Registration Document 2011 - Schneider Electric

3 ORGANISATIONAL
CORPORATE GOVERNANCE
AND OPERATING PROCEDURES OF THE SUPERVISORY BOARD
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2. Organisational and operating
procedures of the Supervisory Board**
Missions and powers of the Supervisory Board
The Supervisory Board exercises ongoing control over the
Management Board’s management of the Company, in accordance
with French law. To this end, it performs all the checks and controls
that it considers appropriate and obtains copies of any and all
documents that it considers necessary in order to fulfi l its duties.
Specifi c powers are vested in the Supervisory Board under French
law and the Company’s articles of association. These include the
power to:
• appoint the Management Board, designating the number of
members that compose it as well as its Chairman. Establish the
compensation of the members of the Management Board;
• if necessary, remove Management Board members from offi ce;
• authorise fi nancing transactions that may have a substantial
effect on the Company’s fi nancial structure (loans, increase in
share capital etc.);
• authorise material business acquisitions and disposals, meaning
strategic transactions amounting to more than EUR250 million, as
well as strategic partnerships;
• authorise the creation of stock option plans or stock grant plans,
with or without performance criteria;
• authorise the signature of regulated related party agreements;
• authorise the issuance of bonds and other guarantees, subject to
compliance with French law.
The Supervisory Board also authorises recommendations made at
the Annual Shareholders’ Meeting concerning the dividend, Board
membership and changes statutory changes.
The Supervisory Board may appoint between one and three
non- voting members and decide to create Board committees. It
draws up internal rules. It determines the allocation of attendance
fees; the total amount is determined by the Annual Shareholders’
Meeting .
Internal rules and procedures of the Supervisory Board
The Supervisory Board’s internal rules and procedures, adopted
on May 3, 2006, include the internal rules and procedures of the
Board committees (the Remunerations and Appointments and
Human Resources Committee and the Audit Committee) as well as
the Director’s charter recommended by the AFEP/MEDEF corporate
governance guidelines. It has been amended on several occasions.
The internal rules and procedures of the Supervisory Board are
made up of 13 articles:
Article 1 defi nes the role and powers of the Supervisory Board
(see above). It specifi es the Management Board decisions that
require the prior approval or consultation of the Supervisory Board.
In particular, acquisitions amounting to more than EUR250 million
require the prior approval of the Supervisory Board.
Article 2 defi nes the principles applied by the Supervisory Board
concerning the renewal of its membership. These include assuring
international representation by maintaining a signifi cant number
of non-French members, maintaining independence through a
majority of independent members as defi ned in the AFEP/MEDEF
corporate governance guidelines, ensuring continuity through
the re-election of a certain proportion of the members at regular
intervals and enabling representation of employee shareholders.
Article 3 defi nes the procedures for organising and conducting
Supervisory Board meetings (notice of meeting, methods of
participation, minutes, etc.).
Article 4 defi nes the role and powers of the Chairman of the
Supervisory Board. The Chairman leads the work of the Board.
He is regularly informed by the Management Board’s Chairman of
material events and developments in the life of the Group.
Article 5 concerns information received by the Supervisory Board.
It stipulates that Supervisory Board members shall receive any
information required to enable them to fulfi l their duties and that
they may request any necessary or relevant documents prior to any
meeting of the Board. The article also describes the content of the
Management Board’s quarterly reports to the Supervisory Board,
to be drawn up in accordance with Article L.225-68 of the French
Commercial Code. It stipulates that the Management Board should
present the Supervisory Board with annual targets, strategic and
operational plans.
Article 6 defi nes the status of members of the Supervisory Board.
This is in compliance with the Director’s charter contained in the
AFEP/MEDEF corporate governance guidelines.
It states that Supervisory Board members must:
• represent all shareholders and act in the corporate interest;
• resign from the Board when they have not participated in more
than half the Board meetings;
• comply with an overall obligation of confi dentiality;
• report any and all confl icts of interest;
• hold at least 250 shares of Company stock;
• abide by strict rules regarding transactions involving Schneider
Electric SA stock (no trading allowed in the 31 days preceding
116 2011 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC