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The Board's work

The Board's role composition and fees

The Board of Directors has ultimate responsibility for Industrivärden’s organization and administration, and plays a central role in Industrivärden’s business model for exercising long-term active ownership. It is responsible for, among other things, the Company’s strategy, matters involving major purchases and sales of securities, formulation and application of the methods for active ownership, and overarching ownership matters concerning the portfolio companies. The Articles of Association stipulate that the Board shall consist of a minimum of three and a maximum of nine directors. The Board’s composition, the directors’ attendance at board and committee meetings, and directors’ fees are shown in the table below.

The Nominating Committee’s reasoned statement ahead of the 2019 AGM certifies that in formulating its recommendations for members of the Board of Directors, the Nominating Committee relied on Rule 4.1 of the Code as its diversity policy. The goal of the policy is that the Board shall have a suitable composition in respect of the Company’s operations, phase of development and conditions in general, distinguished by a diversity and breadth of expertise, experience and backgrounds. 

The composition of Industrivärden’s board meets the Code’s requirement for independent directors. The Nominating Committee’s assessment regarding the directors’ independence conditions ahead of the 2019 AGM is outlined in the table below.

The Board has appointed an audit committee and a compensation committee tasked with conducting preparatory work for audit and compensation matters, respectively, for decision by the Board. The aim of the committees is to take a more in-depth look at, streamline and quality-assure the Board’s work on these matters.

The Board's work 2019

The Board’s duties are laid out in the Rules of Procedure (incl. the CEO’s instruction), which are adopted yearly at the statutory board meeting. The Rules of Procedure and the CEO’s instructions regulate and structure the Board’s duties during the year, clarify internal decision-making processes and prescribe the division of responsibility visà-vis the CEO.

In addition to the Rules of Procedure, the Board adopts a number of governance documents for the Company’s operations. For further information, see Internal control. Every board meeting is conducted in accordance with an agenda that has been distributed to the directors along with relevant documentation. All board decisions are based on extensive documentation and are made following a discussion that is led by the Chairman of the Board. Minutes are recorded of board meetings by the Company’s General Counsel.

In addition to the statutory board meeting, which is held in conjunction with the AGM, the Board normally meets eight times per year (regular meetings, including meetings in connection with the publication of interim and year-end reports). Extra board meetings are convened when necessary. In 2019 the Board held a total of nine meetings.

The regular board meetings cover a number of set agenda points. These include, among other things, a report on the financial result of operations, the development of net asset value and performance of the equities portfolio, and on equity transactions that have been carried out. Reporting also includes a description of the portfolio companies’ performance and macroeconomic conditions. In addition, a special review is normally conducted of one or more of the portfolio companies and of potential investments or divestments. Industrivärden’s action plans for the portfolio companies are also updated on a continuous basis and are presented to the Board. Through representation on the portfolio companies’ boards and nominating committees, Industrivärden’s board members and executive management play a central role in exercising active ownership. Senior executives of Industrivärden participate at board meetings to give presentations on specific matters. During 2019, within the framework of active ownership and as in earlier years, a significant part of the Board’s work consisted of hearing presentations from members of the Executive Management covering Industrivärden’s more in-depth view and action plan for a couple of the portfolio companies, and discussing and evaluating these action plans.

Each year the Board evaluates Industrivärden’s financial reporting and makes demands on its content and structure to ensure it maintains a high level of quality. In connection with the board meeting that deals with the annual financial statements, the Board of Directors’ Report, the proposed distribution of earnings and the year-end report, the Company’s auditor submits a report on its observations and assessments from the performed audit.

Evaluation of the Board's work

The Board’s work is evaluated yearly in a structured process conducted under the direction of the Chairman of the Board. The 2019 evaluation was conducted by means of a questionnaire that each board member was requested to complete, in the aim of gaining an idea about the directors’ views on, among other things, how the board work has been conducted and which measures can be taken to improve the board work as well as which matters the directors feel should be given more attention and in which areas it could possibly be suitable to have additional expertise on the Board. The results of this evaluation were reported and discussed by the Board. In addition, the Chairman’s work on the Board was evaluated with him not being present. The conclusions of these evaluations and discussions were that the board work was considered to work very well, which was reported on to the Nominating Committee.

 

Last update: 04 Mar 2020