Danone // 2020 Universal Registration Document

6 corporate governance 6.1 Governance bodies DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 211 Pursuant to Act No. 2013-504 of June 14, 2013 and the Company’s by-laws, two Directors representing employees are members of the Board and are appointed by the Group Works Council and the European Works Council, respectively. In addition, a member of the Social and Economic Committee participates in Board of Directors’ meetings in an advisory capacity. Ms. Cécile CABANIS, Director since 2018, will continue to support the Board of Directors in her new non-executive functions as Vice-Chair of the Board, as decided by the Board at its meeting of December 2020. In 2017, Mr. Franck RIBOUD was appointed Honorary Chairman in recognition of his invaluable contribution to the Board’s work. He may, therefore, at the request of the Chairman and Chief Executive Officer, share his experience, speak to Danone’s teams, represent Danone, particularly among its longtime partners, and take part in major events. The Board of Directors also includes an honorary Vice-Chairman, Mr. Michel DAVID-WEILL, who was appointed following the Shareholders’ Meeting in 2011 and serves in an advisory capacity. Governance structure Following a period between 2014 and 2017 in which these functions were separated, in 2017 the Board of Directors, acting on the re- commendation of the Governance Committee, unanimously decided to approve the principle of combining the offices of the Chairman of the Board of Directors with those of Chief Executive Officer by appointing Mr. Emmanuel FABER as Chairman and Chief Executive Officer as of December 1, 2017. The Board decided that this gover- nance structure was the most appropriate for several reasons: • in the past, the decision to combine the functions of Chairman and Chief Executive Officer proved to be consistent with Danone’s organization, operation and activity and is in line with its gover- nance culture; • this simplified governance structure ensures the Company’s unified and effective management. This tighter and therefore more responsive formof governance facilitates decision-making and accountability as well as the Company’s strategic leadership; • this governance structure also promotes a close relationship between the Board and executivemanagement, allowing Danone to continue implementing its strategy while speaking with one voice and making decisions in an agile and transparent manner. The Board agreed to discuss the relevance of the chosen governance method annually and each time the Chairman and Chief Executive Officer’s term of office is renewed (as a reminder, his term of office was renewed at the Shareholders’ Meeting of April 25, 2019 with 80.2% of the votes). Therefore, in 2020, the Directors discussed this matter in depth and the Board considered that this governance structure provided stability during this uncertain health and econo- mic crisis and ensured effective governance with optimal, efficient management of operations within Danone and greater agility and effectiveness in decision-making processes. In addition, Danone has established mechanisms to ensure the balance of powers, thanks in particular to the existence of a Lead Independent Director with broader, more enhanced powers in 2017 and a Board of Directors whose members are predominantly Independent Directors. In recent months, Danone’s management and Board of Directors have conducted an open dialogue with shareholders, social partners as well as many other internal and external stakeholders, and a reflection on Danone's governance has been undertaken. Therefore, further to a decision in principle to initiate the process of separating the functions of Chairman of the Board and Chief Executive Officer on March 1, 2021, the Board of Directors, at its meeting on March 14, 2021, reviewed the company’s corporate governance and decided that Mr. Emmanuel FABER will step down as Chairman and Chief Executive Officer, and appointed Mr. Gilles SCHNEPP as Chairman of the Board of Directors with immediate effect. The Board also decided to separate the functions of Chairman of the Board and Chief Executive Officer and appointed Ms. Véronique PENCHIENATI- BOSETTA (Chief Executive Officer) and Mr. Shane GRANT (Deputy Chief Executive Officer) to jointly lead the business while the search of a new Chief Executive Officer is underway. This separation is part of a permanent objective of sustainable and reinforced governance. It enables Danone to pursue its development under the best conditions and provides the company with the most effective governance to achieve its ambition of sustainable value creation. The immediate priority of the new Chairman, together with the Board, will be to lead the transition, including the search for a new Chief Executive Officer. Danone has appointed an international search agency to support the process. Mr. Gilles SCHNEPP and the Governance Committee will oversee the search to ensure that a world leading Chief Executive Officer is found. Chairmanship of the Board The Chairman of the Board of Directors organizes and directs its work and reports on it to the Shareholders’ Meeting. He ensures the proper functioning of the Company’s bodies and ensures in particular that directors are able to fulfill their duties by providing them with all necessary information. Balanced distribution of powers The Board determined that balanced governance is ensured through the presence of a Lead Independent Director, the independence and powers of the Board and its Committees, combined with the strength of the Executive Committee, and the limits imposed on the Chief Executive Officer as described below. This governance structure, subject to the Board’s rules of procedure, thereby provides the necessary safeguards to ensure compliance with best governance practices in the context of unified governance. Enhancement of the powers of the Lead Independent Director In 2017, in order to strengthen the balanced distribution of powers, the Board amended its rules of procedure by expanding the duties, resources and responsibilities of the Lead Independent Director, particularly as regards setting the agenda for its meetings and fa- cilitating dialogue with shareholders (see section Lead Independent Director hereinafter). Independence and powers of the Board and Committees The composition of the Board of Directors and the membership diversity policy contribute to the balance of powers, particularly through the high propor tion of Independent Directors, which allows it to exercise full oversight of the Chief Executive Officer. All Committees are chaired by Independent Directors (as defined by the AFEP-MEDEF Code), with the exception of the Strategy & Transformation Committee. The balance of powers is also ensured by: • the full involvement by Directors in the work of the Board and Committees, their diverse profiles and the regular meetings of outside Directors; • the Directors’ ability to convene the Board directly in case of emergency. This convening, which may be verbal, results from a decision made by the majority of the current Directors, or by one-third of them if the Board of Directors has not met in more than two months; • the free and independent review of Board agenda items and the work in theCommittees enablesDirectors to reviewcertainmatters in greater detail and work in direct contact with Danone’s teams.