HERMÈS - 2019 Universal Registration Document

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CORPORATE GOVERNANCE SUPERVISORY BOARD'S' REPORT ON CORPORATE GOVERNANCE

COMPENSATION OF THE SUPERVISORY BOARD, AUDIT AND RISK COMMITTEE AND CAG-CSR COMMITTEE ALLOCATED IN 2020 FOR 2019

3.5.3

The total number of free shares awarded under each of these delegations and the total number of stock options granted and not yet exercised are limited to 2% of the number of shares in the Company on the day of allocation, without taking into account those already granted under previous delegations. Using this authorisation, the Executive Management awarded shares under general and selective plans in 2019, it being specified that Mr Axel Dumas, sole natural person serving as Executive Chairman, was not awarded any free shares under either of these plans. In table No. 9.1 on page 274, you will find details of free share allocation plan conditions (and, in particular, vesting periods, holding periods and the application of performance conditions, where applicable) and, in table No. 9.2 on page 275, details of the free shares granted to the top ten employee beneficiaries who are not Corporate Officers. In accordance with Articles L. 225-197-1 et seq . of the French Commercial Code, these allocations are always contingent on presence conditions and, for certain plans, also on performance conditions. With the aim of building long-term loyalty, the 2007, 2010 and 2012 plans were associated with a vesting period of four years for participants residing in France and six years for participants abroad, and a mandatory lock-up period of the shares thus acquired of two years for participants resident in France. To harmonise the vesting conditions, the free shares allocated by Executive Management in 2016 and 2019 were subject to identical vesting periods for Group employees in France and internationally. In line with its long-term strategy, the Executive Management has set the vesting periods for these awards at four and five years respectively. However, as permitted by applicable law (Articles L. 225-197-1 et seq . of the French Commercial Code) and in accordance with the 15th resolution of the Combined General Meeting of 31 May 2016 (see page 293 of the 2016 registration document), no lock-up period was established, leaving each beneficiary employee free to decide how long to hold the shares acquired. Bonus share allocations do not dilute the share capital because they consist exclusively of existing shares in the Company. Their value at the allocation date, calculated according to the method used for the consolidated financial statements, is shown in the notes to the consolidated financial statements (Note 33, page 340).

Table 3 on pages 271 details compensation awarded to and received by members of the Supervisory Board in the last two financial years by Hermès International and the entities it controls as defined by Article L. 233-16 of the French Commercial Code.

ALLOCATION OF FREE SHARES AND STOCK OPTIONS GENERAL FREE SHARE AND STOCK OPTION

3.5.4

3.5.4.1

ALLOCATION POLICIES

Allocations of stock options and free allocations of shares form part of the Hermès Group’s long-term compensation and loyalty policy. Such allocations have historically been made on a multiyear basis (see comments below on the plans in force); they are exceptional and their benefits have always extended beyond the Corporate Officers and Senior Executives of the Group. Additional information on free share awards carried out by the Hermès Group and on the general long-term compensation policy and other initiatives involving employees in the Group’s performance are described on page 81, section 2.2 “People-Teams”. In accordance with Article L. 225-197-4 of the French Commercial Code, we hereby report to you on free shares granted in 2019. Executive Management was authorised by the Extraordinary General Meeting of 31 May 2016 to award free shares, on one or more occasions, to some or all employees and/or Senior Executives of the Company or of affiliated companies, by granting existing shares in the Company for no consideration. The conditions of delegations of authority still in force are shown on pages 277. FREE SHARE ALLOCATION PLANS IN EFFECT 3.5.4.2

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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