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Governance

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By-laws and Business Conduct Policies

Pursuant to the Law of July 3, 2008, the Board of Directors, at its meeting on December 18, 2008, studied the provisions of the AFEP- MEDEF Code and decided that the Company shall refer to this Code of governance.

Company Governance

By-laws as of July 26, 2013
Business Conduct Policies

Board of Directors
> Composition of the Board of Directors

The Board of Directors is chaired by Franck Riboud, who also has the function of Chief Executive Officer. The Board is composed of 13 members, of which 8 are independent.

The positions and responsibilities of the Directors are available in the following section:
Board of Directors

In accordance with the law, the administration of the Company is entrusted to the Board of Directors, whose members are appointed by the Shareholders’ Meeting.

Directors’ terms of office

The statutory duration of Directors’ terms of office is three years, and may be renewed. The term of office of any Director who is an individual expires automatically at the conclusion of the Shareholders’ Meeting that votes on the previous year’s financial statements and that is held in the year during which such Director has turned or will turn 70. Nevertheless, pursuant to a decision of the Shareholders’ Meeting, this age limit does not apply to one or more Directors who may remain in office or who may be reappointed one or more times, so long as the number of Directors concerned by this provision does not exceed one-fourth of the number of Directors in office.

All Directors’ terms of office are staggered, thereby facilitating regular renewal of the Board by the shareholders (i) due to the fact that the by-laws provide for relatively short terms of three years and (ii) because of spreading the expiration dates of the various terms of office, the Shareholders’ Meeting is able to vote each year on the terms of office of several Directors. Based on the current composition of the Board, the terms of office of five Directors will expire at the conclusion of the Shareholders’ Meeting convened to vote on the financial statements for fiscal year 2014, the terms of office of six Directors will expire at the conclusion of the Shareholders’ Meeting convened to vote on the financial statements for fiscal year 2015 and the terms of office of the remaining two Directors will expire at the conclusion of the Shareholders’ Meeting convened to vote on the financial statements for fiscal year 2016.

Although French law does not impose a minimum shareholding requirement on the directors of French limited companies (sociétés anonymes) Danone’s by-laws nevertheless require each Director to hold a minimum of 4,000 shares (representing, by way of example, and based on a share price of €50, an amount of €200,000), which must be held as registered shares.

Members of the Board of Directors as of July 26, 2013

As of July 26, 2013, the following persons are the 13 members of the Board of Directors:

Name



Age



Principal
position(a)


Starting date
of Director’s term


Expiration date
of Director’s term
(date of
Shareholders’ Meeting)
Franck RIBOUD 57 Chairman and Chief Executive Officer of Danone 1992 2016
Emmanuel FABER 49 Vice-Chairman of the Board of Directors and Deputy General Manager of Danone 2002 2016
Bernard HOURS 56 Vice-Chairman of the Board of Directors and Deputy General Manager of Danone 2005 2014
Bruno BONNELL (b) 54 Chairman of Awabot 2002 2014
Richard GOBLET D’ALVIELLA (b) 64 Executive Chairman of Sofina SA 2003 2015
Jacques-Antoine GRANJON (b) 50 Chairman and Chief Executive Office of vente-privée-com 2012 2015
Jean LAURENT (b) 68 Chairman of the Board of Directors of Foncière des Régions 2005 2015
Benoît POTIER (b) 55 Chairman and Chief Executive Officer of L’Air Liquide SA 2003 2015
Isabelle SEILLIER 53 Head of Financial Institutions EMEA of J.P. Morgan 2011 2014
Mouna SEPEHRI (b) 49 Member of the Executive Committee, Executive Vice-President of Renault SAS 2012 2015
Jean-Michel SEVERINO (b) 55 Head of “Investisseur and Partenaire Conseil” 2011 2014
Virginia A. STALLINGS (b) 62 Professor of Pediatrics at Children’s Hospital of Philadelphia 2012 2015
Jacques VINCENT 66 Chairman of Compassion Art 1997 2014

(a) Each Director’s term of office and duties are detailed in section 11.2 Positions and responsibilities of the Directors and nominees to the Board of Directors.

(b) Director deemed independent by the Board of Directors on the recommendation of the Nomination and Compensation Committee, in accordance with the AFEP-MEDEF Code (see section 6.1 Board of Directors).

The Board of Directors includes a Lead Independent Director, Mr. Jean LAURENT, who was appointed by the Board of Directors at its meeting on February 18, 2013 on the recommendation of the Nomination and Compensation Committee (please refer to the section Board of Directors’ rules of procedure hereafter for a description of the Lead Independent Director’s powers).

In addition, Mr. Michel DAVID WEILL was appointed Honorary Vice-Chairman of the Board of Directors at the conclusion of the Shareholders’ Meeting of April 28, 2011; he has an advisory role in this capacity.

Since July 26, 2013, the composition of the Board has the following characteristics:

(i)  a rate of independence of 62% (compared with a rate of 43% as of December 31, 2009 when the terms of office of Messrs. Franck RIBOUD and Emmanuel FABER were last renewed). This rate of independence is higher than that recommended by the AFEP-MEDEF Code (which is 50% for widely-held companies without controlling shareholders, such as Danone);

(ii)  a percentage of women of 23% (compared with a rate of 7% as of December 31, 2009 when the terms of office of Messrs. Franck RIBOUD and Emmanuel FABER were last renewed), i.e. three of 13 Directors, in accordance with the prevailing regulations, which require the percentage of women to be 20% by 2014;

(iii) an average age of Directors of 56.8 years (compared with an average age of 60.6 years as of December 31, 2009 when the terms of office of Messrs. Franck RIBOUD and Emmanuel FABER were last renewed); and

(iv) an average duration of Directors’ term of office of 7.8 years (compared with an average term of 11.6 years as of December 31, 2009 when the terms of office of Messrs. Franck RIBOUD and Emmanuel FABER were last renewed). Despite this significant decrease in the average seniority of its members, the Board of Directors has striven to retain, in order to preserve the diversity of the Board, several non-executive Directors who have extensive knowledge of the Group (in particular, Mr. Jacques VINCENT, who has been a Director since 1997) and one Director who will turn 70 during his term of office (Mr. Jean LAURENT).

It should be noted that, for several years, the Board has been committed, and has reiterated its commitment towards its shareholders, to continue, in the future, to make proposals to the Shareholders’ Meeting that improve its corporate governance, particularly in terms of its independence, the percentage of women on the Board and the diversity of its expertise and composition.

In accordance with the law, four members of the Danone works council, nominated by said council (two from the employees category, one from the supervisors and technicians category and one from the executives category) attend all Board meetings in an advisory capacity.

> Board of Directors´ rules of procedure

The Board of Directors’ rules of procedure, which set out the Directors’ rights and obligations and the method of operation of the Board of Directors, were adopted by the Board of Directors on April 25, 2002.

Following each of the self-assessments (the most recent being carried out in 2003, 2007, 2008, 2010 and 2012), the Board of Directors amended the rules of procedure (see section Self-assessment of the Board of Directors hereafter). More specifically, the Board of Directors’ meetings of February 14, 2011, February 14, 2012 and February 18, 2013 amended the rules of procedure to take into account best practices in governance (see, in particular, the section Directors’ Code of Ethics hereafter).

The main provisions of the Board of Directors’ rules of procedure are summarized hereafter.

Responsibilities of the Board of Directors

The Board of Directors is a collegial body in which all Directors have the same powers and duties, and in which decisions are made collectively. It is responsible towards the shareholders, it meets at least five times each year and establishes operating rules for itself and its various Committees.

The Board of Directors sets the Company’s business policies and ensures that they are implemented. It votes on all decisions concerning the Company’s major strategic, economic, social, financial and technological policies.

At each Board meeting, the Chairman reports on transactions concluded since the previous meeting and on significant projects in progress that may be concluded before the following meeting. Each year, the Board reviews the key points of the Group Management Report, as well as the resolutions to be submitted to the Shareholders’ Meeting. Furthermore, at least once every six months, General Management informs the Board of Directors of the Company’s financial position, cash position and commitments.

Between Board meetings, the Directors receive all necessary information concerning events or transactions of significance to the Group. More generally, the Directors may at any time request from the Chairman all information and documents they deem necessary to perform their duties.

Limits on the powers of the Chief Executive Officer

The list of transactions for which the rules of procedure require the Chief Executive Officer to obtain prior Board approval is detailed in section 6.5 Powers of the Chief Executive Officer.

Board of Directors’ meetings

In accordance with statutory and regulatory provisions and the Board of Directors’ rules of procedure, Directors who attend Board meetings by videoconference or other means of telecommunication are deemed to be present for the purposes of calculating the quorum and majority. However, this method of attendance is not permissible when the Board decides on whether to approve Danone’s statutory and consolidated financial statements or when it prepares the management report, including the Group Management Report.

Committees of the Board of Directors

The Board of Directors may create one or more specialized Committees and determine their composition and powers. The Committees perform their duties under the Board of Directors’ responsibility. These Committees may not interfere in the Company’s management or reduce or limit the powers of the Chairman and Chief Executive Officer, the Deputy General Manager or the Board of Directors. On matters within its jurisdiction, each Committee submits proposals, recommendations and opinions, and reports to the Board of Directors on its activities.

The Committees are comprised solely of Directors. Their members are appointed by the Board of Directors on the recommendation of the Nomination and Compensation Committee. They are appointed in their individual capacity and may not, in turn, appoint a proxy to represent them. The Committee Chairmen are appointed by the Board of Directors on the recommendation of the Nomination and Compensation Committee.

Compensation of Board of Directors’ members

The Shareholders’ Meeting determines the total maximum amount of attendance fees to be divided among the Directors. Directors who are members of the Executive Committee do not receive attendance fees. At the Shareholders’ Meeting of April 25, 2013, shareholders will be asked to change the total amount of these attendance fees in order to compensate the new role of Lead Independent Director and to take into account the specific situation of Directors who are resident abroad (by granting them an additional amount to cover their travel to Board meetings).

Directors’ Code of ethics

The Board’s rules of procedure include a Directors’ Code of ethics. Under this Code, the Directors are bound by a general confidentiality obligation regarding the decisions of the Board and of the Committees, as well as with respect to confidential information of which they become aware in the performance of their duties. Each Director is required to act in the interest of and on behalf of all shareholders.

In performing his/her duties, each Director must act independently of any interest other than the corporate interest of the Group and its shareholders. Each Director must at all times ensure that his/her personal situation does not create a conflict of interests with the Group. Any Director who has a conflict of interests must report it to the Board so that it may make a decision thereon, and must refrain from taking part in any vote on the relevant matter.

Following the Board of Directors’ meeting of February 14, 2011, the provisions of the rules of procedure were bolstered with respect to the following three points:

Awareness of Directors’ rights and obligations

At the time he/she takes office, each Director must be aware of the general and specific obligations incumbent on his/her position;

Directors’ confidentiality obligation

The Directors’ general confidentiality obligation was extended to all information and documents of which they may become aware in the course of performing their duties;

Duty to report conflicts of interest

Each Director must provide a sworn statement describing whether or not he/she has any conflicts of interest, including potential conflicts of interest: (i) at the time he/she takes office, (ii) annually, in response to the Company’s request when it prepares the Registration Document, (iii) at any time, if requested by the Chairman of the Board of Directors, and (iv) within ten business days of the occurrence of any event that causes the Director’s previously filed statements to become inaccurate, in whole or in part. In addition, in cases when the Director cannot avoid a conflict of interest, including potential conflicts of interest, he/she must abstain from taking part in discussions and from voting on the subjects concerned.

Moreover, at its meeting of February 14, 2012, the Board of Directors strengthened and detailed the Directors’ obligations regarding their commitment to the Board as follows: Directors must limit the number of their appointments as a director or chairman of committees of the board of directors of other companies in such a manner as to ensure they are able to commit fully to the Danone Board. Furthermore, should a Director wish to accept a new appointment within a French or foreign listed company, he or she must inform the Chairman of the Board of Directors and the Chairman of the Nomination and Compensation Committee.

Transactions involving the Company’s securities

The relevant securities include the Company’s shares and all financial instruments linked to the shares.

In general, the members of the Board of Directors are bound by a duty to exercise due care and diligence, as well as an obligation to exercise particular care with respect to any personal transactions involving the Company’s securities.

In particular, Directors may not engage in speculative or short-term transactions involving the Company’s securities.
Furthermore, they may not engage in transactions involving the Company’s securities in the following cases:

  • if they have information that, when published, is likely to affect the price of the securities;
  • during periods explicitly indicated by the Company, in particular, during the month preceding announcements of the Company’s annual and semi-annual results, or during the two-week period prior to publication of the Company’s quarterly sales figures.

In addition, the members of the Board of Directors must not use any instruments to hedge DANONE shares or any financial instruments linked to DANONE shares (in particular, stock-options or rights to allotments of DANONE shares subject to performance conditions). This rule also applies to all transactions engaged in by persons who have ties to the Directors (within the meaning of the regulations in force). Finally, any Director who is unsure about a transaction involving the Company’s securities (or other financial instruments) that he/she intends to enter into or about the precise nature of the information he/she is required to disclose must inform the Chairman of the Board of Directors or the Lead Independent Director accordingly.

Assessment of the Board of Directors’ performance

The Board’s performance is assessed every two years. This assessment may be a self-assessment, an assessment by the Nomination and Compensation Committee or an assessment by a third party organization.
At its February 14, 2012 meeting, in its annual report on its operations, the Board of Directors reviewed progress to date in implementing the recommendations issued as a result of the self-assessment carried out in December 2010. The last self-assessment was carried out at the end of 2012. Its findings were reviewed by the Board at its meeting on February 18, 2013 (see section Self-assessment of the Board of Directors hereafter).

Lead Independent Director

Discussions with the Company’s shareholders have enabled the Board of Directors to note that certain shareholders consider that the aggregation of the offices of Chairman of the Board of Directors and Chief Executive Officer could cause risks as regards corporate governance. It therefore appeared opportune to the Board to make obligatory the appointment of a Lead Independent Director when the functions of Chairman of the Board of Directors and Chief Executive Officer are combined in order to provide additional assurance as to the smooth operation of the Board and the balance of powers within General Management and the Board. Consequently, at the Board meeting on February 18, 2013, the Board’s rules of procedure were amended to provide for the position of Lead Independent Director.

The Lead Independent Director is appointed by the Board of Directors from among the independent Directors, based on a proposal from the Nomination and Compensation Committee. He/she remains in office throughout the duration of his/her term of office. Each time the Lead Independent Director’s term of office expires, a review will be carried out of the operation of said role and its holder’s powers so that, if necessary, they can be adapted.

Excerpt from the Board’s rules of procedure relating to the Lead Independent Director

Duties of the Lead Independent Director

“The Lead Independent Director’s primary function is to ensure the smooth operation of the Board of Directors and its Committees. In that context, he/she is in charge of the following matters:

Board of Directors assessment
The Lead Independent Director participates in the Board of Directors assessment process.

Management of conflicts of interest
The Lead Independent Director prevents conflicts of interest from occurring, notably by taking preventive measures to raise awareness.
He/she brings any conflicts of interest involving executive directors and officers and other Board members that he/she has identified to the attention of the Board of Directors.

As part of the duty to report conflicts of interest as specified in Article 8.3 of these rules of procedure [see section above Directors’ Code of Ethics], any Director having a conflict of interest, even potential, notifies the Lead Independent Director.

Compliance with the rules of procedure
The Lead Independent Director ensures that these rules of procedure are complied with.
As part of the consultation procedure with respect to market ethics as specified in Article 8.8 of these rules of procedure [i.e. the consultation procedure concerning transactions by the Directors involving DANONE shares, see section above Transactions involving the Company’s securities], the Lead Independent Director may be consulted by the Directors in the same capacity as the Chairman and Chief Executive Officer.

Relations with shareholders
The Lead Independent Director assists the Chairman and Chief Executive Officer, upon his/her request, to answer questions from shareholders, and makes himself/herself available to meet with them and receive comments and suggestions from them, at the request of and with the approval of the Chairman and Chief Executive Officer.

Activity report
The Lead Independent Director reports on the execution of his/her duties once a year to the Board of Directors.
During the Shareholders’ General Meetings, he/she may be requested by the Chairman and Chief Executive Officer to report on his/her actions.

Prerogatives of the Lead Independent Director

As part of his/her duties, the Lead Independent Director exercises the following prerogatives:

Convening of the Board of Directors/Agenda/Informing Directors
The Lead Independent Director may request the Chairman and Chief Executive Officer to convene the Board of Directors for a given agenda.
He/she may propose to the Chairman and Chief Executive Officer additional agenda items.
He/she ensures that the Directors are capable of performing their duties under the best possible conditions, and notably that they are properly informed prior to the Board of Directors meetings.

Independent Directors
Directors certified as independent by the Board of Directors may hold a meeting at the initiative of the Lead Independent Director.
The Lead Independent Director ensures the link between independent Directors and the Chairman and Chief Executive Officer, the other Board members and the General Management.

Board of Directors Committees
The Lead Independent Director may be appointed by the Board of Directors to serve as Chairman or member of one or more Board of Directors Committees. Even if not appointed, the Lead Independent Director may attend the meetings and has access to the work of the other Committees. In particular, the Lead Independent Director is involved in the work of the Nomination and Compensation Committee concerning the annual performance assessment and recommendations regarding the compensation of executive directors and officers.

Meetings with managers
The Company keeps the Lead Independent Director regularly informed of its activities, including through the organization of regular meetings with operational or functional managers, on his/her request.

Means
The Lead Independent Director has access to all documents and information that he/she deems necessary to fulfill his/her duties.”

> Operation of the Board of Directors

Independence of Board members

Independence rules

Each year, after reviewing the opinion of the Nomination and Compensation Committee, the Board of Directors considers the individual situation of each Director having regard to the corpus of the AFEP-MEDEF Code independence rules.

This Code considers a Director to be independent if he/she “ has no relationship of any type with the Company, its Group or its management that could compromise his/her ability to freely exercise his/her judgment ”, and sets forth the following independence criteria. A Director is deemed independent if:

  • “ he/she is not, and during the previous five years has not been, an employee or executive director and officer of the Company, or an employee or director of its parent company or of a company within its consolidation scope;
  • he/she is not an executive director and officer of a company in which the Company directly or indirectly holds a directorship or in which an employee appointed for such purpose or an executive director and officer of the Company (currently or who has held such position within the previous five years) holds a directorship;
  • he/she is not a customer, supplier, investment bank or commercial bank:
    • that is significant to the Company or its Group;
    • or for which the Company or its Group represents a significant part of its business;
  • he/she does not have close family ties with an executive director and officer;
  • he/she has not been one of the Company’s auditors during the previous five years;
  • he/she has not been a Director of the Company for more than 12 years.”

Review of Board members’ independence

As it does every year, the Board of Directors, on the recommendation of the Nomination and Compensation Committee, reviewed the independence of each Director.
Danone’s Board of Directors is composed of 13 Directors, of which eight are considered to be independent, giving an independence rate of 62%.

The six Directors who are not considered to be independent are:

  • Messrs. Franck RIBOUD, Emmanuel FABER and Bernard HOURS in their capacity as executive directors and officers as well as Mr. Jacques VINCENT in his capacity as a former executive director and officer of Danone (he was Deputy General Manager until April 2010);
  • Mrs. Isabelle SEILLIER, an executive within the J.P. Morgan Chase banking group, which is one of the banks with which the Group regularly does business. Various measures have been implemented to ensure that any potential conflicts of interest linked to Mrs. Isabelle SEILLIER’s responsibilities are properly controlled by the Group, namely: (i) systematic abstention of Mrs. Isabelle SEILLIER during deliberations involving, directly or indirectly, the J.P. Morgan group (as stipulated by law), (ii) express reference in the report of the Board of Directors to the Shareholders’ Meeting of her classification as a non-independent Director and of the existence of potential conflicts of interest involving her, (iii) full transparency on compensation terms for the J.P. Morgan group by the Group as part of agreements subject to shareholder approval, and (iv) a systematic resolution concerning all new regulated agreements entered into with the J.P. Morgan group, which will automatically be put to a separate shareholder vote during the subsequent Shareholders’ Meeting.

The eight independent Directors are:

  • Messrs. Bruno BONNELL, Jacques-Antoine GRANJON, Richard GOBLET d’ALVIELLA, Jean LAURENT, Benoît POTIER, Jean-Michel SEVERINO, Mrs. Mouna SEPEHRI and Mrs. Virginia STALLINGS, who meet all of the AFEP-MEDEF Code’s independence criteria;
  • in response to a question from a shareholder representative concerning Mr. Richard GOBLET d’ALVIELLA’s independence due to his responsibilities within Sofina, it was specified that Mr. Richard GOBLET d’ALVIELLA is the Executive Chairman of Sofina, that held, as of December 31, 2012, 2.1% of Danone’s share capital and 3.6% of its gross voting rights (due to the double voting rights mechanism). As a result of this relatively low stake, the Board confirmed that Mr. Richard GOBLET d’ALVIELLA satisfies all of the AFEP-MEDEF Code’s independence criteria and that his situation is not likely to be a source of any conflicts of interest;
  • in response to a question from the same shareholder representative concerning Mr. Jean LAURENT’s independence due to his responsibilities within Eurazeo, it was specified that Mr. Jean LAURENT is Vice-Chairman of the supervisory board of Eurazeo. This group held, as of December 31, 2012, 2.6% of the Company’s share capital and 4.6% of its gross voting rights (due to the double voting rights mechanism). In addition, Eurazeo’s entire equity interest in the Company is pledged to the holders of bonds convertible into DANONE shares, issued by Eurazeo in 2009. These convertible bonds mature on June 10, 2014 and Eurazeo is therefore likely to cease to be a shareholder in the Company on that date. Consequently, the Board has confirmed that Mr. Jean LAURENT satisfies all of the AFEP-MEDEF Code’s independence criteria and that his situation is not likely to be a source of any conflict of interest;
  • in response to a question from the same shareholder representative concerning Mrs. Mouna SEPEHRI’s independence due to her responsibilities within Renault, it was noted that her independence was specifically reviewed by the Nomination and Compensation Committee, followed by the Board of Directors in February 2012, when her candidacy was being considered. Thus, consideration was given as to whether the presence of Mr. Franck RIBOUD on the board of directors of Renault, a group in which Mrs. Mouna SEPEHRI performs management functions, was of a type to compromise Mrs. Mouna SEPEHRI’s independence. The rules of the AFEP-MEDEF Code stipulate that the independence of a Director would be compromised only if said Director were herself an executive director and officer of Renault, which is not the case here (since Mrs. Mouna SEPEHRI is not a director of Renault). In addition, Mr. Franck RIBOUD is himself an independent director on the Renault board of directors. The Board therefore confirmed that Mrs. Mouna SEPEHRI satisfies all of the AFEP-MEDEF Code’s independence criteria and that her situation is not likely to be a source of any conflicts of interest.

Conflicts of interest

To the Company’s knowledge, (i) there are no family ties between the Company’s executive directors and officers, and (ii) during the last five years, no executive director and officer has been convicted of fraud, declared bankruptcy, been placed in receivership or liquidation, been officially and publicly accused and/or penalized by any statutory or regulatory authority, or been deprived by a court of the right to hold a position in a company’s administrative, management or supervisory bodies or to participate in a company’s management or business operations.

To the Company’s knowledge, there are no potential conflicts of interest between any Director’s duties to the Company and their private interests and/or other duties, with the exception of Mrs. Isabelle SEILLIER.

In the case of Mrs. Isabelle SEILLIER, after the matter was reviewed by the Nomination and Compensation Committee, the Board, at its meeting in February 2011, reviewed her proposed appointment as a Director and took note of the existence of a potential conflict of interest due to her position as an executive of the J.P. Morgan banking group, which is one of the banks with which the Group regularly does business. Due to the foregoing, the Board’s rules of procedure were amended to increase Directors’ reporting obligations with respect to conflicts of interests (see in this section the points concerning changes to the Board of Directors’ rules of procedure). Furthermore, in accordance with the law and the Board’s rules of procedure, since her appointment, Mrs. Isabelle SEILLIER has not participated in any discussions or votes on decisions that create a conflict of interest for her. Moreover, the new regulated agreements concluded with the J.P. Morgan group are the subject of specific disclosure in the Board’s report to the Shareholders’ Meeting of April 25, 2013.

As of the date of this Registration Document, no executive director and officer is a party to a service agreement with the Company or any of its subsidiaries that provides him/her with any specific benefits.

Organization of Board of Directors’ meetings

The executive directors and officers always attend Board of Directors’ meetings. The Company’s external Directors meet only when the internal Directors are present to ensure that all Board members have access to the same amount of information and to reinforce the collegial nature of the Board. However, the Lead Independent Director may now convene meetings of the independent Directors.

When the Board sets the compensation of executive directors and officers, they are present at the time of the Board’s deliberations but, in accordance with the law, they do not take part in the vote. However, no executive director and officer attends any meeting of the Nomination and Compensation Committee during which his/her own compensation is discussed.

Directors’ attendance fees

The Shareholders’ Meeting of April 23, 2009 increased from €500,000 to €600,000 the maximum total yearly amount of attendance fees to be divided by the Board of Directors among its members. This total amount was increased solely to take into account an increase in the number of Directors and Board meetings and the creation of a new Committee (the Social Responsibility Committee).

Directors who are also members of the Executive Committee and/or executive directors and officers do not receive attendance fees.

The gross amount of attendance fees due in respect of 2012 was €515,000 (compared to €410,000 in respect of 2011).

A Director who is a member only of the Board of Directors receives compensation that includes a fixed component of €10,000 per year and a variable component of €2,000 for each Board meeting he/she attends. In addition, Directors who are also members of one of the three Committees created by the Board of Directors receive compensation of €4,000 for each Committee meeting he/she attends. The Chairmen of these Committees receive €8,000 per meeting. Honorary Directors do not receive attendance fees.

The Shareholders’ Meeting of April 25, 2013 will be asked to increase the total annual maximum amount of attendance fees that could be paid to all Directors from €600,000 to €800,000 (see section 9.3 Comments on the resolutions submitted to the Shareholders’ Meeting). This increase would enable to (i) meet the costs associated with the appointment of a Lead Independent Director by the Board of Directors at its meeting on February 18, 2013 and (ii) take into account the particular situation of Directors residing abroad through the allocation of an additional amount to cover the cost of their travel to Board meetings. The other rules for allocating board attendance fees would not be amended and, more particularly, the amount of attendance fees for Directors would not be increased in fiscal year 2013 (with the exception of the two changes described above). Any increase in the amounts to be paid to Directors which may, where relevant, be decided upon subsequently will relate only to the variable portion, in order to encourage attendance at Board meetings.

Self-assessment of the Board of Directors

In accordance with its rules of procedure, every two years, the Board of Directors conducts a self-assessment (most recently in 2008, 2010 and 2012), which covers the performance of the Board itself and of each of its Committees.

The Board’s self-assessment in 2008 led the Board of Directors to amend its rules of procedure in order to inter alia (i) clarify the rules concerning information to be provided to the Board on the Company’s financial position (i.e. at least once every six months, which was already the practice) and (ii) definitively prohibit the Directors from using any hedging instruments in connection with the Company’s shares. In addition, following this self-assessment, a dedicated one-day event was initiated for presenting and discussing strategic plans and the annual budget.

The self-assessment of the Board and its various committees in 2010 led to improvements in (i) the operation of the Board, by the introduction of annual meetings on specific topics, (ii) the integration of new Directors, by offering them the opportunity of benefitting from a mentor director and an integration process including site visits and meetings with operational managers and (iii) the composition of the Board, particularly as regards its independence and the diversity of its composition.

To date, the following improvements have been implemented:

  • a three-day study program, which, in all cases, includes visits to the sites of the Fresh Dairy Products Division, was set up to speed up new Directors’ integration and to broaden all Board members’ knowledge of the main issues and opportunities specific to that business. The first two sessions took place in the winter and spring of 2012;
  • a procedure, providing for annual feedback to the Board on the work performed by the various Committees, has been set up;
  • the Board has regularly reviewed the performance of the Unimilk group’s companies since their acquisition in November 2010 and progress as regards their integration into the Group;
  • concerning the composition of the Board, the percentage of women on the Board increased in 2012 from 14% to 21%, the proportion of independent Directors also increased (from 50% to 57%) and its diversity was improved by the appointment of new Directors with additional skills and expertise.

    The most recent self-assessment of the Board and its various Committees was conducted in December 2012. The following changes were decided at the Board meeting on February 18, 2013.

    This self-assessment highlighted the fact that Directors regard the Board’s operation and composition to be satisfactory overall. However, the Directors expressed their wish to (i) strengthen the balance of powers between the Board and General Management and (ii) continue to improve the integration of new Directors.

To implement some of the suggestions made by the Directors following the self-assessment carried out in December 2012, the following changes were decided on by the Board of Directors on February 18, 2013:

  • institution of the position of Lead Independent Director in the event of the non-separation of the offices of Chairman of the Board of Directors and of Chief Executive Officer of the Company;
  • implementation of an improved integration process for new Directors comprising (i) individual meetings with several existing Directors and (ii) individual meetings with members of General Management and the Executive Committee;
  • improved training for the other Directors: proposed presentation sessions by the managers of the Group’s main functions, continuation of site visits and Directors to be encouraged to undertake external training;
  • implementation of a regular update on the results of the Board of Directors’ assessment.
> Work performed by the Board of Directors

Actions undertaken to improve the efficiency of the Board of Directors’ operation continued in 2012.

The Board of Directors met nine times in 2012 (compared to five times in 2011). The average length of each meeting was 2½ hours (compared to 3½ hours in 2011).
The Directors’ attendance, expressed as their attendance rate at meetings, was 92% in 2012 (compared with 94% in 2011).

Following discussions with the shareholders, the decision was taken to disclose, when a Director’s term of office is being renewed by the Shareholders’ Meeting, said Director’s average individual attendance rate, during their expiring term of office.

Recurring matters

The following recurring matters were reviewed and discussed by the Board of Directors in 2012:

(i) Monitoring major policies of day-to-day management

Detailed review of the Group’s business activities, presentation of annual budgets, approving statutory and consolidated annual financial statements, approving the semi-annual financial statements and financial communications (in particular, when the annual and semi-annual financial statements are published), acquisitions and sales of assets or equity interests, reviewing the Group’s financial position and its debt (changes, amount, composition and repayment dates, off-balance sheet commitments, equity levels, liquidity, hedging of financial risks, credit ratings), reviewing the Statutory auditors’ approach to their work, authorizations for commercial paper issuance programs, financial commitments (security interests and guarantees), annual authorization to General Management with respect to the Group’s bond issuance program (EMTN), receiving regular information on the Group’s risk management and internal control systems and reviewing the Group’s risks by overseeing the work of the Audit Committee, annual capital increases reserved for employees, allotting Group performance units and Group performance shares (including setting, each year, the performance objectives for the following year and verifying that such objectives were met the previous year), monitoring the Company’s share price and shareholder structure, setting the proposed dividend, approving the Group’s yearly contributions to danone.communities and the Danone Ecosystem Fund.

(ii) Operation of corporate bodies

Monitoring corporate governance issues, receiving regular reports on the meetings of the three Board Committees (Audit Committee, Nomination and Compensation Committee and Social Responsibility Committee), which are submitted to the Board following each of their meetings, determining all components of the compensation of each of the Company’s three executive directors and officers, approving the various Board reports and proposed resolutions submitted for shareholder approval, and preparing for the Shareholders’ Meeting.

(iii) Group strategy

Reviewing the Group’s transformation axes (i.e. exposure to emerging markets, prioritizing certain key countries, etc.) and their various impacts on the Group (in terms of organization and operation of human resources, adaptation of the Group’s products to local demand, etc.), attending the annual strategic presentations made to the Board by each member of the Executive Committee at a dedicated one-day event held off-site in December. These presentations are always followed by discussions with the Directors.
In addition, each year Directors are invited to attend several working days organized in Evian, where an annual seminar is held for all of the Group’s executives, during which the strategies of the Group’s various Divisions are reviewed and discussed.

Specific matters

The following specific matters were reviewed by the Board of Directors in 2012 and in February 2013:

(i) Transactions and the Group’s accounting and financial position

  • review of year-end closing process in connection with the 2012 consolidated financial statements;
  • share buyback transactions completed in 2012 and 2013 and cancellation of treasury shares upon completion of these transactions;
  • examination of diversified sources of financing for the Company, including a review of the bond issue carried out in the U.S. market by means of a private placement with institutional investors;
  • review of the restructuring of the Group’s debt, including the extension for an additional year of the €2 billion syndicated facilities agreement;
  • review of the authorization for Danone’s guarantee, increased to a total amount of €750 million, for commitments of Danone Corporate Finance Services (in connection with financial risk management transactions carried out by it on behalf of Group companies);
  • review of the adjustment of the trading operating margin target for 2012;
  • in connection with the Shareholders’ Meeting of April 25, 2013, review of the resolutions to be submitted to the Shareholders’ Meeting concerning the renewal of financial authorizations and the resolution concerning the payment of dividends.

(ii) Corporate governance

In connection with the Shareholders’ Meeting of April 26, 2012

  • review of the composition of the Board vis-à-vis its renewal and member recruitment policies, in particular as regards the number of women and of independent members and the diversification of its composition, resulting in the proposal to renew the terms of office of Messrs. Richard GOBLET D’ALVIELLA, Jean LAURENT and Benoît POTIER, and to appoint Mrs. Mouna SEPEHRI, Mr. Jacques-Antoine GRANJON and Mrs. Virginia STALLINGS to positions on the Board;
  • review of the composition of the Nomination and Compensation Committee, and in particular the decision to replace Mr. Hakan MOGREN (whose term of office was not renewed at the conclusion of the Shareholders’ Meeting of April 26, 2012) with Mr. Benoît POTIER;
  • review of the composition of the Audit Committee, and in particular, in compliance with the Nomination and Compensation Committee’s recommendations, the decision to appoint Mr. Jean-Michel SEVERINO and Mrs. Mouna SEPEHRI as members of this Committee (following the non-renewal of the directorships of Mr. Christian LAUBIE and Mrs. Guylaine SAUCIER), and the appointment of Mr. Jean-Michel SEVERINO as the Chairman of the Audit Committee and a financial expert.

    In this framework, the expertise and skills of new members of the Audit Committee have been reviewed:
    • concerning Mr. Jean-Michel SEVERINO, an Inspector General of Finances, the Board noted that in his previous positions (notably as Vice-President for East Asia at the World Bank and as the Chief Executive Officer of the French Development Agency (Agence Française de Développement)) he had developed solid expertise in accounting and finance as well as in internal control and risk management issues. The Board also valued his excellent knowledge of emerging markets. The Board also noted that due to his appointment one year previously as a Director and member of the Social Responsibility Committee, Mr. Jean-Michel SEVERINO is well acquainted with the issues facing the Group;
    • concerning Mrs. Mouna SEPEHRI, the Board had noted that for the last 16 years she had been closely involved in the development of the Renault group and in its major acquisitions and strategic partnerships. The Board also considered that her expertise in the corporate functions delegated to the Chief Executive’s Office, and legal affairs in particular, would enhance the Audit Committee’s skills;
  • amendments to the rules of procedure of the Board, the Audit Committee and the Social Responsibility Committee.

In connection with the Shareholders’ Meeting of April 25, 2013

  • review of the composition of the Board and, more specifically, consideration of (i) the renewal of the terms of office as Directors of Messrs. Franck RIBOUD and Emmanuel FABER and (ii) the renewal of their respective terms of office as Chairman and Chief Executive Officer and Deputy General Manager, subject to the condition precedent of the renewal of their terms of office as Directors by the Shareholders’ Meeting.

    In connection with this review, the Board paid particular attention to the following matters:
    • concerning Mr. Franck RIBOUD: the Board of Directors examined his situation with regard to: (i) the rules relating to the aggregation of offices, (ii) the continuing non-separation of his offices of Chairman of the Board of Directors and Chief Executive Officer, (iii) his employment contract remaining in force, (iv) the indemnities for breach of this employment contract and (v) the obligation to hold shares acquired through the grant of shares subject to performance conditions;
    • concerning Mr. Emmanuel FABER: the Board of Directors examined his situation also with regard to (i) the rules relating to the aggregation of offices, (ii) the indemnities for breach of his employment contract and (iii) his obligations to hold shares acquired through the grant of Group performance shares;
  • examination of the amount of attendance fees paid to the Directors and the proposal to increase the total maximum amount to provide compensation for the new position of Lead Independent Director created by the Board of Directors at its meeting on February 18, 2013 and to take into account the specific situation of Directors residing abroad through the allocation of an additional amount to cover the costs of their travel to Board meetings;
  • amendments to the Board’s rules of procedure concerning, in particular, the creation of the position of Lead Independent Director and the modification of the rules for allocating attendance fees;
  • review of the self-assessment of the Board of Directors and annual update on the operation of the Board;
  • review and authorization of related party transactions.

(iii) Restructuring, disposals and acquisitions

  • overseeing the completion of the acquisition of the Wockhardt group’s baby and medical nutrition business in India;
  • overseeing the integration of the Unimilk group’s companies within the new Danone-Unimilk entity and the performance of this entity in 2012;
  • overseeing the acquisition in progress of Centrale Laitière du Maroc; and
  • reviewing the possibility of acquiring the nutrition activities of Pfizer Inc. (this acquisition did not ultimately take place).

(iv) Corporate Social Responsibility (CSR)

  • annual review of the Group’s situation and policy concerning gender equality at work and pay equality;
  • monitoring the activities of the Danone Ecosystem Fund, danone.communities and Livelihoods funds;
  • review of the Group’s four strategic priorities (Health, For All, Nature, People); and
  • review of the consequences for the Group of the new “Grenelle II” regulations.
Board of Directors Committees

Danone's Board of Directors also includes an Audit Committee, a Nomination and Compensation Committee and Social Responsibility Committee composed of independent directors.

Below is a summary of our committee structure and membership information. To read more about any of the committees, click on committee names in the chart below.

Executive Committee

Under the authority of the management, the Executive Committee meets once a month. It ensures the operational direction of the Company, implements the strategy defined by the Board of Directors, checks the coherence of the actions taken by the operational business lines and business units, decides on the action plans and agrees on the budget.

The biographies of the Executive Committee members are available in the following section:

Remuneration and regulated commitments with regard to Danone's Executive Officers
> Remuneration of Danone's executive officers

2014

Remuneration of Danone's executive officers in 2014 Download the PDF

2013

Remuneration of Danone's executive officers in 2013 Download the PDF
2013 grants to Danone's corporate officers Download the PDF

2012

Remuneration of Danone's executive officers in 2012 Download the PDF
2012 grants to Danone's corporate officers Download the PDF

2011

Remuneration of Danone's executive officers in 2011Download the PDF
2011 grants to Danone's corporate officers Download the PDF

2010

Remuneration of Danone's executive officers in 2010Download the PDF
2010 grants to Danone's corporate officers Download the PDF

2009

Remuneration of Danone's executive officers in 2009 Download the PDF
2009 grants to Danone's corporate officers Download the PDF

> Regulated commitments

Published in conformity with Article R 225-34-1 of the French Code of Commerce

Regulated commitments with regard to Mr. Hours - Board of Directors of February 19th, 2014 Download the PDF
Regulated commitments with regard to Mr. Hours - Board of Directors of December 10th, 2013 Download the PDF
Regulated commitments with regard to Mr. Faber - Board of Directors of February 18th, 2013 Download the PDF
Regulated commitments with regard to Mr. Riboud - Board of Directors of February 18th, 2013 Download the PDF
Regulated commitments with regard to Mr. Hours - Board of Directors of February 14th 2011Download the PDF
Regulated commitments with regard to Mr. Hours - Board of Directors of February 13th 2010 Download the PDF
Regulated commitments with regard to Mr. Faber - Board of Directors of February 13th 2010 Download the PDF
Regulated commitments with regard to Mr. Riboud - Board of Directors of February 13th 2010 Download the PDF
Regulated commitments with regard to Messrs. Riboud, Vincent, Faber and Hours – Board of Directors of February 13th 2008 Download the PDF

29 April 2014 2:30 p.m. CET

Shareholder’s Annual Meeting
25 July 2014

2014 First-Half Results
15 October 2014

Sales in the third quarter and first nine months of 2014