HERMES_REGISTRATION_DOCUMENT_2017

2

CORPORATE SOCIAL RESPONSIBILITY

PEOPLE

Compensation

2.3.1.4

Compensation

2015

2016

2017

In millions of euros

Total payroll

579

609

639

Every year, the Group provides its subsidiaries with budgetary guide- lines for salary growth that take into account inflation and local markets. Particular vigilance is required concerning gender equality and the mar- ket difference (internal and external). Additional budgetsmay be granted if adjustments are necessary. The compensation paid to Corporate Officers is shown onpages155-163of this document. Hermès, the great majority of whose employees work in OECD countries, strictly applies working time and minimum wage regulations in compliance with UN conventions and seeks to exceed such regulations wherever possible.

The Group’s payroll was €639 million in 2017 versus €609 million in 2016,towhichonemustalsoadd€208millionofsocialsecuritycharges. In France, payroll includes distribution of €70.7million in incentive sche- mes and profit-sharing, and €3.3 million in employee support activities, compared with €68.8 million and €2.7 million in 2016 respectively. The rise in payroll costs (excluding exchange rate impact) reflects increases in both workforce and salaries in all geographical areas. Hermès is committed to rewarding employee performance at the collec- tive and individual levels, and the increase in variable compensation at both levels reflects this commitment. Compensation mainly reflects skills, levels of responsibility and local conditions.

2.3.1.5 Employee support activities (France) The total amount paid to Works councils for employee support activities rose by 22% in 2017.

2015

2016

2017

In millions of euros

Employee support activities

2.3

2.7

3.3

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 2017) also benefit froma range of regular additional compensation initiatives in line with performance and local customs.

2.3.1.6 Incentive schemes and profit-sharing (France) Since 2012, a special participation agreement with all of the represen- tative 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 company. These agree- ments have a duration of three years and aim to involve employees with

Incentive schemes

Profit-sharing

Total

In millions of euros

2015 2016 2017

25.9 26.9

40.2 41.9 44.6

66.1 68.8 70.7

26.1 1

(1) Including the ratification of new agreements.

All of these plans send a singlemessage to eligible employees worldwide and their objective is three-fold: s to show the confidence of the House in the long-term commitment of its employees and unite them around the Group strategy; s to acknowledge the contribution made by employees at all levels to the development of the House, by providing a single compensation component to share the benefits of our growth, enabling employees to identify more closely with the long-term Hermès growth decisions; s to consolidate the strong links between the employees and theHouse at every opportunity.

Involving all employees in the Group’s long- term growth

2.3.1.7

Faithful to its family tradition and wanting to involve all employees world- wide in theGroup’s growth, Hermès has historically implemented several employee shareholding plans, notably free share plans in 2007, 2010, 2012 and 2016.

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2017 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL