Volvo 2007 Annual Report Download - page 78
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Please find page 78 of the 2007 Volvo annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.total fee to the Board, for the time until the end
of the next Annual General Meeting, of SEK
5,725,000 to be distributed among the Board
Members according to the following. The Chair-
man of the Board receives a fee of SEK
1,500,000 and each of the remaining mem-
bers SEK 500,000, with the exception of the
President. In addition, the Chairman of Audit
Committee shall receive SEK 250,000 and the
other two members of the Audit Committee
SEK 125,000 each and the members of the
Remuneration Committee SEK 75,000 each.
During the year, the Board reviewed the
business plans and strategies for the various
businesses in the Volvo Group. The Board
also reviewed the fi nancial positions of AB
Volvo and the Volvo Group on a regular basis
and acted in order to ascertain that there are
effi cient systems in order to follow-up and
control the business and fi nancial position of
the Volvo Group. In connection therewith, the
Audit Committee was responsible for prepar-
ing for the Board’s work to assure the quality
of the company’s fi nancial reporting through
reviewing the interim reports and the annual
report. In connection therewith, the Board met
with the company’s auditors during 2007. The
Board continuously evaluated the perform-
ance of the CEO.
During 2007, the Board focused specifi cally
on issues pertaining to the Volvo Group’s
strategy with regard to Asia and thereby
decided to make a public offer for the remain-
ing shares in Nissan Diesel, which resulted in
the Volvo Group at year-end owning all shares
outstanding in the company. In addition, the
Board also decided to sign a letter of intent
with the Indian vehicle manufacturer Eicher
Motors Limited regarding the establishment
of a new Indian joint-venture company. The
Board also made the decision to acquire
Ingersoll Rand’s road development division. In
addition, the Board dealt with matters related
to the integration of the newly acquired opera-
tions into the Volvo Group and matters relat-
ing to the development and introduction of new
products such as engines that fulfi ll US 10
environmental requirements, hybrid engines
and engines that can operate on renewable
fuels. The Board also visited Volvo’s facilities in
Russia.
The Board’s work is mainly performed
through Board meetings and through meet-
ings in the respective committees of the
Board. In addition thereto, the Chairman of
the Board is in regular contact with the CEO in
order to discuss on-going business and to
ensure that the decisions taken by the Board
are executed. An account of each Board
member’s age, education, main professional
experience, other board memberships, owner-
ship of shares in Volvo as of February 26,
2008 and the years of membership on the
Volvo Board, is presented on the Board and
auditors page.
During 2007, the Board performed its
yearly evaluation of the Board’s work. The
Chairman has informed the Election Commit-
tee on the result of the evaluation.
Independence requirements
The Board of Directors of Volvo must meet
independence requirements pursuant to the
rules of the Nordic Exchange in Stockholm,
the Code and the Sarbanes-Oxley Act (SOX).
In 2007, AB Volvo applied for deregistration of
its class B shares from the SEC. Below fol-
lows a short description of the rules of the
Nordic Exchange in Stockholm and the Code.
The independence requirements mainly mean
that only one person from the company’s
management may be a member of the Board,
that a majority of the Board shall be independ-
ent of the company and the company man-
agement and that at least two of the members
that are independent from the company and
the company’s management shall also be
independent of the company’s major share-
holders. In addition, the Code demands that a
majority of the members in the Audit Commit-
tee shall be independent of the company and
that at least one member shall be independ-
ent of the company’s major shareholders. With
regard to the Remuneration Committee, the
Code sets the requirement that members of
the Remuneration Committee, with the excep-
tion of the Board chairman if a member of the
Remuneration Committee, shall be independ-
ent of the company and company manage-
ment.
Considering the above demands regarding
the Board’s independence, the Election Com-
mittee has reported to the company the fol-
lowing understanding about the independ-
ence from the company and the company
management as well as the company’s largest
shareholders with regard to the Board mem-
bers who were elected at the Annual General
Meeting in 2007:
Finn Johnsson, Peter Bijur, Philippe Klein,
Louis Schweitzer, Ying Yeh and Lars Wester-
berg are all independent from the company
and company management.
Leif Johansson, as Volvo’s CEO, is not inde-
pendent from the company and company
management.
Tom Hedelius and Per-Olof Eriksson have
been members of the Board of Volvo since
January 19, 1994. Accordingly, they have
been members for more than 12 years and
consequently, in accordance with the Code,
are not to be considered independent of the
company and company management.
Philippe Klein and Louis Schweitzer are
employee and Chairman of the Board,
respectively, of Renault SA and represent
Renault SA on the company’s Board of Direc-
tors. Since Renault SA controls more than
10% of the shares and votes in V olvo, these
persons may not, pursuant to the Code, be
considered as independent in relation to one
of the company’s major shareholders.
Audit Committee
In December 2002, the Board established an
Audit Committee primarily for the purpose of
overseeing the accounting and fi nancial
reporting processes and the audit of the
fi nancial statements. The Audit Committee is
responsible for preparing the Board’s work to
assure the quality of the company’s fi nancial
reporting through reviewing the interim
reports and the annual report. In addition, the
Audit Committee’s task is to establish guide-
lines specifying what other services than audit
the company may procure from the company’s
auditors and to provide guidelines for and
74 Corporate Governance 2007