Skanska Annual Report 2003

Corporate governanceAs a Swedish stock corporation, SkanskaAB is governed in accordance with Swedishcorporate legislation and Skanska’s Articlesof Association.The highest decision-making body, theAnnual Shareholders’ Meeting, decideson central issues, such as discharging themembers of the Board of Directors and thePresident from liability for the financial yearas well as the composition of the Board.The Annual Meeting in May 2003 gavethe Chairman of the Board a mandate toappoint from among representatives of theCompany’s largest shareholders five members,who may not be members of the Boardof Directors, to comprise together with theChairman a Nomination Committee forthe period until the next Annual Shareholders’Meeting. In preparation for the 2004Annual Meeting, the following individualswere appointed: Carl-Olof By, ExecutiveVice President of Industrivärden AB; StaffanGrefbäck, Head of Investment Managementat Alecta; Per Ludvigsson, President of InterIKEA Investment AB; Mats Guldbrand,Equities Manager at AMF Pension; and CurtKällströmer, Head of the Chairman’s Office,Svenska Handelsbanken.The Board of Directors makes decisionsconcerning overall issues about the ParentCompany and the Group, such as Groupstrategy, publication of interim and full-yearreports, major construction projects andcapital spending as well as the organizationalstructure of the Group.The President and Chief ExecutiveOfficer (CEO) is responsible for day-to-daymanagement and oversight of the Group’soperations. The CEO, four Executive VicePresidents and the Senior Vice President,Human Resources, form the Senior ExecutiveTeam.Governing documentsAs part of the governance of Group operations,Skanska AB’s Board of Directors orthe Senior Executive Team has establishedvarious policy documents and guidelinesthat are available to all business units onSkanska’s internal website. These policydocuments and guidelines are updated regularly.Among the more important governingdocuments are the Board’s rules of procedure,the Group’s financial policy and theCode of Conduct.The work of the Board of DirectorsThe work of the Board follows a yearly agenda,which is established in the Board’s rulesof procedure. In preparation for each Boardmeeting, the Board receives informationcompiled according to certain proceduresestablished by the Board. All information isformulated in English.The Board of Directors consists of ninemembers elected by the Annual Shareholders’Meeting plus three members and threedeputies for these, appointed by the employees.Of the members elected by the AnnualMeeting, more than half are independent inrelation to the Company and at least two areindependent of the Company’s largest shareholders.During the year, the Board heldeight meetings. At its October 2003 meeting,the Board visited the Group’s operations inthe United States, including a work site visitto the new high-speed rail connection toJohn F. Kennedy Airport in New York City.Among the more important issues thatthe Board dealt with were strategic issues,financial reporting and governance of theGroup’s operations.The Board has appointed from amongits own members a Compensation Committeeand an Audit Committee. During2003 the Board also established a specialProject Review Committee, which has theBoard’s mandate to make decisions on majorconstruction projects, purchases and divestmentsof properties and investments in BOTprojects. The Project Review Committee,like the Compensation and Audit Committees,routinely reports to the Board at eachmeeting, in accordance with the mechanismsspecified in the Board’s rules of procedure.The Company’s auditors are present at themeeting each February dealing with theannual financial statements, in order toreport their observations from the auditingtask directly to the Board. During the year,the Company’s auditors were present at allmeetings of the Auditing Committee.The committees of the Board have thefollowing composition: The CompensationCommittee consists of Sverker Martin-Löf,Chairman, and Arne Mårtensson, with thePresident and CEO as rapporteur. The AuditCommittee consists of Anders Nyrén, Chairman,and Finn Johnsson, with the ExecutiveVice President and Chief Financial Officer(CFO) as rapporteur. The Project ReviewCommittee consists of Sverker Martin-Löf,Chairman, Roger Flanagan, Anders Nyrénand Nils-Erik Pettersson, with the Presidentand CEO as rapporteur.Group Staff Units and SkanskaFinancial Services (SFS)At Skanska Group headquarters in Solna,there are nine Group staff units plus SFS.The Group staff units are responsible forGroupwide functions. In addition, theGroup staff units and SFS provide backupto the business units related to such fields asinformation technology, project financingand risk management. The head of eachGroup staff unit reports directly to a memberof the Senior Executive Team.The business units and their governanceThe organizational structure of the SkanskaGroup is characterized by clear decentralizationand a large measure of delegation ofauthority and responsibility to the businessunits. For this reason, each business unit hasits own staff units and other resources inorder to conduct their operations effectively.Aside from day-to-day operations, thereare matters related to the strategic developmentof the business units as well as mattersconcerning strategic investments and divestments.These items of business are preparedby the management team at each respectiveunit, which is headed by a President, and arethen submitted to the Senior Executive Teamor the Skanska AB Board of Directors fora decision. The Boards of Directors of thebusiness units consist of representatives ofSkanska AB as well as of the business unit’smanagement team and personnel. In eachbusiness unit, the Chairman of the Boardis a member of the Senior Executive Team.Where appropriate, employee representativesare included.Changes in the Board and the SeniorExecutive Team during 2003At the Annual Shareholders’ Meeting in May,Per-Olof Eriksson and Eliot Cutler resignedas members of Skanska’s Board. UlrikaFrancke and Jane Garvey, as well as StuartGraham, who had been appointed Skanska’sPresident and CEO in 2002, were electednew members of the Board.There were no changes among the membersof the Board appointed by employeeorganizations.During the year, Daniel Johannessonand Keith Clarke, Executive Vice Presidents,resigned from the Senior Executive Team. InJune, Tor Krusell was appointed Senior VicePresident Human Resources and a memberof the Senior Executive Team.The composition of the Senior ExecutiveTeam and allocation of main responsibilitiesfor the business units that report to it can beseen on the next page.Skanska Annual Report 2003 – Corporate Governance 93