APC 2012 Annual Report Download - page 275

2732012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC
ANNUAL AND EXTRAORDINARY SHAREHOLDERS’ MEETING
8
MANAGEMENT BOARD REPORT TO THE COMBINED ANNUAL AND EXTRAORDINARY SHAREHOLDERS’ MEETING
•the outsourcing of the top-hat defi ned benefi t pension plan
(article 39) for the French directors of the Group, which benefi ts
the Chairman of the Supervisory Board and/or M anagement
B oard members;
•an amendment to the status of Jean-Pascal Tricoire, approved by
the Annual Shareholders’ Meeting of May 3, 2012.
Agreements related to the top-hat defi ned benefi t pension
plan for French directors of the Group (4th resolution)
As a reminder, the Management Board decided to comply with the
recommendations of the AFEP/MEDEF Business Governance Code
with regards to the article 39 pension plan for Group managers
who are subject to French social security plans. Consequently, it
has been decided to implement the new article 39plan that will
eventually replace the current article 39plan. The new article 39
plan makes a provision for linking acquisition of rights to length of
service in the company, a provision that does not exist in the current
article 39plan. Its general structure is presented on page 131.
This new article 39 plan, which benefi ts the members of the
management board, was approved under the terms of the
regulated agreements, by the Shareholders’ Meeting of May 3,
2012. In accordance with the regulations, it has been outsourced.
An insurance contract for defi ned benefi t company pensions (article
L.137-1 of the Social Security code) was signed on February23,
2012 by Schneider Electric SA and Schneider Electric Industries
SAS with AXA France Vie. This contract was approved at the
Annual Shareholders’ Meeting of May3, 2012.
The Management Board decided to outsource commitments
under the current article 39 plan, which supports 36 retirees,
including the Chairman of the Supervisory Board, 10employees,
including members of the Management Board, as well as past
article 39plans: the ex-SEP plan (1 retiree), the ex-CAVICA plan
(6retirees). To this end, an outsourcing contract was signed with the
company AXA France Vie following an invitation to tender issued by
an independent fi rm. The contract was authorized on May3, 2012
by the Supervisory Board under the terms of regulated agreements;
the Chairman of the Supervisory Board and members of the
Management Board benefi t directly or indirectly.
The Supervisory Board of May3, 2012 also authorized the signature
of an amendment to the article 39 plan outsourcing contract with
AXA France Vie to set the effective date of April30, 2012, which was
originally scheduled for July1, 2012. The purpose of this change
was to align the date of entry into force of the outsourcing contract
of the new article 39 plan with that of the current and former article
39plans.
Amendment to Jean-Pascal Tricoire’s status
(5th resolution)
We remind you that pursuant to the TEPA act, the Shareholders’
Meeting of May 3, 2012 approved the renewal of the changed
status of Jean-Pascal Tricoire decided by the Supervisory Board
on February21, 2012 on the occasion of the renewal of his term as
Chairman of the Management Board. Thus, Mr.Tricoire:
1°) benefi ts from:
–the supplementary cover available to the Group’s French
senior executives for health, incapacity, disability and death.
This contingency and supplementary cover compensation
is subject to performance criteria. Compensation is subject
to one of the following two criteria being present: positive
average net profi t of the fi ve years preceding the event, or
positive average free cash fl ow for the fi ve years preceding
the event,
–the Schneider Electric SA and Schneider Electric Industries
SAS employee benefi t plan, which offers health, incapacity,
disability and death cover;
–the top-hat pension plan for the Schneider Group’s French
directors described above;
2°) benefi ts from involuntary severance pay. This severance pay
is capped, taking into account the compensation provided for
in the non-compete agreement described below, at twice the
average of the effective annual remuneration for the last three
years (hereinafter “Maximum Amount”). The amount due will be
subject to performance criteria.
Compensation will be due in the event that:
(i) Mr. Tricoire resigns, is dismissed or is not reappointed as a
member or President and CEO in the 12months following a
material change in Schneider Electric’s shareholder structure
that could change the membership of the Supervisory Board,
(ii) Mr. Tricoire resigns, is dismissed or is not reappointed as a
member or President and CEO following a reorientation of the
strategy pursued and promoted by him until that time, whether
or not in connection with a change in Schneider Electric’s
shareholder structure as described above,
(iii) Mr. Tricoire is asked to resign, is dismissed or is not reappointed
as a member or as President and CEO when the mathematical
average of the rate of achievement of Group objectives used
to calculate his variable bonus was 50% or higher in the four
completed fi nancial years preceding his departure.
Compensation will depend on the mathematical average of
the rate of achievement of performance objectives used to
determine the variable portion of Mr. Tricoire’s remuneration for
the three completed fi nancial years preceding the date of the
Board meeting at which the decision is taken.
If the mathematical average of Group performance objectives
rate over the past three fi nancial years is:
– < to 50% of the target: no compensation will be paid,
– = to 50% of the target: he will receive 75% of the Maximum
Amount,
– = to 100% of the target: he will receive 100% of the Maximum
Amount,
– between 50% and 100%: he will receive between 75% and
100% of the Maximum Amount calculated on a straight-line
basis according to the rate of achievement;
3°) retains forthwith, subject to performance criteria, the benefi t
of his stock options, stock grants and performance shares
granted to him or that will be granted to him, should he leave
the Company. The performance criterion depends on the
mathematical average of the rate of achievement of Group
objectives, which is used to determine the variable portion of
Jean-Pascal Tricoire’s remuneration for the three completed
fi nancial years preceding his departure, being equal to at least
50% of the target;
4°) unless a mutually agreeable arrangement is found, should
Mr.Tricoire leave the Company it may invoke his non-compete
agreement, which calls for monthly payment of an amount
equivalent to 60% of the average monthly compensation for
the last twelve months of presence: (salary plus paid bonus).