HERMÈS - 2019 Universal Registration Document

CORPORATE GOVERNANCE SUPERVISORY BOARD'S' REPORT ON CORPORATE GOVERNANCE

COMPENSATION POLICY GUIDELINES

the compensation of the Executive Chairmen is determined on the s basis of clear, quantifiable criteria (notably growth in revenue and change inconsolidated net income before tax, as described on page 258 below) that are relevant to its business model and have remained unchanged for a considerable number of years; the variable compensation is subject in part (10%) to a CSR criterion s reflecting the Group’s firm and ongoing commitments to sustainable development (for the composition of the CSR criterion, see page 258); the composition of compensation is simple and clear – fixed and s variable compensation, without resorting to complex deferred compensation mechanisms and without guaranteeing a minimum variable compensation in the event of a poor economic performance by the Company; the Executive Management Board of Émile Hermès SARL sets the s actual amount of each Executive Chairman’s statutory annual compensation as per the Articles of Association. To this end, it uses the recommendations of the CAG-CSR Committee and in , in addition to the level of achievement of CSR criteria,takes into account in its decision the performance achieved by the Group in respect of the previous financial year, the strategic challenges in respect of the Group’s medium- and long-term development and the competitive environment in which it operates. As regards the members of the Supervisory Board: the principles governing allocation set out in the compensation policy s for members of the Supervisory Board result in amounts being awarded on the basis of the tasks entrusted to them and their attendance at meetings; these principles are periodically reviewed in line with market s practices. Manner in which the conditions of compensation and employment of the Company’s employees are taken into account in the decision-making process (Article R. 226-1-1, I-3° of the French Commercial Code (Code de commerce)) The conditions of compensation and employment of the Group’s employees are described in chapter 2 of this Universal registration document pages 81 and seq. With regard more specifically to the conditions governing compensation, Hermès’ economic successes are regularly shared with all Group employees, both in France and around the world, in various forms. The aim is to acknowledge the contribution made by employees to the House’s development, regardless of their role in the value-creation chain, in order to share the benefits of our growth over the long term. The Group’s policy is to allow its employees to benefit from its long-term growth prospects through various mechanisms: in general, in all the countries where the Company operates, its s employees are paid in line with market standards in terms of their total compensation;

3.5.1.1

FOR CORPORATE OFFICERS

Pursuant to paragraph 4 of Article L. 226-8-1-I of the French Commercial Code ( Code de commerce ), resulting from the aforementioned order, we hereby present the compensation policy for Corporate Officers (Executive Chairmen and members of the Supervisory Board). This policy describes all components of fixed and variable compensation and explains the decision-making process applied for its determination, review and implementation. The operating rules specific to partnerships limited by shares and the Company’s governance system have resulted in the establishment of the compensation policy for Senior Executives (Executive Chairmen) and other Corporate Officers (Supervisory Board members) being entrusted to the Active Partner and the Supervisory Board respectively. After outlining the general principles applicable to all Corporate Officers, we will present the specific principles of the compensation policy for the Executive Chairmen, then the specific principles of the compensation policy for the members of the Supervisory Board. The AMF encourages companies adhering to the Afep-Medef Code “to draft separate resolutions for each category of Senior Executive where the principles and criteria for determining, allocating and awarding compensation to each category of Senior Executive are distinct and/or the scope of the vote cast by shareholders is different.” (AMF Recommendation 2012-02, section 2.1.8, renewed on 3 December 2019). In addition, the compensation policy for Corporate Officers will be the subject of two separate resolutions at the General Meeting of 24 April 2020: the first will deal with the compensation policy for the Executive Chairmen and the second with the compensation policy for the members of the Supervisory Board. Manner in which the compensation policy respects the interests of the Company and contributes to the Company’s commercial strategy and sustainability (Article R. 226-1-1, I-1° of the French Commercial Code) The compensation policies for the Executive Chairmen and Supervisory Board members are aligned with the corporate interest and contribute to the Company’s commercial strategy and sustainability for the following reasons: As regards the Executive Chairmen: since the Company’s transformation into a partnership limited by s shares, the maximum amount of (“statutory”) variable compensation of the Executive Chairmen has been determined by the Articles of Association (Article 17); the maximum amount of (“additional”) fixed compensation of the s Executive Chairmen and its indexation were determined by the Ordinary General Meeting of 31 May 2001;

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