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REC Annual Report 2011
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To ensure a consistent financial reporting throughout the Group, the
financial information is reported through the Group’s common web
based reporting system, Hyperion Financial Management (HFM). Every
month, except for January and July, each reporting unit reports figures in
HFMbased on output from its own ERP system. HFM has a chart of
accounts and forms designed for group reporting to meet the
requirements in IFRS that are used by all entities. HFM has built-in
controls in the forms and reports designed to check that the reported
information is consistent. The quarterly and year end reporting
processes are expanded to meet various supplementary information
requirements. The consolidation process primarily takes place on Group
level but also on segment level where consolidated financial information
is required. The reporting in HFM is the basis for the management review
on segment and Group level. The review is performed each reporting
month.
Group Finance monitors changes in accounting/reporting requirements
for the Group, implements relevant changes in HFM and provides the
reporting units with adequate information and guidelines. Group Finance
provides relevant training in HFMwhen required. Prior to the year end
reporting Group Finance conducts meetings with the reporting units
where reporting requirements and accounting issues (if applicable) are
discussed.
Prior to each quarterly reporting Group Finance conducts preparation
meetings with the segments and selected entities to discuss issues and
ensure a timely and accurate reporting based on a fixed agenda.
In connection with the quarterly reporting each segment issues a
representation letter to the Group CFO, confirming among others the
completeness, accuracy and validity of the reporting.
Based on the assessment, evaluation and testing of risk management
and internal control over financial reporting performed in 2011, the
Board of Directors did not find any circumstances indicating that it has
not met its obligation to ensure that REC’s accounts and asset
management are subject to adequate control.
The REC Group’s financial risk management is described in note 3 to the
consolidated financial statements. Reference is also made to the Board
of Directors’ report which includes an analysis of the financial
statements and the key risk factors.
In addition to the risk and financial assessment and reporting described
above, the Company has a set of corporate policies on general business
conduct (in particular the Code of Conduct) which applies to all
employees, officers and directors. These policies are implemented inter
alia by setting relevant objectives in employees’ annual goal agreements,
by regularly monitoring performance on an individual and Company level
and reporting of results.
In addition, the Company has recently adopted aWhistleblower
Procedure encouraging all employees, contractors, vendors and other
stakeholders of the Group to report their concerns or complaints related
to the REC Group’s business conduct including its accounting, internal
controls and auditing matters. The Audit Committee will be informed of
all complaints related to accounting and auditing matters. The Board will
be informed of specific complaints as required and will also be provided
regularly with general updates of complaints received. It is stated in the
Code of Conduct that no adverse action may be taken against an
employee due to complaints submitted in good faith. Complaints can be
made anonymously.
11. REMUNERATION OF THE BOARD OF DIRECTORS
The members of the Board receive remuneration in accordance with
their individual roles. Board members who participate in the Audit
Committee and Compensation Committee receive additional
compensation, see note 16 to the consolidated financial statements.
All compensation is disclosed.
The remuneration is not linked to the Company’s performance and the
members are not granted share options. None of the shareholder-
elected members of the Board has taken on specific assignments for the
Company in addition to their appointment as members of the Board.
12. REMUNERATION OF THE GROUP MANAGEMENT
The Board determines all aspects of the remuneration of the
Chief Executive Officer.
REC’s remuneration policy for the GroupManagement has been
established according to guidelines from the Board. The Board
presented its policy on the remuneration of the Management at the
AGM in May 2011 and the AGM endorsed this policy.
The remuneration of the GroupManagement consists of the following
main elements:
• Basic salary
• Variable pay based on an annual performance-related
compensation system
• Share options
• Certain compensation in kind, e.g. company car and telephone
allowances
• Pension and insurance schemes
The variable pay and the value of the share options are linked to the
Company’s financial performance over time and include incentives
related to performance that the employees can influence.
There are absolute limits for performance-related remuneration.
The remuneration of the Chief Executive Officer and the other members
of the GroupManagement are disclosed in note 16 to the consolidated
financial statements.
13. INFORMATION AND COMMUNICATIONS
REC treats its investors equally. Timely information is given and
published simultaneously to all investors in accordance with applicable
legislation and regulations in order to provide the best possible basis for
the valuation of the Company.
The Board of Directors’ report on corporate governance