Volvo 2011 Annual Report Download - page 161

Prior to the Annual General Meeting 2011,
considering the above requirements regarding the
Board’s independence, the Election Committee
reported the following understanding concerning
the Board members who were elected at the
Annual General Meeting in 2011:
Peter Bijur, Hanne De Mora, Louis Schweitzer,
Ravi Venkatesan, Lars Westerberg and Ying Yeh
were all considered independent of the company
and company management as well as of the com-
pany’s major shareholders.
Leif Johansson, as Volvo’s CEO, was con-
sidered independent of the company’s major
shareholders but not of the company and company
management. Olof Persson, who at the 2011
Annual General Meeting, was the President of
Volvo Construction Equipment and who was
elected a member of the Board as from September
1, 2011, when he also was to assume the position
as Volvo’s CEO, was deemed independent of the
company’s major shareholders but was not
deemed independent in relation to the company
and the company management, due to his position
in the Volvo Group.
Jean-Baptiste Duzan was considered inde-
pendent in relation to the company and company
management. However, in his capacity as an
advisor to the CEO of Renault S.A., he was
deemed to have such a relation to Renault s.a.s.
that he could not be considered independent
thereof. Since Renault s.a.s., prior to the 2011
Annual General Meeting, controlled more than 10
percent of the votes in the company, Jean-Baptiste
Duzan was not considered independent in rela-
tion to one of the company’s major shareholders.
Anders Nyrén was deemed independent in
relation to the company and company manage-
ment. However, due to his capacity as CEO of AB
Industrivärden, he was not deemed independent
thereof. Since AB Industrivärden, prior to the
2011 Annual General Meeting, controlled more
than 10 percent of the votes in the company,
Anders Nyrén was not considered independent in
relation to one of the company’s major share-
holders.
The Election Committee must also meet inde-
pendence requirements pursuant to the Code.
According to the Code, most of the members of
the Election Committee are to be independent of
the company and the company management. At
least one member of the Election Committee is to
be independent of the company’s largest share-
holder in terms of votes or any group of share-
holders that act in concert in the governance of
the company. Neither the CEO nor other members
of the executive management are to be members
of the Election Committee. If Board members are
included in the Election Committee, they may not
constitute a majority of the Election Committee’s
members. The Chairman of the Board of the
company or, any other Board member may not be
the Chairman of the Election Committee. If more
than one Board member is included in the Elec-
tion Committee, not more than one of them may
be dependent in relation to the company’s largest
shareholders. All members of the Election Com-
mittee have been considered to be independent
of the company and the company management.
All members of the Election Committee except
Jean-Baptiste Duzan have, prior to being
appointed, been considered to be independent of
Volvo’s largest shareholder in terms of votes. This
conclusion is based on the facts that Renault
s.a.s. is Volvo’s largest shareholder in terms of
votes and that Jean-Baptiste Duzan represents
Renault s.a.s. in the Election Committee.
Audit Committee
In December 2002, the Board established an
Audit Committee primarily for the purpose of over-
seeing the accounting and financial reporting proc-
esses and the audit of the financial statements.
The Audit Committee is responsible for pre-
paring the Board’s work to assure the quality of
the Group’s financial reporting by reviewing the
interim reports, the Annual Report and consoli-
dated accounting. In addition, the Audit Com-
mittee’s task is to establish guidelines specifying
what other services, beyond auditing, the com-
pany may procure from the company’s auditors
and to provide guidelines for transactions with
companies and persons closely associated with
Volvo. The Audit Committee also has the task of
reviewing and overseeing the impartiality and
independence of the company’s auditor. The
Audit Committee is also responsible for evalu-
ating the internal and external auditors’ work,
providing the Election Committee with the
results of the evaluation of the external auditors
and to assist in preparing proposals for the
election of auditors. Finally, the Audit Committee
shall evaluate the quality, relevance and efficiency
of the Group’s system for internal control over
financial reporting, and with respect to the
internal audit and risk management.
At the statutory Board meeting following the
2011 Annual General Meeting, Lars Westerberg,
Peter Bijur and Jean-Baptiste Duzan were
appointed members of the Audit Committee.
Lars Westerberg was appointed Chairman of
the Audit Committee.
The Audit Committee met with the external
auditors and Head of Internal Audit at the meet-
ings of the Audit Committee. The Audit Com-
mittee has also met separately with the external
auditors and the Head of Internal Audit without
the presence of the company management. The
Audit Committee and the external auditors
have, among other tasks, discussed the external
audit plan and risk management. The Audit
Committee held eight meetings during 2011.
Remuneration Committee
In April 2003, the Board established a Remu-
neration Committee for the purpose of preparing
and deciding on issues relating to remuneration
to senior executives in the Group. The duties of
the Committee include presenting recommen-
dations for resolution by the Board regarding
the terms and conditions of employment and
remuneration for the President of AB Volvo,
principles for remuneration, including pensions
and severance payments, for other members of
the Group Executive Team, and principles for
variable salary systems, share-based incentive
programs, pensions and severance payment for
other senior executives in the Group. In addition,
the Remuneration Committee shall approve pro-
posals on remuneration of the other members of
the Group Executive Team in accordance with
the principles established by the Board.
The Remuneration Committee shall monitor
and evaluate ongoing programs and programs
concluded during the year covering variable
remuneration for the Group Executive Team,
application of the guidelines for remuneration
to senior executives on which the Annual General
Meeting shall resolve and the current remuner-
ation structures and levels in the Group. The
Board shall, not later than two weeks prior to
the Annual General Meeting, submit a report on
the results of the Remuneration Committee’s
evaluation on the company’s website.
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