Annual report 2009 - Dexia.com

Corporate governanceManagement reportConsolidatedfinancial statementsAnnual financial statementsAdditional informationExtralegal pensionsSome members of the Management Board benefit from anextralegal pension scheme set up by Dexia. Various schemesare applicable to each of the members.• Claude Piret and Stefaan Decraene are entitled, subjectto certain conditions, in particular a minimum career of 35years, to a benefit equal to an annual retirement annuity,if they enter retirement, to an amount of 80% of a cappedfixed compensation. In 2007, Dexia decided to close thisextralegal supplementary pension scheme whilst maintainingthe acquired and future rights of the persons affiliated priorto 31 December 2006.• Pierre Mariani and Philippe Rucheton benefit from the newscheme of the extralegal pension plan for members of theManagement Board under Belgian contracts. At the time ofretirement, they will be entitled to the capital constituted bythe capitalisation of annual contributions. These represent afixed percentage of a capped annual fixed compensation.Annual premiums of EUR 547,900 were paid in 2009 infavour of the members of the Management Board under Belgiancontract, including EUR 147,830 for the Chief ExecutiveOfficer.Annual collective premiums of EUR 199,910 were paid in2009 in favour of members of the Management Board underBelgian contract for additional cover for death, permanentdisability and the costs of medical treatment, and EUR 5,780in favour of the member of the Management Board underFrench contract for obligatory and supplementary cover fordeath, permanent disability and medical costs.Conditions relating to departureIf Dexia terminates the contract binding him to Dexia, PierreMariani will be entitled to a single lump-sum amount of compensationto be determined in relation to the AFEP-MEDEFrules in force.If Dexia terminates the contract binding them to Dexia, StefaanDecraene and Claude Piret will be entitled to an amountof compensation equal to the fixed and variable compensationand other benefits corresponding to a period of 24months.If Dexia terminates the contract binding him to Dexia, PascalPoupelle will be entitled to an amount of compensationcalculated on the basis of agreements applicable within thecompany.If Dexia terminates the contract binding him to Dexia, withintwelve months of a change of control, Philippe Rucheton willbe entitled to an amount of compensation equal to the fixedand variable compensation corresponding to a period of 18months, notwithstanding the rules of Common Law whichmight be applicable.Principles of compensation of top executivesCompensation is examined once per annum during the firstquarter of the year. It is determined for top executives of thedifferent subsidiaries and under-subsidiaries of the Group inrelation to the general principles and orientations decreed bythe Group Appointment and Compensation Committee.Fixed compensation is determined by taking account of localmarket references and the responsibilities carried.Variable compensation takes account both of Group performancecriteria and also performance criteria specific to theactivity of the top executive and his business line.Taking individual performances into account revolves in particulararound the annual assessment to which each executiveis subject. In fact, each top executive is assessed with regardto the achievement of objectives, in particular financial andcommercial targets, assigned to them within the context ofannual budget procedures.A comparative analysis is carried out annually of the competitivepractices observed on the different activities of the Group(financial markets, private banking, asset management, commercialbanking and so on) in comparable groups. The compensationsystems of the principal subsidiaries are subject tovalidation at Group level in order to ensure their consistencywith the general principles decreed at a global level.Dexia Group controlInternal auditInternal Audit is an independent and objective activity whichhas the task of giving the Dexia Group an assurance on thedegree of risk control. To that end, in accordance with thehighest standards and homogeneously for all Dexia activitiesand entities, Internal Audit ensures the efficient nature andeffective application of the internal control system in place,and if necessary makes recommendations aimed at improvingefficiency.Internal Audit assists the Boards of Directors of all the entitiesof the Group in their surveillance role and the Group ManagementBoard and the Management Boards of the entitiesin achieving their objectives.More precisely, in performing its tasks, Internal Audit assessesin its work whether the risks run by the Dexia Group in itsvarious activities and in all its entities are adequately coveredand that residual risks are in line with management’s perceptionof them. Internal Audit is also attentive to the constantimprovement of the operation of all Group entities, whilstensuring available means are managed efficiently.A common audit charter states the fundamental principlesgoverning the function of Internal Audit in the Dexia Group,describing its objectives, its role, its responsibilities and itsmode of operation. Having regard to the developments onthe organisation plan and the audit methodology within theGroup, this charter Is currently being reviewed and updated.The strategy, the level of requirement and the operating rulesof the Dexia Group Internal Audit are fixed by the ManagementBoard of Dexia SA, within a framework approved bythe Audit Committee of the Board of Directors of DexiaSA which takes account of the requirements of legislationsand local regulations or instructions from prudential controlauthorities.In performing its tasks, Internal Audit has access to all theinformation, documents, premises and persons of the Group.All the activities and entities of the Dexia Group fall withinthe scope of action of Internal Audit, without reservation orexception. Indeed the function of Internal Audit within theDexia Group covers the activities of Dexia SA, the opera-42Dexia Annual report 2009