Corporate governance

Investment AB Latour manages the Group’s investment portfolio and is the Group’s parent company.

Contents on this page:

Latour’s board is responsible for the company’s organisation and management and it regularly assesses the parent company’s and the Group’s financial situation. The board is also responsible for General Meetings, the nomination process, and the work of the committees and auditors.

Annual General Meeting

The Annual General Meeting must be held within six months after the end of the financial year. The Annual General Meeting can be held in Gothenburg or Stockholm. All shareholders recorded in the registered list of shareholders before the Annual General Meeting and who have announced their intention to attend have the right to participate and vote for their entire shareholdings.

The Nominating process

The Annual General Meeting selects board members for a one-year term. At the Annual General Meeting of 2009 the nominating committee provided a proposal concerning the election of the chairman and the other members of the board, remuneration to the board and possible remuneration for committee work to the Annual General Meeting. The nominating committee, which was appointed by the Annual General Meeting 2009, shall consist of Gustaf Douglas and at least two representatives for other major shareholders. Since then the following members have been appointed to the nominating committee: Gustaf Douglas (chairman, principle owner), Björn Karlsson (Bertil Svensson´s family and foundation) and Per Erik Mohlin (SEB funds). None of them has received any remuneration for their participation in the nominating committee.

The Board of Directors

The Latour board consists of seven members, including the chief executive officer. There are no deputies. All members are elected for a one-year term. Except for the chief executive officer no members have a position or assignment in the Group. The secretary of the board is the chief financial officer of the Group. Fredrik Palmstierna was elected chairman of the board by the Annual General Meeting 2009. The members of the board represent 86,5 percent of the voting shares in the company and 78,8 percent of its share capital. Employees are represented in the subsidiary Latour Industrier AB, which is the parent company of the wholly owned companies in the industrial and trading operations. They are therefore not represented in the investment company’s board.

The board annually adopts a work program that regulates board meetings, matters that must be put before the board at these meetings, the division of responsibility between the board and the chief executive officer as well as certain other matters. Instructions to the chief executive officer stipulate his duties and reporting responsibilities to the board.

The board has had three meetings during the year not including the constitutional board meeting as well as two extra board meetings. All board members have attended every meeting. The company’s auditors attended two board meetings and provided reports and observations from the audits performed. The auditors attended one meeting without Group management in attendance to give their views on Group management. Among the matters dealt with by the board are strategic changes in portfolio investments, acquisitions and divestitures of subsidiaries, budgets and forecasts for the subsidiaries as well as financial follow-up of operations.

The chairman of the board has also made sure that during the year an evaluation of the board’s work was carried out and that all board members have expressed their views.

Committees

The board has appointed a remuneration committee, which consists of Fredrik Palmstierna (chairman) and together with Caroline af Ugglas and Eric Douglas, CEO Jan Svensson participates as an additional member, and an auditing committee which consists of the entire board except the chief executive officer.

The remuneration committee has held two meetings and been complete. The committee presents proposals to the board concerning remuneration to the chief executive officer and supports him in determining remuneration to the other senior officers. Thereafter the board decides on the matters at hand.

The auditing committee has met twice and all members as well as the auditors were present. Financial risks and the focus of auditing were discussed, among other things. The auditors have even presented their observations made during the audit.

Remuneration to the chief executive officer consists of a fixed and a variable portion, of which the variable portion is based on achieved individual goals. Remuneration to other senior officers also consists of a basic salary and a variable portion based on a fixed key ratio. The variable portion is maximised to a certain number of monthly wages.

Auditors

Öhrlings PricewaterhouseCoopers was selected at the Annual General Meeting of 2008 as auditors with Helèn Olsson Svärdström as principle auditor. Helén Olsson Svärdström has been active in the auditing firm since 1985 and been in volved in Latour auditing since 2004, responsible for Group coordination. She has no other assignments in companies that are closely related to Latour’s largest owner or the chief executive officer.

The auditors have reported orally and in writing to the board concerning auditing and internal control of the Group at the board meetings in December 2009 and March 2010.

Group management

Latour’s industrial and trading companies are divided into six business areas, which also comprise legal structures. The investment portfolio is managed by the parent company, Investment AB Latour. The subsidiary Latour Industrier AB is a management company and the parent company of all the business areas mentioned above. Other subsidiaries to Investment AB Latour are Nordiska Industri AB which operates as a management company as well as the Group’s internal bank and Karpalunds Ångbryggeri AB, where share trading takes place.

Group management consists of the chief executive officer and the chief financial officer. The business area managers lead operations in the operating parent companies that own shares in the underlying companies and are responsible for business areas profits and management. The Group’s business organisation is built on decentralisation of responsibility and authority. The business areas are responsible for developing their own operations and for meeting financial targets that include the return on capital employed, capital binding and operating margins.

Internal control concerning financial reporting

Internal control relating to financial reporting is based on a control environment that includes the organisation, the decision-making process, authority and responsibility and which has been documented and communicated in management documents. An example of this is the division of responsibility between the board and the chief executive officer as well as instructions for authorisation rights and accounting and reporting instructions.

The risks identified concerning financial reporting are managed by the Group’s control structure.

Control documents have been produced to promote completeness and correctness in the financial reports and have been communicated to appropriate staff. Follow-up of effectiveness and implementation takes place through programmed controls and procedures for personnel. The Group has a common report system in which all reporting is done. Group management regularly visits the subsidiaries where they go through financial reporting and develop controller operations.

The board receives monthly financial reports and the Group’s financial situation is discussed at every board meeting.

A review of the Group's internal control of essential processes was carried out. The larger companies presented their self-assessment concerning the reliability of their procedures. The inadequacies that were noted did not affect the reliability of control over reporting but nonetheless measures will be taken. This will be followed-up in the regular auditing.

The above information concerning internal control has not been reviewed by an auditor.

Applying the Swedish code of corporate governance

Latour applies the Swedish Code of Corporate Governance with the following exceptions.

According to the definition in the Code the majority of Latour’s board members are not independent and several of the board members have been on the board long time. The company´s view is that there are great advantages of long experience of operations and continuity an a company like Latour.

The special auditing function in the form of internal auditing does not exist in the Latour Group. Discussions with the company’s external auditors concerning the focus of auditing as well as the auditing firm’s extensive organisation, together with the controls made by Group management and the existing control functions in the business areas, are considered to be an acceptable level.