Hermès - Registration Document 2016

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CORPORATE GOVERNANCE

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

In 2016, the Board:

s discussed the Company’s policy with regard to professional andwage equality; s approved the wording of the prudential rules applicable by the subsi- diaries, together with updated lists of the authorised signatories and banks of Hermès International; s recalled the responsibility inherent to holding inside information as well as the stock market ethics charter; s approved the update of the rules of procedure of the Supervisory Board, the CAG Committee and the Audit Committee; s approved the update of the Supervisory Board’s ethics charter; s established a collaborative platform for the Supervisory Board. Governance – Appointments – Compensation In 2016, the Supervisory Board: s examinedand/or approvedCAGCommittee reports andwork, as des- cribed on pages 121 and 122, including the summary of the triennial formal assessment of the Board’s work; s set the compensation of the Chairman of the Supervisory Board; s decided upon the distribution and payment of compensation and directors’ fees for members of the Board and the committees; s decided upon the composition of the Audit Committee and the CAG Committee after the General Meeting; s welcomed the new member of the Supervisory Board representing employees and allocated the time necessary for him to perform his duties. At each meeting, the CAG Committee informed the Supervisory Board of current events relating to governance (AMF reports, AFEP-MEDEF reports, HCGE implementation guides, IFA studies, etc.). Corporate Social Responsibility – CSR A presentation of CSR challenges is regularly made to the Board since 2015. Major annual topics – Site visits Every year, at least one detailed presentation on a specific or general topic regarding the Group’s activities is provided by the relevant mana- gement team. Since 2011, the Board has devoted one of its meetings to a site visit in order to enhance its knowledge of one of the Group’s subsidiaries. s examined anti-corruption procedures within the Group; s authorised bank guarantees;

s attended a presentation devoted to digital technology and the Group’s digital strategy; s attended a presentation devoted to shareholders and institutional investors; s attended a presentation devoted to improvementsmade in respect of customer service and price trends by geographical area; s visited the subsidiary Comptoir Nouveau de la Parfumerie, where it was given a presentation of the activity and the results from the Hermès Parfums division, and inspected the manufacturing workshop; s visited the Maroquinerie de Normandie building site, where it was given an overview of the architectural project. Assessment of the Supervisory Board Given the progress made by the Company in recent years in terms of governance, the Supervisory Board decided in 2011 to carry out a ques- tionnaire-based self-assessment only once every three years, while maintaining an annual discussion on the functioning of the Board to be included in the Board meeting agenda. At the end of 2016, the CAG Committee conducted the triennial formal self-assessment of the Supervisory Board after having added new ques- tions to the assessment questionnaire. One question concerns the actual contribution of each member to the Board. In the questionnaire, Board members who so wish are further given the opportunity to meet the Chairman of the CAG Committee for an individual interview more conducive to dialogue and also to add to some answers provided in the questionnaire. In 2016, the CAG Committee received proposals from four firms specialising in governance and Board assessments. The CAG Committee deemed that it was not desirable to call on an outside firm to conduct a formal assessment of the Board for the following reasons: s privacy issues raised by the need to provide information on the Board to a third party; s the relative absence of weak signals raised in response to previous assessments; 3.2.2.7 s progress in terms of governance over the last six years; s the small amount of value added expected from an outside firm. In 2013, the Supervisory Board expressed the view that the assessment questionnaire was mature. To avoid making the CAG Committee’s trien- nial self-assessment repetitive and tedious, it was decided to change the process as follows: s submit the full questionnaire used in 2013 (including new questions) to the new Board members who were not in office at the time of the 2013 assessment (Monique Cohen and Sharon MacBeath); s submit an “abridged” questionnaire to other members, covering: • questions that in 2013 improved the Board’s operations, • general questions about the quality of the assessment and the various points,

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2016 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL