EDF / 2018 Reference document

4.

CORPORATE GOVERNANCE Members and functioning of the Board of Directors

4.2.2

FUNCTIONING OF THE BOARD

EDF’s Chairman and Chief Executive Officer is appointed by decree of the President of the Republic of France, on recommendation from the Board of Directors. They can be dismissed by decree in accordance with Article 20 of the Order of 20 August 2014. In accordance with the provisions of Article 13 of the French Constitution, the Chairman is appointed based on the opinion of the permanent Committees of the French National Assembly and Senate. At the end of the process Jean-Bernard Lévy was appointed as EDF's Chairman and CEO by decree of 27 November 2014. In a press release dated 14 February 2019, the President of the Republic of France announced that he would consider renewing Jean-Bernard Lévy's position as Chairman and Chief Executive Officer of the Company, whose term expires at the end of the Shareholders' Meeting which will be convened on 16 May 2019, based on the opinion of the competent Committees of the French National Assembly and Senate under the conditions provided for in Article 13 of the Constitution. In case of vacation of the office of Chairman and Chief Executive Officer, Article 21 of the order of 20 August 2014 states that the French State can appoint someone to the role temporarily until the appointment of the new Chairman and CEO (1) . Subject to the specific legal provisions governing public sector companies and the powers specifically reserved by law or by the articles of association to the Board of Directors or to Shareholders’ Meetings, and the limits to the powers of the Chairman and Chief Executive Officer provided for by the internal rules of procedure of the Board of Directors as internal rules (see section 4.2.2.3 “Powers and duties of the Board of Directors” below), the Chairman and Chief Executive Officer is vested with the most extensive powers to act on behalf of the Company under all circumstances, within the limits of the corporate purpose. Executive Officer organises and supervises the work of the Board of Directors and reports to the Shareholders’ Meeting. They oversee the proper running of the Company’s bodies and, in particular, ensure that the directors are in a position to fulfil their duties. Powers and duties of the Board 4.2.2.3 of Directors The Board of Directors meets as often as the interest of the Company requires, in accordance with applicable legislative and regulatory provisions. In accordance with the Board’s internal rules of procedure, the directors meet once a year to discuss the strategy of the Company and of the Group as part of an ad hoc seminar. Moreover, under the internal rules of the Board of Directors, a meeting is to be held each year without the attendance of the Chairman and Chief Executive Officer (executive session), and shall be chaired by the Chair of the Governance and Corporate Social Responsibility Committee. In accordance with the law, the Board of Directors sets the strategies for the Company’s activities and oversees their implementation. It defines the major strategic, economic, financial and technological objectives for the Company and the Group, while taking into consideration the social and environmental issues of its activities. Subject to powers expressly attributed to the Shareholders’ Meetings and as limited by the Company’s corporate purpose, the Board may consider any question relating to the proper running of the Company and acts, through its deliberations, on any such issue. The Board deliberates, after examination by the competent Committee or Committees, as the case may be, on the annual budget, the medium-term plan, any significant operation falling outside the Company’s announced strategy, the corporate strategic plan presenting the actions to be implemented by the Company or the Group in order to comply with the objectives of the multi-year energy programme (see section 1.5.2 “Public service in France”), the Group’s strategies relating to upstream and downstream operations of the nuclear fuel cycle, gas and renewable energies and the public service contract. It reviews risks of any kind, as well as the risks and opportunities related to climate change and their impact on the Group's activities, and the measures taken as a consequence. In accordance with its internal rules, the Board of Directors is competent to authorise the following transactions prior to their implementation: external growth transactions (investments, mergers and acquisitions), ■ divestments, organic growth transactions, as well as stock exchange transactions, carried out by the Company or by one of its subsidiaries, which represent overall financial exposure for the Company or the Group exceeding €350 millions; this threshold falls to €150 million for transactions not in line with the Company’s or the Group’s strategic objectives;

OF DIRECTORS The internal rules of procedure of the Board of Directors set the principles of its functioning and the terms and conditions according to which the Board and its specialised Committees fulfil their duties. It also defines the role and powers of the Chairman and Chief Executive Officer. The Board’s internal rules of procedure are regularly updated, particularly to take account of legislative and regulatory changes and changes to the AFEP-MEDEF Code (see section 4.1 “Corporate Governance Code”). Term of office of directors – Staggered 4.2.2.1 re-election of the Board In accordance with the option provided by the aforementioned order of 20 August 2014, the EDF Shareholders’ Meeting held on 21 November 2014 modified the Company’s articles of association and reduced the term of office of the directors to four years. By way of exception, the articles of association provide that the duration of the first term of office of directors representing employees, effective after the Shareholders' Meeting of 21 November 2014, will be five years and that the term of office of directors appointed by the Shareholders' Meeting of 21 November 2014 will end at the end of the Ordinary Shareholders' Meeting convened on 16 May 2019 (see 4.2.1 “Members of the Board of Directors”). In accordance with the provisions of Article 2 of decree no. 2014-949 of 20 August 2014 regarding the implementation of the order of 20 August 2014, the Representative of the French State is appointed for a term equal to the term of office of the members of the Board of Directors, i.e. for a four year term. The term of office of Martin Vial as representative of the French State on EDF's Board of Directors, which ended on 20 November 2018, was renewed by a decree of the Minister of the Economy and Finances of 21 November 2018. The Shareholders’ Meeting of 15 May 2018 modified Article 13 of EDF’s articles of association in order to provide that, starting from the 2019 Shareholders’ Meeting called to approve the financial statements for the 2018 fiscal year, the Board of Directors, excluding directors elected by the employees and the Representative of the French state appointed by decree, be renewed by rotation periodically in such a way that half (rounded to the nearest whole number) of the directors elected by the Shareholders’ Meeting be renewed every two years and that the Board be completely renewed, with respect to the members concerned, at the end of each four-year period. The staggered re-election will be implemented during the Shareholders’ Meeting of 16 May 2019. The directors appointed by the Shareholders’ Meeting can be dismissed at any time by the Shareholders’ Meeting. In accordance with Article 12 of the Law on the Democratisation of the Public Sector, the directors elected by the employees can be individually dismissed for gross negligence in the exercise of their duties by order of the President of the Tribunal de Grande Instance delivered at summary proceedings upon request from the majority of the members of the Board. However, in the event that serious dissent disrupts the Company’s administration, dismissal pronounced by the Shareholders’ Meeting can be extended to representatives of the employees. The Representative of the French State ceases their duties by resigning or if they lose the capacity by virtue of which they were appointed; they can be replaced at any time for the remainder of the term of office. Method of Executive Management − 4.2.2.2 Appointment and powers of the Chairman and Chief Executive Officer In accordance with the option provided for in Article 18 of the Order of 20 August 2014, EDF’s articles of association state that the Chairman of the Board of Directors is the Executive Manager of the Company and holds the title of Chairman and Chief Executive Officer. The “non-separated” Executive Management structure is therefore set out in the Company’s articles of association. The Board’s internal rules of procedure, and in particular the limitations it applies to the powers of the Chief Executive Officer, ensure a satisfactory balance, in the Company’s interest, between the Chairman and Chief Executive Officer and the Board of Directors, whilst preserving the flexibility, effectiveness and responsiveness necessary in the administration and management of the Company.

n accordance with this text, Jean-Bernard Lévy had been appointed, by ministerial decision of 21 November 2014, temporary Chairman and Chief Executive Officer of the (1) Company from 23 November 2014.

258

EDF I Reference Document 2018