APC 2006 Annual Report Download - page 41

tations on major issues within their area of responsibil-
ity. The external Auditors attend the Board meetings
held to approve the annual and interim financial state-
ments.
Between meetings, aside from conversations they may
have with the Chairman of the Management Board,
Supervisory Board members receive a monthly Letter
to Supervisory Board Members, a weekly press
review, all of the Company's press releases, financial
analysts' reports and other documents.
Members also have the opportunity to meet informally
with key members of senior management prior to
Board meetings. New members attend training and
information sessions dealing with the Company's strat-
egy and businesses.
Schneider Electric has adopted a code of ethics for
Supervisory Board members and employees designed
to prevent insider trading. Under the terms of this code,
both Supervisory Board members and employees are
barred from trading Schneider Electric shares SA and
shares in companies for which they have information
that has not yet been made public. In addition, they
may not trade Schneider Electric SA shares during the
30 days preceding publication of the annual and inter-
im financial statements, nor may they engage in any
type of speculative trading involving Schneider Electric
SA shares. This includes margin trading, trading in
options and warrants and purchasing and re-selling
shares in a period of less than four months.
3. Board of Directors’
meetings in the period from
January 1 to May 3, 2006 and
Supervisory Board meetings
in the period from May 3, 2006
to early 2007**
Board of Directors
Three meetings were held in early 2006. The meetings
lasted an average of 2 hours and 40 minutes and the
average participation rate was 93%. They were prima-
rily devoted to the Company's corporate governance,
reviewing the financial statements and preparing the
Annual Shareholders' Meeting.
At its meeting of January 6, 2006, the Board of Direc-
tors discussed the issue of the Chairman’s succession.
On Mr. Lachmann’s suggestion, seconded by the
Remunerations and Appointments & Corporate Gover-
nance 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 and Pierre Bouchut. Mr. Tricoire
would chair the Management Board.
The Board reviewed the Remunerations and Appoint-
ments & Corporate Governance Committee’s report
on the second self-assessment of its performance. The
Board Secretary assisted with this assessment in the
fall of 2005 by sending to Directors a questionnaire
drawn up by the Remunerations and Appointments &
Corporate Governance Committee. The questions
concerned the Board of Directors’ membership, mis-
sions and operating procedures; its relations with the
Chairman and CEO; and the Committees’ organization
and operating procedures.The Board of Directors ana-
lyzed the conclusions provided in a report prepared by
the Remunerations and Appointments & Corporate
Governance Committee. The report revealed that the
Directors were 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 deep-
er contacts with corporate management and the units.
After discussing the Remunerations and Appointments
& Corporate Governance Committee's report, the
Board approved the Chairman and Chief Executive
Officer's compensation package, including the degree
to which his personal targets were met in 2005 and the
rules governing his fixed and variable compensation
for 2006. During the meeting on May 3, 2006, the
Board determined the degree to which the targets
were met in the first four months of the year.
At its meeting on February 15, 2006, the Board of
Directors closed the 2005 accounts, based on the
Audit Committee's report and after seeking the opinion
of the external Auditors who attended the meeting, and
set the 2005 dividend to be submitted for shareholder
approval at 2.25 per share.
The Board reviewed the Group’s strategic targets for
2006 and, during its three meetings, authorized the
acquisition of Invensys’ Building Management Sys-
tems business in North America and the German-
based Merten companies (Ultra Terminal).
The Board called the 2006 Annual Shareholders'
Meeting and approved the reports and resolutions to
be presented at the Meeting. It also discussed the
Chairman's report on the Board's activities and on
internal control, and examined and approved the
replies to written questions submitted by shareholders
under the procedure provided for in article L.225-108
of the French Commercial Code. Thirteen of the four-
teen Directors were present at the Annual Sharehold-
ers' Meeting, which adopted all the resolutions tabled.
The Board of Directors also carried out the procedures
required by law. These include reviewing budgets and
business plans and placing on record capital increas-
es. Lastly, in line with the statutory procedure govern-
ing related party agreements, the Board authorized the
signature of a shareholder agreement with AXA, con-
cerning the AXA and Schneider Electric groups’
respective interests in each other’s capital.
**Paragraphs 2 through 4 and paragraph 8 make up
the Chairman’s report prepared in accordance with article
L225-68 of the French Commercial Code.
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