LISI GROUP - 2016 Financial report

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LISI 2016 FINANCIAL REPORT

REPORT BY THE CHAIRMAN OF THE BOARD OF DIRECTORS

In accordance with the provisions of Article L.225-37 of the French

Commercial Code and the recommendations of the French financial

market authority (AMF), this report sets out the composition of the

Board and the principle of equal representation of men and women,

the conditions governing the preparation and organization of the Board

of Directors’ work, limitations to the Chief Executive Officer’s power,

the principles and rules governing the setting of the remuneration and

benefits in kind granted to the corporate officers as well as internal

audit procedures implemented within the Group.

■■

LISI refers to the corporate governance code for listed companies of

the AFEP-MEDEF in its June 2013 version, available on the MEDEF

website

(www.medef.com

). Such membership has been confirmed

by the Board of Directors.

In order not to overload this report, the invariant part of the elements

referred to in Article L.225-37 of the French Commercial Code relating

to corporate governance and internal audit is described in Chapter 7

of the Annual Report filed with the AMF. Such Chapter 7 sets out the

principles, the statutory provisions, those of the internal rules of the

Board and committee charters that define the tasks, composition and

rules of operation of the Board and its specialist committees.

This report describes the changes and events that occurred during

the 2016 financial year that are subject to the legal provisions

mentioned above.

This report was submitted to, and approved by, the Board of Directors

on February 21, 2017.

1.1

PREPARATION AND ORGANIZATION

OF THE BOARD OF DIRECTORS’ TASKS

The Board of Directors defines the Company’s strategy and business

policies and ensures that they are followed. The Board of Directors also

carries out any audits or checks that it deems necessary.

1.1.1

Organization

Four special committees were set up within the LISI Board of

Directors: the Audit Committee, the Compensation Committee, the

Strategic Committee as well as the Nominations Committee – the

first three tasked with supervising the work carried out by the Senior

Management in each of the three areas. Each committee will submit a

report on their work to the Board of Directors. The role and composition

of these Committees are described in Chapter 7 of the Annual Report

on Governance of the Company.

1.1.2

Composition

The Board of Directors represents the shareholders of the Company;

its composition aims to comply with the various balances of interests.

The members were chosen for their skills and knowledge of the various

markets in which the Group operates.

Since the Shareholders’ General Meeting of April 23, 2014, the Board

of Directors has comprised 13 members, 9 of whom belong to the

majority family groups, and 3 of whom are independent under the

terms of the AFEP-MEDEF Code (of corporate governance). The final

member, having been a director of the Company for more than 12 years

in 2014, can no longer be deemed independent.

Hence, the Board is currently comprised of 4 women and 9 men, the

proportion of women Board members is 31% without any change from

the previous year.

A Vice-Chairman, acting as Senior Director, was appointed at the Board

meeting of February 17, 2016. The Vice-Chairman’s role is to assist

the Chairman in corporate governance issues and liaise between the

Company’s senior management and the independent directors. The

Vice-Chairman, who was chosen among the independent directors,

is Lise Nobre.

To comply with Act No. 2011-103 called the “Copé-Zimmermann”

Act, the Company decided to submit the nomination of a new female

director to the vote of the Shareholders’ General Meeting of 2017

ruling on the 2016 financial statements. In the event of a vote in favor,

the Board will then comprise 5 women and 9 men, i.e. 36% of female

directors.

The Company intends to continue this “feminization” of its Board; in

this way, at the Shareholders’ General Meeting of 2018 ruling on the

financial statements of 2017, on expiry of the term of office of one of

its directors, a further female nominee will be presented for director.

In the event of a vote in favor, the Board will then comprise 6 women

and 8 men, i.e. 43% of female directors.

1.1.3

Operating procedures for the financial year

In respect of the financial year 2016, the Board met five times, with a

member attendance rate of 96%.

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At the meeting of February 17, 2016, during which the non-

executive directors were able to meet in the absence of executive

directors, the Board signed off on the LISI Group’s separate and

consolidated financial statements. It set the amount of the bonuses

Documents specific to the Shareholders General Meeting