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Differences between our practices and those followed by U.S. companies under NYSE standards |
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Section 303A.11 of the New York Stock Exchange ("NYSE") Listed Company Manual ("LCM"), requires that listed foreign private issuers, such as CEMEX, S.A.B. de C.V. ("CEMEX"), must disclose any significant ways in which their corporate governance practices differ from those followed by U.S. companies under NYSE listing standards.
CEMEX is incorporated as a stock corporation with variable capital organized under the laws of the United Mexican States ("Mexico"). Its shares are listed on both the NYSE and the Mexican Stock Exchange ("MSE"). CEMEX is a holding company primarily engaged, through its operating subsidiaries, in the production, distribution, marketing and sale of cement, ready-mix concrete and clinker.
CEMEX's corporate governance practices are governed by its bylaws, by the corporate governance provisions set forth in the Ley del Mercado de Valores (the "Mexican Securities Market Law"), the Circular de Emisoras (the "Mexican Regulation for Issuers") issued by the Comisión Nacional Bancaria y de Valores (the "Mexican Banking and Securities Commission") and the Reglamento Interior de la Bolsa Mexicana de Valores (the "Mexican Stock Exchange Rules") (the Mexican Securities Market Law, the Mexican Regulation for Issuers and the Mexican Stock Exchange Rules, collectively the "Mexican Laws and Regulations"), and by applicable U.S. securities laws including the Sarbanes-Oxley Act of 2002 ("SOX") to the extent they apply to foreign private issuers like CEMEX. CEMEX is also subject to the rules of the NYSE (the "NYSE Rules") to the extent they apply to foreign private issuers. Except for those specific rules, foreign private issuers are permitted to follow home country practice in lieu of the provisions of Section 303A of the LCM.
CEMEX, on a voluntary basis, also complies with the Código de Mejores Prácticas Corporativas (the "Mexican Code of Best Corporate Practices") as indicated below, which was promulgated by a committee established by the Consejo Coordinador Empresarial ("Mexican Corporate Coordination Board"). The Mexican Corporate Coordination Board provides recommendations for better corporate governance practices for listed companies in Mexico, and the Mexican Code of Best Corporate Practices has been endorsed by the Mexican Banking and Securities Commission.
In order to comply with Section 303A.11 of the LCM, the following is a summary of significant ways in which our corporate governance practices differ from those required to be followed by U.S. domestic companies under the NYSE's listing standards.
| NYSE LISTING STANDARDS |
CEMEX CORPORATE GOVERNANCE PRACTICE |
Listed companies must have a majority of independent directors. |
Pursuant to the Mexican Securities Market Law, we are required to have
a board of directors with a maximum of 21 members, 25% of whom must be independent.
Our Board of Directors is not required to make a determination as to the
independence of our directors. Currently, our Board of Directors has 12
members and 3 alternate members, of which more than 25% are independent
under the Mexican Securities Market Law.
The Mexican Securities Market Law sets forth, in article 26, the definition
of “independence”, which differs from the one set forth in Section
303A.02 of the LCM. Generally, under the Mexican Securities Market Law,
a director is not independent if such director is an employee or officer
of the company or its subsidiaries; an individual that has significant influence
over the company or its subsidiaries; a shareholder that is part of a group
that has influence over the company; or, if there exist certain relationships
between a company and a director, entities with which the director is associated
or family members of the director. |
Non-management directors must meet at regularly executive sessions without
management.
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Under our bylaws and the Mexican Laws and Regulations, our non-management
and independent directors are not required to meet in executive sessions.
Our Board of Directors must meet at least once every three months. |
Listed companies must have a nominating/corporate governance committee composed
of independent directors.
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Under our bylaws and the Mexican Laws and Regulations, we are not required
to have a nominating committee. We do not have such committee.
Our Corporate Practices Committee operates pursuant to the provisions of
the Mexican Securities Market Law and our bylaws.
Our Corporate Practices Committee is composed of the same members of our
Audit Committee.
Our Corporate Practices Committee is responsible for evaluating the performance
of the executive officers; reviewing related party transactions; reviewing
the compensation paid to executive officers; evaluating any waivers granted
to directors or executive officers for their taking of corporate opportunities;
and carry out the activities described in the Mexican laws.
Our Corporate Practices Committee meets as required by our bylaws and by
the Mexican Laws and Regulations. One sole Committee may perform the functions
of the Corporate Practices and the Audit Committee. |
Listed companies must have a compensation committee composed of independent
directors.
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Under our bylaws and the Mexican Laws and Regulations, we are not required
to have a compensation committee. We do not have such committee. |
Listed companies must have an audit committee that satisfies the requirements
of Rule 10A-3 under the Exchange Act.
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Our Audit Committee operates pursuant to the provisions of the Mexican
Securities Market Law and our bylaws.
Our Audit Committee is composed of 5 members. According to our by-laws,
all of the members must be independent. One of the members chairs the committee
and another acts as secretary.
Our Audit Committee is responsible for evaluating the company’s internal
controls and procedures, identifying any material deficiencies it finds;
following up with any corrective or preventive measures adopted with respect
to the non-compliance with the operation and accounting guidelines and policies;
evaluating the performance of the external auditors; describing and valuating
those non-audit services rendered by the external auditor; reviewing the
company’s financial statements; assessing the effects of any modifications
to the accounting policies approved during a fiscal year; overseeing measures
adopted as result of any observations made by shareholders, directors, executive
officers, employees or any third parties with respect to accounting, internal
controls and internal and external audit, as well as any complaints regarding
irregularities on management, including anonymous and confidential methods
for addressing concerns raised by employees; assuring the execution of resolutions
adopted at shareholders’ or board of directors’ meetings.
Our Board of Directors has determined that it has an "audit committee
financial expert" serving on its Audit Committee.
Our Audit Committee meets as required by our bylaws and by the Mexican Laws
and Regulations. One sole Committee may perform the functions of the Audit
and the Corporate Practices Committee. |
Listed companies must adopt and disclose corporate governance guidelines.
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Under our bylaws and the Mexican Laws and Regulations, we are not required
to adopt corporate governance guidelines, but, on an annual basis, we file
a report with the Mexican Banking and Securities Commission and the Bolsa
Mexicana de Valores (the "Mexican Stock Exchange") regarding our
compliance with the Mexican Code of Best Corporate Practices. |
Listed companies must adopt and disclose a code of business conduct and
ethics for directors, officers and employees, and promptly disclose any
waivers of the code for directors or executive officers.
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We have adopted a written code of ethics that applies to all of employees,
including our principal executive officer, principal financial officer and
principal accounting officer.
You may request a copy of our code of ethics, at no cost, by writing to
or telephoning us as follows:
CEMEX, S.A.B. de C.V.
Av. Ricardo Margáin Zozaya #325
Colonia Valle del Campestre
Garza García, Nuevo León, México 66265
Attn: Luis Hernández or Javier Amaya
Telephone:(011-5281) 8888-8888 |
Equity compensation plans require shareholder approval, subject to limited
exemptions.
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Shareholder approval is not expressly required under our bylaws for the
adoption and amendment of an equity compensation plan. No equity compensation
plans have been submitted for approval by our shareholders. |
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