APC 2006 Annual Report Download - page 42

Supervisory Board
The Supervisory Board met six times between May 3,
2006, when it was set up, and the end of the year. The
meetings lasted an average of 2 hours and 50 minutes
and the average participation rate was 88%.They were
primarily devoted to the Company's corporate gover-
nance and strategy, and reviewing the interim financial
statements.
At the meeting held immediately after the Annual
Shareholders’ Meeting of May 3, the Supervisory Board
set up the new corporate governance structures.
It appointed Henri Lachmann as Chairman, Serge
Weinberg as Vice Chairman and Claude Bébéar as a
non-voting member and also adopted its internal rules
and procedures. The Board determined the member-
ship of its two committees, appointing Henri Lachmann
as chairman and Claude Bébéar, Willy Kissling and
René de la Serre as members of the Remunerations
and Nominations & Corporate Governance Commit-
tee, and Gérard de la Martinière as chairman and
James Ross, Piero Sierra and Serge Weinberg as
members of the Audit Committee. James Ross was
also given specific responsibility for examining sustain-
able development issues. During the meeting, the
Board set the compensation payable to the Chairman
and determined the rules to be applied for the alloca-
tion of attendance fees, including variable fees based
on each individual’s attendance rate at Supervisory
Board meetings.
The Board decided that the Management Board would
have two members and appointed Jean-Pascal Tricoire
as its Chairman and Pierre Bouchut as the second
member. It determined the status of, and the compen-
sation payable, to the Chairman of the Management
Board. The pension and insurance arrangements for
Jean-Pascal Tricoire and the terms and conditions gov-
erning the reinstatement and termination of his
employment contract with Schneider Electric Indus-
tries SAS were adopted under the procedure applica-
ble to related party agreements.
The Supervisory Board conducted an in-depth review
of the Company’s strategy in a one-day meeting devot-
ed entirely to this topic, held at the Electropole R&D
center in Grenoble. At the close of a specific meeting
held on October 25, 2006 to review the proposed
acquisition of American Power Conversion, the Super-
visory Board authorized the Management Board to
move forward with the transaction and to issue 4.5
billion in debt and more than 1 billion in equity to
finance or refinance the acquisition. The project was
first presented to the Supervisory Board at a meeting
on October 4. At each of its meetings, the Supervisory
Board was informed of the status of proposed acquisi-
tions that had been presented to the Board of Directors.
At each meeting, the Board also devoted time to mon-
itoring business performance. It reviewed the Compa-
ny's financial information policy and ensured consis-
tent compliance with market disclosure requirements,
notably through an analysis of market consensus and
the issuance of press releases.
After reviewing the Company’s financial strategy, the
Supervisory Board authorized a 1 billion bond issue,
carried out in two tranches during July 2006.
At its meeting on July 27, 2006, the Board reviewed
the interim financial statements for the six months
ended June 30, 2006 based on the Audit Committee's
report and after seeking the opinion of the external
Auditors who attended the meeting.
The Audit Committee reported to the Board on the
work carried out by the internal auditors and the Board
also kept up to date on major risks such as the Bridge
information systems project and bird flu.
The Supervisory Board authorized the Management
Board to set up stock option or stock grant plans – par-
ticularly the 2007 plan – and to carry out an employee
share issue (the 2007 worldwide ESPP).
The Supervisory Board also carried out the proce-
dures required by law, which include reviewing budg-
ets and business plans.
4. Committees of
the Supervisory Board
(members, operating
procedures and meetings)**
The Supervisory Board has drafted internal rules gov-
erning the operating procedures and missions of the
Audit Committee and the Remunerations and Appoint-
ments & Corporate Governance Committee. Their
members are appointed by the Supervisory Board,
based on recommendations from the Remunerations
and Appointments & Corporate Governance Commit-
tee. After checking with the Chairman of the Supervi-
sory Board, the Committees may commission research
from outside consultants, and they may also invite any
persons of their choice to attend their meetings, as
required.
Audit Committee
Members
The Supervisory Board’s internal rules stipulate that
the Audit Committee must have at least three mem-
bers. Two thirds of the members must be independent
and at least one must have in-depth knowledge of
accounting standards combined with hands-on experi-
ence of applying these standards and producing finan-
cial statements.
No changes were made to the membership of the
Audit Committee following the replacement of the
Board of Directors by the Supervisory Board. The four
members – Gérard de La Martinière (chairman),
James Ross, Piero Sierra and Serge Weinberg, are all
independent.
Meetings
The Audit Committee meets at least four times a year.
Meetings are called by the Committee chairman, the
Supervisory Board Chairman or the Management
Board Chairman.
The external Auditors attend the meetings devoted to
examining the annual and interim financial statements
and the Committee may also invite any other persons
of its choice to answer its questions.
Corporate governance
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