GPA’s model for corporate governance is driven by transparency in the disclosure of information, a commitment to the capital markets, and respect for shareholders and investors.

Listed on Corporate Governance Level 1 of the BM&FBovespa (Bolsa de Valores de São Paulo), the Company has adopted the International Financial Reporting Standards - IFRS issued by the International Accounting Standards Board - IASB, and follows the rules of the Brazilian Securities Commission (Comissão de Valores Mobiliários – CVM). Outside of Brazil, it is subject to the regulation of foreign companies listed in the United States, by its Securities & Exchange Commission – SEC and the New York Stock Exchange.

GPA also follows the guidelines of the Sarbanes-Oxley Act (SOX), which tries to ensure that companies maintain mechanisms for auditing and reliable controls. In addition, differentiated practices of governance beyond those required for companies listed on Corporate Governance Level 1:

> 58% of the members of the Board of Directors are independent.

> Five committees, the majority of which are composed by members who are external to and independent from the Company, advise the Board of Directors.

> Dividends Policy.

> Specific committees to discuss and resolve on compliance with the policies for Securities Trading and the Disclosure and Use of Material Information and the Guarding of Confidentiality.

Model of Governance

GPA is managed by two main bodies: the Board of Directors and the Board of Executive Officers, with established roles and responsibilities in administering the businesses. In this structure, the Board of Directors enjoys the support and advice of five committees formed by representatives of the Board of Directors and by external members specialized in their respective areas of activity. <4.1 and 4.4>

Members of the Board of Directors and the committees, including the external members, receive fixed monthly compensation, unrelated to their actual participation in meetings and adjusted annually based on market surveys and standards. <4.5>

Executive compensation is structured based on programs that monitor the achievement of the Company’s pre-established goals. The evaluation of the executives follows a meritocratic model, with annual quantitative and qualitative goals, in addition to a behavioral component based on the 360º concept, which consists of a self-evaluation and evaluations by the Chief Executive Officer, subordinates and colleagues, based on the skills required by the Company and the performance expected of the position. <4.10>

The Shareholders’ Meeting is the principal channel of communication between the Company’s shareholders and administration. Convoked on 15 days’ notice, it is a formal space for resolutions, recommendations or critiques of the Company. <4.4>

The Office of Investor Relations is another channel of communication for shareholders, who may be in contact by phone (+55 11 3886-0421) or email ([email protected]). This office promotes dialogue with shareholders, investors and market analysts, by developing a series of actions, including among others: teleconferences and publication of releases with quarterly results; investor day; presentations at public events in Brazil promoted by Brazilian and international financial institutions; etc. <4.4>

Employees, in turn, have specific channels such as the Call-for-Action (Lig-Ação), a channel for complaints about illicit acts that violate the Code of Moral Conduct, or situations involving fraud. Complaints can be made by phone during business hours (Monday through Friday, from 8 a.m. to 5:30 p.m.) or by 24-hour voice mail, at 0800-55-57-11, or by email ([email protected]) or letter (GPA – 0800 – São Paulo – SP – CEP: 01401-999).

Board of Directors

A collegial deliberative body responsible for the overall guidance of the businesses, the Board of Directors has 12 members, including five representatives of the controlling shareholder (the Casino Group) and seven independent directors. The members have a mandate of three years, with re-election being permitted. <4.3>

The Board’s main tasks are: electing the executive officers, supervising the conduct of the business, conducting the corporate governance process, convoking Shareholders’ Meetings, establishing strategies and monitoring their execution. The body is also responsible for approving the financial statements, the annual budget and investments, and the issuance of new shares pursuant to the existing stock option plan.

Meetings are held on an ordinary basis five times per year, or whenever needed. In line with the best practices of corporate governance, the chairman of the Board does not have an executive role at the Company. In 2013, there were 18 meetings, and aggregate director compensation totaled R$6.6 million. <4.2>

Board of Executive Officersa

It consists of nine market professionals specializing in their respective areas, including one CEO, three vice-presidents and five executive officers or heads of business, all elected by the Board of Directors and having variable compensation pegged to the Company’s results. In 2013, aggregate compensation of the board of executive officers was R$43.6 million1.

The officers are responsible for GPA’s day-to-day administration, in line with the guidelines relating to managing the business established by the Board of Directors. In January of 2014, the CEO, Enéas Pestana, submitted a letter of resignation to the Board of Directors, which appointed one of its directors, Ronaldo Iabrudi, to assume the role.

Committees

GPA’s model of governance also prizes administrative efficiency and the professionalization of its managers. In this framework, the committees, whose meetings are held with the periodicity established in each set of internal regulations, have a fundamental role in the interface between the Board of Directors and the Board of Executive Officers.

GPA has five sitting committees, which develop proposals and supply recommendations in their respective areas to the Board of Directors.

These committees are formed by representatives of the Board of Directors and external members, named based on the following criteria: they may not be members the Board of Directors or the Board of Executive Officers of the Group or the entities it controls; they may not be the spouses or family through the second degree of members of the Board of Directors or the Board of Executive Officers of the Group or the entities it controls; they must have knowledge and recognized experience in their respective areas; and they may not occupy positions at companies that compete with the Group and the entities it controls <4.3 and 4.7>

Audit Committee

Formed by three members, of whom two are external and one an independent representative of the Board of Directors, with a mandate of one year, the Audit Committee is responsible for: analyzing management’s report and the financial statements of the Company and the entities it controls; evaluating the effectiveness and sufficiency of the structure of internal controls and the internal and independent auditing processes of the Company and the entities it controls, including in light of the dispositions of the Sarbanes-Oxley Act.

Sustainability Committee <4.9>

Active since 2009, it is formed by five members, of whom one is external and others are representatives of the Board of Directors. The main tasks of the Sustainability Committee are to approve GPA’s strategic guidance on sustainability, evaluate sustainable policies and practices, and promote the initiatives toward sustainability among the leadership and the Board of Directors, among others. In 2013, there were seven meetings.

Finance Committee

Formed by five members, including one external member and the others representing the Board of Directors. The committee is responsible for monitoring and supervising the implementation and realization of the annual investment plan; reviewing and recommending opportunities related to financing transactions to improve the capital structure; and reviewing cash flow. Meetings are held at least every two months. In 2013, the Finance Committee met six times.

Corporate Governance Committee

Created in 2012, it is formed by five members, all representatives of the Board of Directors, including four independent members. Its responsibilities include, among others, ensuring the adoption of the best practices of corporate governance at the Company; and monitoring observance of the Brazilian corporate and securities laws, and the securities market regulators to which the Company is subject. During the year, there were eight meetings.

Human Resources and Compensation Committee

Currently consists of three members, all representatives of the Board of Directors, including two who are independent. Among other matters, it is responsible for examining candidates for becoming members of the Board of Directors and the Board of Executive Officers; reviewing and discussing the compensation of the administration and the stock option plan; proposing criteria to assess the performance of managers, as well as establishing the compensation and incentive policies; and reviewing the Company’s methods of recruitment and selection. In 2013, the committee met eight times.

Fiscal Council

Formed by three sitting members and three alternates, it is responsible for supervising the acts of the administrators, analyzing the Company’s financial statements, and reporting its observations to shareholders. Installed in 2009, it should be active until its tasks are absorbed by the recently seated Audit Committee, in 2014. Under the Company’s bylaws, the Fiscal Council is not a permanent body, and its installation and the election of its members has occurred annually every year since 2009.

Codes and Policies

GPA’s model of corporate governance also consists of a combination of codes and policies that supply the guidelines and the procedures to be followed by all employees and other constituencies, with the objective of ensuring the sustainable practice of the Company. These documents are available for reading or downloading at (www.gpari.com.br).

 

In 2013, the Group advanced in this area by reviewing and updating the Policy for the Disclosure and Use of Material Information and Guarding Confidentiality, which establishes rules for the disclosure and confidentiality of material information, and the Policy for Trading in Securities, which establishes the procedures to be followed in any trading of securities issued by the Company or referenced to them, to guarantee the adoption of good practices and avoid the improper use of confidential information.

The two policies were aligned to GPA’s model of governance, with the inclusion of innovations such as the creation of specific committees responsible for monitoring the execution of each policy. Constituted by the CEO, the vice-president for Finance, the Corporate Communications officer, the Legal officer and the Investor Relations officer, these committees work with the Corporate Governance Committee to reinforce the control mechanisms and standardize the disclosure of information to the market. Committee meetings are held whenever needed.

GPA’s Code of Moral Conduct was relaunched in 2011, and guides the ethical principles and standards that should orient the internal and external relationships of its employees with the company, customers, suppliers, competitors and the public in general. <4.8>

All the business units and companies are submitted to an assessment of risks relating to corruption. <SO2>

At GPA, 0.3% of managers and 36% of the other employees received training relating to corruption in 2013. At Via Varejo, 27.2% of the employees received training with a focus on corruption. The company prepares e-learning on the Code of Conduct for all employees. In addition, 23,983 employees participated in intake training, which deals with, among other matters, GPA’s Code of Moral Conduct. The goal for intake training is to cover all new employees. At Nova Pontocom, 100% of employees hired at all levels in 2013 underwent intake processes. At Assaí, all employees hired in 2013 participated in the Intake Program, which includes GPA’s code of ethical conduct. The goal for 2014 is to raise consciousness through training and talks on ethics and integrity among 100% of the employees in the Marketing department and train the entire leadership cadre (managers of stores and offices) on concepts and behaviors in relation to ethics and integrity in managing the business.

In 2013, training on the code of ethical conduct, the workday, respect for workers’ rights and legal processes for personnel management were reported, totaling 42,578 hours of training for 65% of employees. At Via Varejo, 27.2% of the employees participated in 17,674 hours of trainings on policies and procedures in connection with the Code of Conduct. Employees at Assaí, due to its strong expansion in 2013 and the consequent increase in the staff, accounted for a larger percentage of the participants in attendance at trainings on human rights. As a goal, Assaí will try to implement programs and processes that permit better handling of human rights and diversity and train the leadership on the processes of managing people and dealing with human rights. In the other businesses, there is currently no training on the topic of human rights. <HR3>

External Auditing

In compliance with the standards of the CVM (Comissão de Valores Mobiliários), GPA has adopted a system to rotate independent auditors every five years. The Financial Statements as of and for the year ended December 31, 2013 were audited by Deloitte Touche Tohmatsu Auditores Independentes.