APC 2010 Annual Report Download - page 132

CORPORATE GOVERNANCE
3INTERNAL CONTROL ANDRISKMANAGEMENT
•is bound by a non-compete agreement;
•is entitled to compensation in the event of termination, capped
at 24 months of his target remuneration taking into account
compensation provided for in the non-compete agreement
described above and provided that he resigns, is terminated
or is not re-appointed following a material change in Schneider
Electric’s shareholder structure or a re-orientation of the strategy
pursued and promoted by him until that time;
•retains, subject to performance criteria, all unvested stock
options, stock grants and performance stock grants should he
leave the Company.
At its meetings of April23 and December17, 2009, the Supervisory
Board agreed that Emmanuel Babeau would continue to benefi t
from the top-hat pension plan for senior executives provided under
his employment contract with Schneider Electric Industries SAS.
The Shareholders’ Meeting of April22, 2010 approved this benefi t.
The Supervisory Board, at its meeting of December15, 2010,
authorised the Management Board to outsource the “section39”
Top-Hat Pension Plan to which the Group’s French senior executives
are entitled. Since Mr.HenriLachmann is a benefi ciary of this regime,
the principle for this outsourcing was authorised by the Supervisory
Board under the terms of the regulated agreements. The agreement
is being negotiated as part of a call for tenders. Its signature with the
insurance fi rm being used will receive the prior authorisation by the
Supervisory Board under the terms of the regulated agreements.
Consequently, the terms for the application of this agreement shall
be subject to the approval of the General Meeting called to approve
the 2011 fi nancial statements.
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10. Internal control
andriskmanagement**
1. Definition and objectives of internal control and risk management
1.1. Definition and objectives
The Group’s internal control procedures are designed to ensure:
•compliance with laws and regulations;
•application of instructions and guidelines issued by Senior
Management;
•the proper functioning of the Company’s internal processes,
notably as concerns asset preservation;
•the reliability of fi nancial reporting;
•more generally, internal control helps the Group manage its
businesses, run effi cient operations and use its resources
effi ciently.
Internal control aims to prevent and manage risks related to the
Group’s business. These include accounting and fi nancial risks,
the risk of fraud, as well as operating, fi nancial and compliance
risks. However, no system of internal control is capable of providing
absolute assurance that these risks will be managed completely.
1.2. Scope of this report
The system is designed to cover the Group, defi ned as the Schneider
Electric SA parent company and the subsidiaries over which it
exercises exclusive control.
Jointly controlled entities are subject to all of the controls described
below, with the exception of self-assessments of the implementation
of Key Internal Controls (see “Operating Units” below).
1.3. Internal control reference documents
The Group’s internal control system complies with the legal
obligations applicable to companies listed on the Paris stock
exchange. It is consistent with the reference framework laid down
by France’s Autorité des Marchés Financiers (AMF).
The internal control process is a work in progress; procedures are
adapted to refl ect changes in the AMF recommendations and the
business and regulatory environment, as well as in the Group’s
organisation and operations.
1.4. Information used to prepare this report
This report was prepared using contributions from the Group’s Internal
Audit and Internal Control Departments, the Management Control
and Accounting Departments, as well as the various participants in
internal control. It was reviewed by the Audit Committee.
2010 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC130