Nominating committee report

The Nominating Committee shall, in accordance with a resolution by the 2007 Annual General Meeting, comprise five members. The Annual General Meeting resolved to mandate the Chairman of the Board to contact the largest known shareholders in the Company in order of size until four representatives had been appointed to make up the Nominating Committee together with the Chairman of the Board.

 

The Chairman of the Board has contacted the largest shareholders in accordance with the instruction of the Annual General Meeting, and the members of the Nominating Committee held its first, preparatory, meeting on 4th October 2007.

 

In addition to the Chairman of the Board, Conny Karlsson, the Nominating Committee comprises the following members: William N. Booth (Wellington Management Company), Mads Eg Gensmann (Parvus Asset Management), Michael Allison (Morgan Stanley Investment Management) and Andy Brown (Cedar Rock Capital). Conny Karlsson is the only one of the members who is also a Member of the Board of the Company. Mads Eg Gensmann has acted as the Chairman of the Nominating Committee. The Companys General Counsel, Fredrik Peyron, has acted as Secretary to the Nominating Committee.

 

The Nominating Committee has worked in accordance with the Swedish Code of Corporate Governance and the Instructions for Swedish Match AB's Nominating Committee adopted by the 2007 Annual General Meeting. The Nominating Committee held five formal meetings during the period between the 2007 and 2008 Annual General Meetings in addition to informal contacts and discussions between the members.

During the autumn 2007 the Board commissioned an external consultant to conduct an evaluation of the Board of Directors as regards the conduct and functioning of the Board's work. The Chairman of the Board has informed the Nominating Committee about the outcome of the evaluation. The evaluation also gave the Nominating Committee a basis from which to assess the competence and experience that the Board Members possess and should possess, and this has guided the Nominating Committee's work. The conclusion is that, given Swedish Match's international growth opportunities, the Board should maintain its international experience.

 

During February 2008 the Nominating Committee was informed that the CEO, Sven Hindrikes intends to resign as CEO of the Company and as a consequence hereof he does not intend to stand for re-election at the impending Annual General Meeting. In addition, Board Member John P. Bridendall has announced that he does not intend to stand for re-election.

 

The Nominating Committee has investigated potential candidate Board Members who could bring additional expertise to the Board, particularly with regard to the fast moving consumer products in international markets. The Nominating Committee has had an external consultant at its disposal in its work to identify and evaluate potential new Board members.

 

The Nominating Committee proposes that Karen Guerra be newly elected as Member of the Board at the 2008 Annual General Meeting. Karen Guerra has long standing experience from international fast moving consumer goods business and brand management. She currently holds a Non Executive Director position of Inchcape PLC a leading independent, international automotive retailer and is a Non Executive advisor for RAC UK and France. Her business experiences comprise 23 years at Colgate Palmolive. She was President of Colgate Palmolive SAS and General Manager of the French Branch of CPI LLC until April 2006. Prior to this, she was Chairman and Managing Director of Colgate Palmolive UK Ltd. Karen also spent two years at Pepsi-Cola International as Marketing Manager for Holland and Ireland. Karen holds a BSc in Management Sciences from the University of Manchester Institute of Science and Technology. Karen Guerra is to be considered independent in relation to the company, the company management as well as independent of the company's major owners.

 

The Nominating Committee is otherwise of the opinion that the sitting Board of Directors meets the Board's need for adequate competence and experience.

 

The Nominating Committee accordingly intends to propose to the Annual General Meeting to be held in April 2008 that Swedish Matchs Board of Directors comprises the following seven members: Conny Karlsson, Charles A. Blixt, Andrew Cripps, Karen Guerra, Arne Jurbrant, Kersti Strandqvist and Meg Tivéus. The Nominating Committee has agreed to propose Conny Karlsson as the Chairman of the Board and Andrew Cripps as the deputy Chairman of the Board. All proposed Board members are to be considered independent in relation to the company, the company management as well as independent of the company's major owners.

The Nominating Committee proposes that the fees to the Board of Directors be paid as follows for the period until the close of the next Annual General Meeting: the Chairman shall receive 1,575,000 SEK and the other Board Members elected by the General Meeting shall each receive 630,000 SEK. It is furthermore proposed that the Board, as compensation for committee work carried out, be allotted 230,000 SEK to the Chairmen of the Compensation Committee and the Audit Committee respectively and 115,000 SEK respectively to the other members of these committees, although totaling no more than 920,000 SEK. It is proposed that members of the Board employed by the Swedish Match Group shall not receive any compensation.

The Nominating Committee is of the opinion that the 2008 Annual General Meeting should once again renew the Chairman of the Boards mandate to contact the four largest known shareholders in the Company and ask them each to appoint a representative who will, together with the Chairman of the Board, comprise the Nominating Committee for the period until a new Nominating Committee has been appointed in accordance with a mandate from the 2009 Annual General Meeting. If any of the four largest known shareholders refrain from nominating a representative to the Company's Nominating Committee, the next shareholder by size shall be contacted, until a Nominating Committee comprising four members and the Chairman of the Board can be constituted. The names of the members of the Nominating Committee shall be published no later than six months prior to the 2009 Annual General Meeting. The four largest shareholders are identified on the basis of the known numbers of votes immediately prior to publication.

 

No compensation shall be payable to the members of the Nominating Committee. Any expenses incurred in the course of the Nominating Committee's work shall be borne by the Company.

The Nominating Committee proposes that the Meeting should adopt the Instructions for Swedish Match AB's Nominating Committee which are identical to those adopted by the 2007 Annual General.

The Nominating Committee proposes the re-election of KPMG Bohlins AB as auditor for four years. KPMG has been the auditors of Swedish Match AB since 2004 and has extensive knowledge of the Company and its subsidiaries. In proposing the re-election of KPMG as auditors, the Nominating Committee has followed the recommendation from the Audit Committee.

 

Compensation to the auditors is proposed to be paid on approved account.

The proposals submitted by the Nominating Committee to the Annual General Meeting for resolution are presented in their entirety in the Notice convening the Annual General Meeting which is available from the Company's website at www.swedishmatch.com.