Governance and Management

Transcription

1 Governance and Management Board of Directors Group operating structure BOARD OF DIRECTORS 70 The organisation and working methods of the Board are based on internal Board regulations, voted by the Board itself. Over the past few years, the Board has been working closely with very active committees.the Group has also conformed to requirements set out by the loi de sécurité financière (act on financial security) of 1 August Board of Directors meetings in 2003 The Board of Directors has authority over: - EDF s strategic, economic, financial and technological issues, - Projects involving financial operations or commercially strategic decisions (notably the acquisition or disposal of equity interests), - The framework for financial management and authorisations to invest amounts above predefined limits. In addition, the Board grants the chairman a delegation of authority (last updated on 24 April 2003) (1). Board members are sent an overview of the Group s activities each month in addition to intermediary information whenever current events justify additional material.they also receive training, relating to their role as Board members or their participation in a committee, including a six-day training session when they join the Board. In preparing for Board meetings, they can take the initiative to arrange meetings with company executives. (1) These measures, which have been inplemented for many years, correspond to the recommendations contained in the Bouton Report on corporate governance.

2 _ EDF GROUP ANNUAL REPORT 2003 Active Committees and Commissions Two standing committees are responsible for analysing business trends and large commercial projects. In 2003, the Operations Committee met three times, and the Investment Committee nine times. Executive summaries of these meetings are given to Directors at the first Board meeting following their meeting. In addition, three committees work to guarantee that Board decisions are made on the basis of transparent information provided by the Group. The assignments, membership and operation of commissions are governed by Board regulations.to ensure their independence, committees do not include any corporate officers.their conclusions are presented at the subsequent meeting of the Board. - The Audit Committee (four members) met six times in It primarily discussed the risk-control programme, the risk analysis conducted in 2003 and its main results, the audit programme, budgets and mid-term business plans of the branches, accounts and changes in accounting standards, debt management and risk hedging operations, annual review of financial management, developments regarding EDF Trading, developments affecting asset management and sales of strategic assets. - The Strategy Committee (seven members) met seven times in 2003.The Committee addressed the issue of the Group s 2003 development strategy, and discussed its financial consequences with the Audit Committee. R&D strategy, the business plan for (Plan d actions industriel et social PAIS), the implementation of Group strategy abroad (Nam Theun project, Graninge divestment), and the public service agreement were also discussed. - The Ethics Committee (six members) gives the Board its opinion on sustainable development and company activity.the Committee, which was created in September 2001, met six times in 2003, notably to discuss the Group s new charter of corporate ethics, its annual report, corporate social responsibility issues such as subcontracting in nuclear operations, purchasing, solidarity and industrial restructuring. Committed to stringent standards of corporate governance In 2003, as in 2002, corporate governance issues in France and abroad led to new and improved guidelines worldwide. In April 2003, EDF s Board of Directors appointed an Ethics Vice President to oversee an external evaluation of its practices.the results were presented and discussed during the 26 June meeting. One of the conclusions was that the legal and shareholding framework of the Company has a significant influence on Board practices. However, the Board is evaluated as a space where transparent, constructive and efficient dialogue does take place with all Company stakeholders and where a strong common vision is in the making.this is partly due to the excellent work of the Committees and Commissions and to the quality of information available to Board members. Progress could be made by further preparation of issues before meetings and better tracking of implementation. 71 Therefore, the Board appointed the Ethics Committee to draw up a progress plan based on these recommendations by the beginning of 2004.This programme will also take into account the conclusions of the Parliamentary Commission investigation which was held in 2003, in close collaboration with the Agence des participations de l Etat, an agency created in EDF s Board of Directors also aims to work more closely with EDF international s Board in identifying and monitoring international investments. Director attendance Participation in plenary sessions 87.5% 80.77% 88.1% Participation in the Audit Committee 93.75% 100% 100% Participation in the Strategy Committee 75% 69.05% 75.5% Participation in the Ethics Committee 83.33% 80% 75% In addition to individual preparatory work, EDF Directors dedicated an average of 8.2 days each to the Group in 2002 (down from 9.1 in 2002), due to the fact that fewer meetings were held in 2003.

3 THE BOARD OF DIRECTORS, ON 1 MARCH 2004 (1) The members of the Board of Directors (2) As of: André Aurengo, Head of Nuclear Medicine Department at La Pitié Salpêtrière Hospital 9 July 1999 Bruno Bezard, Deputy Director of the Treasury, Head of the Department of state-owned companies and public shareholdings, Ministry of Economics, Finance and Industry 1 August 2002 Alain Bugat, Chairman, French Atomic Energy Commission 10 September 2003 Jean-Michel Charpin, General Director of the National Institute for Statistics and Economic Studies (INSEE), Ministry of Economics, Finance and Industry 9 July 1999 Pierre-Mathieu Duhamel, Director of the Budget, Ministry of Economics, Finance and Industry 31 January 2003 Laurence Drouhin-Hoeffling, employee representative, supported by the CGT union 1 January 2002 Daniel Foundoulis, member of the National Consumers Council (CNC) 9 July 1999 Jean Gaubert,Vice President of the General Council for the department of Côtes-d Armor 9 July 1999 Alain Martin, employee representative, supported by the CGT union. 9 July 1999 Jean-Marc Mauchauffée, employee representative 9 July 1999 Yvon Montané, Mayor of Mauvezin in Gascogne 9 July 1999 Catherine Nédelec, employee representative, supported by the CGT union 1 October 2000 Robert Pantaloni, employee representative, supported by the CGT-FO union 9 July 1999 Marie-Catherine Polo, employee representative, supported by the CGT union 9 July 1999 François Roussely, Chairman of the Board 9 July 1999 Louis Schweitzer, Chairman and Chief Executive Officer of Renault SA 9 July 1999 Jean-François Stoll, civil servant, Ministry of Economics, Finance and Industry 9 July Other participants: Michèle Rousseau, Director of the Energy, Mineral Resource Division of the Energy and Raw Materials Directorate, Ministry of Economics, Finance and Industry Gilbert Venet, Chief Controller Bruno Rossi, Government Controller René Camporesi, secretary Marie-Hélène Poinssot, advisor to the President, Corporate Secretary to the Board of Directors (1) EDF Board members are appointed for five year mandates.the Board was renewed by decree on 9 July 1999.When a Director resigns, the new Board member is appointed for the remaining period of the mandate. Four EDF Board members are appointed as independent administrators (as defined by the Viénot report III and confirmed by the Bouton Report, an independent administrator has no tie whatsoever with the company that might jeopardise his or her freedom of judgement). At EDF, independent Board members include Mr. Foundoulis, Mr. Gaubert, Mr. Montane and Mr. Schweitzer. (2) Mr François Ailleret resigned from the Board and was not replaced on 1 March La Médiathèque EDF Julien Daniel 1_EDF Board of Directors, 11 March 2004.

4 CORPORATE GOVERNANCE_ EDF GROUP ANNUAL REPORT 2003 GROUP OPERATING STRUCTURE The EDF Group has implemented a new organisational structure divided into nine branches corresponding to businesses and geographic areas. Each branch is accountable for its own results, manages its own assets and participates actively in defining Group strategy. Consolidating organisational structures At the beginning of 2003, the Executive Committee was consolidated around the CEO, the Chief Financial Officer, the Chief Operating Officer and the Chief Human Resources. The new structure also features a Group Management Committee regrouping members of the Executive Committee and Heads of Branches. A Steering Committee (France) has also been created. It includes members of the Executive Committee, the Heads of the Generation and Trading, Customer, Distribution and Local Development Project Branches, as well as the Head of Communications and Public Affairs. Group Management, composed of the members of the Executive Committee, and assisted by corporate support functions, defines and oversees strategy implementation which is discussed in meetings with the Board of Directors, oversees risk management and performance and coordinates business synergies and Group-wide cost reduction programmes. It promotes Group values. Business Lines, created in 2002, really took off in 2003 with the creation of a Business Line Division. Its role is to promote business synergies throughout the Group in EDF s six core businesses. 73 > PERFORMANCE MANAGEMENT CRITERIA Financial performance Business excellence Setting sustainable development standards Social and environmental responsibility EDF Group strategy is grounded in Sustainable Development.Through on-going dialogue with all our stakeholders, we aim for a constructive synergy between economic development, excellent service, and social and environmental responsability. Each is essential to the success of our company and to its business performance.

5 Ethics and management While committed to preserving the diversity of the Group, EDF has adopted a set of common principles and guidelines aimed at building a common corporate culture based on shared ethics. Launched in March 2003, the ethics programme is based on three reference texts: Group Values, Collective Management Guidelines and an Ethics Manual, intended to help staff make the right decision in a given situation.these tools are being implemented at local level, overseen by the Ethics Division. Any external body or staff member can contact the Division directly. In 2003, the Group consolidated its management approach. Corporate management Group-wide will progressively integrate the guidelines outlined in the Manager s Charter, already being implemented throughout France.This charter indicates the responsibilities to be fulfilled and the attitudes to be expected from all managers. Its implementation is evaluated on a yearly and collective basis, and accompanied by self evaluations. Consolidating management structures Management must also ensure that quality is systematically delivered to the customer, using performance indicators and integrating risk identification and management guidelines. High standards applied to Audit The Group s Audit function progressively increased. It constitutes a strong tool to ensure coherence, by offering common methodologies in line with international norms.the Audit Division oversees improvements in this area, for the parent company and all affiliates in which EDF holds a controlling stake. 74 > MEMBERS OF EXECUTIVE COMMITEE (UPDATED ON 1 MARCH 2004) François Roussely, Chairman and CEO. Daniel Camus, Senior Executive Vice President, Chief Financial Officer Corporate finance and cash management, Controlling Group, Investments. Information systems, procurement, property and gas activities. Gérard Creuzet, Senior Executive Vice President, Chief Operating Officer Branch operating performance, Strategy, R&D, Business Lines, EDF Trading. Yann Laroche, Senior Executive Vice President, Chief Human Resources Human Resources and Cultural change, coordination of public service and sustainable development initiatives, which include social responsibility and equal opportunity. 1_From left to right: François Roussely and Daniel Camus. 2 _From left to right : Yann Laroche and Gérard Creuzet.

6 CORPORATE GOVERNANCE_ EDF GROUP ANNUAL REPORT 2003 A stringent Group-wide risk management culture Risk management has stepped up significantly in recent years. In April 2003, a Risk Management Division was created, which enjoys full independence from operational branches. Its main objectives are to ensure that risk is managed in a comprehensive and coherent way throughout the Group in order to preserve the value of its tangible and intangible assets, consolidate and ensure efficient implementation of a Group-wide risk management strategy, to update its analysis of main risks for the Group, define, implement and manage reporting procedures on risk management, and ensure that the Group remains vigilant on risk factors potentially affecting the wider community. In addition to risk management strategies concerning currency and rate fluctuations, and risk related to financial markets implemented since 2001, an energy risk management strategy was defined and implemented in Based on these, a general Group-wide policy on risk management will be deployed in Already in 2003, a full range of main risks concerning all the Group s activities was mapped out. In addition, all investment and divestment projects are analysed according to risk-related guidelines applicable to all Group companies and submitted to Investment Committee approval. Nuclear safety and radioprotection Moreover, as a major player in the nuclear sector, EDF is audited by the Direction Générale de la Sûreté Nucléaire et de la Radioprotection (General Directorate for Nuclear Safety and Radiation Protection). On an internal basis, the General Inspector for Nuclear and Radiation Safety submits a report (which is made public) to the CEO. Its role is to ensure that all EDF nuclear facilities fully abide by safety regulations and to report regularly on results to the Board of Directors.The report is then published and made available to the media and posted on EDF s Internet site. The Mediator Since 1998, EDF has had a Mediator working alongside the CEO to build quality relationships with all stakeholders. Its annual report is available on EDF s website. 75 La Médiathèque EDF Stéphane Remael