According to the AFEP-MEDEF Code and as set forth in the Board of Directors’ Internal Rules, the Board of Directors re-examines annually the situation of each Director in the light of the independence criteria. The Board meeting of 5 May 2015 performed this review based on the proposals made by the Nominations and Remuneration Committee that the Board had accepted.
As in the previous year, the Board followed the definition contained in the AFEP-MEDEF Code and considered that a Director is independent when he or she has no relationship of any kind with the Company, its Group or its Management that could compromise the independence of his or her judgement.
The Board took into account all the criteria recommended by the AFEP-MEDEF Code to assess the independence of its members, and established that in order to be qualified as independent, a Director must not:
- criteria 1: be an employee or an Executive Corporate Officer (dirigeant mandataire social) of the Company, or an employee or Director of its parent company, or of one of the subsidiaries it consolidates, and has not been in such a position in the past five years;
- criteria 2: be an Executive Corporate Officer (dirigeant mandataire social) of a company in which the Company holds, either directly or indirectly, a directorship, or in which a directorship is held or has been held within the past five years by an employee designated as such or an Executive Corporate Officer (dirigeant mandataire social) of the Company;
- criteria 3: be, either directly or indirectly, a significant customer, supplier, investment banker or commercial banker or for which the Company or its Group represents a material proportion of the entity’s activity;
- criteria 4: have any close family ties with a Corporate Officer (mandataire social) of the Company;
- criteria 5: have been a Statutory Auditor of the Company for the past five years;
- criteria 6: have been a Director of the Company for more than twelve years (the loss of the independent status can only take place at expiration of mandate during which he would have exceeded the period of twelve years);
- criteria 7: be, control, or represent a shareholder who holds alone or in concert more than 10% of the Company’s share capital or voting rights in Shareholders’ Meetings.
Each Director is invited to transmit annually to the Company a statement with respect to each of these criteria.
In compliance with the AFEP-MEDEF Code’s recommendation, the Board of Directors may consider that a Director may not be qualified as independent even though the criteria are satisfied and conversely.
In particular, the Board of Directors checked the criteria of key business relationships (criterion #3). Whenever flows of business or relationships have been identified between Alstom and the companies in which those Directors considered independent exercise their functions or mandates, their nature, the non significant amount of their volume assessed from each party’s point of view or the fact that the relevant Director does not hold an executive position within the company or group concerned, have generally been taken into consideration by the Board to confirm the independence of the relevant Directors.
The Board’s view that Mr Jean-Martin Folz should be considered to be independent took into account the fact that despite the relationship that exists between the Group and, on the one hand, Société Générale (one of the banks with which the Group does business on a regular basis) and, on the other, AXA (one of the Group’s main insurers), and for both of which Mr Folz is a Director, the latter had never held an executive position within Société Générale or AXA. In addition, Mr Folz refrains from participating in the decisions of the Board which would involve one of these companies.
The Board’s view that Mr James W. Leng should be considered to be independent took into account the fact that he had been appointed Non-Executive Director of Aon plc in 2014, with which the Group entertains a relationship in some countries and that the Board considered non-significant.
The Board decided that the functions exercised by Mr Klaus Mangold as Chairman of the Supervisory Board of one of the Group’s German subsidiaries, would not compromise the exercise of his independence of judgment within the Board insofar as this entity is a wholly-owned subsidiary and that this mandate did not create any hierarchical relationship with the Company’s management. The Board acknowledged that up to now, Mr Mangold has not informed the Board of any conflict of interest, even potential arising from this mandate, even though, upon his appointment, he had committed to do so, if need be. In accordance with the terms of the Board’s Internal Rules and the AFEP-MEDEF Code’s application guide published in December 2014, he would also not participate in the Board’s decisions in the event of a conflict of interest between the Company and its subsidiary.
The Board also acknowledged that the appointment of Mr Pascal Colombani as Member of the European Advisory Board of JP Morgan Chase, a bank with which the Group has relationships that the Board has also considered non significant, would not compromise Mr Pascal Colombani’s independence of judgment.
Thereby, after reviewing all the criteria, the Board of Directors decided on 5 May 2015 to renew the qualifications set in 2014, considering that ten Directors of the fourteen comprising the Board should be qualified as independent Directors (71%), which exceeds the proportion of one half recommended by the AFEP-MEDEF Code for those non-controlled companies with a widely spread share capital and the rule adopted by the Board set forth in its Internal Rules.
Following the decisions made by the general Shareholders' Meeting held on 30 June 2015 and the new composition of the Board, nine out of fourteen Directors are qualified as independant (64%).