SCH2017_DRF_EN_Livre.indb

3 Corporate governance report

Board committees (composition, operating procedures and activities)

Governance and remunerations committee

4.2

Composition in 2017 The board of directors’ internal regulations and procedures provide that the Governance and remunerations committee must have at least 3 members. It is chaired by the Vice-chairman independent lead director. This committee is composed of 4 members: Mr. Léo Apotheker, Chairman, Mr. Willy Kissling, Ms. Linda Knoll and Mr. Gregory Spierkel. As of December 31, 2017, the Governance and remunerations committee, chaired by an independent director, comprised of 75% of independent directors. Operating procedures The committee is chaired by the Vice-chairman independent lead director. The committee meets at the initiative of its Chairman or at the request of the Chairman and CEO. The agenda is drawn up by the Chairman, after consulting with the Chairman and CEO. The committee shall meet at least 3 times a year. The committee may seek advice from any person it feels will help it with its work. The secretary of the board of directors is the committee’s secretary. Responsibilities The committee will formulate proposals to the board of directors in view of any appointment made: (i) within the board of directors as: E director or non-voting member, E Chairman of the board of directors, Vice-Chairman, or Vice-chairman independent lead director, E Chairman or committee member; (ii) at the Company’s Senior Management. Particularly, the committee advises the board on proposals for the appointment of any Deputy Chief Executive Officer. The committee proposes provisions to the board of directors that will reassure both shareholders and the market that the board of directors carries out its duties with all necessary independence and objectivity. For this purpose, it will organize for yearly assessments to be made of the board of directors. It shall make proposals to the board of directors on: E determining and reviewing directors’ independence criteria and directors’ qualifications with regard to criteria; E missions carried out by the committees of the board of directors; E the evolution, organization and operation of the board of directors; E the application by the Company of national and international corporate governance practices; E the total value of attendance fees proposed to the Annual Shareholders’ Meetings together with their allocation between the members of the board; E the compensation of the Vice-chairman independent lead director.

The committee develops proposals to the board of directors on: compensation of corporate officers (Chairman of the board of directors and/or CEO, and Deputy CEOs) and any benefits of all types granted to them. In this respect, it shall prepare annual assessments of the persons concerned. Activities in 2017 The committee, which met 6 times in 2017, prepared proposals for the board on: E the composition of the board of directors and its committees; E the status of the members of the board with regard to the independence criteria; E the exercising mode of the functions of Chairman and CEO; E the compensation of corporate officers (amount and structure of 2017 compensation, 2017 objectives and level of achievement of 2016 objectives) and the allocation to the above of performance shares as part of the long-term incentive plan; E the presentation of “Say on Pay” 2016 and the principles and criteria of compensation of corporate officers for 2017 to the Annual Shareholders’ Meeting; E the review of the amounts and allocation rules of the attendance fees; E the on-boarding program for new directors; E the amendment of the internal regulations of the board of directors. Further, the committee reported to the board on its review of the succession plan for corporate officers. The committee also reported to the board on its work concerning in particular: E the protection of capital; E the draft report of the Chairman of the board of directors on corporate governance; E the review of the regulated agreements and commitments. In addition, the committee initiated and monitored the formal self- assessment of the board of directors assisted by an external consultant and, on the basis of the summary report presented to it following this self-assessment, identified points for further improvements and defined an action plan for approval by the board. The committee also reported on the Vice-chairman independent lead director’s meetings with governance analysists within the main shareholders: 24 physical or phone appointments covering about 40% of the share capital. These meetings reflect the importance given by the company to the dialogue and direct commitment of directors towards shareholders. The committee met 6 times in 2017. The attendance rate of directors who are members of the committee was 96%. It reported on its work at the board’s meetings of February 15, April 25, October 25 and December 14, 2017.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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