Governance at SCA

Annual General Meeting

The Annual General Meeting (AGM) is SCA’s highest decision-making body, which all shareholders are entitled to attend, to have a matter considered and to vote for all shares held by the shareholder. The company’s Board of Directors is elected at the AGM. The AGM also appoints the company’s auditor. According to its Articles of Association, SCA has two listed classes of shares: Class A and Class B shares. Every Class A share represents one vote and every Class B share represents one tenth of a vote.

Nomination Committee

The Nomination Committee represents the company’s shareholders and is charged with the sole task of preparing proposals for adoption at the AGM with respect to election and remuneration matters and, in certain cases, proposing procedural motions for the next Nomination Committee.

Board of Directors

The Board of Directors has overall responsibility for the company’s organization and administration through regular monitoring of the business and by ensuring the appropriateness of the organization, management team, guidelines and internal control. The Board approves strategies and targets, and decides on major investments, acquisitions and divestments of operations, among other matters.

The Board of Directors shall comprise members elected by the AGM with no deputies. In addition, the Board shall include three members and three deputies appointed by the employees.

SCA’s Articles of Association contain no provisions regarding appointment or dismissal of Board members or amendments to the Articles.

Chairman of the Board

The Chairman of the Board leads the work of the Board and is responsible for ensuring that it is effectively organized and that work is efficiently conducted. This includes continuously monitoring the company’s operations in close dialog with the President and CEO and ensuring that other Board members receive information and decision data that will enable high-quality discussion and decisions by the Board. The Chairman leads the assessment of the Board’s and the President’s work. The Chairman also represents the company in ownership matters.

Audit Committee

The tasks of the Audit Committee include monitoring financial reporting and the efficiency of the company’s internal control, internal audit and risk management. The Committee keeps itself informed on the audit, reviews and monitors the impartiality and independence of the auditors, and contributes proposals for the AGM’s election of auditors. The Audit Committee sets guidelines for the procurement of services other than auditing services from the company’s auditor. Lastly, the Audit Committee evaluates the audit effort and informs the Nomination Committee of the results of the evaluation.

Remuneration Committee

The Remuneration Committee prepares the Board’s motions on issues relating to remuneration principles, remuneration and other terms and conditions of employment for the President and CEO and is authorized to make decisions in these matters for the company’s senior executives. The Committee monitors and assesses programs for variable remuneration, the application of the AGM’s resolution on guidelines for remuneration of senior executives and the applicable remuneration structure and remuneration levels in the Group.

Internal audit

At SCA, it is the employees’ responsibility to ensure sound internal governance and control in the operation or process for which they are responsible. Since 2006, internal audit has been a separate function with the task of evaluating and improving the efficiency of SCA’s internal governance and control, as well as its risk management. This function has 13 employees and reports to the Audit Committee and the Board in terms of internal audit issues. The internal auditors are geographically located throughout the world where SCA conducts operations. The function examines, among other aspects, SCA’s internal processes for ordering, invoicing, purchasing and financial reporting, IT systems, compliance with SCA’s policies, including its Code of Conduct, HR issues and various types of projects. The function also offers internal consultancy services in connection with internal control matters.

President and CEO

SCA’s President and CEO is responsible for and manages the day-to-day administration of the Group and follows the Board’s guidelines and instructions. The President and CEO is supported by an Executive Vice President, who is also the CFO, and the Executive Management Team, the work of which is led by the CEO. The Executive Management Team comprises the President and CEO, the CFO, the Business Unit Presidents and the Presidents of the global units Global Hygiene Category (GHC), Global Hygiene Supply Tissue (GHS-T) and Global Hygiene Supply Personal Care (GHS-PC), as well as Logistics, and the Senior Vice Presidents of the Group functions Human Resources, Sustainability, Legal Affairs, Communications and Strategy and Business Development. The formal work plan for the Board of Directors and terms of reference issued by the Board of Directors to the President detail, for example, the division of work between the Board and President. In consultation with the Chairman of the Board, the President prepares documentation and decision data for the Board’s work.

• SCA has seven business units. After a reorganization on January 1, 2016, the business units are as follows:
• SCA Incontinence Care, which offers incontinence products in Europe and North America.
• SCA Consumer Goods, which offers consumer goods in Europe.
• SCA Latin America, which offers personal care products and tissue.
• SCA MEIA (the Middle East, India and Africa), which offers personal care products and tissue.
• SCA Asia Pacific, which offers personal care products and tissue.
• SCA AfH Professional Hygiene, which offers AfH tissue in Europe and North America.
• SCA Forest Products, which offers paper for packaging and print, pulp, solid-wood products and renewable energy.

In addition to the business units, SCA has established three global units:

• Global Hygiene Category (GHC), with global responsibility for customer and consumer brands and innovation in the hygiene area.
• Global Hygiene Supply Tissue (GHS-T), with global responsibility for purchasing, production and technology in Tissue.
• Global Hygiene Supply Personal Care (GHS-PC), with global responsibility for purchasing, production and technology in Personal Care.

SCA’s business units adhere to the principle of distinct decentralization of responsibility and authority. The business units are fully responsible for developing their respective operations through established objectives and strategies, a process that is also centrally coordinated. The business units are responsible for their operating results, capital and cash flow. Business and earnings position are followed up by the entire Executive Management Team on a monthly basis. Each quarter, business review meetings are conducted during which the management of each business unit personally meets with the President, the CFO and others. These meetings function as a complement to the daily monitoring of operations. Through formal work plans and terms of reference, a number of issues of material significance are placed under the control of the CEO and the Parent Company’s Board of Directors. SCA divides and reports its business in three business areas – Personal Care, Tissue and Forest Products.

External auditors

The company’s auditor, elected at the Annual General Meeting, examines SCA’s annual report and consolidated financial statements, the Board’s and President’s administration and the annual reports of subsidiaries, and submits an audit report.

The audit is performed in accordance with the Swedish Companies Act, International Standards on Auditing (ISA) and generally accepted auditing principles in Sweden.