NEOPOST_REGISTRATION_DOCUMENT_2017

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Corporate governance report

The Board of directors

Implementing the “comply or explain” principle of the Afep-Medef code Under the “comply or explain” rule in article L.225-37 of the

code’s recommendations. However, some recommendations have not been implemented during the 2017 fiscal period for

French commercial code and article 25-1 of the Afep-Medef code, Neopost considers that its practices comply with the

the reasons provided in the following table:

Afep-Medef  recommendations  not applied

Neopost position and explanation

Separation of the offices of Chairman of the Board of directors and Chief Executive Officer (article 3-2 of the code) “[…] it is essential for the shareholders and third parties to be fully informed of the choice made between separation of the offices of Chairman and Chief Executive Officer and maintenance of these positions as a single office.”

On expiry of the Chairman Jean-Paul Villot’s term of office in 2010, the Board of directors resolved to merge the offices of Chairman and CEO, believing that this was the governance method best suited to Neopost’s organization and operations. For Neopost this governance structure takes full advantage of the CEO’s business knowledge and experience, fosters a close relationship between the managers and shareholders, increases the Board's responsiveness and allows for optimal coordination of operations within the Group. During the current period of transition, the Board decided to renew the Chairman and CEO's term of office in 2016 to enable him to successfully complete Neopost's transformation and support the renewal of the Board. In addition, the Board of directors discussed a change in Neopost's governance to separate the roles of the Chairman and the Chief Executive Officer, and instructed Denis Thiery and the appointments committee to submit a proposal for this purpose within the two-year period of the mandate which was submitted for the Board's approval following the General Meeting of 1 July 2016. (The separation of powers went into effect on 1 February 2018). To safeguard the balance of powers during this period of single office, the Board of directors has also implemented the guarantees required for this management model, in accordance with best practices for governance: independent directors making up two-thirds of the Board; • an independent audit committee; • a conflict of interest policy; • formal evaluation of the Board by an external body at the end of 2015/early 2016; • the appointment of a lead director in 2016; • Staggering the directors' mandates. • Change in the composition of the Board has occurred in four areas: increasing the share of independent directors, having a younger Board with more female members, maintaining a strong international outlook and establishing consistency between the Board's competencies and Neopost's new strategy. In the Board of directors' opinion, the decision to retain Denis Thiery's employment contract, initially agreed on 1 October 1998, is justified by 18 years of service in the Group (and 10 years under this employment contract until it was suspended in 2007 when he was appointed Chief Executive Officer). The decision allows the Company to have an internal promotion policy that allows the appointment to corporate officer positions of experienced senior executives with deep knowledge of Neopost's businesses and markets. The loss of entitlements linked to their employment contracts and length of service (such as severance payments) would represent a constraint. The employment contract of the current CEO has been suspended and does not contain any clause relating to severance payments. It was reactivated on 1 February 2018 following the end of Denis Thiery's mandate as Chief Executive Officer. The new Chief Executive Officer has no employment contract.

Termination of employment contract in case of appointment as executive director (article 22 of the code) “[…] When an employee is appointed as executive director, it is recommended to terminate his or her employment contract with the Company or with a company affiliated to the Group”

By-laws for the Board and committees

The by-laws of the Board and committees were drafted on 30 March 2004. The most recent version, approved by the Board on 29 March 2016, is available on the Group's website (www.neopost-group.com). The aim of the by-laws is to specify the mission and competences of the lead director. It also establishes and sets out the role and operating procedures of the Board of

directors, together with the rights, obligations and recruitment practices of its members, within the scope of their authority, in order to ensure the Company's long-term future, its smooth running and the sustained creation of value for shareholders, employees and the Company's other stakeholders. Finally, the by-laws establish and define the mission and competences of

the lead director.

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REGISTRATION DOCUMENT 2017 / NEOPOST