Food Lion 2005 Annual Report Download - page 98

Indemnification of Directors – Article 523 of the Belgian Company Code
– Interest of Directors
In accordance with market practice, the Company subscribes annually to a liabil-
ity insurance policy for acts or omissions committed by its directors and officers
in the performance of their duties on behalf of the Company. However, the
insurance market does not allow adequate coverage by companies of the risk of
directors’ liability in a satisfactory way at justifiable conditions. In order to provide
enhanced liability protection for its directors and to attract and retain highly quali-
fied individuals to act as directors, the Board of Directors approved on May 3,
2005 the undertaking of the Company to indemnify Mr. Pierre-Olivier Beckers,
Baron Georges Jacobs, Count Arnoud de Pret Roose de Calesberg, Count Richard
Goblet d’Alviella, M r. Robert J. Murray, Dr. William L. Roper and Mr. Didier Smits
and all future directors to the maximum extent permitted by law, except if the
liability or expense is covered by insurance taken by the Company or if the liability
of a director would arise out of such director’s fraud or willful misconduct.
In compliance with the Belgian Company Code, all directors who are covered by
the indemnification mechanism, as listed above, so informed the other directors
and the Statutory Auditor prior to the deliberation on the indemnification proposal
and refrained from participating in the discussion and vote on the proposal. The
remaining independent directors, Mr. Philippe Stroobant, Baron de Cooman
d’Herlinckhove and M r. Frans Vreys, who will not be covered by the indemnifica-
tion mechanism, unanimously approved this indemnification resolution.
Committees of the Board of Directors
Until May 2005, the Board of Directors had three standing committees: the Audit
Committee, the Governance Committee and the Compensation Committee. For
efficiency reasons, the Board of Directors decided to restructure as of M ay 26,
2005 the committees of the Board into two committees, namely an Audit
Committee and a Remuneration and Nomination Committee. Under the new
structure, governance matters are largely retained within the jurisdiction of the
Board as a whole. The table above provides the membership of the standing
committees of the Board of Directors.
Audit Committee
The Audit Committee was appointed by the Board to assist the Board in moni-
toring the integrity of the financial statements of the Company, the Company’s
compliance with legal and regulatory requirements, the Statutory Auditor’s
qualification and independence, the performance of the Company’s internal audit
function and Statutory Auditor, and the Company’s internal controls and risk
management. The Audit Committee’s specific responsibilities are set forth in the
Terms of Reference of the Audit Committee, which are attached as Exhibit B to
the Company’s Corporate Governance Charter.
The Audit Committee is composed solely of independent directors. The Board
of Directors also determined that Mr. Robert J. M urray, Count de Pret Roose de
Calesberg and Count Goblet d’Alviella are “audit committee financial experts” as
defined under applicable U.S. law. In 2005, the Audit Committee met five times.
All members of the Audit Committee attended all meetings with the exception
of M r. Philippe Stroobant (whose mandate expired on M ay 26, 2005) who was
excused and represented by another Audit Committee member at two meetings.
The activities of the Audit Committee in 2005 included, among others:
• Review of sales and earnings press releases
• Review the effect of regulatory and accounting initiatives and off-balance
sheet structures on the financial statements
• Review changes, if any, in accounting principles and valuation rules
• Review final IFRS conversion issues and the presentation of the draft
2003/2004 IFRS financial statements
• Review the annual report on Form 20F
• Review of the Internal Audit Plan
• Review the management’s representation letter, significant management letter
observations and management’s responses
• Review the Audit Committee Charter Required Actions Checklist
• Review and approve the policy on complaints (SOX 301 Reports Policy/Sentinel
Hotline)
Committees of the Board of Directors
Director Audit Remuneration and Compensation Governance
Committee Nomination Committee1 Committee2 Committee2
Baron Jacobs Chair Chair Chair
Pierre-Olivier Beckers X
Baron de Cooman d’Herlinckhove3 X
Count de Pret Roose de Calesberg X
Jacques de Vaucleroy4 X
Hugh G. Farrington4 X
Count Goblet d’Alviella X2 X X
Robert J. Murray Chair X X
Dr. William Roper
Didier Smits X
Philippe Stroobant5 X X
Baron Vansteenkiste4
Frans Vreys3 X
(1) Effective immediately after the Ordinary General Meeting of May 26, 2005.
(2) Effective until the Ordinary General M eeting of M ay 26, 2005.
(3) Baron de Cooman d’Herlinckhove and Mr. Frans Vreys resigned from the Board of Directors on M ay 26, 2005.
(4) Elected to the Board of Directors on May 26, 2005.
(5) M r. Stroobant’s mandate as director expired on May 26, 2005.
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