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 and annual report
- Any other business
In 2019 CEO Karl-Johan Persson provided information on – among other things – the strategic plan and goals in response to the great transition that is taking place in the industry as well as the climate change that is affecting us all. Matters such as the customer offering and the status of each brand, digital development, sustainability, optimising the store portfolio along with future store development and the integration of stores and online, continued development of the online store, the supply chain, communications, marketing, organisation, external factors, new initiatives and business models as well as other development opportunities are examples of subject areas discussed on an ongoing basis at the board meetings held during the year, in addition to sales, costs, investments, earnings and the inventory situation. Examples of functions that presented their work during the year include HR as well as Inclusion and Diversity, Business Development, Sustainability, various parts of the H&M brand, New Business, Expansion, Logistics, Group Operations, IT, Advanced Data Analytics and AI, and Communications. One of the year’s board meetings was held in London, where the country manager and her team gave a detailed presentation of H&M’s operations in the UK and Ireland. The board also visited the newly built logistics centre in Milton Keynes outside London.
During the year H&M and H&M HOME opened online in Mexico, and H&M opened via franchise in Indonesia, Thailand and Egypt. This means H&M’s online store is available in 51 markets and in addition, H&M was also launched on India’s leading ecommerce platform Myntra. COS, Monki, Weekday, & Other Stories and ARKET opened online in Norway, & Other Stories also opened on Tmall in China and Afound opened online in the Netherlands. During the year 281 new stores were opened, with Bosnia- Herzegovina, Belarus and (via franchise) Tunisia becoming new H&M store markets, while 173 stores were closed. This makes a net addition of 108 new stores. As a result, there are now H&M stores in 74 markets.
The industry is undergoing significant structural changes and rapid shifts in technology as a result of the increased digitalisation of society. This creates great opportunities, but also puts demands on the organisation. The board therefore discusses the significance of this shift, with more and more shopping taking place online, and the transformation that H&M is undergoing in order to respond to these changed circumstances. Among other things, it discusses future growth plans, how the organisation should adapt to the new situation 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, which might involve developing the customer offering to enable a faster and more flexible product flow with quicker and more varied delivery options, the handling of returns, changes of platform, AI and advanced analytics, mobile payment solutions etc. The long-term investments being made aim to ensure the group’s future expansion and position.
H&M’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 materials, 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, customs duties, internal control, risk, various new regulations, legislation and directives such as GDPR, Task Force on Climate-related Financial Disclosures (TCFD) etc. The overall risk assessment, including the very greatest risks in both the short and the long term, is then also discussed at subsequent board meetings. During the year the board also took part in and discussed the results of the climate risk analysis conducted according to the guidelines issued by the TCFD. 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 various decisions, for example regarding the expansion and investment plan, the dividend proposed to the 2020 AGM – which was SEK 9.75 per share, the payment of the dividend in two instalments during the year, guidelines for remuneration of senior executives, the financial reports etc.
At the board meeting held in January 2019 the board of directors decided that H&M’s growth target to increase sales in local currencies by 10–15 percent per year with continued high profitability remains a longterm 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 29–31), 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 2019 annual general meeting the board assessed how well the guidelines for remuneration to senior executives that were adopted by the 2018 AGM were being applied. The results of this assessment were published on the website in good time before the 2019 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 setting the CEO’s remuneration for the coming year. No member of executive management is present when this is discussed.
The board continually evaluates its work. This evaluation covers working methods and the working climate, as well as the main focus of the board’s work. It also focuses on access to and the need for specialist expertise within the board. The evaluation is used as tool for developing the board’s work and also forms a basis for the work of the nomination committee.