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Continued from page 47The executive management is charged by the Board withimplementing strategic policies. It is empowered to conductthe day-to-day strategic and operational management including,inter alia, the financial management of the Group. It is responsiblefor the management of the Group’s underlying businesses andinvestments, subject at all times to an obligation to provideadequate information on the development of those businessesto the Board.The Board employs various reporting means and controlmechanisms in order to monitor the way in which seniormanagement exercises the authority delegated to it.• Prior to each meeting of the Board, members receive a financialreport, summarising recent Group, divisional and Maisonfinancial performance as well as operational developments.• The Group Chief Executive Officer and Group Finance Directorreport to the Board at each meeting. Supplementary reports areprovided, as required, by the Director of Corporate Affairs, theDirector of Corporate Finance and the Lead Counsel and ChiefIntellectual Property Counsel as well as the Company Secretary.• The Group’s employee performance review process requires thatmembers of senior management are given clearly defined targetsat the beginning of each financial year. The executive directorsof the Board monitor performance against these targets on anongoing basis and report progress to the Board.• There is regular interaction between members of the Boardand the Management Committee, for example, through thepresence of certain executive directors on a regular or ad hocbasis at Board meetings and other Board committee meetings,as outlined above. Members of the Board are also exposedto the decision-making process at the level of each Maisonthrough their involvement with the annual reviews of theMaisons’ strategies and through the Strategic Product andCommunication Committee.• The Group’s internal audit function provides an objectivemeans of assessing how the Group’s risks are being managedand controlled. This function’s independent status is reinforcedby the direct reporting line from the Head of Internal Audit to theChairman of the Audit Committee. The function performs financialand operational audits in accordance with a programme approvedannually by the Audit Committee. This risk-based programme isdesigned to ensure that all business units as well as Group-wideissues are given sufficient audit coverage within an appropriatetimeframe. Findings from each audit, together with any relatedaction plans, are reported in detail to senior management;summary reports are provided to the Audit Committee anddiscussed at Audit Committee meetings. Progress with theimplementation of corrective actions is monitored by seniormanagement and the Audit Committee on a regular basis.Management contractsWith the exception of the contract between Atelier Fund, LLCand Atelier Management, LLC described in note 33(e) on page 99of this report, there are no contracts between the Group and anythird parties for the management of any subsidiary or associatedcompany in the Group.5. COMPENSATION, SHAREHOLDINGS AND LOANSContent and method of determining the compensation and shareownershipprogrammesThe Group’s compensation policies are designed to ensurethat Group companies attract and retain management talent,recognising the international nature of their businesses. TheGroup sets high standards in the selection of executives whoare critical to the long-term development of the business.The Compensation Committee of the Board is responsible forsetting the compensation of the non-executive directors and theexecutive directors of Compagnie Financière Richemont SAtogether with that of the Executive Chairman and for reviewingthe compensation of all other members of senior management.Executives are rewarded in line with the level of their authorityand responsibility within the organisation. In addition to a basicsalary, they generally receive short-term incentives related to theirindividual achievements and the performance of the Group asa whole. Both elements are reviewed annually in accordancewith the Group’s salary review process. Increases in basic salaryare determined by reference to a set of competencies requiredto fulfil the role, the length of time in the position and marketbenchmarking statistics provided by an external consultant.The level of short-term incentive is dependent on performanceagainst a range of individual key performance indicators andcollective strategic objectives, established at the beginning ofthe year. These indicators and objectives relate to the potentialof the area of the business for which the individual is responsible.The level for executives is typically between 30 per cent and40 per cent of basic salary, with further incentives for exceptionalperformance.Executives are also eligible to participate in the Group’s stockoption plan, details of which are set out on page 103 of thisreport. Option awards are linked to each executive’s salary leveland performance. The Group does not operate any schemes toissue shares to executives as part of their compensation package.The 2008 grant of options included vesting conditions linkedto the performance of the Company’s share price relative toa comparative group of luxury goods businesses.The Group also operates a long-term incentive plan. The purposeof this plan is to motivate and reward Maison executives bylinking a major part of their compensation package to the valueadded to the area of the business for which they are responsible,typically over a three-year period.Directors are reimbursed for travel and other necessary businessexpenses incurred in the performance of their duties.Non-executive directors receive an annual fee in respect of theirmembership of the Board. The level of this fee is kept underreview by reference to comparable external figures. Non-executivedirectors are not eligible for performance-related payments anddo not receive awards under the Group’s stock option plan.There is no scheme to issue shares to non-executive directors.Non-executive directors who are also members of the CompensationCommittee or the Audit Committee are entitled to receive anattendance fee of € 3 200 (CHF 5 000) and € 6 400 (CHF 10 000)for each respective Committee meeting.50 Richemont Annual Report and Accounts 2009Corporate governance