BPCE_REGISTRATION_DOCUMENT_2017

2 REPORT ON CORPORATE GOVERNANCE Introduction

Introduction 2.1

Dear Shareholders, In addition to the managementreport and in accordancewith 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 implementationof ● the principle of balanced representation of women a d men; the conditions governing the preparation and organization of the ● Supervisory Board’s work during the year ended December 31, 2017; and

the principlesand rules governingthe determinationof all types of ● pay and benefits granted to corporate officers. This report was reviewed by the Remuneration Committee on February 8, 2018, then approved by the Supervisory Board at its meeting of February13, 2018. 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 2.2

In preparing this report, BPCE referred to the Corporate Governance Code for listed companiespublishedin December 2008 and revised in November 2016 by the Associationfrançaise 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 recommendationson executive pay, as set out in Article L. 225-68 of theFrench 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 and the staggered renewal of Board Member terms, Board Member ownership of a material number of shares and the proportionof independentdirectors on the SupervisoryBoard and its committees. Regarding terms of office, unlike the maximum four-year term recommendedin the AFEP-MEDEFCode, the statutory term of office of BPCE Supervisory Board Members is six years, i.e., the maximum permittedby law. The benefit of a four-yearterm, as presentedby the AFEP-MEDEF Code, is that it gives shareholderssufficiently frequent opportunity to provide an opinion on Board Member performance. However,this is unnecessaryfor BPCE, as its shareholdersare limited to Banque Populaire banks and Caisses d’Epargne, which are already amply representedon the SupervisoryBoard as voting or non-voting members. Accordingly, a shorter term of office would not substantially changethe composition of the Supervisory Board. Similarly, renewals of BPCE Board Member terms are not yet staggered, in the interest of providing a degree of stability and balanced representation of both Groupe BPCE networks (Banque Populaireand Caisse d’Epargne).

Groupe BPCE’s cooperative structure also explains why the Appointments Committee’s recommendations regarding the appointmentof Board Members only concern members from outside Groupe BPCE. Regarding a Supervisory Board Member’s ownership of a material numberof shares,BPCE’s Articles of Associationtake into accountthe fact that, in accordance with Act No. 2008-776 of August 4, 2008, SupervisoryBoard 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. Concerningthe proportionof independentdirectorson the Board and its committees, BPCE does not follow the recommendation of the AFEP-MEDEF Code, under which independentdirectorsmust 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 SupervisoryBoards of the Caisses d’Epargneand the Chairmenof the Boards of Directorsof the Banque Populairebanks account for a majorityof 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 organizationalstructuredoes not compromisethe quality of the work and discussions of the Board, an objective of the AFEP-MEDEFCode recommendation. Furthermore, BPCE formally adheres to and implements the AFEP-MEDEF Code recommendationson executive pay.

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Registration document 2017

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