Louis Vuitton 2007 Annual Report Download - page 12

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THE OBJECTIVES OF THE BOARD OF DIRECTORS, THE STRATEGIC BODY OF
LVMH, ARE TO ENSURE THE SUSTAINABLE DEVELOPMENT OF THE VALUE
OF THE COMPANY, TO ADOPT THE MAJOR STRATEGIES THAT GUIDE ITS MANA-
GEMENT, TO VERIFY THE FAIR AND ACCURATE PRESENTATION OF INFORMATION
ABOUT THE COMPANY, AND TO PROTECT ITS CORPORATE ASSETS. ASPART
OF ITS MISSION, THE BOARD OF DIRECTORS SUPPORTS THE PRIORITY OBJEC-
TIVE OF LVMH MANAGEMENT, WHICH IS, AS IT ALWAYS HAS BEEN, TO
ENSURE THE CONTINUOUS GROWTH OF THE GROUP AND A STEADY INCREASE
IN VALUE FOR ITS SHAREHOLDERS.
The Board of Directors has adopted a Charter that
spells out the membership, mandates, operations
and responsibilities of the Board of Directors.
The Board of Directors has two Committees, the
membership, role and mandates of which are defi-
ned by internal procedural rules.
The Board of Directors’ Charter and the internal
rules of the Committees are provided to every
candidate for the position of Director, and to the
permanent representative of any legal entity,
before he assumes his duties.
Pursuant to the provisions of the Board Charter,
Directors must inform the Chairman of the Board
of Directors of any conflict of interest, even a
potential conflict, between their duties to the
company and their private interests or other duties.
They must also inform the chairman of any convic-
tion for fraud, accusations and/or public sanctions,
prohibition on managing or administration which
has been ordered against them, and any bankruptcy,
receivership or liquidation in which they have been
involved. No information has been provided under
this obligation.
The Company complies with current legal and
regulatory provisions in France with regard to
corporate governance.
Board of Directors
The Board of Directors is made up of 18 members,
6 of whom are independent and free of any inte-
rests with respect to the company.
Members of the Board of Directors must perso-
nally own at least 500 shares of LVMH.
The Board of Directors met four times in 2007,
with an average attendance rate of 83.5%. The
Board approved the annual and interim financial
statements and reviewed the Group’s major stra-
tegic guidelines, budget, the implementation of a
stock subscription option plan and the allotment
of bonus shares, authorization for third party
guarantees, as well as various agreements with
affiliated companies.
LVMH paid a total of 1,125,000 euros in directors’
fees to the members of its Board of Directors.
These fees were distributed among the Directors
and advisors in accordance with a distribution key
defined by the Board of Directors that takes into
account the duties performed on the Board and
in the Committees.
Executive Management
The Chairman of the Board of Directors also serves
as Chief Executive Officer of the company. The
Chief Executive Officer’s powers are not limited
in any way.
In agreement with the Chairman and Chief Execu-
tive Officer, the Board of Directors has appointed
a Managing Director who has the same powers
as the Chief Executive Officer.
Performance Audit Committee
The Performance Audit Committee is primarily
responsible for ensuring that the accounting prin-
ciples followed by the company comply with IFRS,
for reviewing the corporate and consolidated finan-
cial statements before they are submitted to the
Board of Directors, and for ensuring the effective
implementation of the Group’s internal control.
It has currently 3 Directors, 2 of whom are inde-
pendent. Its members and Chairman are appoin-
ted by the Board of Directors.
The Audit Performance Committee met four times
in 2007. One meeting was attended by all
members, and the three other meetings were
attended by the Chairman and one of the two
other members, as well as by the Auditors, the
Chief Operating Officer, the Chief Financial Officer,
the Management Control Director, the Internal
Audit Director, the Accounting Director, the Gene-
ral Counsel and, depending on the issues discussed,
the Director of Financing, the Treasurer, the Tax
Director and an Advisor to the Chairman.
In addition to reviewing the corporate and conso-
lidated financial statements, the work of the
Committee focused primarily on the work of Inter-
nal Audit, the currency hedging policy, as well as
legal issues, in particular any major litigation in
progress.
Nominating
and Compensation Committee
The responsibilities of the Nominating and
Compensation Committee are listed below:
- recommendations on the distribution of Direc-
tors’ fees paid by the company, as well as compen-
sation, in-kind benefits and stock options
granted to the Chairman of the Board of Direc-
tors, the Chief Executive Officer and the Deputy
Managing Director(s) of the company,
- opinions on candidates for the positions of Direc-
tor and Advisor to the Board or membership on
the Executive Committee of the group or the
general management of its principal subsidiaries,
on the compensation and in-kind benefits gran-
ted to the Directors and Advisors of the company
by the company or its subsidiaries, and on fixed
or variable, immediate or deferred compensation
and incentive plans for senior executives of the
Group.
The Committee has 3 members, 2 of whom are
independent. Its members and Chairman are
appointed by the Board of Directors.
The Committee met twice in 2007 with all its
members in attendance. It issued recommenda-
tions on compensation and the awarding of stock
options to the Chairman & CEO and the Group
Managing Director, and issued an opinion on the
compensation, the stock options and the bene-
fits inkind awarded to some Directors by the
company or its subsidiaries.
Advisory Board
The Shareholders’ Meeting may, on the recom-
mendation of the Board of Directors, appoint a
maximum of nine Advisors.
The Advisors are drawn from the shareholders
based on individual merit, and form an Advisory
Board.
They are appointed for a three-year term that
ends immediately after the Shareholders’ Meeting
called to approve the financial statements for the
previous fiscal year, which is held during the year
in which an Advisor’s term expires.
Advisors are invited to attend Board of Directors’
meetings and participate in the deliberations in
an advisory capacity; their absence does not affect
the validity of these proceedings.
Compensation Policy
Part of the compensation paid to members of the
Executive Committee and key operations person-
nel is based on the generation of cash, operating
profit, and the return on capital employed for the
business groups and companies headed by the
respective executives, as well as on their indivi-
dual performance. The variable portion generally
represents between one-third and one-half of their
compensation.
Corporate
governance