LEGRAND_REGISTRATION_DOCUMENT_2017

06

CORPORATE GOVERNANCE

Compensation and benefits of company officers

Criteria and targets for annual variable compensation for 2018

Min

Target

Max

40%

Operating margin

2018 adjusted operating margin (at 2017 perimeter)

As a % of fixed compensation

0%

60%

Indicator value

20% 20.25% 20.5%

15%

Organic growth of revenues

2018 organic revenues growth

As a % of fixed compensation

0%

22.5%

Quantifiable portion: 3/4 of annual variable i.e., 75% of fixed compensation (as a target)

Indicator value

1% 2.5%

4%

10%

As a % of fixed compensation

0%

15%

External Growth

2018 revenues growth (including the effect of the acquisitions) Legrand’s inclusion in CSR benchmark indices

Indicator value

0%

5% 10%

10%

Corporate Social Responsibility (CSR)

As a % of fixed compensation

0%

15%

Indicator value

7

12

14

QUANTIFIABLE TOTAL

0% 75% 112.5%

10%

0%

15%

Revenue growth

Evolution market share, new products, sales policies, access to new markets, partnerships (including outside France), expansion in the new economies

Qualitative portion: 1/4 of annual variable i.e., 25% of fixed compensation (as a target)

10%

0%

15%

External growth policy Compliance with set priorities, emphasis on multiples paid, emphasis on any dilutive effects of acquisitions on the Group’s performance, quality of the integration for acquisitions already made

5%

General criteria

Risk management, initiatives and social dialogue, professional diversity and equality, succession plans

0%

7.5%

QUALITATIVE TOTAL

0% 25% 37.5%

VARIABLE TOTAL AS A % OF FIXED COMPENSATION

0% 100% 150%

Long-term compensation paid to the Chief Executive Officer for the 2018 financial year In respect of 2018 financial year, the Chief Executive Officer’s long-term compensation consists of a performance share plan (the “ 2018 Performance Share Plan ”), decided by the Board of Directors at itsmeeting onMarch 20, 2018 on the recommendation of the Compensation Committee. This initial allocation, which will be converted into performance shares when the Board of Directors meets on May 30, 2018 at the end of the 2018 General Meeting, corresponds to 200% of the target amount of fixed compensation, with a possible variation between 0% and 150% of the initial allocation based on future performance criteria. As stated on page 189 of this Registration Document, the compensation scheme applicable to the Chief Executive Officer has been changed in order to set the compensation at a consistent and reasonable level given the change in his profile, and in order to guarantee that the compensation can fulfill its retention role satisfactorily and encourage long-term value creation. For these reasons, the Board of Directors has decided to increase the weight of the long-term variable compensation in

the total compensation, setting the target value at 200% of fixed compensation (compared to 120% in 2017). It must be recalled that, historically, long-term variable compensation depended in particular on the two following company performance criteria: based on EBITDA, calculated as a percentage of revenues, and normalized free cash flow calculated as a percentage of revenues. As stated on page 183 of the Company’s 2016 Registration Document, a change in the accounting standard (IFRS 16), which will take effect as from 2019, is going to change the measurement of these indicators. On this basis, the Board of Directors at its meeting of March 20, 2018, acting on the recommendation of the Compensation Committee, decided to change the performance criteria for the 2018 Performance Share Plan. Choice of performance criteria for long-term variable compensation and target-setting method It must be specified that: W the first two performance criteria are aligned with the Company’s targets disclosed in February. These targets concern

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REGISTRATION DOCUMENT 2017 - LEGRAND