Consilium is listed on the Nasdaq OMX Nordic Exchange in Stockholm (Stockholmsbörsen). Consilium adopted the Swedish Code of Corporate Governance (the Code) on 1 July 2008 and applies the current rules contained in the Code.

Derogations from the Code

There are no derogations from the Code’s rules by Consilium AB (publ).

Shareholders’ meeting

Shareholders’ influence in the company is exercised at the shareholders’ meeting, which is Consilium’s highest decision-making body.

The annual general meeting of shareholders is held within six months of the end of the financial year. The annual general meeting deals with the election and remuneration of Board members and auditors, the establishment of guidelines for remuneration of key management personnel, the adoption of the income statement and balance sheet, the allocation of profit and discharging members of the Board and the ceo from liability for the financial year.

Nomination Committee

Consilium’s nomination committee has been elected by the Board up to and including the 2009 financial year. The task of the nomination committee is to propose candidates for election to the Board prior to the annual general meeting. In 2009, the nomination committee consisted of Lennart Norling (Chairman, independent of the company and major shareholder), Chairman of the Board Carl Rosenblad, and Rasmus Palmqvist (independent of the company), representing one of the major shareholders, Sound Invest. The nomination committee held one meeting in 2009.

As a result of adoption of the Code, the process of appointing the nomination committee will be transferred to the annual general meeting. Under the rules of the Code, in addition to proposing candidates to serve on the Board, the nomination committee will also propose candidates for the post of chairman, and will make proposals on remuneration of board members and the chairman, and the election and remuneration of the company auditors. The committee will propose a person to chair the annual general meeting.

With effect from the 2009 annual general meeting, the nomination committee will also be responsible for the composition and working procedures of the Board. At the annual general meeting, the nomination committee reports on its work, and also presents and explains its proposals. No special payment was made to the members of the nomination committee in 2009.

Board of Directors

Consilium’s Board has ultimate responsibility for managing the company’s affairs between the annual general meetings. The Board appoints the President and ceo, and makes decisions on issues concerning the strategic direction of the business and the company’s overall organisation. Since the annual general meeting held in May, Consilium’s Board has consisted of five members.

The CEO does not serve on the Board, but is always present at Board meetings, as is the CFO, normally. Other employees in the Group may also attend Board meetings in a reporting capacity. Minutes of the Board meetings are kept by an employee in the Group.

The Board is composed of persons representing the company’s major shareholders and persons who are independent of the major shareholders. In 2009, the Board held five meetings at which minutes were taken. The meetings dealt with issues relating to the annual financial statements, interim financial reports, strategies, budgets, acquisitions, Consilium Sea Chart, large projects and the nomination committee’s proposals.

Chairman

The Chairman’s task is to ensure that the work of the Board is conducted efficiently and that the Board fulfils its obligations. This responsibility includes organising and leading the work of the Board, and creating the best possible conditions for the Board’s activities. The Chairman also remains in regular contact with the Company’s CEO in order to ensure the Board has access to sufficient information to allow it to follow the Company’s performance and plan accordingly. Carl Rosenblad is Chairman of the Board.

Board procedures

The Board of Directors has adopted a formal work plan which defines the division of work between the Board and ceo. The formal work plan also regulates the Board’s areas of work and responsibility, duties and decision-making powers. The main duties involve making decisions on strategic issues, assuming responsibility for the company’s capitalisation and capital structure, ensuring the company is efficiently managed and making decisions on other maters of importance such as large investments and acquisitions. The Board’s formal work plan also contains rules on information management and on evaluation of the work of the Board and the CEO. A written set of instructions to the ceo defines the work division between the Board and ceo, and regulates the powers of the CEO.
An important task of the Board is to ensure correct and timely reporting in the company, and to the Board and share market. Accordingly, the Board regularly receives and adopts reports containing significant events, order intake trends, invoicing, results, cash flow, financial position and the number of employees in the Group and its companies. During the year, the Board has at least one meeting with the chief auditor who also maintains regular contact with the Chairman of the Board.

Committees

The Board of Consilium has decided that the size of the Company does not warrant the establishment of an audit committee, and auditing matters are therefore considered by the full Board. On at least one occasion during the year, Consilium’s auditors report in person to the Board on their observations from the audit and their evaluation of the Group’s internal control. Matters concerning exchange rate movements, investments, acquisitions and strategic direction are also dealt with. The Group’s auditor, authorised public accountant Anders Trast Winqvist, participated in two Board meetings during the year. Anders Trast Winqvist and deputy auditor Sten Håkansson from Öhrlings PricewaterhouseCoopers AB were elected at the 2007 annual general meeting. For the reasons mentioned above, Consilium has decided the full Board will deal with remuneration matters rather than establishing a special remuneration committee. The main work involves defining the CEO’s employee benefits, and preparing share-based payment program, such as option schemes, for adoption by the annual general meeting.

President and CEO

The President and Chief Executive Officer of Consilium is Ove Hansson. The division of work between the CEO and Board and the CEO’s powers are regulated in the instructions to the CEO which are defined and revised on an annual basis. In addition to the President and CEO, Group management comprises the Chief Financial Officer, the MDs of the subsidiaries Consilium Navigation Group AB and Consilium Fire & Gas AB and the Business Development Manager.

Consilium’s operations are organised into three business areas – Automation, Fire & Gas and Navigation. The Group President is responsible for day-to-day operations and their control, and the managers of the subsidiaries report to him. The Group’s business organisation is structured according to the principle of decentralised responsibility and authority. Each subsidiary has its own board. The Group President is normally chairman of the subsidiary boards. Like the Parent Company, each subsidiary has a formal work plan for its board and written instructions for the mds. The subsidiaries also have a number of policies and instructions governing areas which include it, environment, quality, equality, authorisation procedures, financing and currency hedging.

Consilium has organised its operations into a clear functional structure. This functional approach allows the Company to exploit synergies and economies of scale in production, purchasing, marketing and sales. The organisation was developed in such a way as to accommodate a future Group construction concept for Consilium’s products and systems which are being launched now.

Consilium Sea Chart

Consilium has defined its vision, strategies, goals, internal values and principal activities in an integrated management instrument called Consilium Sea Chart. Sea Chart is the company’s own internal navigation instrument for its growth and activities over the coming years. In an ongoing cycle of detailed activities which are completed and replaced with new ones, Consilium Sea Chart represents an active and living tool for the Group’s development.

Consilium’s stakeholders

Consilium is dependent on a large number of external parties. Cooperation and contacts with these parties may take the form of contractual and informal relationships or partnerships. The company’s stakeholders are parties who affect or can be affected by Consilium’s actions. The simplified stakeholder model on the following page does not show fragmented stakeholders such as competitors with whom the company does not have any clear relationship. Added to the model are phrases expressing the values which are inherent in the relationships or which Consilium seeks to establish.

Auditors

The auditor’s task is to examine Consilium’s annual financial statements and accounting records and the administration of the CEO. The chief auditor also submits an audit report to the annual general meeting. Shareholders have the opportunity to put questions to the auditor at the meeting.

Consilium’s auditor is elected by the annual general meeting. The 2007 annual general meeting elected Anders Trast Winqvist and deputy Sten Håkansson from Öhrlings PricewaterhouseCoopers AB as auditors for a period of three years. At the 2009 annual general meeting, it was decided that auditors will be paid against invoice in accordance with approved purchasing principles.

Remuneration of the Board and Key Management Personnel

The 2009 annual general meeting adopted Board fees of SEK 450,000, distributed as follows: Chairman of the Board SEK 150,000, other Board members SEK 100,000 each.

Key management personnel’s compensation consists of the basic salary, including car allowance, and any bonuses earned. Retirement benefit is paid in accordance with the current itp plan. Key management personnel comprises the parent company’s CEO, CFO and Business Development Manager and the MDs of Consilium Fire & Gas AB and Consilium Navigation Group AB. Bonuses are linked to financial targets and may not exceed two monthly salaries.

Operational management

The boards of Consilium’s subsidiaries consist of members of Group management. Like the parent company, each subsidiary has a formal work plan for its board and written instructions for the md. The subsidiaries also have a number of policies and instructions governing areas which include it, financing, environment, quality, equality and authorisation procedures. The instructions for the mds of the subsidiaries require the UN and OECD’s ”Ten Principles” to be followed. The Ten Principles deal with issues such as human rights, child labour, forced labour, the environment and corruption. The subsidiaries submit weekly reports on order intake, invoicing and order backlog for each profit centre. Monthly financial statements are prepared for each profit centre. These are analysed at different levels and consolidated at Group level.

Each business area and subsidiary reports to Group management. Reporting takes place within the system used for preparation of the consolidated financial statements and their quarterly presentation to the market. In addition to the income statements and balance sheets, the monthly financial reports contain key ratios and other relevant information. Analyses are made of inventory levels and movements, trade receivables and customer credit periods. Various graphical presentations are used to allow monitoring of trends over periods. Informal meetings are held between management of the subsidiaries and Group management to discuss the monthly reports.

The fundamental principle of the Group’s reporting and follow-up systems is that they are characterised by transparency and decentralisation. The management of each subsidiary is strongly committed to developing and rationalising these processes. A key to success in this area is access to relevant and correct information to measure and monitor. Much effort has been devoted to the implementation and development of business systems for measuring the profitability of individual transactions, customers, sectors and geographical markets. Individual costs are monitored and measured at critical stages in production, administration and sales. These are then compared with previous results and targets. The information obtained is also used for internal benchmarking, which encourages improvement and exemplifies good practice.

In view of the Group’s size, organisation and financial reporting structure, it is the Board’s belief that a special internal audit function is not warranted at the present time.