Volvo 2015 Annual Report Download - page 176

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, 2015 to April 1, 2015, AB Volvo’s Board
consisted of nine members elected by the Annual General Meeting. The
Annual General Meeting 2015 held on April 1, 2015 elected ten Board
members. Olof Persson stepped down from the Board on April 21, 2015
and therefore the Board consisted of nine members elected by the Annual
General Meeting during the period April 22, 2015 to December 31, 2015.
In addition, the Board had three members and two deputy members
appointed by employee organizations during the period January 1, 2015
to December 31, 2015.
The Annual General Meeting 2015 reelected Matti Alahuhta, James W.
Griffith, Kathryn V. Marinello, Hanne de Mora, Anders Nyrén, Olof Pers-
son, Carl-Henric Svanberg and Lars Westerberg as Board members, and
Carl-Henric Svanberg as Chairman of the Board. Eckhard Cordes and
Martina Merz 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 22,
2016, and the year they were elected on the Volvo Board, is presented in
the “Board of Directors” section on pages 178–179.
Independence requirements
The Board of Directors of AB Volvo must meet independence requirements
pursuant to the Code entailing that only one person from the company’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 com-
pany and the company management and that at least two of the Board mem-
bers 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 Meeting 2015, the Election
Committee presented the following assessment concerning independence
of the Board members elected by the Annual General Meeting 2015.
Matti Alahuhta, James W. Griffith, Kathryn V. Marinello, Martina Merz,
Hanne de Mora, Carl-Henric Svanberg and Lars Westerberg were all con-
sidered independent of the company and the company management as
well as of the company’s major shareholders.
Since Olof Persson had the position as AB Volvo’s President and CEO
of the Volvo Group prior to the Annual General Meeting 2015, he was
considered independent of the company’s major shareholders but not of
the company and the company management.
Eckhard Cordes and Anders Nyrén were considered independent of
the company and the company management.
Since Cevian Capital Partners, prior to the Annual General Meeting
2015, controlled more than 10 percent of the votes in the company,
Eckhard Cordes, due to his capacity as partner in Cevian Capital Partners,
was not considered independent in relation to one of the company’s major
shareholders.
Since AB Industrivärden, prior to the Annual General Meeting 2015,
controlled more than 10 percent of the votes in the company, Anders
Nyrén, due to him at that time being the President and CEO of AB Industri-
värden, was not considered independent in relation to one of the compa-
ny’s major shareholders.
Board of Directors
4
Work procedures
Every year, the Board adopts work procedures for the Board’s work. The
work procedures contain rules pertaining to the number of Board meet-
ings, 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 financial
information should be reported to the Board, as well as defining the distri-
bution of duties between the Board and the President.
The Board’s work in 2015
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 2015, there were nine regular meetings, one extraordinary meeting
and one statutory meeting. The attendance of Board members at these
meetings is presented in the table on page 177.
In addition to what is mentioned in the Introductory remarks on the
Board’s work regarding the appointment of Martin Lundstedt as new
President and CEO of the Volvo Group and the introduction of a new
brand-based organization for the trucks sales operation, the Board has
during 2015 continued to focus on profitability efforts, and on measures
to strengthen the balance sheet.
In this respect, the Board has decided on the divestment of the Volvo
Group’s shares in the listed Indian automotive manufacturer Eicher Motors
Limited (EML) for a total purchase consideration of approximately SEK
4,7 billion. The share divestment, which was completed in two steps, had
a positive impact on the Volvo Group’s cash flow after net investments and
net financial debt in the first and second quarter, and the sale also gener-
ated a capital gain of approximately SEK 4.5 billion. The divestment did
not have any impact on VE Commercial Vehicle, the Group’s longstanding
Indian joint venture, which the Group owns together with EML.
Further, a review of what is core and non-core in the Volvo Group’s IT
operations was performed during 2015, and as a measure to reduce
structural costs and improve the profitability of the Group, it was
announced in October that the Group intends to divest its external IT busi-
ness and to outsource IT infrastructure operations to HCL Technologies.
In addition to the above measures, the Board decided on an overall finan-
cial plan and investment frame for the Group’s operations and continuously
followed-up the Group’s performance and financial position in order to
ensure proper actions and that there are efficient systems for follow-up and
control of the business and the financial position of the Volvo Group. In con-
nection therewith, the Audit Committee was responsible for preparing the
Board’s work to assure the quality of the Group’s financial reporting by
reviewing the interim reports, the Annual Report and consolidated account-
ing. The Board also met with the company’s auditors at several occasions
during 2015 and without the presence of management at one occasion.
During 2015, the Board has also focused on risk-related matters, such as
enterprise risk management, updates on compliance work and on-going
legal cases and investigations, and on monitoring the business environment
in order to be prepared to adapt the operation to prevailing demands. The
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CORPORATE GOVERNANCE CORPORATE GOVERNANCE REPORT 2015