NATIXIS - Universal registration document and financial report 2019

FINANCIAL DATA Consolidated financial statements and notes

Where the payment of compensation is subject to a continuing service requirement, the corresponding expense is recorded over the vesting period on a straight-line basis. When no continuing service requirement exists, the expense is recognized immediately as a debt. The latter is then remeasured at each reporting date taking into account performance criteria and any changes in the value of underlying shares. Changes to the terms and conditions of a cash-settled employee retention and performance plan indexed to the value of the Natixis share, or that of its subsidiaries’ shares, with the result that the plan is reclassified as an employee retention and performance plan settled in shares, would trigger the derecognition of the debt recorded for the initial plan indexed to the value of the Natixis share, or that of its subsidiaries’ shares, and the recognition of a debt equivalent to the services provided for the new employee retention and performance plan settled in shares as at the date of modification. The difference between the recognition in equity and the derecognition of the debt is recorded directly in income. Detailed information about these plans and their quantified impacts over the period are provided in Note 12.2.2. share derivatives All treasury shares held by Natixis are deducted from equity regardless of the purpose for which they are acquired/held. Any gains or losses recognized in the parent company financial statements in respect of the sale, measurement or impairment of treasury shares held for trading or available-for-sale are eliminated in the consolidated financial statements through equity. Treasury share derivatives are recognized differently depending on how they are unwound: as equity instruments, if they are unwound by trading a fixed V number of treasury shares for a fixed amount of cash or another financial asset, and if this trade is the only possible unwinding method. In such case, the instruments are not subsequently revalued; as derivatives, if they are unwound via a net cash settlement or a V net treasury shares settlement. In such case, the fair value changes in the instruments are recorded in the income statement. A contract obligating Natixis to buy its own shares creates a liability in the amount of the discounted acquisition price, regardless of how the derivative is classified, with a corresponding entry in equity. 6.19 Under IFRS 15 “Revenue from contracts with customers”, the entity must recognize income arising from ordinary activities in an amount that reflects the consideration that the entity expects to receive in exchange for the transfer of goods and services promised to customers. Revenue is recognized in five stages: identification of contracts with customers; V identification of specific performance obligations (or items) to be V recognized separately from one another; determination of overall transaction price; V allocation of transaction price to the various specific performance V obligations; recognition of income when performance obligations are met. V Treasury shares and treasury 6.18 Fees and commissions received

Share-based payments 6.17 Capital increases reserved for employees Stock options offered to employees under the Employee Savings Plan, with a discount compared with the average market price for a given period (called the reference price), are encumbered with a lock-up period of five years. The advantage granted is measured as the difference between the fair value of the acquired share, taking into account the lock-up condition and the purchase price paid by the employee on the subscription date, multiplied by the number of shares subscribed. The lock-up valuation method is based on the cost of a two-step strategy consisting of a five-year forward sale of the locked-up shares and purchasing the same number of shares in cash, by financing the purchase with a loan ultimately repayable at the end of the five years with the income from the forward sale. The loan interest rate is that which would have been granted to a market player seeking a non-affected cash loan repayable in five years with an average risk profile. The main assumptions applied for valuing the advantages related to capital increases reserved for employees are provided in Note 12.2.4. The variable compensation policy is in keeping with the regulatory framework, including the European Regulation CRD IV. It also meets transparency requirements with regard to the ACPR, the ECB and the AMF. Some plans are settled in Natixis shares, while others are settled in cash indexed to the Natixis share price. Employee retention and performance plans settled in shares Under IFRS 2 “Share-based payment”, employee bonus share awards give rise to an expense representing the fair value of the goods or services received at the grant date. This payroll expense is recognized against equity. The fair value of the services received is calculated by reference to the fair value of the shares at the grant date, less the present value of dividends forfeited by employees during the vesting period, taking the continued service requirements into account. The expense is recognized on a straight-line basis over the vesting period. The expense is adjusted over the vesting period to reflect any losses of rights. Cash-settled employee retention and performance plans indexed to the value of the Natixis share The accounting treatment applicable to cash-settled share-based payments is governed by IFRS 2 “Share-based payment”. Under IFRS 2, the services acquired and the liability incurred are measured at fair value. Until the liability is settled, debt is remeasured at each reporting date and at the date of settlement, with any changes in fair value recognized in income for the period. The remeasurement of the liability at the reporting date takes into account any changes in the value of the underlying shares, as well as whether or not the continued service requirement and performance criteria have been met. Share-based employee retention and performance recognition plans

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NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2019