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 3 May 2012 performed this review based on the proposals made by the Nominations and Remuneration Committee which 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, which follow:
- a Director is not an employee or a Corporate Officer (mandataire social) of the Company or of one of its consolidated subsidiaries and has not been in such a position for the five previous years;
- a Director is not a Corporate Officer (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 or a Corporate Officer (mandataire social) of the Company;
- a Director is not either directly or indirectly, a significant customer, supplier, investment banker or commercial banker or for which the Company or its Group holds a material proportion of the entity’s activity;
- a Director does not have any close family ties with a Corporate Officer (mandataire social) of the Company;
- a Director has not been an auditor of the Company for the past five years;
- a Director has not been a Director of the Company for more than twelve years;
- a Director does not hold, 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 AFEP-MEDEF recommendation, the Board of Directors may consider that a Director may not be qualified as independent even though the criteria are satisfied and conversely.
On this basis, the Board of Directors decided to maintain its characterisations defined in 2011 and determined that nine members should be considered as independent Directors (Mr Jean-Paul Béchat, Mr Pascal Colombani, Mr Jean-Martin Folz, Mrs Lalita D. Gupte, Mr Gérard Hauser, Mrs Katrina Landis, Mr James W. Leng, Mr Klaus Mangold and Mr Alan Thomson) out of the fourteen members of the Board of Directors.
The Board’s view that Mr Gérard Hauser should be considered to be independent took into account the fact that Mr Gérard Hauser is Non-Executive Director of a company in which another Company Director without executive function is a Non-Executive Director. This element was not considered of the type to affect his freedom of judgment.
After having taken into account the fact that Mr Pascal Colombani is Non-Executive Director of a company in which an ALSTOM Non-Executive Director is Non-Executive Director, the Board’s opinion is that Mr Pascal Colombani should be considered to be independent. This element was not considered of the type to affect his liberty of judgment. The Board’s view that Mr Jean-Martin Folz should be considered to be independent took into account the fact that in spite of the level of relationship between the Group and Société Générale, of which Mr Folz is a Director, Mr Folz does not have and never has had an executive position within Société Générale. In addition, no significant relationship was observed with AXA, of which Mr Folz is a Non-Executive Director.
The Board’s view that Mr James W. Leng should be considered to be independent also took into account the fact that in spite of the relationship between the Group and HSBC Bank plc, of which Mr James W. Leng is a Director, Mr James W. Leng does not have and never has had an executive position within HSBC Bank plc.
The Board of Directors also considered that the nomination of Mr Klaus Mangold as Chairman of the Supervisory Board of a German subsidiary of the Group in order to benefit fully from his experience and skills, does not compromise his ability to maintain independence of judgment insofar as this nomination did not create any hierarchical relationship with the management of the Company. The Board of Directors noted that, to this day, Mr Mangold has not informed the Board of any existing or potential conflict of interest with respect to this mandate, and that he had undertaken to provide such information, as the case may be.
The Board also determined that Mr Jean-Paul Béchat, Mrs Lalita D. Gupte, Mrs Katrina Landis, and Mr Alan Thomson fulfilled each of the above criteria and should be considered to be independent.
In addition to Mr Patrick Kron, Chairman and Chief Executive Officer of the Company, Mrs Candace K. Beinecke who is Chair of Hughes Hubbard & Reed LLP, one of the Company’s legal advisors, Mr Olivier Bouygues who is Delegated Chief Executive Officer of the company Bouygues SA, Bouygues SA which holds on 31 March 2012 approximately 30.74% of the Company’s share capital, and Mr Georges Chodron de Courcel who is Delegated Chief Executive Officer of BNP Paribas, one of the banks the Group does business with on a regular basis, are not independent Directors.
Thereby, the Board of Directors qualified nine members out of fourteen as independent (64%), which exceeds the proportion of one half recommended by the AFEP-MEDEF Code for those companies with a widely spread share capital and the rule adopted by the Board set forth in its Internal Rules.