General information
Five members were appointed at the 2007 Annual General Meeting. A presentation of the Board members appears on page 51. The CEO is not a member of the Board. Other company officials participate in Board meetings to present reports and keep minutes. The Board held 10 minuted-meetings in 2007, one being the inaugural meeting of the new board, and three meetings being held by correspondence. The Board also held one longer meeting to discuss company strategy. Board meetings follow a pre-approved agenda. Agendas and background material are distributed to the members before each Board meeting. The Board takes decisions following an open discussion led by the Chairman. No differences of opinion on any issue requiring a decision were minuted in 2007.
Governance and reporting principles
The Board of Directors applies a set of procedural rules and guidelines regarding the division of responsibilities between the Board and the CEO, and instructions relating to the structure and content of Board meetings. These basic documents are reviewed annually.
The Board’s procedural rules and guidelines regulate the work of the Board and address the following areas:
• Meetings: inaugural board meeting, meeting frequency over the year, conditions for extra meetings, procedures for setting time of meeting, and notice of meeting• Reporting list: compilation and distribution
• Matters to be dealt with at ordinary/inaugural Board meetings
• Procedures for submitting ongoing reports and other information to the Board and auditors
• Division of responsibilities between Board and CEO
• Quorum and attendance
• Minute-taking procedures
• Disqualification and other issues. The CEO also complies with instructions regulating obligations and competences governing Neonet’s operating activities. The CEO provides Board members with a written report once a month. Among other matters, this report contains information on the Group’s operations and business status, earnings for the last month, comments on deviations from budget and an update on the staff situation.
Evaluation of work of the Board
The Chairman of the Board initiates an evaluation based on forms and discussions with individuals. The evaluation is compiled, reported to and discussed with the Board as a whole. The outcome of the evaluation is then reported to the Nominating Committee.
Remuneration Committee
The Remuneration Committee, which comprises Board members Nils-Robert Persson (Chairman) and Staffan Persson, has an advisory role. Its task, on behalf of the Board, is to address issues concerning remuneration of the CEO and other senior executives, including remuneration policy, principles for setting salary levels, and other conditions of employment, as well as issues concerning incentive schemes for the management and employees. The Remuneration Committee assists the Board on relevant issues and reports its observations, recommendations and proposals for measures and decisions to the Board. The Board has adopted specific instructions for the work of the Remuneration Committee, describing such matters as the composition of the Committee, meeting procedures, minute-taking, reporting and duties. The Remuneration Committee shall comprise two Board members appointed by the Neonet Board. The Committee shall appoint a chairman from among its members.
In 2007, the Remuneration Committee submitted recommendations to the Board on the principles to be applied to remuneration of senior executives and other employees. The recommendations covered variable remuneration, salaries and other remuneration for senior executives. The Remuneration Committee has also proposed a set of criteria for the determination of bonuses.
The Board has discussed the Committee’s proposals and has taken decisions based on these. The Board has determined remuneration for the CEO for the 2007 fiscal year. Remuneration of other senior executives has been proposed by the CEO and determined by the Remuneration Committee. The Remuneration Committee met three times in 2007. A fee of SEK 20,000 per person per year was paid to members of the Remuneration Committee in 2006.
See Note 6, for additional information on remuneration of the Board and other senior executives.
Audit Committee and communication with auditors
The Board decided to abolish the previously established audit committee and instead handle any accounting and audit issues within the entire Board.
On one occasion during 2007, Neonet’s auditors reported personally their observations arising from auditing and their assessment of the Group’s internal controls. This meeting took place without the presence of company management.
Internal control
The Board monitors the independence and objectivity of the external auditors in relation to the company by, for example, keeping itself informed of their relationship to the company and management.
Accordingly, the Board must participate in and issue guidelines for the procurement of non-audit-related consultancy services provided by the company for which the auditors work. The Board must then monitor the provision of these services with a view to ensuring the independence and objectivity of the external auditors.
The Board also reviews Neonet’s internal control in terms of bookkeeping, asset management and the company’s financial circumstances in general. The Board discusses with company management and the external auditors the items in Neonet’s annual and interim reports that have been the subject of significant judgments and valuations in preparing the report.
The Board discusses and follows up with the external auditors and company management assessments of risks, risk management and significant exposure to financial risk. The Board also follows up the measures that company management has taken or intends to take to limit, monitor or control exposure to risk.
Neonet also uses the services of an external independent auditor to ensure that any shortcomings in internal routines are identified.
REFER TO NOTE 1 FOR MORE DETAILED INFORMATION ON
NEONET’S OPERATIONAL RISKS AND QUALITY ASSURANCE.
Auditor
PricewaterhouseCoopers AB is the accounting firm appointed by the Annual General Meeting of Neonet AB and Eva Riben has been the Authorized Public Accountant and the auditor-in-charge at Neonet since 2004. PricewaterhouseCoopers AB was appointed for a period of four years at the Annual General Meeting in 2007.
PricewaterhouseCoopers is also the auditor for the operating subsidiaries in Sweden, while Rothstein Kass & Company is the auditor of Neonet’s US subsidiaries.
In addition to audit engagements relating to auditing of quarterly and annual reports, bookkeeping, and the Board and CEO’s administration, PricewaterhouseCoopers also performed other assignments.
These comprised an independent examination of the business of the subsidiary Neonet Securities AB.
See Note 5 for information on auditors’ fees.