BPCE - 2019 Universal Registration Document
REPORT ON CORPORATE GOVERNANCE
Dear Shareholders, In addition to the management report and in accordance with Article L. 225-68 of the French Commercial Code, this report by the Supervisory Board contains information on: the composition of the Supervisory Board and implementation • of the principle of balanced representation of women and men; the conditions governing the preparation and organization of • the Supervisory Board’s work during the year ended December 31, 2019; and
the principles and rules governing the determination of all • types of pay and benefits granted to corporate officers. This report was reviewed by the Remuneration Committee on February 5, 2020, then approved by the Supervisory Board at its meeting of February 6, 2020. The external Statutory Auditors will issue a specific report, appended to their report on the annual financial statements, attesting to the provision of other information required by law in the report on corporate governance (Article L. 225-235 of the French Commercial Code).
Corporate Governance Code 3.2
In preparing this report, BPCE referred to the Corporate Governance Code for listed companies published in December 2008 and revised in January 2020 by the Association française des entreprises privées (AFEP – French Private Companies Association) and the Mouvement des entreprises de France (MEDEF – French Business Confederation), hereinafter referred to as the AFEP-MEDEF Code, including the October 2008 recommendations on executive pay, as set out in Article L. 225-68 of the French Commercial Code. Only certain provisions were not followed, insofar as they are not deemed to apply to BPCE’s operating procedures as the central institution of a cooperative group and its equal ownership by the Banque Populaire and Caisse d’Epargne networks, which is reflected in the composition of its board. These provisions were as follows: terms of office, the proportion of independent directors on the Supervisory Board and its committees, Board member ownership of a material number of shares and the publication of the CEO pay ratio. Regarding terms of office, unlike the maximum four-year term recommended in the AFEP-MEDEF Code, the statutory term of office of BPCE Supervisory Board Members is six years, i.e. , the maximum permitted by law. The benefit of a four-year term, as presented by the AFEP-MEDEF Code, is that it gives shareholders sufficiently frequent opportunity to provide an opinion on Board Member performance. However, this is unnecessary for BPCE, as its shareholders are limited to Banques Populaires and Caisses d’Epargne, which are already amply represented on the Supervisory Board as voting or non-voting directors. Accordingly, a shorter term of office would not substantially change the composition of the Supervisory Board. In addition, BPCE staggers reappointments, renewing the terms of office of half of the Supervisory Board members every three years, in order to avoid mass reappointments and promote a smooth Board member reappointment process. This gives shareholders sufficiently frequent opportunity to provide an opinion on Supervisory Board members, as recommended in the AFEP-MEDEF Code. Regarding Supervisory Board member ownership of a material number of shares, BPCE’s Articles of Association take into account the fact that, in accordance with act No. 2008-776 of
August 4, 2008, Supervisory Board members are no longer required to own shares in the company. As a result, BPCE Supervisory Board members do not own a material number of shares and are not shareholders in a personal capacity, but the two categories of shareholders are represented through their appointment, which ensures that the company’s interests are respected. Concerning the proportion of independent directors on the board and its committees, BPCE does not follow the recommendation of the AFEP-MEDEF Code, under which independent directors must represent half of the members of the boards of companies that are not under control, as defined by Article L. 233-3 of the French Commercial Code. In fact, this recommendation is not compatible with Article L. 512-106 of the French Monetary and Financial Code, which stipulates that the representatives of cooperative shareholders proposed by the Chairmen of the Steering and Supervisory Boards of the Caisses d’Epargne and the Chairmen of the Boards of Directors of the Banques Populaires account for a majority of the Supervisory Board of BPCE. In addition to this legal rule, good governance rules result from Groupe BPCE’s unique structure: a balance of power must be maintained, as well as balanced representation of the Banque Populaire and Caisse d’Epargne networks. However, this organizational structure does not compromise the quality of the work and discussions of the board, an objective of the AFEP-MEDEF Code recommendation. Furthermore, regarding information on company director pay, BPCE does not apply the recommendation which stipulates that information on pay ratios should be published, thereby enabling comparison of company director pay and employee pay. In fact, the legislator’s aim in drafting this legal provision, now taken up by the AFEP-MEDEF Code recommendation, which is to enable shareholders or investors of publicly-traded corporations to assess company director pay against the company’s performance, is not relevant in light of BPCE’s capital structure, under which the Banques Populaires and Caisses d’Epargne together hold all of the share capital and voting rights. Finally, with the exception of the CEO pay ratio, BPCE formally adheres to and implements the AFEP-MEDEF Code recommendations on executive pay.
UNIVERSAL REGISTRATION DOCUMENT 2019 | GROUPE BPCE
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