Hermès - Registration Document 2016

CORPORATE GOVERNANCE

REPORT FROM THE CHAIRMAN OF THE SUPERVISORY BOARD ON THE CORPORATE GOVERNANCE PRINCIPLES

Provisions of the AFEP-MEDEF Code not applied

Explanations

The CAG Committee (see description starting on page 120) is not responsible for establishing the succession plan for the Executive Chairmen, which does not fall within the powers of the Supervisory Board in a société en commandite par actions (partnership limited by shares). The CAG Committee must, since 2016, in accordance with its rules of procedure, ensure the existence of a succession plan for the Executive Chairmen, which it has done (see the Executive Management’s report, page 90). The CAG Committee (see description starting on page 120) is not responsible for setting the compensation of the Executive Chairmen, which falls within the powers of the Active Partner and not those of the Supervisory Board. The Supervisory Board therefore decided that it was not relevant for an employee representative to be a member. The Company has agreed to make a severance payment to Axel Dumas under the conditions described in the explanatory statement on page 288. In view of the importance of the Active Partner’s role within a société en commandite par actions (partnership limited by shares), and in the case of a legal entity of its Legal Representative, it was considered that the termination of duties of Axel Dumas as Executive Chairman, that would result from the replacement of the Executive Chairman of Émile Hermès SARL, should be viewed as a forced departure. The Supervisory Board accordingly considered that the deferred compensation commitment made for the benefit of Axel Dumas complied with the requirements of the AFEP-MEDEF Corporate Governance Code. It did not seem relevant for the Executive Management to propose to shareholders a vote on the compensation of the Chairman of the Supervisory Board insofar as he: s receives fixed compensation in the amount of €100,000 as provided in the rules of procedure of the Supervisory Board and that it is charged against the total amount of directors’ fees approved by the General Meeting,

Succession plan for Executive Corporate Officers (Art. 16.2.2.) The Appointments Committee (or an ad hoc committee ) establishes a succession plan for Executive Corporate Officers. This is one of the committee’s main tasks, although it may, where appropriate, be entrusted by the Board to an ad hoc committee. The Chairman can be part of or associated with the committee’s work for the performance of this task. Composition of the Compensation Committee (Art. 17.1) It is recommended that the Chairman be independent, and that one employee director or member sit on the committee. Severance payment (Art. 24.5.1) The performance conditions set by boards for such benefits should be assessed over two years at least. They should be demanding, and should not allow the compensation of an officer in the event of dismissal, regardless of the form taken by this departure.

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Consultation of shareholders on the compensation of the Chairman of the Supervisory Board (Art. 26.2)

s receives no other elements of compensation of any kind whatsoever. Shareholders have previously been made aware of this information.

CONDITIONS GOVERNING THE PREPARATION AND ORGANISATION OF THE SUPERVISORY BOARD’S WORK

3.2.2

The Supervisory Board elects a Chairman, who is a natural person, and two Vice-Chairmen, fromamong its members (Article 19.2 of the Articles of Association). Composition of the Supervisory Board as at 31 December 2016 The Supervisory Board is currently composed of 11 members: Éric de Seynes, Chairman, Dominique Senequier and Monique Cohen, Vice- Chairmen, Frédéric Afriat (employee representative), Charles-ÉricBauer, Matthieu Dumas, Blaise Guerrand, Julie Guerrand, Sharon MacBeath, Renaud Momméja and Robert Peugeot. All the Supervisory Board members are French except Sharon MacBeath, who is British. Nathalie Besombes, director of company law and stock markets and compliance officer, is the Board Secretary. In a decision dated 21March 2017, the Active Partner set the number of Supervisory Boardmembers at 13 (including employee representatives) to allow the appointment of two new members to the Supervisory Board by the General Meeting of 6 June 2017: Dorothée Altmayer and Olympia Guerrand. Information regarding them is provided on page 107.

Composition of the Supervisory Board

3.2.2.1

Applicable principles The Supervisory Board consists of three to fifteen members (not inclu- ding employee representatives), selected from amongst sharehol- ders who are neither Active Partners, nor legal representatives of an Active Partner, nor the Executive Chairman (Article 18.1 of the Articles of Association). They are appointed by the Ordinary General Meeting (Article L. 226-4 of the French Commercial Code (Code de commerce). When appointments to the Supervisory Board come up for renewal, the number of Supervisory Board members is fixed by a decision adopted by the Active Partner. Amember of the Supervisory Board representing the Group’s employees (or two if thenumber ofmembers of theSupervisory Board is greater than 13) is designated by the managing Group Committee (Article 18.6 of the Articles of Association). The term of office of all members of the Supervisory Board is three years (Article18.2oftheArticlesofAssociation).AspartoftheGeneralMeeting of 2 June2009, theCompany approvedaprovision calling for one-thirdof Supervisory Board members to stand for re-election each year. No person over the age of 75 shall be appointed to the Supervisory Board if, as a result of such appointment, more than one-third of the Board members would be over that age (Article 18.3 of the Articles of Association).

2016 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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