SCH2017_DRF_EN_Livre.indb

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Corporate governance report Organizational and operating procedures of the board of directors

Self-assessment of the board of directors

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Pursuant to its internal regulations, Schneider Electric SE’s board of directors annually reviews its composition, organization and operations, as well as those of its committees. This yearly assessment alternates each year between a written questionnaire sent to the board members and an interview with the board member. The evaluation is conducted under the leadership of the Vice-chairman independent lead director by the secretary of the board of directors. In addition, as per the AFEP/MEDEF Corporate Governance Code providing that the board of directors shall undertake at least once every 3 years a formal self-assessment, which may be conducted with the assistance of an external consultant, the board of directors decided on December 15, 2016 to carry out a formal self-assessment under the Governance and remunerations committee’s supervision with the assistance of an independent consultancy firm selected pursuant to a tender process. The self-assessment consisted in thorough individual interviews with each director. They were led in October and November 2017 on the basis of a detailed questionnaire covering the governance in all its dimensions: methods of exercising general management, composition of the board, efficiency of the mode of operation of the board and its committees, relationships with the general management, shareholders and stakeholders. The assessment also covered the individual contribution of the members of the board. The external consultant reported the conclusions of this assessment to the Governance and remunerations committee on December 13, 2017 and on December 14, 2017 to the board of directors. The conclusion of the self-assessment was a unanimous very positive opinion on the composition and the mode of operation of the board of directors and its committees. Consistent with the conclusions of the previous formal self-assessment carried out in 2015, directors highlighted the robustness of governance thanks to a management that is “open and transparent”, a Vice-chairman independent lead director committed in its liaison role between the Chairman and the directors, and a board of directors that is dedicated and efficient, the combination ensuring a very satisfactory balance of powers. The mutual trust between the board and the management and the quality of the Strategy Session were also highlighted.

The external assessment report concludes: “The board of Schneider Electric is an efficient board with a well- balanced governance, supported by a diverse composition, productive and engaged committees and an open and transparent management. When benchmarked to board best practices, it ranks at the top”. Without prejudice to the general conclusions, this formal assessment confirmed the importance of the continuity of the “refreshment” plan, which aims at reinforcing skills in the field of new technologies and the knowledge of Asian market. The presence at the board of a French personality with an international stature is also requested. The 2 new candidates presented on page 165 meet these needs. This formal assessment suggested other improvements and was duly followed by the approval by the board of directions of the following action plan: E committees: to clarify the missions of the committees and convert the Strategy committee into an Investment committee; E new directors: to formalize a complete on-boarding program; E executive sessions: to open an executive session systematically at the end of each board meeting; E succession plan: to add to the agenda of executive sessions the question of the succession plan twice or 3 times a year; E agenda: to extend certain meetings of the Board to a full day; E documentation: to insert an executive summary along with the work support documentation made available to the directors before the meeting. The internal regulations of the board of directors have been modified to take into account the above listed proposals and the schedule of the Board meetings for 2018 reviewed accordingly. The follow-up of the action plan will be made during the self-assessment to be conducted in 2018.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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