HERMÈS - 2019 Universal Registration Document

3

CORPORATE GOVERNANCE SUPERVISORY BOARD'S REPORT ON CORPORATE GOVERNANCE

SUPERVISORY BOARD'S REPORT ON CORPORATE GOVERNANCE

This chapter incorporates, in sections 3.1 to 3.7, the report of the Supervisory Board on corporate governance prepared pursuant to Article L. 226-10-1 of the French Commercial Code ( Code de commerce ) and in accordance with the recommendations of the Financial Markets Authority (AMF). It was jointly prepared by the Chairman of the Supervisory Board, the CAG-CSR Committee, the Board Secretary and the functional departments concerned. It was approved by the Supervisory Board at its meeting of 25 February 2020.

THE COMPANY’S CORPORATE GOVERNANCE CODE

3.1

CORPORATE GOVERNANCE PRINCIPLES APPLIED The Supervisory Board officially adopted the Afep-Medef recommendations on corporate governance in 2009, as it deemed these recommendations to be entirely in keeping with the Group’s corporate governance policy. The guidelines include the Afep-Medef Corporate Governance Code for listed companies, updated in January 2020, and the recommendations from the HCGE (Corporate Governance High Committee), which further elaborate this Code’s recommendations. With each revision of the Afep-Medef Code, the CAG-CSR Committee performs an exhaustive comparative analysis of the Company’s application of the Afep-Medef Code’s recommendations, and reports to the Supervisory Board. 3.1.1

PROVISIONS OF THE AFEP-MEDEF CORPORATE GOVERNANCE CODE, UPDATED IN JANUARY 2020, NOT APPLIED BY VIRTUE OF THE COMPANY’S LEGAL FORM OR OTHER REASONS – NEWLY COMPLIED WITH

3.1.2

The table below lists the provisions of the Afep-Medef Code not applied by the Company. In line with the recommendations of the AMF, the provisions not applied on account of the Company’s legal form are singled out from those not applied for other reasons, with the corresponding explanations. We have also listed the changes made since the most recent update of the Afep-Medef Code in January 2020 to ensure compliance therewith.

Provisions of the Afep-Medef Code not applied due to the Company’s legal form

Explanations

In view of the role of the Supervisory Board (described on page 213) in a société en commandité par actions (SCA – partnership limited by shares), this provision of the Afep-Medef Code does not apply.

Board meetings and committee meetings (Article 11.3) It is recommended that at least one meeting not attended by the Executive Corporate Officers be organised each year. Succession plan for Executive Corporate Officers (Article 17.2.2) The Appointments Committee (or an ad hoc committee) should design a plan for replacement of Executive Corporate Officers. This is one of the Committee’s most important tasks even though it can, if necessary, be entrusted by the Board to an ad hoc committee. The Chairman may take part or be involved in the Committee’s work during the conduct of this task. Composition of the Compensation Committee (Article 18.1) It is recommended that one of its members be an employee director.

The Company’s CAG-CSR Committee (see description starting on page 249 et seq. ) is not in charge of establishing the succession plan for the Executive Chairmen, a task that does not fall within the remit of the Supervisory Board in an SCA. In accordance with its rules of procedure, since 2016 the CAG-CSR Committee has been tasked with ensuring the existence of a succession plan for the Executive Chairmen, which it first did in 2017, with annual reviews thereafter (see page 197). In 2018, the CAG-CSR Committee also ensured that there was a succession plan for the Chairman of the Supervisory Board, and this mission features in its rules of procedure (see page 209). The Company’s CAG-CSR Committee (see description starting on page 249 et seq. ) is not tasked with establishing the compensation policy for the Executive Chairmen, a task that falls within the remit of the Active Partner and not the Supervisory Board. The Supervisory Board therefore decided that it was not relevant for an employee representative to be a member. The role of the Supervisory Board in the decision-making process applicable to the compensation policy for the Executive Chairmen is described on page 257.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

194