Annual report 2005 - Dexia.com

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DexiaCorporate governanceCompensationThe compensation of the members of theManagement Board is set by the Board ofDirectors of Dexia SA upon recommendationof the Compensation Committee. Thecompensation of the members of theManagement Board has been the subjectof a study conducted by the CompensationCommittee with the assistance of a specializedexternal consultant.The compensation of the members of theManagement Board is composed of a fixedportion and a variable portion. The amountof the fixed compensation is set on the basis ofthe type and importance of the responsibilitiesperformed by each member, with referenceto the market for comparable positions.Thevariable portion is based on a performancecriterion of the Group, i.e. the 2004/2005evolution of Dexia’s net underlying results.The amount of the variable portion willbe determined according to the capacity torespect the budget fixed in the beginning of2005 regarding the estimated net underlyingresults as of December 31, 2005. In addition, anexceptional bonus of 0% to 20% (discretionaryelement) may be added to the amount grantedunder the variable portion. These exceptionalbonusses are set by the CompensationCommittee, upon recommendation of theChief Executive Officer for the members of theManagement Board.In addition to the fixed and variablecompensation, the members of theManagement Board benefit from otheradvantages, including an extralegal pensionscheme (based on the applicable nationalregulations), a death and health insurance,a company car and lump sum paymentsfor representation costs. Members of theManagement Board may also participate inDexia’s stock option plan and share plan.Any compensation received by a member of theManagement Board in his capacity as directorof a company of the Dexia Group is deductedfrom his fixed or variable compensation.The fixed part of the annual compensation paidin 2005 to the members of the ManagementBoard in office in 2005 was EUR 3,935,000,ofwhich EUR 825,000 to the Chief ExecutiveOfficer. The variable portion of the annualcompensation paid in 2005 to the members ofthe Management Board in office in 2005 wasEUR 3,723,810, of which EUR 950,000 to theChief Executive Officer.The aggregate charge for Dexia regarding theextralegal pension scheme of the membersof the Management Board in office in 2005amounted to EUR 4,804,600. The otheradvantages granted to the members of theManagement Board in office in 2005 amountedto an aggregate cost for Dexia of approximatelyEUR 242,100.As part of the 2005 stock option plan, allmembers of the Management Board received atotal of 630,000 Dexia stock options, of which150,000 were granted to the Chief ExecutiveOfficer in office in 2005. In total, this representsapproximately 6.3% of all options granted in2005.The individual compensation paid in 2005 to themembers of the Management Board in office in 2005is given in detail in the Annual Report - Accounts andReports on pages 34 to 36.118
Annual Report 2005Group controlInternal auditDexia has a homogenous internal auditfunction that meets the highest standards.The mission of this function is to promoteinternal control within the Group and toensure continuous performance and effectiveapplication of the control system in force.This requirement is consistent with theGroup’s desire to ensure that the protection ofits reputation and the efficiency and integrityof its structures are priority values.In this context, the internal audit teamevaluates whether the risks incurred byDexia in its activities and in all its entities areidentified, analyzed and adequately covered.The internal audit team must also ensurecontinuous improvement in the operations ofthe Group.OrganizationThe internal audit organization is based onthree fundamental principles:• the strategy, requirement level and operatingrules for the internal audit are set by theManagement Board in a framework approvedby the Audit Committee of Dexia SA;• internal audit’s responsibilities areperformed by a network of auditdepartments that conduct their missionunder the direction of the Group Auditor,who reports directly to the Chief ExecutiveOfficer, Chairman of the Management Board.The Group Auditor has direct access to theAudit Committee to which he/she regularlyreports on the internal audit operationswithin the Group. At the same time, boththe Audit Committee and the Chairman ofthe Board may call on the Group Auditor toperform an audit;• each audit department in the subsidiaries isresponsible for the performance of its missiontowards the Chairman of the ManagementBoard of the entity in question and alsoreports functionally to the Group Auditor.2005 MissionsIn the financial year 2005 several significant“horizontal audits”, involving auditors fromboth Dexia SA and operating entities werecompleted.Notably “horizontal audits” were conducted:on the long-term funding, on the countryrisk monitoring, on the organization ofthe credit spread portfolio activity line andwithin the framework of Basel II, on theinternal rating systems and operationalrisks. In addition, a follow up audit on theprogress of the IFRS project was conducted.Dexia SA’s audit department also initiatedaudits on areas of interest to the Group,including the organization of marketmodelling and the functioning of the GroupCompliance, and conducted “joint” auditswith the audit departments of certainsubsidiaries, including FSA in the UnitedStates.Furthermore each of the Group’s fourcommercial business lines was subject tospecific audits involving, in particular,credit, market and operational risks. Theinformation systems were analyzed intenselybecause of the changes resulting from theregulatory environment (IFRS and Basel II)and the impact of the organizationalchanges in the Group (reorganization of thesystems at Dexia Bank following the mergerwith Artesia Banking Corporation).119
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ANNUAL REPORT 2005no achievement wi
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Annual Report 2005Business linesPub
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Annual Report 2005EARNINGSPER SHARE
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Annual Report 2005(stock market per
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In October 1996, Dexia wasborn of t
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Annual Report 20051 Axel Miller - 2
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Annual Report 2005The alliance has
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Milestone 2The Dexia share,sustaina
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Annual Report 2005STOCK EXCHANGE DA
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Annual Report 2005Every year, Dexia
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Annual Report 2005• Providing reg
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Annual Report 2005The 2005 Dexia/TN
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Milestone 3The Dexia Corporate Univ
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Annual Report 2005Analysis of the s
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Annual Report 2005STATEMENT OF INCO
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Annual Report 2005below). If those
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Annual Report 2005Commenting on the
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Annual Report 2005Costs• In Q3 20
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Annual Report 2005Total shareholder
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It was in 2000, with the acquisitio
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Milestone 6The Bank forRenewable En
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