Volvo 2014 Annual Report Download - page 100

Duties
The Board of Directors is ultimately responsible for Volvo’s organization
and management of the company’s operations. The Board is responsible
for the Group’s long-term development and strategy, for regularly control-
ling and evaluating the Group’s operations and for the other duties set
forth in the Swedish Companies Act.
Composition
During the period January 1, 2014 to December 31, 2014, AB Volvo’s
Board consisted of nine members elected by the Annual General Meet-
ing. In addition, the Board had three members and two deputy members
appointed by employee organizations.
The Annual General Meeting 2014 reelected Jean-Baptiste Duzan,
Hanne de Mora, Anders Nyrén, Olof Persson, Carl-Henric Svanberg and
Lars Westerberg as Board Members, and Carl-Henric Svanberg as Chair-
man of the Board. Matti Alahuhta, James W. Griffi th and Kathryn V.
Marinello were elected as new Board Members. An account of each
Board member’s age, principal education, professional experience, assign-
ments in the company, other important board memberships, their own and
related parties’ ownership of shares in Volvo as of February 26, 2015, and
the year they were elected on the Volvo Board, is presented in the “Board
of Directors” section on pages 100–101.
Independence requirements
The Board of Directors of AB Volvo must meet independence require-
ments pursuant to the Code entailing that only one person from the com-
pany’s management may be a member of the Board, that a majority of the
Board members elected by the General Meeting shall be independent of
the company and the company management and that at least two of the
Board members elected by the General Meeting who are independent of
the company and the company’s management shall also be independent
of the company’s major shareholders. Prior to the Annual General Meet-
ing 2014, the Election Committee presented the following assessment
concerning independence of the Board members elected by the Annual
General Meeting 2014.
Matti Alahuhta, Jean-Baptiste Duzan, James W. Griffi th, Kathryn V.
Marinello, Hanne de Mora, Carl-Henric Svanberg and Lars Westerberg
were all considered independent of the company and the company man-
agement as well as of the company’s major shareholders.
Olof Persson, as AB Volvo’s President and CEO of the Volvo Group, was
considered independent of the company’s major shareholders but not of
the company and the company management.
Anders Nyrén was considered independent of the company and com-
pany management.
Since AB Industrivärden, prior to the Annual General Meeting 2014,
controlled more than 10 percent of the votes in the company, Anders
Nyrén, due to his capacity as President and CEO of AB Industrivärden,
was not considered independent in relation to one of the company’s major
shareholders.
Board of Directors
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Work procedures
Every year, the Board adopts work procedures for the Board’s work. The
work procedures contain rules pertaining to the distribution of work
between the Board members, the number of Board meetings, matters to
be addressed at regular meetings of the Board and duties incumbent on
the Chairman.
Volvo’s Chairman shall organize and guide the Board’s work, be respon-
sible for contacts with the owners regarding ownership matters and pro-
vide the owners’ viewpoints to the Board, ensure that the Board receives
adequate information and decision documents for its work and verify that
the Board’s resolutions are implemented. The work procedures further
refer to the charter of the Audit Committee and the charter of the Remu-
neration Committee for the tasks assigned to the respective committee.
The Board has also issued written instructions specifying how fi nancial
information should be reported to the Board, as well as defi ning the distri-
bution of duties between the Board and the President.
The Board’s work in 2014
The Board’s work is mainly performed within the framework of formal
Board meetings and through meetings in the respective committees of
the Board. In addition, regular contact is maintained between the Chair-
man of the Board and the CEO in order to discuss on-going business and
to ensure that the resolutions taken by the Board are executed.
In 2014, there were nine regular meetings, two extraordinary meetings
and one statutory meeting. The attendance of Board members at these
meetings is presented in the table on page 99.
The Board has during 2014 focused on measures to strengthen the
balance sheet, profi tability efforts and cost reduction initiatives.
As a measure to strengthen the balance sheet the board decided in
March to divest non-strategic commercial real estates, mainly located in
Göteborg, for a total purchase consideration of approximately SEK 2 billion.
The Board further decided to issue a hybrid bond via Volvo Treasury AB
in December amounting to EUR 1.5 billion, in order to further strengthen
the Group’s balance sheet and to prolong the maturity structure of the
debt portfolio. The hybrid bond will be accounted for as a loan and subor-
dinated to all other fi nancial liabilities currently outstanding and the bond
will be eligible for 50 percent equity treatment from the credit rating agen-
cies Moody’s and S&P when calculating Volvo’s credit ratios.
In November it was decided that Volvo Construction Equipment shall
discontinue product development and production of backhoe loaders and
motor graders in Europe and Americas and transfer these operations to
its Chinese company SDLG, with the purpose of adapting the cost struc-
ture and addressing the product profi tability.
Further it has been decided to initiate a review of what is core and non-
core in the Group’s IT operations, with the objective to reduce structural
costs and improve the profi tability of the Group.
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