Hermès - Registration Document 2016

Corporate social responsability

People

Compensation

2.3.1.4

Compensation In millions of euros

2014

2015

2016

Total payroll

518

579

609

The Group’s payroll was €609 million in 2016 versus €579 million in 2015, to which one must also add €198 million of social security charges. In France, payroll includes distribution of €68.8million in incen- tive schemes and profit-sharing, and €2.7 million in employee support activities. 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.

Compensation is determined primarily by employee qualifications. 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 equality between men and women and themarket difference (internal and external). Additional bud- gets may be granted if adjustments are necessary. The compensation paid to Corporate Officers is shown on page 138 of this document. Hermès, the great majority of whose employees work in OECD coun- tries, strictly applies working time and minimum wage regulations in compliance with UN conventions and seeks to exceed such regulations wherever possible.

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2.3.1.5 Employee support activities (France) The total amount paid to Works councils for employee support activities rose by 17.39% in 2016.

2014

2015

2016

In millions of euros

Employee support activities

2.2

2.3

2.7

with regard to the activity and environment of each of these entities, notably quality, safety and productivity. Employees of foreign entities (39% of all Group employees in 2016) 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 associate employees with the development of locally-determined indicators that are relevant

Incentive schemes

Profit-sharing

Total

In millions of euros

2014 2015 2016

24.2 25.9

39.7 40.2

63.9 66.1 68.8

41.9 2

26.9  1

(1) Including the ratification of new agreements. (2) An incentive supplement was paid to all of the Group’s French companies pursuant to the Group’s participation agreement.

All of these plans send a singlemessage to eligible employees worldwide and their objective is three-fold: s s to show the confidence of the House in the long-term commitment of its employees and unite them around the Group strategy; s 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 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.

2016 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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