Sarbanes-Oxley Act

Corporate Governance

 

Sarbanes-Oxley Act

The Sarbanes-Oxley Act of 2002 (the Act), which was signed into law by U.S. President George W. Bush on July 30, 2002, has far-reaching implications for non-U.S. companies that issue securities in the United States or whose securities are traded on U.S. securities exchanges.

The Act mandated a number of reforms to enhance corporate responsibility and financial disclosure and to combat corporate and accounting fraud. It also created the Public Company Accounting Oversight Board to oversee the activities of the auditing profession. You can find links to all of the rules and reports issued by the U.S. Securities and Exchange Commission (the SEC) under the Act at:

http://www.sec.gov/spotlight/sarbanes-oxley.htm  

Our compliance with the Act

We comply with all applicable laws and regulations. We further adhere to best practices that are in the best interest of our investors. For example, we adhere to the SEC's Regulation Fair Disclosure (FD), which prohibits selective disclosure of material information, even though Regulation FD does not apply to non-U.S. issuers. We voluntarily subscribe to Regulation FD because we firmly believe that it reinforces the integrity of the securities markets and increases investor confidence.

The steps we have taken to comply with the Act include:

  • CEO/CFO Certification of Financial Reports

    The Act requires that each annual report filed with the SEC on Form 20-F include a written certification by the issuer's CEO and CFO that no material untrue statements are made and no material omissions exist. Beginning in 2003, our CEO and our Executive Vice President of Planning and Finance certified our Form 20-F annual report.

  • Internal Certification

    We developed a system to assist the CEO and CFO's certification process, in which all of the senior executives who are responsible for providing operating and financial information for public disclosure certify that the information is accurate and no material omissions exist. This internal certification process is not required by the Act, but we believe it is helpful to ensure compliance.

  • Internal Controls

    The Act requires that we include in our annual report on Form 20-F, a report of management on the company's internal control over financial reporting, which must include, among other things, a statement that our external auditors have issued an attestation report on management's assessment of the company's internal control over financial reporting. We are working diligently to ensure that management can give a favorable assessment in our annual report for 2005.

  • Independent Audit Committee

    The Act mandates that each public company establish an audit committee that maintains certain standards of independence. The audit committee is charged, among other things, with overseeing the company's external auditors and establishing mechanisms to ensure the anonymous and confidential treatment of employee complaints regarding accounting and auditing matters. In 2002 our shareholders approved amendments to our by-laws establishing an audit committee. Our audit committee is comprised of three directors, all of whom qualify as independent directors under the Act. In addition, one of the members of the audit committee qualifies as a "financial expert", as defined in the Act.

  • Code of Ethics

    The Act directs the SEC to adopt rules that require each public company to disclose in periodic reports whether it has adopted a code of ethics for its senior financial officers. In 2000 we adopted our code of ethics, which requires all of our employees to abide by the same high standards of conduct. In 2004 we amended and updated our code of ethics to ensure compliance with the Act and to clarify and enhance its provisions.

 

Our commitment to deliver value to our stockholders rests on a clear recognition that, as a public company, we are stewards of other people’s money. They invest with us to achieve superior long-term returns at acceptable risk. We have never—and will never—lose sight of that fact.

We are committed to abide by the laws and regulations of every jurisdiction in which we operate. Our shares are listed on the Mexican Stock Exchange and on the New York Stock Exchange ("NYSE"), and as such, we adhere to all applicable Mexican regulations and NYSE and U.S. Securities and Exchange Commission requirements for foreign issuers, including the Sarbanes-Oxley Act of 2002.

Nonetheless, we recognize that our strict adherence to the law is not enough to run a growing, global organization. Beyond compliance, our commitment—to ourselves, our investors, and to all of our stakeholders—is to manage CEMEX with integrity. Everything we do rests on this foundation.

Our financial culture and management style are open and transparent. Through our regular meetings, reports, guidance, conference calls, and personal interactions, we vigorously work to keep our investors fully and fairly informed of our activities and to ensure our financial disclosure meets the highest ethical standards.

While our board of directors is ultimately responsible for supervising the overall operation of our company, all of our employees play a critical role in enforcing good governance and financial reporting practices. We, therefore, encourage them to comment on our reporting methods and processes and to voice any concerns.

We know that to succeed we must not just do the right things, but do them the right way. Hence, our code of ethics works to ensure that all of our employees abide by the same high standards of conduct in their daily interactions. The code governs our relationships with all of our stakeholders, including such important areas as workplace safety, environmental responsibility, confidentiality, conflicts of interest, financial controls, and preservation of assets.

Finally, we firmly believe that, as managers of a public company, our economic interests should always be aligned with those of our shareholders. Thus, we have adopted stock-based compensation plans that ensure that our managers acquire and retain over time an ownership interest in CEMEX.

We have established governance and management practices that are consistent with our relentless commitment to creating long-term stockholder value. These practices are part of the reason that we have grown from a regional Mexico-based company to a global industry player. They are part of the reason that we are regularly one of the most profitable of our global industry peers. And they are a part of the reason that we are well-positioned for an even more productive future.

Questions?

You may find answers to our most frequently asked questions in our FAQ's page. If your question is unanswered, please contact the investor relations team at the location of your convenience.

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