ASSA ABLOY AB is a Swedish public company with headquarters in Stockholm, Sweden. The company's governance is based on its own articles of association, the Swedish Companies Act, the rules of the Stockholm Stock Exchange including the Swedish Code of Corporate Governance, and other applicable Swedish and foreign laws and regulations.
ASSA ABLOY's objective is that its activities should generate good long-term returns for its shareholders and other stakeholders. An effective scheme of corporate governance for ASSA ABLOY comprises a number of interacting components, which are described below.
The number of shareholders in ASSA ABLOY at year-end was 31,702. ASSA ABLOY's principal shareholders are Investment AB Latour and SäkI (9.5 percent of the capital and 29.7 percent of the votes) and Melker Schörling and companies (4.0 percent of the capital and 11.6 percent of the votes). Foreign shareholders account for 41 percent of the share capital and 28 percent of the votes, while the ten largest shareholders account for 37 percent of the share capital and 57 percent of the votes. Both the total number of shareholders and the proportion of foreign shareholders increased during the year.
Share capital and voting rights
ASSA ABLOY's share capital at year-end amounted to SEK 366 M, distributed among 19,175,323 Series A shares and 346,742,711 Series B shares. Each Series A share carries ten votes and each Series B share one vote. All shares give the holders equal rights to the company's assets and earnings.
Share and dividend policy
ASSA ABLOY's Series B share is quoted on the A list of the Stockholm Stock Exchange. The trading lot is 200 shares. ASSA ABLOY's stock-market value at the end of the year amounted to SEK 45,740 M (41,532). The goal of the Board of Directors is that, in the long term, the dividend should correspond to 33–50 percent of earnings after standard tax of 28 percent, but always taking into account ASSA ABLOY's long-term financial requirements.
Annual General Meeting
Shareholders' rights to decide on the affairs of ASSA ABLOY are exercised at the Annual General Meeting. Shareholders who are recorded in the share register on the nominated day and who have notified their intention to attend may take part in the Meeting, either in person or via a proxy.
Decisions at the Annual General Meeting are normally taken by simple majority. However, on certain matters the Swedish Companies Act or ASSA ABLOY's articles of association prescribe that proposals should be supported by a higher proportion of the shares represented or votes cast at the Meeting.
The Annual General Meeting must be held within six months of the end of the company's financial year. Matters considered at the Annual General Meeting include dividends; approval of the income statement and balance sheet; discharge from liability of the Board of Directors and the CEO; the election of Board members, the Chairman of the Board, the Nomination Committee and, where applicable, auditors; and the fixing of remuneration for the Board and auditors.
The 2005 Annual General Meeting
At the 2005Annual General Meeting Bo Dankis, Carl Douglas, Gustaf Douglas, Georg Ehrnrooth, Per-Olof Eriksson, Lotta Lundén, Sven-Christer Nilsson, Melker Schörling and Carl-Henric Svanberg were elected as Board members. Georg Ehrnrooth was additionally elected Chairman of the Board. The Meeting fixed the dividend at SEK 2.60 per share.
The Meeting also decided on the fees payable to the Board and to elected members of the Nomination Committee up to the end of the 2006 Annual General Meeting. If a shareholder represented by one of the members of the Nomination Committee ceases to be among the major shareholders in ASSA ABLOY, the Committee has the right to elect a representative of any of the current major shareholders to take the place of such a member. The same applies if a member of the Nomination Committee ceases to be employed by such a shareholder or for any other reason leaves the Committee before the 2006 Annual General Meeting.
All members of the Board and the company's appointed auditor were present at the Annual General Meeting.
The duties of the Nomination Committee are to consider the choice of the Chairman and other members of the Board of Directors, the choice of Auditor, the choice of the Chairman of the Annual General Meeting, questions of remuneration and associated matters. The members of the Nomination Committee before the 2006 Annual General Meeting are Gustaf Douglas, Chairman (Investment AB Latour and SäkI), Staffan Grefbäck (Alecta), Marianne Nilsson (Robur) and Melker Schörling (Melker Schörling and companies).
As a basis for its proposals to the 2006 Annual General Meeting, the Nomination Committee has carried out an assessment of whether the current Board is appropriately composed for its purpose and is fulfilling the demands placed on the Board by the company's present situation and future objectives. As one factor in this assessment, the Committee has studied the results of the evaluation of the Board's work carried out under the leadership of the Committee's Chairman. Any recruitment of new Board members is based on a profile of requirements laid down by the Committee. The search for new Board members continues throughout the year. The basis of the Committee's proposed choice of auditor is the preparatory work done by the Audit Committee.
Shareholders who wish to put forward proposals to the Nomination Committee can do so by e-mailing firstname.lastname@example.org. The Committee's proposals are published at the latest in conjunction with the formal notification of the Annual General Meeting.
Board of Directors
In accordance with the Swedish Companies Act, the Board of Directors is responsible for the organization and administration of the Group and for ensuring proper control of bookkeeping, management of assets, financial circumstances etc. The Board decides on the Group's overall goals, strategies and policies and on acquisitions, divestments and investments. The Board approves the Annual Report and Interim Reports, recommends a dividend to the Annual General Meeting and takes decisions about the Group's financial structure and the principles for remunerating the management.
The Board's other duties include:
Working procedures for the Board and instructions for the division of duties between the Board and the CEO are reviewed and set down at least once a year. The Board has also issued written directives specifying how financial reporting to the Board shall be presented, the division of duties between the Board and the CEO, and the cir-
cumstances in which the Deputy CEO should stand in for the CEO.
In addition to leading the work of the Board, the Chairman of the Board shall continually monitor the Group's operations and development by means of discussions with the CEO. The Chairman shall consult with the CEO on strategic issues and shall represent the company in matters concerning the ownership structure. The Chairman shall also, when necessary, take part in particularly important external discussions and, in consultation with the CEO, in other matters of especial significance. The Chairman shall ensure that the work of the Board is evaluated each year and that new members of the Board receive appropriate training.
The Board meets at least four times a year. The regular meetings take place in connection with the company's publication of its year-end or quarterly results. At least one of the Board meetings is combined with a visit and an in-depth review of one of the Group's businesses. Extra Board meetings are held when necessary.
The Board has a Remuneration Committee and an Audit Committee. The purpose of these Committees is to make the work of the Board in these areas deeper and more effective and to lay the ground for decision-making. The Committees themselves have no decision-making powers. The members of the Committees are chosen annually at the first Board meeting. Instructions to the Committees are included in the Board's working procedures.
The Board's work during 2005
The Board met eight times during the year. At three of the meetings one Board member was absent. At the others, all members were present.
At the start of the year the strategy for ASSA ABLOY Entrance Systems was discussed. In this context the Board approved the acquisition of Doorman Services, which represents a broadening of the Group's offering in automatic doors. Asia Pacific's management presented the case for investment in Wangli Security Products, which was approved by the Board as an element in the Group's strategy for the Chinese market.
During the spring and summer the Executive Team's action program for some of EMEA's markets was discussed. The Board also reviewed the results of the Leverage & Growth action program, which was concluded during the year. In September the Board made a round trip to the Group companies Urbis in Romania, Sokymat in Switzerland, Nemef in the Netherlands and Ruko in Denmark. The visit to Sokymat's factory in Granges formed the occasion for a consideration of the strategy for ASSA ABLOY Identification Technology.
In the fall, recruitment was put in hand and the decision taken to appoint Johan Molin as the new President and CEO. As well as the new CEO, the Board also approved the appointment of Juan Vargues as a member of the Executive Team during the year. At the last Board meeting of the year, the Executive Team presented its updated plans for the ongoing work of consolidation, restructuring and outsourcing of the Group's production.