A N N U A L R E P O R T - Bouygues

should monitor the performance-related element
of corporate officers’ pay. It does not allow
senior executives to be awarded stock options
at a discount.
The rules of procedure provide that at least two
directors must be independent within the meaning
of the European Recommendation and the
AFEP-MEDEF report.
1.2. Review of the business of
the Board of Directors in 2005
The Board met five times in 2005. The attendance
rate of the directors was 88%.
In addition to the decisions and votes included
on the agenda under the prevailing laws and
regulations, the Board considered the proposed
privatisation of three motorway concession companies,
and the proposed merger between TPS
and CanalSatellite.
On 1 March 2005 it examined the impact of
the transition to IFRS on 31 December 2004,
and decided to create the Francis Bouygues
Foundation, intended to provide study grants to
deserving young people.
On 28 April 2005, it agreed the text of the replies
to be given to written questions formulated by
shareholders.
On 21 June 2005, it decided to launch a €250
million capital increase, reserved for employees,
through the creation of a new leveraged mutual
fund; it authorised the company to compensate
for the dilutive effect of this increase in the
share capital by purchasing shares with a view
to their cancellation; it decided to create a Group
pension fund; it approved the planned acquisition
by Bouygues of the BNP Paribas Group’s stake in
Bouygues Telecom; it examined the transactions
resulting in the completion of the sale of Saur
to PAI partners; and it analysed and agreed the
principle and terms of bond issues. One such
issue was completed on 21 July 2005 in a global
amount of €750 million. The Board also authorised
a stock option plan for the benefit of directors
and employees of the Group, and cancelled
1,048,873 shares in the company that had been
bought back.
On 13 September 2005, the Board approved the
decision taken by the Group not to make a bid
in the context of the privatisation of the three
motorway concession companies in France. It
examined the accounting treatment of the agreement
with BNP Paribas relating to the potential
purchase of its stake in Bouygues Telecom.
On 13 December 2005, the Board discussed the
proposed merger between TPS and CanalSatellite,
and cancelled 7,312,776 shares that had been
bought back. It also debated its own organisation
and operating methods.
More generally, the Board regularly reviewed
developments in each of the Group’s lines of
business. The strategic options and business
plans of each line of business and of the parent
company were presented to the Board for its
approval. Every ordinary meeting of the Board
commenced with a detailed presentation of the
business and key figures of the company and its
main subsidiaries.
After hearing the reports from the committees
concerned, the Board also drew up its
management report, approved the annual and
quarterly accounts, drew up the special report on
stock options, reviewed the financial statements,
approved the prospectus for the share buyback
programme and set the amount of the dividend.
1.3. Work of the committees
established by the Board
The Board has established four committees
whose remit and operating rules are defined in
the Board’s rules of procedure.
1.3.1. Accounts Committee
The Accounts Committee, created in 1995, reviews
the quarterly and annual accounts before they
are presented to the Board, ensuring that
the accounting methods used to draw up the
accounts are both relevant and consistent, and
verifying the internal reporting procedures used
for the collection and monitoring of the information
on which the accounts are based. It also
supervises the appointment of the auditors.
The members of the Accounts Committee are
Michel Rouger (Chairman), Patricia Barbizet and
Georges Chodron de Courcel. Michel Rouger and
Georges Chodron de Courcel are independent
directors. Charles de Croisset, an independent
director, was appointed to the Committee in
February 2006.
The Committee met four times in 2005 and the
attendance rate of its members was 66.66%.
The Committee verified the comparability of
the accounts after changes in the scope of
consolidation of the Group, and ensured that the
extent of the audit was sufficient. It analysed the
provisions included in the accounts according to
subject matter and scope, and reviewed the quarterly
accounts. It also examined the measures
taken by the Group with a view to the adoption
of IAS/IFRS, and approved the provision of information
regarding the transition from the old to
the new accounting principles. It checked the
valuations of intangible fixed assets, goodwill,
provisions for risks and charges and deferred
tax assets.
The Accounts Committee also examined the following
matters:
• control structure of Saur;
• brand awareness surveys carried out for
Eurosport;
• treatment of the UMTS fee;
• Bouygues Construction sites at risk;
• sales of hotels and guarantees of income given
to customers at Bouygues Immobilier;
• activation of deferred taxes;
• analysis of movements in TF1’s programme
stock;
• universal service and customer loyalty provisions
at Bouygues Telecom;
• Portsmouth contract entered into by Colas;
• BFR goodwill and development;
• operations for the cancellation of shares;
• treatment of the Bouygues Confiance 3 plan;
• fiscal deficits of TF1 Expansion;
• revaluation of 2006 World Cup rights; and
• procedures implemented at Bouygues
Construction and TF1.
In the context of its business, the Accounts
Committee interviewed the Group’s Finance
Director, Accounts and Audit Director and auditors,
without senior executives present.
1.3.2. Remuneration Committee
The Remuneration Committee was created in
1996 with the task of putting proposals to the
Board concerning the remuneration and other
benefits of corporate officers. Its members are
Pierre Barberis (Chairman) and Patricia Barbizet.
Pierre Barberis is an independent director.
The Committee met once in 2005 and the attendance
rate of its members was 100%. It considered
the remuneration of corporate officers
and the stock options awarded to them. It also
examined and put to the Board reports on the
remuneration of corporate officers and the award
and exercise of stock options during the year.
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