The Board of Directors is charged with the organization of the company and management of the company's operations. The Board shall also issue guidelines and instructions to the CEO. In addition, the Board shall ensure that the company's organization in respect of accounting, management of funds and the company's financial position in general includes satisfactory control.
The Board has adopted work procedures for its internal activities that contain rules pertaining to the number of Board meetings, matters to be handled at regular meetings of the Board and duties incumbent on the Chairman.
The Board has also issued written instructions specifying when and how information required to enable the Board to evaluate the company's and Group's financial position should be reported to the Board, as well as the distribution of duties between the Board and the CEO.
The duties of the Board are partly exercised through its Audit Committee, Remuneration Committee and Transformation Committee.
The external auditors report their findings to the full Board once a year.
The Board of Directors of AB Volvo must meet independence requirements pursuant to the Swedish Corporate Governance Code ("the Code"). Further, the Audit Committee must meet independence requirements pursuant to the Swedish Companies Act. Below follows a short description of the independence requirements.
The independence requirements mainly state 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 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.
In addition, the Code demands that a majority of the members in the Audit Committee shall be independent of the company and the company management and that at least one of the members who is independent of the company and the company management shall also be independent of the company's major shareholders.
According to the Swedish Companies Act, the members of the Audit Committee may not be employees of the company and at least one member of the Audit Committee shall be independent of the company, the company management and the company's largest shareholders and shall have accounting and auditing expertise.
With regard to the Remuneration Committee, the Code sets the requirement that members of the Remuneration Committee, with the exception of the Board Chairman if a member of the Remuneration Committee, shall be independent of the company and company management.
Volvo has had internal control processes for a long time.
Volvo applies internal control principles introduced by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The COSO principles consist of five interrelated components. The components are: control environment, risk assessment, control activities, information and communication and follow-up/supervision.
Volvo has had a specific department for internal control since 2005. The aim of the Internal Control function is to provide support for management groups within business areas, so that they are able to continuously provide good and improved internal controls relating to financial reporting. The Audit Committee is informed of the result of the work performed by the Internal Control function within Volvo with regard to risk, control activities and follow-up on the financial reporting.
Volvo also has a Group Internal Audit function with the primary task of independently verifying that companies in the Group follow the principles and rules that are stated in the Group's directives, policies and instructions for financial reporting. The head of Group Internal Audit reports directly to the CEO, the Group's General Counsel and the Audit Committee.
For more information, read under the heading "Internal control over financial reporting" in the Corporate Governance Report.
The Board has an Audit Committee primarily for the purpose of supervising the accounting and financial reporting processes and the audit of the annual financial statements
The Audit Committee’s duties include preparing the Board’s work to assure the quality of the Group’s financial reporting by reviewing interim reports, Annual Report and the consolidated accounts. The Audit Committee also has the task of reviewing and overseeing the Group’s legal and taxation matters as well as compliance with laws and regulations that may have a material impact on financial reporting. Furthermore, the Audit Committee has the task of reviewing and overseeing the impartiality and independence of the company’s auditors. The Audit Committee is also responsible for evaluating both internal and external auditors’ work and, when applicable, handling the tender process for audit services.
In addition, it is the Audit Committee’s task to preapprove what other services, beyond auditing, the company may procure from the auditors. The Audit Committee also adopts guidelines for transactions with companies and persons closely associated with Volvo. Finally, the Audit Committee evaluates the quality, relevance and effectiveness of the Group’s system for internal control over financial reporting, as well as with respect to the internal audit and risk management, and discharge any other duties of an audit committee.
Composition
The Audit Committee consists of the following members:
The Board has a Remuneration Committee for the purpose of preparing and deciding on issues relating to the remuneration of senior executives in the Group. The duties of the Committee include making recommendations to the Board on the Board’s decisions regarding terms of employment and remuneration of the CEO and, if appointed, the Deputy CEO of AB Volvo, principles for the remuneration, including pensions and severance payments, of other members of the Group Executive Board and principles for variable salary systems, share based incentive programs and for pension and severance payment structures for other senior executives in the Group.
The Remuneration Committee shall also monitor and evaluate ongoing programs and programs concluded during the year for the variable remuneration of senior executives, application of the guidelines for the remuneration to the Volvo Group Executive Board, and the current remuneration structures and levels in the Group.
The Board shall prepare a remuneration report for each financial year detailing the remuneration that is covered under the guidelines. The remuneration report shall include the total remuneration, i.e. both compensation that has been and remains to be paid out, and outline how such remuneration correlates to the guidelines. The remuneration report also provides details on the remuneration of AB Volvo’s President and CEO and, if appointed, the Deputy CEO. The remuneration report shall be submitted to the Annual General Meeting for approval.
The Remuneration Committee consists of following members:
The Board has a Transformation Committee, which was established during 2022, that focuses on the strategic direction and transformation of the Volvo Construction Equipment business area. The main purpose of the committee is to ensure that Volvo Construction Equipment is successful in the transformation.
Composition
The Transformation Committee consists of the following members:
