Loreal 2011 Annual Report Download - page 46

44 REGISTRATION DOCUMENT − L’ORÉAL 2011
2Corporate governance
The Board’s composition and the way in which theBoard’s work is prepared andorganised
Throughout the year, proposed acquisitions were reviewed by
the committee before being submitted to the Board for it to
make a decision. In addition, the committee familiarised itself
with the industrial strategy, particularly in new markets from the
perspective of local production, a search for flexibility and the
need to adapt to local constraints. Furthermore, at each of its
meetings, the committee examined the most recent launches
of high value-added products in terms of innovation. Finally,
in2011, the committee received a presention on the Company’s
Sustainable Development policy and noted that this policy is
aimed at:
♦ensuring lasting economic growth, built on a model that
values the diversity of teams;
♦promoting ethical, responsible behaviour on an everyday
basis, and development of new avenues in the field of
sustainable consumption;
♦sharing the Group’s development through good corporate
citizenship.
The committee reported to the Board on all its work.
The Audit Committee
The main remit of the Audit Committee involves monitoring
the process for preparation of financial information, the
effectiveness of the Internal Control and risk management
systems, the statutory audit of the annual and consolidated
accounts by the Statutory Auditors and finally the Statutory
Auditors’ independence.
Furthermore, if in the course of its work the committee detects a
substantial risk, which in its view is not adequately dealt with, it
warns the Chairman of the Board accordingly. The committee
can also, in agreement with the General Management,
consult other people who may be able to help it carry out
its duties, particularly managers with economic and financial
responsibilities and those in charge of processing financial
information.
In2011, another independent D irector, Mr.Louis Schweitzer,
was appointed to the committee, thus increasing the number
of committee members to four. The committee is chaired
by Mr.Charles-Henri Filippi, an independent D irector who
has recognised financial expertise, Mr.Jean-PierreMeyers,
Mr.Francisco Castañer Basco, both of whom have been
members of the committee since it was created in1999, and
Mr.Louis Schweitzer, an independent D irector. These Directors
have the necessary qualifications due to their professional
experience and their good knowledge of the Group’s
accounting and financial procedures which are presented to
them on a regular basis. They participate actively in c ommittee
meetings, with complete freedom of judgment and in the
interest of all the shareholders.
The provision of the AFEP-MEDEF Code that recommends that
two-thirds of the Directors should be independent has not
been adopted inasmuch as the Company is controlled by two
main shareholders. However, the Board of Directors decided
to change the composition of this committee by appointing
another independent Director to the committee in 2011, so
that half the committee's members are now independent .
All the committee members ensure that L’Oréal’s economic and
financial balances are preserved and controlled.
The Audit Committee met four times in2011, in the presence of
all its members. On several occasions, it interviewed the Vice-
President of the Administration and Finance Division and the
senior managers in charge of the areas in which the committee
reviews activities, in particular within the scope of the processes
related to risk management and control. The Statutory Auditors
attend meetings. The committee did not consider it appropriate
to use outside experts.
The committee assessed the quality of the Group’s annual and
interim results of which it was informed prior to the meetings
concerned, and examined the main items on the Company’s
balance sheet and off-balance sheet commitments.
Within the scope of the auditing of the accounts by the Statutory
Auditors, the committee regularly asked for their comments and
their opinions. Like it does every year, the committee met with
the Statutory Auditors outside the presence of management.
The principles adopted by the Group in relation with Information
Systems Security were presented to the committee, which noted
that L’Oréal’s development was taking place through a solid,
durable and innovative infrastructure, in a secure environment,
with controlled costs.
The committee reviewed the activities of the Internal Audit
Department and observed that the organisation and the
results of its assignments were of better quality, with identified
improvements. In relation with Internal Control, the committee
reviewed the risk map showing the risks identified on the basis of
an in-depth process, within the regulatory framework and within
the scope of the recommendations made by the AMF, of risk
identification and analysis. The committee noted that risks are
taken into consideration at operational level and that there is a
process for a regular review of risks by the Executive Committee.
The committee is regularly informed of the legal risks and the
potential litigation and major events liable to have a significant
impact on L’Oréal’s financial position and its assets and liabilities.
No major event liable to have a significant impact on L’Oréal’s
financial position and its assets and liabilities was noted by the
committee.
Finally, the committee reviewed the process for the preparation
and approval of financial press releases and appreciated the
quality of the “Ethical and Legal Guide to Fair Competition”.
The committee reported to the Board on all its work.
The Appointments and Governance Committee
The main remits of the Appointments and Governance
Committee involve enlightening the decisions made by the
Board with regard to the conditions of performance of General
Management and the status of the executive officers, making
proposals to the Board for the choice of Directors, discussing
the classification of independent D irector which is reviewed
by the Board every year before the publication of the Annual
Report, issuing an opinion on the proposals of the Chairman
of the Board for the appointment of the Chief Executive
Officer, making sure that the code of corporate governance
to which the Company refers is properly applied, ensuring