our Corporate Governance

A distinct purpose for our corporate governance is active and responsible ownership of our affiliates, proper distribution of responsibilities and good communication with all stakeholders.

Corporate Governance Report

Corporate governance within Volvo Car Group The purpose of Volvo Car Group's corporate gov-ernance is to create a good foundation for active and responsible ownership, a proper distribution of responsibilities between the different company bodies, as well as good communication with all of the Group's stakeholders.

The corporate governance principles adhered to by Volvo Car Group are based on Swedish law, mainly the Swedish Companies Act and the Swed-ish Annual Accounts Act (Sw. årsredovisningslagen (1995:1554), the Swedish Code of Corporate Gov-ernance (the "Code") and Nasdaq Stockholm's rule-book for issuers as well as other relevant laws andregulations. The Code is based on the "comply or explain" principle, meaning that companies are not obliged to at all times apply every rule in the Code, but are allowed the freedom to choose alternative solutions which they feel are better in their particu-lar circumstances, provided they report every devi-ation, describe the alternative solution and explainthe reasons for the deviation. Volvo Car Group applies the principles of sound corporate govern-ance and responsible business practice and the Code without any deviation with the exception of a deviation from the Code, rule 2.5, stipulating that the company is to announce the names of members of the nomination committee on its website no later

2. NOMINATION COMMITTEE

1. SHAREHOLDERS THROUGH SHAREHOLDERS' MEETINGS

9. EXTERNAL AUDITORS

  • 1) As of 10 February 2022, the Board decided that the People and Sustainability Committee's assignment shall only relate remuneration to the CEO and executive management.

    The Board also resolved that it will handle the work of the the Product Strategy and Investment Committee and Commercial Transformation Committee and that these committees will cease to exist.

  • 2) Full EMT participation.

  • 3) Selected members representing EMT.

CORPORATE GOVERNANCE REPORT

than six months before the Annual General Meet-ing. The members of Volvo Cars' Nomination Com-mittee for the Annual General Meeting 2022 were appointed based on the ownership information as of 11 November 2021 and the names of the members were announced on 2 December 2021. The Annual General Meeting will be held on 11 May 2022 meaning that the names of the Nomination Com-mittee members were announced later than six months before the Annual General Meeting. The reason for the deviation is that Volvo Cars was listed on Nasdaq Stockholm on 29 October 2021 and wanted the appointment of members to the Nomination Committee to be based on ownership information post listing. Next year the Company intend to comply also with the aforementioned rule 2.5 of the Code.

The Board of Directors of the Company (the "Board") is responsible for Volvo Car Group's organ-isation and the management of its business world-wide and is obliged to follow directives provided by the General Meetings. The Board may appoint com-mittees with specific areas of responsibility and fur-thermore authorise such committees to decide on specific matters in accordance with regulations established by the Board. During 2021, the Board had the Audit Committee, the People and Sustaina-bility Committee, the Product Strategy and Invest-ment Committee and established the temporary Commercial Transformation Committee.

The Chairperson of the Board directs the work of the Board and monitors the Board's fulfilment of its obligations. A Vice Chairperson has been appointed to support the Chairperson as appropriate. The Board annually adopts regulations for the work of the Board, which set out the principles on govern-ance of the Board and its committees.

The President of Volvo Car Group, who is also the Chief Executive Officer (CEO), is appointed by theBoard to handle the Group's day-to-day manage-ment and to lead the Executive Management Team (EMT) as overseen by the Board. The EMT's role is to assist the CEO in the operation of Volvo Car Group's business. The EMT has appointed its own boards (responsible for e.g. product strategies, sus-tainability, volume and production planning, corpo-rate development, etc., as further outlined in the corporate governance model above) to assist in car-rying out decisions and actions, but the CEO retains responsibility for the actions of the EMT boards.

1. Shareholders and General Meetings

The General Meetings, the Company's highest deci-sion-making body, is where shareholders exercise their influence. The Annual General Meeting is held within six months after the end of the financial year. Decisions made by shareholders' at the General Meetings include (i) adoption of instructions for the Nomination Committee which nominates members to the Company's Board of Directors, (ii) determina-tion of the number of Board members, composition of the Board (including the Chairperson of the Board) and remuneration of Board members, based on recommendations by the Nomination Commit-tee, (iii) election of external auditors, (iv) determina-tion of the distribution of dividends (v) confirmation of income statements and balance sheets and the disposition of the Company's profit or loss, (vi) dis-charge from liability of the Board of Directors and CEO as well as (vii) guidelines for remuneration to the CEO and other members of the Executive Man-agement Team. In addition, the shareholders of the Company can resolve on other matters that are important to the Company at the General Meeting, for example changes to the Articles of Association.

In addition to the Annual General Meeting, Extraordinary General Meetings can be convened when required.

Notice of the Annual General Meeting, as well as an Extraordinary General Meeting at which the matter of amendment to the Articles of Association is to be addressed, shall be issued not earlier than six weeks and not later than four weeks prior to the General Meeting. Notices of other Extraordinary General Meetings shall be issued not earlier than six weeks and not later than three weeks prior to the Extraordinary General Meeting. Notice of General Meetings shall be published in the Swedish Official Gazette (Sw. Post- och Inrikes Tidningar) and on the Company's website. Simultaneously, an announce-ment with information that the notice has been issued shall be published in Dagens Industri.

Right to attend General Meetings

All shareholders who are directly recorded in the Company's share register maintained by Euroclear Sweden six banking days prior to the General Meet-ing and who have notified the Company of their intention to participate in the General Meeting not later than the date indicated in the notice of the General Meeting, are entitled to attend the General Meeting and vote for the number of shares they hold.

In addition to notifying the Company, sharehold-ers whose shares are nominee registered through a bank or other nominee must request that their shares are temporarily registered in their own names in the register of shareholders maintained by Euroclear Sweden, in order to be entitled to partici-pate in the General Meeting. Shareholders should inform their nominees well in advance of the record date. Voting registrations made by nominees not later than four banking days prior to the General Meeting will be taken into account.

Shareholders may attend the Company's General Meetings in person or by proxy and may be accom-panied by a maximum of two assistants. It will nor-mally be possible for shareholders to register for the General Meeting in several different ways, as indi-cated in the notice of the meeting.

Shareholder initiatives

Any shareholder of the Company who wishes to have a matter dealt with at a General Meeting must submit a written request to the Board of Directors to that effect. The matter will be dealt with at a General Meeting if the request has been received by the Company no later than seven weeks prior to the General Meeting, or after such date, if it still is in due time for the matter to be included in the notice of the General Meeting.

Number of shareholders and ownership structure

The total number of shares in Volvo Car AB (publ.) amounts to 2,979,524,179 shares of series B which are listed on the Nasdaq Stockholm Stock Exchange. Volvo Cars largest shareholder is Geely Sweden Holdings AB holding approximately 82 per cent of the total number of shares in the Company representing approximately 82 percent of the total number of votes in the Company. The remaining 18% of the shares are held by Nordic and interna-tional investos and approximately 190,000 other investors. For further information on the ownership structure, please refer to page 48.

2. Nomination Committee

Under the Code, a company listed on Nasdaq Stock-holm shall have a Nomination Committee, the pur-pose of which is to make proposals to the General Meeting in respect of the Chairperson at General Meetings, number of Board members, elections of Board members, Chairperson of the Board and audi-tor, remuneration of each Board member (divided between the Chairperson of the Board and other

CORPORATE GOVERNANCE REPORT

Board members, and remuneration for committee work), remuneration to the auditor, and to the extent deemed necessary, proposals for amendments to the instruction for the Nomination Committee. At the Extraordinary General Meeting held on 17 October 2021, the current instruction for the Nomi-nation Committee was adopted to apply until further notice.

The Nomination Committee prior to the Annual General Meeting 2022 consists of representatives of the three largest shareholders in terms of voting rights, as of 11 November 2021. Members of the Nomination Committee are:

  • • Eric Li, Chairperson of the Board of Volvo Car AB

  • • Hans-Olov Olsson, appointed by Geely Sweden Holdings AB, Chairperson of the Nomination Committee

  • • Yimin Chen, appointed by Geely Sweden Holdings AB

  • • Anders Oscarsson, appointed by AMF

  • • Ylva Wessén, appointed by Folksam

The Nomination Committee has adopted a frame-work for nomination of members to the Board, which stipulated that the composition of the Board shall be diverse in terms of gender, nationality, pro-fessional background and other competences. This to ensure that the Board has the appropriate bal-ance of expert knowledge, which matches the scale and complexity of Volvo Cars, supports a sustaina-ble development and meets the independency requirements of Volvo Cars. It is Volvo Cars' aim to have a balanced composition when it comes to gen-der and it is the ambition that each gender shall have a share of at least some 40 per cent of the Board members elected by the shareholders' meet-ing, an ambition not yet fully reached. The Unions represented in the Volvo Cars Board shall be encouraged to apply the corresponding goal when appointing their representatives.

3. Board of Directors

The Board of Directors, which is the highest deci-sion-making body after the General Meeting, bears ultimate responsibility for Volvo Car Group's organi-sation, management and control of the Company's financial conditions. The Board of Directors shall further ensure that the Company applies the Code and complies with applicable laws and regulations, Nasdaq Stockholm's rulebook for issuers, the listing rules of the Luxembourg Stock Exchange's Euro MTF market, the Company's Articles of Association and the regulations for the work of the Board.

Name of the Board members

Li Shufu (Chairperson of the Board)

Composition

At all times, the Board shall consist of a minimum of three and a maximum of twelve members and in addition thereto the number of employee represent-atives as required under Swedish law. No member of the Executive Management Team other than the CEO shall be a member of the Board. Each new Board member is provided with an induction pro-gramme to learn about the Volvo Car Group, the regulatory requirements and it is the Board's inten-tion, during normal conditions, to visit a Volvo Car Group site other than the headquarters at least once a year.

Independent of the company/senior management

NLone Fønss Schrøder (Vice Chairperson of the Board) YHåkan Samuelsson (CEO) Li Donghui

Jonas Samuelson Thomas Johnstone Betsy Atkins Michael Jackson Xingsheng (Jim) Zhang Winfried Vahland

Lila Tretikov3) Diarmuid O'Connell4) Winnie Fok5)

N Y Y Y Y Y Y Y Y Y Y

Independent of the company's major shareholder

In accordance with the Code, the regulations for the work of the Board stipulate that the majority of the Board members shall be independent of the Company and the EMT and at least two of these independent members shall also be independent of major shareholders. In order to determine whether a member of the Board is independent in relation to the Company and the EMT, an overall assessment must be made of all circumstances which might give reason to call into question the independence of the Board member, for example, if the Board member has recently been hired by the Company or an affiliate. Furthermore, in order to determine the independence in relation to major shareholders,

Board meeting attendanceCommittee meeting attendance

N

Remuneration, Board and Committees1), SEK

12/16

N2)

N/A

15/16

Y N Y Y Y Y Y Y Y Y Y

16/16

13/13

5/5

14/16

N/A

2,765,000

3/13

N/A N/A

16/16

4/4

15/16

1,025,000

9/10

1,178,000

15/16

10/10

1,150,000

16/16

17/17

1,212,000

16/16

8/9

1,150,000

15/16

5/5 N/A N/A

1,050,000

12/13

900,000

13/13

900,000

3/3

3/3

900,0006)

  • 1) Annual average remuneration of the Board and Committees as adopted by the Annual General Meeting in March 2021 valid for March-October 2021 and by the Extra

    Shareholders' Meeting in September 2021 valid for November 2021-April 2022.

  • 2) Lone Fønss Schrøder is, as of 2020, a director in the board of Geely Sweden Holdings AB, the main owner of Volvo Cars.

  • 3) Member of the Board from 18 March 2021.

  • 4) Member of the Board from 18 March 2021.

  • 5) Winnie Fok left the board in connection with the Annual General Meeting held on 18 March 2021.

  • 6) Annual remuneration as adopted by the Annual General Meeting in March 2020.

CORPORATE GOVERNANCE REPORT

consideration must be given to the scope of the Board member's direct or indirect relationship to the Company's major shareholders. Pursuant to the Code, "major shareholder" means a shareholder who, directly or indirectly, controls 10 per cent or more of the shares or voting rights in the Company. The Nomination Committee's assessment of the independence of the Board members in relation to the Company, the EMT and major shareholders is presented below. Lone Fønss Schrøder, Daniel Li, Thomas Johnstone, Winfried Vahland, Betsy Atkins, Xingsheng (Jim) Zhang, Michael Jackson, Jonas Samuelson, Lila Tretikov, and Diarmuid O'Connell are deemed independent in relation to the Company and the EMT, and, among these members, Thomas Johnstone, Winfried Vahland, Betsy Atkins, Xing-sheng (Jim) Zhang, Michael Jackson, Jonas Samu-elson, Lila Tretikov, and Diarmuid O'Connell are also deemed independent in relation to major sharehold-ers. The Company thereby satisfies the Code's independence requirement.

Conflicts of interest

Board members shall inform the Chairperson and/ or the Vice Chairperson immediately if they find themselves in a conflict-of-interest situation. A Board member with a conflict of interest in relation to any matter to be dealt with by the Board may not participate in the discussions or decisions regarding such matter.

Matters for the Board

The Board is responsible for the organisation of Volvo Car Group and the management of its busi-ness worldwide. The Board continuously monitors Volvo Car Group's performance, evaluates Volvo Car Group's strategic direction and business plan as well as other aspects such as adherence to its Code of Conduct.

Sustainability is an integral part of Volvo Car Group's strategy and the Board monitors Volvo Car Group's efforts in that area. Certain matters that have not been expressly allocated to the Board are delegated to the Board's Committees or the CEO as set out in the regulations for the work of the Board.

The work of the Board follows an annual cycle in order to allow the Board to address matters within the scope of its responsibility on a yearly basis. To ensure that the Board has good visibility of the Group's operations, the President and CEO of the Volvo Car Group submits a report on the business, including reporting from the Group's strategic affili-ates, where appropriate, at all Board meetings. The CFO also reports on the financials of Volvo Car Group, including relevant matters relating to treas-ury, hedging, risk management, insurance etc., as appropriate. In addition, the Board discusses spe-cific strategic topics of relevance and the Board Committees report on their work. At each Board meeting the Board is also presented with a number of decision items for consideration and approval as set out in the regulations for the work of the Board.

Authorisation for the Board to resolve on new issues of shares

At the Extra General Meeting held on 17 October 2021, the shareholders resolved to authorise the Board to, on one or several occasions up to the next Annual General Meeting, resolve on new issues of common shares series B. The total number of shares that may be issued by virtue of the authori-sation shall be within the limits of the articles of association and not exceed ten (10) per cent of the total number of shares in the Company at the time of the Board's resolution. The authorisation includes a right to resolve to issue new shares for cash con-sideration, by contribution in kind or payment byset-off. Issues for cash consideration or for consid-eration by set-off may be made with deviation from the shareholders' preferential rights only for the purpose of financing acquisitions and provided that the share issue is made on market terms. The pur-pose of the authorisation is to enable payment though issuance of shares in connection with potential acquisitions that the Company may carry out, and to enable capital raises in connection with, and in order to finance, such acquisitions.

Board meetings

In accordance with the regulations for the work of the Board, the Board is expected to meet six to eight times per year at venues to be agreed by the Board. The Board has held sixteen meetings during 2021, of which eight were ordinary and eight extraordinary. The Board meets the statutory audi-tor at least once a year without the CEO or any other member of the EMT present. In addition, the Board occasionally holds non-executive meetings. The CFO and the General Counsel, who is the sec-retary of the Board, also attend Board meetings.

The table on page 64 shows the Board members' attendance to the Board meetings in addition to their independence according to the requirements of the Code in relation to (i) the Company and (ii) the major shareholder, and the remuneration to the Board members for Board and Committee work.

Evaluation of the work of the Board

The Board conducts an annual survey of its work performed during the year. The survey covers areas such as the climate at Board meetings and the allo-cation of time spent on different topics, the work of the Board committees, the efficiency of the work of the Board, Board leadership and relations with the Executive Management Team. Based on the result of the survey the Board will evaluate the perfor-mance and identify possible areas of improvement. In addition to the annual survey, the Vice Chairper-son conducts meetings with each individual Board member during the year.

Board committees

According to the Swedish Companies Act and the Code, the Board of Directors shall institute an Audit Committee and a Remuneration Committee. The Chairperson of the Board may chair the Remunera-tion Committee. The other members of the Remu-neration Committee that have been elected by the General Meeting are to be independent of the Com-pany and the Executive Management Team. A majority of the Audit Committee's members are to be independent in relation to the Company and its Executive Management Team and at least one of the members who is independent in relation to the Company and the Executive Management Team is also to be independent in relation to the Company's major shareholders. At least one member of the Audit Committee must also have accounting or auditing proficiency.

The Board has established three permanent com-mittees, the Audit Committee, the People and Sus-tainability Committee (which fulfils the tasks of the Remuneration Committee pursuant to the Code) the Product Strategy and Investment Committee, and the temporary Commercial Transformation Committee.

The major tasks of these committees are of pre-paratory and advisory nature, but the Board of Directors may also delegate decision-making pow-ers on specific issues to the committees. The issues considered at committee meetings shall be recorded in minutes of the meetings and continu-ously reported to the Board. The committees are appointed at the statutory Board meeting following election of Board members. The Board has also

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Volvo Car AB published this content on 06 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 06 April 2022 12:51:04 UTC.