APC 2013 Annual Report Download - page 128

3CORPORATE GOVERNANCE
This report includes the Chairman’s report on the composition of the board of directors, the application of the principle
of equal representation of women and men on the board of directors, and the conditions applicable for the preparation
and organization of the work carried out by the board of directors, and the internal control and risk management
procedures implemented by the company.
The sections governance structure, 1, 2, 3, 4, 7 (Group senior management compensation policy, Pension benefits and
Compensation of members of the board of directors), 9 and 10, and Section2 (Annual Shareholders’ Meetings and
Voting Rights) and 7 of Chapter7 constitute the Chairman of the board of Director’s report provided for in
articleL.225-37 of the French Commercial Code. They are indicated with**.
Governance structure**
Since May2006, the governance of Schneider ElectricSA has been based on a dual structure (supervisory
board/management board), composed of a management board and a supervisory board. In 2012, Henri Lachmann,
having expressed his intention to the Board to resign as Chairman of the supervisory board, the supervisory board has
considered it necessary to strengthen his role and his involvement in the supervision of the Group by adopting an
organization with a board of directors.
The dual structure has been successful in ensuring the succession of the head of the Group's Senior Management.
However, this structure, which relies on two bodies – a supervisory board and a management board, no longer
appeared entirely appropriate to the situation of Schneider Electric. The French Commercial Code limits the maximum
number of members of the management board to seven and provides for the collective operation.
This limit on the number of management board members was incompatible with the managerial organization
implemented by Jean-Pascal Tricoire, which provides for a managerial line of more than ten managers in order to be
closer to customers and employees. In addition, to cope with the extreme volatility of the environment, it should be
extremely responsive. But the ability to respond is difficult to reconcile with a cumbersome collective operation.
Moreover, practice has shown that the two levels of governance, that of the management board to which the Executive
Committee is attached, and that of the supervisory board, did not facilitate close working relationships between the
members of the supervisory board and the members of Executive Committee. The return to the combined structure will
allow members of the board of directors to have a deeper understanding of the business thanks to more direct contact
that they will be able to have with members of the Executive Committee.
On February20, 2013 the supervisory board approved proposed amendments to the articlesof association required for
the implementation of this change. The annual shareholders’ meeting of April25, 2013 approved them and appointed
the members of the new board of directors.
The board of directors of April25, 2013 was called to approve the unification of the functions of Chairman of the board
and Chief executive officer, and appointed Jean-Pascal Tricoire as Chairman and CEO. The board considered the
unification of functions and the appointment of Jean-Pascal Tricoire to be the most appropriate decisions, considering:
its composition, with largely more than 50% of independent directors;
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the economic environment, which requires responsiveness by the leadership and clarity in naming the person in
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charge of directing the Group. This clarification given by the use of the title of Chairman and CEO is particularly
necessary vis-à-vis employees, customers and partners, in France and abroad;
provisions to ensure accurate information and effective functioning by the board of directors, in particular the
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institution of an Independent Vice-chairman Lead Director, of the principle of holding an executive session at each
meeting of the board presided over by the Independent Vice-chairman Lead Director, and the creation of four
Committees of the board;
the experience and achievements of Jean-Pascal Tricoire. Since 2006, when he was made head of the Group, the
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revenue of Schneider Electric is up from EUR11.7billion to EUR24billion; and the Group share of net income is up
from EUR994million to EUR1,840million;
the obligation of the board of directors to reconsider each year the unification of the functions of Chairman of the
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board of directors and Chief executive officer.
The company applies the AFEP/MEDEF corporate governance guidelines. There are a few exceptions, which are
described below (see Section10).
The guidelines are available online at www.medef.fr.
126 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC