APC 2009 Annual Report Download - page 90

2009 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC88
CORPORATE GOVERNANCE
3MANAGEMENT INTERESTS ANDCOMPENSATION
Conflicts of interest
To the best of the Company’s knowledge, there are no arrangements
or understandings with major shareholders, customers, suppliers
or others pursuant to which a member of the Supervisory Board
or Management Board has been selected as a member of an
administrative, management or supervisory body or a member of
Senior Management .
To the best of the Company’s knowledge, there are no confl icts of
interest between any duties to Schneider Electric SA of the members
of the Supervisory Board or Management Board and their private
interests.
To the best of the Company’s knowledge, the members of the
Supervisory Board and Management Board have not accepted any
restrictions on selling their Schneider Electric shares aside from those
stipulated in stock option and stock grant plans (see page212 ) for
members of the Management Board and the 250 share-holding
requirement for members of the Supervisory Board.
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8. Management interests
andcompensation
Management Board and Executive
Committee compensation policy **
The general principles underlying the Senior Management
compensation policy and the situation of each executive are reviewed
by the Remunerations and Appointments & Corporate Governance
Committee and presented to the Supervisory Board.
The policy’s aims are to:
•retain and motivate the best talents;
•reward individual and collective performance;
•align overall compensation with the Group’s results.
The basic principles consist of competitively positioning Schneider
Electric in relation to market compensation rates for senior executives
of comparable industrial groups in each country concerned, as
follows:
•cash compensation, comprising a fi xed salary and a variable
bonus, is set at the market median, with the salary portion below
the market median;
•total compensation (cash compensation, stock options or stock
grants) is set above the market median.
The variable bonus depends on the degree to which objectives set at
the beginning of the year are met and can range from 0% to 160%
of salary for members of the Executive Committee and 0% to 200%
for the Chairman of the Management Board, establishing a close link
between performance and compensation.
The variable bonuses of Executive Committee members are
determined as follows:
•40% of the bonus is determined by reference to the Group’s
overall performance, as measured in terms of operating margin,
organic growth and customer satisfaction rates;
•60% is based on the performance of the executive’s unit, as
measured on the basis of business targets and on the attainment
of measurable personal performance targets.
The compensation of the Management Board members is set
by the Supervisory Board based on the recommendations of
the Remunerations and Appointments & Corporate Governance
Committee.
The variable bonuses of the Management Board members are
determined as follows:
•60% of the bonus is determined by reference to the Group’s overall
performance, as measured in terms of operating margin, organic
growth, cash generation ratio and customer satisfaction rates;
•40% depends on the attainment of measurable personal
performance targets set by the Supervisory Board.
Senior Management may also be granted stock options or stock
grants. US citizens or residents may be granted stock appreciation
rights (SARs) that match option characteristics.
The options have a ten-year life. The exercise price is equal to the
average share price of the twenty trading days prior to the date of
grant and does not include any discount. Half of the options vest
only if certain targets are met (all options in the case of Management
Board members). The Statutory Auditors verify the level to which
these targets are met.
Stock grants have a total vesting and/or lock-up period of four to
fi ve years (see page216 ). Half of the stock grants vest only if certain
targets are met (all stock grants in the case of Management Board
members). The Statutory Auditors verify the level to which these
targets are met.
Pension benefits **
French members of the Management Board and Supervisory
Board are covered by the Group’s top-hat pension plan for senior
executives, which provides for the payment of pension benefi ts
corresponding to up to 25% of their average compensation
corresponding to the sum of (i) their gross basic salary and (ii) their
variable bonus for the reference years, less the total benefi ts received
under the defi ned contribution supplementary pension plan.
Non-French members are covered by funded pension plans in line
with local practice in their respective countries.