Board of Directors

Board of Directors

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 and Remuneration Committee.

The external auditors report their findings to the full Board once a year.

Members of the board of directors

Carl-Henric Svanberg
Carl-Henric Svanberg

Chairman of the Board
Chairman of the Remuneration Committee

Matti Alahuhta
Matti Alahuhta

Member of the Remuneration Committee

Lars Ask
Lars Ask

Employee representative

Eckhard Cordes
Eckhard Cordes

Board member

James W. Griffith
James W. Griffith

Member of the Remuneration Committee

Mats Henning
Mats Henning

Employee representative

Camilla Johansson
Camilla Johansson

Employee representative

Mari Larsson
Mari Larsson

Employee representative

Martin Lundstedt
Martin Lundstedt

President and CEO

Martina Merz
Martina Merz

Board member

Hanne de Mora
Hanne de Mora

Member of the Audit Committee

Håkan Samuelsson
Håkan Samuelsson

Board member

Helena Stjernholm
Helena Stjernholm

Board member

Mikael Sällström
Mikael Sällström

Employee representative

Lars Westerberg
Lars Westerberg

Chairman of the Audit Committee

Independence requirements

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.

Prior to the Annual General Meeting 2016, considering the above requirements regarding the Board's independence, the Election Committee reported the following understanding with regard to the Board members who were elected at the Annual General Meeting in 2016.

Matti Alahuhta, James W. Griffith, Kathryn V. Marinello, Martina Merz, Hanne de Mora, Håkan Samuelsson, Carl-Henric Svanberg and Lars Westerberg were all considered independent of the company and company management as well as of the company's major shareholders.

Martin Lundstedt, as Volvo's CEO, was considered independent of the company's major shareholders but not of the company and company management.

Eckhard Cordes was considered independent of the company and company management. As partner in Cevian Capital he was considered not to be independent thereof. Since Cevian Capital controlled more than 10 percent of the votes in the company, prior to the Annual General Meeting 2016, he could not, in the Election Committee’s opinion, be considered as independent of one of the company’s major shareholders.

Helena Stjernholm was considered independent of the company and company management. As Chief Executive Officer of AB Industrivärden she was considered not to be independent thereof. Since AB Industrivärden controlled more than 10 percent of the votes in the company, prior to the Annual General Meeting 2016, she could not, in the Election Committee's opinion, be considered as independent of one of the company's major shareholders.

Control over financial reporting

The organization of the internal control over financial reporting

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 an 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 the Internal Audit function reports directly to the CEO, the Group's CFO and the Audit Committee.

For more information, read under the heading "Internal control over financial reporting" in the Corporate Governance Report.

Committees

Audit Committee

At the Board meeting held on April 6, 2016, the following Board members were appointed members of the Audit Committee:

• Lars Westerberg, Chairman

• Helena Stjernholm

• Hanne de Mora

Remuneration Committee

At the Board meeting held on April 6, 2016, the following Board members were appointed members of the Remuneration Committee:

• Carl-Henric Svanberg, Chairman

• Matti Alahuhta

• James W. Griffith