The Company’s Supervisory Board has established a Nominations and Compensation Committee and set the following rules for its internal governance:
16.5.2.1 Composition
The Nominations and Compensation Committee members are appointed for a period coinciding with their appointment as members of the Supervisory Board. When selecting members of the Nominations and Compensation Committee, particular consideration is given to the independence
of members, as well as their competence in the selection and remuneration of senior executives and company officers for listed companies.
Based on its Internal Regulations, the Nominations and Compensation Committee is required to have between two (2) and four (4) members, at least two (2) of whom (including the Chairman) must be independent members of the Supervisory Board. For more information on the definition of independence, see Articles 17 to 19 of the Bylaws and Article 1 of the Supervisory Board’s Internal Regulations.
As of the date of this Registration Document, the Nominations and Compensation Committee is composed of Gérard Buffière (Chairman), Françoise Leroy, Jacques Garaïalde and Bernard-André Deconinck (see Section 14.1.2, “Supervisory Board”, for biographical information).
Therefore, the composition of this committee (two (2) independent members out of a total of four (4) members) does not comply with the Afep-Medef Code, which requires a majority of independent members (see Section 16.6, “Statement Relating to Corporate Governance”).
The Nominations and Compensation Committee’s Internal Regulations provide that the secretary may be any person designated by the Chairman of the Committee or with the Chairman’s approval.
16.5.2.2 Duties
The Nominations and Compensation Committee is a specialized committee of the Supervisory Board whose main function is to assist the Supervisory Board in appointing members of the Executive Committees of the Company and the Group, as well as in determining and regularly reviewing the compensation and benefits awarded to the Company’s senior executives (as such term is defined in the Supervisory Board Internal Regulations), including any deferred benefits and/or voluntary or compulsory redundancy payments awarded by the Group.
Accordingly, it carries out the following functions:
• proposing the appointment of independent members of the Supervisory Board, of the Management Board and of the Supervisory Board’s committees, and examining and assessing the application of non-independent members to the Supervisory Board;
• conducting an annual assessment of the independence of the Supervisory Board members;
• examining and proposing all aspects of and conditions to the remuneration of principal senior executives and the Group’s executive management;
• reviewing and making proposals to the Supervisory Board with respect to attendance fees; and
• reviewing any exceptional compensation relating to missions given by the Supervisory Board to any of its members outside the ordinary course of business.
16.5.2.3 Operation
The Nominations and Compensation Committee may conduct meetings in person or via video or telephone conference pursuant to the same rules as the Supervisory Board, when convened by its Chairman or secretary, so long as at least half of its members are present.
The Nominations and Compensation Committee makes recommendations to the Supervisory Board, indicating the number of votes a particular matter of business has received.
The Nominations and Compensation Committee meets as often as necessary and, in any event, at least once (1) a year prior to the Supervisory Board’s meeting on its members’ independence and in advance of any Supervisory Board meeting during which matters of Management Board compensation or Supervisory Board attendance fees are to be decided. For more information on the definition of independence, see Articles 17 to 19 of the Bylaws and Article 1 of the Supervisory Board Internal Regulations.
16.5.2.4 Activities of the Nominations and Compensation Committee during 2013
The Nominations and Compensation Committee met three times during 2013 and reported on its work to the Supervisory Board.
In 2013, the Nominations and Compensation Committee’s work focused, in particular, on (i) the development of senior executives’ teams within the Group, (ii) the performance of senior executives, (iii) the achievement of economic objectives for senior executives and (iv) changes in compensation.
Nominations and Compensation Committee attendance was 100% in 2013.
16.6 STATEMENT RELATING TO CORPORATE GOVERNANCE
The Company adheres to the Corporate Governance Code for Listed Companies of the Association Française des Entreprises Privées (“AFEP”) and of the Mouvement des Entreprises de France (“MEDEF”) (hereinafter, the “Afep-Medef Code”).
The Afep-Medef Code may be consulted on the Internet at http://www.medef.com/. The Company keeps copies of such code available to the members of its governing bodies at all times.
Tarkett believes that it complies with the principles of corporate governance defined in the Afep-Medef Code, since the Code’s stated principles are compatible with the organization, size and means of the Tarkett group. The recommendations with which the Company does not strictly comply are set forth and explained below:
• Termination payments for members of the Management Board (Recommendation 23.2.5,
“Termination Payments”). The performance requirements set by the Board must be demanding and may not allow for the indemnification of an executive director, unless his or her departure is imposed, regardless of the form of this departure, and linked to a change in control or strategy.
o As from the initial public offering, the Supervisory Board chose to ensure that Mr.
Giannuzzi’s termination payment would be due only in the event of his forced departure, in accordance with the recommendations of the Afep-Medef Code, without, however, limiting such events to change of control or disagreement on strategy. The Supervisory Board believes that, given the performance requirements to which these payments are subject, combined with the exclusion of serious misconduct or gross negligence, these measures provide the protections sought by the Afep-Medef Code.
• The proportion of independent members on Nomination and Compensation Committees (Recommendations 17.1, 18.1).
o The Nominations and Compensation Committee is composed of four (4) members, half of whom are independent, including the Chairman. The current composition of this committee (two (2) independent members out of a total of four (4) members) does not comply with the Afep-Medef Code, which requires a majority of independent members. This composition reflects the wishes of the shareholders to have two (2) members appointed by each of the two principal shareholders, each with recognized experience on these subjects.
16.7 ORGANIZATION OF INTERNAL CONTROL AND RISK MANAGEMENT