Volvo 2015 Annual Report Download - page 172

The Swedish Corporate Governance Code
AB Volvo’s shares are admitted to trading on the stock exchange
Nasdaq Stockholm and accordingly, Volvo complies with Nasdaq Stock-
holm’s Rule Book for Issuers. As a listed company, Volvo also applies the
Swedish Corporate Governance Code (the Code), which is available at
www.corporategovernanceboard.se.
This Corporate Governance Report has been prepared in accordance
with the Swedish Annual Accounts Act and the Code, and is separate
from the Annual Report. The report has been reviewed by Volvo’s auditors
and includes a report from the auditors.
Corporate Governance Model
Introductory remarks
Corporate governance is defined as the structures and processes by
which companies are directed and controlled. Sound corporate govern-
ance is a fundamental guiding principle for the Volvo Group, and a key
factor in making the Group more accountable and transparent to share-
holders, employees and other stakeholders.
The Board of Directors is ultimately responsible for Volvo’s overall stra-
tegic direction and the organization and management of the Group’s
operations, and consequently has an important role to play in sound cor-
porate governance for the Volvo Group.
One of the Board’s key tasks is to appoint the President and CEO of the
Volvo Group, who is responsible for driving the daily operations of the Group.
After over ten years of acquisition driven growth starting in 1999, the Volvo
Group entered a phase of product renewal and cost efficiency programs in
2012, during which much efforts were also put into strengthening the
Group’s balance sheet. This transformation phase was largely completed
during 2015, paving the way for a new phase for the Volvo Group with
increased focus on customer success, organic growth and performance.
To lead the Group into this new phase, the Board decided in April 2015
to recruit Martin Lundstedt as new President and Chief Executive Officer
(CEO) of the Volvo Group and he took on the position in October. Martin
brings 25 years of experience from development, production and sales
within the commercial vehicle industry into the Volvo Group.
As a first step on this new part of the Group’s journey, Volvo is introducing
as of March 1, 2016, a brand-based organization for the Group’s truck
brands Volvo Trucks, UD Trucks, Renault Trucks and Mack Trucks, expanding
the mandate for the sales organizations to control and develop their busi-
nesses and providing a clear responsibility for their respective profitability.
The annual Board visit to a Volvo facility went to UD Trucks’ site in Ageo,
Japan in October. It was an important and interesting visit, providing the
Board with additional valuable insights into the Japanese market and the UD
Trucks operation. It confirmed the Board’s view that the steps taken during
the past years in order to strengthen the UD Trucks business have given
positive results but that an accelerated development is necessary, which will
be addressed in the new organizational set-up with UD Trucks as a separate
Business Area.
Finally, the competence within the Board was also strengthened during
the year through the addition of the newly appointed Board members Mar-
tina Mertz and Eckhard Cordes, contributing with valuable knowledge and
experiences from the automotive industry from both the supplier and the
OEM side.
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 the 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 its 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 CEO of the Volvo Group. The CEO is in charge of the daily manage-
ment of the Group in accordance with guidelines and instructions pro-
vided 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.
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CORPORATE GOVERNANCE CORPORATE GOVERNANCE REPORT 2015