The following areas are usually reviewed at each board meeting:
- Minutes of the previous meeting
- CEO’s status report
- Report by CFO
- Strategic matters
- Feedback from latest auditing committee meeting
- Financial reporting, such as interim report, annual report
- Decisions on particular matters
During 2016 CEO Karl-Johan Persson provided information on the following, among other things: sales, costs, results, the customer offering for each brand and market performance, investments, store and online expansion, sustainability, external factors and development opportunities. The CEO also provided ongoing information on purchasing, production, the stock-in-trade, marketing and PR activities, organisational changes, the broadening of the product range, and new initiatives and the development of new brands.
Decisions taken by the board during the year included the opening of around 425 new stores net, with Puerto Rico, Cyprus and New Zealand as new store markets for 2016, as well as rapid online expansion, with eleven new H&M online markets in 2016. The sector is undergoing interesting structural changes and rapid shifts in technology – which creates
great opportunities, but also puts demands on the organisation. The board therefore discusses the significance of the increased digitalisation and which investments need to be made in order to be able to offer customers a shopping experience that is as complete and seamless as possible. The board receives ongoing updates on these projects. These might concern development of the online offering in terms of faster delivery options, mobile payment solutions, handling of returns, changes of platforms and advanced data analytics, etc. The long-term investments being made aim to ensure the group’s future expansion and position.
The group’s integrated sustainability work is very important and is discussed regularly by the board. Every six months, the head of sustainability provides an update on the group’s sustainability work with reference to key indicators and targets, such as compliance with the Code of Conduct, sustainable material, climate impact, anti-corruption, etc.
At each board meeting the chairman of the auditing committee reports to the board on what the auditing committee discussed at its latest meeting. This primarily concerns areas such as accounting, auditing, tax, internal control, risk, various new regulations and new legislation, etc. The overall risk assessment, involving the very largest risks – in both the short and the long term – is then also discussed at subsequent board meetings. At four of the year’s meetings the board goes through quarterly reports before they are published and at the January meeting the board discusses the annual report, with the auditor also reporting on the year’s audit.
During the year the board takes a number of different decisions such as on the expansion and investment plan, the proposed dividend, which was SEK 9.75 per share for the 2015 financial year, as proposed to the 2016 AGM, guidelines for remuneration of senior executives, the financial reports, etc. In 2016 the board also took the decision to propose amendment of the articles of association. At a board meeting on 30 January 2017 the board decided to rephrase the earlier growth target. Since H&M does not have a separate review function (internal audit) for work on internal control, but has instead established its own model for managing the company’s risk and internal control (see pages 8-10 in the corporate governance report 2016), once a year the board assesses the need for a separate internal audit function. This year the board again reached the conclusion that the present model for monitoring internal control is working in a satisfactory way. Before the 2016 annual general meeting the board carried out an assessment of the application of the guidelines for remuneration to senior executives that were adopted by the 2015 AGM. The results of this assessment were published on the website in good time before the 2016 AGM.
H&M has no remuneration committee, since the board of directors deems it more appropriate for the entire board to carry out the tasks of a remuneration committee. It is the board that prepares the proposed guidelines for remuneration to senior executives that are presented at the AGMs, and it is the board that decides on the CEO’s salary in accordance with the guidelines adopted at the last AGM. The board continually assesses the CEO’s work and once a year discusses this matter separately in conjunction with the setting of the CEO’s remuneration for the coming year. No member of executive management is present when this is discussed.