HERMES_REGISTRATION_DOCUMENT_2017

CORPORATE GOVERNANCE

OTHER INFORMATION FROM EXECUTIVE MANAGEMENT’S REPORT

STATEMENTS BY CORPORATE OFFICERS

The total number of free shares awarded under each of these delega- tions 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. Throughtheuseofthisauthorisation,in2017theExecutiveManagement awarded shares under a selective plan, it being specified that Axel Daumas, sole natural person as Executive Chairman, was not awarded any bonus shares under said plan. Table 11 on page 162 sets out the conditions of the free share allocation plans (in particular the vesting period, holding period and performance conditions where applicable) and Table 12 on page 163 sets out the details of free shares allocated to the top 10 employee beneficiaries who are not Corporate Officers. In accordance with Articles L. 225-197-1 et seq. of the French Commercial Code, free share allocations under some plans are always contingent on service and performance conditions. With an objective of building long-term loyalty, the 2007, 2010 and 2012 plans were associated with a vesting period of four years for participants resi- ding in France and six years for participants abroad, and a mandatory retention period of the shares thus acquired of two years for parti- cipants resident in France. To harmonise the vesting conditions, the free shares allocated by Executive Management in 2016 were accom- panied by 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 (Article 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 p.140 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 conso- lidated financial statements, is shown in the notes to the consolidated financial statements (Note 30, page 237). Stock options The ExecutiveManagement was authorised to grant stock options to cer- tain employees and Corporate Officers of the Company and of affiliated companies by the Extraordinary General Meeting. These delegations of authority were not used in 2017. As shown in the table on page 161, no stock option plans existed at 31 December 2017. Stock options All stock option plans to subscribe for new shares lapsed in 2009. No authorisation from the General Meeting allows the Executive Management to grant stock options. 3.3.3.3 3.3.3.4

3.3.2

According to the statements made to the Company by the Corporate Officers: s no Corporate Officer was convicted of fraud in the last five years; s no Corporate Officer was involved in any bankruptcy, sequestration or liquidation in the last five years in their capacity as a member of an administrative, management or supervisory body or as a Executive Vice-President; s no Corporate Officer was barred by a court from acting as a member of an administrative, management or supervisory body of a listed company or from participating in the management or conducting the business of a listed company in the last five years; s no Corporate Officer was accused or penalised in a court of law by a statutory or regulatory authority (including designated professional bodies).

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ALLOCATION OF FREE SHARES AND STOCK OPTIONS

3.3.3

General free share and stock option allocation policies

3.3.3.1

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 at a multiyear rate (see com- ments below on the plans in force); they are exceptional and their bene- fits 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 ini- tiatives involving employees in the Group’s performance are described in the section 2 “Corporate social responsibility information” on page 64. Free share allocation plans in effect In accordance with Article L. 225-197-4 of the French Commercial Code, we hereby report to you on free shares granted in 2017. Executive Management was authorised by the Extraordinary General Meeting of 31May 2016 toaward free shares, ononeormoreoccasions, to some or all employees and/or senior executives of the Company or entities affiliated therewith by granting existing shares in the Company for no consideration. The conditions of delegations of authority still in force are shown on page 163 to 168. 3.3.3.2

2017 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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