Actively involved committees prepare for the board meetings
The Board's Committees act strictly within the framework of the remit given to them by the Board. They are actively involved in preparing the Board's work, and make proposals, but do not have any decision-making powers.
The Strategy and Implementation Committee
This Committee clarifies, through its analyses, the strategic orientations submitted to the Board, and monitors the implementation and advancement of significant operations in progress. It ensures that the main financial balances are preserved. In this context, the Committee reviews the main strategic lines of development, options and projects presented by the General Management, together with their economic and financial consequences, acquisition opportunities, and financial transactions that may significantly change the balance sheet structure
The Committee met five times in 2009. Along with the constant and close review of the group's business activity and the analysis of markets and competitors, the Committee noted at the start of 2009 the economic contraction, and took note of the strategic decisions taken at a very early stage to tackle the difficult economic environment. On the proposal of the Committee, the Board encouraged the General Management to continue to introduce more accessible innovation, create major products, win market share in the field, and control industrial, administrative and commercial costs. Increased investment in research and advertising and promotion expenses, which are essential business drivers for the support and long-term development of the brands, was validated.
Without prejudice to the authority of the Board of Directors, this Committee is in particular responsible for monitoring the process of preparing financial information, the effectiveness of internal control and risk management systems, the auditing of the annual and consolidated financial statements by the Statutory Auditors, and the independence of the Statutory Auditors. Mr Charles Henri Filippi, L'Oréal director and a financial expert, is the Chairman of the Committee.
The Committee met four times in 2009, each time in the presence of the Statutory Auditors. The necessary documents were provided to it prior to the meeting concerned. The Committee considered that the work by the Internal Audit Department and the Internal Control process put in place, which it reviewed on several occasions particularly with regard to the risk aspects, are continuing to improve in quality. The Committee also reviewed the main items of the profit and loss accounts and the balance sheets, and the conditions of application of the Eighth Directive on Statutory Audit. In this respect, it noted that its modus operandi was in keeping with the text of the order of December 2008. The Committee also carried out hearings of the Statutory Auditors in connection with the renewal of their term of office in 2010.
The main remits of the Remuneration Committee, in the context of the work of the Board of Directors, are to make proposals with regard to the remuneration of the Chairman of the Board and the Chief Executive Officer, to the amount of attendance fees to be submitted to the Annual General Meeting and the method of distribution of such fees, and to the implementation of long-term incentive plans, such as those providing, for example, for distributions of stock options or for free grants of shares.
The Committee met four times in 2009 to consider all these matters. After the closing of accounts it made proposals to the Board of Directors with regard to the remuneration of the corporate officers and the implementation of a plan relating to stock options and conditional allocations of shares to employees concerning a large number of people. The Board approved the Committee's proposals.
The Appointments and Governance Committee
In addition to the complementary remits entrusted to it at the end of 2009, the Appointments and Governance Committee's other remits consist of making proposals to the Board on the choice of directors, expressing an opinion on the Chairman's proposals for the appointment of the Chief Executive Officer, ensuring the implementation of a procedure preparing the succession plans for the corporate officers in the event of an unforeseen vacancy, and conducting the reflection process with regard to the Committees in charge of preparing for the Board's work.
The Committee met three times in 2009. As in 2008, it proposed that the Board should review the situation of each of its members on a case-by-case basis, in particular in light of the independence criteria set out in the Afep-Medef Code. In the 2009 Reference Document, the independent directors are clearly identified as such, in light of the criteria adopted by the Board. Furthermore, the Committee continued its work of very thoroughly studying the concurrent employee and corporate officer status of the Chief Executive Officer. It made a recommendation on this matter to the Board of Directors in early 2010. Lastly, the Committee considered the best way of providing for the regular renewal of the Board of Directors, and it proposed a new scheme for staggering the terms of office which was accepted by the Board, and which led to an amendment to the Internal Rules.