Preparation and organization of the Board of Directors’ work

Composition of the Board of Directors

Details of members of the Board of Directors are given in the Corporate governance chapter of the reference document. At 31 January seven out of eleven board members are independent under the definition provided in the joint AFEP/MEDEF report dated October 2003 on «Corporate Governance of Listed Companies» and approved by the appointments committee on 14 January 2004:

«An independent director is a person who has no relationship with Neopost, its Group or management that might compromise freedom of judgement».

Appended to this definition is a list of incompatible situations (employee or officer of Neopost or a Group company, customer, supplier, significant commercial or investment banker, director with close family ties with an officer, director for more than 12 years, auditor of the company over the last five years etc).

Each director’s other appointments are also detailed in the Corporate governance chapter of the reference document. Following discussions and a review undertaken by the appointments committee, the Board of Directors has decided to alter the Company’s management structure by splitting the positions of Chairman and CEO. The Chairman will henceforward devote himself more to matters of governance and long-term direction, while the CEO will be responsible for managing the Group and implementing the business model.

The CEO was appointed as a director by the Ordinary General Meeting of 10 July 2007. In 2007, a new director who is an active member of the IFA (Institut Français des Administrateurs, French Institute of Directors) was also appointed.

Role of the Board of Directors

The roles and tasks of the Board of Directors are described in the Corporate governance chapter of the reference document. Details on how the Board of Directors operates, the rights, commitments and recruitment practices of its members and the real limits of their competence are defined in the by-laws. These also state the tasks and operations for which approval is necessary.

Operation of the Board of Directors

In addition to the information provided in the Corporate governance chapter, it should be noted that the Board of Directors met six times during the year (the by-laws require a minimum of four meetings per financial year). The average attendance rate was 81%.

Among the topics discussed at these meetings, were the following in particular:

  • budgetary procedure: presentation of draft 2007 budget;
  • 2007 outlook and quarterly results;
  • cash and debt positions, dividends, launch and monitoring of share buy-backs programmes;
  • observations of the audit committee;
  • observations of the remuneration committee (eg Chairman’s remuneration);
  • independence of members of the Board in the light of the definition in the by-laws;
  • composition of and regulations covering management committees;
  • revision of the shareholder’s charter;
  • Financial Security law: the Chairman’s 2007 report on corporate governance and internal control, analysis of IFA recommendations on corporate governance;
  • review of Neopost Group’s strategy;
  • review of proposed acquisitions.

Note that active disputes are presented and discussed as a matter of course at Board meetings.

Information regarding the agenda for board meetings is sent by management as soon as it is finalised and, wherever possible, several days before the meetings. The Chairman, CEO, Chief Finance Officer and Legal Counsel review each others’ documents before presentation to the Board.

The by-laws state that the Chairman of the Board or the CEO’s obligation to provide information comes with a commitment by each director to inform himself and request in good time from the Chairman the information necessary for him to understand the points on the agenda, to make himself available and devote the time and attention needed to carry out his functions.

The tasks and members of the specialist committees (audit, remuneration and appointments) are presented in the Corporate governance chapter. Regulations covering these committees are in the Board of Directors’ by-laws.

In continuation of the actions undertaken in 2005 with respect to best corporate governance practice, Neopost distributed a self-assessment questionnaire to all directors on the Board’s operations and practices.

This questionnaire was based on 40 proposals presented by the IFA (Institut Français des Administrateurs) in its white paper dated 19 October 2005 («Sharing best corporate governance practice»). Action plans have been implemented on the basis of the opinions and suggestions provided. These include in particular:

  • a training session in Group activities (with contributions from functional and operational Group managers on the specific problems they face);
  • a seminar on 5 July 2007 on strategic issues and growth opportunities for the Neopost Group. This will complement previous Board meetings on the subject.

No specific session of the Board of Directors is devoted to an analysis of risk control, but this is reviewed before any major decision (acquisition, credit allocation...) and monitored thereafter. Risks are discussed by the Board in a more wide-ranging manner when the three-year plan is drawn up. During this cycle:

  • the Neopost Group CEO presents market conditions (postal regulations, market trends, competition...);
  • the Chief Finance Officer presents the Group’s strategy and financial objectives (by country, business...).

Risks are also identified as part of the preparation and presentation of the budget.

Internal regulations governing remuneration of corporate officers

The remuneration committee of the Board of Directors, consisting of three independent directors, is tasked with making proposals to the Board of Directors regarding remuneration for corporate officers and awarding stock options. Based on these recommendations, and in accordance with the by-laws, the Board of Directors «confirms ... that the remuneration policy for corporate officers is appropriate to market conditions and that the correct information is given to shareholders regarding remuneration of corporate officers». The Board then takes the necessary decisions to set this remuneration.