BPCE - 2020 Universal Registration Document

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REPORT ON CORPORATE GOVERNANCE

INTRODUCTION

Introduction 3.1

Dear shareholders, In addition to the management report and in accordance with Article L. 225-68of 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, 2020;

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 10, 2021, then approved by the Supervisory Board at its meeting of February 11, 2021. 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 CompaniesAssociation) and the Mouvement des entreprises de France (MEDEF – French Business Confederation), hereinafter referred to as the AFEP-MEDEF Code, including the October 2008 recommendationson 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 SupervisoryBoard 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 proportionof independentdirectors 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’sunique 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. However, BPCE wishes to demonstrate the independence of the members of its Supervisory Board representing the 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. The report “Coopératives et mutuelles: un gouvernement d’entreprise original” [Cooperatives and mutual insurance companies: original corporate governance], drafted within the framework of the French Institute of Directors in January 2006, explains why the elected directors of the cooperative companies that are the Banques Populaires and the Caisses d’Epargne fully meet the definition of “independent director.” Thus, the question of “independent directors” concerns a specific type of company, which is the listed company. (…) In cooperative enterprises, the form of government is radically different. (…) The legitimacy and control of a mutual manager, and therefore his independence, depend on the office he holds through his election. Removing a director from the electoral process would dissociate him from the

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UNIVERSAL REGISTRATION DOCUMENT 2020 | GROUPE BPCE

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