Volvo 2004 Annual Report Download - page 39

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In 2004, the Remuneration Committee
held five meetings. One member was
excused from two of the meetings.
CEO and management
For the CEO and each member of the
Group Executive Committee an account
of their respective age, education, board
memberships, ownership of shares in
Volvo, and year of joining Volvo can be
found on pages 48–49.
Nomination Committee
The Nomination Committee is the share-
holders’ body responsible for submitting
to the Annual General Meeting the
names of candidates to serve as mem-
bers of the Board and as external
auditors. The Committee also proposes
the fees to be paid to the members of the
Board.
On April 16, 2004, the Annual General
Meeting resolved to authorize the
Chairman of the Board to appoint a
Nomination Committee comprising, in
addition to the Chairman of the Board,
three members from among the repre-
sentatives of the company’s three largest
owners in terms of voting rights, plus one
member representing shareholders with
smaller holdings in the company. The
Nomination Committee, which was
appointed during the third quarter of
2004 and for the period until the next
Annual General Meeting, comprises the
Chairman of the Board Finn Johnsson,
Lars Idermark, Chairman of the
Nomination Committee, Second Swedish
National Pension Fund (AP 2), Thierry
Moulonguet, Renault, Marianne Nilsson,
Robur, and Bengt Hane representing
shareholders with smaller holdings.
External auditing
Volvo’s auditors are elected by the Annual
General Meeting, for a period of four
years. The current auditors were elected
at the 2003 Annual General Meeting and
the next election of auditors will be at the
2007 Annual General Meeting. Volvo’s
auditor is PricewaterhouseCoopers AB
(“PwC”). Two PwC partners, Olof Herolf
and Olov Karlsson, are responsible for the
audit of Volvo. Olof Herolf has primary
responsibility.
The Auditors report their findings to
the shareholders through the audit report,
which they present to the Annual General
Meeting of the shareholders. In addition,
the auditors report detailed findings to
the Audit Committee at each of the ordi-
nary meetings of the Audit Committee
and to the full Board once a year.
PwC provides certain services to Volvo
in addition to the audit. In 2004 such
services comprised i.a. advice on prepara-
tion and implementation of testing and
reporting of internal controls, which is
mandatory under the provisions of the US
Sarbanes Oxley Act. PwC also advised on
the transition to International Financial
Reporting Standards, which will take place
during 2005. In addition PwC provides tax
advice and other audit related services to
Volvo. When PwC is retained to provide
services other than the audit, it is done in
accordance with rules established by the
Audit Committee pertaining to pre-
approval of the nature of the services and
the fees. Hence, Volvo believes that the
provision of the additional services does
not jeopardize PwC’s independence.
For more detailed information con-
cerning auditors’ fees see note 32 of the
notes to the consolidated financial state-
ments.
Remuneration Policy
The guiding principle is that remuneration
in the form of fixed and variable salaries
for Volvo Group employees is prepared
and decided by the employee’s superior,
in consultation with his or her superior
and in accordance with guidelines adopt-
ed within the Group.
Leif Johansson and a number of sen-
ior executives receive variable salaries in
addition to fixed salaries. Variable salaries
are, in most cases, based on operating
income and cash flow for the Volvo Group
and/or for the executive’s company, in
accordance with a system established by
the Volvo Board. A variable salary may
amount to a maximum of 50% of the
fixed annual salary.
A more detailed account of remunera-
tion to the CEO and principles for the
remuneration to other senior executives
can be found in note 31 to the consoli-
dated financial statements.
The Board of Directors at a plant visit in Poland.