HERMÈS - 2018 Registration document

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Corporate social responsibility

People: teams

At Group level, social dialogue is expressed first and foremost through the annual meeting of theGroupWorks Council, which fosters discussion with employee representatives and representatives of the five national tradeunionspresent intheGroup.Thismeetingenablesdialogueandthe sharing of results from the previous year and the outlook for the coming years. Furthermore, a Social Dialogue Monitoring Committee (France) was set up in2008pursuant to the agreement on social dialogue and the exercise of union rightswithinHermèsGroup companies, signed in2008 by all of the representative tradeunions. In2018, inaddition to its annual meeting, this Committee had a second exceptional meeting to provide its members with answers regarding the establishment of the Social and Economic Committee, the new employee representative body created by French law that combines the three former representative bodies (Employee Delegates, Works Council, Health and Safety Committee). Social dialogue at the Group level also involves the annual meeting of the Health Expense Reflection and Discussion Group, which is a forum for dialogue organised around the healthcare plan applicable in most of the Group’s companies. The Group’s payroll was €695 million in 2018, compared with €639 mil- lion in 2017, plus €228 million in social security charges. In France, €88.8 million was distributed in incentive and profit-sharing sche- mes, and €3.5 million in employee support activities, compared with €70.7 million and €3.3 million in 2017 respectively. Payroll costs (excluding exchange rate impact) reflect increases in both workforce and salaries in all geographical areas. Hermès is committed to rewarding employee performance at both the collective and individual levels, and the development of variable com- pensation at both levels in recent years reflects this commitment. Compensation mainly reflects skills, levels of responsibility and local conditions. Every year, the Group provides its subsidiaries with budgetary guide- lines for compensation growth that take into account inflation and local markets. Particular vigilance is required concerning gender equality and market differences (internal and external). Additional budgets may be granted if adjustments are necessary. The compensation paid to Corporate Officers is shown in Note 22 of chapter 6 of this document. Hermès, the vast majority of whose employees work in OECD countries, strictly applies working time and minimum wage regulations in com- pliance with UN conventions and seeks to exceed such regulations whe- rever possible. In France the minimum wage is defined by law. Compensation In millions of euros Total payroll

In the various companies, social dialogue also involves the day-to-day functioning of employee representative bodies and a robust and active collective bargaining process. Collective agreements have been signed in all companies that have trade union delegates. As a result, in France in2018, more than65agreements andamendmentswere signed (inclu- ding a Group agreement on additional profit-sharing) on topics as varied as salary enhancement, incentive schemes, flat day rates and the right to disconnect, gender equality, and the establishment and functioning of Social and Economic Committees. All of these topics reflect the signi- ficant involvement of employee representatives and the relevant mana- gement in a constructive and respectful social dialogue.Internationally, labour relations in the distribution operations are supervised by the Human Resources Directors for each area (or country, depending on the size of the local markets), who ensure compliance with local regulations and application of the Group’s ethical charter. 2.3.1.2.3 Sharing economic values The Group’s policy is to give employees a share in long-term growth through various measures such as incentive and profit-sharing schemes and a share ownership plan. The Group’s employees are eligible for short-term benefits (paid leave, sick leave, profit-sharing), long-term benefits (long-service awards) and post-employment benefits under defined contribution/defined benefit plans (mainly retirement benefits and supplemental pension plans). As detailed inNote26 to the consolidated financial statements, theGroup’s total commitment to pensions and similar items is €196 million. Profit-sharing and incentive schemes (France) Since 2012, a special profit-sharing agreement signed with all of the representative unions has enabled all employees of the companies in France to be associated with the profits of the Group in a harmonised manner. Incentive agreements are also in place at each French company. These agreements have a duration of three years and aim to involve employees with the development of locally-determined indicators that are relevant with regard to the activity and environment of each of these entities, notably quality, safety and productivity. Employees of foreign entities (38% of all Group employees in 2018) also benefit froma range of regular additional compensation initiatives in line with performance and local customs. 2016 2017 2018 609 639 695

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2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL