Annual report 2006 - Dexia.com

CORPORATE GOVERNANCE
MANAGEMENT REPORT
COMPTES CONSOLIDÉS
COMPTES SOCIAUX
In the context of its responsibilities, the Audit Committee:
• analyzes the financial information and the accounting procedures
and, in particular:
– is informed of the work of the Statutory Auditors and discusses
their findings, comments and recommendations by
giving them the opportunity during each meeting to express
their views in the presence of the members of the committee
only;
– may suggest further work if deemed appropriate;
– ensures that the policy on the independence of Statutory
Auditors is respected and gives advice on their appointment.
• reviews the existence and implementation of the procedures
to assess and control credit, market and operational risks; for
this purpose, the Audit Committee reads the conclusions of
internal audits and ensures that the recommendations made
are effectively followed;
• may also recommend additional audits;
• approves by proxy the audit charter, the audit universe, the
audit plan and the resources available to the internal audit
and compliance departments;
• is consulted regarding the rules of ethics in force within the
Group.
The Audit Committee ensures the performance and the independence
of the operations of the compliance department.
The Audit Committee meets at least four times a year. Three
of these meetings take place prior to the Board of Directors’
meetings called to approve the annual and quarterly financial
statements. The committee may meet at the request of one
of its members, or the Chairman of the Board of Directors. It
reports the results of its work and its comments to the Board
of Directors.
Operation and activities in 2006
In 2006, the Audit Committee met four times: January 13,
February 23, May 11 and September 1 to study the following
issues:
• presentation of the Dexia corporate and consolidated financial
statements and results for the year ended December 31,
2005;
• follow-up of recommendations of the audit as of September
30, 2005;
• quarterly risk review as of December 31, 2005;
• 2005 report on risk measurement and monitoring;
• 2005 activity report on internal audit;
• annual report on internal controls and on internal audit
activities in 2005;
• presentation of the report of the Chairman of the Board of
Directors on the activities of the Board of Directors and of the
internal report in 2005;
• audit program for 2006 and the multi-year 2006-2009
plan;
• presentation of the results as of March 31, 2006;
• quarterly report on internal audit activities and the followup
to recommendations as of March 31, 2006;
• progress in the Basel II process;
• situation in the Netherlands;
• important legal issues, including Lernout & Hauspie;
• monitoring the independence process for the auditors;
• review of the Dexia corporate and consolidated financial
statements and results for the period ended June 30, 2006;
• monitoring the Compliance situation in the Group;
• quarterly risk review as of June 30, 2006;
• renewal of the term of office and compensation for the
Group’s auditors.
Attendance of each individual director at
Audit Committee meetings
The individual attendance rate of directors at the meetings
of this committee was 100% in 2006, with the exception of
André Levy-Lang, who was excused because he could not
attend the Audit Committee meetings in 2006.
Compensation Committee
Membership
The Compensation Committee is composed of four non-executive
directors who have no relationship that might directly
or indirectly influence their judgment. In this respect, careful
attention is given to the relations that exist on the Boards of
Directors between the officers of Dexia and the companies to
which members of this committee may belong.
If he is not a member, the Chairman of the Board of Directors
attends the meetings of this committee. The Chief Executive
Officer may also attend the meetings of the Compensation
Committee, but may not be a member (as he is not a nonexecutive
director).
The members of the Compensation Committee (as of December
31, 2006) were:
• Anne-Claire Taittinger, independent director and Chairman
of the Compensation Committee since February 7, 2006
• Brian Unwin, independent director
• Pierre Richard, Chairman of the Board of Directors
• Guy Burton, director
Responsibilities (as of December 31, 2006)
The responsibilities of the Committee include:
• the elements of the compensation of the Chairman of the
Board and the Chief Executive Officer and, on the recommendation
of the Chief Executive Officer, the compensation for
the members of the Management Board;
• the stock options granted in application of the general principles
defined by the Board of Directors.
It is also consulted on the compensation and incentives for
the Group top executives, as well as on the employee shareholding
policy.
It also makes recommendations on the fees paid to directors
and the allocation of those fees to directors.
Operation and activities in 2006
The committee meets at least twice a year, no later than
the date of the Board of Directors’ meeting that closes the
accounts for the year. It may also be convened at the request
of the Chairman of the Board of Directors or two of its
members.
It reports to the next meeting of the Board of Directors concerning
the results of its work and its meetings. On request,
it provides copies of the minutes of its meetings to the Board
of Directors.
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Dexia / Annual Report 2006