AFD - 2018 Registration document

CORPORATE GOVERNANCE Compensation policy and practices

Name of the convention Further information Agreements and commitments approved in previous years which continued to be performed in financial year 2018 CNSL_Financing of a project to support citizen participation in Colombia.pdf Agreements and commitments approved during the 2018 financial year WITH THE NGOS CNSL_Improvement of the quality of nursery schools in Sri Lanka Subsidy of €375,000 granted. No payment in 2018 CNSL_ Coalition Education phase 2

A meeting of the Board of Directors on 13 July 2017 authorised the conclusion of an agreement with CSL for an amount of €349,706. At 31 December 2018, payment of €200,751

Subsidy of €271,894 granted. At 31 December 2018, payment of €170,982

WITH PROPARCO AFD/Proparco Service Agreement

Fee paid to AFD in 2018: €44,501K Declared by Proparco in regulated agreements

Agreements and commitments not previously approved N/A

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3.2 Compensation policy and practices

3.2.1 Compensation policy governance Article L.511-89 of the French Monetary Code, resulting in particular from the implementation of the CRDIV directive, requires that banks and financing companies of “significance” establish an Appointments Committee and a Compensation Committee and refers to a decree from the Minister of the Economy for the definition of “significance”. Article 104 of the decree of 3 November 2014 uses, as the sole criteria characterising “significance”, the fact that the total company or consolidated balance sheet exceeds €5 billion, meaning that these provisions apply to AFD, while CRDIV contains provisions that have not been implemented and which would exempt AFD from establishing these committees. However, the establishment of Appointments Committees and Compensation Committees conflicts with certain bylaw and legal provisions and certain organisational principles for State public undertakings that apply to AFD. With regards to Compensation Committees, under the terms of Article 76-2 and Article 95-1 of the CRDIV directive regarding Compensation Committees, governments only have to stipulate that Compensation Committees are established in undertakings that are “significant” in terms of their size but also their internal organisation and the nature, scope and complexity of their activities. These derogations and criteria established by the CRDIV directive and Article L.511-89 of the French Monetary Code were not specified in the decree of 3 November 2014. It should be noted that the compensation of all AFD employees, including the Executive Committee and “individuals whose activities have a significant impact on the company’s risk profile” is determined by AFD’s bylaws. Moreover, no variable compensation is awarded. This particular characteristic of

AFD, together with the partial implementation of the CRDIV directive in French law, argues in favour of exempting AFD from establishing a committee which would, ultimately, not have the power to exercise the prerogatives expected by the regulator. The HR function is the only entity involved in designing and implementing the compensation policy. The reason for this is that no AFD employee receives variable compensation (except for profit sharing). 3.2.2 Principal compensation policy characteristics 3.2.2.1 Determining compensation The compensation of every AFD employee is defined essentially using their salary point: on recruitment, a job level (comprising a range of salary points) is allocated to each individual in accordance with the strict definitions in the Staff Regulations. The salary point value is then determined, within this range, according to the employee’s age, training and experience (there is a strong internal concept of fairness). 3.2.2.2 Compensation structure Compensation comprises the following elements: P basic salary (Article 12.1 of the Staff Regulations) For employees on job levels C to G, the basic salary includes, without distinction, all hours worked including overtime. “It is calculated by applying the Caisse Française de Développement value to the salary point. It is monthly and payable in arrears (1) .”

(1) Extract from Staff Regulations

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REGISTRATION DOCUMENT 2018