Reporting of the abuse of corporate jet use by top management at Sweden's largest companies has focused attention on the internecine links between Sweden’s top investors and largest public companies
Svenska Dagbladet the Swedish newspaper has reported that Swedish forestry company SCA has been using several private jets to fly top managers and wives and children to an SCA-owned hunting lodge in northern Sweden, the Olympics in London and the European football championships in Kiev. It is reported that some directors of other big Swedish companies such as Nordea and Swedbank have also accepted trips in the jets. One hapless participant in a hunting trip even sent a jet back to Stockholm to pick up the wallet he had forgotten.

Influential shareholders at the centre of an intricate web of ownership amongst top Swedish companies have voiced their concerns and board room changes will follow however this is not a clear out and the changes risk creating new governance tensions that will need to be addressed.

Handelsbanken, Sweden’s biggest bank, is replacing its chairman and chief executive. Anders Nyren currently Chairman of Handelsbanken will step down as chairman but remain on the board. Par Boman who is currently chief executive of Handelsbanken will become chairman. The company has yet to announce who the new chief executive will be.

Industrivarden, which has a controlling stake in Handelsbanken, will also get a new chairman and chief executive. Sverker Martin-Lof currently chairman at Industrivarden will step down and be replaced by. Anders Nyren, who is currently chief executive at Industrivarden.and who is stepping down as the chairman of Handelsbanken. The recruitment process for a new CEO has been commenced.

SCA the Swedish forestry company at the centre of the corporate jet scandal in which Industrivarden holds a large stake, will also get a new chairman. Par Boman who is the current CEO at SCA and soon to be chairman of Handelsbanken will replace Martin Lof as chairman.

Clear?
The process for implementing these changes is also somewhat convoluted. Handelsbanken pension foundation and pension fund and the pension foundation for SCA are the main owners of Industrivarden. These influential funds and foundations have advocated the Handelsbanken and Industrivarden board changes. For the changes to happen the nomination committees at Handelsbanken, Industrivarden and SCA must make formal proposals and these proposals must be approved by shareholders at general meetings.

Minority shareholders will hope to receive assurances about the risks which attend these board changes at the respective AGMs. Principle amongst these risks is the risk that the division of responsibilities between the chairman and chief executive is not clear.
The Swedish governance code recognises this risk and requires that “the division of work and responsibilities between the chair and the chief executive officer is to be clearly stated in the board’s statutory Rules of Procedure and its Instruction to the chief executive officer” [Svensk kod för bolagsstyrn 6.2]

In Sweden the chairman traditionally sits on the Nominatiion Committee and so it is unclear if the former CEO of Handelsbanken and the former CEO of Industrivarden will lead the search for their successors and, once appointed, whether the new CEOs will be subject to oversight by their predecessors. Industrivarden’s AGM will be held on May 6th. Handelsbanken’s AGM will be held in March.