APC 2004 Annual Report Download - page 30

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2
Organizational
and operating procedures
of the Board of Directors **
The Board of Directors defines the Company's busi-
ness strategy and oversees its implementation. Its
members are elected by shareholders in Annual
Meeting upon proposal of the Board. According to the
Company bylaws, Directors may not hold office
beyond their 74th birthday.
Based on a review by the Remunerations and
Appointments Committee, the Board considered in
February 2004 that nine of the thirteen Directors sit-
ting on the Board since May 6, 2004 were indepen-
dent Directors, as defined in the Bouton report on
corporate governance. Foreign representation is also
significant as the Board includes five non-French
Directors. Employee shareholders are represented
by a Director who sits on the Supervisory Board of
the “Schneider Actionnariat”corporate mutual fund.
The average age of the Board members is 59.
The Board approved a set of operating rules and pro-
cedures in March 2003. The document, which include
the operating rules and procedures of the Board com-
mittees (the Remunerations and Appointments
Committee and the Audit Committee) as well as
the Directors' charter recommended under AFEP-
MEDEF corporate governance guidelines, comprises
8 Articles:
Article 1 defines the Board's role and powers. The
Board defines the Company's business strategy and
oversees its implementation. To enable the Board to
fulfill its duties, the Chairman must inform the Board
of any material event arising in the normal course of
business. He or she must also submit to the Board's
authorization any proposal to acquire or sell assets
exceeding 100 million as well as all transactions
involving a commitment by the Company above this
amount. In addition, the Board must carry out an
annual review of its membership, organization and
operating procedures.
Article 2 defines the principles the Board shall apply
concerning the renewal of its membership. These
include assuring international representation by main-
taining a significant number of non-French Directors,
maintaining independence through a majority of inde-
pendent Directors as defined in the Bouton report,
ensuring continuity through the re-election of one
quarter of the Directors each year and enabling rep-
resentation of employee shareholders by a Director
who is a member of the Supervisory Board of a mutu-
al fund invested in Company stock.
Article 3 defines procedures for organizing Board
meetings. In addition to the legal provisions for calling
Board meetings, participation of Directors, minutes,
etc., this article calls for a minimum of six meetings a
year and the attendance of the Executive Vice-
President, Finance and any line executives con-
cerned by the major issues put before the Board.
Article 4 defines the status of Directors and their
responsibilities. These include:
Representing all shareholders and acting in the cor-
porate interest.
Submitting their resignation when they have not
participated in more than half the Board meetings.
Respecting an obligation of confidentiality.
Requesting any documents needed to fulfill their
responsibilities and meeting with Company execu-
tives as required.
Reporting conflicts of interest.
Owning at least 250 shares of Company stock.
Complying with rules governing trading in
Schneider Electric shares.
Disclosing on a timely basis any transactions involv-
ing Schneider Electric shares.
Attending the Annual Shareholders' Meeting.
Articles 5 to 7 apply to the Board Committees and
are described in the corresponding section below.
Article 8 defines the scope of the internal rules and
procedures.
To ensure that Board members are fully prepared, the
Company sends them the meeting agenda ten days
before upcoming Board meetings, along with draft
minutes of the previous meeting. Four to five days
beforehand, the Directors also receive a Board meet-
ing file, which may include financial statements when
appropriate (the deadline is shorter, however, for the
interim financial statements). The file includes notes
or the text of presentations scheduled on the agenda,
as well as, when appropriate, any draft reports and
the consolidated or parent company financial state-
ments. A supplementary file may also be provided at
the meeting.
Between meetings, aside from conversations they
may have with the Chairman, Board members receive
a monthly Letter to Directors, a weekly press review,
all of the Company's press releases, financial ana-
lysts' reports and other documents.
Directors also have the opportunity to meet informal-
ly with key members of senior management prior to
Board meetings. In addition, new Directors attend
training and information sessions dealing with the
Company's strategy and businesses.
**Paragraphs 2 through 5 make up the Chairman's report
prepared in accordance with article L225-37 of the French
Commercial Code.