Activity of the Board of Directors and its Committees in 2014
Directors are generally given written notice during the week prior to Board meetings. Whenever possible, documents to be considered for decisions to be made at Board meetings are sent with the notice of meetings. The minutes of the previous meeting are expressly approved at each following Board meeting.
The Board of Directors held ten meetings in 2014. The attendance rate for all the directors was 91.9%.
The Audit Committee held seven meetings. The attendance rate for its members was 95.6%.
The Compensation Committee held three meetings, with 92.8% attendance.
The Governance and Ethics Committee held four meetings, with 100% attendance.
The Strategic Committee held two meetings, with 92.3% attendance.
A table summarizing individual attendance at the Board of Directors and Committee meetings is provided below.
Directors’ attendance at Board and Committees Meetings in 2014
Board of Directors’ meetings in 2014
The meetings included, but were not limited to, a review of the following subjects:
- 2014 Budget;
- presentation by the Director of Scientific Research of changes in the Group’s R&D activities: issues and strategic directions according to the business segments;
- the Group’s financial policy (debt-to-equity ratio, liquidity, dividend policy, share buyback);
- information about a planned acquisition of a stake in the PRL-15 Block (Elk – Antelope) in Papua New Guinea to increase the exploration potential in the area; and
- information about the planned development of the Shah Deniz field in Azerbaijan and the proposed sale of the Group’s stake in this project.
- 2013 accounts (Consolidated Financial Statements, parent company accounts) after the Audit Committee’s report and work performed by the statutory auditors;
- main financial communications, including industrial safety and environment aspects;
- debate on the Board of Directors’ practices based on a summary presented by the Governance and Ethics Committee of the evaluation carried out in the form of a detailed questionnaire to which each director responded. Definition of the proposed strategic directions;
- assessment of the directors’ independence and report on the absence of conflicts of interest;
- proposal to renew directorships;
- determination of the amount of directors’ fees due for fiscal year 2013;
- the compensation of the Chairman and Chief Executive Officer, who did not participate in the voting;
- review of the possibility of granting the Company’s performance shares and stock options; and
- Shareholders’ Meeting convening and approval of the documents related to this meeting.
- summary of the February 11, 2014 Strategic Committee meeting;
- presentation to the Board of the work of the Audit Committee at its meeting on March 24, 2014;
- approval of the development of the Kaombo project located offshore of Angola, with a presentation that included social (local content) and environmental information;
- preparation of the Shareholders’ Meeting: review of various chapters of the Registration Document forming the Management Report within the meaning of the French Commercial Code (risk factors, social, environmental and societal information); review of requests made by the Central Works Council and the Total Actionnariat France company savings plan to include draft resolutions on the Shareholders’ Meeting agenda; the Board of Directors’ position on these requests; and
- establishment of the schedule related to the payment of interim dividends and the balance of the dividend for 2015.
- results for the first quarter 2014 after the Audit Committee’s report and work performed by the statutory auditors;
- payment of an interim dividend; and
- information on the creation of the economic and social database and on the procedures for consulting the Worker’s Council on strategic policies, in accordance with the law of June 14, 2013.
May 16 - pre-shareholders’ meeting
- review of the draft responses to the written questions submitted by a shareholder.
- information about the sale of the Group’s stake in the Shah Deniz field (Azerbaijan);
- strategic perspectives of the Refining & Chemicals segment including safety and energy efficiency aspects and prevention of major environmental risks;
- results for the second quarter 2014 and the first half of 2014 after the Audit Committee’s report and work performed by the statutory auditors;
- payment of an interim dividend;
- based on the Audit Committee’s report, information about the key recommendations made by the monitor appointed under the agreement signed with the U.S. authorities on May 29, 2013 in his first report;
- approval of the change in the composition of the Committees, at the recommendation of the Governance and Ethics Committee;
- decision to amend the Board of Directors’ rules of procedure and the Audit Committee’s rules of procedure at the recommendation of the Governance and Ethics Committee;
- performance shares grants at the recommendation of the Compensation Committee;
- decision to carry out a capital increase reserved for employees of the Company and its subsidiaries and establishment of the terms and conditions of the operation at the recommendation of the Compensation Committee; and
- presentation of the Company’s equal opportunity and salary equality policy and comparative status of overall employment and training conditions for women and men in the Company.
September 18 - meeting held in Antwerp
- information about the proposed sale of Bostik, subsidiary specialized in adhesive chemicals;
- strategic perspectives of the Upstream segment (Exploration & Production and Gas & Power) with a presentation of safety indicators and environmental objectives;
- mid-2014 financial communications: presentation of the outlook and objectives for the coming years as part of a cost-cutting strategy; and
- the Company’s strategic directions.
- following the death of the Chairman and Chief Executive Officer, decision, based on the Governance and Ethics Committee’s report, to separate the positions of Chairman and Chief Executive Officer; appointment of the Chairman of the Board of Directors and the Chief Executive Officer; and
- initial arrangements regarding the Chief Executive Officer’s compensation and the commitments with regard to him.
- based on the Compensation Committee’s report, decisions regarding the compensation of the Chief Executive Officer;
- amendment of the rules of procedure of the Board of Directors to allow the Chairman of the Board of Directors, who is not compensated, to receive directors’ fees which are paid to him for his participation in Board and Committee meetings;
- summary of the Strategic Committee meeting of September 18;
- strategic perspectives of Marketing & Services, including the operational safety and technological risk aspects, and strategic perspectives of New Energies (solar and biotechnology);
- results for the third quarter 2014 after the Audit Committee’s report and work performed by the statutory auditors; and
- payment of an interim dividend.
- the Group’s 5-year plan: outlook of the Group and business segments and financial summary of the long-term plan;
- 2015 budget review;
- Board of Directors’ response to the Central Works Council’s opinion on the strategic directions presented to the Board on September 18;
- presentation of the new investments to be made in connection with the Kashagan project (Kazakhstan);
- approval of the change in the composition of the Committees; and
- determination of the commitments made to the Chief Executive Officer (supplementary pension plan, retirement benefits, severance pay and life insurance plan).
Audit Committee activity
In 2014, the members of the Audit Committee reviewed the following matters:
- review of the accounts for the fourth quarter of 2013, the Group’s consolidated results and the statutory accounts of parent company TOTAL S.A. for 2013. Presentation by the statutory auditors of a summary of their work performed in accordance with French and American professional audit standards, in particular on the Group’s positions in terms of valuing assets and assessing country risk and handling risk and legal proceedings in the financial statements and notes;
- review of the Group’s financial position;
- presentation of the preparation process and key validation stages of the Management Report forming chapter 3 of the Registration Document;
- update on internal audit: presentation of the 2013 main accomplishments and key topics of the audit plan for 2014. Comments on the results of the assessment of internal control on financial reporting conducted for fiscal year 2013 as part of the implementation of the Sarbanes-Oxley Act (SOX), along with a summary of the statutory auditors’ assessments of internal control related to financial reporting as part of the SOX 404 process; and
- review of the draft of the Chairman’s report on internal control and risk management procedures.
- presentation of the Group’s anti-corruption compliance policy: 2013 results and information on the progress made in implementing the program;
- presentation of certain parts of the Registration Document: risk factors and legal proceedings;
- review of the hydrocarbon reserves evaluation process at yearend 2013; and
- presentation of the Group’s insurance policy: coverage for 2014 against property damage, business interruption and civil liability. Update on the main pending claims.
- review of the consolidated and statutory financial statements of TOTAL S.A. for the first quarter of 2014, with a presentation by the statutory auditors of a summary of their limited review;
- presentation of the Group’s financial position at the end of the quarter; and
- update on the internal audits conducted in the first quarter of 2014.
- presentation of the topics covered by the Group Risk Committee in 2013: supplier risk; risk related to local content in host countries; corporate veil; ethical and compliance risk;
- presentation of the main industrial safety risk categories (occupational risk, logistical risk and technological risk);
- presentation of Gas & Power’s risk map: range of key risks; identification and assessment processes implemented;
- presentation of the risk mapping for the Group level information systems: identification and actions taken for better assessment and greater control; and
- review of the consolidation department’s functions in terms of accounting standards and its organization within the Group; presentation of recent changes to the IFRS and the main proposed changes in standards in progress.
- compliance: presentation of the key recommendations made by the independent monitor appointed by the U.S. authorities (DoJ and SEC) in his first report before it was sent to the Board of Directors;
- review of the Consolidated Financial Statements for the second quarter and first half of 2014 and of the statutory financial statements of TOTAL S.A. Presentation by the statutory auditors of a summary of their limited review;
- presentation of the Group’s financial position at the end of the quarter; and
- update on the internal audits conducted in the second quarter of 2014.
- presentation of the risk mapping process for the Marketing & Services business segment; identified risks and action plans;
- presentation of the risk mapping process for New Energies: risk management system at SunPower and in the Department; action plans;
- review of significant litigation and status update on the main pending proceedings involving the Group;
- statutory auditors’ analysis of the challenges facing the Group related to the 2014 economic environment and specific important points noted with respect to their 2014 audit plan;
- statutory auditors: review of the rules for pre-approval of audit and non-audit services and approval, without changes to the policy implemented; and
- update on the statutory auditors’ fees;
- The members of the Committee then met with the statutory auditors without management being present.
- review of the consolidated and statutory financial statements of TOTAL S.A. for the third quarter and first nine months of 2014;
- presentation by the statutory auditors of a summary of their limited review;
- presentation of the Group’s financial position at the end of the quarter;
- update on the internal audits conducted in the third quarter of 2014;
- the Committee was informed that the relevant employees acted in compliance with the provisions of the Financial Code of Ethics; and
- presentation of the supervision of the audit of the equity affiliates’ financial statements.
At each meeting related to the quarterly financial statements, the Committee reviewed the Group’s financial position in terms of liquidity, cash flow and debt, as well as its significant risks and offbalance sheet commitments. The Audit Committee was periodically informed of the risk management processes implemented within the Group and the work carried out by the Internal Audit Department which was presented at each Committee meeting where the quarterly financial statements were reviewed.
The Audit Committee reviewed the accounts within the time limits required by the AFEP-MEDEF Code, namely two days prior to their review by the Board of Directors.
The statutory auditors attended all Audit Committee meetings held in 2014.
The Chief Financial Officer, the Vice President Accounting and the Vice President Internal Control and Audit attended all Audit Committee meetings, and the Treasurer attended all meetings related to his area.
The Chairman of the Committee reported to the Board of Directors on the Committee’s activities.
Compensation Committee activity
- proposed compensation for the Chairman and Chief Executive Officer (fixed portion for 2014 and variable portion for his duties in 2013) and proposals regarding the variable portion for 2014;
- review of compliance with the restrictions on share transfers by the Chairman and Chief Executive Officer;
- information regarding the compensation policy for the members of the Executive Committee;
- review of the proposed amendments to the performance shares and stock options grant policy and approval of the proposed text to be included in the 2013 Registration Document; and
- for the parts within its remit, provision of the information and reports that must be sent to shareholders by the Board of Directors or its Chairman.
- proposals regarding the 2014 performance shares grant plan: number of recipients, length of the vesting period (three years) and holding period (two years), performance conditions for final grant. Proposals regarding the grant of performance shares to the Chairman and Chief Executive Officer.
- review of the proposed compensation for the Chairman and the Chief Executive Officer (fixed portion and variable portion);
- review of compliance with the restrictions on share transfers by the Chief Executive Officer; and
- proposed amendment to the Board of Directors’ rules of procedure to uphold the right of the Chairman of the Board of Directors who does not serve as Chief Executive Officer to receive directors’ fees for his participation in Board of Directors’ and Committee meetings.
Governance and Ethics Committee activity
- results of the formal self-assessment of the Board’s work conducted in the form of a detailed questionnaire to which the Directors responded. The Committee expressed its support for the suggested improvements, which will be submitted to the Board of Directors and mainly concerned a review at the outset of the meeting of the major points (e.g., financial statements, large-scale investments and divestments projects) and a presentation of new topics at the meetings of the Strategic Committee (e.g., monitoring of significant development projects, analysis of major risks that may affect the Group’s strategy, etc.);
- proposals to the Board of Directors regarding the assessment of the independence of the directors based on the independence criteria specified in the AFEP-MEDEF Code and after reviewing the level of activity between certain directors and the Group’s suppliers;
- proposals to the Board of Directors regarding the list of directors whose appointment will be voted on by the 2014 Shareholders’ Meeting;
- review of the terms and conditions for allocating directors’ fees to directors and Committees’ members. After noting the criteria used, the Committee proposed setting the fees to be paid to Directors for 2013 based on the number of Board and Committee meetings in which they participated at €1.251 million; and
- review, for the parts within its remit, of the reports that must be sent to shareholders by the Board of Directors or its Chairman.
- presentation by the Chairman of the Ethics Committee of a review of the ethics program for 2013 (information campaigns, changes in the matters and cases reviewed, ethical assessments conducted at the Group’s entities, actions related to human rights) and presentation of the priorities for 2014;
- information about the action taken by the monitor appointed under the agreements signed with the U.S. authorities (Department of Justice and Securities and Exchange Commission) as part of an investigation regarding the pursuit of business in Iran;
- information about the proposed timetable for the appointment by the Central Works Council of a director representing employees on the Board of Directors, which needed to occur by November 15;
- proposals regarding changes in the composition of the Committees;
- proposed amendment to the Board of Directors’ rules of procedure to take into account information regarding concurrent appointments and confidentiality inherent to the Board’s activities;
- proposed amendment to the Audit Committee’s rules of procedure to allow the appointment of a Director representing employee shareholders or employees; and
- update on the Committee’s position to be submitted to the Board of Directors following the letter from the High Committee for Corporate Governance regarding the independence of Directors who have served on the Board of Directors for more than 12 years.
- following the death of the Chairman and Chief Executive Officer; review of the management form and proposal to separate the positions of Chairman and Chief Executive Officer;
- proposed appointment of the Chairman and the Chief Executive Officer; and
- initial proposals regarding the commitments to be made to the Chief Executive Officer and authorizations related to reimbursement of costs and expenses.
- proposals regarding changes in the composition of the Committees.
Strategic Committee activity
- presentation of the Group’s security management by the Chief Administrative Officer, including the consideration of social aspects; and
- presentation by the Vice President Communications of the Group’s image, the new “Committed to Better Energy” signature and the associated campaign.
- presentation of the strategic guidelines by the Chairman and Chief Executive Officer; and
- presentation of the CLOV project in Angola by the President of Exploration & Production.