Volvo 2013 Annual Report Download - page 108

The purpose of the program for variable
remuneration is to create an incentive for the
executives to strive for the Volvo Group devel-
oping in such a manner that the defi ned perfor-
mance targets are achieved, thereby constituting
a management tool. Accordingly, the performance
targets set by the Board for variable remuneration
inter alia relate to the Group’s fi nancial targets for
improved operating margin.
The Group Executive Team members have
participated in the Group’s long-term, share-
based incentive plan for senior executives com-
prising the years 2011–2013. The plan applied
during the fi nancial years 2011 until and includ-
ing 2013 and consisted of three yearly plans.
The participants invested in Volvo shares during
each yearly plan, up to a maximum of 15 per-
cent of the fi xed gross base salary for Group
Executive Team members and 10 percent of the
fi xed gross base salary for other participants.
On the conditions that the participant remained
an employee within the Volvo Group and also
retained the invested Volvo shares for at least
three years after the investment date, one
matching share per invested share and a num-
ber of performance shares per invested share
could be allotted. Allotment of performance
shares was conditional on the Volvo Group’s
ROE reaching at least 10 percent according to
the Group’s annual report for the fi nancial year
in question. Maximum allotment of performance
shares was effected if ROE for the fi nancial
year reached 25 percent. According to the plan
conditions, no matching shares should be allot-
ted for a yearly plan if the Annual General Meet-
ing held the following year resolved that no divi-
dend should be distributed to the shareholders.
Maximum allotment of performance shares
under a yearly plan amounted to seven shares
per invested share for the CEO, six shares per
invested share for Group Executive Team mem-
bers and fi ve shares per invested share for
other participants.
The Remuneration Committee conducts an
annual evaluation of the remuneration policy,
Volvo’s system for variable remuneration to
executives and the long-term, share-based
incentive program to senior executives and
the Board prepares a special report of this
evalu ation and the conclusions. The report on
the evaluation for 2013 will be available on
Volvo’s website not later than two weeks prior
to the Annual General Meeting 2014,
www.volvogroup.com. For more information
about remuneration to the Group Executive
Team and an account of outstanding share and
share-price related incentive programs to the
management, refer to Note 27 in the Group’s
notes in the Annual Report.
Changes to the Group Executive Team
On April 1, 2013, Eva Persson retired and thereby
resigned from the Group Executive Team and
from her position as General Counsel and Exec-
utive Vice President Corporate Legal & Compli-
ance. Sofi a Frändberg assumed the position on
the same date.
On April 1, 2013, Jan-Eric Sundgren took up
an assignment as expert adviser assisting the
CEO and senior management on issues pertain-
ing to environment, technology, policies, research
and education. He therefore resigned from the
Group Executive Team and from his position as
Executive Vice President Public & Environmen-
tal Affairs. Niklas Gustavsson assumed the posi-
tion on the same day.
On January 1, 2014, Patrick Olney left the
Volvo Group and he therefore resigned from the
Group Executive Team and from his position as
Executive Vice President Volvo Construction
Equipment. Martin Weissburg assumed the
position on the same date. Martin Weissburg
therefore resigned from his position as Execu-
tive Vice President Volvo Financial Services.
While the recruitment process to fi nd the
successor to that position is ongoing, Scott
Rafkin will, as per January 1, 2014, assume the
position as Acting Head of Volvo Financial Ser-
vices and in such capacity participate at the
Group Executive Team meetings.
On January 1, 2014, Jan Gurander joined the
Group Executive Team and assumed the posi-
tion as Executive Vice President. On March 1,
2014, Anders Osberg will assume a new posi-
tion and strengthen the management work on
the long-term development of the Business
Areas of the Volvo Group. He will therefore
resign from the Group Executive Team and from
his position as CFO and Executive Vice Presi-
dent Corporate Finance & Control. Jan Gurander
will assume this position on the same date.
The Board is responsible for the internal con-
trols according to the Swedish Companies Act
and the Code. The purpose of this report is to
provide shareholders and other interested
parties with an understanding of how internal
control is organized at Volvo with regard to
fi nancial reporting. The description has been
designed in accordance with the Swedish
Annual Accounts Act and is thus limited to
internal control over fi nancial reporting.
Introduction
Volvo primarily applies internal control princi-
ples introduced by the Committee of Sponsor-
ing Organizations of the Treadway Commission
(COSO).
Volvo has a specifi c function for internal con-
trol. The objective of the Internal Control func-
tion is to provide support for management,
allow ing them to continuously provide solid and
improved internal controls relating to fi nancial
reporting. Work that is conducted through this
function is primarily based on a methodology
that aims to ensure compliance with directives
and policies, and to create effective conditions
for specifi c control activities in key processes
related to fi nancial reporting. The Audit Com-
mittee is informed of the results of the work
performed by the Internal Control function
within Volvo with regard to risks, control activi-
ties and follow-up on the fi nancial reporting.
Volvo also has a Corporate Audit function
with the primary task of independently monitor-
ing that companies in the Group follow the prin-
ciples and rules that are stated in the Group’s
directives, policies and instructions for fi nancial
reporting. The head of the Corporate Audit
function reports directly to the CEO, and to the
Group’s General Counsel and the Board’s Audit
Committee.
Control environment
Fundamental to Volvo’s control environment is
the business culture that is established within
the Group and in which managers and employ-
ees operate. Volvo works actively on communi-
cations and training regarding the company’s
basic values as described in The Volvo Way, an
internal document concerning Volvo’s business
culture, and the Group’s Code of Conduct, to
ensure that good morals, ethics and integrity
permeate the organization.
Group Management
Internal control over
fi nancial reporting
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