APC 2002 Annual Report Download - page 32

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It sets the criteria of independence for Directors and examines
their situation in respect to these criteria. It recommends the
amount of attendance fees for approval at the Annual Meeting
and their allocation among Directors. It is also responsible for
preparing a succession plan for the Chairman and examines
solutions to provide for the replacement of Executive
Committee members.
c. Meetings in 2002
The Remunerations and Appointments Committee met three
times in 2002, with an attendance rate of 100%. It informed
the Board of Directors of its findings on February 16 and
October 25, 2002. It made recommendations to the Board
concerning the Chairman’s compensation. It also proposed
that the Board co-op René Barbier de La Serre as Director
and appoint him to the Audit Committee, as well as revise
the Committee’s membership by adding two new members,
James Hardymon and René Barbier de La Serre, and by
appointing Michel François-Poncet to serve as Chairman.
5 - Interests and compensation
of corporate officers and executives
Compensation of corporate officers and members
of the Executive Committee
The Remunerations and Appointments Committee makes
recommendations to the Board of Directors concerning the
Chairman’s compensation. It also reviews compensation for
senior executives, particularly the members of the Executive
Committee.
Since reorganizing in October 2001, General Management
has been represented by a nine-member Executive Committee
chaired by Henri Lachmann. Its members are paid a fixed
salary plus a variable bonus representing a certain percentage
of their fixed salary. Each component of this compensation
package is calculated to be competitive with the compensation
paid to executives in similar companies in other countries,
based on analyses and comparisons performed by
international compensation consulting firms.
The amount of the variable component depends on the degree
to which objectives set at the beginning of the year are met
and can therefore vary significantly. The objectives concern
targets based on consolidated sales and net income before
goodwill, as well as individual objectives based on quantitative
and qualitative criteria. The bonuses are paid following
approval of the financial statements for the year to which they
relate.
To involve senior executives more closely in the growth and
development of Schneider Electric’s business, their variable
bonuses represent a greater proportion of their total
compensation than is the practice among other manufacturing
companies. In addition, Executive Committee members also
benefit from stock option plans (see above, page 19).
Executive compensation in 2002
In 2002, total gross compensation paid to the members and
the Chairman of the Executive Committee amounted to 6.1
million, of which 2.3 million in variable bonuses. The total
includes the Executive Committee members’ fixed salaries
and benefits for 2002 and their variable bonuses for 2001,
paid in 2002. The amount of the variable component was
based on corporate financial criteria, as well as on each
member’s individual quantitative and qualitative objectives.
The corporate financial criteria were as follows:
2001 sales, with no bonus if sales did not exceed
9.63 billion.
Net income before goodwill, with no bonus if net income
did not exceed 803 million.
Growth in the share price.
Compensation of the Chairman
Compensation paid by Group companies, including Director
attendance fees, to Henri Lachmann, is as follows:
- Fixed salary and benefits: : 735,600
- Attendance fees: 54,000
- Variable compensation: 91,800