a clear and effective structure for responsibility and governance.
Compliance to Swedish Code for Corporate Governance
Securitas has published principles for Corporate Governance in previous Annual Reports and has a separate section on the Group website. Securitas complies with the Swedish Code for Corporate Governance principle of “comply or explain” and all deviations from the Code are presented and explained in the below table. In all other respects Securitas believes that the Code requirements were met as of year end 2007.
Significant Shareholders
The principal shareholders in Securitas AB on December 31, 2007 were Investment AB Latour, which together with SäkI AB, Förvaltnings AB Wasatornet and Karpalunds Ångbryggeri AB held 11.6 percent (11.4) of the share capital and 30.1 percent (30.0) of the votes, and Melker Schörling AB, with 4.7 percent (4.5) of the share capital and 11.1 percent (10.9) of the votes. These shareholders are represented on the Board of Directors by Gustaf Douglas, Carl Douglas, Fredrik Palm-stierna, Melker Schörling and Sofia Schörling Högberg. For more detailed information on shareholders please see the table on page 20. The company’s share capital consisted of 17,142,600 Series A shares and 347,916,297 Series B shares as of December 31, 2007. Each Series A share carries ten votes and each Series B share one vote.
In the event that the company issues new Series A and B shares, current shareholders have the preferential right to subscribe for new shares of the same series in proportion to their existing holdings.
Annual General Meeting
All shareholders are able to exercise their influence at the Annual General Meeting, which is the company’s highest decision-making body. The Annual General Meeting also provides shareholders with an opportunity to ask questions directly to the Chairman of the Board, the Board of Directors and the President and CEO, even though the company strives to respond to queries from shareholders as they arise during the year. The company’s auditors are present at the meeting. The minutes from the Annual General Meeting can be found at Securitas website. The Annual General Meeting resolves, among other things, on the following issues: – adoption of income statement and balance sheet; – appropriation of the company’s profit or loss; – appointment of Nomination Committee members;
– discharge of the Directors of the Board and the President and CEO from their liability;
– election of Directors of the Board, Chairman of the Board and appointment of Auditors;
– determination of fees for the Board of Directors and the Auditors.
The Annual General Meeting of Securitas AB (publ.) was held on April 17, 2007 and the minutes are available on Securitas webpage.
Nomination Committee
The Nomination Committee is an organ established by the Annual General Meeting of the company with the task of preparing the election of members of the Board of Directors and the election of the Chairman of the Board, the establishment of fees to the Board of Directors and other related matters before the forthcoming Annual General Meetings. In addition, before General Meetings at which the election of auditors is to take place and after consultation with the Board of Directors and Audit Committee, the Comittee shall prepare for the election of auditors, the resolution on fees to the auditors, and matters pertaining thereto.
§ Deviation Explanation
2.1.2 The majority of the Nomination Committee
  members do not consist of non Board
  members and the chairman of the Nomination
  Committee is a Board member.
Two out of four members of the Securitas Nomination Committee are Board members and one of these is the chairman of the Committee.
The principal owners presently represented in the Nomination Committee find it important for an efficient continuously ongoing nomination work that there are a limited number of Nomination Committee members. At the same time, the two major owners must be represented. This results in an equal number of Board members and external members of the Nomination Committee. A majority of external members would require a total number of five members, which is considered too many. Furthermore, the above mentioned owners find it natural that the representative of the largest shareholder in terms of votes is the chairman of the Committee.
3.2.4 The majority of the Directors elected by the
  shareholders’ meeting are not considered
  independent of the company and its
  management.
The provision is not complied with because of the so called “12-year-rule”. Out of ten Board members in total, six are considered as dependent of the company according to the definition of the Code. With respect to five of these, the dependence arises merely due to the so called “12-year-rule”.
The Nomination Committee is of the opinion that in a company such as Securitas dependence does not arise merely due to the fact that a Board member has worked with and gained knowledge about the company over a period of time. Refer to Board of Directors section on page 93 for an overview of the Board’s independence.
3.8.2 The majority of the Audit Committee members
  are not considered independent of the
  company and its management.
Out of the three members in total, two are considered as dependent of the company according to the definition of the Code merely due to the “12 year rule”.
The Board of Directors is of the opinion that in a company such as Securitas dependence does not arise merely due to the fact that a Board member has worked with and gained knowledge about the company over a period of time.
4.2.1 None of the Remuneration Committee
  members are considered independent
  of the company and its management.
Both of the members of the Remuneration Committee are considered as dependent of the company according to the definition of the Code merely due to the “12 year rule”.
The Board of Directors is of the opinion that in a company such as Securitas dependence does not arise merely due to the fact that a Board member has worked with and gained knowledge about the company over a period of time.
At the Annual General Meeting held on April 17, 2007, Gustaf Douglas and Melker Schörling, representing the principal owners of Securitas AB with 16 percent of the share capital and 41 percent of the votes, together with Marianne Nilsson (representing Swedbank Robur with 2.8 percent of the share capital and 2.0 percent of the votes) were re-elected as members and Mats Tunér (representing SEB Fonder with 3.9 percent of the share capital and 2.8 percent of the votes) was elected as new member of the Nomination Committee before the Annual General Meeting 2008.
Gustaf Douglas was re-elected Chairman of the Nomination Committee. The Nomination Committee shall be entitled to appoint one additional member of the Nomination Committe. The General Meeting resolved that in case a shareholder, whom a member of the Nomination Committee represents, is no longer one of the major shareholders of Securitas (based on votes), or if a member of the Nomination Committee is no longer employed by such shareholder or any other reason leaves the committee before the Annual General Meeting 2008, the Committee shall have the right to appoint another representative of the major shareholders to replace such member.
The Committee’s work is established in the Procedure and Instructions for the Nomination Committee of Securitas AB. The Committee shall hold meetings as often as necessary in order for the Committee to fulfill its duties. However, the Committee shall hold at least one meeting annually. During 2007 the committee has met 4 times.
During 2007 the Committee has prepared for the election of auditors, since the four-year period for which the Annual General Meeting in 2004 elected PricewaterhouseCoopers AB as audit firm expired with the financial year end 2007 and thus the election of Group auditors will be on the agenda at the Annual General Meeting in 2008. The Nomination Committee has consulted with the Board of Directors and Audit Committee in this process.
As part of the proposed process for the election of Group auditors for the period 2008-2011, the Audit Committee suggested that an internal evaluation of current auditors be conducted. The evaluation has been carried out via a questionnaire focusing on certain key areas with statements to be ranked. This evaluation covered all reporting units within the Group including Loomis.
The Audit Committee made a recommendation to the Board of Directors based on the comprehensive evaluation and other information presented and the Nomination Committee has been recommended to base its recommendation to the Annual General Meeting upon this.
Board of Directors
The Members of the Board of Directors
According to the Articles of Association the Board of Directors shall have five to ten Board members elected by the Annual General Meeting, with no more than two deputy directors. Securitas has ten members elected by the Annual General Meeting, three employee representatives and two deputy employee representatives. The General Meeting 2007 re-elected Carl Douglas, Gustaf Douglas, Marie Ehrling, Annika Falkengren, Stuart E. Graham, Berthold Lindqvist, Fredrik Palmstierna, Melker Schörling and Sofia Schörling Högberg and elected as a new Board member Alf Göransson, who succeeded Thomas Berglund as President as of March 5, 2007. Thomas Berglund declined re-election. The General Meeting re-elected Melker Schörling as Chairman of the Board. Mikael Ekdahl, Attorney of law, is the secretary of the Board. For further information on the members of the Board of Directors and President and CEO, please see pages 102–103.
    Independence
  Independence in relation in relation to shareholders
Board Member to the company  
Melker Schörling No (owing to: Board Member > 12 yrs) No
Gustaf Douglas No (owing to: Board Member > 12 yrs) No
Alf Göransson No (President and CEO) Yes
Annika Falkengren Yes Yes
Carl Douglas No (owing to: Board Member > 12 yrs) No
Stuart E. Graham Yes Yes
Berthold Lindqvist No (owing to: Board Member > 12 yrs) Yes
Fredrik Palmstierna No (owing to: Board Member > 12 yrs) No
Sofia Schörling Högberg Yes No
Marie Ehrling Yes Yes
Total 4 5
It was resolved that the fees to the Board should amount to SEK 4,350,000 in total (excluding fees for committee work) to be distributed among the Board members as follows; Chairman of the Board: SEK 900,000, deputy Chairman of the Board: SEK 650,000 and each of the other Board members (except the President and CEO) SEK 400,000.
The Responsibilities of the Board of Directors
The Board of Directors is responsible for the Group’s organization and administration in accordance with the Swedish Companies Act and appoints the President and CEO, the Audit Committee and the Remuneration Committee. In addition, the Board of Directors decides on the President and CEO’s salary and other remuneration. The Board meets a minimum of six times annually. At least one meeting per year involves visiting the operations of one of the Group’s divisions. The Group’s auditors participate in the meeting of the Board of Directors in conjunction with the yearly closing of the books.
The Procedure of the Board of Directors
The activities of the Board of Directors and the division of responsibility between the Board and Group Management are governed by formal procedures, which are adopted by the Board each year after the Annual General Meeting. According to these rules, the Board shall decide on, among other things, the Group’s overall strategy, corporate acquisitions and property investments, in addition to establishing a framework for the Group’s operations by approving the Group’s budget. The rules include a work instruction for the Chief Executive Officer as well as instruction for the financial reporting. The Board’s procedures are documented in a written instruction. The procedures prescribe that an annual evaluation of the work of the Board of Directors shall be carried out.
Report of the Board of Directors – Corporate Governance and Internal Control
Securitas AB is a Swedish public company with its registered office in Stockholm, Sweden. Securitas AB, which has been listed since 1991 on the Stockholm Stock Exchange, now called the OMX Nordic Exchange Stockholm, is governed by the Swedish Companies Act and Swedish stock exchange rules. This report does not form a part of the Annual Accounts and has not been audited.
 
Securitas Approach to Corporate Governance
Securitas is committed to meeting high standards of Corporate Governance. The ultimate aim of the Corporate Governance is to protect the interests of shareholders’ (and other stakeholders). In order to achieve this Securitas has created a clear and effective structure for responsibility and governance.
 
Compliance to Swedish Code for Corporate Governance
Securitas has published principles for Corporate Governance in previous Annual Reports and has a separate section on the Group website. Securitas complies with the Swedish Code for Corporate Governance principle of “comply or explain” and all deviations from the Code are presented and explained in the below table. In all other respects Securitas believes that the Code requirements were met as of year end 2007.
 
Significant Shareholders
The principal shareholders in Securitas AB on December 31, 2007 were Investment AB Latour, which together with SäkI AB, Förvaltnings AB Wasatornet and Karpalunds Ångbryggeri AB held 11.6 percent (11.4) of the share capital and 30.1 percent (30.0) of the votes, and Melker Schörling AB, with 4.7 percent (4.5) of the share capital and 11.1 percent (10.9) of the votes. These shareholders are represented on the Board of Directors by Gustaf Douglas, Carl Douglas, Fredrik Palm-stierna, Melker Schörling and Sofia Schörling Högberg. For more detailed information on shareholders please see the table on page 20. The company’s share capital consisted of 17,142,600 Series A shares and 347,916,297 Series B shares as of December 31, 2007. Each Series A share carries ten votes and each Series B share one vote.
 
In the event that the company issues new Series A and B shares, current shareholders have the preferential right to subscribe for new shares of the same series in proportion to their existing holdings.
 
Annual General Meeting
All shareholders are able to exercise their influence at the Annual General Meeting, which is the company’s highest decision-making body. The Annual General Meeting also provides shareholders with an opportunity to ask questions directly to the Chairman of the Board, the Board of Directors and the President and CEO, even though the company strives to respond to queries from shareholders as they arise during the year. The company’s auditors are present at the meeting. The minutes from the Annual General Meeting can be found at Securitas website. The Annual General Meeting resolves, among other things, on the following issues: – adoption of income statement and balance sheet; – appropriation of the company’s profit or loss; – appointment of Nomination Committee members;
– discharge of the Directors of the Board and the President and CEO from their liability;
– election of Directors of the Board, Chairman of the Board and appointment of Auditors;
– determination of fees for the Board of Directors and the Auditors.
 
The Annual General Meeting of Securitas AB (publ.) was held on April 17, 2007 and the minutes are available on Securitas webpage.
 
Nomination Committee
The Nomination Committee is an organ established by the Annual General Meeting of the company with the task of preparing the election of members of the Board of Directors and the election of the Chairman of the Board, the establishment of fees to the Board of Directors and other related matters before the forthcoming Annual General Meetings. In addition, before General Meetings at which the election of auditors is to take place and after consultation with the Board of Directors and Audit Committee, the Comittee shall prepare for the election of auditors, the resolution on fees to the auditors, and matters pertaining thereto.
 
§ Deviation Explanation
 
2.1.2 The majority of the Nomination Committee
  members do not consist of non Board
  members and the chairman of the Nomination
  Committee is a Board member.
 
Two out of four members of the Securitas Nomination Committee are Board members and one of these is the chairman of the Committee.
The principal owners presently represented in the Nomination Committee find it important for an efficient continuously ongoing nomination work that there are a limited number of Nomination Committee members. At the same time, the two major owners must be represented. This results in an equal number of Board members and external members of the Nomination Committee. A majority of external members would require a total number of five members, which is considered too many. Furthermore, the above mentioned owners find it natural that the representative of the largest shareholder in terms of votes is the chairman of the Committee.
 
3.2.4 The majority of the Directors elected by the
  shareholders’ meeting are not considered
  independent of the company and its
  management.
 
The provision is not complied with because of the so called “12-year-rule”. Out of ten Board members in total, six are considered as dependent of the company according to the definition of the Code. With respect to five of these, the dependence arises merely due to the so called “12-year-rule”.
 
The Nomination Committee is of the opinion that in a company such as Securitas dependence does not arise merely due to the fact that a Board member has worked with and gained knowledge about the company over a period of time. Refer to Board of Directors section on page 93 for an overview of the Board’s independence.
 
3.8.2 The majority of the Audit Committee members
  are not considered independent of the
  company and its management.
 
Out of the three members in total, two are considered as dependent of the company according to the definition of the Code merely due to the “12 year rule”.
 
The Board of Directors is of the opinion that in a company such as Securitas dependence does not arise merely due to the fact that a Board member has worked with and gained knowledge about the company over a period of time.
 
4.2.1 None of the Remuneration Committee
  members are considered independent
  of the company and its management.
 
Both of the members of the Remuneration Committee are considered as dependent of the company according to the definition of the Code merely due to the “12 year rule”.
 
The Board of Directors is of the opinion that in a company such as Securitas dependence does not arise merely due to the fact that a Board member has worked with and gained knowledge about the company over a period of time.

Page 93

 
At the Annual General Meeting held on April 17, 2007, Gustaf Douglas and Melker Schörling, representing the principal owners of Securitas AB with 16 percent of the share capital and 41 percent of the votes, together with Marianne Nilsson (representing Swedbank Robur with 2.8 percent of the share capital and 2.0 percent of the votes) were re-elected as members and Mats Tunér (representing SEB Fonder with 3.9 percent of the share capital and 2.8 percent of the votes) was elected as new member of the Nomination Committee before the Annual General Meeting 2008.
 
Gustaf Douglas was re-elected Chairman of the Nomination Committee. The Nomination Committee shall be entitled to appoint one additional member of the Nomination Committe. The General Meeting resolved that in case a shareholder, whom a member of the Nomination Committee represents, is no longer one of the major shareholders of Securitas (based on votes), or if a member of the Nomination Committee is no longer employed by such shareholder or any other reason leaves the committee before the Annual General Meeting 2008, the Committee shall have the right to appoint another representative of the major shareholders to replace such member.
 
The Committee’s work is established in the Procedure and Instructions for the Nomination Committee of Securitas AB. The Committee shall hold meetings as often as necessary in order for the Committee to fulfill its duties. However, the Committee shall hold at least one meeting annually. During 2007 the committee has met 4 times.
 
During 2007 the Committee has prepared for the election of auditors, since the four-year period for which the Annual General Meeting in 2004 elected PricewaterhouseCoopers AB as audit firm expired with the financial year end 2007 and thus the election of Group auditors will be on the agenda at the Annual General Meeting in 2008. The Nomination Committee has consulted with the Board of Directors and Audit Committee in this process.
 
As part of the proposed process for the election of Group auditors for the period 2008-2011, the Audit Committee suggested that an internal evaluation of current auditors be conducted. The evaluation has been carried out via a questionnaire focusing on certain key areas with statements to be ranked. This evaluation covered all reporting units within the Group including Loomis.
 
The Audit Committee made a recommendation to the Board of Directors based on the comprehensive evaluation and other information presented and the Nomination Committee has been recommended to base its recommendation to the Annual General Meeting upon this.
 
Board of Directors
The Members of the Board of Directors
According to the Articles of Association the Board of Directors shall have five to ten Board members elected by the Annual General Meeting, with no more than two deputy directors. Securitas has ten members elected by the Annual General Meeting, three employee representatives and two deputy employee representatives. The General Meeting 2007 re-elected Carl Douglas, Gustaf Douglas, Marie Ehrling, Annika Falkengren, Stuart E. Graham, Berthold Lindqvist, Fredrik Palmstierna, Melker Schörling and Sofia Schörling Högberg and elected as a new Board member Alf Göransson, who succeeded Thomas Berglund as President as of March 5, 2007. Thomas Berglund declined re-election. The General Meeting re-elected Melker Schörling as Chairman of the Board. Mikael Ekdahl, Attorney of law, is the secretary of the Board. For further information on the members of the Board of Directors and President and CEO, please see pages 102–103.
 

    Independence
  Independence in relation in relation to shareholders
Board Member to the company  
Melker Schörling No (owing to: Board Member > 12 yrs) No
Gustaf Douglas No (owing to: Board Member > 12 yrs) No
Alf Göransson No (President and CEO) Yes
Annika Falkengren Yes Yes
Carl Douglas No (owing to: Board Member > 12 yrs) No
Stuart E. Graham Yes Yes
Berthold Lindqvist No (owing to: Board Member > 12 yrs) Yes
Fredrik Palmstierna No (owing to: Board Member > 12 yrs) No
Sofia Schörling Högberg Yes No
Marie Ehrling Yes Yes
Total 4 5
 
It was resolved that the fees to the Board should amount to SEK 4,350,000 in total (excluding fees for committee work) to be distributed among the Board members as follows; Chairman of the Board: SEK 900,000, deputy Chairman of the Board: SEK 650,000 and each of the other Board members (except the President and CEO) SEK 400,000.
 
The Responsibilities of the Board of Directors
The Board of Directors is responsible for the Group’s organization and administration in accordance with the Swedish Companies Act and appoints the President and CEO, the Audit Committee and the Remuneration Committee. In addition, the Board of Directors decides on the President and CEO’s salary and other remuneration. The Board meets a minimum of six times annually. At least one meeting per year involves visiting the operations of one of the Group’s divisions. The Group’s auditors participate in the meeting of the Board of Directors in conjunction with the yearly closing of the books.
 
The Procedure of the Board of Directors
The activities of the Board of Directors and the division of responsibility between the Board and Group Management are governed by formal procedures, which are adopted by the Board each year after the Annual General Meeting. According to these rules, the Board shall decide on, among other things, the Group’s overall strategy, corporate acquisitions and property investments, in addition to establishing a framework for the Group’s operations by approving the Group’s budget. The rules include a work instruction for the Chief Executive Officer as well as instruction for the financial reporting. The Board’s procedures are documented in a written instruction. The procedures prescribe that an annual evaluation of the work of the Board of Directors shall be carried out.