On July 1, 2007, AXA granted 50 free shares per employee to all employees of the Group. In total, 2.3 million shares were granted to 46,900 employees in 24 countries on the 2+2 plan (i.e. two-year vesting period with a subsequent two-year restriction period), and 3.2 million shares were granted to 64,838 employees in 30 countries on the 4+0 plan (i.e. fouryear vesting period with no subsequent restriction period).
The free shares are valued using the CNC approach described in the AXA Group Shareplan section using assumptions adapted to the structure of the plan (2+2 or 4+0 plan), based on a market price of €32 per share on July 1, 2007.
Only those plans that are material at Group level are described below.
The total cost of AXA Financial’s share-based compensation plans in 2007 included €0.3 million in respect of AXA Financial Stock Appreciation Rights (as they are subject to variations in the basis of recognition due to changes in the market value of AXA ADRs) and €4.6 million in respect of AXA ADR Restricted Shares and Performance Accelerated Restricted Shares granted to senior executives and nonemployee directors.
AllianceBernstein grants Restricted Units and options to acquire AllianceBernstein Units, which are valued and booked according to IFRS principles. These plans have not been disclosed in prior years in the AXA Group annual report for materiality reasons.
In 2006: — Short-term benefits: compensation paid to members of the Management Board in respect of 2006 totaled €14.9 million, including fixed salary, bonuses, directors’ fees and benefits in kind.
— Long-term benefits: amounts provisioned or recognized by AXA SA and its subsidiaries for the payment of pensions or retirement benefits to its corporate officers (members of the Management Board, Chairman of the Supervisory Board and the employees’ representative on the Supervisory Board) totaled €33.8 million.
— Share-based compensation: the expense recognized in 2006 in respect of share-based compensation granted to Management Board members was €13 million.
25.5. SALARIED WORkFORCE At December 31, 2007, the Group employed 103,534 salaried people on a full-time equivalent basis (96,009 in 2006, including 14,984 Winterthur employees, and 78,800 in 2005).
Venture Preference Limited with 544 and 1,439 employees, respectively, and growth in PPP Healthcare (449 employees); — the acquisition of Alpha Insurance in Greece with 333 employees, and of AXA-MPS Vita and Danni in Italy with 140 and 53 employees, respectively; — the acquisition of Kyobo Auto in South Korea (1,464 employees); — the acquistion of ELLA Bank in Hungary (229 employees); — an increase at AllianceBernstein (672 employees) mainly in the teams which manage institutional investments, private clients, mutual funds and corporates, due to the growth of the activity; — an increase in the Assistance business (845 employees) mainly in France, Spain, Benelux, the UK and the US; — an increase in Australia/New Zealand with 499 employees due to a growing activity.
The Group calculates a basic net income per ordinary share and a diluted net income per ordinary share: — The calculation of the basic net income per ordinary share assumes no dilution and is based on the weighted average number of outstanding ordinary shares during the period.
On January 11, 2007, the meetings of holders of AXA’s 2014 and 2017 convertible bonds were held to vote on an amendment of the final conversion dates of the bonds to January 26, 2007 in exchange for a cash payment in respect of the value of the conversion option. The meeting of holders of the 2014 convertible bonds approved the amendment. Consequently, holders who did not convert their bonds by January 26, 2007, received €16.23 per bond on January 31, 2007. The meeting of holders of the 2017 convertible bonds did not approve the amendment. Consequently, to fully neutralize the dilutive impact of the 2017 convertible bonds, AXA purchased from a banking counterparty, for a total cash amount equivalent to the payment proposed to bondholders, call options on AXA shares with an automatic exercise feature. This feature is such that one option is automatically exercised upon each conversion of a convertible bond. Consequently, each issuance of a new share resulting from the conversion of the bond will be offset by the delivery by the bank to AXA (and subsequent cancellation) of an AXA share. The issuance of a share in respect of the conversion of the bond and the cancellation by AXA of the AXA share received will offset each other. As a result of this transaction, there will no longer be a change to the outstanding number of AXA outstanding shares created by the convertible bond conversion.
(a) Weighted average. (b) Taking into account the impact of potentially dilutive instruments.
In 2007, the Company was party to the following transactions with related parties which may be deemed to have been material to AXA or the related party in question or unusual in their nature or conditions.
The Mutuelles AXA (AXA Assurances IARD Mutuelle and AXA Assurances Vie Mutuelle) are two mutual insurance companies engaged in the Property & Casualty insurance business and Life & Savings insurance business in France. The Mutuelles AXA have no shares outstanding and the business of each Mutuelle is supervised by a board of directors elected by delegates representing policyholders. The Company and the Mutuelles have in common certain members of management and certain members of the Company’s Supervisory Board and Management Board serve as directors or executive officers of the Mutuelles AXA.
The Property & Casualty insurance business generated in France by insurance brokers is underwritten through a coinsurance arrangement between AXA France IARD, a Property & Casualty insurance subsidiary of the Company, and AXA Assurances IARD Mutuelle. Technical results are shared between entities in proportion with their written premiums. Aggregate written premiums recorded in the agreement amounted to €1,531 million in 2007 (of which €1,363 million was attributed to AXA France IARD).
From time to time the Company enters into GIEs with certain of its subsidiaries. GIEs are French intercompany partnerships, governed by French law, created to perform various common services for their members and to allocate associated costs and expenses among their members. The allocation of costs and expenses invoiced to GIE members may be based on various agreed criteria including particular activity drivers. These GIEs cover a variety of common services including services performed by the AXA Group’s central functions for the benefit of AXA Group companies (such as finance, accounting and reporting, tax, legal, marketing and brand, internal audit, human resources, procurement, information systems, risk management, cash management, etc.) as well as certain other services. Expenses invoiced by these GIEs to the Company and its subsidiaries are generally invoiced at cost and are included in the consolidated expenses reflected on Company’s audited consolidated financial statements.
AXA has given numerous commitments and guarantees, including financing commitments, guarantees given to financial institutions and customers, pledged assets, collateralized commitments and letters of credit. For a detailed description of these commitments and guarantees, see Note 28 “Contingent assets and liabilities and unrecognized contractual commitments”. Certain of these guarantees are given by the Company for the benefit of its subsidiaries and affiliates for various business purposes including to promote development of their business (e.g. to facilitate acquisitions, integration of acquired businesses, internal restructurings, sales or other disposals of assets or businesses or similar transactions), to support their credit ratings, and/or to promote efficient use of the Group’s capital resources. In this context, the Company may guarantee repayment of loans extended from one of its subsidiaries to another guarantee obligations of its subsidiaries to third parties or provide other types of guarantee for the benefit of its subsidiaries. The beneficiaries of these guarantees are generally required to compensate the Company at a negotiated rate based on prevailing market rates and conditions for guarantees of a similar nature. In addition, from time to time, the Company may provide comfort or similar letters to rating agencies and/or regulators for the benefit of its subsidiaries and affiliates for various business purposes, including facilitating specific transactions, achieving target ratings levels and, more generally, helping develop the business of these subsidiaries.
In addition, the Company may enter into various other types of transactions with its subsidiaries and affiliates from time to time in connection with liquidity, solvency and capital management initiatives designed to promote efficient use of the Group’s capital resources which may involve loans or other extensions of credit, acquisitions or sales of securities or other assets, swaps or other types of derivatives, securitization transactions or other similar types of arrangements or transactions.
Various executive officers and directors of the Group may, from time to time, purchase insurance, wealth management or other products or services offered by AXA in the ordinary course of its business. The terms and conditions of these transactions are substantially similar to the terms and conditions generally available to the public or to AXA employees generally.
Off-balance sheet commitments received by AXA totaled €39,474 million at the end of 2007, an increase of €1,774 million compared to the end of 2006.
At the end of 2006, the integration of Winterthur contributed €2,959 million to off balance sheet commitments received, mainly including €2,934 million of collateral for mortgage loans.
Guarantee commitments received amounted to €4,844 million, and mainly consisted of: — guarantees received from customers of AXA Bank Belgium and Belgium Life & Savings (€3,196 million), and from AXA Banque (French bank) (€1,033 million) principally in the form of mortgages and,
— guarantees received from credit institutions by Italy Property & Casualty (€103 million) in the case of the failure of general agents, and from AXA Banque (€219 million).
Pledged securities and collaterized commitments received totaled €24,004 million at the end of 2007, and mainly consisted of: — Mortgage security interests taken by AXA Bank Belgium for home loans and other business loans (€15,087 million).
— Collaterized commitments in Switzerland Life & Savings (€2,249 million), mainly relating to mortgage loans.
— Pledged securities representing technical commitments made by reinsurers, mainly for France Life & Savings (€230 million) and AXA Corporate Solutions Assurance (€298 million).
Other commitments received totaled €1,040 million at the end of 2007, broken down as follows: — €777 million received by France Life & Savings, — €107 million commitments received by AXA Bank Belgium related to Forex and Money Market activities, — €100 million commitments on real estate properties in the
— €34 million received by AXA RE, to purchase real estate funds from AXA REIM.
Commitments given totaled €33,737 million at the end of 2007, an increase of €1,291 million as compared to the end of 2006. At the end of 2006, the integration of Winterthur contributed €2,217 million to commitments given.
Financing commitments given totaled €3,151 million at the end of 2007, and consisted of: — Financing commitments to customers (€2,217 million), mainly comprising commitments given by AXA Bank Belgium in the context of its retail activities (€933 million), and credit lines and overdraft authorizations granted by AXA Banque (French bank) to its customers (€1,084 million). These commitments were almost stable compared to 2006.
Financing commitments given decreased by €823 million, including €—392 million attributable to the sale of the Netherlands, and €—530 million in the United States (where commitments given to Limited Partnership are shown as other commitments from 2007 on).
(€3,384 million) including mainly guarantees given by AXA SA mainly to credit institutions (€3,053 million).
— Guarantees commitments given to customers (€1,969 million) mainly including (i) gap guarantees on structured products granted by AXA Banque to funds managed by AXA Investment Managers (€1,601 million), and (ii) a guarantee provided by Australia Life & Savings as part of its mutual fund distribution business, guaranteeing that customers will recoup their initial investment in the funds (€290 million).
— €2,968 million commitments given by France Life & Savings, €621 million given by France Property & Casualty, and €123 million given by AXA Corporate Solutions, notably including €2,045 million on Private Equity Funds.
— €1,065 million in the United Kingdom, mainly in commitments due to the Parallel Ventures (€136 million) and AXA Private Equity funds (€696 million). These funds are vehicles (partnerships and similar vehicles) that allow exposure to private equity investments in the United Kingdom, United States and European markets.
— AXA issued the following subordinated debt instruments (i) €1,524 million at 2.5% issued in February 1999 and due in 2014, and (ii) €1,099 million at 3.75% issued in February 2000 and due in 2017. The difference between the issue price and the redemption price (in the event of non-conversion for the debt maturing in 2017) is amortized over the life of the instrument at the effective interest rate for each issue. The unamortized balance at the end of 2007 was €983 million.
On December 15, 2005, and after authorization on June 29, 2005 by the AXA Supervisory Board, the AXA Group (AXA and its subsidiaries) and the BNP Paribas Group entered into an agreement that replaces the one in force since September 12, 2001 (and amended on October 26, 2004). The new agreement maintains the existing provisions in terms of minimal and stable cross-shareholdings (the AXA Group undertakes initially to hold at least 43,412,598 shares of BNP Paribas stock; the BNP Paribas Group undertakes initially to hold at least 61,587,465 shares of AXA stock; these amounts will be adjusted thereafter to reflect the impact of capital transactions, including but not limited to free allotments of stock or share tenders involving the same company (stock splits, business re-combinations, etc.), and capital increases involving either BNP Paribas or AXA), and also provides for a reciprocal repurchase option in the event of a hostile takeover attempt on either AXA or BNP Paribas. In force for a period of five years as of the date of signature, this agreement is renewable automatically for an initial period of two years and for successive periods of one year thereafter, unless one of the two parties decides to terminate beforehand, in which case it is required to give three months notice prior to the next renewal date. The agreement was made public by the AMF (Autorité des marchés financiers) on December 21, 2005.
28.3. OTHER ITEMS: RESTRICTION ON DIVIDEND PAYMENTS TO SHAREHOLDERS Some AXA subsidiaries, principally insurance companies, are subject to restrictions on the amount of funds they may transfer in the form of cash dividends or otherwise.
30.1. MATTERS DIRECTLY CONCERNING AXA SA AXA SA is involved in lawsuits (both class actions and individual litigations), investigations, and other actions (the “Parent Company Litigations”) arising in the various jurisdictions where it does business, including the following: In 2007, AXA SA completed the squeeze-out of the minority shareholders at two German subsidiaries, AXA Konzern AG (“AKAG”) and Kölnische Verwaltungs-AG für Versicherungswerte (“KVAG”). Following the effective date of these squeeze outs in July 2007, certain former AKAG and KVAG shareholders brought an action alleging that the cash compensation offered by AXA SA was not adequate. Management believes that these claims are without merit and intends to vigorously defend them.
The Subsidiary Litigations include the following matters concerning AXA Financial, AXA Equitable and AllianceBernstein which are discussed, among other litigations and related matters, in the Subsidiary SEC Reports: AXA Financial and AXA Equitable Matters
— In September 2004 and November 2004, respectively, petitions for appraisal entitled Cede & Co v. AXA Financial Inc. and Highfields Capital, Ltd v. AXA Financial, Inc. were filed in the Delaware Court of Chancery by or on behalf of certain former MONY stockholders holding approximately 3.6 million shares of MONY common stock. The petitions sought a judicial appraisal of the value of those shares pursuant to Section 262 of the General Corporation Law of the State of Delaware. In February 2005, the Delaware Court of Chancery consolidated the two actions for all purposes. Following a trial in April 2007, the court awarded the plaintiffs $24.97 per MONY share held by them plus interest at an agreed upon rate. The amount awarded was less than the $31.00 per share paid to all other
shareholders of MONY by AXA Financial in connection with the acquisition of MONY, which was completed in 2004. The plaintiffs did not appeal this decision, which is final.
— AXA Equitable and/or AXA Advisors LLC is currently the subject of four putative class actions filed between July 2006 and September 2007 in Federal court alleging certain wage and hour violations with regard to certain sales personnel. Each of the cases seeks substantially the same relief under essentially the same theories of recovery: violation of the Fair Labor Standards Act for failure to pay minimum wage and overtime and violation of similar provisions under state labor laws in the respective states. In September 2007, the parties agreed to consolidate in the Northern District of California all four pending actions: Meola v. AXA Advisors and AXA Equitable; Lennon v. AXA Advisors, et al.; Bolea v. AXA Advisors, LLC and AXA Equitable, et. al.; and Dhruv v. AXA Advisors, LLC, et al. Plaintiffs seek compensatory damages, restitution of all wages improperly withheld or deducted, punitive damages, penalties, and attorneys’ fees.
In addition to the matters set forth above, AXA Financial, AXA Equitable and AllianceBernstein, as well as certain of AXA’s other U.S. subsidiaries, are involved in various other types of lawsuits (both class action and individual), regulatory inquiries, investigations or actions, including in connection with the ownership and/or management of real estate, asset management activities, corporate transactions, employee benefit disputes, alleged discrimination in employment practices, as well as other matters. For additional details on these matters, please see the Subsidiary SEC Reports.
Subsequent to September 11, 2001, litigation commenced in New York concerning whether the attack and destruction of the World Trade Center constituted a single occurrence or two separate occurrences for property insurance coverage purposes. The jury verdicts rendered to date in this litigation with respect to the insurance company defendants have been mixed. A jury verdict for one group of defendants deemed to have written coverage on a broker’s form determined that the attack on the WTC constituted one occurrence for property insurance coverage purposes. A second jury verdict for the remaining defendants, which were deemed to have written coverage on other forms, determined that the attack on the WTC constituted two occurrences for property insurance coverage purposes. On May 23, 2007, certain insurers and all insureds publicly announced that they had reached a settlement of substantially all issues in dispute among these parties in the litigation and on July 9, 2007, these parties entered into a final settlement agreement. While AXA is not party to this litigation, certain of its subsidiaries may be affected by the outcome. Management believes, however, that the ultimate outcome of these matters will not be material to the consolidated financial position or results of operations of the AXA Group, taken as a whole.
Some of the Parent Company Litigations and Subsidiary Litigations have been brought on behalf of various alleged classes of claimants, and certain of the claimants in these actions seek significant or unspecified amounts of damages, including punitive damages. In some jurisdictions, juries have substantial discretion in awarding punitive damages. Although the outcome of any lawsuit cannot be predicted with certainty, particularly in the early stages of an action, management believes that the ultimate resolution of the Parent Company Litigations and the Subsidiary Litigations should not have a material adverse effect on the consolidated financial position of AXA, taken as a whole. However, due to the nature of such lawsuits and investigations and the frequency of large damage awards in certain jurisdictions (particularly the United States) that bear little or no relation to actual economic damages incurred by plaintiffs, AXA’s management cannot make an estimate of loss, if any, or predict whether or not the Parent Company Litigations or Subsidiary Litigations will have a material adverse effect on the AXA’s consolidated results of operations in any particular period.
PricewaterhouseCoopers Audit Mazars & Guérard 63, rue de Villiers 61, rue Henri Régnault 92208 Neuilly-sur-Seine Cedex 92400 Courbevoie
This is a free translation into English of the report of the Statutory Auditors issued in French and is provided solely for the convenience of English readers. The report of the Statutory Auditors includes information specifically required by French law in such reports, whether modified or not. This information is presented below the opinion on the consolidated financial statements and includes an explanatory paragraph discussing the Auditors’ assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account captions or information taken outside of the consolidated financial statements.
This report together with the Statutory Auditors’ report addressing financial and accounting information in the Chairman’s report on internal control, should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
In our opinion, the consolidated financial statements for the fiscal year 2007 give a true and fair view of the assets and liabilities and of the financial position of the group as of December 31, 2007 and of the results of its operations for the year then ended in accordance with the IFRS adopted by the European Union.
We have assessed the reasonableness of the assumptions used to calculate these values, particularly with respect to the Group’s experience and its regulatory and economic environments. We also assessed the overall consistency of these assumptions.
— The carrying values of purchase goodwill are tested at each closing for recoverability using the methods described in note 1.6.1 to the consolidated financial statements.
We have verified that the valuation methods used take into account the nature of tax differences, business plans established by the Group and, when accounting policies permit, its intentions.
We have assessed whether the hedging activities recognized in this manner have been duly documented, and whether this documentation includes an explanation of the hedging relationship, its efficiency and the Group’s objective in terms of risk management and hedging strategy.
The assessments were made in the context of our audit of the consolidated financial statements, taken as a whole, and therefore contributed to the opinion we formed which is expressed in the first part of this report.
— Management Board and Supervisory Board members 380 certain additional inforMation description of aXa’s capital stock
MeMoranduM and articles of association The Company is a holding company organized under the laws of France as a Société Anonyme (SA) (a form of limited liability company), with a Supervisory Board and a Management Board. The Company’s principal office is located at 25, avenue Matignon, 75008 Paris, France and AXA is registered with the Paris Trade and Companies Register (Registre du Commerce et des Sociétés) under number 572 093 920.
objects and purposes Under Article 3 of its statuts AXA’s corporate purpose is generally to: — hold equity interests whatever their forms in any French or foreign companies or businesses, including insurance companies or businesses,
— perform any and all industrial, commercial, financial, real estate or movable property transactions, directly or indirectly related to any of the foregoing.
ManageMent board and supervisory board MeMbers In addition to French law provisions, AXA’s statuts and the Supervisory Board’s Rules of Procedure include a number of specific provisions concerning members of the Supervisory Board and Management Board, including the following: compensation
Board. Members of the Supervisory Board receive a fixed directors’ annual fee, the overall amount of which is determined by the shareholders at their Annual Meeting and apportioned by the Supervisory Board among its members. The Supervisory Board also may authorize that its members be compensated for the performance of special tasks or assignments in accordance with the provisions of French company law. In addition to directors’ fees, the Supervisory Board may decide to grant remuneration to its Chairman and Vice-Chairman. Any Supervisory Board decision to award such compensation requires approval of the Supervisory Board (majority vote) at a duly convened meeting where at least half the members are present. For further information please see Part III “Corporate governance, executive compensation, major shareholders and related matters” of this Annual Report.
Article 10 A-2 of AXA’s statuts provides that each member of the Supervisory Board must own at least 100 AXA ordinary shares during his or her term of office.
Neither French law nor AXA’s statuts require members of the Management Board to be shareholders of the Company. However, the Supervisory Board, acting on the recommendation of the Compensation Committee, has adopted guidelines for share ownership applicable to members of the Management Board. These guidelines provide that each member of the Management Board is required to hold a certain number of shares based on his annual compensation: (i) for the Chairman of the Management
description of aXa’s capital stock transactions involving aXa’s registered share capital As of December 31, 2007, there were 2,060,753,492 ordinary shares outstanding, each with a par value of €2.29. All these ordinary shares were fully paid and non assessable. These shares began earning dividends on January 1, 2007.
The following table sets forth changes in the number of outstanding ordinary shares from December 31, 2004 to December 31, 2007: date operations number of shares issued or cancelled issue or merger premium (in euro)
number of shares after the operation amount of share capital after the operation
Share capital reduction by cancellation of shares — 19,809,693 — 466,353,090 2,190,434,266 5,016,094,469
date operations number of shares issued or cancelled issue or merger premium (in euro)
Share capital reduction by cancellation of shares — 63,103,647 — 1,754,535,072 2,058,621,093 4,714,242,303
Pursuant to the statuts of AXA and French law and subject to the exceptions described below, the share capital of AXA may be increased only with the approval of two-thirds of the shareholders present or represented by proxy voting together as a single class at an extraordinary general meeting.
Increases in AXA’s share capital may be affected by the issuance of additional ordinary shares which may be: — for cash, — in satisfaction of indebtedness incurred by AXA, — for assets contributed to AXA in kind, — by capitalization of existing reserves, profits or share premium, — upon conversion, exchange or repayment of securities giving access to shares through AXA shares, — upon the exercise of share warrants or other similar securities consisting of rights to subscribe for ordinary shares or of stock options, or
of its share capital within 18 months from the date of the shareholders’ meeting authorizing a shares repurchase program. In addition, AXA may not cancel more than 10% of its outstanding share capital over any 24-month period and may not hold more than 10% of its share capital in selfheld shares and shares owned by subsidiaries.
Under French law, shareholders have preemptive rights to subscribe on a pro-rata basis for additional shares of any equity securities or other securities giving a right, directly or indirectly, to equity securities issued by AXA for cash. During the subscription period relating to a particular offering of shares, shareholders may transfer preferential subscription rights that they have not previously waived. In order to issue additional ordinary shares without preemptive rights, beyond issuances already approved by AXA shareholders, AXA must obtain the approval of its shareholders, together in an extraordinary meeting of AXA shareholders, and voting following a two-thirds majority of the voting rights.
Upon proposal by AXA’s Management Board and subject to prior approval by the Supervisory Board, the shareholders of AXA may decide to allocate all or part of distributable profits to special or general reserves, to carry them forward to the next fiscal year as retained earnings, or to allocate them to the shareholders as dividends. If AXA has earned a distributable profit since the end of the previous fiscal year, as reflected in an interim balance sheet certified by its auditors, the Management Board may distribute interim dividends to the extent of the distributable profit without shareholders approval in accordance with French law. AXA’s statuts require AXA to distribute dividends between its shareholders pro-rata according to their share holdings in the capital. Dividends are usually paid within the few business days following the date of the shareholders’ meeting approving their distribution. The right to receive the dividend is due to the shareholders at the date of payout.
Under AXA’s statuts, the actual dividend payment date is decided by the Management Board after a prior authorization by the Supervisory Board. AXA must pay any dividends within nine months of the end of its fiscal year. Dividends not claimed within five years of the date of payout become the property of the French Treasury Department.
forM, holding and transfer of securities French regulations provide that AXA ordinary shares are not represented by share certificates but by book-entry only.
form may be transferred through accredited financial intermediaries and may be traded without further requirement. A fee or commission is payable to the broker involved in the transaction, regardless of whether the transaction occurs within or outside France. Normally, no registration duty is payable in France, unless a transfer instrument has been executed in France.
disclosure requireMents when holdings eXceed specified thresholds French law provides that any person or entity that, directly or indirectly, acting alone or in concert with other shareholders, becomes the owner of more than 5%, 10%, 15%, 20%, 25%, 33%, 50%, 66%, 90% or 95% of the outstanding share capital or voting rights of AXA (including through ownership of ADRs representing ADSs), or whose holding falls below any of these thresholds, must notify AXA and the AMF in writing within five trading days of exceeding or falling below the relevant level and indicate the number of ordinary shares and voting rights it holds.
If a shareholder (including an owner of ADRs representing ADSs) fails to comply with these notification requirements, the shareholder will be deprived of voting rights attached to the shares he holds (or underlying its ADRs) in excess of the relevant threshold at all shareholders’ meetings held until the end of a two-year period following the date on which the shareholder has complied with the notification requirements. Failure to comply with the notification requirements set forth in AXA’s statuts will trigger the same voting limitations upon a request, registered in the minutes of the relevant shareholders’ general meeting, by one or more shareholders holding 5% or more of the share capital.
Furthermore, any shareholder who fails to comply with these notification requirements may have all or part of its voting rights (with respect to all of its AXA shares, not only those in excess of the relevant threshold) suspended for a period of no longer than five years by commercial court decree at the request of the Chairman of the Management Board, any AXA shareholder or the AMF. Such shareholders may also be subject to criminal penalties under French law.
voting rights Each AXA ordinary share entitles its holder to one vote at all meetings of AXA shareholders, subject to the provisions concerning double voting rights described below. As a result of the decision of the General Meeting of the shareholders of the Company held on May 26, 1977, each ordinary share fully paid and held in registered form by the same person for at least two full fiscal years entitles its holder to double voting rights with respect to such ordinary share at any meeting of
AXA shareholders, whether ordinary or extraordinary. The double voting right will automatically terminate for any share that has been converted into a bearer share or for which ownership has been transferred. Any transfer of shares as a result of inheritance, division of community property by spouses or donation to a spouse or heir will not affect the double voting rights of such shares.
In the event of a capital increase by capitalization of existing reserves, profits or share premium, shares granted freely to any shareholder as a result of the holding by that shareholder of shares entitled to double voting rights will also carry double voting rights. Double voting rights may be terminated at any time upon the decision of an extraordinary general meeting of shareholders, provided that such decision is confirmed by a two-thirds majority of the holders of double voting rights voting separately.
liquidation rights If AXA is liquidated, the assets remaining after it pays its debts, liquidation expenses and all prior claims will first be used to repay AXA shareholders up to the amount of the liquidation balance and of the shares par value held by each shareholder. Any surplus will be divided among all shareholders, subject to rights arising, if any, from the different classes of shares, in duty proportion of the rights they own in the Company’s Capital share.
At least fifteen days (or six days if convened, in the event that the Company is subject to a tender offer, for purposes of approving measures the implementation of which would be likely to cause such tender offer to fail) prior to the date set for the meeting on first call, and at least six days (or four days if convened, in the event that the Company is subject to a tender offer, for purposes of approving measures the implementation of which would be likely to cause such tender offer to fail) before any second call, the Company shall send a final notice containing, among other things, the final agenda, place, date and other information in respect of the meeting by mail to all registered shareholders who have held shares for more than one month prior to the date of this final notice and publish this final notice in a newspaper as well as in the BALO.
Shareholders are convened, meet, and deliberate in accordance with applicable French law and AXA’s statuts. All shareholders are entitled to attend these meetings, either in person or by proxy, provided that they show valid proof of ID and share ownership. The right to attend the shareholders’
meetings of companies whose stock is traded on a regulated market or transactions of a central depository is evidenced by an accounting entry showing the number of shares in the name of the shareholder of record (or the intermediary of record for the account) in accordance with the seventh paragraph of Article L. 228-1 of the French Commercial Code, on the third business day preceding the meeting at midnight (Paris time), either in the nominee share ownership records kept by the Company or in the bearer share records kept by a qualified intermediary. The accounting registration or recording of the shares in the bearer share accounts on the books of the qualified intermediary is evidenced by a certificate of attendance delivered by the latter.
Shareholders may participate either in person, be represented by a spouse, another shareholder or the Chairman of the meeting, or, as provided for by the statuts and subject to approval by the Management Board, participate by videoconference or by any means of telecommunications allowing shareholders to be identified in accordance with applicable laws. In addition, a holder of bearer shares who is not a French resident may be represented at shareholders’ meetings by an appointed intermediary.
In accordance with applicable laws and regulations, shareholders may also transmit in paper form and/or, subject to approval by the Management Board published in the notice of Meeting, proxy or mail voting cards by electronic means.
anti-takeover provisions There are no French anti-takeover statutes similar to the anti-takeover statutes enacted by certain states in the United States. However, a number of French law provisions including certain provisions of the European Directive of April 21, 2004 concerning takeover bids implemented in France in 2006, may have certain anti-takeover effects. In the case of AXA, the relevant provisions include, among other things, the Company’s ability to repurchase its own shares regarding legal requirements and the existence of AXA shares with double voting rights.
French law requires mergers and certain consolidations to be approved by two-thirds of the shareholders present or represented at the extraordinary general meeting called to decide on such matters. French law also requires
the affirmative vote of the shareholders of the surviving corporation of a merger at an extraordinary general meeting. However, no general meeting of shareholders of the merged company is required in the case of a merger of a whollyowned subsidiary with its parent company.
convertible/eXchangeable bonds For information on convertible/exchangeable bonds and notes issued by the Company, see Note 13 “Shareholders’ Equity, Minority Interests and Other Equity” of the Consolidated Financial Statements included in this Annual Report as Part V.
APPENDIX XI cOMMiSSiON rEgulATiON OF APril 29, 2008 — cOrrESPONDENcE TAblE 474
For information on the conditions of preparation and organisation of the Supervisory board’s work please see Part iii — “corporate governance, executive compensation, major shareholders and related matters”, ”Supervisory board” and “Supervisory board committees” Sections of this Annual report.
INtRoDuCtIoN in accordance with article l. 225-68 of the French commercial code, the chairman of the Supervisory board has prepared the report below relating to the internal control procedures implemented by the company at group level. in this report, the term “group” refers to the company together with its direct and indirect subsidiaries falling into the scope of consolidation of the company.
The internal control system maintened by management and deployed by the various entities of the group, is designed to ensure, in particular, compliance with applicable laws and regulations, the reliability of financial information, and the monitoring of operations.
in this context, AXA has decided to adopt the “internal control — integrated Framework”, publicly known as cOSO (committee Of Sponsoring Organizations) of the Treadway commission, the name of the committee that designed this standard. This report is structured around various cOSO components, with a specific focus on controls in place over financial and accounting information.
CoNtRol ENVIRoNmENt The control environment is the basis of an internal control system. AXA therefore promotes the establishment of a disciplined internal control environment throughout the group, designed to ensure in particular that: — group strategy, operational objectives, reporting lines with subsidiaries and accountability for executing objectives are clear,
— AXA’s principal subsidiaries, whether traded on a public stock market or not, have appointed independent (non-executive) directors to their boards of directors and audit committees,
— formal guidelines are in place for all businesses and operations, in particular the group compliance and Ethics guide, anti-fraud and anti-money laundering policies,
The aim of AXA’s strategic planning process is to ensure coherent group wide strategies and action plans, and the three-year forecasts developed by the group’s main subsidiaries. Subject to various analyses and adjustments between group Management (Mb, group Strategic Plan Steering committee, group Management Services (gMS) teams, including group Strategic Planning (gSP) and business Support and Development (bSD)) and the entities, this process results in a consolidated forecast that is used as the basis for the group’s budget and forms the basis of the objectives contained in each operating unit’s annual target letter.
Each year, the principal operating business units of the group present the following information for each of their business segments (Property & casualty insurance, life insurance, asset management, banking), with a rolling three-year outlook: — analysis of business strategies and entity positioning, — quantitative targets (revenues, expenses, profitability, productivity and quality indicators) based on a central set of economic forecasts,
— specific information depending on the group’s priorities — Ambition 2012.
This process enables group Management to set targets that are consistent with its ambitions.
As indicated above, the group has a decentralized organization structured around seven business units.
in addition, the bSD teams collect and review all the relevant information concerning the business model, the market position or any other issue that may be of interest to the Management board. The bSD teams pass on specific information to facilitate and monitor the execution of the strategic plan.
bSD officers also sit on boards of directors of main entities, and are involved in major bu projects, such as acquisitions, partnerships and restructuring.
RISk ASSESSmENt AND mANAgEmENt A sophisticated risk management process has been put in place to ensure that the aforementioned objectives are met.
in preparation for individual meetings with the Management board, each business unit provides the board with formal quarterly information updates on its performance, operational questions that are specific to it, and transversal issues.
Hr enabling each employee to formalize his contribution to the strategic initiative Ambition 2012,
Qbrs also provide members of the Executive committee with regular and formal opportunities to meet and discuss the group’s strategic priorities for the years to come, to develop action plans and monitor their execution.
in addition, members of the Executive committee share their local achievements during these meetings, and efforts are made to encourage the reuse of winning practices and success stories in areas touching on the business as well as on its people.
Further, the Executive committee meeting is the venue for discussion on actions that need to be taken to optimize group operations.
The role of risk Management is to identify, quantify and manage the main risks to which AXA is exposed. To this end, the risk Management Department develops and deploys a number of risk measurements, monitoring instruments and methods, including a set of standardized stochastic modeling tools.
— grM conducts a decentralized review of risk-adjusted pricing and profitability for new products prior to launch; this review is centralized for variable annuity products with secondary guarantees, and submitted to the Management board,
— the asset/liability management policy, in place at operating unit level, is monitored and controlled through an annual detailed analysis of asset/liability matching. This work is undertaken to validate the strategic allocations of invested assets. in addition, a quarterly reporting process is used to monitor portfolio developments and detect deviations from strategic asset allocations as well as with respect to benchmarks determined with asset managers,
— economic capital is estimated annually for each product line and operating unit and then aggregated at the group level. This is one of the main uses of the stochastic modeling tools developed and implemented by the grM. This work enables asset, liability and operational risks to be modeled together,
— credit and concentration risks in the group’s asset portfolios (equities and bonds) are managed by the risk Management department and aggregated at the group level. grM also monitors the corresponding exposures on a monthly basis, and ensures that local operating units comply with the concentration limits established by the group.
Summary findings are then presented to the Management board, for decision-making purposes when appropriate. The Supervisory board and the Audit committee are also informed.
Property & casualty reinsurance policy is implemented by operating units with the help of AXA cessions, a reinsurance company fully dedicated to servicing group entities. Operating units define their needs on the basis of cost constraints and risk exposure reduction targets. with the main exception of facultative reinsurance operations that are ceded directly by entities to reinsurers, the majority of treaty reinsurance is ceded to AXA cessions. AXA cessions has state of the art expertise, particularly in carrying out analysis of the group’s exposure to catastrophic risks. its role consists also in organizing intra-group mutualization as well as the cession of some risks towards market reinsurers. AXA cessions manages re-insurer counterparty risk through a Security committee.
Several years ago, the group Audit Department set up a riskbased planning process for local internal audit teams. The aim of the risk-based planning process is to identify each entity’s risk exposure and to evaluate the internal control systems that have been adopted in order to prevent and/or limit the level of risks.
A dedicated organization, group iS Department, has been set up to handle iT risks: — group iS defines group iT strategy and policy, in particular in relation to information security and iT governance, — AXA Technology Services (AXA Tech) is responsible for supplying iT infrastructure service delivery (servers, storage, desktops and telecoms) for 80% of the group,
— the iT departments of local operating companies develop and maintain the software used in the business; 20% of them also manage their own iT infrastructures.
At group level, a dedicated team is responsible for defining standard regarding crisis Management and business continuity, and monitoring their implementation at local level. in 2007, crisis Management and business continuity issues faced by AXA entities have been reviewed and this has led the group team to develop a new (“second generation”) business continuity Maturity Model. The existing Standard for business continuity has been rewritten, taking into account crisis Management and crisis communication aspects, and the updated crisis Management & business continuity Standard is to be discussed and approved by the Management board in the course of 2008. Then, the updated Standard and the business continuity Maturity Model will be rolled out across the group in the second half of 2008.
For each of these areas, the priority missions are described as below: — support group strategy and develop a set of shared methods, such as the program conducted with AXA subsidiaries on service quality, the deployment of a methodology known as customer Value Management, and the identification of significant sources of growth,
— develop a set of key performance indicators, with the aim of measuring group and subsidiaries performance, in particular for customer and distributor satisfaction, as well as customer retention and distribution network performance,
The Management board approves group procurement strategy and is kept informed on its implementation status.
The role of the group’s Pbrc Department is described in detail in the paragraph “consolidation Management, reporting, and control over Financial and Accounting information”.
The group monitors internal frauds reported by entities on a semi-annual basis. The group internal Fraud Officer organizes annual training days for local Fraud Officers. in 2006, a groupled fraud assessment and review was conducted in the group’s major entities. in 2007, the entities reviewed their fraud risk assessments in light of new threats.
Financial commitments are monitored as part of the consolidation process, under which each subsidiary transmits information to the Pbrc (Plan budget résultat centrale).
The DcFg is organized in such a way as to separate the responsibilities of the team in charge of initiating derivatives transactions from those of the team in charge of controlling related risks. The latter is in charge of publishing detailed set of reports, allowing consolidating and controlling interest rate and foreign exchange exposures. Furthermore, derivative transactions are valued on a daily basis by the group, through an integrated trading, risk and operations management software. Valuations are individually checked with an external banking source on a semi-annual basis.
The Supervisory board’s Finance committee and the Management board are regularly informed by the cFO of major projects and changes relating to the management of the group’s consolidated financial position, and examine reports and forecasts periodically. These forecasts, together with sensitivity analyses which factor in extreme financial market swing scenarii, are also updated monthly and presented as part of the group Management performance indicators.
in addition, the Finance committee reviews the risk analysis methods, measurement standards and action plans that allow the group to maintain a solid financial position. it also determines the scope of action of the Management.
working in close collaboration with local finance teams, the DcFg (i) defines and manages subsidiaries’ capital adequacy, (ii) defines and manages the group’s liquidity policy, and (iii) coordinates and centralizes the group’s financing policy.
As part of the recurrent capital allocation process, each subsidiary sends periodic reports to the DcFg including actual and forecasted solvency positions, enabling the latter to verify the subsidiaries’ capital adequacy with respect to local regulatory constraints.
DcFg, through a significant amount of unused confirmed medium-term credit facilities maintained as a back-up at all times, and using long-term and mainly subordinated debt resources,
— “giE AXA Trésorerie Europe”, an inter-company partnership (giE), carries out centralized cash management for AXA operating units in the Euro zone, using group standards designed to ensure liquidity due to the profile of invested assets, particularly through the ownership of a significant portfolio of assets defined as eligible by the European central bank (Ecb),
The structure of financial resources and debt ratios are managed to ensure that they remain compatible with the group’s financial strength rating targets, even in adverse circumstances of rising interest rates, declining equity markets and falling profits. The structure of financial resources, as well as the repayment schedule and debt service costs, is managed on the basis of a three-year plan.
The group conducts an annual evaluation of the effectiveness of its internal control over financial reporting and its disclosure controls and procedures. This evaluation is designed to support annual certifications required to be filed with the united States Securities and Exchange commission (SEc) by AXA’s chief Executive Officer and chief Financial Officer under Sections 302, 906 and 404 of the uS SarbanesOxley Act (SOX). AXA is subject to SOX as a result of its listing on the New york Stock Exchange. For the year ended December 31, 2006, Management concluded that the design and operation of the group’s internal control over financial reporting were effective as of December 31, 2006 based on criteria established in cOSO and that the group’s disclosure controls ans procedures were also effective at that date.
Financial and accounting information is monitored in different ways depending on the medium used, with the aim of enhancing disclosures in both qualitative and quantitative terms: financial communication media (press releases, press and financial market presentations, etc.) information issued via these media is produced by the investor relations Department, and is intended to give a clear and intelligible overview of the group’s business and operations (e.g., earnings release, merger and acquisition, financing…). key announcements are reviewed and validated by the Finance Department and the legal Department prior to submission for approval to the Management board. Press releases concerning financial statements are reviewed by the Supervisory board. The External Auditors also review press releases concerning annual and half-year accounts closings.
The communications and Sustainable Development (cSD) Department defines the group policy and monitors its roll out worldwide in terms of internal communications, press relations (policy, tools and support), sustainable development, communications to individual shareholders and
corporate philanthropy. cSD has the necessary resources to release accurate, time sensitive and reliable information and to manage any image impairment risk. in addition, cSD ensures that information flows smoothly and is shared throughout the group. To achieve this aim, it uses a variety of media, including but not limited to, internet and intranet, document databases, periodic in-house publications, and relies on its internal correspondent network and information processes.
The Supervisory board and some of its specialized Subcommittees use regular self-assessment as a means to improve performance. The procedures used to evaluate the Supervisory board and its committees are described in the first section of this report. in accordance with the law, the Supervisory board exerts a permanent control on the Management board.
The internal audit profession has its own international organization, the institute of internal Auditors (iiA), which has drawn up a set of international standards governing practice. These standards have been recognized by regulators and adopted by the group Audit Department, for application globally.
AXA’s internal audit organization is structured around a central group Audit Department that coordinates and supervises the group’s overall internal audit process and capability, and internal audit teams set up within group subsidiaries. The group Audit Department operates mainly through: — management of internal audit teams within operating units, — strategic and transversal internal audit assignments.
The head of the group Audit Department reports to the chairman of AXA’s Management board (with a functional reporting line to AXA’s chief Financial Officer) and also has a direct and regular contact with the chairman of AXA’s Audit committee.
local internal audit teams are placed under the responsibility of a chief Audit Executive, who reports directly to the local chief Executive Officer or chief Financial Officer or a member of the local Executive committee, and also to the local internal audit committee. These local teams also have a reporting line to the group Audit Department.
— ensuring that adequate resources are made available to internal audit teams, and monitors on an annual basis the internal audit teams’ performance and coverage,
— carrying out strategic and transversal internal audits, which are intended to determine whether the local business management is effectively fulfilling their planning, organizational, governance and supervisory roles. These audit assignments are carried out exclusively in accordance with the written instructions of the chairman of the Management board.
local internal audit teams focus mainly on identifying the key risks facing their business units, and on evaluating the design and operation of associated controls.
Audit assignments generally culminate in a report with a set of recommendations for the audited unit or business. All internal Audit teams in the group report the major findings and action plans to their local executive management and their local Audit committee.
group Audit recommendations and related action plans are subject to regular monitoring, the results of which are submitted to the Management board and Audit committee for review.
local operating units develop AXA way projects with the support of an AXA way leader, and the sponsoring of a local chief AXA way Officer (who is also a member of the Executive committee). while these projects are carried out on the basis of the aforementioned group method, it is sufficiently flexible and can be adapted to take local issues into account.
have been set up and all AXA way teams are highly engaged to raise the service quality level for exceeding our customer expectations.
in late 2005, the cNil (commission Nationale de l’informatique et des libertés) adopted and published guidelines on whistle-blowing hotlines that set forth its position on the matter. AXA conducted a review of its own major incident reporting system to ensure compliance with the cNil guidelines.
The Pbrc (Planning, budgets, results and central) Department within the group Finance Department is responsible for consolidation, management reporting and control over financial and accounting information. it works with local Pbr units within the finance departments of group subsidiaries. Pbrc policies and procedures allow an adequate monitoring and supervision at the decentralized locations.
The subsidiaries are responsible for the consolidation and the control of the financial information produced in their consolidation sub-group whereas Pbrc reviews this information and produces the group’s consolidated financial statements and related summaries at group level.
The role of the Pbrc in this process is as follows: — upstream of the consolidation and control process, it is responsible for the information transmission system — comprised of the consolidation system, consolidation guidelines, reporting guidelines and guidelines for measuring embedded value — and for issuing instructions to subsidiaries,
— downstream of the consolidation and control process, it is responsible for reviewing financial and accounting information produced by subsidiaries, and for producing the various outputs, including the Document de référence,
— it is also responsible for monitoring and resolving technical accounting issues specific to the company and the entities.
The consolidation system is managed and updated by a dedicated team. Financial accounting data that comply with the group’s accounting standards and that reflect consolidation rules under iFrS accounting standards are entered into the system locally.
group accounting standards, which are consistent with accounting and regulatory principles for consolidated financial statements, are set forth in the AXA group consolidation guidelines. updated regularly by Pbrc experts, these guidelines are submitted to AXA’s independent auditors for review and validation before being made available to AXA subsidiaries.
Moreover, the review and analysis of financial and accounting information, which is consolidated using the aforementioned system and accompanied by comments from subsidiaries that make up the various consolidation sub-groups, are carried
Along with work relating to the preparation of financial statements, the Pbrc Department produces monthly activity reports, quarterly profitability reports and one half-year and two full-year sets of forecasts for internal use, and consolidates the financial data contained in the budget and the strategic plan. The Pbrc team and the statutory auditors identify risks and validate the proposed accounting principles and accounts closing options, working on both annual and half-year financial statements.
CoNCluSIoN by implementing the aforementioned structures of corporate governance and human resources, as well as the internal departments, procedures and standards described above, AXA has set up an internal control system that is considered as being adapted to the risks of its business.
Naturally, this system is not foolproof. However, it does constitute a robust control structure for a global organization such as AXA.
Report of the Statutory Auditors, prepared in compliance with the Article l.225-235 of the french Commercial Code, on the report prepared by the Chairman of the AXA Supervisory Board pertaining to the internal control procedures relating to the preparation and treatment of financial and accounting information
To the Shareholders of AXA 25, avenue Matignon 75008 Paris in our capacity as Statutory Auditors of AXA, and in compliance with the requirements of the Article l.225-235 of the French commercial code, we hereby submit our report on the report prepared by the chairman of the Supervisory board of your company pursuant to Article l.225-68 of the aforementioned code, for the year ended December 31, 2007.
we performed our procedures in accordance with professional standards applicable in France. These require us to perform procedures to assess the fairness of the information set out in the chairman’s report on the internal control procedures relating to the preparation and processing of financial and accounting information to prepare the consolidated financial statements in accordance with iFrS, as adopted by the European union. These procedures notably consisted of: — reviewing the internal control procedures pertaining to the preparation and treatment of accounting and financial information used to establish the consolidated financial statements in accordance with iFrS, as adopted by the European union, and underlying the information disclosed in the chairman’s report and in the existing documentation; — reviewing the work serving as the basis for the information and data provided in this report and the existing documentation; — Assessing if the potential material deficiencies of internal control procedures relating to the preparation and processing of financial and accounting information that we may have identified in the course of our mission are appropriately disclosed in the chairman’s report.
On the basis of these procedures, we have no matter to report in connection with the information contained in the report of the chairman of the Supervisory board, which was prepared in accordance with the requirements of Article l.225-68 of the French commercial code, relating to the internal control procedures applied within the company in connection with the preparation and treatment of accounting and financial information used to establish the consolidated financial statements in accordance with iFrS, as adopted by the European union.
AXA to hold today an investor conference on AllianceBernstein and AXA UK activities (06/21/2007)
(a) Press releases issued prior to May 10, 2007 were listed in the Annual information Document of AXA’s Fy 2006 Annual report.
Bulletin of Required legal Notices Publications (BAlo) www.journal-officiel.gouv.fr 2006 Annual Financial Statements before Shareholders’ Meeting (04/25/2007)
Extract of the minutes of the Shareholders’ Meeting of 05/14/2006 regarding the appointment of new members of the Supervisory Board (06/18/2007)
Extract of the minutes of the Shareholders’ Meeting of 05/14/2006 regarding the modifications of the Bylaws (06/04/2007)
Extract of the minutes of the Management Board of 07/16/2007 regarding the increase of the share capital (07/26/2007)
Extract of the minutes of the Management Board of 11/28/2007 regarding the increase of the share capital (12/07/2007)
Documents at the disposal of the Shareholders Headquarters of the Company 25, avenue matignon 75008 Paris — france ordinary and Extraordinary general meeting — may 14, 2007
A copy of the “BALO” dated April 6, 2007 and a copy of a Legal Advertisement Newspaper “La Gazette du Palais” dated April 7, 2007 containing the Notice of Convening
The Supervisory Board comments on the Management Board Report and on the 2006 financial statements
Disclosure of trading in the Company’s shares by members of the management Board and the Supervisory Board 01/03/2007 Kip Condron 09/25/2007 Jacques Tabourot 01/12/2007 Kip Condron 09/28/2007 Henri de Castries 01/25/2007 Léo Apotheker 10/01/2007 François Pierson 02/23/2007 Norbert Dentressangle 10/01/2007 Denis Duverne 02/27/2007 Norbert Dentressangle 10/12/2007 Henri de Castries 03/26/2007 Alfred Bouckaert 10/30/2007 Jacques Tabourot 03/26/2007 Kip Condron 11/15/2007 Denis Duverne 03/29/2007 Kip Condron 11/28/2007 Henri de Castries 03/29/2007 Alfred Bouckaert 11/28/2007 Kip Condron 04/21/2007 Denis Duverne 11/28/2007 Alfred Bouckaert 04/21/2007 François Pierson 11/28/2007 Claude Brunet 04/21/2007 Henri de Castries 11/28/2007 Denis Duverne 04/21/2007 Claude Brunet 11/28/2007 Claude Bébéar 05/09/2007 Jacques Tabourot 11/28/2007 Jacques Tabourot 06/14/2007 Denis Duverne 12/14/2007 Claude Bébéar 06/15/2007 Claude Bébéar 12/14/2007 Denis Duverne 07/02/2007 François Pierson 12/14/2007 Henri de Castries 08/10/2007 Norbert Dentressangle 12/17/2007 Denis Duverne 09/06/2007 Denis Duverne 12/17/2007 Claude Brunet 09/20/2007 Claude Brunet 12/17/2007 Henri de Castries 09/24/2007 Denis Duverne 02/08/2008 Claude Bébéar 09/24/2007 Henri de Castries 03/14/2008 François Pierson
From April 2 to April 3, 2007 From August 20 to August 24, 2007
From April 16 to April 20, 2007 From August 27 to August 31, 2007
From April 23 to April 27, 2007 From September 3 to September 7, 2007
From April 30 to May 4, 2007 From September 10 to September 14, 2007
From May 7 to May 11, 2007 From September 17 to September 21, 2007
From June 4 to June 8, 2007 From September 24 to September 27, 2007
From August 9 to August 10, 2007 On November 19, 2007
From August 13 to August 17, 2007 On December 28, 2007
Information published over the previous 12 months where the information can be obtained
Disclosures of share ownership thresholds www.amf-france.org official public notice of shareholders’ agreement clauses www.amf-france.org -
Press Release issued on November 13, 2007 by AXA, announcing the investor conference on Ambition 2012 to be held on November 13, 2007 form 6-k for january 2008: Press Release issued on January 31, 2008 by AXA, announcing its full year 2007 activity indicators form 6-k for february 2008: Press Release issued on February 28, 2008 by AXA, announcing its consolidated earnings for the full year 2007
Statement of the person responsible for the Annual Report (Document de Référence)
PERSoN RESPoNSIBlE foR fINANCIAl INfoRmAtIoN Denis Duverne Member of the Management board, group chief Financial Officer
Membership in a professional body: Pricewaterhousecoopers Audit is registered as an independent auditor with the compagnie régionale des commissaires aux comptes de Versailles.
AltERNAtE AuDItoRS mr. Patrick frotiée: 63, rue de Villiers — 92208 Neuillysur -Seine, first appointed on May 17, 1995. The current appointment is for a term of 6 years, until the Annual general Meeting of the shareholders called to approve the financial statements for the fiscal year 2011.
Statutory audit and certification examination of local and consolidated financial statements
Other diligences and services directly related to the statutory auditors’ mission 4,521 5,718 8% 10% 296 355 4% 7%
Capitalization of reserves, earnings or premiums — 1 billion (a) 26 months July 14, 2009
Ordinary shares and other securities granting a claim to shares of the Company through subscription, conversion, exchange, redemption, presentation of a warrant or otherwise (d) 6 billion (b) 1.5 billion (c) 26 months July 14, 2009
Shares or other securities giving access to the capital, reserved for employees
(a) independent ceiling. (b) The aggregate nominal value of debt instruments associated with the issue of securities with or without preferential subscription rights may not exceed the global upper limit of e6 billion. This upper limit is separate and distinct from the amount of the securities that give the right to grant debt securities with no claim to the share capital of the company (ceiling of e2 billion).
(c) The aggregate nominal value of the capital increase with or without preferential subscription rights may not exceed the global upper limit of e1.5 billion. (d) including the issue of ordinary shares or securities for up to 10% of the share capital in accordance with the terms and conditions determined by the Shareholders’ Meeting of May 14, 2007, in the event of a public offer initiated by the company, in consideration for contributions in kind for up to 10% of the share capital, or as result of a securities issue by subsidiaries of AXA.
(e) At the date of the Shareholders’ Meeting of April 20, 2005. (f) Existing shares and/or issued shares. (g) At the date on which restricted shares are granted by the Management board. (h) At the date on which options are granted by the Management board.
Performance shares (actions gratuites) 1% of the share capital (a) 38 months June 22, 2011
Shares or other securities giving access to the capital, reserved for employees 100 million (c) 18 months October 22, 2009
(a) At the date on which performance shares are granted by the Management board. (b) At the date on which options are granted by the Management board. (c) common ceiling.
New mutual funds with direct voting rights have been created to allow beneficiaries, in most cases, to directly exercise their voting rights at AXA’s Shareholders’ Meeting.
The Shareplan 2007 program was carried out through a share issue that took place in November and was open to all group employees in 36 countries through voluntary contributions.
Approximately 44,000 employees in 36 countries took part in Shareplan 2007, and participating employees invested a total of approximately e552 million (versus e375 million invested in November 2006), as follows: — e74 million in the traditional plan (versus e51.8 million in
November 2006); — e478.3 million in the leveraged plan (versus e323.7 million in November 2006).
Stock options in 2007, by virtue of the authorization granted by the shareholders at the Annual general Meeting of April 20, 2005 (26th resolution), 9,745,234 stock options giving the right to their beneficiaries to subscribe new AXA ordinary shares have been granted by the AXA Management board.
Performance / restricted shares in 2007, by virtue of the authorizations granted by the shareholders at the Annual general Meeting of April 20, 2005 (25th resolution) and May 14, 2007 (24th resolution), 6,369,332 performance / restricted shares have been granted by the AXA Management board (i.e. 782,432 shares by virtue of the 2005 authorization and 5,586,900 shares by virtue of the 2007 authorization). No later than at the end of the acquisition period of the shares, which can be 2009 or 2011 depending on the country of its beneficiary, the AXA Management board will decide whether these performance / restricted shares are existing or newly issued AXA shares.
The income received from financial subsidiaries came to €134 million, down €58 million, including €92 million linked to compagnie Financière de Paris, which paid out in 2006 an exceptional dividend of €121 million. On the other hand, the dividend paid by AXA investment Managers reached €73 million, compared to €26 million in 2006, reflecting its earnings’ increase.
Net financial expenses, including interest expenses net of interests from loans and investments, totaled €538 million, compared to €334 million in 2006.
financial income increased by €149 million to €450 million: — income from loans and receivables grew by €102 million, €50 million of which were attributable to the interests on the loans taken on by AXA SA and initially granted by the crédit Suisse group to winterthur subsidiaries, and €52 million to the new loans granted to subsidiaries to finance their development.
— The €100 million increase in income from swaps, was essentially driven by the derivative instruments used to hedge net investments in foreign subsidiaries. The company benefited both from an increase in Euro interest rates on swaps’ receiving legs and from depreciation in the uS Dollar, which reduced its borrowing costs, as well as from an increase in its debts denominated in foreign currencies with interest rates more favourable than the Euro one, such as in yen.
— conversely, income from cash holdings fell by €55 million. During 2006, the company received €106 million financial income on proceeds from winterthur financing, between the date of issuance, and the closing date. This was partially offset by a surplus cash position averaging €1.5 billion in 2007, which generated €40 million in net treasury income.
interests on the perpetual deeply subordinated notes increased by €192 million owing to the issuances completed during the second half of 2006 to finance the acquisition of winterthur and to issues of £700 million and €750 million during 2007. in addition, the loans granted by subsidiaries to the company generated €61 million of additional financial charges.
lastly, interest payments on commercial paper grew by €70 million as a result of an average outstanding amount higher by €1.5 billion in 2007, and the rise in short term interest rates.
operating charges came to €232 million, up €42 million, owing primarily to initiatives taken to by the group to promote its brand, notably following the winterthur acquisition.
The net gain on capital operations, which stood at €421 million in 2006, came to €318 million in 2007, broken down as follows: — Net foreign-exchange gains of €564 million, versus €533 million in 2006, owing principally to the renewal of net foreign-currency investment hedges, which matured during the financial year and in respect of which AXA SA benefited from a more favorable exchange rate vis-à-vis the Euro, giving rise to a €480 million gain. in addition, hedging of the 2007 earnings made by the group’s consolidated units against currency fluctuations generated a gain of €105 million net of the cost of these protections, which were implemented through currency options.
— Allowances to provisions for contingent liabilities amounted to €287 million, well up from €104 million in 2006, and primarily comprised the annual allowance of €92 million for redemption premiums on bond issues, as well as a financial provision of €159 million reflecting the negative mark-to-market of an equity swap negotiated with another subsidiary of the group covering an equity portfolio.
— Allowances to provisions for financial investments amounted to €112 million, including €103 million related to AXA rE given the exceptional dividend payment.
— Net exceptional items amounted to €155 million and notably comprised a charge of €149 million arising from the repurchase in January 2007 of the option to convert the convertible bonds maturing in 2014 in order to eliminate the potentially dilutive impact of these bonds.
The net income tax benefit amounted to €40 million, compared with a loss of €46 million in 2006. This change was related principally to an increase of financial charges and to a reduced taxation of unrealized foreign exchange differences at year-end 2007.
— AXA SA increased its investment in AXA investment Managers by €118 million through notably the buy-out of the shares in the latter owned by AXA Nederland,
— in connection with the restructuring measures carried out following the acquisition of winterthur in 2006, the company sold some AXA Holding Japan shares to winterthur life for a €488 million book value.
— offset in part by an increase in shareholders’ equity of €707 million, including €552 million through the issue of shares to employees of the group, Shareplan, and €144 million through the exercise of stock options.
other shareholders’ equity includes perpetual deeply subordinated notes, which amounted to €6,323 million compared to €4,824 million in 2006, representing an increase of €1,499 million. To finance the repayment of maturing borrowings, two new perpetual deeply subordinated notes were issued during 2007 for €750 million and £700 million, representing a total amount of €1,755 million. in addition, positive currency effects came to €309 million.
The €937 million in other payables principally included a current account advance of €790 million vis-à-vis winterthur Swiss insurance company in connection with the acquisition of Hispanowin shares, plus €122 million in accrued expenses.
The amount available for the appropriation of 2007 earnings comprises: — net income for the year €1,765,325,129 — allocation to retained earnings €713,797,107 representing a total for appropriation of: €2,479,122,236
The Management board proposes that this amount be appropriated as follows: — dividend €2,472,904,190 — allocation to retained earnings €6,218,046
The corresponding dividends on the shares owned by the company at the time of the dividend payment, if any, will be allocated to retained earnings.
Unrealized foreign exchange gains 1,117 663 461 totAl lIABIlItIES AND SHAREHolDERS’ EQuIty 55,608 51,707 41,521
Other expenses oPERAtINg PRofIt (III = I + II) 1,407 1,057 1,041
III. NEt INComE foR tHE fINANCIAl yEAR VI + VII +VIII 1,765 1,433 1,137
01/01/2003 12/31/2003 01/01/2004 12/31/2004 01/01/2005 12/31/2005 01/01/2006 12/31/2006 01/01/2007 12/31/2007 1 — CloSINg BAlANCE SHEEt SummARy b) Ordinary shares (numbers in million) 1,778 1,908 1,872 2,093 2,061 c) Bonds convertible into shares (numbers in million) 126 16 16 16 7 (a)
(a) Since January 2007, only the AXA’s 2017 bonds can still be converted (6.6 millions bonds as at December 31, 2007). in order to neutralize the dilutive impact of the 2017 convertible bonds, AXA has purchased from a banking counterparty, for a total cash amount equivalent to the payment proposed to “bondholders 2017”, call options on the AXA shares with an automatic exercise feature. This feature is such that one option is automatically exercised upon each conversion of a convertible bond. consequently, each issuance of a new share resulting from the conversion of a bond will be offset by the delivery by the bank to AXA (and subsequent cancellation) of an AXA share; the issuance of a share in respect of the conversion of the bond and the cancellation by AXA of the AXA share received will offset each other.
from 01/01/2007 to 12/31/2007 from 01/01/2006 to 12/31/2006 from 01/01/2005 to 12/31/2005
A. DEtAIlED INfoRmAtIoN CoNCERNINg SuBSIDIARIES AND INVEStmENtS ACCouNtINg foR IN EXCESS of 1% of AXA’S SHAREHolDERS’ EQuIty 1) Subsidiaries (at least 50%-owned)
AXA CANADA (b) 2020 rue University — MONTREAL — QUEBEC H 3A 2A5
AXA gENERAl INSuRANCE HoNg koNg 30th F, Hong Kong Telecom Tower, Taikoo Place, 979 King’s Road QUARRY BAY — HONG KONG
AXA uk PlC (b) 5 Old Broad Street London EC2N 1AD
AXA mEDItERRANEAN HolDINg Calle monseñor Palmer numéro 1 — PALMA DE MALLORCA
(a) For insurance companies: gross written premiums. For real estate companies: rental revenues. For holding companies: dividends. For financial services companies: gross banking revenues.
CIE fINANCIÈRE DE PARIS 137, rue Victor Hugo — 92687 LEVALLOIS-PERRET
AXA oyAk HolDINg AS Meclisi Mebusan caddasi n 81 Oyak hann — Salipazari 80040 — ISTANBUL
VINCI B.V. Graadt van Roggenweg 500 — Postbus 30800 3503 AP UTRECHT — PAYS-BAS
AXA tECHNology SERVICES Les collines de l’Arche — 76 route de la Demi-lune — 92057 PARIS LA DéFENSE
BAo mINH INSuRANCE CoRPoRAtIoN 26 Ton That Dam, Districk 1, Ho Chi Minh City — VIETNAM
AXA SA has applied crc regulation 2000-06 relating to liabilities since January 1, 2002. Application of this regulation has had no impact on the company’s financial statements.
AXA has applied regulations 2002-10 relating to depreciation and amortisation of assets since January 1, 2005, as amended by crc regulation 03-07, and 2004-06 relating to the definition, recognition and measurement of assets. Application of this regulation has had no impact on the company’s financial statements.
Financial assets are represented by (i) subsidiaries and affiliates plus related receivables and (ii) other financial assets and loans.
Securities are classified using the following criteria: — investments in subsidiaries and affiliates are securities representing at least 10% of the share capital of the issuing company plus those which AXA deems held for the long term.
Treasury shares acquired through a liquidity contract and the share buyback program is classified as “Other investments”, as are mutual fund units acquired through the liquidity contract.
The statement of income distinguishes between ordinary operations and capital operations. — Ordinary operations include dividends, income from other investments, financial expenses, operating expenses and income from transactions in investments.
— Disposals of investments in subsidiaries and affiliates are measured using the weighted average unit cost method.
To improve the transparency of the financial statements, charges and releases of provisions for exchange rate risk are recognised under translation variance; similarly, charges and reversals of provisions for tax repayment risk are recognised directly under tax.
2.4 Intangible assets intangible assets totalled €322 million. They mainly included the AXA brand contributed by FiNAXA as part of the merger in 2005 and valued at €307 million based on brand royalties billed to group subsidiaries and to the Mutuelles AXA.
Financial assets are measured at acquisition cost or transfer cost. At the balance sheet date, the acquisition cost is compared with the fair value, and the lower of these two values is then recognised in the balance sheet.
The fair value of investments in subsidiaries and affiliates is their going concern value for the firm. This may be determined as a function of either the share price or equity, including unrealised gains, and prospects for the subsidiary.
of the European Embedded Value of the life, Savings and Pensions businesses published by the group, or similar calculations for other activities. For other investments, the fair value is the share price for listed securities and the likely trading value for unlisted securities.
2.6. Receivables receivables are measured at nominal value. An impairment provision is charged in the event of risk of non-recovery.
At the balance sheet date, the acquisition cost is compared with the fair value, which is the realisable value, for SicAV and FcP mutual funds, and with the average share price in the last month before the balance sheet date for other securities.
On January 11, 2007, the meetings of holders of AXA’s 2014 and 2017 convertible bonds were held to vote on an amendment of the final conversion dates of the bonds to January 26, 2007 in exchange for a cash payment in respect of the value of the conversion option. The general Meeting of 2014 convertible bondholders accepted the amendment. As a result, holders who did not convert their bonds by January 26, 2007 received €16.23 per bond on January 31, 2007. The payment by AXA SA amounted to €149 million and was recognized through the income statement. The general Meeting of 2017 bondholders did not approve the amendment. As a result, to fully neutralise the dilution impact of the 2017 convertible bonds, AXA bought call options on AXA shares with an automatic exercise mechanism from a bank counterparty for a total cash amount equivalent to the payment proposed to bondholders. This €96 million premium is spread over the residual ten-year term of the bond.
For the purpose of discounting benefit commitments, additional provisions have been recognised to cover future retirement benefit obligations and post-retirement benefits. The value measured has given rise to an adjustment of the provision, the total value of which is posted to the balance sheet as a liability, amounted to €21 million at December 31, 2007.
A translation variance asset relating to a debt which is hedged by the purchase of a currency future does not give rise to recognition of a provision. The same is done true for loans which are hedged from origination through exchange rate swaps. if a loan or borrowing generates an unrealized translation loss, but is hedged, a provision for unhedged risk is registered.
(a) Of which: — Acquisition from winterthur Swiss insurance company of 100% of Hispanowin, winterthur’s Spanish holding company, for €1,584 million. — €118 million increase in investment in AXA investment Managers, in particular by purchasing shares owned by AXA Nederland. — €111 million capitalisation of AXA life Europe.
(b) Of which: — Purchase by winterthur Swiss insurance company of a share of its own stock for a €367 million book value. — Sale of AXA Holding Japan shares to winterthur life, the net book value of which was €488 million. (c) Of which €264 million increase in AXA shares, mainly intended to cover share-based compensations plans , and €153 million relating to bonds, of which €82 million in respect of securitisation of a pan-European portfolio of individual motor insurance. (d) Of which €499 million in repayment of the short-term advance to giE AXA Trésorerie.
gross value less than 1 year 1 to 5 years more than 5 years
Subsidiaries’ current accounts 86 totAl 337 3.5. Expenses payable over more than one period
This mainly comprises €45 million of translation variance recognised on loans in foreign currencies.
(a) cancellation of 63 million AXA shares with a value of €1,899 million under the share purchase program aimed at controlling dilution resulting from share-based compensations and employees’ Shareplan progam.
Other equity amounts to €6,323 million, compared with €4,824 million in 2006.
Value at December 31, less than one year more than 5 years
Other payables (b) and tax and social security liabilities 937 937 —
(a) remaining capital to be called up (b) Of which €790 million of current account in respect of winterthur Swiss insurance company for the acquisition of Hispanowin shares, and €122 million of expenses payable.
unrealized foreign exchange gains amounted to €1,118 million in 2007, compared with €663 million at December 31, 2006. This account is the matching item for exchange rate gains arising from the revaluation of foreign-currency denominated liabilities and receivables at the balance sheet date exchange rate. This account shows an increase compared with the prior period, which is mainly due to the euro’s appreciation against the dollar. These are unrealized gains representing the foreign currency position at the balance sheet date; they are not recognized through the income statement, in accordance with accounting regulations.
— Directors’ fees €1,100 k — Other remuneration (net of rebilling) €5,800 k
4.2 Income tax income tax amounted to €40 million, compared with an expense of €46 million in 2006. This movement was mainly due to a rise in financing expense and lower tax on translation variance unrealized at the 2007 balance sheet date.
Notional value (Commitments given) market value financial futures instruments foreign exchange forward 209 (3)
Financial income €2,341 million by virtue of its business, AXA SA is mainly exposed to interest rate and exchange rate risk in financial markets. The table below shows an estimate of changes in the fair value of debt, loans and hedging instruments in the event of a 1% rise in the interest rate curve or a 10% depreciation of the euro.
(a) 10% depreciation of the euro. (b) External debt (excluding intra-group debt) before hedging.
(c) loans are net of internal refinancing. (d) both eligible and ineligible derivatives under iFrS. (i) A 1% rise in interest rates leads to a 4.5% decrease in the fair value of debt, a 2% increase in the fair value of loans, and a 15.8% rise in the fair value of derivatives. (ii) A 10% depreciation of the euro leads to a 3.8% increase in the fair value of debt, a 4.5% increase in the fair value of loans and a 129.7% decrease in the fair value of derivatives. The information on fair value presented above should be used with care — Since these estimates are based on the use of measurements such as interest rates and spreads at the balance sheet date; such measurements may fluctuate over time. — And because there are a number of possible ways to perform these calculations.
The above mentioned financial statements are the responsibility of the Management board. Our role is to express an opinion on these financial statements based on our audit.
I —opinion on the Company’s financial statements we conducted our audit in accordance with the professional standards applicable in France, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. we believe that our audits provide a reasonable basis for our opinion.
The assessments were made in the context of our audit of the financial statements, taken as a whole, and therefore contributed to the formation of our opinion expressed in the first part of this report.
III — Specific verifications and information in addition, we have carried out specific verifications required by law, in accordance with the professional standards applicable in France.
— the fairness of the information provided in the Management board report on compensation and benefits paid to AXA executives, as well as commitments made to them when they assumed, changed or ceased to exercise their duties, or thereafter.
As required by law, we have verified that the information pertaining to equity and controlling interests of the company and to the identity of owners of equity interest in the company has been duly disclosed in the aforementioned Management board report.
Life & Savings EEV of acquired / disinvested business 131 (470) (340)
change is on a comparable basis: at constant exchange rates, methodology and scope.
AXA publishes EEV only for its life & Savings business. The value can be considered in two pieces, 1) “Adjusted Net Asset Value” (ANAV) which measures the current balance sheet wealth, 2) “Value of inforce” (ViF) which measures the present value of future shareholder profits for business currently in the portfolio, adjusted for the cost of holding capital that can not be distributed while the business is in force.
one year to the next. life & Savings EEV does not include any value for future sales.
“life & Savings Annualized Premium Equivalent” (APE) is a measure of new business volume which includes sales of regular recurring premium business at 100% but sales of single premium business at only 10%. The “APE Margin” is the ratio of NbV to APE.
“life & Savings Present Value of Expected Premium” (PVEP) is a measure of new business volume which includes the present value of the future premiums expected to be received over time for business sold in the current year. The “PVEP Margin” is the ratio of NbV to PVEP.
The group EV can be reconciled to life & Savings iFrS Shareholder’s equity as follows (in Euro million): Euro million — group share life & Savings other than life & Savings total
Net unrealized capital gains not included in Shareholders’ equity 683 1,394 2,077
The life & Savings ANAV is derived by aggregating the local regulatory (statutory) balance sheets and reconciling with the life & Savings iFrS shareholders’ equity on the following main adjustments: — Addition of unrealized capital gains/losses not included in
Shareholders’ equity, — Elimination of the value of intangibles, — Subtraction of unrealized capital gains included in the projection of future cash flows (ViF), — Adjustment for the differences between AXA’s consolidated accounting basis and local regulatory bases.
Adding the life & Savings ViF to the life & Savings ANAV completes the life & Savings EEV.
The Tangible Net Asset Value (“TNAV”) for other-than-life business is reflecting the consolidated iFrS shareholders’ equity adjusted for the elimination of all intangible assets and all debt (TSS/TSDi) that are treated as equity in iFrS.
The group EV equals the life & Savings EEV plus the Other business TNAV.
The life & Savings ViF calculation by its nature involves many assumptions about the future. For life & Savings EEV, AXA has adopted a “market-consistent” approach to setting asset return assumptions. Each cash flow is discounted at an appropriate discount factor, so that starting with Euro 1 of bond or of equity, projecting expected cash flows, and discounting, will simply give Euro 1 of value. Mechanically, this can be described in a short-cut as assuming that all assets will earn the risk-free rate defined by the current market in the future. However, cash flows are projected not only in a single scenario, but rather a stochastic set of scenarios is created, with the set maintaining the market-consistent condition that Euro 1 of any asset projected into the future gives a present value of Euro 1. Future earnings available to shareholders are assessed across this range of stochastic scenarios, with the present value being the life & Savings ViF. Our major assumptions include: — Actuarial assumptions reflect best estimates based on recent experience.
— No productivity gains are assumed in future expenses, while future inflation averaging 2.2% was assumed in 2006 and 2007.
— A weighted average tax rate of 33.4% in 2006 and 32.4% in 2007.
Separate iDrs are calculated for the total inforce portfolio at the end of the year and the new business sold during the year: VIf IDR
in addition to providing a comparison basis to other valuation techniques, the ViF iDr for 2006 also provides an element of the movement analysis between 2006 and 2007.
The following table presents an analysis of the movement of life & Savings EEV between 2006 and 2007: Euro million — group share life & Savings EEV
Change in investment assumptions total Return on life & Savings EEV 5,009
operating performance from existing business considers the movements in EEV related to the business inforce at the beginning of the year, excluding the investment impacts that are shown below. The total operating performance of E2,457 million is analyzed in several components: — Expected return on VIf + Required capital (unwind of
— Expected return on surplus of E90 million is the expected after-tax profit on surplus assets (using the illustrative real world investment scenarios used to calculate iDr for the prior year) in excess of those supporting the ViF. The expected return is not large because (i) AXA generally does not retain large free surplus balances within its life & Savings operations and (ii) the expected return on surplus is lower than the iDr.
2007 New Business Value of E1,772 million reflects the strain (first year loss) and ViF impacts described above.
Current year investment experience of E781 million includes (i) the variance in experience during 2007 from that expected in the illustrative real world investment scenario at the end of 2006, and (ii) the change in value created by reflecting year-end 2007 yield curves and investment conditions in the EEV rather than those of year-end 2006.
total Return on life & Savings EEV before currency effects and capital flows of E5,009 million combines the Operating return with the investment impacts. it represents 13% of the Opening life & Savings EEV.
Capital flows of E—1,645 million reflect net transfers out of the life & Savings segment in 2007 including dividends paid, received and capital injections.
Closing life & Savings EEV of E38,490 million is the total value at the end of the year, representing the prior year balance plus opening adjustments, plus Total return, plus capital flows, plus EEV of acquired/disinvested business and the exchange rate impact.
The following table provides an analysis of movement of the group EV between 2006 and 2007: Euro million — group share life & Savings EEV
other business tNAV total group EV = life & Savings EEV + other Business tNAV at 12/31/06 38,390 (2,758) (a) 35,632
Adjusted opening group EV = life & Savings EEV + other Business tNAV 37,501 (1,942) 35,559
(b) Other business operating return = underlying earnings (E2,293m) + normative 4.5% capital growth on equity investments (E448m) — Net interest charge on TSS & TSDi (E290m) + elimination of expense for equity-settled share based compensation (E127m).
Estimated upward parallel shift of 100 bp in reference interest rates 318 230
10% higher value of equity markets at start of projection 1,594 45 10% lower value of equity markets at start of projection (1,639) (53)
Overall and permanent decrease of 10% in expenses 1,164 103 5% lower mortality rate for annuity business (158) (2)
Upward parallel shift of 25% of the volatility on equity markets (746) (107)
An independent actuarial consultancy, Tillinghast, was hired by AXA to perform a review on the life & Savings EEV, and has issued the following statement of opinion: “Tillinghast, the insurance consulting business of Towers Perrin, has assisted AXA in developing the methodology and has reviewed the assumptions used in the life & Savings European Embedded Value (EEV) at December 31, 2007, and the 2007 life & Savings New business Value (NbV) for the principal life operations of the AXA group. Our review included the analysis of movement in embedded value from December 31, 2006, and the sensitivities shown above.
Tillinghast has concluded that the methodology and assumptions comply with the EEV Principles. in particular: — The methodology makes allowance for the aggregate risks in the covered business through the market consistent methodology described in Section V of the EEV report, which includes a stochastic allowance for the cost of financial options and guarantees; — The operating assumptions have been set with appropriate regard to past, current and expected future experience; — The economic assumptions used are internally consistent and consistent with observable market data; and
— For participating business, the assumed bonus rates, and the allocation of profit between policyholders and shareholders, are consistent with the projection assumptions, established company practice and local market practice.
The methodology and assumptions used also comply with the EEV guidance (noting the disclosed exception concerning the treatment of affiliated investment management companies, where the value of their profits for managing assets for the life & Savings segment are not included in the life & Savings EEV).
Approval of the company’s financial statements for 2007 — parent only
Earnings appropriation and declaration of a dividend of €1.20 per share fourth resolution
Approval of the Auditors’ Special report on regulated agreements fifth resolution
Appointment of Mr. Francis Allemand to serve as a member of the Supervisory board, upon the recommendation of the employee shareholders of the AXA group
Appointment of Mr. gilles bernard to serve as a member of the Supervisory board, upon the recommendation of the employee shareholders of the AXA group
Appointment of Mr. Alain chourlin to serve as a member of the Supervisory board, upon the recommendation of the employee shareholders of the AXA group
Appointment of Mr. Hans Nasshoven to serve as a member of the Supervisory board, upon the recommendation of the employee shareholders of the AXA group twelfth resolution (Not approved by the management Board)
Appointment of Mr. Jason Steinberg to serve as a member of the Supervisory board, upon the recommendation of the employee shareholders of the AXA group fourteenth resolution (Not approved by the management Board)
Appointment of Mr. Andrew whalen to serve as a member of the Supervisory board, upon the recommendation of the employee shareholders of the AXA group fifteenth resolution
Authorization granted to the Management board to allot free shares to employees and eligible corporate officers of the AXA group
Authorization granted to the Management board to allot stock purchase and/or stock subscription options to employees and eligible corporate officers of the AXA group
The first items on the agenda pertain to the approval of AXA’s parent company (first resolution) and consolidated (second resolution) financial statements. AXA’s parent company financial statements for the year ended December 31, 2007 show a profit of 1,765 million euros, compared with 1,433 million euros for the year ended December 31, 2006, which is an increase of 23%. The consolidated financial statements for fiscal year 2007 show net income group share of 5,666 million euros, compared with 5,085 million euros for the preceding fiscal year, which is an increase of 11.43 %. For more information on AXA’s financial statements for 2007 and on the business of the company during the 2007 fiscal year or since January 1st, 2008, please refer to the Management board report that is included in the 2007 Annual report (Document de référence) filed with the AMF (Autorité des marchés financiers) which is available, in accordance with applicable legislation, in particular on AXA’s website (www. axa.com).
The proposed dividend entitles eligible recipients to the 40% tax relief set forth in paragraph 2°, of Article 158.3 of the French general Tax code (code général des impôts). it applies to natural persons resident in France for tax purposes, and it amounts to 0.48 euros per share. As a reminder, Article 117 quater of the French general Tax code, as it results from the 2008 Finance Act, provides that natural persons who are French residents for tax purposes, and whose income is eligible for the 40% tax relief may, barring certain exceptions, opt to have an 18% flat deduction at source, calculated on the basis of the gross amount of income received.
Exercising the option for a flat deduction at source is binding and have to be renewed at each payment. However, the aforementioned option leads to the loss of the 40% tax relief mentioned above, of the lump-sum abatement of 1,525 euros or 3,050 euros, depending on marital status, and of the tax credit ceiling on other distributions that the natural person has received in the course of the same calendar year.
The flat deduction at source, which is done immediately, is paid by the institution in charge of payment within the first two weeks of the month following the date of the dividend payout. The welfare taxes (cSg, crDS and welfare deduction) due by the persons who are French residents for tax purposes are in any case paid at the date of the dividend payout.
Pursuant to the relevant provisions of Article 243 bis of the French general Tax code, the table below summarizes dividend payout information, with and without the 40% tax relief, in the previous three fiscal years.
(a) This amount of distributable dividend entitled the natural persons resident in France for tax purposes to a 50% tax relief. This dividend payout was made in 2005. (b) This amount of distributable dividend entitled the natural persons resident in France for tax purposes to a 40% tax relief. This dividend payout was made in 2006. (c) This amount of distributable dividend entitled the natural persons resident in France for tax purposes to a 40% tax relief. This dividend payout was made in 2007.
in the fourth resolution, you are being asked to approve the special report of the Statutory Auditors on the so-called regulated agreements. it is specified under this resolution that no new regulated agreements were entered into in fiscal year 2007. There are three agreements that were authorized in years prior to 2007 that remained in force in 2007: they are the shareholders agreement with the Schneider group on the maintenance of cross-shareholdings, the shareholders agreement with the bNP Paribas group on the maintenance of cross-shareholdings, and the contract with France Telecom pertaining to the AXA group’s communications networks.
Appointment of a member of the Supervisory board on the recommendation of the employee shareholders of the AXA group (6th to 14th resolutions)
FcPE group, and Mr. Hans Nasshoven, designated by the international FcPE group. The proposed appointment of each candidate is the subject of a separate resolution, and you, the Shareholders, are being asked to vote on each one of them. A short biography of each candidate may be found in the exhibits to this report.
it falls within the competence of the Management board to issue an opinion on every proposed resolution that is submitted to the Shareholders. As a consequence, the Management board has decided to recommend that the shareholders vote in favor of the ninth resolution (Appointment of Ms. wendy cooper to serve as a member of the Supervisory board, upon the recommendation of the employee shareholders of the AXA group) and, consequently, to reject resolutions 6 to 8 as well as 10 to 14. This recommendation of the Management board was approved by the AXA Supervisory board, after its own Selection, Ethics, governance and Human resources committee issued a positive opinion on the appointment of Ms. wendy cooper to serve as a member of the Supervisory board.
The Management board also recommends that the shareholders vote in favor of only one of the sixth to the fourteenth resolutions, and that they reject the others, because the bylaws of your company request the appointment of only one member of the Supervisory board designated on the recommendation of the employee shareholders. it should be noted, however, that in the event that several of the resolutions numbering from the sixth to the fourteenth receive more votes in favor than a majority of all the votes cast by the shareholders present at the Meeting or duly represented, only that resolution receiving the highest number of votes in favor shall be considered as having passed; the other resolutions in the aforementioned series shall be considered as rejected.
These shares may be acquired for the purpose of: a) optimizing the liquidity of AXA securities, notably to foster regular and liquid trading in the securities through a liquidity
The acquisition, sale or transfer of these shares may be completed and paid for by all appropriate means in accordance with applicable laws and regulations, including through open market transactions or private agreements, over-the-counter and in particular through block trades, by using financial derivatives or warrants or, more generally, through securities with a claim on shares of the company, or through public offerings, at such time as the Management board shall decide.
in the 20th resolution, the Shareholders are also being asked to grant full authority to the Management board, which may delegate such authority, to cancel in one or more times, the shares acquired by the company by virtue of the 15th resolution submitted to this general Meeting, within the limit of 10% of the company’s share capital in any given 24month period, and to reduce the company’s share capital accordingly, pursuant to the relevant provisions of Article l.225-209 of the French commercial code.
Pursuant to the relevant provisions of Articles l.225-197-1 and following of the French commercial code, we are recommending that you authorize the Management board, for a period of thirtyeight months starting from the date of this Meeting, to freely allot existing shares or shares of the company to be issued, in one or more times, to members of personnel chosen from among the employees and eligible corporate officers of the AXA group.
The rationale behind freely allotting these shares is to reward and retain the best talents by associating them with the intrinsic performance of the AXA group and of their entity as well as the performance of the AXA share price on the medium-term (2 to 4 years). At first, the number of free shares initially granted is determined for each entity, usually regarding its participation to the group earnings as for the previous fiscal year. The allotment finally granted will be decided by the Management board for each beneficiary according to the following criteria: the importance of the job, the importance of the individual in the job, the importance of the individual in the future i.e. his potential and the quality of the individual contribution.
The total number of freely allotted shares offered by virtue of this authorization may not exceed 1% of the number of shares comprising the company’s share capital on the date the Management board decides their allotment, it being specified that this upper limit is independent from the ceiling provided for stock options in the 17th resolution and from the ceilings set in the other financial authorizations proposed to this Meeting or adopted by the Annual general Meeting of May 14, 2007 and that are still in force.
Pursuant to the provisions of applicable law, as for the shares freely granted to the eligible corporate officers according to the aforementioned authorization, the Supervisory board may decide that those shares may not be disposed of for as long as the beneficiaries hold their positions, or it may specify the number of shares that those beneficiaries must own as registered shareholders for as long as they hold their positions.
The aforementioned authorization would cancel and replace the unused portion of that given by the Shareholders at their Annual Meeting held on April 20, 2005 under the 25th resolution, which also authorized the Management board to freely allot company shares. However, this authorization would not cancel and replace the one granted to the Management board under the 24th resolution by the Shareholders at their Annual Meeting held on May 14, 2007, which authorized the Management board to grant free shares to all employees of the AXA group in connection with the “Ambition 2012” plan (24th resolution). in fact, these two authorizations address very different objectives and are completely separate from one another.
The bylaws of your company require that the Management board obtain the prior consent of the Supervisory board if it decides to make use of this authorization. As provided for by law, the Management board shall inform the Shareholders at the Annual general Meeting of all transactions carried out by virtue of this authorization.
The aim of stock subscription or purchase options is to encourage beneficiaries to take an active interest in the development of their company by allowing them to share in the possible appreciation of the value of the shares to which these options entitle them. grant criteria used for options are similar to those used for freely allotted shares and that are described above.
As provided for by law, the Management board would have all necessary powers to determine the list of option grantees as well as the number of options to be granted to each one, and to set the other terms and conditions governing these options.
For more information on AXA’s policy regarding stock subscription and purchase options, please refer to the Section “Executive compensation” of the 2007 Annual report (Document de référence) filed with the AMF (Autorité des marchés financiers).
The subscription price of the shares issued pursuant to this authorization shall not be more than 20% lower than the average of the quoted price of the shares of the company on the Paris Stock Exchange during the twenty trading days preceding the decision setting the subscription opening date to a capital increase realised by virtue of the eighteenth resolution, or higher than this average; the Management board shall be entitled to decide to reduce or cancel any discount so granted, as it deems appropriate, in order to take into account, legal, social, tax or accountancy regulatory rules applicable locally.
This 21st resolution grants full authority to carry out all formal publication, filing and other requirements, as the case may be, following this Annual Meeting.
The decision of the Shareholders’ Meeting mentionned above entailed the waiver by Shareholders of their preferential subscription rights to the shares or securities to be issued and, as the case may be, freely allotted to employees of the group, and a waiver of the preferential subscription rights to the ordinary shares of stock that the aforementioned securities may give access.
in addition to the traditional plan for increasing capital for the benefit of employees, the group offered investment leverage plans. in connection with this investment leverage plan, several different mutual funds were set up for French residents and for residents of other countries.
— 1,878,626 shares with stock warrants subscribed at a price of e29.03 each, earning dividends as of January 1, 2007, under the investment leverage plan in germany.
A shareholder who holds 1% of AXA’s share capital prior to this capital increase reserved for employees, would hold 0.989% after the increase, which represents a decrease of 1.04%.
For the shareholder who holds 1 share of AXA stock prior to the completion of this capital increase reserved for employees, the percentage share in AXA’s consolidated shareholders’ equity would increase by 0.15% based on the financial statements dated June 30, 2007, from e21.80 to e21.83.
AXA SuPErViSOry bOArD’S cOMMENTS ON THE MANAgEMENT bOArD’S rEPOrT AND THE FiNANciAl STATEMENTS
Dear Shareholders, your Supervisory board met nine times in 2007. in accordance with applicable regulations and AXA’s bylaws, the board completed all the checks and controls on the operations and business of the Management board it deems appropriate, based on the works of its four special-purpose committees (Selection, Ethics, governance and Human resources committee, which held three meetings; compensation committee, which held three meetings; Finance committee, which held four meetings; Audit committee, which held seven meetings).
your Supervisory board, in particular, sought to ensure particularly that its own organization resulted in good corporate governance of the company.
The Supervisory board states to the Shareholders’ Meeting that it does not have any comment on the financial statements and report submitted by the Management board.
consequently, the board recommends you to approve the 2007 financial statements as well as all of the other resolutions put to the vote at your Meeting and approved by the Management board.
we would like to thank specially the employees of the AXA group and the Management board for the quality of their work and their high commitment to the success of the company.
(Article l.225-197-1 of the French commercial code) (Annual Meeting of Shareholders of April 22, 2008 — 16th resolution)
your Management board is asking that you grant it the authority to freely allot shares, either existing or new. The Management board is required to prepare a special report on this transaction that it wishes to undertake. Our role is to examine this report and to report to you of any comments we may have on information that are disclosed to you in connection with the proposed transaction.
given the absence of professional standards with respect to this type of transaction, which was made possible under laws passed on December 30, 2004 and on December 30, 2006, we have performed the procedures that we deemed necessary. in particular, we have verified that the conditions proposed and set forth in the Management board report are consistent with the requirements of relevant legislation on this type of transaction.
Pricewaterhousecoopers Audit Mazars & guérard Eric Dupont — yves Nicolas Patrick de cambourg — Jean-claude Pauly
Special report of the Independent Auditors on stock purchase or stock subscription options granted to eligible employees
(Annual Meeting of Shareholders of April 22, 2008 — 17th resolution)
it is the responsibility of the Management board to establish a report on the reasons for, on the terms under which these stock purchase and/or stock subscription options may be granted, and on the proposed modalities for the purpose of determining the purchase or subscription price. Our role is to express a conclusion on the projected terms and conditions under which the subscription or purchase price is established.
we performed our work in accordance with the standards of our profession applicable in France. Those standards require that we plan and perform the review required to check that the terms and conditions for setting the subscription or purchase price are mentioned in the Management board report, that they comply with legislation in force, and that they do not appear to be manifestly inappropriate.
Special report of Statutory Auditors on the equity issue reserved for employees
To the Shareholders of AXA 25, avenue Matignon 75008 Paris in our capacity as Statutory Auditors of AXA, and in accordance with Article l.225-135 and following of the French commercial code, we hereby submit our report on the proposed capital increase with preferential subscription rights waived, for up to a nominal amount of 100 million euros, by issuing shares or other securities giving a claim to the share capital of the company reserved for employees and former employees of your company and affiliated companies or economic interest groups within the meaning of Article l.225-180 of the aforementioned French commercial code, a transaction that is being submitted for your consideration and vote.
your Management board is asking that you, acting on the basis of its report, delegate, over a period of 18 months, to it the authority to determine the terms of this transaction and is proposing that you waive your preferential subscription rights to any shares issued by virtue of this delegation.
— The Management board may reduce or eliminate the aforementioned discount, as it deems appropriate, in particular to take into account the new international accounting standards, or, inter alia, locally applicable legal, accounting, tax or social regulations.
Notwithstanding subsequent review of the terms and conditions under which any of these capital increases may be decided, we have nothing to report in connection with the information given on the basis used to calculate the subscription price of the equity securities to be issued, as disclosed in the Management board report.
As the amount of the issue price is not yet determined, we express no conclusion on the final terms and conditions under which the capital increase will be carried out and consequently on the proposal that is made to you to waive your preferential subscription rights.
Report of the Statutory Auditors on the capital increase with waiver of the preferential subscription rights of the Shareholders reserved for a category of beneficiaries
(Annual Meeting of Shareholders held on April 22, 2008 — 19th resolution)
Acting on the basis of its report, your Management board is asking you to delegate to it full authority, for a period of eighteen months, to determine the terms and conditions of this transaction and to waive your preferential subscription rights.
it is the responsibility of your Management board to prepare a report in accordance with Articles r.225-113 and r.225114 of the French commercial code. we are required to give our opinion on the fairness of the figures taken from the financial statements, on the proposal to waive the preferential subscription rights and on other disclosures pertaining to the issuance and contained in this report.
it is understood that: — the aggregate nominal amount which may result from this resolution and the 18th resolution shall not exceed the nominal amount of Eur 100,000,000.00; — your Management board is asking you to waive the preferential subscription rights of the shareholders to the shares to be issued in connection with this authorization and to reserve the subscription to the category of beneficiaries having the following characteristics: any bank or any entity held by such bank, which, at the request of the company, participates in the implementation of a structured offer for employees and corporate officers of companies or economic interest groups affiliated to the company within the meaning of Articles l.225-180 of the
French commercial code and l.444-3 of the French labour code, which are residents in certain countries outside France, and having an economics profile, similar to the offer which would be made in connection with a capital increase conducted under the 18th resolution; — the Management board may grant a discount on the subscription price of the new shares that shall not be more than 20% than the average of the quoted price of the shares of the company on the Paris Stock Exchange during the twenty trading days preceding the decision of the Management board setting the subscription opening date to a capital increase realised by virtue of the 18th resolution; — the Management board shall be entitled to reduce or cancel any discount so granted in order to take into account new international accounting standards, inter alia, locally applicable legal, accounting, tax or social provisions.
Notwithstanding subsequent review of the terms and conditions under which the proposed share capital increase may be conducted, we have no particular observations to make with respect to the methods used to determine the issue price that are described in the report of the Management board.
we performed our work in accordance with the standards applicable in France. Those standards require that we plan and perform procedures to assess whether the reasons for and terms of the capital reduction are proper.
The Management board is asking you to delegate to it full authority, for a period of eighteen months, to cancel shares purchased under the proposed share repurchase program up to a maximum of 10% of the share capital per 24-month period.
we have no matters to report as to the reasons for and terms of the proposed capital reduction, provided that such a transaction is subject to your prior approval of the proposed share repurchase program.
Supplementary report of the Statutory Auditors on the capital increase reserved for employees with waiver of the preferential subscription rights
To the Shareholders of AXA 25, avenue Matignon 75008 Paris in our capacity as Statutory Auditors of AXA and pursuant to the provisions of Article r.225-116 of the French commercial code, we hereby present a supplementary report to our special report of April 10, 2007 on the issuance of shares with waiver of the preferential subscription rights as decided by the Annual general Meeting of May 14, 2007.
Exercising the powers entrusted to it, the Management board decided, at its Meeting of November 28, 2007, to conduct a capital increase of a nominal amount of €50,582,894 via the issuance of: — 3,186,392 new shares at a subscription price of e23.23 each under the classic plan reserved for employees of the company, of affiliated companies that are directly or indirectly controlled by the company, and of affiliated economic interest groups, and earning dividends as from January 1, 2007; — 17,023,582 new shares at a subscription price of e24.89 each under the investment leverage plan reserved for employees of the company, of affiliated companies that are directly or indirectly controlled by the company (except for german employees), and of affiliated economic interest groups, and earning dividends as from January 1, 2007; — 1,878,626 shares with stock warrants attached at a subscription price of e29.03 each, earnings dividends as from January 1, 2007, under the investment leverage plan offered to employees in germany.
we performed our work in accordance with the standards of our profession applicable in France. Those standards require that we plan and perform procedures to verify: — the fairness of the figures taken from the interim financial statements on June 30, 2007, prepared under the responsibility of the Management board in accordance with the same methods and pursuant to the same presentation as the last financial statements. we conducted a limited review of those interim financial statements in accordance with the professional standards applicable in France; — the conformity of the terms and conditions of the transaction with the delegation of authority granted by the Annual general Meeting, and the fairness of the information provided in the supplementary report of the Management board on the calculation of the subscription price and its amount.
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, and having reviewed the Management board reports, the Supervisory board report relative to the Management board report and the financial statements for the year ended December 31, 2007, and the Auditors’ report on the financial statements, hereby approve the financial statements of AXA (the “company”) for the year ended December 31, 2007 as presented, together with the transactions reflected therein or referred to in the aforementioned reports, showing a profit of €1,765,325,129.
Earnings appropriation and declaration of a dividend of €1.20 per share
The Shareholders further resolve that the dividend of €1.20 for each of the 2,060,753,492 ordinary share earning dividends as from January 1st, 2007, shall be made available for payment on April 29, 2008.
in accordance with paragraph 2° of Article 158.3 of the French general Tax code (code général des impôts), natural persons resident in France for tax purposes will be eligible for 40% tax relief on the dividend, or €0.48 per share.
(a) This amount of distributable dividend entitled the natural persons resident in France for tax purposes to 50% tax relief. This dividend payout was made in 2005. (b) This amount of distributable dividend entitled the natural persons resident in France for tax purposes to 40% tax relief. This dividend payout was made in 2006. (c) This amount of distributable dividend entitled the natural persons resident in France for tax purposes to 40% tax relief. This dividend payout was made in 2007.
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, and having reviewed the Auditors’ Special report on agreements falling within the scope of Article l.225-86 of the French commercial code (code de commerce), hereby approve the aforementioned report, which does not mention the existence of any new regulated agreements falling within the scope of the aforementioned Article and that were concluded during the year ended December 31, 2007.
Appointment of Mr. Francis Allemand to serve as a member of the Supervisory Board, upon the recommendation of the employee shareholders of the AXA Group
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, having reviewed the Management board report, and Article 10. c of the company’s bylaws in particular, and upon the recommendation of the employee shareholders mentioned in Article l.225-102 of the French commercial code, — hereby appoint Mr. gilles bernard to serve as a member of the
Appointment of Ms. Wendy Cooper to serve as a member of the Supervisory Board, upon the recommendation of the employee shareholders of the AXA Group
Appointment of Mr. Rodney Koch to serve as a member of the Supervisory Board, upon the recommendation of the employee shareholders of the AXA Group
Supervisory board, replacing Mr. Jacques Tabourot, whose term of office expires at the end of this general Meeting, for a four-year term, as provided for in Article 10. c of the company’s bylaws, expiring at the close of the general Meeting of Shareholders in 2012 called to approve the financial statements for the year ending December 31, 2011; — also decide that (i) in the event that several of the resolutions numbering from the sixth to the fourteenth resolution receive more votes in favor than a majority of all the votes to which the shareholders present today or duly represented may cast, only that resolution receiving the highest number of votes in favor shall be considered as having passed; the other resolutions in the aforementioned series shall be considered as rejected; and finally decide that (ii) in the event that none of the resolutions numbering from the sixth to the fourteenth resolution receive more votes in favor than a majority of all the votes to which the shareholders present today or duly represented may cast, then no candidate shall be appointed to serve as a member of the Supervisory board by the present general Meeting.
Appointment of Mr. Frédéric Souhard to serve as a member of the Supervisory Board, upon the recommendation of the employee shareholders of the AXA Group
Authorization granted to the Management Board to purchase the Company’s shares
The Shareholders, having fulfilled the quorum and majority requirements pertaining to ordinary general meetings, and having reviewed the Management board report: 1) Hereby authorize the Management board, pursuant to Articles l.225-209 and following of the French commercial code, to purchase a maximum of 10% of the total number of shares comprising the company’s share capital at any given time, or 5% of the total number of shares comprising the company’s share capital in the case of shares acquired by the company for the purpose of holding them for subsequent payment or tender in a merger, spin-off or contribution, it being specified that these limits may be assessed at any time whatsoever, by applying the percentage to an adjusted amount of equity capital after the completion of capital transactions that may affect it after the date of this Meeting. The number of shares of its own stock that the company can hold at any given time must not exceed 10% of the shares comprising its outstanding share capital; 2) resolve that these shares may be acquired for the purpose of: a) optimizing the liquidity of AXA securities, notably to foster regular and liquid trading in the securities through a liquidity contract that complies with the Association Française des Entreprises d’investissement (AFEi) code of conduct approved by the Autorité des marchés financiers (AMF) entered into with an investment service provider in compliance with the market practice accepted by the AMF, b) (i) hedging stock options offered to some or all employees or eligible corporate officers of the company and/or affiliated entities or economic interest groups as defined in Article l.225-180 of the French commercial code, (ii) granting free shares to employees and former employees enrolled in a company savings plan sponsored by the company or the AXA group and/or (iii) granting free shares to some or all employees or eligible corporate officers of the company and/or its affiliated entities or economic interest groups as defined in Article l.225-1972 of the French commercial code, in accordance with the provisions of Articles l.225-197-1 and following of the French commercial code, c) holding shares for subsequent payment or exchange in connection with potential external growth acquisitions, in compliance with the market practice accepted by the AMF, d) delivering shares upon exercise of rights attached to bonds giving access to the company’s share capital by way of repayment, conversion, exchange, presentation of a warrant or in any other manner e) canceling some or all of these shares subject to shareholders approval of the twentieth resolution hereinafter, which authorizes this cancellation, and/or, more generally, f) performing all operations in compliance with the laws and regulations in force; 3) resolve that the maximum purchase price per share shall not exceed €45. However, the Management board may, in the event of transactions involving the company’s share capital, in particular a modification of the shares nominal value, a capital increase via the capitalization of reserves, a stock split or a re-bundling of shares, adjust the maximum purchase price indicated above to take into account the impact of such transactions on the value of the share;
These shares shall be subject to a minimum holding period of two years, commencing on the date as of which these shares are definitively granted. Notwithstanding the foregoing, the Management board may decide not to impose or to shorten this mandatory holding period for shares whose acquisition period has been set to last for at least four years.
The grant of shares shall be definitive, as shall the option of freely transferring, selling or assigning these shares, before the end of the acquisition period determined by the Management board in case of a disablement of the beneficiary as set forth under Article l.225-197-1 of the French commercial code.
This authorization automatically entails in favor of the beneficiaries of freely allotted shares a waiver by the Shareholders of (i) their preferential subscription rights to any shares that are issued for free allotment by virtue of this resolution, (ii) their rights on any part of the reserves, profits or premiums which will be capitalised for the purpose of this allotment and (iii) any existing shares freely allotted. The corresponding capital increase shall be considered definitely completed by sole virtue of the definitive granting of the freely allotted shares to their beneficiaries. The Shareholders hereby empower the Management board, acting within the limits set forth above, to do whatever is necessary to give effect to this extraordinary resolution, in particular to: — Determine the eligible beneficiaries of shares and the number of shares granted to each; — Determine the dates, terms and conditions under which these shares may be granted, in particular the period following which these grants shall be considered as definitive and, if need be, the required holding period for each beneficiary; — Determine the conditions, notably regarding the performance of the company, of the AXA group or of its affiliated entities, as well as, if need be, the criteria according to which the shares will be allotted; — Determine if the freely allotted shares are to be issued or existing, and in the event that newly issued shares are granted, increase the share capital through the capitalization of reserves, profits or premiums, set the amount and the nature of reserves, profits or premiums to be incorporated into the capital, record the amount of any capital increase, amend the bylaws accordingly and , more
This authorization, which cancels and replaces the unused portion of that given by the Shareholders on April 20, 2005 under the twenty-fifth resolution, is granted for a period of 38 months as of the date of this Meeting.
Authorization granted to the Management Board to allot stock purchase and/or stock subscription options to employees and eligible corporate officers of the AXA Group
The Shareholders, having fulfilled the quorum and majority requirements pertaining to extraordinary general meetings, and having reviewed the Management board report and the Auditors’ Special report, 1) Hereby authorize the Management board, in accordance with Articles l.225-177 and following of the French commercial code, to grant, in one or more times, company’s stock purchase and/or stock subscription options to some or all employees and to some or all eligible corporate officers of the company or any of its affiliated companies or any economic interest groups within the meaning of Article l.225-180 of the French commercial code.
4) The Management board shall determine the terms and conditions under which the options shall be granted. Said terms and conditions may include clauses prohibiting the immediate resale of all or part of such shares; notwithstanding the foregoing, the maximum period of this prohibition is set at three years starting from the option exercise date. As an exception to the foregoing, the Supervisory board may, acting in accordance with applicable legislation with respect to the corporate officers of the company concerned, enact clauses prohibiting the exercise of options for as long as they hold their position or immediate resale with the obligation to hold in registered form all or part of the shares that result from the exercise of options for as long as they hold their position.
Options shall not be granted to persons who personally own a portion of share capital that exceeds the upper threshold provided for by law.
No stock subscription and/or purchase options whatsoever shall be granted less than twenty trading days after the detachment from the shares of a coupon entitling the bearer to a dividend or a capital increase, or during the ten trading days before and after the date when the consolidated financial statements or parent financial statements are made public.
5) The Shareholders hereby grant all powers to the Management board, as provided for by law, the company’s bylaws, and this authorization, to implement this resolution and notably to determine the type of options granted (stock subscription options or stock purchase options), set the price and conditions of the granting of options, determine the list of beneficiaries and the number of options granted to each of them, determine the option period(s) and the other terms under which the options may be exercised, determine the terms and conditions under which the price and number of shares to be subscribed or purchased shall be adjusted in accordance with prevailing regulations, undertake or have undertaken all formalities
Authorization granted to the Management Board to increase the Company’s share capital by the issue of shares or other securities with a claim on the Company’s share capital, reserved for members of the Company’s savings plan
Any issue of shares pursuant to this resolution shall be completed within 18 months as from the date of this Meeting.
Authorization granted to the Management Board to reduce the share capital through the cancellation of shares
Authorization to comply with all formal requirements in connection with this Meeting
Director conservateur Finance AXA Assurances iArD Mutuelle AXA Assurances Vie Mutuelle
Expert at the council of Europe: various missions in Eastern Europe countries regarding the reform of the code of the Judicial Organization, the reform of the magistrates and lawyers training and the revision of the code of civil procedure
Principal function Member of the European works council and staff representative - AXA belgium (belgium)
Since 1983 works in AXA — life underwriting division — internal Audit — Safety and security division gIllES BERNARD
Since 1973 works in AXA — Head of Sales in the East region — AXA Assurances — Head of the Distribution in the North-East region — AXA
France — company Secretary of the North-East region Distribution and Sales division — AXA France
Principal function company Secretary of the North-East region Distribution and Sales division — AXA France
Number of AXA shares Number of units held as of December 31, 2007 in AXA Mutuals funds invested in AXA shares: 8,632
August 1987 — march 1995 First Deputy Superintendent of insurance of the New york insurance Department january 1990 — june 1990 Acting Superintendent of insurance of the New york insurance Department may 1995 Joined The Equitable, predecessor to AXA Equitable as Vice President & Associate general counsel
Since September 1999 Senior Vice President & Associate general counsel AXA Equitable (united States)
Principal function Senior Vice President & Associate general counsel AXA Equitable (united States)
Appointment as a member of the Supervisory Board, upon the recommendation of the employee shareholders of the AXA group (approved by the management Board)
lead Developer & AXA way greenbelt “Help Desk triage team” Syracuse Operations center — iT — Distribution — AXA Financial, inc. (united States)
2005-2007 webStation and AXA Partners Siebel System Support licensing Appointment & registration System Development
Professional Associations 2006 — 2008 Project Management institute - Member 1983 — 2008 institute of Management Accountants - Member guiDE international (ibM North America user group) — Project/group Manager (1989-1993) — board of Directors — Treasurer (1993-1995) — Delegate to SHArE Europe conference (1994) — Managing Director of Marketing (1995-1999)
Principal function lead Developer & AXA way greenbelt — Syracuse Operations center — iT — Distribution — AXA Financial, inc. (united States)
member of the works Council of Head office AXA Service Ag (germany)
Expert It advisor general works council member AXA’s European works council
Nixdorf computer Ag Apprenticeship as toolmaker (1965-1969) Training course at Nixdorf Academy to become programmer (1969-1971)
Number of AXA shares Number of units held on December 31, 2007 in AXA Mutual funds invested in AXA shares: 246
Number of AXA shares Number of units held as of December 31, 2007 in AXA Mutuals Funds invested in AXA shares: 2,352
bachelors of Science in business and Economics — State university of New york at Oneonta
Since february 2006 black belt, AXA way at AXA Financial, inc. (united States)
Since 1985 branch Asset Management Specialist at AXA Financial, inc. (facilitate the sales of investment products in the upstate Ny branch offices this includes the AXA Equitable Variable Annuity lineup as well as the lPl investement platform).
Principal function branch Asset Management Specialist — AXA Financial, inc. (united States)
Number of AXA shares Number of AXA shares and/or AXA ADr held on December 31, 2007: 414 plus 10,375 units held in the 401(k) Plan of AXA Equitable
in accordance with the relevant provisions of the French commercial code resulting from the New Economic regulations Act (loi sur les Nouvelles régulations Economiques) adopted in May 2001, the company herewith discloses the way in which it takes into account the social and environmental consequences of its business and activities.
SoCIAl INfoRmAtIoN As a holding company, the company has no other active employees than the French members of its Management board. Detailed information on their remuneration is provided in Part iii, section 3.2 of this Annual report.
The company, having essentially an activity of holding company, has no material local employment or regional development impacts, nor does it resort to subcontracting.
AXA SA contributes to social actions such as the AXA research Fund (a partnership between AXA SA and academic circles launched in 2007 and providing a E100 million funding over 5 years), the “Vocation Patrimoine” program (an international world heritage protection program in partnership with the uNEScO), and the acquisition of several “national treasures” (in collaboration with the louvre Museum, the Quai branly Museum, and the Museum of Fine Arts of lyon). More detailed information on these initiatives is available on www.axa.com.
in addition to these core objectives, a further area for action has been identified: a more effective electronic waste management, notably in connection with the waste Electronic and Electrical Equipment (wEEE) Directive.
All the above objectives are regularly monitored, including via an annual reporting process, in order to assist local entities in gradually defining and implementing action plans. More information on this topic (policy, procedures, programs and results) is or will be available on www.axa.com and in the 2007 Activity and Sustainable Development report.
This Document de référence includes all the compulsory matters required to be covered in the Management board’s report of AXA established pursuant to articles l.225-100 and l.225-100-2 of the French commercial code.
18. Table of the capital increase delegations 408 to 409 19. Table of the Company’s financial results over the last five years 416 20. Chairman of the Supervisory Board’s Report 390 to 398
15. remuneration and benefits 15.1. Amount of remuneration paid ...................................................................................................................................... 132 to 153 15.2. Amounts set aside or accrued to provide pension, retirement or similar benefits .................................................. 136 16. board practices 16.1. Date of expiration of the current term of office ..................................................................................................... 117 and 124 16.2. information about members of the management bodies’ service contracts with the issuer or any of its subsidiaries ................................................................................................................. 122 and 127 16.3. information on the Audit committee and the remuneration committee ........................................................ 122 to 124 16.4. Statement of compliance with the country of incorporation’s corporate governance regime .............................. 116 17. Employees 17.1. Number of employees ...................................................................................................................................................... 130 to 131 17.2. Shareholdings and stock options ........................................................................................................ 142 to 143 and 148 to 153 17.3. Arrangements for involving the employees in the capital of the issuer ........................................................... 158 to 159 19. related party transactions ............................................................................................................................... 158 to 159 and 366 to 367 20. Financial information concerning the issuer’s assets and liabilities, financial position and profits and losses 20.1. Historical financial information * ................................................................................................................................ 197 to 375 20.2. Pro forma financial information .............................................................................................................................................. n/a 20.4. Auditing of historical annual financial information ............................................................................................... 376 to 377 20.5. Age of latest financial information ......................................................................................................................................... 401 20.6. interim and other financial information ................................................................................................................................ 401 20.8. legal and arbitration proceedings ............................................................................................................................. 373 to 375 20.9. Significant change in the issuer’s financial or trading position ....................................................... 49 to 54 and 110 to 113 21. Additional information 21.1. Share capital ............................................................................................................................................ 156 to 158 and 382 to 384 21.2. Memorandum and Articles of association ................................................................................. 116; 380 to 381 and 383 to 387 22. Material contracts .................................................................................................................................................................................... n/a 23. Third party information and statement by experts and declarations of any interest ........................................................... n/a 24. Documents on display ........................................................................................................................................................................... 403 25. information on holdings ......................................................................................................................................... 14 to 16 and 218 to 224 otHER PERIoDICAl INfoRmAtIoN REQuIRED By tHE Amf gENERAl REgulAtIoNS
This Document de référence includes all the components of the Annual Financial report (rapport Financier Annuel) referred to in paragraph i of article l.451-1-2 of the French Monetary and Financial code as well as in article 222-3 of the AMF general regulations.
Report of the statutory auditors on the financial statements of the Company-parent only 431 to 432
Report of the statutory auditors on the consolidated financial statements of the Group 376 to 377
Report of the Chairman of the Supervisory Board on the conditions of preparation and organization of the Board’s work and on internal control procedures 390 to 398
PART II — THE AXA GROUP: OUR GLOBAL BUSINESS OPERATIONS, RECENT FINANCIAL PERFORMANCE AND FINANCIAL CONDITION 3 2.1 Selected Consolidated Financial Data 4 2.2 Information on the Company 9 2.3 Activity Report 44 2.4 Liquidity and Capital resources 110
Pursuant to the article 212-13 of the AMF General Regulations, this Annual Report has been filed with the AMF on March 28, 2008 and may, as a consequence, be used in connection with a financial transaction provided it is accompanied by a prospectus registered with the AMF.
Contacts Readers can address any comments and questions on this document to: Individual Shareholders