1.9. AFEP-MEDEF Code Recommendations not Implemented: Application of the “Comply or Explain” Rule
As recommended by the AMF, the table below summarizes those provisions of the AFEP-MEDEF Code with which the company is non-compliant and explains the reasons why, applying the “comply or explain” rule provided for in article L. 225-37 of the French Commercial Code and referred to in article 25.1 of the AFEP-MEDEF Code: AFEP-MEDEF Code recommendations not implemented Obligation for each director to own personally a signiﬁcant number of shares relative to the director’s fees received: if the director does not own these shares when joining the Board, he or she should use the director’s fee received in order to purchase shares A variable portion dependent on attendance in calculating the payment of directors’ fees
Explanation The Board considers that the four directors collectively hold a very large number of shares, and that their concern for the interests of the shareholders is selfevident. It further considers that it is neither necessary nor sufﬁcient to be a large shareholder, individually, to fulﬁll the duties of a director diligently. The two non-executive directors, who individually own fewer shares, have been selected for their independence and their experience outside the company.
In view of the strong commitment displayed by the members of the Board of Directors, in particular the historically high rate of attendance at meetings of the Board of Directors and its Committees, and the number of meetings, the Board has not considered it necessary to establish a variable portion dependent on attendance in calculating the payment of directors’ fees or a supplementary fee to encourage directors’ participation in specialized committees. The company fulﬁlls none of the conditions laid down in the French Commercial Code (employee shareholdings exceeding 3% of the corporate capital or at least 5,000 full-time employees in France or 10,000 worldwide), and is therefore not affected by this provision. The company considers that, given the small number of directors, maintaining the stability of the Board of Directors, with coincident terms of ofﬁce, is an important factor in the proper functioning of the Board and its Committees and guarantees a better understanding of the activities, strategy, challenges and issues speciﬁc to the company. The Audit Committee meets on the morning of the same day on which the Board of Directors meets, prior to the latter’s meeting, in order to shorten the time between the closing of consolidated and statutory ﬁnancial statements and market disclosure. However, the members of the Audit Committee, like those of the Board of Directors, are given sufﬁcient time for consideration insofar as the relevant documents are communicated to them at least three to ﬁve days before their meetings. The Chairman of the Audit Committee systematically communicates the Committee’s recommendations to the Board in the course of the latter’s meeting. The company is not covered by the obligation to appoint employee directors and consequently this recommendation does not apply.
Presence of employee representatives on the Board of Directors Staggering of directors’ terms of ofﬁce
Minimum period of two days between the meeting of the Audit Committee and that of the Board of Directors
Presence of an employee director on the Compensation Committee