HERMÈS - 2019 Universal Registration Document

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CORPORATE GOVERNANCE SUPERVISORY BOARD'S' REPORT ON CORPORATE GOVERNANCE

COMPENSATION AND BENEFITS PAID TO CORPORATE OFFICERS

3.5

COMPENSATION POLICY FOR THE EXECUTIVE CHAIRMEN (EXECUTIVE CORPORATE OFFICERS) AND MEMBERS OF THE SUPERVISORY BOARD (NON-EXECUTIVE CORPORATE OFFICERS)

3.5.1

an initial annual ex-ante vote will be taken on the compensation s policy for Corporate Officers ( i.e . the Executive Chairmen and members of the Supervisory Board). This policy must set out the principles and criteria, aligned with the interests of the Company, determining the compensation of Corporate Officers. The policy is binding, which means that compensation paid to Corporate Officers is confined to that set out in a previously approved compensation policy. If a new compensation policy is rejected, the most recent approved policy continues to apply and a revised compensation policy is submitted to the Company’s next Ordinary General Meeting. In the absence of a previously approved compensation policy, compensation is determined in accordance with the compensation granted for the previous financial year or, in the absence of compensation granted for the previous financial year, in accordance with existing practices within the Company. In exceptional circumstances, it is possible to depart from the application of the compensation policy if this departure is temporary, aligned with the corporate interest and necessary to guarantee the Company’s continuity or viability; a second ex-post vote is taken on the content of the corporate s governance report setting out the compensation paid or awarded to Corporate Officers during the prior financial year. The content of this report has been expanded to include new disclosures, including equity ratios. Several resolutions must be presented: a resolution on disclosures concerning all compensation paid or • awarded to Corporate Officers during or in respect of the prior financial year ( i.e . the Executive Chairmen, the Chairman of the Supervisory Board and other members of the Board). If rejected, a revised compensation policy is submitted to the Company’s next Ordinary General Meeting. The payment of compensation to Supervisory Board members for the current financial year (formerly termed “directors’ fees”) is suspended until a revised compensation policy is approved. If the revised compensation policy is rejected, the suspended amounts are not paid and the compensation of the members of the Supervisory Board for the current financial year is suspended, a resolution for each Executive Chairman and a resolution for the • Chairman of the Supervisory Board concerning the total compensation and benefits of any kind paid during or awarded in respect of the prior financial year (Supervisory Board members are not subject to individual votes). The payment of the variable and exceptional portion of the compensation of the relevant person is subject to the prior approval of the resolution concerning him/her.

Framework in force in 2019 The provisions resulting from law 2016-1691 of 9 December 2016 relating to transparency, the fight against corruption and the modernisation of economic life (known as “Sapin II”), in particular Articles L. 225-37-2 and L. 225-82-2 of the French Commercial Code relating to: approval by the General Meeting of the principles and criteria for s determining, allocating and awarding the fixed, variable and exceptional components of the compensation of Executive Corporate Officers ( ex-ante vote); approval of the components of compensation paid or allocated in s application of the said principles ( ex-post vote) to executive and non-Executive Corporate Officers; were not applicable to partnerships limited by shares by virtue of Article L. 226-1 of the same Code, which expressly excludes them. The Company complied with the recommendations of the Afep-Medef Code (revised in November 2016) by asking the General Meeting to vote ex-post on the compensation of the Executive Chairmen, on an advisory basis (see the 2018 registration document – explanatory memorandum on page 372). The 2018 compensation of the Executive Chairmen was accordingly submitted to a vote of the General Meeting in 2019. In addition, pursuant to Article L. 225-42-1 of the French Commercial Code, commitments in respect of the Executive Chairmen’s deferred compensation (commitments corresponding to compensation, indemnities or benefits due or liable to be due as a result of the termination or change of these functions, or subsequent to these functions, or defined-benefit pension commitments) were subject to the strengthened regulated agreements procedure. These commitments therefore required a decision by the Supervisory Board and approval by the General Meeting in a specific resolution. System applicable from 2020 Order 2019-1234 of 27 November 2019 created a new mechanism applicable to partnerships limited by shares ( sociétés en commandite par actions ) as regards Senior Executive compensation. This text comes into force for the Company from the date of the Combined General Meeting of 24 April 2020. The new system is based on a dual vote by the Ordinary General Meeting and the Active Partner:

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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