Universal Registration Document 2020

4. Corporate governance

4.1 Corporate Governance Code

EDF adheres to the AFEP-MEDEF Code, which is the Corporate Governance Code to which the Company refers, in accordance with Article L. 22-10-10 of the French Commercial Code subject to the specific laws and regulations applicable to EDF.

These specific laws and regulations, in accordance with EDF’s status as a French State-owned company and in particular the application to the Company of Order no. 2014-948 of 20 August 2014 and its implementing texts, and Decree no. 53–707 of 9 August 1953, are detailed in this Universal Registration Document and relate specifically to:

the composition of the Board of Directors (see section 4.2.1 “Members of the Board of Directors”);
the terms and conditions for the appointment of the Chairman & Chief Executive Officer of EDF and the method of exercising Executive Management (see section 4.2.2.2 “Method of exercising Executive Management – Appointment and powers of the Chairman & Chief Executive Officer”); and
the terms and conditions for setting the remuneration of the Chairman & Chief Executive Officer (see section 4.6.1.1 “Remuneration policy applicable to the Chairman and Chief Executive Officer”).

In addition to the aforementioned specific laws and regulations, the table below sets out the AFEP-MEDEF Code recommendations that are not applied by the Company and the related explanations:

AFEP-MEDEF Code Recommendation	Company’s Position	Explanation	Section of the Universal Registration Document
Holding of Company shares by directorsRecommendation no. 20:“[…] the Director should personally be a shareholder and, by virtue of the provisions in the articles of association or the internal regulations, hold a minimum number of shares that is significant in relation to the directors’ allocated remuneration. If he or she does not hold these shares when assuming office, he or she should use his or her directors’ remuneration to acquire them.”	Holding of Company shares by directorsRecommendation no. 20:“[…] the Director should personally be a shareholder and, by virtue of the provisions in the articles of association or the internal regulations, hold a minimum number of shares that is significant in relation to the directors’ allocated remuneration. If he or she does not hold these shares when assuming office, he or she should use his or her directors’ remuneration to acquire them.” Company’s Position The Company’s articles of association and the Board’s internal Rules of Procedure do not require directors to hold a minimum number of shares that is significant in relation to the remuneration they receive for their term of office.	Holding of Company shares by directorsRecommendation no. 20:“[…] the Director should personally be a shareholder and, by virtue of the provisions in the articles of association or the internal regulations, hold a minimum number of shares that is significant in relation to the directors’ allocated remuneration. If he or she does not hold these shares when assuming office, he or she should use his or her directors’ remuneration to acquire them.” Explanation In accordance with the law of 26 July 1983, the directors representing the employees receive no remuneration for their term of office. Furthermore, the remuneration received for their term of office by directors recommended by the French State, who are civil servants, is paid to the French State budget. Directors appointed on the recommendation of the French State, who are not civil servants, can receive only 85% of the remuneration due to them, the remainder being paid to the French State budget. Finally, the Chairman of the Board of Directors does not receive any remuneration for his or her term of office as Director. Taking account of the wide range of situations, the Board has not established a single rule on the holding of the Company’ shares. Furthermore, each Director must act in the Company’s best interests, irrespective of the number of Company shares they hold personally.	Holding of Company shares by directorsRecommendation no. 20:“[…] the Director should personally be a shareholder and, by virtue of the provisions in the articles of association or the internal regulations, hold a minimum number of shares that is significant in relation to the directors’ allocated remuneration. If he or she does not hold these shares when assuming office, he or she should use his or her directors’ remuneration to acquire them.” Section of the Universal Registration Document See sections 4.6.3 (“Total remuneration of directors”) and 4.5 (“Shareholding by corporate officers and trading in EDF securities by corporate officers and executives”).
Requirement for corporate officers to hold sharesRecommendation no. 23:“The Board of Directors defines a minimum number of shares that the corporate officers must retain through to the end of their term of office. […] Until this objective regarding the holding of shares has been achieved, the corporate officers will devote a proportion of exercised options or allocated performance shares for this purpose as determined by the Board.”	Requirement for corporate officers to hold sharesRecommendation no. 23:“The Board of Directors defines a minimum number of shares that the corporate officers must retain through to the end of their term of office. […] Until this objective regarding the holding of shares has been achieved, the corporate officers will devote a proportion of exercised options or allocated performance shares for this purpose as determined by the Board.” Company’s Position The Board of Directors has not prescribed regulations for the holding by the Chairman & Chief Executive Officer of a minimum number of the Company’s shares.	Requirement for corporate officers to hold sharesRecommendation no. 23:“The Board of Directors defines a minimum number of shares that the corporate officers must retain through to the end of their term of office. […] Until this objective regarding the holding of shares has been achieved, the corporate officers will devote a proportion of exercised options or allocated performance shares for this purpose as determined by the Board.” Explanation The Chairman & Chief Executive Officer does not receive any remuneration for his or her term of office as Director. His or her remuneration is limited in accordance with Decree no. 53-707 of 9 August 1953 amended by Decree no. 2012-915 of 26 July 2012. Finally, the Company has not put in place a stock and/or performance stock option plan in favour of the Chairman & Chief Executive Officer. Accordingly, it was decided not to implement this recommendation. Furthermore, the executive corporate officer must act in the Company’s best interests, irrespective of the number of Company shares they hold personally.	Requirement for corporate officers to hold sharesRecommendation no. 23:“The Board of Directors defines a minimum number of shares that the corporate officers must retain through to the end of their term of office. […] Until this objective regarding the holding of shares has been achieved, the corporate officers will devote a proportion of exercised options or allocated performance shares for this purpose as determined by the Board.” Section of the Universal Registration Document See sections 4.6.2 (“Total remuneration of the Chairman & Chief Executive Officer”), 4.6.4 (“Stock options – Bonus shares”).
Rules for the distribution of remuneration paid to Directors for their term of officeRecommendation no. 21.1:The method of distribution of this remuneration “should take into account, in such ways as it shall determine, the directors’ actual attendance at meetings of the Board and Committees, and the amount shall therefore consist primarily of a variable portion”.	Rules for the distribution of remuneration paid to Directors for their term of officeRecommendation no. 21.1:The method of distribution of this remuneration “should take into account, in such ways as it shall determine, the directors’ actual attendance at meetings of the Board and Committees, and the amount shall therefore consist primarily of a variable portion”. Company’s Position A significant but not preponderant share of the remuneration paid to Directors for their term of office is dependent upon actual attendance by the directors of the Board and Committee meetings.	Rules for the distribution of remuneration paid to Directors for their term of officeRecommendation no. 21.1:The method of distribution of this remuneration “should take into account, in such ways as it shall determine, the directors’ actual attendance at meetings of the Board and Committees, and the amount shall therefore consist primarily of a variable portion”. Explanation Special distribution rules were adopted, which take account in particular of the level of responsibilities and the time spent by the directors on their duties. Though the variable share of remuneration paid for the term of office, that compensates the actual presence of Directors is not preponderant, the Company considers that it is nonetheless significant, insofar as it accounts for 50% of the total amount allocated and, as recommended by the AFEP-MEDEF Code, as it is appropriate to the level of responsibilities assumed by the directors and to the time that they must spend on their duties.	Rules for the distribution of remuneration paid to Directors for their term of officeRecommendation no. 21.1:The method of distribution of this remuneration “should take into account, in such ways as it shall determine, the directors’ actual attendance at meetings of the Board and Committees, and the amount shall therefore consist primarily of a variable portion”. Section of the Universal Registration Document See section 4.6.3 “Total remuneration of directors”.

AFEP-MEDEF Code Recommendation

Company’s Position

Explanation

Section of the Universal Registration Document

Holding of Company shares by directorsRecommendation no. 20:“[…] the Director should personally be a shareholder and, by virtue of the provisions in the articles of association or the internal regulations, hold a minimum number of shares that is significant in relation to the directors’ allocated remuneration. If he or she does not hold these shares when assuming office, he or she should use his or her directors’ remuneration to acquire them.”

The Company’s articles of association and the Board’s internal Rules of Procedure do not require directors to hold a minimum number of shares that is significant in relation to the remuneration they receive for their term of office.

In accordance with the law of 26 July 1983, the directors representing the employees receive no remuneration for their term of office. Furthermore, the remuneration received for their term of office by directors recommended by the French State, who are civil servants, is paid to the French State budget. Directors appointed on the recommendation of the French State, who are not civil servants, can receive only 85% of the remuneration due to them, the remainder being paid to the French State budget. Finally, the Chairman of the Board of Directors does not receive any remuneration for his or her term of office as Director. Taking account of the wide range of situations, the Board has not established a single rule on the holding of the Company’ shares. Furthermore, each Director must act in the Company’s best interests, irrespective of the number of Company shares they hold personally.

See sections 4.6.3 (“Total remuneration of directors”) and 4.5 (“Shareholding by corporate officers and trading in EDF securities by corporate officers and executives”).

Requirement for corporate officers to hold sharesRecommendation no. 23:“The Board of Directors defines a minimum number of shares that the corporate officers must retain through to the end of their term of office. […] Until this objective regarding the holding of shares has been achieved, the corporate officers will devote a proportion of exercised options or allocated performance shares for this purpose as determined by the Board.”

The Board of Directors has not prescribed regulations for the holding by the Chairman & Chief Executive Officer of a minimum number of the Company’s shares.

The Chairman & Chief Executive Officer does not receive any remuneration for his or her term of office as Director. His or her remuneration is limited in accordance with Decree

no. 53-707

of 9 August 1953 amended by Decree

no. 2012-915

of 26 July 2012. Finally, the Company has not put in place a stock and/or performance stock option plan in favour of the Chairman & Chief Executive Officer. Accordingly, it was decided not to implement this recommendation. Furthermore, the executive corporate officer must act in the Company’s best interests, irrespective of the number of Company shares they hold personally.

See sections 4.6.2 (“Total remuneration of the Chairman & Chief Executive Officer”), 4.6.4 (“Stock options – Bonus shares”).

Rules for the distribution of remuneration paid to Directors for their term of officeRecommendation no. 21.1:The method of distribution of this remuneration “should take into account, in such ways as it shall determine, the directors’ actual attendance at meetings of the Board and Committees, and the amount shall therefore consist primarily of a variable portion”.

A significant but not preponderant share of the remuneration paid to Directors for their term of office is dependent upon actual attendance by the directors of the Board and Committee meetings.

Special distribution rules were adopted, which take account in particular of the level of responsibilities and the time spent by the directors on their duties. Though the variable share of remuneration paid for the term of office, that compensates the actual presence of Directors is not preponderant, the Company considers that it is nonetheless significant, insofar as it accounts for 50% of the total amount allocated and, as recommended by the AFEP-MEDEF Code, as it is appropriate to the level of responsibilities assumed by the directors and to the time that they must spend on their duties.

See section 4.6.3 “Total remuneration of directors”.