HERMÈS - 2019 Universal Registration Document

3

CORPORATE GOVERNANCE SUPERVISORY BOARD'S' REPORT ON CORPORATE GOVERNANCE

Measures to avoid or manage conflicts of interest (Article R. 226-1-1, I-2° of the French Commercial Code (Code de commerce)) A number of measures have been implemented to prevent possible conflicts of interest: the maximum amount of (“statutory”) variable compensation of the s Executive Chairmen is 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; since its creation on 24 March 2010, the CAG-CSR Committee of the s Supervisory Board of Hermès International has been tasked each year with ensuring that compensation paid to the Executive Chairmen complies with the provisions of the Articles of Association and the decisions made by the Active Partner; changes to the two components of the compensation of Executive s Chairmen depend on objective and comprehensible quantifiable qualitative criteria unaltered for many years, that are public and predefined by nature, as described under the heading “Specific compensation policy guidelines for Executive Chairmen" (see page 257); when setting the actual amount of each Executive Chairman’s s statutory annual compensation under the Articles of Association, the Executive Management Board of Émile Hermès SARL uses the recommendations of the CAG-CSR Committee and takes into account in its decision the performance achieved by the Group in respect of the prior financial year, the strategic challenges in respect of the Group’s medium- and long-term development and the competitive environment in which it operates; from 2020, the compensation policy for the Executive Chairmen is s subject to the advisory opinion of the General Meeting and the actual compensation of the Executive Chairmen is subject to a decision by the Supervisory Board. Disclosure methods of the compensation of Corporate Officers Pursuant to Article R. 226-1-1, V of the French Commercial Code, the compensation policy for Corporate Officers, together with the date and result of the last ex-ante vote in the General Meeting, is disclosed on the Company’s financial website https://finance.hermes.com on the business day following the date of the vote. Pursuant to Article 26.1 of the Afep-Medef Code updated in January 2020, all potential or vested compensation of the Executive Chairmen is disclosed on the Company’s financial website https://finance.hermes.com immediately after the meeting of the Executive Management Board of the Active Partner that approved it.

the Company also offers its employees: s employee share ownership plans: such plans have been in place • for many years (the first plan dates back to 1993) and acknowledge the contribution made by employees to the House’s development, regardless of their role or geographical location, by providing a single component of compensation in order to share the benefits of our growth, enabling employees to identify more closely with decisions having an impact on Hermès’ long-term growth, incentive schemes involving employees with the development of • locally determined indicators that are relevant with regard to the activity and environment of each of the French subsidiaries, notably quality, safety and productivity, a Group profit-sharing agreement giving all employees of • companies in France a share of the Group’s profits in a harmonised manner, other mechanisms enabling employees of foreign subsidiaries to • benefit from additional compensation adapted to local performance and practices. The Group’s employee compensation policy is ambitious and comprehensive; it incorporates a wide range of compensation tools. The budget guidelines for wage increases during the annual salary review take account of inflation and changes in local wage markets. Particular attention is paid to gender equality and gaps in relation to the market (internal and external). Specific budgets may be provided if adjustments are necessary. Hermès is committed to rewarding employee performance at both the collective and individual levels, and the development of variable compensation at both levels in recent years also reflects this commitment.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

256