SCH2017_DRF_EN_Livre.indb

3 Corporate governance report

Organizational and operating procedures of the board of directors

2. Organizational and operating procedures of the board of directors

2.1 Governance structure The company is a European company with a board of directors. The functions of the Chairman and the Chief Executive Officer are carried out by Mr. Jean-Pascal Tricoire, who was appointed Chairman and Chief Executive Officer on April 25, 2013 and renewed on April 25, 2017. The performance by Mr. Tricoire of the duties of Chairman and Chief Executive Officer seems particularly appropriate to the board of directors taking into account: E the composition of the board, which comprises more than 80% independent directors within the meaning of the AFEP/MEDEF Code; E the economic environment, which requires responsiveness through leadership and clarity in designating the person in charge of directing the Group. This clarification given by the use of the title of Chairman ( Président ) is particularly necessary vis- à-vis employees, customers and partners, in France and abroad; E mechanisms provided for by the articles of association and internal regulations to ensure accurate information and effective mode of operation of the board of directors, in particular the The board of directors shall determine the strategic orientation of the Company’s business and oversee implementation thereof. It shall examine any and all matters related to the efficient operation of the business and make decisions about any and all issues concerning the Company, within the limits of the corporate purpose, except for those matters which, by law, can only be decided on by the shareholders in a Shareholders’ Meeting. Specific powers are vested in the board of directors under French law and the Company’s articles of association. These include the power to: E determine the method of exercising the Senior Management of the Company; E appoint executive corporate officers and also remove them from office (Chief Executive Officer and Deputy Chief Executive Officers) as well as set their compensation and the benefits granted to them; E co-opt directors whenever necessary; E call Annual Shareholders’ Meetings and, where applicable, of bondholders, based on the agenda it sets; E approve the corporate and consolidated financial statements; E draw up business reviews and reports for Annual Shareholders’ Meetings; 2.2

appointment of a Vice-chairman independent lead director, the principle of proposing an executive session at each meeting of the board chaired by the Vice-chairman independent lead director, and the creation of 4 board committees; E the requirement for the board to deliberate each year on the unification of the functions of Chairman and Chief Executive Officer. On April 25, 2017, simultaneously with the renewal of Mr. Jean-Pascal Tricoire’s term as director, the board of directors deliberated and concluded that the unification of the functions of Chairman and Chief Executive Officer is a governance structure that particularly fits the personality of the CEO and the Group’s governance, which has been confirmed by the external assessment of fall 2017, and further decided to unify the functions of Chairman and CEO, in accordance with article 1 of its internal regulations, which provides that the choice between the 2 methods of exercising general management is made when renewing the term of office of the Chairman of the board of directors or the CEO. This decision is subject to deliberation of the board of directors each year thereafter. E draw up management planning documents and the corresponding reports; E draw up the corporate governance report as provided for in article L.225-37 of the French Commercial Code; E decide on the use of authorizations granted at Shareholders’ Meetings, more particularly for increasing Company capital, buying back the Company’s own shares, carrying out employee shareholding transactions and cancelling shares; E authorize the issue of bonds; E decide on the allocation of options or free/performance shares within the limits of authorizations given at Annual Shareholders’ Meetings; E authorize regulated agreements (agreements covered by article L.225-38 et seq. of the French Commercial Code); E authorize the issue of sureties, endorsements and guarantees; E decide on the dates for the payment of dividends and any possible interim dividends. The board of directors may appoint between 1 and 3 non-voting members and decide to create board committees. It draws up internal regulations. It determines the allocation of attendance fees; the total amount is determined by the Annual Shareholders’ Meeting.

Missions and powers of the board of directors

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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