Board’s Study Committee

Audit and risks committee

Composition

Since April 25, 2019, the Audit and risks committee has six members: Ms. Cécile Cabanis, Chairperson, Ms. Carolina Dybeck Happe, Messrs. Fred Kindle, Willy Kissling, Ms. Mary Ma and Ms. Fleur Pellerin. Five out of six members are independent, i.e. 83%. Mr. Pierre Lévêque, Director of Internal Audit, is the secretary of the Audit and risks committee.


Operating procedure

The committee meets at the initiative of its Chairperson or at the request of the Chairman and CEO. At least five meetings are held during the year.

The committee may invite any person it wishes to hear to its meetings. The statutory auditors attend meetings at which financial statements are reviewed and, depending on the agenda, all or some of the other meetings. It may also require the CEO to provide any documents it deems to be useful. It may also commission studies from external consultants.

The Deputy Chief Executive Officer, Finance is the spokesperson for the Audit and risks committee.


Responsibilities

A cornerstone of the Group’s internal control system, the Audit and risks committee is responsible for preparing the work of the Board of directors, making recommendations to the Board and issuing opinions on financial, extra-financial, accounting and risk management issues. Accordingly, it:

• prepares for the annual and interim financial statements to be approved by the Board and, more particularly:
  • checks the relevancy and consistency of the accounting methods used for drawing up consolidated and corporate accounts, as well as checking that significant transactions at the Group level have been dealt with appropriately and that rules relating to the scope of consolidation have been complied with,
  • analyses the scope of consolidation, risks, including those of a social and environmental nature, and off-balance sheet commitments as well as the financial position and the cash position,
  • examines the process for drawing up financial and extra-financial information;
• reviews the draft annual report, which is also the registration document which contains information on internal control, and receives comments from the AMF thereon, if any; also reviews the draft reports on the interim financial statements and other main financial documents;
• makes recommendations concerning the appointment or re-appointment of the statutory auditors;
• handles follow-up on legal control of annual and consolidated accounts made by statutory auditors, including by examining the external audit plan and results of controls made by statutory auditors;
• verifies the auditors’ independence, in particular by reviewing fees paid by the Group to their firm and network and by giving prior approval for assignments that, strictly speaking, fall outside the scope of the auditing of the financial statements;
• monitors the efficiency of internal control and risk management systems. For this purpose, it:
  • reviews the organization and resources used for internal audit, as well as its annual work schedule, and receives a quarterly summary report on the findings of the audits carried out,
  • reviews the mapping of risks related to the company’s business and its year-on-year evolution, and ensures procedures are implemented to prevent and reduce them,
  • reviews risk mitigation and coverage optimization,
  • reviews the rollout of the Group’s internal control system and acknowledges the outcome of entities’ self-assessment regarding internal control. It ensures procedures are implemented to identify and handle anomalies,
  • ascertains the existence of Group compliance policies notably concerning competition, anti-bribery, ethics and data protection and the measures implemented to ensure that these policies are circulated and applied.

The Audit and risks committee examines proposals for distribution as well as the amount of financial authorizations submitted for approval at Annual Shareholders’ Meetings.

The Audit and risks committee reviews all financial and accounting issues and those related to risk management submitted to it by the Board of directors.

The Audit and risks committee presents the findings of its works and how they contribute to the integrity of the financial and extra-financial information. It informs the Board of the follow-up actions that it proposes to take. The Chairperson of the Audit committee keeps the Chairman and the Vice-chairman independent lead director promptly informed of any difficulties encountered.

Governance and remunerations committee

Composition

Since April 25, 2019, the committee consists of Messrs. Léo Apotheker, Chairperson, Fred Kindle, Willy Kissling, Ms. Linda Knoll and Mr. Gregory Spierkel. The secretary to the Board of directors, Ms. Delphine Gieux, is the secretary of the committee.


Operating procedure

The committee is chaired by the Vice-chairman independent lead director. The committee meets at the initiative of its Chairman or at the request of the Chairman and CEO. The agenda is drawn up by its Chairman, after consulting with the Chairman and CEO. It meets at least three times a year.
In order to carry out its assignments, the committee may hear any person it wishes


Responsibilities

The committee formulates proposals to the Board of directors on all appointments to:

(i) the Board of directors as:

• director or non-voting member,
• Chairman of the Board of directors, Vice-Chairman, or Independent Vice-chairman lead director,
• Chairman or committee member;

(ii) the company’s Senior Management. The committee also advises the Board on proposals for the appointment of any deputy Chief Executive Officer.

The committee proposes provisions to the Board of directors that will reassure both Shareholders and the market that the Board of directors carries out its duties with all necessary independence and objectivity. For this purpose, it organizes annual assessments to be made of the Board of directors. It makes proposals to the Board of directors on:

• the determination and review of independence criteria for directors and the status of directors in light of these criteria;
• the responsibilities of the committees of the Board of directors;
• changes in the organization and functioning of the Board;
• the implementation by the company of national and international corporate governance practices;
• the total value of attendance fees proposed to the Annual Shareholders’ Meetings together with their allocation between the members of the Board and compensation of the Vice-chairman lead director.

The committee shall also formulate proposals to the Board of directors on the principles and criteria governing the compensation of the executive corporate officers (chairman of the Board of directors and/or CEO, deputy CEO), and further, on the compensation granted to them in accordance with these principles. To this end, it uses the works of the Human Resources and CSR committee. The committee prepares and presents to the Board the annual assessments of the persons concerned.

Human Resources and Corporate Social Responsibility committee

Composition

Since April 25, 2019, the committee consists of Ms. Linda Knoll, Chairperson, Mr. Willy Kissling, Ms. Xiaoyun Ma, Ms. Fleur Pellerin and Mr. Runevad. The Group Human Resources Director, Mr. Olivier Blum is the secretary of the committee.

In compliance with the requirements of the AFEP/MEDEF Corporate Governance Code of listed companies, an employee director, namely. Ms. Xiaoyun Ma, is a member of the committee.

Operating procedure

The committee meets at the initiative of its Chairman or at the request of the Chairman and CEO. The agenda is drawn up by the Chairman, after consulting with the Chairman and CEO. It meets at least three times a year.

In order to carry out its assignments, the committee may hear any person it wishes.


Responsibilities

The committee formulates proposals to the Board of directors on:

• the establishment of stock purchase or subscription options plans, the allocation of free/performance shares, and the monetary value of options or shares allocated to corporate officers.

The committee issues opinions on:

• principles and conditions for determining the compensation of Group executives;
• compensation for members of the Executive Committee.

The committee is kept informed of any nomination of members of the Executive Committee and of key Group executives.

It reviews the succession plan for key Group executives.

The committee prepares for the Board of directors’ deliberations on (i) promotion of employee shareholding development, (ii) reviews made by the Board on social and financial impacts of major re-organization projects and human resource policies, (iii) risk management related to Human Resources and (iv) the different aspects of the Group’s CSR policy, including the policy on the equal treatment of men and women.

Investment committee

Composition

Since April 25, 2019, the committee consists of Mr. Fred Kindle, Chairperson, Ms. Xiaoyun Ma, Messrs. Patrick Montier, Anders Runevad, Gregory Spierkel and Lip-Bu Tan. The Strategy director, Mr. Leonid Mukhamedov, is the secretary of the committee.


Operating procedure

The committee meets at the initiative of its Chairman or at the request of the Chairman and CEO. The agenda is drawn up by the Chairman, after consulting with the Chairman and CEO. It meets at least three times a year.

In order to carry out its assignments, the committee may hear any person it wishes and notably, may call upon the Group Mergers and Acquisitions Director.

Responsibilities

The committee prepares the Board of directors’ deliberations on investment policy.

To this purpose, the committee:

• shall elaborate recommendations for the board on major capital deployment decisions;
• shall advise the management team on capital deployment strategies;
• may launch, at the board’s request, or suggest research projects leading to material investments for the company, typically for capital deployment decisions of €250million or above;
• may investigate matters of smaller scale, if the strategic significance warrants it or the board/chairman of the board specifically requires it;
• shall provide recommendations on major merger, alliances and acquisition projects;
• shall pay special attention to reconfiguration or consolidation scenarios happening in the sectors the company is operating in or likely to operate in;
• shall examine portfolio optimizations and divestment projects of financial or strategic significance;
• shall support the management in the elaboration of investment policies linked to the long-term positioning of Schneider Electric, such as innovation and R&D strategies or any major organic growth investments;
• shall present to the board social and environmental aspects of the strategic projects submitted to it such as M&A projects.

Digital committee

Composition

Since April 25, 2019, the committee consists of Messrs. Greg Spierkel, Chairperson, Léo Apotheker, Ms. Mary Ma, Ms. Fleur Pellerin and Mr. Lip-Bu Tan. The Chief Digital Officer, Mr. Hervé Coureil, is the secretary of the committee.


Operating procedure

The committee shall meet at the initiative of its Chairperson. The agenda shall be drawn up by the Chairperson of the committee after consulting with the Chairman & CEO. The committee shall meet at least three times a year, including a joint review on Cyber-security risks with the Audit and risk committee.

In order to carry out its assignments, the committee may hear any person it wishes.

Responsibilities

The purpose of the Digital committee is to assist the Board in digital matters in order to guide, support and control the Group in its digitization efforts. The Digital committee prepares the Board of directors’ deliberations on digital matters.

For this purpose, the Digital committee is invited to provide insight to the Board on 7 areas:

1. Development and growth of the EcoStruxure digital business;
2. Improvement and transformation of the Group’s Digital Customers & Partners Experience;
3. Improvement of Schneider Electric’s Operational Efficiency through the effective use of Information Technology and digital automation capabilities;
4. Assessment of Cyber Risks and enhancement of the Group’s Cyber Security posture (jointly with the Audit committee);
5. Assessment of the contribution of potential M&A operations to the Group’s Digital strategy;
6. Monitoring and analysis of the Digital landscape (competitors and disrupters, threats and opportunities);
7. Checking that the company is equipped with the right pool of talents for digital transformation.