HERMÈS - 2019 Universal Registration Document

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CORPORATE GOVERNANCE SUPERVISORY BOARD'S' REPORT ON CORPORATE GOVERNANCE

Changes made to the compensation policy of the Executive Chairmen since the last General Meeting (Article R. 226-1-1, I-5° of the French Commercial Code) The rate of approval by the General Meeting of 4 June 2019 of the ex-post resolutions validating opinions on the components of the compensation due or awarded in respect of the year ended 31 December 2018 was 94.58% for Mr Axel Dumas and 94.38% for Émile Hermès SARL. With the exception of the incorporation of a CSR criterion into the variable portion from 2019 (see page 265), announced at the General Meeting, of 4 June 2019, no changes have been made to the compensation policy. Terms of application to newly appointed or reappointed Executive Chairmen (Article R. 226-1-1, I-6° of the French Commercial Code) The term of office of the Executive Chairmen is indefinite under the terms of the Articles of Association, and is therefore not subject to renewal. The compensation policy would apply to newly appointed Executive Chairmen on a pro-rata basis in accordance with their presence during the first year of their term. Exceptions to the application of the compensation policy (Article R. 226-1-1, I-7° of the French Commercial Code) In the event that exceptional circumstances should arise, the Executive Management Board is authorised to temporarily waive the application of the compensation policy used to set the variable compensation of the Executive Chairmen, within the limit authorised by the Articles of Association, and after the favourable opinion of the Supervisory Board. Specific components of the compensation policy for the Executive Chairmen (Article R. 226-1-1, II of the French Commercial Code) Pursuant to Articles L. 226-8-1 and R. 226-1-1 of the French Commercial Code, we set out below the specific components comprising the compensation policy for the Executive Chairmen. During their term of office The term of office of the Executive Chairmen is open-ended. The Executive Chairmen may be dismissed by a decision of the Active Partner. Annual fixed and variable compensation and respective importance - CSR criterion for variable compensation In accordance with the principles set out in Article 17 of the Articles of Association, each Executive Chairman is entitled to fixed compensation (referred to as “additional” in the Articles of Association) for which the maximum amount is determined by the Ordinary General Meeting with the unanimous approval of the Active Partners and, potentially, variable compensation (referred to as “statutory” in the Articles of Association): fixed compensation (referred to as “additional compensation” in the 1) Articles of Association) was introduced by the Ordinary General Meeting of 31 May 2001, which set a ceiling of €457,347.05, and When the office is taken up No such commitment exists.

provided for it to be indexed upwards only, in accordance with any increase in consolidated revenue for the previous financial year over the year prior to that, at constant scope and exchange rates. Fixed compensation is, therefore, set on an annual basis. In accordance with this principle and to facilitate understanding of how the additional compensation of Executive Chairmen is calculated before indexing, it is referred to as “fixed compensation” by analogy with market practices; the calculation of the variable compensation (referred to as “statutory 2) compensation”) set by Article 17 of the Articles of Association has remained constant since the IPO on 3 June 1993. This compensation is capped at 0.20% of the consolidated net income before tax generated in the previous financial year. This mode of determination naturally leads to a strict variability in the statutory compensation of Executive Chairmen, transparently and without any guarantee of a minimum amount. With the aim of clarity, the statutory compensation of the Executive Chairmen is referred to as “variable compensation”, by analogy with market practices. Since 2019, the variable compensation of the two Executive Chairmen has been partially conditioned (10%) on a “CSR” criterion reflecting the Group’s stated and constant commitments in respect of sustainable development. The CSR criterion contributes to the objectives of the Executive Chairman’s compensation policy. The indicators making up the CSR criterion relate to the following: decoupling between activity growth at constant scope and s exchange rates and changes in industrial energy consumption (quantifiable environmental criterion); actions implemented in favour of the Group's local integration in s France and throughout the world, excluding major cities (qualitative societal criterion); Group initiatives in favour of gender balance (qualitative social s criterion). This new way of structuring the variable component of compensation was applied for the first time when evaluating variable compensation owing for 2019, which is measured and paid in 2020 (see page 265 ). Not exceeding the maximum amount of the approved compensation policy defined herein, and in accordance with the criteria and targets set out above on page 258, the Executive Management Board of Émile Hermès SARL, Active Partner, sets the actual amount of the annual compensation of each Executive Chairman as follows: target (“statutory”) variable compensation is set by applying the strict s variability of the consolidated pre-tax result of variable compensation, 10% of which is conditional on the achievement of the targets making up the CSR criterion (see above); (“additional”) fixed compensation is set by applying the strict s variability, upwards only, of revenue to the compensation of the previous financial year; the other components of compensation are set in strict application of s the compensation policy for the Executive Chairmen.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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