LEGRAND_REGISTRATION_DOCUMENT_2017

CORPORATE GOVERNANCE

Compensation and benefits of company officers

compensation in the total compensation has been increased compared to 2017 to ensure that the compensation can meet its retention objective in a satisfactory manner and encourage the creation of long-term value. The diligence conducted by the independent consulting firms commissioned by the Compensation Committee show that the proposed weightings result in a total target compensation equal to €2,800,000, which is slightly lower than the first quartile of the CAC 40, according to the external study carried out, which the Board of Directors has considered to be reasonable. B – Determination of the calculation principles, criteria and weightings applicable to the annual variable and long-term elements of compensation attributable to the Chairman and Chief Executive Officer for the 2018 financial year by virtue of his office as from February 8, 2018 Annual variable compensation of the Chief Executive Officer for the 2018 financial year The principles for the calculation of variable compensation for the 2018 financial year, including applicable criteria and their weighting shown in the table below, were determined by the Board of Directors at its meeting held on March 20, 2018 on the recommendation of the Compensation Committee. As mentioned on page 189, the compensation scheme applicable to the Chief Executive Officer has been modified to suit the change in his profile,in order to guarantee that the compensation can fulfill its retention role satisfactorily and encourage value creation. In relation to this, the Board of Directors has decided to increase the weight of annual variable compensation in total compensation, setting the target value at 100% of fixed compensation (compared to 80% in 2017) and the maximum value at 150% (compared to 120% in 2017). At its meeting on March 20, 2018, on the recommendation of the Compensation Committee, the Board of Directors also decided to maintain unchanged the nature and weighting of quantifiable and qualitative criteria of annual variable compensation that had been established for the 2017 financial year.

been moderately revaluated compared to the annual fixed compensation applicable to the Chairman and Chief Executive Officer in 2017, given the following components: W there had been no revaluation of the fixed compensation of Mr. Gilles Schnepp since 2011; W the change in chief executive officer, his situation, profile and his experience required to set compensation at a consistent and reasonable level compared with the market in order to ensure that the retention objective is met satisfactorily. It must be noted that the amount of the annual fixed compensation after such revaluation remains lower than the first decile of the CAC 40 in accordance with the external study carried out, which the Board of Directors has considered to be reasonable. W an annual variable compensation, the target value of which was set at 100% of fixed compensation (3/4 quantifiable and 1/4 qualitative) , potentially ranging between 0% and 150% of fixed compensation, depending on the level of achievement of the predefined quantifiable and qualitative criteria presented on pages 191-192. The Board of Directors has wished thereby to place the emphasis on annual variable compensation in order to incentivize financial and extra-financial performance. The diligence conducted by the independent consulting firms commissioned by the Compensation Committee shows that the proposed weightings result in total target cash compensation equal to €1,400,000, which is slightly lower than the first decile of the CAC 40, according to the external study carried out, which the Board of Directors has considered to be reasonable. W a long-term compensation in the form of performance share plans , the target value of which has been set at 200% of the fixed compensation and which will be converted into shares. The number of shares can range thereafter between 0% and 150% of the initial allocation based on the level of achievement of four financial and non-financial criteria measured on the basis of a three-year average and detailed on pages 192–194. It must also be noted that the weighting of the long-term W it was positionned below comparables,

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Choice of performance criteria for annual variable compensation and target-setting method

Performance criterion

Reason for criterion

Target-setting method

The ranges of the performance targets to be reached correspond to the Company’s annual targets, disclosed to the market upon publication of the annual financial statements for the previous year (February). Consistency with the Group’s growth model (measured by the growth in revenues for the year by scope effect). Depending on the number of CSR benchmark indices in which Legrand is present.

Adjusted operating margin before acquisitions

Alignment with published annual targets

Organic growth of revenues

Alignment with published annual targets

External growth

Consistent with the Group’s growth model

Legrand’s inclusion in CSR benchmark indices

Non-financial criterion depending on the rating of third parties and consistent with the Company’s sustainable development targets

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REGISTRATION DOCUMENT 2017 - LEGRAND