PERNOD RICARD - Universal Registration Document 2019-2020

2. CORPORATE GOVERNANCE Compensation policy

General principles for the determination, review and implementation of the compensation

policy for corporate officers The Board of Directors follows the general guidelines, drawn up within the framework of the recommendations of the AFEP-MEDEF Code, for the determination, review and implementation of its compensation policy. It thus ensures that this compensation policy is consistent with the principles of compliance, comparability, competitiveness, comprehensiveness, motivation, performance, intelligibility of the rules and measurement. Compliance In its analysis and proposals to the Board of Directors, the Compensation Committee is particularly careful to follow the recommendations of the AFEP-MEDEF Code, which the Company uses as reference. Comparability and competitiveness Compensation is based on the assumed responsibilities, the performed tasks and the obtained results. Market practice is also a reference that is taken into account. Studies are regularly conducted with the assistance of consulting firms to measure compensation levels and structures in relation to panels of comparable companies (in terms of both size and scope). Comprehensiveness and balance All components of the compensation and other benefits are analysed exhaustively each year using an element-by-element approach and then an analysis of overall consistency to achieve the best balance between fixed and variable, individual and collective and short- and long-term compensation. Coherence The Compensation Committee is informed annually of the terms and conditions of compensation and employment of the Group’s employees. It is therefore able to propose to the Board of Directors a coherent compensation policy for the Executive Director, in particular in relation to that of the Group’s Senior Managers. Motivation and performance In its recommendations to the Board of Directors, the Compensation Committee seeks to propose a compensation policy commensurate with the responsibilities of the recipients and in line with the practices of comparable large international corporations and seeks to maintain a good balance between fixed compensation, variable annual compensation and long-term compensation. Lastly, with regard to the Executive Director specifically, the variable compensation policy (in particular the criteria for the annual variable portion and the performance conditions for stock options and performance-based shares) is kept under regular review, based on the Group’s strategic priorities and in a way that is aligned with shareholders’ interests. Intelligibility of the rules The Group ensures that the compensation policy is simple and that each of the rules set out in this document is clear enough for everyone to understand. Measurement The Group endeavours to strike the right balance when setting the compensation policy, taking into account the interests of the Company, market practices, management performance and stakeholders.

Review The Group’s compensation policy is reviewed at least once a year by the Board of Directors on the proposal of the Compensation Committee to take into account changes in laws and regulations, best practices and recommendations, codes of corporate governance and shareholder votes and, where applicable, the opinions expressed at Shareholders’ Meetings. Implementation On the recommendation of the Compensation Committee, the Board of Directors ensures that the policy is applied in accordance with the rules approved by the Shareholders’ Meeting. The Group works to ensure that the compensation system is coherent and that payment of employees is fair. Governance The determination, review and implementation of compensation policies for corporate officers are established by the Board of Directors, on the recommendation of the Compensation Committee, and then submitted to the Shareholders’ Meeting. The Compensation Committee ensures the strict application of all of those policies in accordance with the above-mentioned principles. Conflicts of interest The Board of Directors and the Compensation Committee ensure the prevention and management of any conflicts of interest that may arise in this decision-making process. As a result, the Chairman & CEO refrains from taking part in deliberations and voting on policies that concern him. In accordance with the provisions of the AFEP-MEDEF Code, an independent Director is a non-executive corporate officer of the Company or its Group and has no special ties with them. Compliance with the corporate interest and relationship to strategy The compensation policy adopted by the Board of Directors includes incentives that reflect the Group’s strategy of long-term profitable growth through responsible actions and compliance with the interests of the Company and its shareholders, both in terms of the correlation of compensation with the Company’s short- and long-term performance and in terms of the policy of giving the executive a share of the capital and the associated share of risk. This compensation policy, which reflects the interests of the Company, helps to secure the Group’s long-term future and is part of its business strategy. The performance conditions of the compensation policy for corporate officers are directly linked to the Group’s performance metrics. Thus, the compensation policy of corporate cfficers: reinforces the alignment of the interests of the Executive Director — with the Company’s corporate interest insofar as it is in line with and supports the Company’s strategy; and contributes to the Company’s sustainability thanks in particular to its — long-term compensation policy and its loyalty-building effects as well as its incentives for sustainable performance.


Pernod Ricard Universal Registration Document 2019-2020

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