HERMÈS - 2019 Universal Registration Document

CORPORATE GOVERNANCE SUPERVISORY BOARD'S' REPORT ON CORPORATE GOVERNANCE

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

Explanations

The Supervisory Board determined that slightly less than two-thirds of the Audit and Risk Committee members are independent (60%, i.e. three out of five members). This situation enables the Audit and Risk Committee to carry out its duties in an appropriate manner. The Audit and Risk Committee rules of procedure stipulate that at least one-half of the seats on the Audit and Risk Committee should be held by members who qualified as independent at the time of their appointment and throughout their term of office. In its 2014 report, the HCGE considers “that an Audit Committee with, for example, three independent members out of five remains compliant with the spirit of the Code, provided that the Chairman is an independent member”, as is the case for this company. There are no immediate plans to increase the proportion of independent members of the Audit and Risk Committee to two-thirds, however the Board will review the matter at each annual evaluation. The Company has undertaken to make a severance payment to Mr Axel Dumas under the conditions described in the explanatory statement on page 418 et seq . Given the importance of the Active Partner’s role in an SCA including the power to appoint and dismiss any Executive Chairman and, in the case of a legal entity, its legal representative, it was decided that any termination of Mr Axel Dumas duties as Executive Chairman resulting from the replacement of the Executive Chairman of Émile Hermès SARL should be deemed a forced departure. The Supervisory Board accordingly considered that the deferred compensation undertaking made for the benefit of Mr Axel Dumas complied with the requirements of the Afep-Medef Corporate Governance Code. In its November 2018 report on corporate governance and Senior Executive compensation, the AMF recommends that the Board carry out a regular review of the components of compensation that may be due at the time of or subsequent to the departure of an officer and that it questions the possibility and desirability of compliance with new Code provisions. No compliance was made necessary by the new provisions of the Afep-Medef Code updated in January 2020.

Proportion of independent members on the Audit and Risk Committee (Article 16.1) Independent directors should account for at least two thirds of Audit and Risk Committee members and the Committee should not include any Executive Corporate Officers.

Severance payment (Article 25.5.1) The performance requirements set out by Boards for these benefits must be evaluated over at least two financial years. They must be demanding and may not allow for the indemnification of a director unless his or her departure is forced, regardless of the form of this departure.

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Changes made since the most recent update of the Afep-Medef Code in January 2020 to ensure compliance therewith

Explanations

The gender balance policy and the resulting objectives are described on page 203. The results obtained in 2020 will be described in the 2020 Universal registration document published in 2021. It has been decided to adopt the scope referred to in Article L. 227-37-3 of the French Commercial Code ( Code de commerce ) and to establish the ratios on the basis of information about Hermès International. These ratios are presented on page 266 and 267.

Gender balance policy in governing bodies (Article 7)

Equity ratios (Article 26.2)

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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