Manuel Lorenzo Pardo: un ingeniero excepcional

Report of the Chairman of the Board of Directors

Report of the Chairman of the Board

3.2

of Directors

on the composition of the Board, the application of the principle of gender

balance among its members, the conditions governing the preparation and

organization of the Board’s work and the internal control and risk

management procedures implemented by the Company

Pursuant to article L. 225-37, paragraph 6, of the French This report, drawn up under the responsibility of the Chairman of the Commercial Code, this report contains details of the composition of Board of Directors pursuant to article L. 225-37 of the French the Board, the application of the principle of gender balance among Commercial Code, has been prepared with the assistance of the its members, the conditions governing the preparation and Internal Audit department, which referred in particular to the AMF’s organization of the Board’s work in 2015 and the internal control final report on audit committees dated July 22, 2010 and the AMF’s and risk management procedures implemented by the Company. studies and recommendations on Chairman’s reports on internal control and risk management procedures; the Finance department; It also specifies the principles and rules laid down by the Board of _{and the Legal, Risk & Compliance department. The report was} Directors for determining the compensation and benefits in-kind

reviewed by the Audit & Risk Committee at its meetings of granted to Corporate Officers, special terms relating to the

December 9, 2015 and January 21, 2016, and by the Nomination & participation of shareholders in Shareholders’ Meetings, and the

Compensation Committee at its meetings of December 1, 2015 and Corporate Governance Code to which the Company refers. It also

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January 26, 2016. It was reviewed in draft form by the Board of mentions the publication of information provided for under article

Directors on December 11, 2015 and subsequently approved at the L. 225-100-3 of the French Commercial Code.

Board meeting of February 24, 2016.

Corporate Governance Code

3.2.1

At its meeting on December 16, 2008, the Company’s Supervisory The AFEP-MEDEF Corporate Governance Code of Listed Board considered that the Company’s corporate governance Corporations (hereinafter “the AFEP-MEDEF Code” or “the Code”) arrangements were consistent with the AFEP-MEDEF can be downloaded from the AFEP website: recommendations of October 6, 2008 on executive compensation http://www.afep.com/en, and can also be obtained from the for listed companies and decided that the Company would refer to Company’s registered office.

the Corporate Governance Code of Listed Corporations published

Pursuant to article L. 225-37 of the French Commercial Code, this by AFEP and MEDEF. The amended version of this Code dated

report details the provisions of the AFEP-MEDEF Code which the November 2015 notably introduces the principle of consulting

Group has not complied with and the reasons for these exceptions Shareholder's Meetings in the event of a disposal (in one or more

in the table below. transactions) of at least half of a company’s assets and thereby

brings the Code into line with the new provisions of the French law on supplementary pension schemes (“Macron law”).

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Corporate governance

Report of the Chairman of the Board of Directors

AFEP-MEDEF recommendations Bureau Veritas practices/explanations

Evaluation of the Board of Directors (section 10.2 of the Code) During the annual evaluation of the Board of Directors and its committees, each Director is asked about the organization of the Board’s work, at which time he/she has The evaluation should consider the actual contribution of each Director to

the opportunity to discuss any problems. Any Directors who so wish can therefore the Board’s work through his or her competence and involvement in

freely express their opinion on the actual contributions of each Director within the discussions

scope of their discussions with the Chairman of the Nomination & Compensation Committee or the specialist firm in charge of the evaluation. It should be recalled that the Nomination & Compensation Committee and subsequently the Board evaluate each Director’s contribution and how well their profiles match the Company’s needs on renewing the terms of office of Directors and Committee members. Given the positive findings of the evaluation, with individual contributions generally found to be satisfactory, to date the Board has not expressed a wish to conduct a formal evaluation of each Director’s contribution, since it considers this could adversely affect the culture of trust.

Composition of the Audit & Risk Committee (section 16.1 of the Code) Besides the independence criterion, and in view of the composition of the Board, Directors are selected primarily based on their experience and expertise, particularly in Two-thirds of the members of the Audit & Risk Committee must be

the fields of finance, accounting and risk management. Even though the proportion of independent directors.

two-thirds of independent members has not been observed, two of the four members including the Chairman of the Committee are independent.

Independent directors (section 9.4 of the Code) The Board of Directors has carefully examined the situation of Pierre Hessler with regard to the AFEP-MEDEF Code, which recommends “not to have been a Director of Directors cannot be members of the Board for more than 12 years.

the corporation for more than twelve years”.

It noted that Pierre Hessler’s seniority on the Board grants him a more extensive ability to understand the issues and risks at hand, and to question General Management, adds weight to the opinions he expresses and enables him to formulate balanced and objective judgments, regardless of the circumstances, with regard to General Management. Pierre Hessler’s ability to think critically during debates and decision-making by the Board, his personality, skills, leadership and commitment, which are widely recognized by the Company’s shareholders, 86.15% of whom voted to approve the renewal of his term of office on May 20, 2015, also illustrate his independence of spirit.

The Board also considered that the attention that Pierre Hessler has always paid to the proper organization of the Board’s work as Chairman of the Nomination &

Compensation Committee, in particular within the scope of the annual evaluations and the appointment and renewal of terms of office of independent directors, is essential. These qualities, combined with a strong grasp of the challenges faced by the Company, make a major contribution to the Board’s deliberations and to the contextualization of its decisions.

The Board of Directors therefore considered that the 12-year criterion set out in the Code was not sufficient to automatically disqualify a Director as an independent director and therefore decided not to apply it in these circumstances.

Stock purchase options and performance shares The amounts awarded are closely monitored and reassessed for each new plan in line (section 23.2.4 of the Code) with changes in the Bureau Veritas share price.

The Board has set the maximum percentage of compensation that stock options and performance shares can represent based on the situation of each company and the aggregate award approved by shareholders.

Stock purchase options and performance shares Based on the recommendation of the Nomination & Compensation Committee, the (section 23.2.4 of the Code) Board of Directors considered that Executive Corporate Officers are subject to an

already significant requirement to hold at least 50% of the shares resulting from The award of performance shares to Executive Corporate Officers is

exercising stock options and performance shares in registered form until the end of conditional on the purchase of a defined quantity of shares once the

their term of office. awarded shares become available.

Stock purchase options and performance shares Although the ceiling for stock purchase option and performance share awards (section 23.2.4 of the Code) expressed as a percentage of capital is not defined in the resolutions, the Board

ensures that there is a fair balance between these awards and the Company’s capital, The resolution authorizing the award plan submitted to a vote at the

the Chief Executive Officer’s compensation and the total number of stock purchase Shareholders’ Meeting must mention the maximum percentage of options

options and performance shares awarded. and performance shares that can be awarded to Executive Corporate

Officers in relation to the aggregate award approved by the shareholders in the form of an award sub-ceiling for Executive Corporate Officers.

Benefits for taking up a position, termination and non-competition The instances in which the Chief Executive Officer is paid termination benefits are (section 23.2.5 of the Code) broader than those provided for in the recommendations of the Code. However, they

strictly exclude any payment in the event of resignation, proven misconduct or change The performance conditions for termination payments shall be assessed

in function within the Group. Demanding performance conditions have been over at least two financial years.

established and the Board must determine if they have been met. Performance conditions set by the Board must be demanding and may not

allow for the indemnification of an officer unless his or her departure is imposed, regardless of the form of this departure, and linked to a change in control or strategy.

Fixed portion of Executive Corporate Officers’ compensation The Chief Executive Officer’s fixed compensation was reviewed in 2015. The increase (section 23.2.2 of the Code) in his compensation, assessed in light of Bureau Veritas’ benchmark market, is in line

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Corporate governance

Report of the Chairman of the Board of Directors