HERMÈS - 2018 Registration document

Corporate Governance

Supervisory Board’s report on corporate governance

COMPENSATION AND BENEFITS PAID TO CORPORATE OFFICERS

0.20%of the consolidatednet incomebefore tax generated in thepre- vious financial year. This mode of determination naturally leads to a strict variability in the statutory compensation of ExecutiveChairmen, 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. Changes to the two components of the compensation of Executive Chairmen depend upon objective and comprehensible quantifiable cri- teria unaltered for many years, that are public and predefined by nature, as described in paragraphs 1 and 2 above. Within the maximum amounts set forth herein, the Executive Management Board of the Active Partner, Émile Hermès SARL, shall determine the effective amount of the annual statutory compensation of each Executive Chairman. Thus, no minimum statutory compensation is guaranteed for the Executive Chairmen. It uses the recommendations of the CAG-CSR Committee and takes into account in its decision the per- formance achieved by the Group in respect of the previous financial year, the strategic challenges in respect of theGroup’smedium- and long-term development and the competitive environment in which it operates: Mr Henri-Louis Bauer, the Legal Representative of Émile Hermès SARL (Executive Chairman), does not personally receive any compensation from Hermès International. He receives compensation from Émile Hermès SARL for his functions as Executive Chairman of this company, which is unrelated to the appointment as Executive Chairman of Émile Hermès SARL in Hermès International. The Executive Chairmen do not receive any compensation or benefits of any kind from the subsidiaries of Hermès International. A breakdown of effective compensation paid to the Executive Chairmen set by the Executive Management Board of Émile Hermès SARL for the last two financial years is provided in table 2 on page 196. Each year, the CAG-CSR Committee of the Supervisory Board of Hermès International is responsible for 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.

3.1.5

Compensation policy guidelines for Executive Chairmen (Executive Corporate Officers)

3.1.5.1

The principles and criteria for determining, distributing and allocating the fixed, variable and exceptional components of overall compensa- tion and benefits of any kind payable to Executive Chairmen – Executive Corporate Officers, for performing their duties, in accordance with the AFEP-MEDEF Code, are presented below.

When the office is taken up No such commitment exists. During their term of office Annual fixed and variable compensation

3

In accordance with Article 17 of the Articles of Association, Executive Chairmen are entitled to fixed compensation (referred to as “additional” in the Articles of Association) whose maximum amount is determined by the Ordinary General Meeting with the unanimous approval of the Active Partners and, potentially, variable compensation (referred to as “statu- tory” in the Articles of Association): 1. fixed compensation (referred to as “additional compensation” in the Articles of Association) was introduced by the Ordinary General Meeting of 31 May 2001, which set a ceiling of €457,347.05, and 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 addi- tional compensation of Executive Chairmen is calculated before indexing, it is referred to as “fixed compensation” by analogy with market practices; 2. the calculation of the variable compensation (referred to as “statu- tory compensation”) set by Article 17 of the Articles of Association has remained constant since the IPO on 3 June 1993. It is capped at

HISTORY OF FIXED AND VARIABLE COMPENSATION PAID TO EXECUTIVE CHAIRMEN OVER THE LAST THREE FINANCIAL YEARS 1 Mr Axel Dumas 2018 2017 2016

Fixed compensation (referred to as “additional” in the Articles of Association) Variable compensation (referred to as “statutory” in the Articles of Association)

1,470,773 € 1,622,043 € 3,092,816 €

€1,354,303 €1,420,353 €2,774,656

€1,260,991 €1,294,762 €2,555,753

TOTAL

Émile Hermès SARL

2018

2017

2016

Fixed compensation (referred to as “additional” in the Articles of Association) Variable compensation (referred to as “statutory” in the Articles of Association)

€500,000 €756,409 €1,256,409

€500,000 €756,409 €1,256,409

€500,000 €756,409 €1,256,409

TOTAL

(1) For further explanation of changes please refer to the paragraph above entitled «Compensation policy for Executive Chairmen».

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