Assystem - 2018 Register document

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CORPORATE GOVERNANCE REPORT

COMPENSATION AND BENEFITS IN KIND ALLOCATED BY THE COMPANY AND OTHER GROUP ENTITIES TO MEMBERS OF THE ADMINISTRATIVE AND MANAGEMENT BODIES IN OFFICE

4.2.2.3.1 DOMINIQUE LOUIS Following the formation of HDL Development and its successful takeover bid for Assystem shares, two related party agreements were signed on 1 April 2014 between HDL and HDL Development: ● a services agreement in relation to HDL’s compensation as Chair of HDL Development. In 2018, €200,000 (excl. VAT) was paid to HDL under this agreement; ● a services agreement (amended on 1 October 2014, 29 April 2015, 7 March 2017 and 15 March 2018) under which HDL undertook to provide services to HDL Development involving strategy definition, management, organisation and oversight for the Assystem Group in return for compensation comprising a fixed and variable portion. In accordance with this second agreement, HDL Development paid HDL fixed compensation of €348,000 (excl. VAT) for 2018 (as for previous years). Of this amount, €174,000 (excl. VAT) was rebilled to Assystem as provided for in an agreement signed between HDL Development and Assystem (whereas in previous years the whole amount was rebilled). In addition, in application of the Board of Directors’ decision of 15 March 2018, based on the Nominations and Compensation Committee’s recommendation issued on that same date, this agreement provided for the payment of variable compensation for 2018 representing up to €800,000 (excl. VAT). As stated in the agreement entered into between HDL Development and Assystem, if this variable compensation was earned its amount was to be rebilled to Assystem based wholly on Assystem’s consolidated EBITA margin (i.e. EBITA including the share of profit of equity-accounted investees apart from Expleo Group expressed as a percentage of revenue). The amount payable in relation to this criterion was to be determined on a straight-line basis between a floor (i.e., the level below which the criterion was deemed not to have been met) and a cap (i.e. the level at which the criterion was deemed to have been fully met), it being specified that EBITA corresponds to operating profit (including the share of operating profit of equity- accounted investees whose business is directly related to the business of the Company’s fully-consolidated entities) before share-based payment expense (free shares/performance shares and stock options), acquisition costs, capital gains and losses arising on business divestments, and non-recurring income and expenses related to unusual, atypical and infrequent events. Acting on the recommendation of the Nominations and Compensation Committee, and based on an analysis of the criterion, the Board of Directors decided not to award the variable portion to HDL for 2018. Lastly, in compliance with Articles L. 225-47 and 225-53 of the French Commercial Code, at its meeting on 22 May 2014, the Board set at €50,000 the gross annual compensation payable to Dominique Louis in his capacity as Chairman of Assystem’s Board of Directors. Dominique Louis was paid this sum in 2018, divided into monthly instalments. No stock options or performance shares were awarded to Dominique Louis in 2018.

4.2.2.3.2 PHILIPPE CHEVALLIER At its 9 March 2016 meeting, the Board unanimously decided to set Philippe Chevallier’s compensation as CFO & Deputy CEO as follows:

● gross annual fixed compensation of €315,000;

● gross annual variable compensation of up to €300,000 depending on the achievement of performance targets set each year. At its 15 March 2018 meeting, acting on the recommendation of the Nominations and Compensation Committee issued on that same date, the Board decided that 60% of Philippe Chevallier’s variable compensation for 2018 would be based on Assystem’s consolidated EBITA and the remaining 40% would be based on the year-on-year improvement in average quarterly days sales outstanding (DSO). For this purpose (i) an improvement in average quarterly DSO corresponds to a reduction in said DSO, and (ii) quarterly DSO corresponds to the number of days obtained by dividing the amount of trade receivables in the consolidated balance sheet at the end of the quarter (including accrued trade receivables and net of any accounts receivable credit balances) by the amount of consolidated revenue for the quarter (including VAT and determined on an annualised basis for calculating DSO), it being specified that both of these figures would be adjusted where necessary for changes in the scope of consolidation. The amount payable in relation to these criteria was determined on a straight-line basis between a floor (i.e. the level below which the criterion is deemed not to have been met) and a cap (i.e. the level at which the criterion deemed to have been fully met). At its 13 March 2019 meeting, acting on the recommendation of the Nominations and Compensation Committee issued on 12 March 2019, and based on the above criteria, the Board of Directors decided to award Philippe Chevallier €50,000 (gross) in variable compensation for 2018. Previously, at its 9 March 2016 meeting, the Board decided that if Philippe Chevallier’s term of office as CFO & Deputy CEO were to be terminated at the Company’s initiative before the Annual General Meeting to be held to approve the parent company and consolidated financial statements for 2019, he would be eligible for a termination benefit of €500,000. Payment of this termination benefit would, however, be subject to the following conditions: ● Philippe Chevallier must not have committed gross negligence or wilful misconduct within the meaning of the provisions of French labour law and employment-related case law; ● the following performance criteria set at Group level must have been met: (i) the Statutory Auditors must have signed off on the consolidated financial statements without any reservations, and within the legally prescribed timeframe, throughout Philippe Chevallier’s term of office, and (ii) average ROCE (after standard-rate tax) must amount to least 6% for the last three financial years preceding his departure. In compliance with Articles L. 225-42-1 and L. 225-40 of the French Commercial Code, this termination benefit was approved by Assystem’s shareholders at the Annual General Meeting held on 24 May 2016. No stock options or performance shares were awarded to Philippe Chevallier in 2018.

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ASSYSTEM

REGISTRATION DOCUMENT 2018