All activities of the committees in 2015
The Audit Committee met nine times in 2015. These meetings had an attendance rate of 98%.
It met regularly with Orange’s Senior Management and the main managers of the Group’s Finance Department, in particular with the Head of the Group Audit and Risk Control and Management Department and the Statutory Auditors, in order to review with them their respective action plans and the implementation of these plans.
The Committee analyzed the statutory and consolidated financial statement for the 2014 fiscal year and the first half of 2015, together with the first and third quarter results for 2015, and verified that the processes for producing accounting and financial information complied with regulatory and legal requirements, especially in terms of internal control. In this respect, the Committee reviewed the draft Management Reports and heard the Statutory Auditors’ Reports. It also examined the budget for the fiscal year and its update, significant risks and off-balance sheet commitments and their accounting impact, as well as the results of the asset impairment tests.
In addition, the Committee reviewed all financial communications before their publication.
Internal Control and Risk Management
Before approving each set of financial statements, the Committee undertook a review of the significant litigation in which the Group is involved.
Moreover, the Committee examined in a joint meeting with the CSER Committee and the Innovation and Technology Committee the results of the annual evaluation of the internal financial control system, which were presented to it by the Group Internal Control Department, and concluded that the system was effective (see Section 5.4.3 in 2015 RD Summary of the work on internal control accomplished under Section 404 of the Sarbanes-Oxley Act).
Finally, the Committee examined the major risks with which the Group could be faced. It also ensured that the recommendations formulated by the Audit, Control and Risk Management Department after the internal audit assignments were correctly implemented. The findings of the audit assignments completed in 2015 as well as the agenda of the audit assignments to be undertaken during 2016 were also presented. A description of the main risks is given in Section 2.4 Risk factors, which is an integral part of the Management Report of the Board of Directors.
Management of Debt and Cash
The Committee regularly examined the Group’s policy on debt refinancing and cash management.
Plans for International Expansion
The Committee studied a number of potential strategic transactions in various geographies, including in France (disposal of Dailymotion), in Spain (acquisition of Jazztel) and the United Kingdom (disposal of EE), as well as the MEA region.
In addition, the Committee examined the Essentials2020 strategic plan, the deployment of the Fiber Plan in Spain, the participation in the LTE auction in Poland and the Arcep tender offer for the 700 MHz band in France. A subscription offer for Orange shares reserved for employees of the Group was also studied.
The Committee reviewed the fees for the Statutory Auditors for 2015 and the financial terms of their work during the year.
Governance and Corporate Social and Environmental Responsibility Committee (CSER Committee)
The CSER Committee met eight times in 2015. These meetings had an attendance rate of 100%.
Compensation of Directors and Officers
The Committee determined the targets’ proposals and calculation methods for the variable portion of the compensation of the Chairman and Chief Executive Officer and the Chief Executive Officer Delegate for 2015. The calculation of the variable portion of Corporate Officer compensation is based on a weighted average of four indicators that focus on the Group’s growth, profitability, quality of service, and CSR performance. The indicators and their relative weighting are described in Section 5.3.1 Compensation of directors and officers in 2015 RD.
The Committee also determined the targets’ proposals for Corporate Officers in 2016.
In addition, the Committee monitored the implementation of the long term incentive plan (LTIP), for Corporate Officers and members of the Executive Committee, and refined certain criteria that were submitted to the Board for voting. This plan took effect on January 1, 2015, following its adoption by the Board of Directors in December 2014.
On the basis of a proposal by the Committee, this plan was extended under the same conditions as for 2016 / 2018. It is detailed in Section 5.3.1. in 2015 RD.
Lastly, the Committee prepared the breakdown of attendance fees for directors and defined their allocation for 2016, as described in Section 5.3.1. in 2015 RD.
Governance and operation of the Board
The Committee considered the Chairman’s 2014 report on governance and internal control.
It also reviewed, like every year, each of the independent directors’ positions in terms of the independence criteria set out in the Afep- Medef Code. This review allowed it to propose to the Board that it qualify seven directors as independent according to the Afep-Medef Code.
The Committee also considered the annual activity report of the Lead Director.
Finally, the Committee selected and submitted to the Board for its decision a consultant in order to provide support in the assessment of the operating procedures of the Board and its committees, including the measurement of the effective contribution of the directors (see Section 126.96.36.199 Periodic review of the work of the Board of Directors and its committees in 2015 RD).
In 2015, the Committee discussed the composition of the Board of Directors and proposed that the Board submit a resolution to the Shareholders’ Meeting to renew the terms of office of Mouna Sepehri, Bernard Dufau, Helle Kristoffersen and Jean-Michel Severino, as well as, on the basis of a proposal by the government, the appointment of Anne Lange as director.
It also recommended to the Board of Directors to appoint Ramon Fernandez and Pierre Louette as Chief Executive Officer Delegates.
In 2016, it reviewed the conditions of renewal of the terms of office of three directors or the appointment of new directors (See Section 6.4
Report of the Board of Directors on the resolutions submitted to the Combined Ordinary and Extraordinary Shareholders’ Meeting of June 7, 2016).
CSER, ethics, compliance
The Committee reviewed the strategy and important issues related to the Group’s corporate social and environmental responsibility policies.
It examined the major achievements and the 2014 summary of this work and monitored the implementation of the CSER reporting obligations introduced by the French Grenelle 2 law. The Committee reported to the Board of Directors on its work on this subject.
An update on the roll-out within the Group of the program to prevent corruption was presented to the Committee and a statement presented to the Board of Directors.
The Committee also examined the Ethics Committee’s Annual Report on the Group-wide actions to implement the ethical practices program (see Section 5.6 Corporate social and environmental responsibility – Ethics Committee in 2015 RD).
The CSER Committee also reviewed the succession plans put into place for the Corporate Officers and senior management. The internal management system of the succession plans was also reviewed by the Committee, in order to ensure that the Group has sufficient expertise, in particular in the event of an unforeseen vacancy. A report was submitted to the Board of Directors.
The Committee examined the planned employee shareholding offer, Orange Ambition 2016, and the delegation granted to General Management to implement it (see Section 188.8.131.52 Compensation).
The Committee monitored changes in the half-year indicators of the employee satisfaction survey. The Annual Report on equal pay and gender equality in the workplace was presented in detail, and the Committee prepared the deliberations for the Board.
Innovation and Technology Committee (ITC)
The ITC met four times in 2015. These meetings had an attendance rate of 90%.
As part of its work, the Committee had the API (Application Programming Interface) presented at the premises where the API are being developed, examined changes in the ecosystem of industrial players, the partnerships between players and the role of standards and the organizations that define them. Work was also done on the evolution of networks and expertise, as well as on Big Data applications.
Finally, the Committee contributed to the strategic planning on key innovation issues of the Essentials2020 plan, in particular regarding the key role of the Information System.
As part of its Internal Guidelines, as reviewed in March 2014, it was planned that a strategic seminar gathering all members of the Board of Directors would take place twice a year, and formally replace the Strategy Committee. This seminar gathered all of the members of the Board of Directors in July 2015, and subsequently, as part of a oneday seminar, all of the members of the Board of Directors and the Executive Committee in December 2015. These meetings allowed members to view presentations on and discuss the Group’s financial, strategic, social and regulatory positions, as well as the results of actions undertaken in France and around the world. The major strategic issues in the Group’s markets were also presented and indepth discussions ensued in regard to the Group’s strategy as part of the Essentials2020 plan.