SFIL Annual financial report 2018

2 I Report on corporate governance 48 SFIL Annual Financial Report 2018 1.3 – THE SPECIALIZED COMMITTEES OF THE BOARD OF DIRECTORS The Board of Directors may decide to create committees made up of its members tasked with assisting the Board, for which it determines the composition, powers, and com- pensation, if any, of the members who carry out their activ- ities under its responsibility and report on their work. The Chairman of each committee is appointed by the Board of Directors. The members are from the Board of Directors, but do not have a position within the Company's management. Mem- bers are chosen on the basis of their expertise (finance, banking, human resources management, etc.) and the con- tribution they may make to the work of the committee in question. Their chairmanship is entrusted to an independent Board member, who has proven competency in the areas under review by the committees. Twelve members of the Board of Directors are therefore members of the specialized committees. 1.3.1. The Financial Statements Committee and the Risks and Internal Control Committee These two committees are composed of seven members (including three independent members). They meet at least four times per year. In 2018, Virginie Fernandes replaced Delphine de Chaise- martin in these two committees. Furthermore, Sandrine Peraud-Chemla took over from Frédéric Guillemin on the Financial Statements Committee and Thomas Morisse took over from Patrick Galland on the Risks and Internal Control Committee. In 2018, the Risks and Internal Control Committee met five times. The primary purpose of the first meeting in 2018 was to study the procedures used (mapping, risk management procedures, annual control plan, and the results of controls) for internal control activities at SFIL and Caisse Française de Financement Local and the results of the intermediary review by the Company’s Statutory Auditors. The partici- pants of this first committee meeting included only Com- mittee members, the Statutory Auditors and the heads of internal control at SFIL (the Operational Risks and Per- manent Control division, the Compliance division and the Internal Audit and Inspection division). The other meetings held in 2018, in the presence of General Management and representatives of operating units concerned by the mat- ters under review, for the most part discussed the quarterly reports on risk monitoring, the Pillar 3 report, the ICAAP and ILAAP reports, updates to the SFIL backup recovery plan, the risk appetite, internal credit models (policies, roll-out plan and permanent partial use), the compensation policy, export credit, the IT simplification program, and semi-annual reports on compliance and audit activities. In 2018, the Financial Statements Committee met four times. It examined the financial statements of SFIL and Caisse Française de Financement Local as of December 31, 2017 and those as of June 30, 2018, as well as the quarterly finan- cial statements as of March 31, 2018, and September 30, 2018, and the corresponding Statutory Auditors’ reports, the loan sensitivity reduction activities, the 2019 budget and the 2020-2023 budget forecasts, as well as the implementation of the IFRS 9 accounting standard. 1.3.2. The Governance and Appointments Committee and Compensation Committee These committees are composed of five members (includ- ing three independent members). These committees meet at least twice a year. In 2018, Delphine de Chaisemartin ceased her functions and was not replaced in the Govern- ance and Appointments Committee and the Compensation Committee. Marion Domalain replaced Pascal Cardineaud on the Governance and Appointments Committee. In 2018, the Governance and Appointments Committee met four times. Meetings were devoted in particular to assess- ing the functioning of the Board of Directors, appointing new directors, including five employee representative direc- tors elected on April 4, 2018, and validating SFIL's draft Criterion 1 Criterion 2 Criterion 3 Criterion 4 Criterion 5 Criterion 6 Criterion 7 Criterion 8 Chantal Lory ok ok ok ok ok ok ok ok Philippe Mills x x x ok ok ok x ok Jean-Pierre Balligand ok ok ok ok ok ok ok ok Serge Bayard ok ok x ok ok ok ok ok Gabriel Cumenge ok ok ok ok ok ok ok x French State, represented by Schwan Badirou Gafari ok ok ok ok ok ok ok x Virginie Fernandes ok ok x ok ok ok ok x Cathy Kopp ok ok ok ok ok ok ok ok Françoise de Panafieu ok ok ok ok ok ok ok ok Pierre Sorbets ok ok ok ok ok ok ok ok Legend: “ok” represents that the independence criteria have been satisfied under the Afep/Medef Code “x” represents a criterion not satisfied under the Afep/Medef Code Criterion 1: Not having been an employee or member of the management or supervisory bodies during the past five years Criterion 2: Not having cross-directorships Criterion 3: Not having material business relationships Criterion 4: Not having close family ties to a member of a management or supervisory body Criterion 5: Not having served as Statutory Auditor of the Company during the past five years Criterion 6: Not having been a director of the Company for more than 12 years Criterion 7: Not receiving variable compensation in cash or shares or any other compensation tied to the performance of the Group Criterion 8: Not being a representative of a major shareholder