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 2018 CEO Karl-Johan Persson provided information on – among other things – the strategic plan in response to the great transition that is taking place in the industry. The customer offering, digital development, optimisation of the store portfolio, expansion and the integration of stores and online and future store development, sales, costs, earnings and the status of each brand, sustainability, external factors and development opportunities are examples of matters discussed. 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. During the year 375 new stores net were opened, with Ukraine and Uruguay as new H&M store markets for 2018, and 146 stores were closed, resulting in a net addition of 229 new stores. The following new online markets were opened during the year: India and, via franchise, Kuwait, Saudi Arabia and the United Arab Emirates. The plan is to roll out the online store to all existing store markets and to other markets as well.
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 the H&M group 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.
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 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 and new legislation such as GDPR 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 various decisions, for example regarding the expansion and investment plan, the proposed dividend, which was SEK 9.75 per share for the 2018 financial year, as proposed to the 2019 AGM, the payment of the dividend in two instalments during the year, guidelines for remuneration of senior executives and the financial reports etc.
At the board meeting held on 30 January 2018 the board of directors decided that the growth target of the H&M group to increase sales in local currencies by 10–15 percent per year with continued high profitability remains a long-term 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 27–29), 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 2018 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 2017 AGM. The results of this assessment were published on the website in good time before the 2018 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.