LEGRAND / 2018 Registration document

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GROUP OVERVIEW

A PROFITABLE GROWTH STRATEGY BASED ON DEVELOPING LEADING POSITIONS

Synthetic key performance indicators Three key performance indicators are measured for each country manager. Firstly, development of the Group’s business, via local market shares of each family of products that drive profitability, the deployment of international commercial programs, and steps to strengthen the Group’s presence in new distribution channels. Secondly, economic profit (after or before income tax depending on countries), defined as adjusted operating profit less the cost of capital employed. Finally, CSR performance, measured by the achievement rate of priorities set out in the roadmap. Solid processes organized around a permanent management dialog between Country Managers and the Group As part of the management of the Group’s financial performance: W once a year, the Group signs a Financial Performance Contract with each country manager and his/her team for the coming year. This outlines several scenarios of change in revenue and economic margin (economic profit on sales); one scenario is chosen and the country manager and his/her team are fully responsible for its implementation; W quarterly performance reviews with managers from the Group’s main countries. This is an opportunity during the course of the year to assess the level of achievement of the Financial Performance Contract and if necessary choose a different scenario depending on whether business is better, not as good or in line with the scenario initially chosen; W finally, comprehensive monthly reports are used to confirm that the performance of each country is in line with the latest approved scenario. Accountable, experienced and motivated senior management teams, particularly through compensation aligned with the challenges of creating value in the short and long term On average, members of Legrand’s senior management team have around 20 years of experience in the electrical and digital building infrastructure industry. Their experience and commitment have allowed Legrand to create and maintain a unique corporate culture, which inspires and rewards talent and initiative. The influence of its senior management team has enabled Legrand to continue growing while maintaining a strong financial performance.

Countries are run by managers who are true entrepreneurs. Management and management dialog between countries and the Group are based on a high level of accountability for local managers, who are incentivized to create long-term value. The Group has also set up long-term performance linked profit-sharing plans involving more than 2,000 beneficiaries in 2018, to drive value creation over the long term and increase the management team’s loyalty to the Group (see sections 4.4.3.1, 7.2 and 7.3 of this registration document). For the Group’s key managers, this might take the form of performance shares (see section 6.2 of this registration document). This plan, with a four-year vesting period, depends on future performance conditions and gives key managers a greater interest in creating value over the long term. In addition, the Group’s current and former senior management and employees held 3.88% of the Company’s share capital as at December 31, 2018. R 2.2.3.4 MEDIUM-TERMMODEL The depth of its offering, the ongoing and controlled investment to ensure profitable and sustainable growth, and the momentum related to an accessible market worth more than €100 billion, driven by many macrotrends, offer Legrand with sustainable growth prospects. Legrand is thus confident in the soundness of its model and its ability to fuel lasting profitable growth and has confirmed its medium-term model: W assuming a buoyant economic backdrop and excluding exchange- rate effects, the Group intends to achieve annual growth in sales and adjusted operating profit of around +10%; W assuming a lackluster or unfavorable economic backdrop, Legrand will focus on protecting its model, profitability and generation of free cash flow. Over a full economic cycle, and excluding any major economic slowdown, this model would result in average annual total growth in sales above that of the Group’s reference markets, adjusted operating margin averaging around 20% of sales (1) , normalized free cash flow ranging on average between 13% and 14% of sales (1) and an attractive dividend. Legrand also intends to continue rolling out an ambitious approach to CSR, driven by demanding roadmaps.

2

(1) Without major acquisition and taking into account the implementation of IFRS 16 standard.

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LEGRAND

REGISTRATION DOCUMENT 2018