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Corporate Governance

QPR Software Plc (QPR) 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, QPR Software Plc's Articles of Association, and the insider regulations prepared by the NASDAQOMX Helsinki Ltd, the Central Chamber of Commerce of Finland and the Confederation of Finnish Industries entered into force on 1 January 2006. The principles stated herein are intended only to supplement legal provisions. In addition, QPR complies with the Corporate Governance Code for Listed Finnish Companies that entered into force on October 1, 2010.

Corporate Governance Statement

See Corporate Governance Statement

Annual General Meeting

QPR's highest decision-making body is the shareholders' meeting, at which the shareholders participate in the control and supervision of the company. The shareholders' meeting is convened at least once a year.

The Annual General Meeting (AGM) shall be held within six months following the end of the fiscal year. Materials relating to matters to be considered at the shareholders' meeting can be inspected in advance at the company's head office in Helsinki.

The AGM shall decide the number of members on the Board of Directors and appoint Board members. In addition, it has the authority under the Finnish Companies Act to alter the Articles of Association, adopt the financial statements, determine the amount of dividends and select the auditors. Each QPR share entitles its holder to one vote at shareholders' meetings. QPR's Articles of Association have no redemption clauses or voting limitations.

Shareholder agreements

The company is not aware of any shareholder agreements concerning the use of voting rights in the company, or of any agreements limiting the surrender of company shares.

Board of Directors

The AGM elects three to six Board members for a term of one year at a time. Board members consist of representatives of major shareholders and external, independent experts with broad experience in business and the industry in which QPR operates. The AGM confirms annually in advance the emoluments payable to the members of the Board of Directors. The Board elects a Chairman from among its members.

QPR's Board of Directors is responsible for the company's strategic policies and the appropriate organization of business operations and administration. The Board of Directors acts in the company's interests in all situations. The Board has a predetermined agenda. The Board of Directors always handles and decides on matters that are financially, commercially or fundamentally significant for the company's operations. At each Board meeting, the Board shall consider a progress report provided by the CEO. In line with the standard agenda, the Board also monitors sales performance and market development at all Board meetings. QPR's CEO attends Board meetings and presents items on the agenda to the Board.  Company's CFO acts as the Board's recording secretary.

QPR's Board of Directors shall, in accordance with its agenda:

• confirm the company's long-term goals and strategies; 
• make decisions on Group structure and organisation; 
• handle and adopt interim reports, consolidated financial statements and the annual report; 
• confirm the Group's operating plan, budget and investment plan: 
• make decisions on strategically or financially important individual investments, company acquisitions, disposals or other arrangements, and contingent liabilities; 
• decide on strategically significant product development projects; 
• confirm the Group's risk management and reporting practice; 
• make decisions on reward and incentive schemes for Group management; 
• establish a dividend policy and be responsible for the development of shareholder value; 
• appoint the company's Managing Director and determine his remuneration; and 
• be responsible of other duties determined for the Board of Directors in the Companies Act or otherwise

The work of the Board of Directors is organized as effectively as possible to support the proper functioning of the company's administrative and control systems. So far the Board of Directors as a whole has familiarized itself in advance and been involved in the preparation of many matters for which separate committees are set up in large companies. This is because the scope of the company's activities has not yet required the establishment of separate committees - instead the entire Board has been involved in the preparation of all matters within its authority and belonging to its duties.

The Board of Directors regularly assesses its operations and working procedures by carrying out a self-assessment once a year. In the fiscal year 2012, QPR's Board of Directors had 13 board meetings. The average attendance at the meetings was 92 percent.

QPR Software Plc's Annual General Meeting held on 22 March, 2012 elected four members to the Board of Directors. Their term started on 22 March, 2012 and will expire at the close of the 2013 Annual General Meeting. The Board members elected at the 2012 General Meeting are: Kirsi Eräkangas, Jyrki Kontio, Vesa-Pekka Leskinen and Topi Piela. Vesa-Pekka Leskinen is the Chairman of the Board as elected by the Board of Directors on 22 March, 2012.

QPR Software Plc’s Annual General Meeting held on 22 March 2012 decided that the Chairman of the Board receives an annual emolument in total of EUR 25,230 in year 2012 and that each Member of the Board receives an annual emolument in total of EUR 16,820 in year 2012. No separate meeting fees are paid.

Chief Executive Officer

The CEO's duty is to manage the company's activities in accordance with the Finnish Companies Act and the Board of Directors' instructions and rules and to inform the Board of Directors about the development of the company's business and financial situation. The CEO is also responsible for arranging the company's day-to-day administration and ensuring that the financial administration of the company has been arranged reliably. The CEO primarily presents matters in Board meetings and is responsible for preparing draft solutions.

QPR's Board of Directors appointed Jari Jaakkola the CEO on 3 January, 2008.

Principles of compensation

QPR's Board of Directors appoints the CEO and decides the terms of his/her service contract. The CEO's terms of service have been agreed on in writing. The CEO is not appointed for a certain term, but is appointed indefinitely until further notice is given. The Company does not have any differing pension arrangements for the CEO. The period of notice for the CEO is three months. Compensation on termination is equivalent to six months' salary.

QPR Software Plc has no option plans in effect, but the Company has a share-based incentive plan for the Group's executive management team (incl. the Chief Operating Officer), effective as of 2011. Read more

Executive Management Team

QPR has an Executive Management Team, the Chairman of which is QPR's CEO and the members  who are either Senior Vice presidents (SVP) or Vice Presidents (VP) responsible for the company's business operations and business units and corporate support functions. The Executive Management Team can be expanded if this is considered necessary for the matter under consideration.

The Executive Management Team's main responsibility is to assist the CEO, monitor and develop the company's business in line with the objectives set, and disseminate information. The Executive Management Team is informed about all business plans, profit performance and majority of the matters that are handled by QPR's Board of Directors, and it also participates in the preparation of these matters as appointed by the CEO. The Executive Management Team meets twice a month.

The Chairman of the Executive Management Team is QPR's CEO Jari Jaakkola and the members are SVP, Direct & OEM Business Matti Erkheikki;  CFO Pauli Leppänen; VP Delivery, Finland Mikko Mäki-Rahkola; and SVP, Products and Technology Jaakko Riihinen. CEO Jari Jaakkola will lead Resellers & Russia unit, responsible for QPR's Channel sales and Russian business until VP Maija Erkheikki returns from her maternity leave in August, 2013.

Principles of compensation

QPR's Board of Directors makes decisions on the salary benefits of the members of the Executive Management Team. The employment agreements of the members of the Executive Management Team are based on the collective agreement in force, including the periods of notice thereto. The Executive Management Team Members have no differing arrangements related to the termination of their contract or any differing pension arrangements.

The system of compensation for QPR's Executive Management Team is based on Group's net sales and operating profit and their growth. The targets for the company's management are specified one year at a time. Compensation for the management of QPR involves performance-related pay and options plans. The terms and maximum compensations are decided by the Board of Directors.

In 2011 the system of compensation for QPR's executive management team is based on Group's net sales and operating profit and their growth.

QPR Software Plc has no option plans in effect, but the Company has a share-based incentive plan for the Group's executive management team (incl. the Chief Operating Officer), effective as of 2011. Read more

Insiders

QPR has its own Insider Guidelines which comply with the Guidelines for Insiders applicable to public companies approved by the NASDAQ OMX Helsinki Ltd.

QPR's Insider Guidelines prohibit trading with company shares, or securities giving entitlement to them, by permanent insiders, during a 14-day period prior to publication of an interim report or financial statement bulletin of the company (the so-called ‘Closed window’). In addition, in accordance with the company's Insider Guidelines, permanent insiders shall in advance inform company's CEO of any intentions to trade.

Statutory insiders, on the basis of their position, include Board members, the CEO, the auditors and principal auditor of the company's firm of auditors. Insiders defined on the basis of their responsibilities include members of the management team.

In situations where the company is preparing for an event which could have a significant effect on the value of the company's shares (e.g. a corporate acquisition), the company shall establish a project-specific insider register. The Guidelines approved by the NASDAQ OMX Helsinki Ltd will also be complied with in the case of project-specific insiders.

The CFO of QPR administrates and monitors compliance with Insider Guidelines. QPR's insider register is held by the CFO of QPR. Public ownership information on insiders is available on the company web pages. 

Auditors

According to the Articles of Association, QPR Software Plc has a minimum of one and a maximum of two auditors elected by the Annual General Meeting. The auditor is elected into his duties for the time being. At least one of the auditors shall be an auditor authorised by the Central Chamber of Commerce.

The company's auditors provide shareholders with a report, as required by law, in conjunction with the company's annual financial statements. The primary aim of the statutory audit is to verify that the financial statements give a true and fair view of the company's financial performance and position for each fiscal year. QPR's financial year is the calendar year. In addition to the auditor's report provided with the annual financial statements, the auditor's report on their findings to the company's Board of Directors and Management continuously and always in connection with each interim report.

The auditor participates at least once a year in a meeting of the Board of Directors to provide for a review of the auditing plan and the results of the audit. In addition, the auditor is present at the company's Annual General Meeting and at company's extraordinary shareholder's meetings if required.

The Annual General Meeting 2012 of QPR Software Plc elected KPMG Oy Ab, Authorized Public Accountants, as QPR Software Plc’s auditor and Authorized Public Accountant Sixten Nyman as the principle auditor.

Risk management, internal audit and internal control

Risk management and internal control in QPR Software Plc aims to ensure that the Company operates efficiently and effectively, distributes reliable information, complies with regulations and operational principles, reaches its strategic goals, and ensures continuity of its business.

It is the duty of the Board of Directors to monitor the appropriateness, effectiveness and efficiency of risk management and internal control in QPR Software Group. Coordination of risk management and internal control and the related reporting is the responsibility of the Chief Financial Officer. Risk management in QPR Software is guided by the requirements of legislation, shareholders’ expectations regarding business objectives and expectations among important stakeholders, such as customers and personnel.

Risk management

Risk management in QPR Group aims systematically and comprehensively to identify risks related to Group's operations and ensures that risks are managed and taken into account in decision-making. The Group does not have a separate risk management organization, and risk management is part of routine responsibilities throughout the organization. Risk management is developed by constantly improving operative processes in the Group.

QPR Software identifies the risks by their essentiality: if actualized, the risks selected for monitoring would have a material impact on the Company's business operations. The Group has identified the following four categories of risks related to its operations: 

1. risks related to business operations 
2. risks related to information and products
3. risks related to financing, and
4. risks related to new businesses

Property, operational and liability risks are covered by insurance.

The Risk management report is presented to the Board in connection with quarterly financial reporting. The threat caused by the risks to shareholders is used as a criterion when the Board of Directors evaluates these risks. The Board of Directors also monitors that the Company has defined operational principles for internal control and that the Company monitors the effectiveness of internal control.

For more information on risk management in QPR Software,  please see the Corporate Governance Statement

Internal audit

The task of internal audit is to assess and secure the adequacy and efficiency of Group’s internal control, when standard auditing is not sufficient taken in the account the nature and scope of Company’s business operations. When needed, the service for internal control is acquired form an external and independent service provider chosen by the Board of Directors. The Board decides the need for the internal control and its scope.

Internal audit is independent from QPR’s business or other units. It reports directly to the Board of Directors and administratively to the CEO. Internal audit is coordinated by the CFO.

Internal audit instructions and plans are approved by the Board case-by-case and by the circumstances.

Company shares and options holdings December 31, 2012

The members of QPR’s Board of Directors and the CEO held 12.7 percent of the company’s shares and votes (1,581,172), directly or indirectly through the companies they own. The Board members, CEO, and members of the Executive Management Team (incl. controlled companies and closely related people) held a total of around 16.5 percent of the company’s shares and votes.

QPR Software Plc has no option plans in effect, but the Company has a share-based incentive plan for the Group's executive management team (incl. the Chief Operating Officer), effective as of 2011. Read more

Salaries and Emoluments in the fiscal year 2012 and 2011

Both in the fiscal year 2012 and 2011 Board members received annual emoluments totaling EUR 92,618. Both in 2012 and 2011, the Chairman of the Board received an annual emolument in total of EUR 25,230 and each Member of the Board received an annual emolument in total of EUR 16,820. No separate meeting fees were paid.

In the fiscal year 2012, the CEO of QPR received salaries, fees and fringe benefits of EUR 176,000 (in 2011 EUR 155,000).

QPR Software Plc has given no loans, guarantees or other contingent liabilities for its CEO or Board members.

QPR Software Plc has no option plans in effect, but the Company has a share-based incentive plan for the Group's executive management team (incl. the Chief Operating Officer), effective as of 2011. Read more

No stock options were allocated to the management in 2012 or 2011. The management had zero (0) stock options at December 31, 2012.

The auditor's fees the fiscal year 2012 and 2011

The auditor's fees in the fiscal year 2012 were EUR 51,000. Other fees charged by the firm of auditors amounted to EUR 5,000. The other fees were primarily related to tax planning. The company’s auditor in the fiscal year 2012 was KPMG Oy Ab, Authorised Public Accountants, with Sixten Nyman, Authorized Public Accountant, as the principle auditor.

The auditor's fees in the fiscal year 2011 were EUR 57,000. Other fees charged by the firm of auditors amounted to EUR 3,000. The other fees were primarily related to tax planning. The company’s auditor in the fiscal year 2011 was KPMG Oy Ab, Authorised Public Accountants, with Sixten Nyman, Authorized Public Accountant, as the principle auditor.

Last updated: 21 February, 2013.

Board of Directors
QPR Software Plc