APC 2005 Annual Report Download - page 41

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The Audit Committee reviewed the annual and interim
financial statements and the management reports.
It also reviewed the work of the internal and external
auditors. In connection with its risk review, the Com-
mittee examined the Company's environmental policy,
the status of operations in France, base cost trends,
information systems outsourcing and globalization,
and goodwill of newly-acquired businesses.
Concerning the application of accounting standards,
the Committee primarily examined the Group’s divi-
sion into Cash Generating Units (CGUs).
The Committee made recommendations to the Board
of Directors concerning the allocation of the Group’s
profit.
It verified the Auditors' independence, in particular by
reviewing fees paid by the Group to their firm and net-
work.
The Committee reported to the Board on its activities
in 2005 at the Board meetings held on February 16,
July 28 and December 1, 2005.
Remunerations
and Appointments & Corporate
Governance Committee
Members
Since February 2005, the Remunerations and
Appointments & Corporate Governance Committee
has been made up of René Barbier de La Serre,
Chairman, Claude Bébéar, Willy Kissling and Henri
Lachmann.
Responsibilities
The Committee is regularly informed of the Group's
compensation policies, especially executive compen-
sation. It reviews stock option plans and employee
stock purchase plans decided by the Board. It makes
recommendations to the Board concerning the nomi-
nation of candidates for election as Directors, the
appointment of members of Board Committees and
the compensation of the Chairman, which comprises a
variable component partially linked to the achievement
of personal and performance objectives. The Chair-
man is not present when his compensation is dis-
cussed. The Committee sets independence criteria for
Directors and examines their situation with 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 suc-
cession planning solutions for members of the Direc-
tion and Strategy Committee and the Operations
Committee.
The Remunerations and Appointments & Corporate
Governance Committee presents its findings and rec-
ommendations to the Board and distributes the min-
utes of its meetings to the Directors.
Meetings in 2005
The Remunerations and Appointments & Corporate
Governance Committee met three times in 2005, with
an average attendance rate of 92%.
It made recommendations to the Board concerning
the membership of the Board and its Committees and
the Chairman's compensation. The Chairman was not
present when the Board discussed this latter topic. It
also recommended that the Board set up three new
option plans (25, 26 and 27).
During the year, the Committee continued the discus-
sions initiated in 2003 concerning the Chairman’s suc-
cession. It presented its conclusions to the Board on
January 6, 2006 (see above).
The Committee reported to the Board on its activities
in 2005 at the Board meetings held on February 16,
May 12, June 28, July 28, October 5, and December 1,
2005 and on January 6, 2006.
Internal Control **
To anticipate and control the risks associated with its
operations, as well as the risk of accounting and other
errors and fraud, procedures have been established at
Group level that ensure effective risk management.
The purpose of these procedures is to:
Ensure that management actions, transactions and
employee behavior are consistent with the overall
business strategy decided by the Board of Directors of
Schneider Electric SA, the Group's parent company,
that they comply with the applicable laws and regula-
tions and that they reflect the Group's values and inter-
nal standards and rules.
Obtain assurance that statutory and management
accounting data presented to the Board of Directors of
Schneider Electric SA and Group senior management
present fairly the sales, results of operations and
financial position of the Group.
No system of internal control designed to fulfill the
above objectives is capable of providing absolute
assurance that the objectives will be met due to the
inherent limitations of procedures, however well con-
ceived. The internal control process is a work in
progress; procedures are adapted to reflect changes
in the business and regulatory environment, as well as
in the Group’s organization. The different participants
in the process constantly ensure that procedures are
updated and circulated throughout the Group.
This report was prepared on the basis of discussions
among these participants, in particular senior man-
agement, Finance and Control – Legal Affairs, and the
internal auditors. It is supported by a review of the
internal control resources and procedures deployed by
the Group.
Corporate Governance
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