Corporate Governance Report

9. Group Management

The Group Executive Team has 16 members including the CEO. In addition to the CEO, the Group Executive Team comprises the Executive Vice Presidents of the five Group Trucks divisions, the Executive Vice President Volvo Construction Equipment, the Executive Vice President Business Areas, the Executive Vice President Volvo Financial Services and the Executive Vice Presidents of the seven Corporate Functions. The members of the Group Executive Team report directly to the CEO.

The CEO leads the operations of the Group partly through the Group Executive Team but also through the Group Trucks Executive Management Team, which normally holds weekly meetings. In addition, the CEO conducts regular follow-ups with the heads of Group Functions, the other Business Areas and Corporate Functions. Further, the Busines Areas and the Group Functions have separate decision foras called Business Review Meetings and there are also cross-functional committees that manage matters concerning processes pertaining to more than one Group Function. These bodies effect control and monitoring of the Group’s financial development, strategies and targets and make decisions regarding investments and other matters.

Remuneration to the Group Executive Team
AB Volvo’s Annual General Meeting annually approves a policy on remuneration to the Group Executive Team, following a proposal from the Board. The remuneration policy adopted by the Annual General Meeting 2012 states that the guiding principle is that remuneration and other terms of employment for the Group Executive Team shall be competitive in order to ensure that the Volvo Group can attract and retain competent executives.

The policy also states that the executives may receive variable salary in addition to fixed salary. The variable salary may, as regards the President, amount to a maximum of 75% of the fixed salary and, as regards the other executives, a maximum of 60% of the fixed salary. In 2012, members of the Group Executive Team were entitled to variable salary according to a program for variable remuneration determined by the Board. The performance targets defined in the program were primarily related to operating margin and operating rolling cash flow.

The purpose of the program for variable remuneration is to create an incentive for the executives to strive for the Volvo Group developing in such a manner that the defined performance targets are achieved, thereby constituting a management tool. Accordingly, the performance targets set by the Board for variable remuneration inter alia relate to the Group’s financial targets for improved operating margin.

The Remuneration Committee conducts an annual evaluation of the remuneration policy and Volvo’s system for variable remuneration to executives and the Board prepares a special report of this evaluation and the conclusions. The report on the evaluation for 2012 will be available on Volvo’s website not later than two weeks prior to the Annual General Meeting 2013, For more information about remuneration to the Group Executive Team and an account of outstanding share and share-price related incentive programs to the management, refer to Note 27 in the Group’s notes in the Annual Report.

Changes to the Group Executive Team
On July 1, 2012, Per Löjdquist retired and thereby resigned from the Group Executive Team and from his position as Executive Vice President Corporate Communication. Mårten Wikforss assumed the position on the same date.

On September 30, 2012, Pär Östberg resigned from the Group Executive Team and from his position as Executive Vice President Truck Joint Ventures. In conjunction with Pär Östberg's departure from the Volvo Group, Truck Joint Ventures organizationally became part of Group Trucks Sales & Marketing and JVs APAC, headed by Joachim Rosenberg.

On January 1, 2013, the Head of Volvo Financial Services, Martin Weissburg, joined the Group Executive Team. On January 1, 2013, Martin Weissburg thereby assumed the position as Executive Vice President Volvo Financial Services.

On April 1, 2013, Eva Persson will retire and resign from the Group Executive Team and from her position as General Counsel and Executive Vice President Corporate Legal & Compliance. Sofia Frändberg will assume this position on the same date.