Volvo 2014 Annual Report Download - page 96

The Swedish Corporate Governance Code
AB Volvo’s shares are admitted to trading on the Nasdaq Stockholm and
accordingly, Volvo complies with Nasdaq Stockholm’s Rule Book for Issuers.
As a listed company, Volvo also applies the Swedish Corporate Govern-
ance Code (the Code), which is available at
www.corporategovernanceboard.se.
In 2014, Volvo deviated from Rule 9.9 of the Code (“Fixed salary during
a period of notice and severance pay are together not to exceed an
amount equivalent to the individual’s fi xed salary for two years”) by approv-
ing, under separation arrangements with two members of the Group
Executive Team (the “Executives”), payment to those Executives of pen-
sion premiums corresponding to the period from the termination of the
employment, however from the age of 60 at the earliest, until the age of
65, in addition to salary during the 12-month termination period and 12
months’ severance pay. The premium payments correspond to about one
annual salary for each Executive. The reason for the deviation was a reor-
ganization within the Group entailing among other things that the number
of Group Executive Team members decreased from 16 to 10 and that the
two Executives’ respective positions did not remain.
This Corporate Governance Report was prepared in accordance with
the Swedish Annual Accounts Act and the Code, and is separate from the
Annual Report. The report has been examined by Volvo’s auditors and
includes a report from the auditors.
The governance and control of the Volvo Group is carried out through a
number of corporate bodies. At the General Meetings of AB Volvo, which
is the Parent Company in the Volvo Group, the shareholders exercise their
voting rights with regard to for example the composition of the Board of
Directors of AB Volvo and election of auditors.
An Election Committee, appointed by the Annual General Meeting of
AB Volvo, submits proposals to the next Annual General Meeting
concerning the election of Board members, Board Chairman and, when
necessary, external auditors, and proposals for resolutions concerning
fees to the Board and the auditors.
The Board is ultimately responsible for Volvo’s organization and man-
agement of the operations. The duties of the Board are partly exercised
through its Audit Committee and its Remuneration Committee.
In addition, the Board appoints the President of AB Volvo, who is also
the Chief Executive Offi cer (CEO) of the Volvo Group. The CEO is in
charge of the daily management of the Group in accordance with guide-
lines and instructions provided by the Board.
Division of responsibilities and duties between the General Meeting,
the Board of Directors and the President are regulated inter alia by the
Swedish Companies Act, Volvo’s articles of association, the Code and the
Board’s work procedures.
Corporate Governance Model
Chairman’s word
Sound corporate governance is a fundamental guiding principle for the
Volvo Group. It is a key factor in building trusting relations with sharehold-
ers and other stakeholders and to ensure that the Volvo share is consid-
ered as a good investment.
The Board plays an important role in sound corporate governance. It is
responsible for the Volvo Group’s organization, the overall strategic direc-
tion and the performance of the company. In this context the Board has
the task of supporting as well as challenging the executive management.
During 2014, the Board has thoroughly discussed the structures and
procedures for the Board’s work in order to ensure that its time and
efforts are focused on discussions on strategic issues and other matters
of great importance for the Volvo Group. This has resulted in updated
work procedures and a well thought through work plan, entailing that a
few recurrent important focus areas have been selected for each ordinary
meeting. In order to cover all matters, the number of ordinary annual
meetings has further increased from six to nine in the recent past, while
the length of the ordinary meetings has been considerably prolonged and
voluntary training sessions for the Board members have been introduced.
Further, the industrial competence of the Board has been strength-
ened, through the addition of new appointed Board members with relevant
industrial background. This gives a solid base for valuable discussions and
has strengthened the ability to support and challenge management in an
effective way.
I am confi dent that with the good structure and focus of the Board’s
work and the highly competent and experienced Board members, the
Board will be able to contribute to a positive development of the Volvo
Group for the benefi t of the shareholders, employees and other stake-
holders.
Carl-Henric Svanberg
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CORPORATE GOVERNANCE REPORT 2014 CORPORATE GOVERNANCE