PRESENTATION OF THE PROPOSED RESOLUTIONS. Report of the Board of Directors

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1 Translation for information purposes only PRESENTATION OF THE PROPOSED RESOLUTIONS Report of the Board of Directors This report describes the proposed resolutions that are being submitted to the Shareholders Meeting by the Board of Directors. It consists of an introduction, a summary table of the financial resolutions and a glossary. Its purpose is to draw your attention to the important points in the proposed resolutions, in accordance with applicable laws and regulations and with best corporate governance practices for companies listed in Paris. It is not intended as an exhaustive guide; therefore it is essential that you read the proposed resolutions carefully before exercising your vote. The presentation of the financial situation, business and performance of Valeo and its Group over the past fiscal year, as well as various information required by applicable legal and regulatory provisions, also appear in the report on the 2013 fiscal year, which you are urged to read. 1

2 INTRODUCTION I. Ordinary business excluding buy-back program a. Approval of financial statements (1 st and 2 nd resolutions) First, your Meeting is convened to approve the unconsolidated financial statements (first resolution) and consolidated financial statements (second resolution) of the Company, to allocate the profits and to set the amount of the dividend (sixth resolution please refer to the term dividend in the glossary for the tax related information relating to the dividend for the past three fiscal years). b. Appointment of directors (3 rd to 5 th resolutions) (i) Renewal of the term of office of Daniel Camus (3 rd resolution) We propose that you renew the term of office as Director of Mr. Daniel Camus for a new four year period, i.e. until the closing of the Ordinary Shareholders Meeting called to approve the financial statements for the fiscal year ending on December 31, Mr. Daniel Camus is Chief Financial Officer of The Global Fund. He is also member of the Supervisory Boards of Morphosys AG (Germany), SGL Group SE (Germany), Cameco Corp. (Canada) and Vivendi S.A. He was Senior Advisor at Roland Berger Strategy Consultants until Prior to this, he served as group Executive Vice-President in charge of International Activities and Strategy at the EDF group until December 1, After working in the chemical and pharmaceutical industry for 25 years within the Hoechst-Aventis group in Germany, Canada, the United States and France, he joined the EDF group in 2002 as group Chief Financial Officer. He was also a member of the Supervisory Boards of EnBW (Germany) and Dalkia SAS, Chairman of the Board of Directors of EDF International and director of EDF Energy (United-Kingdom). He holds a doctorate in economics, is an associate professor of management sciences and graduated with distinction from the Institut d études politiques de Paris (IEP). Daniel Camus has been a director of your Company since May 17, 2006 and is an independent director as defined by the criteria set out in the Board of Directors Internal Procedures. (ii) Renewal of the term of office of Jérôme Contamine (4 th resolution) We propose that you renew the term of office as Director of Jérôme Contamine for a new four year period, i.e. until the closing of the Ordinary Shareholders Meeting called to approve the financial statements for the fiscal year ending on December 31, Jérôme Contamine has been Executive Vice-President and Chief Financial Officer of Sanofi since March 16, He is also President of SECIPE and Sanofi 1, President and director of 2

3 SETC (Belgium) and manager of Sanofi North America, CEO of Sanofi-Aventis Europe and Sanofi-Aventis Participations. He joined Veolia in 2000 as Executive Vice-President of Finance, before becoming Executive Vice-President responsible for cross-functional activities in 2002, and Senior Executive Vice-President of Veolia Environnement in 2003 until January 16, He was also director of Zentiva N.V. (Nederland), Sanofi Pasteur Holding, Mérial Ltd. (United-Kingdom), Veolia Transport, Veolia Propreté, VE Services-Ré, Veolia Environmental Services Plc (Great-Britain), Veolia ES Holdings Plc (Great-Britain), Veetra, Rhodia and director and Managing Director of Veolia UK (Great-Britain). He was also member of the Supervisory Boards of Veolia Eau and Dalkia France and a member of the A and B Supervisory Boards of Dalkia. He served as Chairman of VE Europe Services (Belgium), VE IT and VENAO (United States). Between 1988 and 2000, he held several positions within the Elf group: financial management positions including Financing and Treasury Director (1991 to 1994), Deputy Director in Europe and the United-States for the Exploration and Production Division, and CEO of Elf Norway ( ). In 1999 he was appointed Director of the integration group with Total, tasked with reorganizing the new merged entity, TotalFinaElf, and in 2000 he became Vice-President of Continental European and Central Asian Operations for the Exploration and Production Division of Total. He graduated from Ecole polytechnique and from Ecole nationale d administration and is a special advisor to the French Court of Auditors (Cour des comptes). Jérôme Contamine has been a director of your Company since May 17, 2006 and is an independent director as defined by the criteria set out in the Board of Directors Internal Procedures. (iii) Renewal of the term of office of Noëlle Lenoir (5 th resolution) Noëlle Lenoir is a member of the Conseil d Etat (France s highest administrative court) and a partner in the law firm Kramer Levin Naftalis & Frankel LLP. She serves as Ethics Officer at the French National Assembly. During her career she has held some of the highest positions in the French State; in addition to being the first woman to be appointed as a member of the French Constitutional Council (Conseil constitutionnel) ( ), she was Deputy Minister of European Affairs from 2002 to Since 2004, Noëlle Lenoir has mainly worked as a partner with the law firms Debevoise & Plimpton LLP ( ) and Jeantet et Associés. She has been director of Generali France since 2008 and director of Compagnie des Alpes since March She serves as Municipal Advisor of Valmondois (Val d Oise, France). Noëlle Lenoir is also Chairwoman of the Europe Institute HEC, Adjunct Professor at HEC, Honorary Chairwoman of the Association des amis d Honoré Daumier and Founding Chairwoman of the Cercle des Européens. She is also a member of the American Law Institute, of the French Academy of Technology, and of the Board of Directors of the French Association of Constitutionalists (Association Française des Constitutionnalistes) and of the French Association of Consitutionality (Association Française des Constitutionnalités). She was also a lecturer at University Paris I Panthéon-Sorbonne, member of the executive committee of the Association of French Mayors, of the Board of the Comparative Law Society (Société de Législation Comparée), of the French Association of Women Lawyers and of the High Level Group of Company Law Experts at the European Commission. Noëlle Lenoir holds a postgraduate degree in public law and is a graduate from Institut d études 3

4 politiques de Paris (IEP). Noëlle Lenoir has been a director of your Company since June 3, 2010 and is an independent director as defined by the criteria set out in the Board of Directors Internal Procedures. c. Allocation of earnings (6 th resolution) We propose that you allocate the distributable earnings for the 2013 fiscal year to dividends and to the retained earnings account. The dividend is set at 1.70 per share for each share entitled to the payment of a dividend, an increase of 13 % compared with the dividend paid for the 2012 fiscal year. d. Approval of the related party agreements (7 th resolution) The special report of the Company s Statutory Auditors on agreements and undertakings governed by Article L et seq of the French Commercial Code identifies the following agreements and undertakings previously approved by the Shareholders Meeting that have been pursued during the 2013 fiscal year: (i) the grant to the Chief Executive Officer, Jacques Aschenbroich, of a life insurance policy to cover death or disability or any other consequence of an accident occurring during business travel, authorized by the Board of Directors during its meeting of April 9, 2009; (ii) the grant to the Chief Executive Officer, Jacques Aschenbroich, of the benefit of the new additional retirement defined benefits pension plan that has applied to the Group s Senior Executives since January 1, 2010, authorized by the Board of Directors during its meeting of October 20, 2009, the principle features of which are the following: cap due to the nature of the regime: additional pension of 1% of the reference salary per year of seniority, up to a maximum of 20%; cap on the basis for the determination of the rights: the total amount of vested retirement rights, all professional activities resulting of all plans (mandatory schemes in France and mandatory collective equivalent outside France) combined, including those from other supplemental pension plans of Valeo, acquired by the beneficiary in respect of his/her entire activity in France and outside France, shall in no case exceed 55% of the reference salary; the reference salary is the final salary which is equal to the average of the base remuneration of the 36 past months, excluding variable part, received under full time activity in the Valeo group. 4

5 Moreover, pursuant to the Board s decision of principle of April 9, 2009, it was decided to attribute five years of seniority to Jacques Aschenbroich upon his taking office, in light of his age and the fact that he does not benefit from any other complimentary retirement regime; (iii) the agreements, authorized by the Board of Directors of February 24, 2010, entitling Jacques Aschenbroich to termination benefits that will be paid in the event of a forced departure due to a change in the Company s control or strategy (forced resignation or revocation of his term of office as Chief Executive Officer, except in the event of gross professional misconduct) and allowing the Board of Directors to require Jacques Aschenbroich to sign a non-compete clause. The Board of Directors of February 24, 2011, authorized, within the framework of the renewal of Jacques Aschenbroich s term of office as Director and Chief Executive Officer, the renewal of the agreement entitling Jacques Aschenbroich to termination benefits that was authorized by the Board of Directors of February 24, 2010, and extended these benefits to 24 months compensation (fixed and variable) as from It is specified that the agreement on the non-compete clause to which Jacques Aschenbroich can be bound by the Board of Directors and which was approved by the Board of Directors of February 24, 2010 and the Shareholders Meeting of June 3, 2010, was maintained. In case of exercise of the non-compete clause, the non-compete compensation would be imputed to the amount of the termination benefits. Thus, the maximum amount of compensation to be paid to Jacques Aschenbroich as non-compete compensation and/or termination benefits would be in any case limited to 24 months compensation. (iv) The brand licensing agreement between Valeo and Valeo Service, a Group s operating subsidiary, was authorized by the Board of Directors of November 17, 2011 and was approved by the Shareholders Meeting of June 4, 2012 in its 7 th resolution. Renewal and modification of the brand licensing agreement were authorized respectively by the Board of Directors at its meeting of October 18, 2012 and of January 22, 2013, and were approved by the Shareholders Meeting of June 6, 2013 in its 7 th resolution. The above mentioned brand licensing agreement is no longer a related party agreement for the Company. These agreements, having already been approved by the Shareholders Meeting are not being resubmitted for a vote at this Meeting. e. Opinion on the compensation components owed or awarded to Pascal Colombani, Chairman of the Board of Directors, for the fiscal year ended December 31, 2013 (8 th resolution) The Board of Directors of February 20, 2014, acting on a recommendation of the Appointments, Compensation and Governance Committee and in compliance with the 5

6 recommendations of the AFEP-MEDEF code revised in June 2013 (article 24.3), to which the Company refers pursuant to Article L of the French Commercial Code, decided to submit to the shareholders opinion, on the Shareholders Meeting of May 21, 2014, the compensation components owed or awarded by the companies of Valeo Group to each executive director for the 2013 fiscal year. In order to inform the shareholders, the Board of Directors submits to the Shareholders Meeting a special report on compensation components owed or awarded by all companies of Valeo Group to each executive director for the 2013 fiscal year ( the Special Compensations Report ). We propose that, under this resolution, you deliver an opinion on the sole compensation component owed or awarded to Pascal Colombani by Valeo for the 2013 fiscal year, i.e. the amount of his fixed compensation, as presented in the Special Compensations Report. f. Opinion on compensation components owed or awarded to Jacques Aschenbroich, Chief Executive Officer, for the fiscal year ended December 31, 2013 (9 th resolution) The Board of Directors of February 20, 2014, acting on a recommendation of the Appointments, Compensation and Governance Committee and in compliance with the recommendations of the AFEP-MEDEF code revised in June 2013 (article 24.3), to which the Company refers pursuant to Article L of the French Commercial Code, decided to submit to the shareholders opinion, on the Shareholders Meeting of May 21, 2014, the compensation components owed or awarded by the companies of Valeo Group to each executive director for the 2013 fiscal year. In order to inform the shareholders, the Board of Directors submits to the Shareholders Meeting the Special Compensations Report. We propose that, under this resolution, you deliver an opinion on the following compensation components owed or awarded to Jacques Aschenbroich by Valeo for the 2013 fiscal year, as presented in the Special Compensations Report: - the amount of his fixed compensation, - the amount of his annual variable compensation, - the number and accounting valuation of performance shares allotted to him in 2013, and - the value of benefits in kind (company car, annual contribution to the Garantie Sociale des Chefs and Dirigeants d entreprise insurance scheme and annual pension contribution) provided to him. Your opinion is not requested on the other compensation components of Jacques Aschenbroich described in the Special Compensations Report (termination benefits, noncompete payment and the benefits of the pension plan), which did not result in a compensation, either owed or awarded, for the 2013 fiscal year and which were already approved as related party agreements by the Shareholders Meetings of June 3, 2010 and June 6

7 8, In any case, in the event of a renewal of Mr. Jacques Aschenbroich s terms of office as director and chief executive officer in 2015, these compensation components would be reexamined by the Board of Directors g. Determination of the annual amount of attendance fees (10 th resolution) You are asked, under the tenth resolution, to grant your approval on the maximum annual amount of the attendance fees that can be allocated to the members of the Board of Directors. The aim is to adapt this amount to the work development of the Board and its Committees. Therefore, we ask you to set the maximum annual amount of the attendance fees allocated to the Board of Directors for the year 2014 at If it is approved, this decision will be maintained and such maximum annual amount will be allocated to the Board of Directors for the subsequent years until the Shareholders Meeting adopts a new decision. This decision shall replace the former one taken by the Shareholders Meeting of June 20, 2008 which set the maximum annual amount of the attendance fees at 600,000, an amount which has not been reevaluated since that date. h. Power for formalities (14 th resolution) We ask you to grant all powers to perform any necessary formalities required by law. II. Financial management of the Company We now propose a series of resolutions that are intended to provide the Company with the financial means to develop and properly carry out its strategy, in order to share its success with all of the constituents of your Company, shareholders, employees, and corporate officers. These proposed resolutions are summarized below, and set forth in greater detail in the summary chart that follows this introduction, which we urge you to read and which is hereby incorporated by reference into this report. a. Share buy-back program (11 th resolution) We propose that you authorize your Board to buy-back Valeo shares for the reasons and according to the terms set forth in the summary table that follows this introduction, which we urge you to read and which is incorporated by reference into this report. b. Other financial authorizations Share incentive schemes for your Company s employees and corporate officers (12 th and 13 th resolutions) 7

8 (i) General description We propose that you approve two resolutions designed to enable the Company to involve employees and corporate officers in the Group s success, by allowing them to acquire shares in the Company. The purpose of these resolutions is to implement allocation plans that foster loyalty and create incentives for employees of the Company, particularly individuals who are essential to Valeo s future: key personnel, high-potential juniors, and recently promoted employees. They are also intended to strengthen Valeo s position in both historic and emerging markets, which is essential to the Group s continued growth, and in which Valeo must respond to highly volatile employment markets. We therefore propose that the Shareholders Meeting delegate to the Board of Directors the authority to: - Allot free shares, existing or to be issued to some or all Group s employees and corporate officers up to shares (12 th resolution); and - increase the capital by issuing shares or securities giving access to the capital reserved for members of employee savings plans, with waiver of the preferential subscription right in favor of such members (13 th resolution). These proposed resolutions are presented in greater detail in the summary table that follows this introduction, which we urge you to read. The approval of the delegations authorizing your Board to allot free shares (12 th resolution) or to issue shares reserved for the members of employees savings plans (13 th resolution) will trigger, under applicable law, the express waiver of the shareholders preferred subscription right in favor of the beneficiaries of these issues or allocations. (ii) Delegation to the Board of Directors of authority to allot free shares, either existing or to be issued, to all or some of the Group s employees and corporate officers (12 th resolution) The Board of Directors of February 20, 2014, acting on the recommendation of the Appointment, Compensation and Governance Committee, set out the principles that apply to the allotment of free shares or performance shares qualifying for allotment by virtue of the 12 th resolution, subject to their adoption by your Shareholders Meeting. The Board of Directors decided that: - the allotments should be distributed in the 2015 and 2016 fiscal years; - no free share should be allotted to the Company s Chairman of the Board of Directors; - the maximum number of free shares that may be allotted is shares, i.e. 1.9% of the share capital; 8

9 - the beneficiaries would be: the Chief Executive Officer, the members of the Operational Committee, the members of the Steering Committee, the main immediate subordinates of the members of the Steering Committee and, for approximately 500,000 free shares, the employees; - the maximum number of performance shares that may be allotted to the Chief Executive Officer is 75,000 performance shares, i.e. 0,1% of the share capital, it being underlined that the allotment of conditional performance shares which may be alloted to the Chief Executive Officer, appraised using IFRS norms, may not exceed 135% of his annual fixed compensation of the given fiscal year. This would make it possible to balance the full package of the Chief Executive Officer s annual compensation based on three equally weighted components: one third composed of the fixed annual compensation, one third composed of its variable annual compensation, that may not exceed 135% of his annual fixed compensation, and one third composed of the longterm performance shares that may be allotted during a given fiscal year and may not exceed 135 % of his fixed annual compensation, which would come nearer to the observed median with respect to chief executive officers compensation of companies operating within the same business sector as the Group; - the number of stock options and performance shares allotted to the Chief Executive Officer and to the Operating Committee in 2015 and in 2016 shall be subject to the satisfaction of stringent performance conditions over a period of three years. Thus, (i) the final allotment of the performance shares would be possible only following a minimum three year acquisition period from the date of their allotment; and (ii) this allotment would depend on Valeo achieving a performance measured for the period including the 2015, 2016 and 2017 fiscal years for the allotments carried out in 2015 and for the period including the 2016, 2017 and 2018 fiscal years for the allotments carried out in 2016 with respect to three criteria: the operating margin rate, the rate of return on capital employed ( ROCE ) and the rate of return pre-tax on assets ( ROA ). The criteria for the operating margin rate and the ROCE would be satisfied if for each of these criteria, the arithmetic average for the three fiscal years of the reference period, of the ratio between the rate effectively achieved and the target rate that will have been set by the Board of Directors and which must be at least equal to the guidance for the fiscal year in question, is equal to or greater than one. Then: If these three criteria are reached, the allotment of all of the performance shares will become final. If only two of these criteria are reached, only 60% of the allotment of performance shares will become final, and the remainder will be forfeited. If only one of these criteria is reached, only 30% of the allotment of performance shares will become final, and the remainder will be forfeited. 9

10 If none of these criteria is reached, none of the performance shares will be definitively granted. Approximately 500,000 free shares, which are not submitted to performance criteria, would be allotted to the employees. The allotments of stock options and performance shares in 2015 and 2016 to the members of the Steering Committee (other than the members of the Operating Committee) and their principle immediate subordinates would be subject, for 100% concerning the allotments to the members of the Steering Committee and for 50% concerning the allotments to the main immediate subordinates of the members of the Steering Committee, to the satisfaction of a performance measured over the reference period of three fiscal years with regard to two performance criteria: the operating margin rate and the ROCE. The rules for the satisfaction of these two criteria would be the same as for the allotments to the Chief Executive Officer and to the members of the Operating Committee and the following scale would be applicable to the allotments subject to performance criteria: - If two criteria are reached, the allotment of all of the performance shares will become final. - If only one criteria is reached, only 50% of performance shares subject to performance criteria will be exercised or become final respectively, and the remainder of stock options and shares subject to performance criteria will be forfeited. - If none of the criteria is reached, none of the performance shares subject to performance criteria will be exercised or definitively granted, respectively. Moreover, the free shares and performance shares allotted would be subject, for the Chief Executive Officer, to his term of office being in effect on the date of the final allotment (this presence condition may, however, be waived by the Board of Directors unless the departure is due to misconduct or gross misconduct), and, for other beneficiaries, to their employment contract or term of office being in effect and the beneficiary not being on notice period due to resignation or dismissal at the date of final allotment, except in the case of defined exceptions (death, total and permanent invalidity, retirement or pre-retirement, beneficiary whose entity has been sold or discretionary decision of the Board of Directors). The Chief Executive Officer will also be subject to obligations to retain his shares. At the end of a of three-year vesting period and of the legal two-year holding period, he must retain at least 50% of the number of performance shares definitively allotted in registered form until the termination of his term of office. Moreover, the Chief Executive Officer should not use hedging transactions to reduce his risk. The outstanding performance shares as of December 31, 2013 represented 1.34% of the share capital of the Company on that date. In the case of final allotment of all performance shares proposed in these resolutions through the issuance of new shares, the dilutive effect on the Company s capital would be limited as this percentage would increase to 3,23% of the share capital, based on the amount of the share capital as of December 31, Valeo s practice has been to allot existing shares and not to issue new shares. 10

11 The average unadjusted three-year burn rate amounts to 0.702% (this rate is lower than the maximum rate that applies to companies in Valeo s business sector). The annual volumes allotted by virtue of the 12 th resolution will be consistent with the maximum burn rate that applies to Valeo. Pursuant to Article L of the French Commercial Code, the allotment of free shares to the Company s corporate officers may not occur unless the Company implements one of the measures described in these Articles. c. Delegation of authority to be made to the Board to issue shares or securities giving access to the capital reserved for the members of employees savings plans with removal of preferential subscription rights in favor of such members (13 th resolution) The 13 th resolution is designed to enable the Company to involve employees and corporate officers in the Group s success, by allowing them to acquire shares in the Company. The purpose of this resolution is to foster loyalty and create incentives for employees and to strengthen Valeo s position in both historic and emerging markets, which is essential to the Group s continued growth. We therefore propose that the Shareholders Meeting delegate to the Board of Directors the authority to increase the capital by issuing shares or securities giving access to the capital reserved for members of employee savings plans, with waiver of the preferential subscription right in favor of such members. This proposed resolution is presented in greater detail in the summary table that follows this introduction, which we urge you to read. III. Information relating to ongoing business since the beginning of the 2014 fiscal year As global and European automobile production is expected to increase slightly in 2014 and based on raw material prices and exchange rates in line with current levels, the Group is aiming for sales growth greater than that of the market in the main production regions for the coming year and slightly higher operating margins (expressed as of percentage of turnover), compared to The beginning of the 2014 fiscal year was marked by the following developments: - On January 2, 2014, Moody s rating services confirmed its Baa3/P3 long-term and short term corporate credit ratings for Valeo with a stable outlook. - Following the exercise by Osram GmbH of its put option to sell to Valeo its entire stake in the North American joint venture, Valeo Sylvania LLC, Valeo owns 100% of Valeo Sylvania LLC share capital as of January 21, 2014 (closing date of the acquisition). - For the first time, Valeo attended the global CES Fair dedicated to technical innovation in consumer electronics which took place in Las Vegas from January 7 to Janaury 10, 11

12 2014. Valeo introduced three major innovations which will sustain its development for years to come and promote intelligent mobility, more in touch with the driver and his environment. - In order to lengthen the average maturity profile of its bond and to benefit from record low market conditions, Valeo issued on January 22, 2014 a new bond amounting to EUR 700 million, repayable in January 2024, with a 3.25% coupon. This bond issue has enabled, through an exchange operation, to buy back EUR 354 million of the 2017 bonds outstanding and EUR 227 million of the 2018 bonds outstanding. The average maturity of the Group s debt has been increased to 6 years (compared to 3.5 years previously) - A cooperation, development and license agreement was entered into on February 10, 2014 between Valeo and Leddar Tech, supplier of novel detection and ranging technology, enabling Valeo to move a step further towards the control of detection and tracking functions of road obstacles thanks to a new infrared sensor. - On February 18, 2014, Valeo s 50 % stake in the Indian joint venture relating to access mechanism activity was sold to Minda Capital Limited. March 11,

13 Draft March 21, 2014 SUMMARY TABLE OF FINANCIAL RESOLUTIONS PRESENTED AT THE SHAREHOLDERS MEETING BY THE BOARD OF DIRECTORS A glossary is provided at the end of this table; the terms that are defined therein are indicated by an asterisk. No. Purpose Period of validity Possible reasons for use of the delegation of authority Specific limit maximum Price (or method for determining price) Other information and comments 11 Authorization to carry out transactions in shares issued by the Company 18 months Possible reasons why the Company might wish to repurchase its own shares: - Implementation of Company stock option plans or any similar plan - Allocation of free shares to employees or corporate officers - Allotment or sale of shares to employees to allow them to share in the profits of the Company s expansion or for the implementation of any company or group employees savings plan (or similar plan) as provided for by law - Generally, to comply with obligations in connection with stock option programs or other allotments of shares to employees or corporate officers - Delivery of shares on exercise of rights attached to securities giving access to the capital * - Cancellation of part or all of the securities so acquired - Delivery of shares in connection with external growth, mergers, spin-offs or - The Company may not at any time hold a number of shares representing more than 10% of its share capital, as adjusted to reflect transactions affecting the share capital subsequent to this Meeting - The number of shares acquired in view of their retention or future delivery in connection with a merger, spinoff or contribution transactions may not exceed 5% of Maximum purchase price of 150 per share This delegation of authority may not be used during a public offer

14 No. Purpose Period of validity Possible reasons for use of the delegation of authority Specific limit maximum Price (or method for determining price) Other information and comments contribution transactions the share capital - Market-making in the secondary market or maintenance of liquidity of the Company s share by an investment services provider under a liquidity contract that complies with the ethical code recognized by the French stock market regulator (Autorité des Marchés Financiers) - Any other reason authorized or that may subsequently be authorized by the laws or regulations in force - Maximum total amount allocated to the share repurchase program: 1,191 million 12 Allotment of free shares to some or all employees and corporate officers of the group 26 months - May be used to create a system encouraging employee shareholding and/or employee and/or corporate officers profit sharing scheme, that would complement the current employees savings scheme and share purchase options - Cancellation of the preferential subscription right (DPS)* required by law - 1,500,000 shares (with an intermediate maximum limit of 75,000 shares to be allotted to executive corporate officers) - Included in the Overall Maximum Limit* - Possibility to adjust the number of free shares allotted to preserve the rights of beneficiaries based on the potential transactions relating to the Company s capital - Allotment of free shares policy, conditions and criteria of allotment, and potential impact of these allotments regarding dilution are described in Chapter 3 of the 2013 Registration Document: - in Sections (page 91) and (pages 95 to 103) as regards allotment to executive corporate officers, and - in Sections and (pages 105 to 108) as regards allotment to other 14

15 No. Purpose Period of validity Possible reasons for use of the delegation of authority Specific limit maximum Price (or method for determining price) Other information and comments beneficiaries. These elements are also described in Chapter 6 of the 2013 Registration Document, in Section (pages 336 and 337) and in this report (pages 7 to 11).) 13 Issuance of shares or securities giving access to the capital* reserved for members of employees savings plans with removal of preferential subscription rights (DPS)* in favor of such members 26 months - Enables the Board of Directors to offer to employees of the Valeo Group in France and abroad the possibility to subscribe new shares or securities giving access to the capital of the Company, in order for them to share in the Company s success - Resolution meeting the requirement of Article L of the French Commercial Code, which requires the Shareholders Meeting to decide upon a draft resolution allowing for a capital increase reserved for employees that are members of an employee s savings plan when the agenda of such Shareholders Meeting includes the adoption of resolutions approving an increase of capital through a cash contribution, unless the capital increase results from a prior issuance of securities giving access to the capital. - Cancellation of the preferential subscription rights (DPS)* required by law. - 5 million - Included in the Overall Maximum Limit* 15 - Price set by the Board subject to a minimum issuance price for the shares or securities giving access to the capital of: o 80% of the Reference Price* o 70% of the Reference Price* where the lock-up period stipulated by the plan is 10 years or more. - Possibility to reduce or cancel the discounts, within legal and regulatory limits, in order to take into account, in particular, local legal, accounting, tax and

16 No. Purpose Period of validity Possible reasons for use of the delegation of authority Specific limit maximum Price (or method for determining price) Other information and comments social regimes. security 16

17 Draft March 21, 2014 GLOSSARY Dividend Amount of dividends distributed in the three prior fiscal years: 2012 fiscal year: million 2011 fiscal year: million 2010 fiscal year: 90.7 million All of these amounts were eligible for the 40% allowance provided for by article of the French General Tax Code when they were distributed to individual shareholders having their tax residence in France. Preferential subscription right or DPS Any capital increase made by issuing shares for cash entitles existing shareholders to a preferential subscription right, which is detachable and may be traded during the subscription period: for a period of at least five trading days after the opening of the subscription period, each shareholder has the right to subscribe for a number of new shares in proportion to his/her existing interest in the capital. In some of the resolutions, the Board of Directors is asking you to give it the option of waiving this preferential subscription right. Indeed, depending on market conditions, the type of investors targeted by the issuance and the number of securities issued, it may be preferable or even necessary to waive shareholders preferential subscription rights in order for the newly-issued securities to be placed on the best possible terms in particular, when speed is essential to the success of an issuance or when an issuance is made on foreign financial markets. Waiving preferential subscription rights can make it easier to obtain a more important quantity of capital by offering better issue terms. Finally, in some cases, the law provides for such waiver: in particular, the approval of the resolutions delegating authority to the Board of Directors to grant free shares (12th resolution) or to issue shares reserved for members of employees savings plans (13th resolution), entails by law the express waiver by the shareholders of their preferential subscription rights in favor of the beneficiaries of these issuances or grants. Subsidiaries Companies in which the Company directly or indirectly owns more than 50% of the share capital. Overall Maximum Limit General maximum limit for capital increases made further to (i) the 9th, 10th, 11st, 12nd, 14th resolutions of the Shareholders Meeting of June 6, 2013, (ii) the 11th resolution of the Shareholders Meeting of June 4, 2012, and (iii) to the 12th and 13th resolutions of this Shareholders Meeting, and is equal to 101 million, or any other overall maximum limit that

18 could possibly be provided for by a resolution of the same kind as the 9th resolution of the Shareholders Meeting of June 6, 2013 that could follow such resolution. Reference Price Minimum issuance price required by law and equal to the weighted average of the prices of the Company s shares quoted on the regulated market of Euronext during the twenty trading sessions preceding the day of the Board decision setting the opening for subscriptions by members of a company or group savings plan (or a similar plan). Securities giving access to the capital Characteristics of securities giving access to the capital The 13th resolution submitted to this Meeting would allow the Board to reserve the issuance of securities giving access to the capital of the Company to members of savings plans, either by issuing new shares (such as bonds convertible into or redeemable for shares, or bonds with share warrants attached) or by delivering existing shares (such as OCEANE bonds, which are convertible into new shares or exchangeable for existing shares); these securities may take the form either of debt instruments as in the examples given above, or of equity instruments, as for example, shares with share warrants attached. However, the issuance of equity instruments that are convertible into debt instruments is prohibited by law. Methods of allocating the securities to which securities giving access to the capital give right, and dates when this right may be exercised Securities giving access to the capital in the form of debt securities (such as bonds convertible into or redeemable for shares, or bonds with share warrants attached) may entitle holders to shares at any time, or during specified periods, or on specified dates. This allotment of shares may be effected by conversion (e.g. convertible bonds), redemption (e.g. bonds redeemable for shares), exchange (e.g. bonds exchangeable for shares), or presentation of a warrant (e.g. bonds with share warrants attached) or by any other means during the term of the debt instruments, whether or not shareholders preferential subscription rights are maintained in respect of the securities thereby issued. In accordance with applicable law, the delegations of authority made by this Meeting in connection with the issuance of securities giving access to the capital entail the waiver by the shareholders of their preferential subscription rights for the shares issued in connection with these securities. Therefore, if the 13th resolution for the purpose of reserving the issuance of securities giving access to the capital of the Company to members of an employees savings plan is adopted at this Shareholders Meeting, you would by law waive your preferential subscription rights over any shares that the Company might issue in connection with the redemption of bonds redeemable for shares. 18