ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
In 2005, our Board of Directors was made up of 15 Directors, including 6 French
Directors, 7 non-French Directors and 2 Directors with dual nationality (French
and one other). At the Shareholders Meeting of May 5, 2006, Jean-Jacques Salane
was reappointed to the Board of Directors until 2010.
The following sets forth the names of the current members of the Board of
Directors as elected at the Annual Shareholders' Meeting of May 5, 2006, their
position, age, dates of appointment and the expiration of their current term.
Name First Most recent Expiration Address
appointment appointment of current
term of
office
Gérard Mestrallet (56 June 15, 1994 2005 2009 SUEZ 16, rue de la Ville
years old) Chairman and l'Evêque
Chief Executive Officer 75008 Paris
Albert Frère (79 years June 19, 1997 2004 2008 Groupe Bruxelles Lambert
old) Vice-Chairman avenue Marnix
24 B-1000 Brussels
Edmond Alphandéry (62 April 27, 2004 2004 2008 CNP Assurances 4, place
years old)* Director Raoul-Dautry
75015 Paris
Antonio Brufau (57 years April 25, 2003 2003 2007 REPSOL YPF, S.A. Paseo de
old)* Director la Castellana,
278E-28046 Madrid
René Carron (63 years April 27, 2004 2004 2008 Crédit Agricole S.A.
old) Director 91-93, boulevard Pasteur
75015 Paris
Gerhard Cromme (62 years June 14, 1995 2004 2008 ThyssenKrupp AG
old)* Director August-Thyssen Strasse
1D-40211 Dusseldorf
Etienne Davignon (73 August 3, 1989 2004 2008 SUEZ-TRACTEBEL place du
years old) Trône,
Director 1,B-1000 Brussels
Paul Desmarais Jr. (51 April 14, 1998 2005 2009 Power Corporation du
years old) Canada 751 Square
Director Victoria, Montreal,H2Y 2J3
Quebec
Richard Goblet d'Alviella May 13, 2005 2005 2009 Sofina Rue de l'Industrie,
(58 years old)* Director 31B-1040 Brussels
Jacques Lagarde (67 years June 14, 1995 2003 2007 1314 Arch Street,
old)* Director Berkeley,
CA 94708, USA
Anne Lauvergeon (46 years May 5, 2000 2003 2007 Areva 27-29, rue Le
old)* Director Peletier
75009 Paris
|
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Jean Peyrelevade (66 June 22, 2004 2008 Toulouse et Associés
years old)* 1983 23-27, rue Cambon75001
Director Paris
Thierry de Rudder (56 April 27, 2004 2008 Groupe Bruxelles Lambert
years old) 2004 avenue Marnix 24B-1000
Director Brussels
Jean-Jacques Salane (54 April 26, 2006 2010 Lyonnaise des Eaux Pays
years old)Director 2002 Basque
15, Avenue Charles Floquet
BP 8764202 Biarritz Cedex
Lord Simon of Highbury May 4, 2001 2005 2009 53 Davies Street London
(66 years old)* Director W1K 5JH, UK
Secretary of the Board of
Directors:Patrick
Billioud
*
Independent Director. Independent Directors, as defined in the Bouton Report of 2003
on Corporate Governance: "A director is considered 'independent' when he/she has no
relations of any kind with the company or its management, which could impede the
free exercise of his/her judgment." At its meeting held on March 8, 2006, our Board
examined the situation of the Directors in light of the criteria set out in the
Bouton Report on corporate governance, in relation to directors' independence. It
was felt that the criteria of length of service provided for in the Report should be
assessed in relation to our specific situation, given that we are not simply the
continuation of the pre-June 1997 Lyonnaise des Eaux and legal affiliation alone may
not, from this point of view, be considered relevant. On this basis eight Directors
are deemed to be independent and seven are deemed to be non-independent.
BIOGRAPHICAL INFORMATION CONCERNING DIRECTORS
Gérard Mestrallet, French national.
A graduate of the prestigious French engineering school, Polytechnique, and the
Ecole Nationale d'Administration, or ENA, Gérard Mestrallet joined Compagnie de
SUEZ in 1984 as Vice-President, Special Projects. In 1986, he was appointed
Executive Vice-President, Industry and then in February 1991, Executive Director
and Chairman of the Management Committee of Société Générale de Belgique. In
1995, he became Chairman and Chief Executive Officer of Compagnie de SUEZ and in
June 1997, Chairman of the SUEZ Lyonnaise des Eaux Executive Board. On May 4,
2001, Gérard Mestrallet was appointed Chairman and Chief Executive Officer of
SUEZ. He is also Chairman of the Association Paris Europlace and a member of the
Board of the Institut Français des Administrateurs (French institute of
corporate directors).
Certain other directorships and positions: Chairman of the Board of Directors of
SUEZ Environment and SUEZ Energy Services (France), SUEZ-TRACTEBEL and
Electrabel (Belgium), and Hisusa (Spain), Vice-Chairman of Aguas de Barcelona
(Spain), Director of Saint-Gobain (France) and Pargesa Holding SA (Switzerland),
and Member of the Supervisory Board of Axa (France).
Mr. Gérard Mestrallet holds 33,326 SUEZ shares.
Albert Frère, Belgian national.
After having occupied a number of positions in the family company and acquiring
in-depth knowledge of the iron and steel industry in the Charleroi basin, Albert
Frère founded the company Pargesa Holding in 1981 in Geneva, in association with
several other businessmen. In 1982, this company acquired an interest in Groupe
Bruxelles Lambert.
Certain other directorships and positions: Honorary manager of the National Bank
of Belgium, Chairman of the Board of Directors and Executive Director of Groupe
Bruxelles Lambert (Belgium), Chairman of the Board of Directors of
Frère-Bourgeois, ERBE, Financière de la Sambre (Belgium) and Stichting
Administratiekantoor Frères-Bourgeois (Netherlands), Vice-Chairman, Executive
Director and member of the Management Committee of Pargesa Holding SA
(Switzerland), Chairman of the Supervisory Board of Metropole Television M6
(France), Honorary Chairman of the Chamber of Commerce and Industry of Charleroi
(Belgium), Director of LVMH and Château Cheval Blanc (France), Member of the
International Committee of Assicurazioni Generali S.p.A. (Italy).
Mr. Albert Frère holds 2,000 SUEZ shares.
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Edmond Alphandéry, French national.
Edmond Alphandéry is a graduate of the Paris Institute of Political Studies, or
IEP, and a qualified lecturer (agrégé) in economics. He is Professor Emeritus at
the University of Paris II as well as mayor of Longué-Jumelles and departmental
councilor of Maine and Loire. He was the French Minister of the Economy from
March 1993 to May 1995. He chaired the Supervisory Board of CNP from 1988 to
1993 and was Chairman of Electricité de France from 1995 to 1998. Since
July 1998, he has once again served as Chairman of the Supervisory Board of CNP
Assurances. In addition, he has been a Director of Calyon since 2002. He has
also been Chairman of the Centre National des Professions Financières since
June 2003.
Certain other directorships and positions: Chairman of the Supervisory Board of
CNP Assurances, Chairman of CNP International, Chairman of the Centre National
des Professions Financières (France), Director of Calyon and Icade (France),
Caixa Seguros (Spain) and CNP Fineco Vita (Italy).
Mr. Edmond Alphandéry holds 2,000 shares. He is a member of the Audit Committee.
Antonio Brufau, Spanish national.
Antonio Brufau has an economics degree from the University of Barcelona. He is a
chartered accountant and graduate of the IESE. After holding various positions
at Arthur Andersen, he became a member of the Arthur Andersen Worldwide Advisory
Council in 1986. In 1988, he was Senior Executive Vice-President of Caja de
Ahorros y Pensiones de Barcelona "la Caixa." He was also Chairman and Chief
Executive of "la Caixa" Group from 1999 to 2004. Since October 27, 2004, he has
been Chairman and Chief Executive of Repsol YPF, SA.
Certain other directorships and positions: Chairman and Chief Executive Officer
of Repsol YPF, SA (Spain), Chairman of YPF, SA (Argentina) and Comupet Madrid
2008, SL (Spain), and Vice-Chairman of Gas Natural SDG, SA (Spain).
Mr. Antonio Brufau holds 2,222 SUEZ shares. He is a member of the Audit
Committee.
René Carron, French national.
René Carron operates a farm in Yenne. He is a Knight of the Legion of Honor and
the National Order of Merit and a Commander of the Order of Agricultural Merit.
He has held a variety of elected offices in the Savoie region of France. In
1981, René Carron joined the Crédit Agricole group. In 1992, he became Chairman
of Caisse Régionale de la Savoie, which became Caisse Régionale des Savoie after
its merger with Caisse de Haute-Savoie in 1994. In 1995, he joined the committee
of the Fédération Nationale du Crédit Agricole, where he was Chairman from
July 2000 to April 2003, and subsequently appointed Vice-Chairman. In
December 2002, he was appointed Chairman of the Board of Directors of Crédit
Agricole SA.
Certain other directorships and positions: Chairman of the Board of Directors of
Crédit Agricole SA, Chairman of Caisse Régionale de Crédit Agricole des Savoie
and the Confédération Nationale de Crédit Agricole "CICI" (France),
Vice-Chairman of the Confédération Nationale de la Mutualité de la Coopération
et Crédit Agricole "CNMCCA," Fédération Nationale du Crédit Agricole (France)
and Banca Intesa (Italy), Director of Crédit Agricole Solidarité et
Développement, Fondation du Crédit Agricole Pays de France, Sacam, Sacam
Participations, and Scicam (France), Member of the Supervisory Board of
Lagardère, Member of the Management Committee and Legal Manager of ADICAM
(France) and Member of the Management Committee of GIE GECAM.
Mr. René Carron holds 3,500 SUEZ shares. He is a member of the Ethics,
Environment and Sustainable Development Committee.
Gerhard Cromme, German national.
Gerhard Cromme has a doctorate in Law and a number of diplomas in economics
(Münster, Lausanne, Paris and Harvard Universities). He joined the Saint-Gobain
Group in Germany in 1971, before joining the Krupp Group in 1986.
Certain other directorships and positions: Chairman of the Supervisory Board of
ThyssenKrupp AG (Germany), Member of the Supervisory Board of Allianz AG, Axel
Springer AG, E.ON AG, Hochtief AG, Siemens AG and Volkswagen AG (Germany),
Director of Deutsche Lufthansa AG (Germany), BNP-Paribas and Saint-Gobain
(France).
Mr. Gerhard Cromme holds 2,000 SUEZ shares. He is a member of the Nomination
Committee.
Etienne Davignon, Belgian national.
Etienne Davignon successively occupied the functions in Belgium of Principal
Private Secretary to the Foreign Minister (1964-1969), Chairman of the
International Energy Agency Management Committee (1974-1977), Vice-Chairman of
the European Community Commission (1981-1985), and Chairman of the Royal
Institute of International Relations. In 1985, he joined Société Générale de
Belgique, where he was Chairman from April 1988 to February 2001 and
Vice-Chairman until the merger of Société Générale de Belgique and Tractebel on
October 31, 2003. He then became Vice-Chairman of SUEZ-TRACTEBEL.
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Certain other directorships and positions: Chairman of Compagnie Maritime Belge,
Compagnie des Wagons-Lits, Recticel, Sibeka, SN Airholding and Palais des
Beaux-Arts (Belgium), Vice-Chairman of SUEZ-TRACTEBEL (Belgium), Director of
Accor (France), Cumerio, Real Software, Sofina SA and SN Brussels Airlines
(Belgium), and Gilead (USA).
Mr. Etienne Davignon holds 11,111 SUEZ shares. He is Chairman of the Ethics,
Environment and Sustainable Development Committee.
Paul Desmarais Jr, Canadian national.
Paul Desmarais Jr. studied at McGill University in Montreal and then at INSEAD
in Fontainebleau. He has a Masters in Business Administration. In 1984, he was
appointed Vice-Chairman of Power Financial Corporation, a company he helped set
up, becoming Chairman of the Board in 1990 and Chairman of the Executive
Committee in May 2005. He was appointed Chairman of the Board and Co-Chief
Executive Officer of Power Corporation of Canada in 1996.
Certain other directorships and positions: Chairman of the Board of Directors
and Co-Chief Executive Officer of Power Corporation of Canada, Chairman of the
Executive Committee of Power Financial Corporation (Canada), Vice-Chairman of
the Board of Directors and Executive Director of Pargesa Holding S.A.
(Switzerland), Vice-Chairman of the Board and member of the Strategy Committee
of Imérys (France), Director and member of the Management Committee of
Great-West Lifeco Inc. and its main subsidiaries, and of IGM Financial Inc
(Canada) and its main subsidiaries, Director and member of the Permanent
Committee of Groupe Bruxelles Lambert (Belgium), Director of Total (France),
Member of the International Board, Board of Directors and Audit Committee of
INSEAD, Chairman of the International Advisory Board of HEC Business School
(Canada) and Chairman of the Advisory Committee of Sagard Private Equity
Partners (France).
Mr. Paul Desmarais Jr holds 2,000 SUEZ shares. He is a member of the
Compensation Committee.
Richard Goblet d'Alviella, Belgian national.
Mr. Goblet d'Alviella holds a commercial engineer's degree from the Free
University of Brussels and a Master's degree in business administration from the
Harvard Business School. He has a background in investment banking, specializing
for fifteen years in international finance, both in London and New York. He was
Managing Director of the Paine Webber Group before joining Sofina, a Belgian
company, where he has been Executive Director since 1989.
Certain other directorships and positions: Director of Danone, Eurazeo (France),
Delhaize, Finasucre, Glaces de Moustier, Henex, Suez-Tractebel, Union Financière
Boël (Belgium), and Caledonia Investments (United Kingdom).
Mr. Goblet d'Alviella holds 2,000 SUEZ shares. He is a member of the Audit
Committee.
Jacques Lagarde, French-U.S. dual national.
Jacques Lagarde is a graduate of the prestigious French business school, HEC,
and of the Harvard University Advanced Management Program. He has been Director
of the Lyon Business School, Chief Executive Officer of Gillette France,
President of Oral-B Laboratories (USA), Chairman of the Executive Board of Braun
AG (Germany) and Executive Vice-President of The Gillette Company (USA).
Certain other directorships and positions: Director of Eukarion Inc. (USA).
Mr. Jacques Lagarde holds 5,778 SUEZ shares. He is Chairman of the Audit
Committee.
Anne Lauvergeon, French national.
A graduate of the prestigious French engineering school, the Ecole des Mines and
also the Ecole Normale Supérieure, Anne Lauvergeon is a qualified lecturer
(agrégée) in physics. She has been Chair of the Areva group Executive Board
since July 2001 and Chair and Chief Executive Officer of the Cogema group since
June 1999. She has been Executive Vice-Chair and member of the Executive
Committee of Alcatel in charge of industrial holdings since 1997 and from 1995
to 1997 was Managing Partner of Lazard Frères et Cie. In 1990 Anne Lauvergeon
was appointed Special Advisor to the office of the French President in the area
of the international economy and foreign trade and in 1991, became Deputy
General Secretary as well as Aide to the French President for the organization
of international summits (G7). Anne Lauvergeon began her career in 1983 in the
iron and steel industry before joining CEA where she studied the problems of
chemical safety in Europe.
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Certain other directorships and positions: Chair of the Executive Board of
Areva, Chair of the Board of Directors of Cogema, Chair of Areva Enterprises
Inc. (USA), Vice-Chair of the Supervisory Board of Safran SA, and Director of
Areva T&D Holding S.A., Total and Vodafone Group plc (United Kingdom).
Mrs. Anne Lauvergeon holds 2,278 SUEZ shares. She is a member of the Ethics,
Environment and Sustainable Development Committee.
Jean Peyrelevade, French national.
A graduate of the prestigious French engineering school, Polytechnique, and the
Paris Institute of Political Studies (IEP), Jean Peyrelevade successively held
the positions of Chairman of Compagnie de SUEZ, Banque Stern, UAP and Crédit
Lyonnais. He resigned as Chairman of the latter in October 2003. He has been a
partner of Toulouse & Associés since September 1, 2004.
Certain other directorships and positions: Director of Bouygues (France) and
Société Monégasque de l'Electricité et du Gaz (Monaco), Member of the
Supervisory Board of CMA/CGM (France) and Partner of Toulouse & Associés
CMA/CGM.
Mr. Jean Peyrelevade holds 3,694 SUEZ shares.
Thierry de Rudder, Belgian-French dual national.
Thierry de Rudder has a degree in mathematics from the University of Geneva and
the Free University of Brussels and an MBA from the Wharton School of Business
in Philadelphia. He began his career in the United States, joining Citibank in
1975 and holding various positions in New York and Europe. He joined Groupe
Bruxelles Lambert in 1986 and is now Executive Director.
Certain other directorships and positions: Executive Director of Groupe
Bruxelles Lambert (Belgium), Director of Imerys, Total and Compagnie Nationale à
Portefeuille (France) and SUEZ-TRACTEBEL (Belgium).
Mr. Thierry de Rudder holds 2,000 SUEZ shares.
Jean-Jacques Salane, French national.
After having trained as an accountant, Jean-Jacques Salane joined Lyonnaise des
Eaux in March 1972. From 1990-1996, he was a member of the Board of Directors of
Lyonnaise des Eaux, where he represented the Workers' Council.
Certain other directorships and positions: CGT union representative, Union
representative on the Lyonnaise des Eaux France Pays Basque Workers' Council
since 1996, Union representative on the Lyonnaise des Eaux Central Workers'
Council since 1996, Union representative on the SUEZ Worker's Council since
1996, and President of the French Supervisory Board of Spring Funds.
Mr. Jean-Jacques Salane holds 2,000 SUEZ shares. He is a member of the Ethics,
Environment and Sustainable Development Committee.
Lord Simon of Highbury, British national.
Lord Simon has an MA from Cambridge and an MBA from INSEAD, Fontainebleau. In
1961 he joined British Petroleum, where he occupied a number of management
positions before being appointed Chairman in 1995. After exercising several
ministerial positions from 1997, he became advisor to the British Prime Minister
for the modernization of government. He was also appointed advisor to President
Prodi for the reform of the European Union. Lord Simon entered the House of
Lords in 1997.
Certain other directorships and positions: Senior Advisor Morgan Stanley
International (Europe), Director of Unilever plc, Member of the International
Advisory Board of Fitch (Belgium), Member of the Cambridge University Council,
Trustee of the Cambridge Foundation and Trustee of the Hertie Foundation (United
Kingdom).
Lord Simon of Highbury holds 2,000 SUEZ shares. He is Chairman of the
Compensation Committee.
B. Compensation
The following table presents the total compensation received by members of the
Board of Directors, excluding the Chairman and Chief Executive Officer, and the
total compensation received by members of the Executive Committee, including the
Chairman and Chief Executive Officer:
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(in millions of €, 2005 2004 2003
except number of members) Number Total Number Total Number Total
compensation compensation compensation
Board of Directors 15 1.24* 16 1.9* 14 1.9*
Executive Committee 10(1) 12.75 11 11.95 (a) 18 16.3
(b) 11 9.9
(1)
The number of members of the Executive Committee returned to 11 as of November 1, 2005.
*
Excluding social security charges.
A table indicating total compensation received by corporate officers is
presented in Note 37 to our Consolidated Financial Statements.
The 2003 situation of the Executive Committee is presented twice:
·
first, (a) the actual situation is given in respect of the aggregate number of
members, taking account of the changes that took place in the composition of the
Executive Committee during 2003, and in respect of the total compensation and
ancillary payments, including retirement bonuses, paid to its members on leaving
the Committee;
·
and secondly, (b) the cumulative compensation of the Committee at December 31,
2003 taken over the year in question.
Executive compensation
Our executives receive both fixed and variable compensation.
The change in the fixed part of the compensation is linked to changes in
specific situations, such as an increase or material change in specific
responsibilities, adjustments made necessary in light of the our
internally-applied principles of equity or as a result of blatant discrepancies
in relation to the external market.
The variable part of the compensation seeks to compensate the management's
contribution to the profits of the operating division in which he or she works,
and the Group as a whole.
The variable part of the compensation, the balance of which was paid in 2005 in
respect of fiscal year 2004, was calculated for Gérard Mestrallet, Jean-Pierre
Hansen and Gérard Lamarche based on earnings per share from operations, gross
cash flow as well as on the absence of exceptional losses, the existence of a
cash surplus and the reduction in operating expenses. The Compensation Committee
decided to add an exceptional bonus to the figures resulting from the above
equation, to reflect that our results exceeded initial targets.
For Executive Committee members who are responsible for an operating division,
half the variable compensation was based on quantitative criteria and half on
qualitative criteria. The quantitative criteria applied are earnings per share
from operations, EBITDA, net cash surplus, gearing ratio and the absence of
exceptional losses. They are taken into account in respect of 40% in relation to
the performance of Suez, and 60% in relation to the performance of the division.
For the other members of the Executive Committee, the variable portion was
calculated in the same way, save in respect of the quantitative criteria, which
were based solely on the performance of SUEZ.
The variable part of compensation, the balance of which is payable in 2006 in
respect of fiscal year 2005, for Gérard Mestrallet, Jean-Pierre Hansen and
Gérard Lamarche is 25% based on qualitative objectives and 75% based on
quantitative criteria. The quantitative criteria applied are income from
operating activities for 50% and cash flow from operating activities before
disposals for 50%.
For Executive Committee members who are in charge of a Group operating division,
half the variable compensation is based on quantitative criteria and half on
qualitative criteria. The quantitative criteria applied are growth in gross cash
flow before finance costs, total cash flow for the year, income from ordinary
activities and net income. They are taken into account in respect of 40% in
relation to the performance of Suez, and 60% in relation to the performance of
the division.
For the other members of the Executive Committee, the variable portion is
calculated in the same way, except in respect of the quantitative criteria,
which are based solely on the performance of SUEZ.
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The following table presents total compensation paid to all members of the
Executive Committee during the 2005 and 2004 fiscal years.
Gross compensation including benefits in kind
(in millions of euros, except percentages) 2005 2004 2005/2004
Fixed 5.97 6.4 -6.7%
Variable 6.77 5.55 +22%
Total 12.75 11.95 +6.7%
Number of Executive Committee members 10 (1) 11
(1)
The number of members of the Executive Committee returned to 11 as of November 1,
2005.
Variable compensation represented 53% of total compensation in 2005, compared to
46% in 2004.
Total average compensation paid to members of the Executive Committee increased
from €1.09 million in 2004 to €1.27 million in 2005. The Executive Committee
comprises all deputy vice presidents in charge of divisions, several of whom are
subject to the employment criteria of the Belgian market.
Corporate officer compensation
The Group paid Gérard Mestrallet, Chairman and Chief Executive Officer, total
compensation of €2,532,819 (versus €1,774,986 in 2004), of which €1,104,411
(€1,004,711 in 2004) was fixed, including a benefit in kind in relation to the
use of his company vehicle (€4,410). The variable part of €1,428,408 (€770,215
in 2004) represents 56% of total compensation (compared with 43% in 2004), an
increase of 85.4% compared with 2004. This variable part includes €194,249 paid
in respect of attendance fees received in Gérard Mestrallet's capacity as
Director of several Group companies (€265,845 in 2004).
Pursuant to the recommendation of the Compensation Committee, as approved by the
Board of Directors, the variable part of his remuneration for 2005 will amount
to €1,436,750.
Jean Gandois, Vice-Chairman of the Board of Directors and Vice-President, Group
Company Special Projects up to the Shareholders' Meeting of May 13, 2005,
received total compensation of €477,071, including €107,611 paid in respect of
attendance fees received in his capacity as Director of several Group companies.
In terms of pension benefits, Gérard Mestrallet has no special entitlements. He
enjoys the same conditions as all SUEZ SA employees under the Group plan, which
combines an individualized defined-contribution scheme (as per a company
agreement signed in 1988 and amended in 2005) and a defined-benefit scheme (as
per a company agreement signed in 1991 and amended in 1998 and 2005). Payments
under the defined-benefit plan are not guaranteed, as they depend on being
active within the company at the time of retirement. The plan concerns employees
earning 4 to 50 times the annual French social security ceiling. Gérard
Mestrallet currently has no compensation, indemnity or benefit due, or liable to
be due, in the event of his functions being terminated or changed, neither at
the time of occurrence nor subsequently.
Directors' fees
See "- Board Practices".
Employee profit-sharing and incentive plans
Each year, our employees benefit from profit-sharing schemes. In accordance with
French law, the amounts paid do not give rise to an additional contribution by
the employer. Amounts paid during the last six years were as follows:
2000 2001 (a) 2002 2003(b) 2004 2005
€5,083,977 €552,420 €112,051 - €1,137,170 €321,406
(a)
The marked decrease in figures from 2001 is due to the spin-off of the Water
Division and a decrease in the number of parent company employees.
(b)
Pursuant to the application of derogatory formulae or applicable French ordinary
law, profit sharing equals zero because of the 2003 loss.
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An incentive agreement was signed on June 30, 1997. In accordance with French
law, the amounts paid do not give rise to an additional contribution by the
employer. Amounts paid during the last six years were as follows:
2000 2001 (a) 2002 2003 2004 2005
€4,516,119 €642,670 €598,455 €353,465 €288,547 €275,092
(a)
The marked decrease in figures from 2001 is due to the spin-off of the Water
Division and a decrease in the number of parent company employees.
C. Board Practices
Article 15 of the Bylaws defines the powers of the Board of Directors.
"The Board of Directors determines the strategic direction of the Company's
activities and ensures its implementation. It considers all issues concerning
the proper functioning of the Company and settles all matters relating thereto,
within the scope of the corporate purpose and subject to those powers expressly
granted by law to shareholders' meetings.
The Board of Directors performs all controls and verifications it considers
appropriate. Each Director receives all information necessary to the performance
of his or her duties and may request any documents he or she considers
necessary."
Reaffirming its commitment to rules of corporate governance, the Board of
Directors adopted Internal Regulations in May 2001, which have been amended on
several occasions, and a Directors' Charter in January 2002. These documents
provide the Board with the channels and means necessary to operate efficiently,
while serving the interests of the Company and its shareholders, and set out
with full transparency the rights and obligations of Directors (these documents
are available at our corporate headquarters and on our website: www.suez.com).
In addition, our Ethics Charter and related documents, notably the
"Confidentiality and Privileged Information" guide, are applicable to Directors.
These documents forbid Directors, in particular, from trading in SUEZ securities
or the securities of any of its listed subsidiaries during the period of
preparation and approval of the financial statements which begins on the first
day of the month preceding the date of the Board of Directors meeting held to
approve the annual and half-year financial statements and terminates two days
after this meeting. This general measure is supplemented by Article 8 of the
Directors' Charter, which requires Directors to seek and obtain the advice of
SUEZ's General Secretary before transacting with or having a transaction carried
out by a third party in the securities of Group companies.
Article 5 of the aforementioned Charter also provides for the completion of
regular evaluations of the Board of Directors' performance, by an independent
Director. Jacques Lagarde was asked to perform such evaluations of the Board of
Directors and its committees in 2002 and 2003.
In October 2004, the Ethics, Environment and Sustainable Development Committee
chose a methodology for evaluating the Board and its Committees based on a
document prepared by an external consultancy firm, and after having issued an
invitation for bids from three specialized consultancy firms, it appointed an
external consultant to carry out this evaluation.
The summary report on the evaluation work, carried out under the responsibility
of Etienne Davignon, was approved by the Ethics, Environment and Sustainable
Development Committee at its meeting of January 19, 2005 and was submitted to
the meeting of the Board of Directors held on the same day. The Board of
Directors meeting held on March 9, 2005 recorded the suggestions for
improvements in the functioning of the Board of Directors and its Committees and
will oversee their implementation.
Pursuant to Article 11 of the Company's Bylaws, each Director must hold at least
2,000 SUEZ shares throughout his/her term of office.
The Board of Directors meets whenever required by the interests of the Company
and, in any event, at least four times a year.
It met eight times during fiscal year 2005 and the overall attendance rate was
87%. Between January 1, 2006 and June 10, 2006, the Board of Directors met eight
times.
Directors receive directors' fees based on attendance, the amount of which was
set during the General Shareholders' Meeting of April 26, 2002 at an aggregate
of €800,000 per year for fiscal year 2002 and all subsequent fiscal years until
a new decision is taken in this respect.
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Pursuant to the recommendation of the Compensation and Nomination Committee made
on April 27, 2004, the Board of Directors meeting held on the same day set the
following allocation rules:
Directors
Fixed fee €35,000 per year
Variable fee, dependent €1,500 per meeting
on attendance
Committee chairman
(other than Audit
Committee)
Fixed fee €15,000 per year
Variable fee, dependent None, given that the Board considers that a Committee
on attendance meeting cannot be held in the absence of its Chairman.
Committee member (other
than Audit Committee)
Fixed fee €7,000 per year
Variable fee, dependent €1,000 per meeting
on attendance
Taking into account the substantial increase in the Audit Committee's workload
due to the implementation of the French Financial Security Act, the Loi de
Sécurité Financière and the US Sarbanes-Oxley Act, the Board of Directors,
acting on a recommendation from the Compensation and Nomination Committee,
decided at its meeting held on May 13, 2005, to increase the Audit Committee's
annual compensation as follows:
Audit Committee Chairman
Fixed fee €25,000 per year
Variable fee, dependent None, given that the Board considers that a Committee
on attendance meeting cannot be held in the absence of its Chairman.
Audit Committee member
Fixed fee €10,000 per year
Variable fee, dependent €1,000 per meeting
on attendance
Gérard Mestrallet, as Chairman of the Board, and Jean-Jacques Salane, as a Group
employee, do not receive directors' fees.
On this basis, the following attendance fees were paid to Directors in respect
of fiscal year 2005:
Jean Gandois €25,333 Director until the Shareholders'
Meeting of May 13, 2005
Albert Frère €44,000 (a)
Edmond Alphandéry €65,417
Antonio Brufau €55,500 (a)
René Carron €62,667
Gerhard Cromme €49,000 (a)
Etienne Davignon €70,500 (a)
Lucien Douroux €27,250 Director until the Shareholders'
Meeting of May 13, 2005
Paul Desmarais Jr. €49,000 (a)
Richard Goblet €40,500 Director appointed by the
d'Alviella Shareholders' Meeting of May 13, 2005
Jacques Lagarde €70,500 (a)
Anne Lauvergeon €59,000
Jean Peyrelevade €45,500
Thierry de Rudder €45,500 (a)
Lord Simon of €57,667 (a)
Highbury
(a)
Before deduction of the 25% withholding tax leveled on attendance fees paid to
Directors who are not French residents.
In 2005, the total amount of attendance fees was €767,334, compared with
€725,666 in 2004.
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Directors service contracts
Under certain circumstances, our internal regulations (accord d'entreprise
interne) allow that we grant our executive officers (cadres dirigeants
supérieurs), including executive officers who are members of the Board of
Directors, a departure bonus (prime de départ) in an amount up to 18 months of
salary.
Corporate Governance
We have securities publicly listed and traded on markets in France (Euronext
Paris) and in the United States on the New York Stock Exchange. As a result of
our activity in two different stock exchanges, our corporate governance
structure includes the mandatory provisions of French corporate governance law
and the securities laws and regulations of both France and the U.S., as well as
the rules that are promulgated by both public markets.
In 2005, our Board of Directors was made up of 15 Directors, including 6 French
Directors, 7 non-French Directors and 2 Directors with dual nationality (French
and one other). At its meeting held on March 8, 2006, our Board examined the
situation of the Directors in light of the criteria set out in the Bouton Report
on corporate governance, in relation to directors' independence. According to
the Bouton Report of 2003 on Corporate Governance: "A director is considered
'independent' when he/she has no relations of any kind with the company or its
management, which could impede the free exercise of his/her judgment." It was
felt that the criteria of length of service provided for in the Report should be
assessed in relation to our specific situation, given that we are not simply the
continuation of the pre-June 1997 Lyonnaise des Eaux and legal affiliation alone
may not, from this point of view, be considered relevant. On this basis eight
Directors are deemed to be independent and seven are deemed to be
non-independent.
We have several specialized committees to support the decision-making process of
the Board of Directors, including an Audit Committee consisting of four members,
an Ethics, Environment and Sustainable Development Committee consisting of four
members, a Compensation Committee consisting of three members, and a Nominations
Committee consisting of three members all of whom are independent directors as
defined in the Bouton Report. Under French law, Board committees are advisory
only, while under the NYSE rules, specific committees are vested with certain
powers that in France remain with the Board. Under French corporate law,
shareholders must appoint the Group's auditors at annual shareholder meetings.
Our shareholders receive the proposals for such appointments from the Board of
Directors, who in turn receive recommendations from the Audit Committee. We
believe that the requirements of French law, including the requirement that two
statutory auditors must be appointed by the shareholders, achieve the NYSE's
objectives for auditor independence.
In order to emphasize our commitment to promoting transparency and compliance
with rules and regulations, and in line with the NYSE Listed Company Manual, we
have adopted a written Code of Ethics applicable to our Chief Executive Officer,
Chief Financial Officer, Executive Vice-Presidents and other Group financial
officers.
Sub-Committees of the Board of Directors
In order to help it in its work, the Board of Directors has set up four
Committees. The Compensation and Nomination Committee was split into separate
Compensation and Nomination Committees by Board decision May 13, 2005. The
Committees' general task is to study specific questions as preparatory work for
certain of the Board's deliberations, issue opinions and recommendations to the
Board of Directors concerning decisions to be taken and finally draft
resolutions.
The Audit Committee
The Audit Committee has four members, all of whom are deemed to be
"independent"(*) according to the criteria set out in the Bouton report and
"financial experts" according to the US Sarbanes-Oxley Act:
·
Jacques Lagarde*;
·
Edmond Alphandéry*;
·
Antonio Brufau*;
·
Richard Goblet d'Alviella*.
Article 4 of the Board of Directors' Internal Regulations defines the rules and
operating procedures of this Committee. This article was modified on January 19,
2005 in order to review and reinforce the role of the Audit Committee in light
of the changes in French legislation, the Loi de Sécurité Financière (Financial
Security Act) and US legislation (the Sarbanes-Oxley Act).
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This committee has two key roles. The first is to examine in detail the draft
financial statements, the relevance and consistency of the accounting principles
and policies that are used and the content of the documents that are made
public. The second role is to gain an understanding of the internal and external
control procedures in order to ensure that such procedures provide appropriate
coverage of all risk areas.
The Audit Committee met seven times during 2005 and the overall attendance rate
was 86%. The Statutory Auditors attended five of the Audit Committee meetings.
Five meetings have been scheduled for 2006 and three meetings had already been
held as of June 10, 2006.
The Ethics, Environment and Sustainable Development Committee
The Committee has four members, including one Director who is deemed to be
"independent*" according to the criteria set out in the Bouton Report on
corporate governance.
·
Etienne Davignon;
·
René Carron;
·
Anne Lauvergeon*;
·
Jean-Jacques Salane.
Article 5 of the Board of Directors' Internal Regulations defines the rules and
operating procedures of this Committee. It ensures compliance with individual
and collective values on which the Group bases its actions and the rules of
conduct that must be adhered to by each employee. It also examines the channels
and resources available to achieve the Group's objectives with respect to the
environment and sustainable development.
The Ethics, Environment and Sustainable Development Committee met three times
during 2005 and the overall attendance rate was 83%. One meeting has already
been held as of June 10, 2006.
The Compensation Committee
The Committee has three members, including one Director who is deemed to be
"independent"* according to the criteria set out in the Bouton Report on
corporate governance.
·
Lord Simon of Highbury, President*;
·
Etienne Davignon;
·
Paul Desmarais Jr.
Article 7 of the Board of Directors' Internal Regulations defines the rules and
operating procedures of this Committee. It reviews and makes recommendations to
the Board of Directors regards the compensation of the Board, including the
Chairman.
In its new form, the Compensation Committee has met once since May 13, 2005 and
the attendance rate was 67%. Two meetings has already been held in 2006 as of
June 10, 2006
This Committee is also consulted with respect to compensation conditions for the
members of group's executive Committee.
The Compensation and Nomination Committee (before its division) met twice before
May 13, 2005 and the overall attendance rate was 75%.
The Nomination Committee
In the interests of transparency and information, the Board of Directors
decided, at its meeting of May 13, 2005, to divide the existing Compensation and
Nomination Committee into two separate committees. The Nomination Committee has
three members, including two Directors who are deemed to be "independent"(*)
according to the criteria set out in the Bouton Report on corporate governance.
·
René Carron, Chairman;
·
Gerhard Cromme*;
·
Anne Lauvergeon*.
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Article 6 of the Board of Directors' Internal Regulations defines the rules and
operating procedures of this Committee. It reviews and makes recommendations to
the Board of Directors regarding any candidates for membership on the Board of
Directors as well as any appointment to Group executive management positions or
proposed appointment of a Chairman of any company heading one of the Group's
divisions.
In its new form, the Nomination Committee has met once since May 13, 2005 and
the attendance rate was 67%. Two meeting have already been held in 2006 as of
June 10, 2006.
The Compensation and Nomination Committee (before its division) met twice before
May 13, 2005 and the overall attendance rate was 75%.
Executive Committee - composition at December 31, 2005 (11 members)
Gérard Chairman and Chief Executive Officer
Mestrallet
Jean-Pierre Chief Operating Officer, Executive Vice-President of the
Hansen Executive Committee, head of SUEZ Energie Europe
Gérard Lamarche Executive Vice-President, Finance (Chief Financial Officer)
Yves-Thibault de Senior Executive Vice-President in charge of International and
Silguy Institutional Relations
Patrick Buffet Senior Executive Vice-President in charge of Business Strategy
and Development
Dirk Beeuwsaert Executive Vice-President in charge of SUEZ Energie International
Jean-Louis Executive Vice-President in charge of SUEZ Environnement
Chaussade
Jérôme Tolot Executive Vice-President in charge of SUEZ Energie Services
Valérie Bernis Executive Vice-President in charge of Communications
Emmanuel van Executive Vice-President in charge of Group Human Resources
Innis
Yves de Gaulle* General Secretary
* As of November 1, 2005.
In addition to these 11 members, the following individual has the right to
attend Executive Committee meetings:
Henry Masson Group Senior Vice-President for Risk, Organization and Central
Services
The following is a summary of the business experience of the members of our
Executive Committee, who are not also members of our Board of Directors.
Jean-Pierre Hansen, former Chairman of the Board of Directors of Electrabel, was
appointed Chief Executive Officer of Electrabel as of January 1, 2005, a
function which he previously exercised from 1992 to March 1999. He is also
Vice-Chairman of Electrabel and Chairman of its Strategic and General Management
Committees. Since 1999, he held the positions of Chief Executive Officer of
Tractebel as well as Director and Member of the Executive Committee of Société
Générale de Belgique; he served in those capacities until the two companies
merged on October 31, 2003, whereupon he became Chief Executive Officer of the
new entity SUEZ-TRACTEBEL. He was appointed Chief Operating Officer of SUEZ in
January 2003 and Officer in charge of SUEZ Energy Europe. He is Executive
Vice-Chairman of the SUEZ Executive Committee.
Certain other directorships and positions: Chairman of the Board of directors of
Fluxys and Member of its Appointments and Remuneration Committee, Director and
Member of the Strategic Committee of Distrigas SA, Chairman of the Board of
Directors of Fabricom, Vice-Chairman of the Federation of Enterprises in
Belgium, Director of Suez Environnement SA and SUEZ Energy Services SA (France),
Acea SpA, AceaElectrabel SpA and Electrabel Italia SpA (Italy), Arcelor SA
(Luxemburg), Agbar SA, SUEZ Energy Services España SA, Niesa SA and Reva SA
(Spain) and SUEZ Energy North America, Inc. (United States).
Gérard Lamarche served as senior accountant and then consultant with Deloitte
Haskins & Sells in the mid-eighties. He joined Société Générale de Belgique in
1988 as controller and in 1992 became a member of the Corporate Strategy Group.
In 1995, he joined Compagnie de Suez and in 1997, Mr. Lamarche served first as
chief of staff for the Chairman and Chief Executive Officer and eventually
assumed the duties of Senior Vice-President and Controller of SUEZ Lyonnaise des
Eaux. He accepted an assignment in the United States as Executive Vice-President
and Director for Ondeo Nalco, then a Group subsidiary, returning to Group
headquarters in 2003 to become Chief Financial Officer. He presently serves as
Senior Executive Vice-President, Finance of SUEZ (Chief Financial Officer).
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Certain other directorships and positions: Chairman of Cosutrel, Director of
Suez-Tractebel, Electrabel, Distrigaz, SUEZ Environment, SUEZ Energie Services,
Aguas de Barcelona, Leo Holding Company and Ondeo North America Inc.
Yves-Thibault de Silguy, former European Commissioner, joined the Executive
Board of SUEZ Lyonnaise des Eaux in May 2000. In May 2001 he was appointed
Senior Executive Vice-President of SUEZ. In February 2002 his responsibilities
for International Affairs and Corporate Relations were extended to French
commercial development, European Affairs and development of Group businesses in
China. Between March 2003 and July 2006, he has been Senior Executive
Vice-President in charge of International and Institutional Relations of SUEZ
before being appointed Chairman of VINCI.
Certain other directorships and positions: Chairman of the Board of Directors of
Sino French Holdings, President of Société Polynésienne d'Eau et
d'Assainissement, Calédonienne des Eaux, Sadet, Association des Amis de l'UFE
and of INA-PG, Director of Degrémont, SUEZ Environment, SUEZ Energie Services,
SUEZ-TRACTEBEL, Electricité et Eau de Calédonie, Electricité de Tahiti, Marama
Nui and Unelco Vanuatu, Member of the Supervisory Board of Métropole Télévision
M6 and Sofisport.
Patrick Buffet joined the Group as a member of the management committee and
director of industrial holdings and strategy of Société Générale de Belgique.
Since February 1998, he is Senior Executive Vice?President in charge of Business
Strategy and Development of SUEZ.
Certain other directorships and positions: Director of SUEZ-TRACTEBEL, SUEZ
Energie Services, Fluxys and Electrabel, Member of the Supervisory Board of
Areva, IXIS-CIB.
Dirk Beeuwsaert has spent his career until 2000 within the Electrabel group,
after joining Intercom in 1971. In May 2000, he became a member of the former
General Management Committee of Tractebel in charge of Electricity and Gas
International and Chief Executive Officer of Tractebel Electricity and Gas
International. In January 2003, he was appointed Executive Vice-President of
SUEZ, in charge of SUEZ Energy International.
Certain other directorships and positions: Chairman of SENA, Vice-Chairman of
Tractebel Bahamas LNG Ltd, Director of Glow Energy and Director and member of
the Strategic Committee of Tractebel Energia SA.
Jean-Louis Chaussade joined Degrémont in 1978. In 1989, he became Chief
Executive Officer of Degrémont Spain, and in 1992, he was appointed Special
Adviser of Dumez Copisa (Spain). In 1997, he was appointed Group Delegate for
the Southern Cone of South America and became Chief Operating Officer of
Lyonnaise des Eaux America Latina in May 2000. Chairman of Degrémont since
March 2002, he was appointed Executive Vice-President of SUEZ in charge of SUEZ
Environment in March 2004.
Certain other directorships and positions: Director and Chief Executive Officer
of SUEZ Environment, Chairman of the Board of Degrémont, Director of Lyonnaise
des Eaux France, Société des Eaux de Marseille, Sita France, SUEZ Environment
Espana (& Chief Executive Officer), Hisusa (representing SUEZ Environment
Espana), Aguas de Barcelona, United Water Inc., United Water Resources Inc.
Jérôme Tolot joined the SUEZ Lyonnaise des Eaux Group which later became SUEZ in
1982. In 2000, he was appointed Director and Senior Executive Vice-President for
the central functions of the Vinci group. In February 2002, he was named
Chairman and Chief Executive Officer of Sita, and became Executive
Vice?President of SUEZ. He was also appointed Chief Executive Officer of
Fabricom in September 2003. Since January 2004, he is Executive Vice-President
of the SUEZ Energy Services.
Certain other directorships and positions: Executive Director of Fabricom,
Chairman of the Board of Directors of Fabricom GTI, Director of SUEZ Energie
Services, SUEZ Environment, SUEZ University, Axima, Ineo, Rivolam and SUEZ
Energie Services Espana.
Valérie Bernis was Special Press Advisor in the French Ministry of Economics,
Finance and Privatization from 1986 until 1988. In 1988 she took up the position
of Senior Vice-President Communications at Cerus. From 1993 until 1995 she was
in charge of communications and press for the Prime Minister. In December 1995
she was appointed Senior Vice-President of Communications of Compagnie de Suez.
In June 1997 she became Senior Vice-President Communication and Special Advisor
to the President of the Executive Board of SUEZ Lyonnaise des Eaux. Since
May 2001 she is Executive Vice-President in charge of Communications of SUEZ and
was Chairman of Paris Première Television Channel (1999-2004).
Certain other directorships and positions: Director of SUEZ-TRACTEBEL, Permanent
Representative of SUEZ Communication on the Board of Directors of SAIP
(Libération).
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Emmanuel van Innis had several key functions in his career, starting at Intercom
in 1971 and then with Electrabel when the former merged to form Electrabel in
1990. He became a member of Tractebel's General Management Committee in 1996,
where he was General Manager Corporate Administration, Finance and Controlling.
He became a Director of Tractebel in 1997 and of Société Générale de Belgique in
2001 and served in those capacities until those companies merged on 31
October 2003, whereupon he became Director of the new entity, SUEZ-TRACTEBEL. In
March 2003, he was appointed Executive Vice-President of SUEZ, in charge of
Group Human Resources.
Certain other directorships and positions: Chairman of the Board of Directors of
Contassur SA, Insutrel SA and Telfin SA, Chairman and Chief Executive Officer of
CEF SA,Vice-Chairman of the Board of Directors of Electrabel SA, Fabricom SA,
Reva SA, SN Airholding II SA, and Tractebel Espana SA, Director of
AceaElectrabel Produzione SpA, Cosutrel SA, Distrigas SA, Distrihold SA, Elyo
SA, Inec SA, Lithobeton SA, Pensiobel ASBL, Seinsa SA, SUEZ University SA,
Tractebel Inc., Neil and Federation of Entreprises in Belgium, Member of the
Remuneration Committee of Electrabel SA, Distrigaz S.A. and SN Airholding SA.
Yves de Gaulle joined SUEZ in April 2004 in the role of Joint General Secretary,
and became General Secretary on July 1, 2004. Since November 1, 2005 he has been
a member of the Executive Committee. Mr. de Gaulle began his career at the
Ministry of Finance (1977), notably at the Management of the Treasury where he
was chief of the office of monetary policy and credit. He was then technical
advisor (1986) to the Minister in charge of privatization and the General
Secretary of the Privatization Commission (1986-1989). In 1989 he became a
Partner of the law firm KPMG/Fidal, then a Partner of the law firm Jeantet
(1991-1992). He joined the AGF/Allianz Group in 1992, and was Chief Executive
Officer of a subsidiary of the Group in Spain (1993-1996), Joint Chief Executive
Officer in charge of the international department and member of the Executive
Committee (1997-1998) and Chief Executive Officer of the EULER Group
(1999-2001).
Certain other directorships and positions: Director of SUEZ-TRACTEBEL,
Electrabel, Cosutrel and SUEZ University.
Central Management Committee - composition at December 31, 2005 (13 members)
The Central Management Committee is consulted on matters submitted to the
Chairman and Chief Executive Officer or Board of Directors for decision.
Its members are as follows:
The Executive Committee members, other than the two division heads, Dirk
Beeuwsaert and Jean-Louis Chaussade, and with the addition of Henry Masson,
whose functions are set out above, together with:
Isabelle Kocher Group Senior Vice-President for Performance and
Organization
Robert-Olivier Leyssens Group Senior Vice-President for Corporate Finance, Tax
and Treasury
Christelle Martin Group Senior Vice-President for Strategic Planning,
Control and Accounting
Reports of the Board of Directors Sub-committees
Audit Committee
The Audit Committee met seven times during fiscal year 2005 and three times at
the end of June 2006, with the main individuals responsible for the Company's
accounting, financial, internal audit and risk issues attending these meetings.
The Statutory Auditors attended six of these meetings.
The Audit Committee focused particularly on the following issues:
Financial statement review
2005 was a pivotal year with the changeover to IFRS insofar as SUEZ had to:
·
prepare the consolidated financial statements for the year ended December 31,
2004 in accordance with three sets of accounting standards:
French GAAP for the last time,
IFRS for the first time,
U.S. GAAP since SUEZ shares are listed on the New York Stock Exchange;
·
prepare the 2005 half-yearly consolidated financial statements in accordance
with IFRS in connection with the cash and share bid for Electrabel which
therefore required the issuance of a prospectus prepared according to the new
European regulations.
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Managing this transition entailed the preparation of several reconciliations:
French GAAP to IFRS as of January 1, June 30 and December 31, 2004, introduction
of IAS 32-39 as of January 1, 2005, early adoption of the interpretations
regarding concession contracts (D 12-13-14) and rights of use (IFRIC 4), and
finally a new reconciliation of IFRS with U.S. GAAP with respect to 2004 in
preparation of the next Form 20-F:
·
before their presentation to the Board, the Committee analyzed:
the 2004 financial statements prepared according to French GAAP and IFRS,
the 2005 quarterly, half-yearly and annual financial statements prepared in
accordance with IFRS as well as the updated (approved) forecasts for 2005
earnings, the 2006 budget and the 2006-2009 medium-term plan.
The Committee reviewed the reconciliation of the IFRS financial statements with
those prepared according to French GAAP. This reconciliation was the subject of
a document entitled "Transition to IFRS - 2004," which included a specific
report from the Statutory Auditors which was provided to shareholders, after
review by the Board of Directors, at the Shareholders' Meeting of May 13, 2005;
·
as the shares of SUEZ have been traded as ADRs on the New York Stock Exchange
since September 18, 2001, the Committee was provided with a presentation of the
consolidated financial statements for fiscal year 2004 in accordance with U.S.
GAAP and it reviewed the reconciliation of these statements with the financial
statements prepared in accordance with French GAAP:
the Committee took note of Form 20-F, filed with the Securities and Exchange
Commission (SEC) on June 29, 2005. The measures set up in the Group in relation
to the CODIS program (see below) enabled the Chief Executive Officer (CEO) and
the Chief Financial Officer (CFO) to sign the documents required by US
legislation,
the Committee noted that the U.S. GAAP and French GAAP financial statements had
converged to a greater extent (in terms of total balance sheet figures and
management indicators) due to the full consolidation of Electrabel in the two
sets of standards, since the Group acquired more than 50% of the share capital
of Electrabel;
·
the Committee reviewed, on several occasions, the progress being made in
relation to the implementation of the International Financial Reporting
Standards which have been adopted as from January 1, 2004 in place of French
GAAP:
the Committee had to validate a certain number of choices, in relation to the
main options offered by IFRS. The principle set by the Committee was to favor
consistency and to maintain a conservative approach which does not promote
short-term reporting considerations to the detriment of future profits,
the Committee was provided with a presentation of detailed simulations as to the
effects of this change in standards, in particular in relation to shareholders'
equity earnings and debt. In addition, the impact on the Group's main management
indicators was studied in order to approve the amendments proposed by Financial
Management;
·
the Committee closely followed the valuation process used for the Group's assets
as of the end of 2005;
·
the Committee was notified by Financial Management of the creation within
corporate head office of an Accounting Standards Center of Expertise, whose
purpose is to ensure accounting security (regulatory oversight, analysis of
complex operations and validation of material positions) and accounting
consistency (managing the standards network, updating the manual for reporting
and coordination of training), and to facilitate the sharing of best practices
within the Group.
Financing policy
The Committee continued to oversee the reduction of Group debt and its financing
policy based on the following objectives:
·
maintenance of a regular amortization profile with respect to gross debt;
·
maintenance of access to reasonably priced short-term financing;
·
smoothing and gradual extension of the maturity of bond issues;
·
standardization of the level of cash and credit lines;
·
rationalization of syndicated credit lines.
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Centralized cash management at Group level should lead to a better match between
the location of debt, cash and cash flow, a reduction in the overall cost of
debt and better control over cash and cash equivalents.
In this context, the Audit Committee was informed about the main debt
renegotiations and restructuring as well as the market transactions in relation
to the listing of certain subsidiaries.
Policy for managing interest rate and currency risks
The Committee was provided with a presentation of the Group's policy for
managing interest rate and currency risks.
These risks are:
·
interest rate risks with respect to net debt, including outstanding derivative
positions to hedge assets which are mainly denominated in euros and in US
dollars;
·
currency risks in relation to assets (impact on the balance sheet and the income
statement of the consolidation of the subsidiaries' financial statements) which
are mainly denominated in US dollars and Brazilian reals, and to a lesser extent
in Thai bahts, Chilean pesos, pounds sterling and Argentine pesos;
·
currency risks in relation to unrealized transactions in the functional currency
of the Group entity concerned.
The Committee noted that:
·
the Group had certain currency positions mainly concentrated on US Dollars and
brazilian reals;
·
the managing of interest rate and currency risk in relation to assets was
coordinated by the Group Finance function.
Major financial transactions in 2005
Before carrying out operations, the Committee was provided with a presentation
of the terms and conditions, and financial impact of:
·
the increase in capital carried out in cash with preferential subscription
rights;
·
SUEZ's combined cash and share bid for all shares of Electrabel not yet held by
the Group.
The Committee was thus able to assess the positive financial impact of these
operations before they were carried out.
2005-2006 Optimax plan and SUEZ/Electrabel operational synergies
The Committee was given a presentation about the progress of the 2005-2006
Optimax plan, which was reviewed for fairness by the statutory auditors, and the
plan for the implementation of synergies between SUEZ and Electrabel.
Informed of the progress made by the end of 2005 and the actions identified for
2006, the Committee was able to assess the work to be completed to achieve the
objectives of the Optimax plan.
The synergies to be achieved are based on the integration of functions between
SUEZ and Electrabel as well as the strengthening of the purchasing performance
program thanks to the added buying power of Electrabel. The Committee noted the
actions planned for the 2006- 2008 implementation period.
Dividend distribution policy
The Committee paid particular attention to the dividend distribution policy
proposed by the Group, both with regard to the 2004 fiscal year and the new
dividend increase proposed for 2005.
In particular, the Committee examined the appropriateness of this policy in
relation to 2005 net income and the financial outlook for the Group and the
parent company.
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Presentation of two business lines
Jérôme Tolot, Executive Vice-President in charge of SUEZ Energie Services,
presented the business line he is responsible for:
·
first to the Audit Committee in February 2005;
·
subsequently to the Board of Directors in June 2005.
Jean-Louis Chaussade, Executive Vice-President in charge of SUEZ Environnement,
also presented the business line he is responsible for:
·
first to the Audit Committee in June 2005;
·
subsequently to the Board of Directors in December 2005.
The Committee was thus able to assess more closely the strategy and the
financial outlook for these two business lines.
Internal Audit activity report
The Audit Committee listened to a presentation by the head of Group Internal
Audit on the reorganization of the internal audit function in line with recent
changes, and the set-up of a new functional link with the Electrabel audit team.
The Committee was informed of past assignments and the program for 2005 and
2006.
Given the increased responsibilities borne by the internal audit team in the
context of the US Sarbanes-Oxley Act and the need to coordinate activities with
the external audit team, the Committee approved and supported an increase in the
number of members of the internal audit teams.
Implementation of internal control procedures
The Audit Committee took note of the work of the CODIS (Control and Disclosure)
Program, developed under the impetus of Financial Management and intended to
strengthen internal controls in all areas and improve financial reporting.
The program is part of the Group implementation of the French Loi de Sécurité
Financière (Financial Security Act) and the US Sarbanes-Oxley Act and has led to
attestation reports being issued, as required under the provisions of these
Acts.
In this context as well, the Committee encouraged the strengthening of the
internal audit teams to meet the approaching deadlines (application of section
404 of the Sarbanes-Oxley Act for 2006).
Pre-approval procedures for engagements performed by the Statutory Auditors
In accordance with US regulations, the Committee set up a system to verify the
independence of Statutory Auditors, in particular with regard to the prior
approval of authorized engagements.
Depending on their nature, some engagements are subject, within certain limits,
to general prior approval, while others are subject to specific approval ahead
of the engagement.
Statutory Auditors' fees and fees paid to members of audit networks by the Group
during 2005
Please refer to Item 16C.
Ethics, Environment and Sustainable Development Committee Report
The Ethics, Environment and Sustainable Development Committee held three
meetings in 2005: on January 19, June 8 and September 13. The Committee has met
once between January and June 2006. A report on each of these meetings was
presented by the Committee Chairman to the Board of Directors.
In general, the Committee monitored the development of ethical initiatives
within the Group in order to ensure that they had been correctly implemented and
that they had been subject to application and control procedures in order to
maintain the high standards and reputation of the Group, its subsidiaries and
affiliated companies.
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Certain specific points should be highlighted:
·
as is the case each year, a report was submitted in June 2005 to the Committee
on the results of the compliance letter procedure, which requires the Chairmen
of the Group's principal subsidiaries to confirm their company's compliance with
the Group's Ethical Charter during 2004. This process was applied for the first
time in coordination with the compliance measures required by the US
Sarbanes-Oxley Act for companies listed on the New York Stock Exchange. It also
expressed its wish, in the interests of simplification, and as in previous
years, to continue the simultaneous performance of the environmental and ethics
compliance processes;
·
the Committee was also informed about the work carried out by the Group's
network of ethics managers, in particular during their annual conference held on
May 26 and 27. The Committee duly noted the operational issues that were dealt
with at this conference in consultation with a large number of Business Unit
managers and the work of developing and improving SUEZ's ethical initiatives.
One such project, in which the Committee took part, was the updating of the
Ethics Charter of SUEZ and the Values and Ethics action plan which is
distributed along with this founding document, both in terms of internal
communication and staff training;
·
the Committee spent a substantial part of its meetings reviewing the positions,
actions and measures taken by SUEZ that fell within its remit. This was the
case, for example, with respect to the organization and impact of the
environmental activities of the Group's operating entities and the internal
structuring of SUEZ in relation to the implementation of a Sustainable
Development organization and function;
·
in the same way, it focused on questions relating to health and safety in the
workplace, an area in which it consulted the Vice-Presidents in charge of the
Group's Divisions, in the presence of the Group Chairman. The Committee was thus
able to assess directly with management the action plan decided by COMEX. The
Committee will be informed each year of the plan's progress;
·
with the same approach in mind, the Committee was presented with the Group's
communication policy, particularly in relation to Sustainable Development;
·
the Committee also wished to review and develop the evaluation process relating
to the functioning of the Board of Directors. It thus organized a new, more
complete set of measures incorporating the services of an outside expert. The
evaluation was conducted in its new form at the end of 2004 under the
responsibility of the Chairman Etienne Davignon, and presented to the Board of
Directors at the beginning of this year. In partnership with an outside expert,
the Committee also performed an intermediate evaluation at the end of 2005 which
revealed the improvements that had been made in the functioning of the Board
through the application of the above process;
·
lastly, it should be noted that the Chairman Etienne Davignon presented the
Committee's activities directly to the shareholders during the Shareholders'
Meeting of May 13, 2005.
Report of the Compensation and Nomination Committees
Compensation and Nomination Committee before its division
The Compensation and Nomination Committee met twice in 2005 before being divided
into two separate committees by decision of the Board of Directors at its
session of May 13, 2005. The new Compensation Committee then met twice as of the
date of 10 June 2006, as did the new Nomination Committee.
Regarding appointments to the Board of Directors, the Compensation Committee
proposed to the Board to submit to the Shareholders' Meeting the renewal of the
terms of office of the Directors Gérard Mestrallet, Paul Desmarais Jr and David
Simon of Highbury, as well as the appointment of Richard Goblet d'Alviella.
With regard to the composition of the Board's Committees, the Committee reviewed
the proposal to be made to the Board of Directors with respect to the
appointment of René Carron to the Ethics, Environment and Sustainable
Development Committee.
Compensation Committee
The Compensation Committee proposed to the Board the terms of the fixed and
variable compensation in 2005 for corporate officers, the Chief Operating
Officer and Vice-President of the Executive Committee, Finance. It was informed
by the Chairman and Chief Executive Officer of the proposed compensation terms
for other members of the Executive Committee. It also proposed, at the decision
of the Board, the content and features of the 2005 stock option plan, and set
the number of options to be allotted to Gérard Mestrallet and the Chief
Operating Officer and the Vice-President of the Executive Committee, Finance.
The same procedure was followed in the allotment of free shares.
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Nomination Committee
The Nomination Committee, meeting in the same session with the Compensation
Committee, was informed about the succession plan for the Group's main officers.
D. Employees
The total number of employees of the Group was 157,639 at December 31, 2005,
compared to 160,712 at December 31, 2004. This 1.9% decrease is mainly due to
the statistical removal of employees taking early retirement or compensation for
permanent disability who were previously counted in the total workforce under
the "inactive" category.
The breakdown of the number of employees of the Group at December 31, 2005, 2004
and 2003 is as follows:
By Sector Employees at December 31,
2005 2004 2003
Energy 84,902 87,300 89,000
Environment 72,130 72,800 83,150
Others 607 600 150
Total 157,639 160,700 172,300
By Geographical Area Employees at December 31,
2005 2004 2003
France 60,898 60,200 60,850
Belgium 25,480 26,650 27,800
Other European Union countries 37,888 39,650 35,850
Other European countries 2,648 2,350 6,900
North America 4,454 5,700 11,800
South America 17,547 16,950 20,250
Asia and Oceania 5,450 5,200 4,750
Africa and Middle East 3,274 4,000 4,100
Total 157,639 160,700 172,300
According to the current regulations in different countries, especially in
France and Belgium, various committees which represent employees meet on a
regular basis. These committees are informed about and consulted on pertinent
employee matters. In case of restructuring or re-organization, potential impacts
on employment and working conditions are addressed by local management through
consultation and negotiation with trade unions.
We have not experienced any significant work disruptions or conflicts in the
last few years and we consider our relationship with our employees to be
satisfactory.
Human Resources Policy
After assisting in the reorganizations completed in previous years (2003, 2004),
the principal mission of the Human Resources Departments (HR Dept) has been to
develop the base for broad programs for the future, while continuing the efforts
made in the areas of health and safety, training and preparation for demographic
transition. Their actions have been defined within the framework of medium and
long-term objectives, with a focus on the need to ensure that the Group has at
any time the human resources it needs for its growth. The "change management"
aspect of the role of human resources was confirmed.
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As of December 31, 2005, the Group had 157,639 employees, down 1.9% from 2004.
Most of this decline represents the statistical removal of employees taking
early retirement or compensation for permanent disability who were previously
counted in the total workforce under the "inactive" category. SUEZ has not seen
a case where the end of a major contract resulted in a substantial cut in the
number of employees in a specific country. A few adjustments made in each of the
four divisions (removal from the scope of consolidation, adaptation to economic
constraints) explain the rest of the changes recorded.
In 2005, the six priorities that form the framework for the HR action plan were
reaffirmed with special emphasis on the evaluation of the performance of the
programs implemented.
Human Resources Management Planning
Anticipating the Group's needs in terms of human resources is fundamental to
SUEZ's strategy. To meet its goal to permanently have the HR it needs, the group
has identified the positions required for SUEZ to operate. In addition, careful
attention is paid to the career development and mobility for the executives who
currently hold these key positions This issue is also handled by the Career
Management Committee chaired by Gérard Mestrallet. In addition, a group of about
1,200 potential successors who will be able to fill 350 key positions in the
Group was formed. These potential leaders participate in the "Leaders for the
Future" (LFF) program which is designed for three categories of future
executives. The L1 are ready to succeed the Group's executive managers (who are
referred to internally as TOPEX), the L2 must still obtain experience, while the
L3 (who have to confirm their potential) are carefully monitored by the HR
Department. One of the Group's goals in 2005 was to broaden significantly the
diversity of LFF profiles.
A full program of assessment, training and preparation is available to the LFF.
To assist this process, the SUEZ Center for Development and Assessment has
developed two specific programs: one for the L2, and the other for the L1 and
executives, the principal objective of which is to make them aware of their
potential and to develop a dedicated career plan. In addition to personalized
evaluations, the LFF benefit from various training modules, especially those
developed by SUEZ University. For example, "Global Player" trains established
managers in the design and implementation of corporate strategy and change
management.
Skills development is another priority for the HR Department. The manual
"Developing Talent" that was completed in 2005 was distributed widely among HR
managers over the course of the year. An indispensable guide for career
management, it details the "human resources development cycle," which, at SUEZ,
takes the shape of annual appraisals, career assessments, manager review, and
succession plans. The manual offers advice for every situation, including the
reception of new associates as well as information on how to handle future
mobility opportunities.
Once the development plan was defined, the Group made available everything that
an associate needs to acquire the skills that are indispensable to his or her
job. While the training offered is primarily decided within the divisions and
operational units to guarantee it meets practical needs, the programs offered to
Group managers by SUEZ University are a driving force for career management.
The "Taleo" application, which is accessible on the Intranet to over 55,000
employees, facilitates applications for vacant positions. Currently being
installed in new entities, this application can also be accessed on the
Internet. Nearly 10% of the pool of candidates on Taleo are Group employees.
More than 42% of the manager positions placed online have been filled from
within the Group. Updated "Mobility Principles" regulate the way in which job
changes within the Group are organized: a negotiable notice period before a
change in position, carryover of seniority, payment of moving expenses, absence
of a trial period, etc.
Ensuring commitment to the Group and disseminating its values
The "We are SUEZ" program launched in 2004 and designed to strengthen Group
cohesion has evolved into a true corporate project. Based on four pillars
(strategy, image, organization, management way), this program is intended to
intensify strategic dialogue, give the group a strong brand image and fluid
organization, but also to disseminate common managerial practices.
The emphasis placed on the dissemination of a "management way" unique to SUEZ
highlights the importance given to the emergence of a specific operating method
and corporate culture given the variety of the Group's sites and businesses. The
implementation of the SHERPA project should reinforce the overall coherence of
the corporate organization. In addition, progress made in terms of corporate
reporting has given a clearer picture of the reality of the Group and its
divisions and facilitated a comparison between divisions and entities.
A common vocabulary and managerial practice is also built through SUEZ
University, which celebrates its fifth anniversary this year and continues to be
a success story. In 2005, 70 seminars were offered to nearly 2,200 managers (500
more than in 2004), raising the total number of beneficiaries to 9,200 in five
years. The "Discovery" program for new managers, the "Explorer" program for
junior managers, and the "Focus" series of themed training sessions (leadership
and change management, interpersonal communication, management by project,
finance, HR, and health and safety management among others) for experienced
managers contributes to the emergence of a homogeneous identity within the Group
via the dissemination of a shared vision and an exchange of good practices.
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In addition to the "Group HR Guidelines," which are a formal statement of the
principles of the HR program and detail the role of the HR managers at SUEZ, "HR
for HR" training sessions are offered to HR managers and also to employees who
hold a position with an HR dimension (entity or site managers, for example).
Finally, a glossary is currently being developed to harmonize all definitions of
the HR terms and indicators for SUEZ.
In order to strengthen the ties that unite the Group's employees, the "Spring"
employee shareholding operation was relaunched in 2005. A total of over 36,000
employees in 25 different countries subscribed. Taking into account the capital
increase that occurred at the same time last October and the Takeover Bid on
Electrabel, the percentage of capital held by the employees is 3.3% (compared
with 4.2% in 2004), but the number of subscribers rose substantially (+24% over
the previous operation).
Supporting change management
In line with the strengthening of its role in assisting change, the HR staff
work very closely with the operational units by deploying job planning tools for
the coming years. The inclusion of a HR component in SUEZ's medium-term
strategic plan is indicative of the Group's goals in this area.
"Succession Planning" anticipates the needs that will arise from demographic
transition in the key positions of the organization between now and 2010.
However, the identification and training of tomorrow's executive managers
assumes the participation of today's executives in the process at a time when
the employment of people over the age of 55 is changing (later retirements in
Europe). Career Management for the oldest employees will in fact have to change,
and new initiatives have to be proposed to capitalize on their experience and
adapt their working conditions (work station ergonomic assistance, new types of
training, employability development, etc.).
The contribution of Human Resources to the Group's performance is essential to
all its projects. Forecasting management tools to facilitate the anticipation of
future needs and to measure the effectiveness of Human Resources are being
implemented at the same time. By the end of 2006, the regular establishment of
an HR performance scorecard must identify and analyse the major HR trends and
facilitate forward planning for the major employment issues (quantitative and
qualitative changes in the workforce, payroll). The HR risks have been mapped
generically, and this map is now being defined at the level of the operational
entities with, critically, the definition of action programs to provide a better
understanding and delineation of those risks.
Finally, in addition to the strategic forum for executive managers ("Semafor")
and the "SUEZ Prospective" conferences organized by SUEZ University, the third
week of the "Global Player" program is devoted to change management. It offers
managers the opportunity to acquire the tools and methods to assist change and
to share the Group's best practices in this area. The "Focus Leadership & Change
Management" program offers an understanding of the challenges of change
processes and their impact on the results.
Optimization of HR processes and pooling of resources
As a part of the SHERPA organization project, the Group-wide optimization of
support functions holds a prominent place. A mapping of HR processes is being
used to ensure the readability and consistency of decision and action circuits.
In addition, Shared Services Centers (SSCs), which are a source of economies of
scale, improved reaction time to user requests, and harmonized practices are
being deployed in several large entities. Three subjects have been given
priority: accounting, employee administration, and IT infrastructure. The goal
over the very long term is to complete the SSC architecture by gradually
extending access to the Group's new entities and widening the range of relevant
back-office services.
The optimization and sharing of the processes are facilitated by the
implementation of efficient IT tools. Taleo, the new version of the Recruitsoft
program used by the Group, has an interface to aid recruitment and internal
mobility. It has become an indispensable vector for the harmonization of
practices within SUEZ for nearly 400 HR managers, and has resulted in
substantial savings of time. Similarly, the intranet application ESS (Employee
Self Service) makes it possible for employees of Electrabel, Tractebel
Engineering, and the Paris and Brussels head offices to manage their personal
information and requests (profile, vacations, absences, expense accounts) by
themselves. Beyond back-office functions, a sharing project for part of the
technical training is also being studied. The goal of optimizing certain HR
roles has also begun thanks to the Opting program, which is rationalizing
purchasing procedures within SUEZ.
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As part of Optimax, the Insurance Department and the HR department have begun to
analyze the technical aspects of SUEZ contingency plan coverage in France and
Belgium. Savings have already been made in the cost of the coverage. Various
adaptations have been made to supplementary retirement plans in France and
Belgium to bring them into conformity with the Fillon and Vandenbroucke Laws. It
should also be noted that the Group received the prize for best pension fund in
Belgium for the second consecutive year at the Investments & Pensions Europe
awards ceremony.
Consolidation and Management of corporate Data and information
In 2005, further efforts were made to make the reporting of company data more
accurate. The definitions of HR indicators were revised to make differences
between countries easier to understand. New indicators are also being developed
- and the operational entities are now being called on to fill them in. Auditing
procedures during the synchronization of company information using "Topaz" (a
consolidation software package) were made more reliable thanks to the new
functionalities that HR reporting coordinators had at their disposal. This was
just one part of an even more complete coverage of group activities by company
reporting; out of 120 indicators published, 88 have a coverage scope of greater
than 95%. Also, in order to improve the reliability of data, the health and
safety network increased its efforts in terms of consolidation and audits on
health and safety statistics.
Finally, several projects that aim to better define the contributions and the
impact of the group are underway so that the estimated management in matters of
human resources may be refined. As mentioned above, the analysis of company
expenses should make the management of changes in payroll easier in the medium
term, while work relating to the mapping of HR risks is gradually integrated
into the Group's risk management.
Social Responsibility and Management of social issues
This year, the Group's dialoguing bodies once again worked hard at their
assigned tasks. The European Consultative Committee (ECC) and the Central Works
Council for French operations met at regular intervals. The broad outlines of
SUEZ's corporate and employment strategies were discussed by management and
employee representatives.
The ECC continued its supervision of commitments made by the group regarding
labour rights. The ECC paid especially close attention to the application of the
International Social Charter. In practice, the joint monitoring of the Charter
by the HR Departments and employee representatives consisted in an analysis of
results by branch and country of operation as well as an in-depth discussion of
points where interpretation may differ. In addition, the ECC went into further
depth on matters that have been selected as "key topics" by the ECC members.
Accordingly, the Steering Committee for the right to lifelong learning and
training examined the progress of experimental pilot programs such as tutoring
and "skills passports" that were implemented in selected subsidiaries, while the
scope of the Diversity Commission's activities was more precisely defined.
The steering Committee for Health and Safety, which consists of representatives
from management and the ECC highlighted quarterly results in terms of
occupational accidents, analysis of fatal accidents, and the implementation of
the requirements of the Workplace Health and Safety Charter and the 2005-2010
Global Action Plan. Some of the most important measures decreed by the Action
Plan, such as the systematizing of health and safety training, regular
self-evaluation of conformity to procedures, and a complete battery of external
audits, are meant to ensure a high level of compliance with the Charter's
requirements on the part of the operational entities. By raising employee
awareness and paying closer attention to the analysis of all accidents, the
Group seeks to develop a culture of health and safety risk prevention in the
day-to-day life of its subsidiaries. To this end, it was decided to include
targets connected to health and safety results in the awarding of the variable
pay scheme to operational managers.
In addition, SUEZ has continued to promote exchanges with all stakeholders,
especially through the activities of the International Social Observatory (ISO).
When the Group first committed to "the right to lifelong education and
training," the ISO conducted further studies and discussions on the conclusions
and closely followed the experimental pilot programs that were being carried out
at some SUEZ subsidiaries. Among the other activities in 2005 are the advances
in the working group "Complexity, Direction, Management" whose purpose was to
shed further light on effective HR performance indicators. In addition,
preliminary studies were part of the preparation for the 2006 symposium in Paris
with the theme "Success in China: what management and what kind of human
resources management are needed for what HR issues?"
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Besides making the principles of corporate social responsibility (CSR) part of
its business activities, SUEZ has endeavored to respond to its stakeholders'
expectations. The publication of a "White Paper" (February 2006) that listed
sound corporate responsibility practices within the Group was to make a body of
examples available that all subsidiaries could adapt to their own needs. This
document also provided a reminder that partnerships with stakeholders can also
contribute to the Group's success.
Another key issue was equal opportunities, which was the object of an in-depth
study by SUEZ and echoed by the endorsement of France's Workplace Diversity
Charter and the signature of a national agreement with the ANPE (the French
national employment agency) to combat discrimination in the job market. A series
of recommendations drafted Group-wide is to allow entities to act in favor of
diversity, according to their priorities and the specific needs of their
businesses. Pioneering workplace integration programs that have been in place
for years, such as SITA Rebond (for underprivileged employees), Lyonnaise des
Eaux (for apprentice workers), INEO (for handicapped workers), and Gepsa (for
participants in prison work programs), are to serve as models for the other
companies in the Group.
Indicators
The following table shows the indicators used by the Group to track
implementation of its human resources and social policies. The indicator
reporting scope is provided in parentheses.
SEE SEI
2003 2004 2005 2003 2004 2005
WORKFORCE PER GEOGRAPHIC ZONE
European Union 15,570 16,607 15,812 135 194 185
Rest of Europe 998 5 - 48 45 49
North America 1,518 1,500 1,183
South America 1,414 1,474 1,564
Africa/Middle East 83 19
Asia/Oceania 1,103 1,079 1,066
TOTAL 16,568 16,612 15,812 4,301 4,292 4,066
(100.0%) (100.0%) (100.0%) (100.0%) (100.0%) (100.0%)
DISTRIBUTION OF EMPLOYEES BY CATEGORY
Managers 2,800 2,675 2,861 851 922 1,017
Skilled technicians and 2,074 2,053 2,887 1,042 779 1,117
supervisors
Workers and technicians 11,694 11,884 10,064 2,408 2,591 1,932
TOTAL 16,568 16,612 15,812 4,301 4,292 4,066
(100.0%) (100.0%) (100%) (100.0%) (100.0%) (100%)
PROPORTION OF WOMEN IN GROUP
Proportion of women in 20.9% 21.1% 23.0% 17.6% 17.9% 19.0%
workforce
(99.5%) (100.0%) (100%) (99.9%) (100.0%) (100%)
Proportion of women in 13.8% 13.5% 15.0% 19.0% 18.7% 21.1%
management
(99.4%) (100.0%) (100%) (80.1%) (100.0%) (100%)
BREAKDOWN OF EMPLOYEES BY TYPE OF CONTRACT
Open-ended contract 93.0% 92.6% 91.5% 94.7% 94.4% 99.2%
Other 7.0% 7.4% 8.5% 5.3% 5.6% 0.8%
(99.8%) (91.2%) (99.8%) (100.0%) (100.0%) (100%)
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SEE SEI
2003 2004 2005 2003 2004 2005
AGE DISTRIBUTION (for open-ended contracts)
< 25 3.1% 3.5% 4.1% 4.2% 2.7% 4.1%
25-29 6.9% 8.0% 9.4% 13.8% 12.2% 13.8%
30-34 11.3% 11.1% 11.0% 18.7% 19.8% 20.9%
35-39 12.7% 13.6% 13.3% 18.0% 17.8% 17.3%
40-44 14.6% 16.0% 16.0% 17.0% 17.7% 16.6%
45-49 16.0% 18.2% 17.4% 14.2% 14.4% 13.2%
50-54 17.0% 17.7% 17.2% 8.1% 8.7% 8.4%
55-59 17.5% 11.5% 11.1% 4.2% 4.9% 4.1%
60-64 0.9% 0.4% 0.5% 1.5% 1.4% 1.2%
65 + - - - 0.3% 0.4% 0.4%
(100.0%) (100%) (99.8%) (100.0%) (100%) (100%)
EMPLOYMENT S1 S2 S1 S2 S1 S2 S1 S2 S1 S2 S1 S2
Turnover* 10.13% 4.3% 1.6% 1.9% 2.0% 1.7% 4.7% 10.3% 3.7% 4.9% 5.7% 5.8%
(95.0%) (94.7%) (99.8%) (91.3%) (98.9%) (99.9%) (86.8%) (85.6%) (99.4%) (99.5%) (99.5%) (100%)
Voluntary 1.2% 1.4% 1.6% 1.3% 3.4% 3.9% 4% 4.4%
turnover
(99.8%) (91.3%) (98.9%) (99.9%) (99.4%) (99.5%) (99.5%) (100%)
Hiring rate 4.2% 5.2% 5.5% 7.2% 7.6% 6.8% 8.0% 6.9%
(99.8%) (91.3%) (98.9%) (99.9%) (99.4%) (99.5%) (99.5%) (100%)
Hiring rate with 40.9% 43.5% 46.2% 42.3% 58.7% 59.4% 93.9% 98.6%
open-ended contracts
(99.8%) (91.3%) (98.9%) (99.9%) (99.4%) (99.5%) (99.5%) (100%)
% of disabled persons/ 0.30% 0.28% 0.30% 0.27% 0.12% 0.07% 0.07% 0.07%
avg. workforce
WORK CONDITIONS S1 S2 S1 S2 S1 S2 S1 S2
Absenteeism (days of 13.1 11.3 9.6 8.29 7.6 8.3 3.8 2.8
absence/person)
(99.6%) (99.5%) (99.7%) (99.8%) (100%) (87.1%) (100%) (100%)
Overtime 2.3% 2.3% 2.6% 3.3% 5.8% 5.4% 6.1% 6.7%
(100.0%) (88.9%) (99.8%) (98.5%) (98.4%) (71.9%) (100%) (100%)
REMUNERATION
Average gross worker's 3.1 4.0 4.0 9.2 11.5 9.3
salary#/ minimum gross
local salary
(Minimal value) 1.5 1.6 1.5 4.4 2.9 3.8
(72.3%) (94.2%) (95.5%) (93.1%) (78.3%) (88%)
Average gross
salary/Sector
average gross salary
Managers 1.8 1.6 1.6 1.6 1.9 1.7
(91.9%) (95.6%) (94.5%) (97.6%) (92.4%) (99%)
Skilled technicians and 2.0 1.6 1.4 2.9 2.4 1.8
supervisors
(81.5%) (83.6%) (90.6%) (91.4%) (86.5%) (98.6%)
Workers and 2.0 1.4 1.8 2.1 2.3 1.8
technicians
(72.3%) (94.2%) (95.5%) (93.1%) (78.3%) (97.8%)
# On this ratio, only the "gross worker's salary" indicator was reviewed.
* Change of calculation method from the first semester 2004. See next paragraph on methodology factors.
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SEE SEI
2003 2004 2005 2003 2004 2005
Average gross worker's 3.0 4.0 3.7 4.6 6.8 5.3
salary/local cost of
living
(72.3%) (94.2%) (95.5%) (93.1%) (78.3%) (97.8%)
OCCUPATIONAL SAFETY
No. of accidental deaths 1 1 - - - -
(employees)
Frequency rate 5.95 4.19 4.61 5.06 4.49 2.46
Severity rate 0.15 0.10 0.18 0.11 0.08 0.06
(93.5%) (99.1%) (99.6%) (100.0%) (100.0%) (94.7%)
TRAINING
% of workforce trained 74.0 72.7 68.2 59.1 66.6 72.8
(85.5%) (99.5%) (94.6%) (92.5%) (94.1%) (78.7%)
Proportional of managers
and
non-managers trained
Managers 14.6% 15.3% 18.9% 13.2% 15.8% 24.0%
Skilled technicians and
supervisors
+ Workers and 85.4% 84.7% 81.1% 86.8% 84.2% 75.9%
technicians
(88.0%) (99.5%) (94.6%) (94.5%) (94.1%) (78.7%)
Training costs per 1,505.2 954.8 1,156.8 877.5 1489.1 1008.6
person (€/person)
(85.5%) (99.5%) (94.6%) (86.7%) (93.5%) (78.7%)
Hours of training per 38.8 39.4 41.4 90.0 63.9 76.5
person (hrs./person)
(84.9%) (99.5%) (89.8%) (91.6%) (93.5%) (78.7%)
Training costs per hour 40.2 24.2 27.9 68.8 23.3 13.2
of training (€/hour)
(84.9%) (99.5%) (94.6%) (86.7%) (98.9%) (100%)
Hours of training by
subject
Trade technique 28.2% 40.3% 48.8% 66.6% 36.6% 37.2%
Quality, Environment, 13.5% 11.9% 16.1% 10.6% 26.4% 22.5%
Safety
Languages 2.6% 3.1% 5.1% 6.3% 10.4% 9.6%
Misc. 55.6% 44.7% 30.0% 16.6% 26.6% 30.7%
(82.8%) (99.0%) (94.6%) (100.0%) (99.4%) (100%)
SUEZ 2005 FORM 20-F | 127
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SES SE
2003 2004 2005 2003 2004 2005
NO. OF EMPLOYEES PER REGION
European Union 62,768 61,340 60,401 45,917 47,743 47,261
Rest of Europe 2965 2,224 2,520 2,873 83 79
North America 32 33 10 10,233 4,165 3,261
South America 501 523 435 18,319 14,959 15,548
Africa/Middle East 780 753 - 3,261 3,224 3,255
Asia/Oceania 1,106 1,523 1,658 2,566 2,607 2,726
TOTAL 68,152 66,396 65,024 83,169 72,781 72,130
(100.0%) (100.0%) (100%) (100.0%) (100.0%) (100%)
DISTRIBUTION OF EMPLOYEES BY CATEGORY
Managers 7,860 7,925 9,506 5,965 6,494 6,783
Skilled technicians and 15,312 13,958 24,226 10,117 9,633 11,835
supervisors
Workers and technicians 44,765 44,513 31,292 58,077 56,654 53,512
TOTAL 67,937 66,396 65,024 74,159 72,781 72,130
(99,7) (100.0%) (100%) (89.2%) (100.0%) (100%)
PROPORTION OF WOMEN IN GROUP
Proportion of women in 10.4% 10.7% 10.7% 13.6% 18.1% 18.5%
workforce
(98.4%) (99.9%) (100%) (97.5%) (99.7%) (99.9%)
Proportion of women in 11.0% 11.6% 10.8% 16.8% 20.8% 21.4%
management
(98.1%) (99.9%) (100%) (73.9%) (99.7%) (99.9%)
BREAKDOWN OF EMPLOYEES BY TYPE OF CONTRACT
Open-ended contract 95.4% 94.8% 93.9% 95.6% 94.8% 94.5%
Other 4.6% 5.2% 6.1% 4.4% 5.2% 5.5%
(97.3%) (97.1%) (99.9%) (76.1%) (87.9%) (99.9%)
AGE DISTRIBUTION (for open-ended contracts)
< 25 6.4% 5.7% 5.2% 5.6% 5.4% 5.0%
25-29 10.3% 10.7% 11.1% 11.9% 10.5% 10.2%
30-34 13.6% 13.0% 12.6% 16.2% 14.6% 14.0%
35-39 16.0% 15.8% 15.4% 17.2% 16.6% 16.4%
40-44 15.0% 15.5% 15.7% 15.6% 16.4% 16.6%
45-49 14.0% 14.3% 14.2% 13.3% 14.1% 14.4%
50-54 13.7% 13.7% 13.4% 11.0% 11.7% 11.9%
55-59 9.4% 9.5% 10.2% 7.3% 8.0% 8.4%
60-64 1.5% 1.9% 1.9% 1.6% 2.3% 2.6%
65 + 0.1% 0.1% 0.1% 0.3% 0.4% 0.5%
(97.5%) (99.5%) (99.9%) (96.4%) (97.9%) (99.9%)
SUEZ 2005 FORM 20-F | 128
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SES SE
2003 2004 2005 2003 2004 2005
EMPLOYMENT S1 S2 S1 S2 S1 S2 S1 S2 S1 S2 S1 S2
Turnover* 9.2% 6.0% 4.4% 4.4% 3.6% 5.1% 6.2% 5.3% 3.1% 5.6% 5.0% 5.6%
(71.9%) (73.6%) (58.3%) (95.9%) (81.8%) (99.8%) (60.5%) (65.7%) (37.5%) (90.7%) (96.7%) (99.9%)
Voluntary 2.5% 2.1% 2.2% 2.9% 1.4% 2.5% 2.0% 2.3%
turnover
(58.3%) (95.9%) (81.8%) (99.8%) (37.5%) (90.7%) (96.7%) (99.9%)
Hiring rate 7.6% 13.1% 6.2% 8.6% 7.7% 7.6% 9.7% 9.1%
(58.3%) (95.9%) (81.8%) (99.8%) (37.5%) (90.7%) (96.7%) (99.9%)
Hiring rate with open-ended 61.2% 76.3% 69.2% 60.7% 56.8% 57.2% 65.3% 69.8%
contracts
(58.3%) (95.9%) (81.8%) (99.8%) (37.5%) (90.7%) (96.7%) (99.9%)
% of disabled persons/average 1.06% 1.09% 1.34% 1.30% 1.09% 2.69% 1.34% 1.42%
workforce
WORK CONDITIONS S1 S2 S1 S2 S1 S2 S1 S2
Absenteeism (days of 10.6 15.4 7.1 7 11.0 11.0 8.0 7.3
absence/person)