LensCrafters 2006 Annual Report Download - page 77

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ANNUAL REPORT ON
CORPORATE GOVERNANCE 2006 |77 <
On November 6, 2006, after positive opinion given by the Internal Control Committee and the
Board of Statutory Auditors, the Company’s Board of Directors approved the Financial Risk
Management Policy applicable to all companies within the Luxottica Group.
Said policy establishes the principles and rules for the management and monitoring of financial
risks, with particular reference to the transactions made by Luxottica Group to minimize risks
deriving from the variations of interest rates and exchange.
The policy clarifies that for covering the “rate risk” the instrument used is the “interest rate swaps”,
while for the “exchange risk” derivative instruments such as “forward exchange contracts”, “stop
loss orders” and “collar zero costs” are used. The use of derivative instruments is not allowed for
speculation purposes.
In addition to the limits established for each single transaction in derivatives, the policy establishes
acap linked to the aggregate Luxottica Group debt exposure.
In November 2006, the Credit Policy applicable to all wholesale companies within the Luxottica
Group and to Retail Service was updated.
This policy defines the rules and responsibilities for the management and the collection of credit in
order to prevent financial risks, optimize credits’ revolving, control their evolution and reduce
losses on such credits. In particular,the above said policy establishes the guidelines required for
the following activities:
• Apportionment and control of the credit lines;
• Monitoring of the credits trend;
• Soliciting unpaid/expired credits;
• Management and control of the initiated legal actions;
• Management and control of the accounting reserves and losses on credits;
• Definition and control of the payment conditions applied on the different markets;
• Control of the security forms.
According to the resolution taken on February 19, 2007, the Board of Directors assesses the
adequacy,efficacy and effective operation of the control system; this is carried out also in
accordance with the conditions further described in Section VIII of this Report.
Internal Control Committee. On June 14, 2006, the Board of Directors confirmed Messrs. Lucio Rondelli,
Chairman, Tancredi Bianchi and Mario Cattaneo as members of the Internal Control Committee.
The Internal Control Committee thus comprises three Independent Directors (Messrs. Tancredi
Bianchi, Lucio Rondelli and Mario Cattaneo) appointed by the Board of Directors.
On July 27, 2005, the Board of Directors approved the Rules governing operation of the Internal
Control Committee, which - in their first and second part, respectively - set out the duties
performed by the Committee permanently, as Internal Control Committee, and provisionally (until
June 14, 2006) as Audit Committee.
In compliance with the resolutions passed by the Board of Directors, from July 31, 2005 to June
14, 2006 - the date when the new Board of Statutory Auditors was appointed -, the Committee also
acted as Audit Committee - as provided for by the Sarbanes-Oxley Act and the provisions issued
by the Securities and Exchange Commission and the New York Stock Exchange; these duties will