Specialist Committees

All members of the Audit Committee are independent. They are also independent within the terms of the Sarbanes-Oxley Act.

All members of this committee have financial or accounting knowledge as a result of their training and work experience. They also all qualify as financial experts within the terms of the Sarbanes-Oxley Act and French legislation.

The principal remit of the Committee shall be to monitor matters relating to the preparation and audit of accounting and financial information. Without prejudice to the powers of the Board of Directors, the Committee shall inter alia be responsible for monitoring:

• the process for the preparation of the annual and half-year financial statements, and financial information more generally;
• the implementation and effectiveness of internal control and risk management systems, and if appropriate of internal audit as regards procedures for preparing and processing accounting and financial information, but without undermining the independence of internal audit;
• the audit of the parent company financial statements and consolidated financial statements by the statutory auditors.

The role of the Committee shall be not so much to examine the financial statements in detail as to monitor the process of preparing them and to assess the validity of elective accounting treatments used for significant transactions.

In fulfilling its role, the Committee shall have access to all documents and interview the statutory auditors and the officers responsible for finance, accounting, and treasury management. It shall be possible for such interviews to take place without the Chief Executive Officer being present if the Committee sees fit. The Committee may also visit or interview managers of operational entities in furtherance of its role, having given prior notice to the Chairman of the Board and to the Chief Executive Officer.

The Committee shall interview the person responsible for internal audit, and give its opinion on the organization of the internal audit function. The Committee shall be notified of the internal audit program and shall be sent internal audit reports or a periodic summary of such reports.

The Committee shall be able to call upon external experts.

In addition, the Committee shall:

• direct the selection process for the statutory auditors, submit the results of this process to the Board of Directors, and issue a recommendation. It shall supervise any call for tenders, and approve the terms of reference and the panel of firms invited to tender;
• be informed of the fees paid to the statutory auditors, oversee compliance with rules relating to auditor independence, examine with them any risks to such independence and protective measures to mitigate those risks;;
• approve in advance any request to/from the statutory auditors to provide services that are ancillary or directly complementary to the audit of the financial statements and rule on requests to supply services other than audit of the financial statements, in compliance with the relevant laws;
• examine risk exposures and significant off balance sheet commitments, assess the materiality of deficiencies or weaknesses reported to it and, where appropriate, inform the Board thereof;
• examine the scope of consolidation and, if applicable, the reasons for an entity’s inclusion or exclusion from that scope;
• obtain assurance that the Company’s internal audit function has sufficient resources to fulfill its remit;
• obtain assurance that the Company’s accounting policies are relevant, consistent and reliable, and examine any changes in those policies;
• ensure that internal early warning procedures relating to accounting, internal accounting controls and audit are in place and applied;
• ensure that independent Directors receive no compensation other than attendance fees.

The role of the Committee shall be to:

• make recommendations and proposals to the Board about compensation, pension and welfare plans, top-up pension plans, benefits in kind, miscellaneous pecuniary benefits, and awards of restricted or performance shares or stock options to the executive officers of Sanofi;
• define the methods used to set the variable portion of the compensation of the executive directors, and check that these methods are applied;
• formulate general policy on the granting of performance shares and stock options, and determine the frequency of grants for each category of grantee;
• issue recommendations on the total amount of attendance fees granted to Directors, and how those fees are to be allocated between them;
• oversee compliance with ethical standards within the Company and in its dealings with third parties;
• examine human resources policy, especially as regards industrial relations, recruitment, diversity, talent management, and building staff loyalty;
• advise the Chief Executive Officer on the compensation of key senior executives;
• assist in the preparation of the sections of the annual report dealing with the policy used to determine the compensation of the executive officers of Sanofi.

The role of the Committee shall be to:

• assess and recommend suitable candidates to the Board for appointment as Directors or executive officers;
• assess and make recommendations to the Board of Directors as necessary regarding the reappointment of individuals whose terms of office are due to expire;
• establish corporate governance rules for the Company, and oversee the application of those rules;
• ensure that there is adequate succession planning for the Company’s executive bodies;
• oversee compliance with ethical standards within the Company and in its dealings with third parties;
• determine whether each Director qualifies as being independent, both on his or her initial appointment and annually prior to publication of the Reference Document, and report its conclusions to the Board of Directors;
• establish corporate governance rules for the Company and monitor application of those rules;
• consider ethical issues that the Board, the Chairman or the Audit Committee may decide to refer to it;
• ensure that there is adequate succession planning for the Company’s executive bodies, in particular through the establishment of a succession plan for the Executive Officers;
• establish a procedure for the selection of future independent Directors and carry out research on potential candidates prior to any contact with them;
• debate the skills and/or financial expertise of Directors nominated to the Audit Committee and report its conclusions to the Board of Directors;
• propose methods for evaluating the operating procedures of the Board and its Committees, and oversee the application of these methods;
• examine draft reports on the governance of the Company.
• review and monitor the Company’s corporate social responsibility (CSR) commitments and orientations, assess the extent to which they meet stakeholder expectations, and more generally ensure that CSR issues are taken into account when developing and implementing corporate strategy;
• review drafts of the Company’s governance and CSR reports, and more generally ensure that all related disclosures required by applicable legislation have been made;
• ensure that regular communication is established with shareholders on corporate governance issues and determine how this is done, without undermining the principle of equality of treatment between shareholders or the collegiate nature of the Board; and
• identify and discuss emerging trends in governance and CSR, and ensure that the Company is preparing as well as possible for the challenges specific to its operations and objectives.

The Committee’s remit shall be to identify, investigate, propose, support, assess and monitor strategic development priorities and initiatives relating to the Company and its operations. It may address any significant question relating to such matters.

It briefs the Board of Directors on issues of major strategic interest, such as:

• external growth opportunities;
• divestment opportunities;
• development priorities;
• financial and stock market strategies, and compliance with key financial ratios;
• potential diversification opportunities;
• strategic alliances and major corporate actions outside the Company’s declared strategy;
• and more generally, any course of action judged essential to the Company’s future.

The Committee’s remit shall be to identify, investigate, propose, support, assess and monitor strategic development priorities and initiatives relating to the Company and its operations. It may address any significant question relating to such matters.

The role of the Committee shall be to:

• assist the Board in scrutinizing the strategic orientation and investments proposed by the Chief Executive Officer in those areas;
• identify and discuss emerging trends and new challenges, and ensure that Sanofi is well prepared for them; and
• ensure that processes are in place to enable optimal decision-making on investments in R&D, consistent with the strategy determined by the Board.