Group organisation
Since 1972, Peugeot S.A. has had a two-tier management structure, comprising a Managing Board, responsible for strategic and operational management, and a Supervisory Board, responsible for oversight and control. This separation is especially effective in addressing the concern for a balance of power between the executive and oversight functions, as reflected in the principles of good corporate governance.

The Supervisory Board
Members
The Supervisory Board has twelve members plus two non-voting advisors (censeurs), all of whom are elected by stockholders for six-year terms. The other functions and directorships held by Supervisory Board members and advisors are listed below, as well as the dates when they were elected and when their terms expire. Under French company law, only Stockholders in a General Meeting have the authority to remove a Supervisory Board member from office.
Each member of the Supervisory Board must own at least 25 shares of Peugeot S.A. stock.

Functions and Directorships Held by Supervisory Board members as of December 31, 2008

Role of the Supervisory Board
In accordance with the law, the Supervisory Board is responsible for appointing the members of the Managing Board and for overseeing their management of the Company. The Company's bylaws also attribute to the Supervisory Board authority to remove members of the Managing Board from office, and to approve corporate actions, bond issues, the signature or termination of agreements with other companies operating in the same industry that will have a decisive impact on the Group's future development, and any major transaction that substantially alters the business or financial structure of the Company or the Group. In addition, the Supervisory Board ensures that the strategy implemented by the Managing Board is consistent with the Group's long-term vision, as defined by the Supervisory Board. The Supervisory Board meets at least once every quarter; the agenda of each meeting is prepared by the Chairman.In accordance with the law, the Supervisory Board is responsible for appointing the members of the Managing Board and for overseeing their management of the Company. The Company's bylaws also attribute to the Supervisory Board authority to remove members of the Managing Board from office, and to approve corporate actions, bond issues, the signature or termination of agreements with other companies operating in the same industry that will have a decisive impact on the Group's future development, and any major transaction that substantially alters the business or financial structure of the Company or the Group. In addition, the Supervisory Board ensures that the strategy implemented by the Managing Board is consistent with the Group's long-term vision, as defined by the Supervisory Board. The Supervisory Board meets at least once every quarter; the agenda of each meeting is prepared by the Chairman.

Supervisory Board Meetings in 2008
The Supervisory Board met five times in 2008, with an average attendance rate of 98%.
At each meeting, the Board reviewed the Managing Board's report on the Group's operations and performance in terms of quality, sales, production, financial results and human resources. It was also presented reports on the Group's major strategic growth programs and objectives.
The Managing Board presented the 2009 budget at the December meeting.
The Committees of the Board reported their findings and recommendations at each of the meetings during the year.

Supervisory Board Operating Procedures
The Supervisory Board's internal rules set out its stewardship and control responsibilities. In particular, the Supervisory Board is responsible for reviewing the Managing Board's quarterly reports, as well as the annual financial statements of the Company and the Group and the Managing Board's report to the Annual Stockholders' Meeting.
The internal rules also stipulate that the Supervisory Board is required to authorise, in advance, the following actions by the Managing Board as provided for in Article 9 of the bylaws:

• stockholder-approved share issues (whether paid up in cash or by capitalising retained earnings) and capital reductions;
• issues of ordinary or convertible bonds;
• any proposed merger agreements or agreements for the sale of a business;
• the signature or termination of any manufacturing or sales agreements representing a future commitment for Peugeot S.A., with companies whose corporate purpose is similar or related to that of Peugeot S.A., and generally the execution of any major transaction which substantially alters the business or financial structure of the Company or the Group.

Certain other actions exceeding financial limits set by the Supervisory Board may be carried out only with the unanimous backing of all the members of the Managing Board or, failing that, with the prior authorisation of the Supervisory Board. These include the purchase or sale for cash or for shares of any building and business rights used by Peugeot S.A. involving an amount in excess of ¤50 million, the purchase or sale of any equity interest in any other company directly or indirectly representing an immediate or deferred investment, expense, credit guarantee or seller's warranty involving an amount in excess of ¤50 million, and any borrowings by Peugeot S.A. other than in the form of bonds, involving an amount in excess of ¤100 million.
The internal rules describe the information to be made available to the Supervisory Board, the process to be followed to determine the issues to be discussed at Supervisory Board meetings, the terms of reference of each Board committee as well as the obligations of Supervisory Board members, especially those arising from their constant access to insider information.
Lastly, guarantees given on behalf of subsidiaries are submitted for Supervisory Board approval when the amount involved exceeds ¤25 million or the cumulative amount of guarantees given during the year exceeds ¤125 million (excluding customs and tax bonds).
In February 2008, the Supervisory Board conducted a new selfassessment of its procedures and structure, which found that the quality of discussions during the meetings and the members' knowledge of the Group had all improved. The number of meetings was set at five per year. The self-assessment also noted the members' interest in examining in more depth subjects concerning strategic or long-term issues. Lastly, knowledge of the Group has been further improved by theme presentations by members of the Managing Board or senior executives and by meetings with line managers during on-site visits. The assessment also addressed the terms of reference of the Board committees and the reporting of the Committees' findings and recommendations.

Supervisory Board Committes
The Supervisory Board has created three specialised committees:the Strategy Committee, the Compensation and Appointments Committee and the Finance Committee.
The role of these Committees is to analyse and prepare certain matters to be discussed at Supervisory Board Meetings. They issue proposals, recommendations and opinions on the areas falling within their terms of reference. They act in a purely consultative capacity under the authority of the Supervisory Board, which has actual decision-making powers. The Committees report to the Supervisory Board for each Board Meeting and more often when necessary.

Supervisory Board Committes

Supervisory Board Compensation
Supervisory Board members and advisors are paid annual attendance fees up to an aggregate amount determined in advance by the Annual Stockholders' Meeting. Pursuant to the decision of the Annual Stockholders' Meeting of May 28, 2008, this amount has been set at ¤600,000 until further notice.
In 2008, of the total ¤600,000 in fees approved by Shareholders, ¤20,000 was allocated to each member of the Supervisory Board and ¤15,000 to each advisor. Members of Board Committees are paid an additional ¤10,000, or an additional ¤15,000 in the case of the Chairmen.
The Chairman of the Supervisory Board received ¤425,000 in compensation for 2008, the same amount as for 2007, and each of the Vice Chairmen of the Supervisory Board received ¤30,000.
No benefits in kind were awarded to Supervisory Board members, with the exception of a company car provided for the Chairman.
Details on the different types of compensation, commitments and benefits granted to Supervisory Board members in respect of 2008 are presented in Table 3 below.
In addition, Thierry Peugeot, Jean-Philippe Peugeot, Robert Peugeot and Marie-Hélène Roncoroni receive compensation for working or holding corporate offices in the Peugeot family's companies. Details regarding this compensation are provided in the Foncière, Financière et de Participations (FFP) management report.

Remuneration and benefits of Corporate officers

Situation of Supervisory Board and Managing Board members
Thierry Peugeot, Jean-Philippe Peugeot, Robert Peugeot, Marie-Hélène Roncoroni, Pierre Banzet and Marc Friedel are related. There are no family ties among the other Supervisory Board or Managing Board members.
No loans or guarantees have been granted to or on behalf of any members of the Supervisory Board or Managing Board by the Company or any Group entities.
No assets required for the operation of the business are owned by any members of the Supervisory Board or Managing Board or their families.
To the best of the Company's knowledge, there are no conflicts of interest between the duties of Supervisory Board and Managing Board members to Peugeot S.A. and their private interests or other duties.
None of the members of the Supervisory Board or Managing Board have service contracts with Peugeot S.A. or any of its subsidiaries, providing for benefits upon termination of employment.
To the best of the Company's knowledge, in the last five years no member of the Supervisory Board or Managing Board has been convicted of any fraudulent offence, been a member of the administrative, management or supervisory body of a company that has been declared bankrupt, or placed in liquidation or receivership, been the subject of any official public incrimination and/or sanctions by statutory or regulatory authorities or been disqualified by a court from acting as a member of the administrative, management or supervisory bodies of an issuer or from acting in the management or conduct of the affairs of any issuer.
Under French company law, only the annual Stockholders' Meeting has the authority to remove a Supervisory Board member from office. Managing Board members may be removed from office by the Supervisory Board, in accordance with Company bylaws, or by the Annual stockholders' Meeting, in accordance with French company law.

The Managing Board
Members of the Managing Board
In 2008, the Managing Board was comprised of Christian Streiff, Chairman, Grégoire Olivier, Frédéric Saint-Geours, Gilles Michel and Roland Vardanega. Managing Board is comprised of Christian Streiff (who acts as Chairman), Grégoire Olivier, Jean-Philippe Collin and Roland Vardanega. Managing Board members are appointed by the Supervisory Board for four-year terms. They may be removed from office by the Supervisory Board pursuant to the Company's bylaws, or by stockholders in a General Meeting, in accordance with French company law.
On 29 March 2009, the Supervisory Board removed Christian Streiff from office as member and Chairman of the Managing Board and appointed Philippe Varin Chairman of the Management Board effective 1 June 2009. Roland Vardanega, who is already a member of the Managing Board, was appointed Chairman pro tempore for the period from 30 March to 31 May 2009.
The other functions and directorships held by Managing Board members are listed below, as well as the dates when they were appointed and when their terms expire.
The Managing Board's membership changed twice in 2008 and early 2009: on January 1, 2008 following the appointment of Jean-Philippe Collin as Executive Vice President of Automobiles Peugeot, replacing Frédéric Saint-Geours, who has been appointed Advisor to the Chairman of the Managing Board, and on January 1, 2009 following the resignation of Gilles Michel who has not yet been replaced.

Executive Management
Executive management of the PSA Peugeot Citroën Group is the responsibility of the Managing Board with the support of the Executive Committee, which had 10 members in 2008. As of 1 April 2009, following the departure of Christian Streiff, Gilles Michel and Jean-Luc Vergne, the members of this Committee were:
Roland Vardanega, Chairman of the Managing Board; Jean-Philippe Collin, member of the Managing Board (Peugeot); Grégoire Olivier, member of the Managing Board (Programmes); Roland Vardanega, member of the Managing Board (Manufacturing and Components); Frédéric Saint-Geours (Advisor to the Chairman); Isabel Marey- Semper (Finance and Strategy); Denis Martin (Human Resources); Jean-Claude Hanus (Legal Affairs, Institutional Relations and Internal Audit); and Liliane Lacourt (Communications).
In addition to the above members, the Expanded Executive Committee also includes Claude Vajsman (China), Vincent Rimbaud (Mercosur), Jean-Christophe Quémard (Purchasing), Daniel Marteau (Replacement Parts), Alain Sartoris (Executive Development and Information Systems) and Pascal Henault (Automotive Research and Innovation), who each report directly to the Chairman of the Managing Board.

Functions and Directorships Held by Managing Board Members as of December 31, 2008

Managing Board compensation

- Compensation policy
The compensation paid to each Managing Board member is determined by the Supervisory Board after reviewing the recommendations of the Compensation and Appointments Committee.
The annual compensation paid to Managing Board members includes a base salary and an incentive bonus based on the achievement of a certain number of objectives.
The five members of the Managing Board have been assigned both shared objectives and personal objectives related to their respective executive responsibilities. Each objective includes qualitative and quantitative targets. The Chairman of the Managing Board receives an incentive bonus that, barring exceptional circumstances, may not be less than 50% or more than 110% of his base salary. Incentive bonuses for the other members of the Managing Board may not exceed 100% of their base salary.
At the end of the year, the Supervisory Board determines the base salary that will be paid to Managing Board members the following year and, at the beginning of the year, it calculates the incentive bonus based on an evaluation of how well each member met his or her assigned objectives over the year. Also at the beginning of the year, the Supervisory Board sets objectives for each of the Managing Board members for the current year.

- 2008 Compensation
The base salary paid to Managing Board members for 2008 was unchanged from the previous year.
Of the total incentive bonus paid to the Chairman of the Managing Board, 45% was based on consolidated recurring operating income and margin and 55% on product quality levels (as measured by the decline in warranty costs) and on progress in building the future by implementing the Group's strategic plans.
Of the total incentive bonus paid to members of the Managing Board, 25% was based on meeting the Group's consolidated recurring operating income target and 75% on meeting objectives directly related to their respective areas of responsibility.
Christian Streiff has elected to forego his incentive bonus in respect to 2008. Bonuses paid to the other members of the Managing Board were reduced to 30% of their base salary for Grégoire Olivier and Roland Vardanega and to 20% of their base salary for Jean-Philippe Collin and Gilles Michel.

Managing Board compensation

Internal and External controls
Internal Control

As part of its commitment to preventing and limiting the effects of internal and external risks, the Group has established internal control procedures and processes designed to provide reasonable assurance concerning the achievement of objectives.

Internal Control Procedures

External Auditors

In accordance with French company law, the financial statements of Peugeot S.A. and the consolidated financial statements are audited by two firms of auditors. The two firms jointly audit all of the accounts and examine the processes used to prepare the financial statements, as well as the Group's internal processes and procedures.

The two statutory auditors, PricewaterhouseCoopers Audit and Mazars, were appointed by stockholders at the Annual Meeting on May 25, 2005, following a proposal process managed by the Finance Committee of the Supervisory Board. Their appointment expires at the Annual Stockholders' Meeting to be called in 2011 to approve the 2010 financial statements.

Through the members of their networks in all the countries where the Group operates, PricewaterhouseCoopers Audit and Mazars act as contractual auditors of all the Group's fully consolidated subsidiaries, with the exception of the companies in the Faurecia sub-group. They therefore have access to the information required to audit the consolidated financial statements of the PSA Peugeot Citroën Group. Effective from 2003, they perform continuous audits of the main Automobile Division companies and finance companies in France, therefore improving the overall quality of their audit. PricewaterhouseCoopers Audit, as Group Statutory auditor, also reviews the processes for the preparation of environmental and social information published on the Group's sustainable development website.

In the case of Faurecia, the two firms of auditors, PricewaterhouseCoopers Audit and Ernst & Young Audit, were appointed by stockholders at the Annual Meeting on June 1, 2001, for period expiring at the Annual Meeting to be called to approve the 2006 accounts.

The auditors of joint ventures set up with other automakers, which are accounted for by the equity method, are appointed by the joint venture partners.

The total fees paid to the auditors in respect of 2006 amounted to ¤8.9 million for PricewaterhouseCoopers, ¤1.9 million for Mazars and 1.9 million for Ernst & Young. None of these firms performed any nonaudit work during the year.

New stricter rules have been established concerning non-audit work performed by the auditors, as required under the Financial Security Act.

Statutory and Substitute Auditors

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