CORPORATE GOVERNANCE REPORT Management and oversight of the Company 5 5.1 Management and oversight of the Company The Company has had the corporate form of a société anonyme (joint- prerogatives of the Supervisory Board, the balanced composition of stock corporation) with an Executive Board and Supervisory Board which safeguards the independence of the control and balance of since July 21, 1998. This mode of exercising general management was its powers. adopted as it provides a clear separation between the management The Company refers to the Corporate Governance Code for listed bodies of the Company and the oversight of this management, companies published by the French Association of Private Businesses which is provided by the Supervisory Board. This choice as to form (AFEP) and the French Employers Association (MEDEF) (the AFEP- of corporate governance structure has made it possible to retain a MEDEF Code). The AFEP-MEDEF Code may be consulted at the proactive and effective structure together with a flexible and rapid AFEP’s website at the following address: www.afep.com. mode of operation for the executive bodies, in accordance with the In accordance with the guidelines of the AFEP-MEDEF Code and in accordance with of Article L. 225-68 of the French Commercial Code, the table below indicates the recommendation of the above Code that is currently not adhered to and the reasons for this: AFEP-MEDEF Code guidelines Implementation Section 17.1 – Composition of the Committee responsible for compensation The Nomination and Compensation Committee has four members, two of whom It is recommended that this Committee be mainly composed of independent are independent, i.e., a 50% ratio of independent members. The Committee is Directors. chaired by an independent member. In this regard, it should be noted that the French High Committee for Corporate Governance stipulated in its report of October 2014 that a Compensation Committee made up of two members out of four remains compliant with the spirit of the Code as long as it is chaired by an independent member. Lastly, in order to strengthen Klépierre’s compliance with the AFEP-MEDEF Code, the Committee’s Chairman has been assigned a casting vote in the event of tied votes within the Committee. 5.1.1 Supervisory Board 5.1.1.1 Composition of the Supervisory Board Provision of the bylaws and internal rules of the Supervisory Board applicable to the composition of the Supervisory Board The Company’s bylaws and the internal rules of the Supervisory Board > ownership of Klépierre shares: each member of the Supervisory define the following principles: Board must hold at least 60 shares throughout his/her term of > number of Supervisory Board members: the Supervisory Board office; is composed of at least 3 members and no more than 12 members; > chairmanship and vice chairmanship of the Supervisory Board: > term of office of members of the Supervisory Board: the term the Supervisory Board elects a Chairman and a Vice Chairman of office is three years. However, the Ordinary General Meeting of from among its members. Shareholders may, by exception, elect one or more Supervisory Board members for a term of less than three years for the sole purpose of establishing a system of retirement by rotation such that only a proportion of the Supervisory Board members stands for re-election at any one time; KLÉPIERRE 2017 REGISTRATION DOCUMENT 217