Corporate governance report
The General Meeting is the forum where shareholders make certain decisions about Perstorp Holding AB and its subgroup subsidiaries. The Annual General Meeting was held on 9 May 2017, at which the annual report for the 2016 financial year was adopted together with the proposal for distribution of profits. The Board of Directors was re-elected at the meeting.
Board of directors
As of the end of 2017, the Board of Directors consists of seven members, all nominated and elected by the company owners. The individuals re-elected to the Board at the 2017 Annual General Meeting are Tore Bertilsson, Fabrice Fouletier, Jan Secher, Karin Markides, Brendan Cummins, Ragnar Hellenius and Claes Gard. In addition to the aforementioned individuals, the Board also includes three employee representatives.
The Board's responsibilities are regulated by the Swedish Companies Act and the formal working procedures, which are approved by the Board once per year. These procedures outline the Board's assignments and which decisions must be taken at Board level. The working procedures also regulate the division of responsibility between the Board, its committees and the President. The Chairman leads the Board's work. The division of responsibilities among Board members does not extend beyond certain special assignments for the Chairman.
During 2017, eight scheduled Board meetings were held, as well as one statutory convening meeting and four extra board meetings. Minutes were kept at all meetings. On average, attendance at Board meetings for ordinary Board members was 99%. Other employees also attended meetings, either to make presentations or give specialist information prior to key decisions. Every month the Board received a written report presenting and analyzing the development of the Group and the earnings and financial position. Preparatory materials were sent to Board members before each Board meeting. The President was also in continuous contact with the Chairman of the Board. The following points were addressed at each Board meeting:
Responsible Care report, status report from the President
Financial position and outlook
Investment decision for projects worth more than SEK 15 m
Other important matters:
In addition to these fixed agenda items, several main subjects such as the budget, forecasts, refinancing and financial structure were addressed during the year. The extra Board meetings during the year were held to address the proposed divestment of Site Gent in Belgium and refinancing and financial structure.
The Board is served by an Audit Committee, which focuses on securing the quality of the Group’s financial reporting and risk management, and the committee is therefore also close to the development of control instruments for internal control. An important activity is to follow up and assess the external audit. The committee does not have decision-making rights. Decisions shall be made by the Board.
At the end of 2017, the Audit Committee consisted of the following members: Fabrice Fouletier, Claes Gard, Ragnar Hellenius and Tore Bertilsson. During the year, the committee held six ordinary meetings and one extra meeting. The extra meeting was held to address the refinancing and financial structure. Minutes were taken at all meetings.
The Board is also served by a Remuneration Committee. This committee's task is to propose principles for remuneration and other employment terms for the President and senior executives. The committee also prepares the terms for global incentive schemes and makes an assessment of the schemes. The committee has certain decision-making powers.
At the end of 2017, the Remuneration Committee consisted of Board members Tore Bertilsson, Brendan Cummins, Fabrice Fouletier and Ragnar Hellenius. The committee held two ordinary meetings during the year, at which minutes were taken.
President & Executive leadership team
The President of the Group, Jan Secher, is also elected by the Board as the CEO of the parent company. He exercises ongoing control of the Group. The EVPs of the Business Areas Advanced Chemicals & Derivatives and Specialties & Solutions report to him along with the EVP Supply chain, EVP Operations, EVP Regions & Group Management, EVP Finance, Legal & IT and EVP Innovation. The President manages the business in accordance with the instructions concerning the division of responsibilities between the Board and President adopted by the Board. The work of the President and Board is assessed annually.
Perstorp’s auditor is elected for a term of office of one year. Auditing firm PricewaterhouseCoopers AB (PwC) is the appointed auditor of the company with Michael Bengtsson being the lead auditor. The Board’s and Group Management’s aim is to have a close relationship with the auditors, to the extent that they shall be kept well informed about relevant issues concerning the accounts, reporting procedures and management of the company’s/Group’s assets. There is, therefore, a continuous dialogue with the auditors and they participate in at least one Board meeting per year. The auditors receive the minutes of Board meetings, documents relating to Board decisions, and the monthly financial reports for the Group.
During 2017, PwC performed assignments relating to the audit in addition to regular auditing work. On all those occasions, the Group emphasized that the additional services should not compromise the independence of the audit, which was also been carefully examined by PricewaterhouseCoopers.
For Perstorp, the concept of internal control is fundamental and involves the Group’s capability of implementing an effective system for control and follow-up of the company’s activities. It also involves ensuring that rules are followed, both with regard to external legislation/regulation and internal guidelines/control documents. An important part of the practical work on internal controls, furthermore, is to identify risks and ensure that they are managed efficiently. The purpose is to minimize risk exposure as far as possible in selected areas while also ensuring the opportunities are exploited as desired. The Group’s organization is adapted to meet the requirements for good internal control and working methods are characterized by organizational transparency with a clear division of responsibility
The Group’s financial reporting manual, together with the business systems, are important control instruments that enable reliable consolidation and financial reporting. Group reports are produced once per month following well-established procedures, and the outcome is always presented in a report that includes extensive analysis. Work on the year-end accounts involves a number of people at Group, department and company level, and the summarized results are reported back continually to management functions and the Board. For several years, the Group has performed an extensive annual self-assessment of internal controls, with the majority of the subsidiaries assessed in 2017. The purpose is to identify key control points for the various departments, analyze procedures, follow development in relation to previous activity and thus ensure that internal controls are at a good level and remain so. The implementation of a new ERP system in several of our companies in Sweden has led to improved capabilities for performing and ensuring good internal control. The assessment has been complemented with a partly expanded verification operation by the company’s auditors for certain areas. In relation to this, special follow-up has been carried out from the central level within the Group. Work aimed at securing good internal control is a constantly ongoing process.