Annual Report 2013

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Board oversight

Electrolux is a public Swedish Limited-liability Company. Its governance is based on the Swedish Companies Act, the rulebook for issuers at Nasdaq OMX and the Swedish Code of Corporate Governance.

Electrolux comprises approximately 160 companies with operations in over 150 countries. The Electrolux Board of Directors’ work is governed by rules and regulations including the Swedish Companies Act, the Articles of Association, the Swedish Code of Corporate Governance and working procedures adopted by the Board.

To ensure that the Group’s governance system builds value and long-term success, among the issues addressed by the Companies Act are transparency, auditing, remuneration of directors, conflicts of interest, financial reporting and shareholder rights. A key function of the Board is to help Electrolux anticipate the full spectrum of business risks and opportunities – including non-financial ones – and manage these in a transparent way.

The entry point into the Group’s governance system is the Corporate Governance report, published every year in the Annual Report. In addition, the following overview is provided to satisfy the reporting requirements of the Global Reporting Initiative (GRI).

Governance structure

With the exception of CEO Keith McLoughlin, all members of the Board are non-executive. During 2013, 30% (33) of the members were female and six (five) nationalities were represented.

The Board has established two board committees for Remuneration and Audit, respectively. In addition, a Nomination Committee is established each year in accordance with a process adopted by shareholders. The Nomination Committee is composed of one representative of each of the four largest shareholders together with the Chairman of the Board and one additional Board member. See table: Composition of the Board.

The Board has responsibility for overseeing company organization and administration. This includes reviewing the Group’s result and financial position, responsibility for follow-up and control of operations, communication and organization, including evaluation of the Group’s operational management. In addition, the Board bears overall responsibility for establishing an effective system of internal control and risk management.

The Board is considered to be in compliance with relevant requirements for independence. The Chairman of the Board, Marcus Wallenberg, is a non-executive member. The CEO is a Board member and not considered independent. For more information on Board composition and the independence of its members, see CV Board of Directors and auditors.

Compensation for the members of the highest governance bodies, senior managers and executives are not based on the Group's social and environmental performance.

Shareholder and employee input to the Board

Shareholder input is sought annually through the Annual General Meeting (AGM). Shareholders wishing to have a matter considered at the AGM must make the request in advance.

In accordance with Swedish law, the Board of Directors comprises three employee representatives and three deputies who provide employee input into company decision-making. The votes of employee representatives carry equal decision-making weight as those of other Board members appointed by the shareholders’ meeting.

Through the third-party operated Ethics Helpline, employees can submit reports of potential breaches of the Code of Ethics to the Audit Committee at any time. These are submitted for review, as provided for under the Code of Ethics. The helpline enables employees to remain anonymous (to the extent permitted under local law), without fear of exposure or retaliation.

Allegations by employees or other stakeholders regarding issues such as misappropriation of funds are investigated by the internal auditors’ function (Management Assurance & Special Assignments), which reports to the Board’s Audit Committee.

Avoiding conflicts of interest

Conflicts of interest are covered by the Swedish Companies Act and Swedish Corporate Governance Code, a complement to legislation that aims to promote good corporate governance in Swedish listed companies. Both underline that no Board member may participate in discussions that are potentially incompatible with the interests of Electrolux. Conflicts of interest are also addressed in the Code of Ethics, adopted by the Board, and by which all Electrolux employees are expected to abide.

Composition of the Board and its committees

The Governance Code recommends that the Board’s composition be appropriate to the company’s operations, phase of development and other relevant circumstances. The Board members elected by the shareholders’ meeting must collectively exhibit diversity and breadth of qualifications, experience and background. The company strives for equal gender distribution on the Board.

Board oversight on performance, risks and opportunities

The Board reviews economic, environmental and social performance on an as-needs basis. An overview of various items on the 2013 meeting agendas is described here.

Process for evaluating board performance on sustainability

Performance evaluations are conducted on an annual basis for both the Board and CEO, as described in the Corporate Governance Report. The Board is not specifically evaluated on sustainability performance.

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