Hermès - Registration Document 2016

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CORPORATE GOVERNANCE

COMPENSATION AND BENEFITS PAID TO CORPORATE OFFICERS

The Executive Management has been authorised by the Extraordinary General Meeting of 31 May 2016 to allocate bonus shares, on one or more occasions, to some or all employees and/or Senior Executives of the Company or companies affiliated therewith, by granting existing shares in theCompany for no consideration. The condition of delegations of authority still in force are shown on pages 266 to 269. The total number of shares freely allocated under each of these autho- risations and the total number of purchase 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 authorisations. Making use of these authorisations, the ExecutiveManagement in 2016 granted shares under democratic and selective plans, it being stipulated that Axel Dumas, the sole natural person among the Executive Chairmen, received no free shares under these two plans. You will find, in Table 11 on page 146, the details of the conditions of the free share allocation plans (and notably the vesting period, the retention period and the condi- tions of performance where applicable) and, in Table 12 on page 146, the details of shares freely allocated to the 10 biggest beneficiaries who are Non-Corporate Officers. Bonus share allocations do not dilute the share capital because they consist exclusively of existing shares in the Company. Their value as of the allotment date, calculated using the method for recognition of the shares in the consolidated financial statements, is shown in the notes to the consolidated financial statements (Note 30.2, page 205). Additional information on free share grants in 2016, on the general long- termcompensationpolicy and other initiatives involving employees in the Group’s performance are described in the “Social, environmental and societal information” on pages 47 and 48. 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 2016. As shown in the tables on page 142, there were no stock option plans existing as at 31 December 2016. Stock subscription options All stock subscription option plans lapsed in2009. No authorisation from the General Meeting allows the Executive Management to grant stock options. 3.4.4.3 3.4.4.4

These allocations have no connection with the beneficiaries’ executive positions in the Company. They were made exclusively in accordance with their respective employment contracts with the entities of the Group indicated above. No free shares were granted to the other members of the Supervisory Board during the 2016 financial year.

ALLOCATION OF BONUS SHARES, STOCK OPTIONS

3.4.4

General policies on granting bonus shares and of stock options

3.4.4.1

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 multi-year rate (see com- ments below on the plans in force); they are exceptional and have always benefited a much wider population than that of the Corporate Officers and Senior Executives of the Group. Concerning freely allocated shares, in 2007, 2010, 2012 and in 2016, these were allocated to all Group staff (subject to minimum seniority on the allocation date) in France and abroad. In accordance with the provisions of Articles L. 225-197-1 et seq. of the French Commercial Code (Code de commerce), these allocations are always associated with conditions of presence, and conditions of performance for some plans. With an objective of building long-term loyalty, the 2007, 2010 and 2012 plans were associated with a ves- ting period of four years for participants residing in France and six years for participants abroad, and a mandatory retention period of the shares thus acquired of two years for participants resident in France. To harmonise the vesting conditions, the free shares allocated by the Executive Management in 2016 were accompanied 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 the applicable law (Article L. 225-197-1 et seq. of the French Commercial Code (Code de commerce) ) and in accordance with the fifteenth resolution of the Annual General Meeting of 31 May 2016 (see below), no lock-up period was established, leaving each beneficiary employee free to decide how long to hold the shares acquired. Free share allocation plans in force In accordance with Article L. 225-197-4 of the French Commercial Code (Code de commerce), we hereby report to you on free shares granted during FY 2016. 3.4.4.2

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2016 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL