APC 2005 Annual Report Download - page 39

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operating procedures. At its meeting of February 15,
2006, the Board of Directors analyzed the conclusions
provided in a report prepared by the Remunerations
and Appointments & Corporate Governance Commit-
tee. The report revealed that the Directors are very
satisfied with the way in which the Board operates
("the Chairman makes excellent use of the Board",
"the quality of the discussions are a real strength for
the Company"). The Board was rated very favorably in
general, as well as in comparison to other Boards and
to the first self-assessment carried out in 2002. The
main areas for improvement involved deeper contacts
with corporate management and the units.
The Board discussed its membership and that of the
Committees of the Board. In early 2005, the Board was
saddened by the death of Michel-François Poncet, to
whom it paid tribute. At the same time, Thierry Breton
resigned from the Board after being appointed
France’s Minister of Economy and Finance. Based on
a proposal by the Remunerations and Appointments
Committee, the Board decided to recommend at the
Annual Shareholders' Meeting the re-election as
Directors of René Barbier de La Serre and Henri
Lachmann. It also decided to recommend electing as
Director Serge Weinberg, to replace Hans Friderichs
who had reached the age limit set in the bylaws, and
Jérôme Gallot, to replace Caisse des Dépôts et
Consignations (Schneider Electric SA’s largest share-
holder). Mr. Gallot was Caisse des Dépôts et Consigna-
tions’ permanent representative on the Board. Lastly,
the Board of Directors decided to co-opt Noël
Forgeard as Director and appoint Cathy Kopp as a
non-voting Director. The Board appointed Serge Wein-
berg to the Audit Committee and Claude Bébéar to the
Remunerations and Appointments Committee. René
Barbier de La Serre was asked to replace Michel-
François Poncet as Chairman, and the Committee’s
mission was expanded to include Remunerations,
Appointments and Corporate Governance.
After discussing the Remunerations and Appoint-
ments & Corporate Governance Committee's report in
the Chairman's absence, the Board approved the
Chairman's compensation package, including the
degree to which his personal targets were met in 2004
and the rules governing his fixed and variable com-
pensation for 2005. The Board was informed of the
compensation policy for the Company's senior execu-
tives. It also decided to set up three new option plans
(25, 26 and 27). Plan number 27, the annual plan for
2006, was set up in December 2005 following a
change in the timetable for setting up annual stock
option plans.
After discussing the Remunerations and Appoint-
ments & Corporate Governance Committee’s report
and voting not to separate the responsibilities of
Chairman and Chief Executive Officer, the Board re-
appointed Henri Lachmann Chairman and CEO, not-
ing that one of his missions will be to prepare his suc-
cession.
At its meeting of January 6, 2006, the Board of Direc-
tors discussed the issue of the Chairman’s succes-
sion. On Mr. Lachmann’s suggestion, seconded by the
Remunerations and Appointments & Corporate Gov-
ernance Committee, the Board decided to ask share-
holders to approve a change in the corporate gover-
nance system at the Annual and Extraordinary Meet-
ing of May 3, 2006. The system would comprise a
Supervisory Board, chaired by Mr. Lachmann and
made up of the current members of the Board of
Directors, and a Management Board, made up of
Jean-Pascal Tricoire, currently Chief Operating Officer
of Schneider Electric, and Pierre Bouchut, Executive
Vice-President Finance and Control – Legal Affairs.
Mr. Tricoire would chair the Management Board.
The Board considers that a two-tier Supervisory
Board/Management Board system is the best solution
for ensuring a seamless succession and continuation
of Schneider Electric’s growth strategy.
At its meeting of February 16, 2005, the Board called
the Annual Shareholders' Meeting and approved the
reports and resolutions to be presented at the Meet-
ing. It also heard the Chairman's report on the Board's
activities and on internal control. It examined and
approved the replies to written questions submitted by
shareholders under the procedure provided for in arti-
cle L.225-108 of the Commercial Code or otherwise.
Eleven of the twelve Directors were present at the
Annual Shareholders' Meeting of May 12, 2005, which
adopted all the resolutions tabled.
The Board tracked the share buyback program and
decided to allocate shares bought back over the year,
plus a portion of shares held in treasury, to serving the
stock option plans.
The Board of Directors also carried out the proce-
dures required by law. These include reviewing budg-
ets and business plans and placing on record capital
increases.
Directors and corporate officers hold 0.004% of the
Company's capital and 0.006% of the voting rights.
Alain Burq has an employment contract with Schnei-
der Electric Industries SAS, through which he receives
compensation comprising a fixed salary and a vari-
able component (bonus and profit-linked incentive
plan). None of the members of the Board of Directors
derives benefits from a services contract with the
Company or any of its subsidiaries.
Chris Richardson was consulted by Square D in his
capacity as former Executive Vice-President of
Schneider Electric's North American Division. Mr.
Richardson received fees of $100,000 in 2005 for his
consulting work.
No related-party agreements have been entered into
between the Company and its Directors or officers.
No loans or guarantees have been granted to officers
by the Company.
Over the past five years, none of the Directors has:
Been the object of any official public incrimination
and/or sanctions by a statutory or regulatory authority.
Been convicted in relation to fraudulent offenses.
Corporate Governance