25th Mar 2008 07:00
Compagnie de Saint-Gobain20 March 2008 20 March 2008 Agreement on the conditions for Wendel seats at the Board of Directors Pierre-Andre de Chalendar, Chief Executive Officer of Compagnie de Saint-Gobain,presented to the Board of Directors of Saint-Gobain at its meeting of 20th March2008 the conclusions of the mission entrusted to him last November 22ndconcerning the bases on which Wendel, the leading shareholder of Compagnie deSaint-Gobain, might enter the Board. The Board studied the proposals put forward and the commitments undertaken byWendel, as set out in the letter reproduced in the appendix hereto, havingregard to three essential principles: 1) Support for the Strategy approved by the Board of Directors and implemented by the Executive Management Wendel has confirmed its support for the strategy of the Group and, beingrepresented on the Board, it is planned that Wendel be part of a StrategyCommittee which will be established following the Shareholders Meeting of 5thJune 2008. This Committee, which will have three members, will be chaired by anindependent member of the Board and will include the Chief Executive Officer anda director representing Wendel. The Appointments Committee will be expanded toinclude a director representing Wendel. 2) Respecting the Independence of the Group and Equal Treatment for All Shareholders Wendel has committed to limit its holding to 21.5% of the share capital and tolimit the exercise at a shareholders meeting of the double voting rights whichit will have in 2010 and 2011, so as not to surpass, solely because of suchdouble voting rights, 34% of the votes of shareholders participating at thatshareholders meeting. Wendel has also committed not to join in or favour atender offer for Saint-Gobain which had not been recommended by the Board ofDirectors. 3) Stability of the Shareholder Base and a Medium Term Commitment These provisions remain in force through to the conclusion of the ShareholdersMeeting of 2009 and are automatically renewed (unless otherwise notified inadvance). A conciliation procedure is provided for in case of a majordisagreement. The provisions concerning limits placed on the use of doublevoting rights will remain in force through to the conclusion of the ShareholdersMeeting of 2011. Finally, should Wendel wish to dispose of all or part of itsholding, Saint-Gobain will under certain conditions have a right of "first offer". The Board of Directors of Saint-Gobain considered unanimously that based on thecommitments taken by Wendel regarding the respect of those 3 principles, it isnatural that Wendel, the leading shareholder of Compagnie de Saint-Gobain,should be able to participate at the Board level. It has therefore accepted therequest to that effect from Wendel and will propose to the Shareholders Meetingof 2008 the appointment to the Board of two directors representing Wendel, and athird such director to the Shareholders Meeting of 2009; the total number ofdirectors being increased from 15 to 16 as from the Shareholders Meeting of 5thJune 2008. The Board of Directors welcomes the upcoming entry of new members representingWendel. With a holding of near to 20% of its share capital, Wendel will bringstability to the shareholder base of Saint-Gobain, at the same time aspreserving the independence of the Group so that it may continue itsdevelopment. Investor Relations Department Mrs Florence TRIOU-TEIXEIRA Tel.: +33 1 47 62 45 19 Mr Alexandre ETUY Tel.: +33 1 47 62 37 15 Mr Vivien DARDEL Tel.: +33 1 47 32 44 29 Fax.: +33 1 47 62 5062 WENDELTranslation Mr Jean-Louis Beffa Compagnie de Saint-Gobain 18 March 2008 Dear Mr Chairman, Our discussions, which have been carried out in a spirit of partnership, haveallowed us to explore together the conditions in which Wendel could participatein the governance of your company. We are therefore in a position to confirmthe measures to be taken to allow us to make our contribution, as principalshareholder, to the development of Saint-Gobain in becoming part of its board ofdirectors; and to provide you with the assurances which you have considerednecessary. As the principal shareholder of Saint-Gobain we intend to support its strategy,implemented by its Chief Executive Officer, to contribute to the realisation ofits plans while providing stability to its shareholder base. 1. Voting Rights Should Wendel be in the position where it were able to exercise, together or inconcert, more than 34% of the votes of shareholders participating at ashareholders meeting of Saint-Gobain, solely though the holding of double votingrights, we are prepared to limit the exercise of such rights at thatshareholders meeting so that Wendel did not surpass this threshold of 34%.(1) These provisions will remain in effect until the conclusion of the annualshareholders meeting held in 2011. All the above provisions limiting the voting rights of Wendel will cease toapply should any other shareholder surpass the threshold of 11% of the sharecapital of Saint-Gobain (alone or in concert) and in the case of a tender offerfor Saint-Gobain. 2. Governance We have noted that the governance of Saint-Gobain is in line with the principlesestablished by AFEP and MEDEF. We understand that you are considering proposing to the annual shareholdersmeeting of 5 June 2008 to increase the number of directors to 16 in order tomaintain a sufficient number of independent directors, and we shall vote infavour of this resolution. In this context, our representation on the Board ofDirectors of Saint-Gobain would include three directors, of which the first twowould be nominated by the Board of Directors at the annual shareholders meetingof 5 June 2008 and the third at the annual shareholders meeting of 2009. A Strategy Committee will be established following the shareholders meeting of5th June 2008. It will be comprised of three members. It will be chaired by anindependent director and will include the Chief Executive Officer ofSaint-Gobain and a director proposed by Wendel. This Committee will permit thecontinuation of the dialogue which we have engaged with the Executive Managementof Saint-Gobain. It will meet six times per year in order to study thestrategic plan, areas of potential improvement in the same and the strategicmatters put forward by its members. In addition, a director representing Wendel will be appointed to theAppointments Committee as from the shareholders meeting of 2008. We also agree to reduce our representation on the Board of Directors ofSaint-Gobain to one director should our holding in its share capital fall below10%. Furthermore, Wendel and the Executive Management will consult with each other,one month in advance of the relevant Board of Directors meeting, on any draftresolutions relating to matters other than those set out in (a) and (b) belowand which are to be submitted to a shareholders meeting. We shall submit no resolution to the vote of the shareholders of Saint-Gobain atthe annual shareholders meeting of 2008 or 2009 unless approved in advanced bythe Board of Directors. More specifically, we are in a position to indicate to you that we shall vote asfollows: (a) at the annual shareholders meeting of 5th June 2008: • for the adoption of a resolution similar to the 20th resolution adopted at the shareholders meeting of 7th June 2007; and • for the renewal of the mandate as director of the Chairman of the Board of Directors; (b) at the annual shareholders meeting of June 2009: • for the adoption of resolutions similar to resolutions 12 through 20 adopted at the extraordinary part of the shareholders meeting of Saint-Gobain of 7th June 2007. 3. Evolution of the Holding of Wendel We confirm to you that we shall not increase the direct or indirect holding ofWendel (alone or in concert) in the share capital of Saint-Gobain beyond thethreshold of 21.5%. Of course this provision will not apply in case of a reduction in the number ofshares of Saint-Gobain or of Saint-Gobain acquiring its own shares - in eitherof which case Wendel would keep the number of shares held theretofore. Furthermore, should there be an increase in the share capital of Saint-Gobain,Wendel will be entitled (should it wish to do so) to exercise its rights so asto maintain or increase its holding subject to the limit of 21.5% of the sharecapital. However, the provisions above concerning the evolution of the holding of Wendelwill cease to apply should any other shareholder, acting alone or in concert,surpass the threshold of 11% of the share capital of Saint-Gobain or in case ofa tender offer for Saint-Gobain. Finally, Wendel agrees not to join a tender offer if the terms thereof have notbeen approved by the Board of Directors of Saint-Gobain; to abstain from anyaction which would be susceptible of provoking, encouraging or favouring thesuccess of any such tender offer and from publicly recommending the same;provided that Wendel shall remain free to accept, with respect to all or part ofits shares, any such offer. 4. Right of First Offer We share your desire to favour a stable and sound shareholder base. Therefore,should we consider transferring, in a single or in several transactions, sharesrepresenting at least 5% of the share capital of Saint-Gobain, to a limitednumber of persons, we shall inform the Executive Management of our plan and ofthe price which we wish to obtain. The Executive Management will then have 5 business days from the time of thenotification to arrange for the acquisition by a third party or by Saint-Gobainat the price indicated, the shares which it is proposed to sell. If such is notarranged, we shall be free to transfer the shares for a price no less than theprice indicated. In any event, the Executive Management of Saint-Gobain willmake its best efforts to contribute to the success of the transaction in aspirit of cooperation and partnership. This right of first offer does not apply in case of a tender offer onSaint-Gobain for shares of Saint-Gobain in respect of which Wendel accepts atender offer which has been declared valid. 5. Duration The commitments which we are assuming in this letter will remain in forcethroughout a period expiring upon the conclusion of the annual shareholdersmeeting of Saint-Gobain in 2009, except for the provisions in respect of votingrights in paragraph 1 hereof. We agree that these commitments thereafter be automatically renewed (save asbelow) for successive periods of 12 months through to the conclusion of theannual shareholders meeting of Saint-Gobain in 2011. However we shall beentitled to terminate these commitments by notice to Saint-Gobain at the latesttwo months prior to the next scheduled expiry date. In that case, the directorsrepresenting Wendel will resign from the Board of Directors effective uponexpiry of this agreement. Should any major disagreement arise between Wendel and the majority of the Boardof Directors of Saint-Gobain, a conciliation procedure of two months durationwill be organised. If, following this conciliation procedure, the disagreementremains, the directors of Wendel will resign at that time from the Board ofDirectors. In the two cases set out here above, and except for the provisions relating tovoting rights in paragraph 1 hereof, only the provisions of paragraphs 3 and 4hereof concerning the evolution of our holding and the right of first offergiven to Saint-Gobain shall remain in force: (a) in the case of non-renewal ofthe agreement - during the notification period provided for above; and (b) incase of a major disagreement - during the conciliation period also provided forabove; furthermore, in each of these two cases, during a period of the ensuingtwo months, Wendel would be freed from its commitments if an shareholdersmeeting of Saint-Gobain, other than the combined annual shareholders meetingcalled upon to vote on proposed resolutions which are habitual for this kind ofshareholders meeting, was called by the board of directors during any suchnotification or conciliation period or any ensuing two month period as providedfor above. 6. Communication It is agreed that neither of our two groups will publish a press release orpublicly take a position regarding the other without having informed the otherin advance. Yours sincerely Chairman of the Supervisory Board Chairman of the Management Board Ernest-Antoine Seilliere Jean-Bernard Lafonta -------------------------- (1) Wendel and Saint-Gobain will notify the arrangement thus agreed to theentity in charge of organising the holding of the shareholders meeting so thatthe latter can carry out the necessary calculations, of which it will inform thebureau of the meeting. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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