SFIL Annual financial report 2018

Report on corporate governance I 2 49 Annual Financial Report 2018 SFIL Management report Report on corporate governance Consolidated financial statements in accordance with IFRS Annual financial statements in accordance with French GAAP Shareholders’ Meeting of May 29, 2019 General information governance policy. The committee also reassessed and reaf- firmed the independence of the following directors of SFIL: Cathy Kopp, Chantal Lory, Françoise de Panafieu, Pierre Sorbets and Jean-Pierre Balligand. Lastly, the committee approved the procedure relating to CAFFIL's succession plan and unanimously voted to extend its responsibilities to cov- ering CSR. In 2018, the Compensation Committee met three times. Meetings were devoted in particular to updating the com- pensation policy to address the areas for improvement identified by the Risks and Internal Control Committee, the compensation of the Chair of the Board of Directors and the Chief Executive Officer, and the review of the com- pensation of members of SFIL's Executive Committee. In addition, the committee issued a favorable opinion on the payment in April 2018 of the 2017 variable compensation package proposed by General Management. The Commit- tee also approved the increase in the amount of attendance fees allocated to the Chair of the Board of Directors (new amount set at EUR 12,500 per fiscal year). Lastly, it reviewed the prevention and retention action plan implemented for sensitive Risks division staff. Composition of the committees The following table summarizes the composition of all of the Board’s specialized committees. Composition of the specialized committees (as of December 31, 2018) Financial Statements Committee Risks and Internal Control Committee Governance and Appointments Committee Compensation Committee Schwan Badirou-Gafari ü ü ü ü Jean-Pierre Balligand ü ü ü ü Serge Bayard ü ü Pascal Cardineaud ü Marion Domalain ü Virginie Fernandes ü ü Cathy Kopp üü üü Chantal Lory ü ü Thomas Morisse ü Françoise de Panafieu ü ü Sandrine Peraud-Chemla ü Pierre Sorbets üü üü Legend: üü : Chair of the committee ü : Member of the committee 1.4 – APPLICATION OF THE CORPORATE GOVERNANCE CODE With respect to governance, the Company refers to the Afep/Medef Code( (1) ), whose recommendations it applies with a few exceptions. These exceptions pertain to its shareholding structure, and more particularly the fact that the French State is its majority shareholder. The main differ- ences between the Company’s governance and provisions of the Code are as follows. •  The number of shares held by the members of the Board of Directors: this provision is not applied by SFIL, whose shareholding structure is described above and whose shares are not publicly traded. •  The number of independent members on the Risks and Internal Control Committee and on the Financial State- ments Committee: even though the ratio of independent members reaches to 50% (not including directors repre- senting employees), but not two-thirds as recommanded, notably due to the composition of the Board of Directors and the number of independent directors who can be members of specialized committees. It should be noted that the Board includes representatives from each share- holder (as shareholders oversee the Company’s activities in accordance with the conditions set by the European Com- mission) as well as five directors representing employees. (1) Code updated in June 2018, available at www.afep.com . •  The meeting of the Board of Directors at least once a year without the presence of executive members of manage- ment and supervisory bodies: a Risks and Internal Control Committee takes place without members of management and supervisory bodies in order to review the bank’s entire internal control system. The external consultant who reviewed the Board's functioning in 2018 recommended extending the “executive session” principle to the Finan- cial Statements Committee. The Governance and Appoint- ments Committee and the Board of Directors decided that this principle would be applied to each of the other spe- cialized committees that deemed it necessary, by provid- ing for an annual executive session at the end of one of the scheduled meetings. •  Training for directors: the Board of Directors asked the Human Resources department to study the possibility of offering additional training to independent directors, pos- sibly spread out over time if these training courses are long and costly. Meanwhile, compliance and ICAAP infor- mation and training sessions for all directors were initiated in early 2019. •  Participation by directors at Shareholders’ Meetings: since all shareholders are represented on the Board of Directors and all of the agenda items have already been presented in Board meetings, the participation of directors in Share- holders’ Meetings aside from those who also represent shareholders does not have the same importance as for a company with a diverse group of shareholders.