APC 2011 Annual Report Download - page 135

1332011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
CORPORATE GOVERNANCE
3
INTERNAL CONTROL AND RISK MANAGEMENT
approved by the Shareholders’ Meeting. Under this agreement, set
out on pages130 Jean-Pascal Tricoire:
•benefi ts from the Top-hat Pension Plan for Schneider Electric
senior executives, the Schneider Electric SA employee benefi t
plan and the supplementary health, disability and death coverage
available to the Group’s senior executives;
•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
dismissed 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.
On February21, 2012 the Supervisory Board gave the Management
Board authorisation to change the Top-hat Pension Plan for the
Schneider Group’s directors to comply with the AFEP/MEDEF
recommendations that provide for progressive acquisition of rights
according to length of service. It has also given authorisation for
Management Board members to benefi t from the modifi ed plan
(see pages 260, 261 and 265 ).
The Supervisory Board decided to renew the Management Board
on expiry of its appointment on May2, 2012 for a further period
of three years. As a result, and pursuant to the TEPA act, the
Supervisory Board decided to renew the sections of the articles
of association relating to Mr Jean-Pascal Tricoire. These remain
unchanged under the following conditions:
•the benefi t of supplementary sickness, incapacity, disability
and death coverage available to the Schneider Electric’s senior
executives is subject to performance criteria;
•compensation in the event of termination is not capped at twice
the target remuneration (fi xed and variable target), but at twice
the mathematical average of the effective annual remuneration
(fi xed and variable) for the last three years (see pages 261-262,
265-266 ).
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10. Internal control and risk
management**
10.1 Definition and objectives of internal control and risk management
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.
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).
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.
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.