Los aluminosilicatos y la geopolimerización

Appointment of President and Chief Executive Officer and members of senior management

In appointing a President and Chief Executive Officer, a Board makes an important statement with respect to governance. It is appointing the individual who will lead organizational strategy and direction.

The Board appointed Michael Sabia as President and Chief Executive Officer of the Caisse. The Board acknowledged that Mr. Sabia, as President and Chief Executive Officer, waived payment of any short- and long-term bonuses for 2009 and 2010, regardless of the Caisse’s results, along with any pension or other retirement benefit and any separation allowance, even if his mandate were terminated without just or sufficient cause.

Further, at Mr. Sabia’s request and to ensure the absence of any potential conflict between the personal situation of the President and Chief Executive Officer and the interests of the Caisse, the Governance and Ethics Committee reviewed the management of Mr. Sabia’s personal assets. It also acknowledged Mr. Sabia’s decision to surrender his BCE Inc. stock options.

The Board also ensured that the senior management team has the required skills, vision and leadership to manage the Caisse successfully. On the recommendation of the President and Chief Executive Officer, the Board proceeded with the appointment of Roland Lescure as Executive Vice-President and Chief Investment Officer, a strategic position for an institution such as the Caisse.

Establishment of an effective relationship between the Board and management Trust

A quality relationship between the Board and management is critical. Good governance requires trust and transparency. To build this trust, the Board introduced regular meetings with senior management, either during Board or Committee meetings – including presentations by investment sector leaders planned for Board meetings during 2010 – or outside formal Board meetings, for example, in meetings held the day before Board meetings. The Board seeks to establish an open, ongoing and constructive dialogue.

The Board members feel that the understanding of the organiz- ation acquired during these discussions will improve their ability to review management proposals, enhance discussions and move the organization forward.

Performance evaluation and succession planning

The Board must monitor the performance of the President and Chief Executive Officer and the senior management team and ensure a succession planning exercise for all key positions. In 2009, the Chairman of the Board ensured that the Board was able to devote the time necessary to address these issues in depth. When Mr. Sabia took up his position, the Board members reviewed his 2009 objectives with him. Based on these objectives and on the mandate with which he was entrusted by the Board, the Human Resources Committee and the Board conducted a formal performance evaluation of the President and Chief Executive Officer at the beginning of 2010. The Board also reviewed the President and Chief Executive Officer’s evaluation of the members of the senior management team.

Further, the Chairman of the Board asked the Human Resources Committee, in addition to establishing a new compensation program, to make succession planning a priority in 2010.

Compensation oversight

The Board must oversee the compensation of management and employees to ensure that it is both equitable and competitive. Given the lack of a functional compensation program for 2009 and coming years, the Board assigned the Human Resources Committee the task of developing a compensation program focused on a balance between risk and return and grounded in the performance of employees, of portfolios (for managers) and of the Caisse. To balance management expertise in this area and to ensure their independence, the Board and the Human Resources Committee retained the services of a recognized firm of compen- sation consultants, Hugessen Consulting.

For further information about the Caisse’s compensation program, see Report on Compensation Policy, p. 86.

Strategic planning exercise

Strategic planning and financial risk management are among the primary responsibilities of the Board. For financial institutions worldwide, the fall of 2008 led to profound changes in the way investment and growth strategies are viewed. Clarity of vision and direction are critical in this environment.

In 2009, the Board was actively involved in the development of five strategic priorities for the Caisse. It reviewed the proposed priorities at length with management and suggested adjustments, particularly with respect to the new model of collaboration with depositors, the reworking of specialized portfolios, and the Caisse’s key leadership role in the economic development of Québec. The Board approved the priorities retained and their implementation by management as of 2010.

As strategic planning is an ongoing process which must adapt to environmental changes, both external and internal, the Board also agreed with management on how work on these priorities would be monitored.

Review of the exercise of voting rights and socially responsible investing practices

The Governance and Ethics Committee ensured good governance practices in the exercise of voting rights in companies in which the Caisse is a shareholder. Accordingly, the Committee reviewed, with the individuals responsible for the exercise of the Caisse’s voting rights, the principles governing the exercise of voting rights in various transactions carried out by the Caisse. The Committee and the Board also reviewed, with the individuals responsible, the application of the policy on socially responsible investment in 2008 and 2009.

Risk management oversight

One of the strategic priorities adopted by the Board concerns risk management. Aware that achieving returns requires taking some risks, the Board must ensure that risks are held to appropriate levels. To fulfill its oversight role, the Board must have access to information that is accurate, relevant, and clear.

In 2009, the Board therefore entrusted its Risk Management Committee with the key task of overseeing the implementation of a plan to strengthen risk management practices. The Board and the Committee supported management with accelerated implementation of the plan. In barely nine months, most of the recommendations included in the three-year plan to strengthen risk management practices were implemented.

These recommendations included an in-depth review of the governance model for risk management at the Caisse. The Risk Management Committee has received a detailed risk-return report for the Caisse at each of its meetings since the end of 2009. It also receives a risk-return report for each specialized portfolio. These reports allow members to rapidly identify issues affecting either a particular portfolio or the Caisse as a whole and to make any necessary recommendations to the Board.

For further information on the new risk management governance model, see Report on Risk Management, p. 74.

CONCLUSION

2009 was a transition year for the Caisse and for the Board of Directors. A year of rebuilding solid foundations that will underpin the exercise of the Board’s strategic and oversight responsibilities. Between April and December 2009, the Board held 17 meetings and was consulted on numerous key matters. All elements are now in place to enable the Board to deal with issues in a timely manner. The Board has implemented a clear operating model and has ensured that individuals with the requisite skills hold the right positions. The Board has become a cohesive body and this cohesion continues to grow. We are confident that the Board has a healthy governance culture which fosters a constructive relationship of trust and mutual respect with management.

The purpose of the compliance policy is to ensure conformity with the laws, regulations, policies and guidelines applicable to the Caisse’s operations, at all levels and in all functions. The compliance activities involve monitoring and implementing compliance programs, training officers and employees, as well as providing the documentation and needed guidance.

The policy requires, among other things, that those in charge of compliance provide the Board of Directors, the Risk Management Committee and the Executive Committee with the assurance that compliance programs are applied. They must also provide the Audit Committee with the assurance that the compliance monitoring mechanisms are adequate and effective.