Hermès - Registration Document 2016

CORPORATE GOVERNANCE

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

Tasks and activity of the CAG Committee in 2016 In 2016, the CAG Committee met five times (as opposed to six times in 2015). Individual and average rates of attendance are indicated in the table on page 115.

CAG Committee Missions

Activity of the CAG Committee in 2016

The Compensation, Appointments and Governance Committee studies and prepares certain proceedings of the Supervisory Board and submits its opinions, proposals and recommendations to the Board. Without prejudice to the powers of the Supervisory Board, which it does not replace, the Compensation, Appointments and Governance Committee missions are: s to receive information and draw up recommendations from the Board to the Executive Management on the terms and conditions of compensation paid to Executive Committee members; s to receive information and draw up recommendations from the Board to the Executive Management on the terms and conditions of allotment of any stock options and bonus shares granted to Executive Committee members; s to draw up proposals and recommendations on the total amount of directors’ fees and other compensation and benefits awarded to members of the Supervisory Board and of its specialised committees, and on the apportionment thereof, primarily on the basis of Board members’ attendance at meetings; s to review proposals for stock subscription or purchase options and bonus share distributions to Senior Executives in order to enable the Supervisory Board to determine the aggregate or individual number of options or shares allotted, and the terms and conditions of allotment; s to review proposals for stock subscription or purchase options and bonus share distributions for employees and to draw up recommendations thereon for submission to the Executive Management; s to assist the Supervisory Board in determining the conditions and performance criteria to be applied in the allocation of stock subscription or purchase options, performance-based shares and/ or additional pensions to Executive Chairmen; s to ascertain that the compensation of the Executive Chairmen complies with the provisions of the Articles of Association and the decisions made by the Active Partner; s to remain informed and to make recommendations to the management or supervisory bodies of the main French subsidiaries within the Hermès Group, relative to compensation of Executive Corporate Officers; s to remain informed and to make recommendations to the management or supervisory bodies of the main French subsidiaries within the Hermès Group, relative to granting options to purchase shares to Executive Corporate Officers; s to perform specific assignments entrusted to it by the management or supervisory bodies of the main French subsidiaries within the Hermès Group. s to prepare the Board’s proposals to the Active Partner after examining all the elements which it must take into account in its deliberation: balance to be sought in the composition of the Board in light of the composition of, and changes in, the Company’s shareholders, search for and appraisal of possible candidates and advisability of reappointments; s to organise a selection procedure for future independent members of the Board and carry out its own research on potential candidates, to which the Executive Chairmen are associated; s to ensure a plan of succession of the Executive Corporate Officers (the Executive Chairmen) drawn up by the Active Partner; With respect to appointments With respect to compensation

In 2016, the CAG Committee was required to examine and/or issue recommendations on many subjects and in particular the following:

With respect to compensation

s review of the chapters of the registration document on corporate governance and compensation of Senior Executives (management report) and of the description of the proposed resolutions relative to the advisory opinion (“Say on Pay”) regarding the compensation of Senior Executives; s projected distribution of directors’ fees and compensation payable to the Board members and Committee members in respect of FY 2015; s presentation of company policy in matters of professional and earnings equality; s 2016 compensation of the Hermès International Executive Chairmen and press release to be published on the financial Internet site; s review of compensation of Executive Committee members; s validation of the compensation of Corporate Officers of French subsidiaries remunerated for their office. s review of a proposed allocation of free shares;

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The CAG Committee reviewed current events in matters of compensation:

s AFEP – Study on directors’ fees (July 2016);

s AFEP – Study on performance criteria of compensation of Senior Executives (June 2016); s AFEP – Summary of Say on Pay studies and renewal of terms of office of Executive Corporate Officers as directors (July 2016).

With respect to appointments

s change of the composition of the Board;

s information on the appointment by the Group Committee of a new Board member representing the employees to replace Denis Marmonier; s succession plan for Senior Executives (presentation by the Head of HR of the talent review process and summary of the results, presentation by Axel Dumas of the Executive Management succession plan);

2016 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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