Registration Document 2005 - Total.com

5
Corporate Governance
Report of the Chairman of the Board of Directors
(Article L. 225-37 of the French Commercial Code)
The Committee meets at least four times a year to examine the
consolidated annual and quarterly financial statements.
The Audit Committee may meet with the Chief Executive Officer,
perform inspections and interview managers of operating or
functional entities, as may be useful in performing its duties.
The Committee meets with the independent auditors and examines
their work, and may do so without management being present.
If it deems it necessary for the accomplishment of its mission, the
Committee may request from the Board the means and resources
to make use of outside assistance.
The Committee submits a written report to the Board of Directors
regarding its work.
The Committee members are Messrs. Jacques Friedmann,
Bertrand Jacquillat and Thierry de Rudder, each of whom is an
independent Director.
The Committee is chaired by Mr. Friedmann, who has also been
appointed as Audit Committee Financial Expert.
As of December 31, 2005, the Committee members’ length
of service as Directors of TOTAL was five years, nine years,
and six years, respectively.
Audit Committee activity
The Audit Committee met on seven occasions in 2005, with an
effective attendance rate of 100%.
At its meeting on February 14, the Committee reviewed the
accounts for the fourth quarter 2004 and the consolidated earnings
of the Group and parent company accounts of TOTAL S.A. for
2004 as well as the draft report of the Chairman on internal control
procedures. A presentation was also made on the internal audit
work plan for 2005.
The meeting on March 30 was dedicated to reviewing the
consolidated financial statements under IFRS and U.S. GAAP. The
Committee also discussed the independent auditors’ fees, the
outlook for 2005, currency risk management and the accounting
treatment of derivatives.
In the second quarter, the Committee met on May 2 to review
the consolidated accounts for the first quarter. On June 29, the
Committee reviewed the results of its self-evaluation, which had
been conducted with the assistance of an external consultant.
This evaluation was favorable overall and presented suggestions
for improving certain practices. At this meeting, the Committee
also modified its charter and evaluated the progress of the
implementation of the internal control provisions under the
Sarbanes-Oxley Act.
108 TOTAL - Registration Document 2005
In the second half, at its meeting on August 3, the Committee
reviewed the accounts for the second quarter and the first half.
On October 17, the Committee examined the current state of the
project to spin off Arkema and a study of the changes in working
capital of the Group.
On November 2, the Committee reviewed the accounts for the
third quarter 2005 and the budget for the work of the independent
auditors.
Each quarter, the Committee reviewed the financial condition of the
Group and the work performed by the internal audit department.
The Nominating & Compensation Committee
The principal objectives of this Committee are to:
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recommend to the Board of Directors the persons that are
qualified to be appointed as Directors or corporate officers and to
prepare the corporate governance rules and regulations that are
applicable to the Company; and
review and examine the executive compensation policies
implemented in the Group and the compensation of members of
the Executive Committee, recommend the compensation of the
Chief Executive Officer, and prepare any report that the Company
must submit on these subjects.
It performs the following specific tasks:
1. With respect to nominations:
a) assists the Board in the selection of Directors, corporate
officers, and Directors as Committee members;
b) recommends annually to the Board the list of Directors who
may be considered as “independent Directors” of the Company.
2. With respect to compensation:
a) makes recommendations and proposals to the Board regarding:
(i) compensation, the retirement and pension system, in-kind
benefits, and other financial benefits of the executive Directors
of TOTAL S.A., including retirement, and
(ii) allocations of stock subscription or purchase options and
specifically allocations to individual executive Directors;
b) examines the compensation of members of the Executive
Committee, including stock option plans, restricted stock
grants and plans based on movements in share price
(“equity-based plans”), retirement and pension systems,
and benefits in-kind.