PSA - 2019 Universal Registration Document

CORPORATE GOVERNANCE Compensation of company officers

Annual variablecompensation It is designedto align the compensationpaid to membersof the Managing Board with the Group’s annual performance and to contributeyear on year to the implementation of its strategy. Basedon the recommendation of the Appointments,Compensation and GovernanceCommittee,the SupervisoryBoard determinesat the beginning of the year precise, ambitious qualitative and quantitativetargetsfor the currentfinancialyear, after acquainting itself withthe Company’smedium-term strategy andactivity. The rules for setting annual variable compensation have been changed for 2020. In accordance with the AFEP-MEDEF recommendations (Section 24.3.2), variable compensation is expressed as a percentageof fixed annualcompensation.For the Chairmanof the ManagingBoard,variablecompensationmay be 170%of the target, 125% for Mr OlivierBOURGESand Mr MaximePICAT,and 100% for Mr Michael LOHSCHELLER. Furthermore,in order to have a variable compensationstructure consistent with the majority of market practices, and to reward outperformance,compensation for exceeding targets has been introduced. Precise,pre-established,ambitious objectives The actualallocationof variablecompensation is conditionalupona triggerthreshold.The same thresholdis appliedto all beneficiaries of variablecompensation,whethermembersof theManagingBoard or employeesof the Automotive division ofGroupe PSA. The threeperformance indicatorschosento triggerthe entitlement to variablecompensation in 2020 are: the operating free cash flow of manufacturing and sales n companies; The structure of the variable component of compensation of ManagingBoardmembersand Group employeesis establishedon an annual basis according to financial and non-financial performanceobjectives,with a multi-annualperspectivein line with the Group’sstrategicplan. The payment of the variable component is dependent on the achievement of Collective Group Targets and personal targets specific toeachexecutive company officer. the levelof CO 2 fromvehiclessold inEurope; n the GroupWorldAutomotive warranty claimrates. n

Startingin 2020, in the event that all collectiveGroup targets are exceeded and the predefined outperformance levels achieved, additional compensationmay be granted. This would raise the maximum variable compensation from 170% to 250% for the Chairmanof theManagingBoard(200%in 2019),from125%to 147% for Mr Olivier BOURGES and Mr Maxime PICAT (percentages identicalto thosefor 2019),and from 100%to 200%for Mr Michael LOHSCHELLER (percentagesunchanged,set out in his employment contractwith Opel AutomobilesGmbH).The increasein maximum variable compensation, submitted for the approval of the Shareholders’General Meeting, was approvedby the Supervisory Board having reviewed the practices of a panel of comparable companies.Whilstthe Groupis enteringa key periodwith plansfor the cross-border merger with Groupe FCA, the importance of strategic challengesfaced by the sector and an adverse market outlook, the SupervisoryBoard consideredit appropriateto raise the cap on variablecompensationattributableto the Chairmanof the ManagingBoard inthe event ofoutperformance. CollectiveGroupTargetsaccountfor 80%of the maximumvariable part of membersof the ManagingBoard. They consist of at least one economic performance objective and at least one quality-related objective. Their definitive allocation is conditional upon a trigger threshold. Personal targets specific to each executive company officer, represent20% ofthe maximum variable part. They are established in relation to the respective executive functionsof the membersof the ManagingBoard,and there are at leasttwo of them. They are chiefly based on economic performance, with the understanding that at least one corporate social responsibility criterionis assignedto theChairman of the ManagingBoard. Quantifiabletargets take precedenceover qualitativetargets. The criteria aredefined ina precise manner. Thetriggerthresholdandthe levelof achievement requiredfor each of these criteriaare establishedby referenceto the corresponding budget items.

The criteriatrigger entitlement to the variablecomponentof compensation and theCollectiveGroupTargetsfor 2020 are detailed below:

Thresholddistribution/targets

Thresholds

Typeofcriterion

2020 operating freecashflowfrom manufacturing and sales companies (excluding restructuring and exceptional events)Economicperformance Level ofCO 2 from vehicles sold in Europe in respect of 2020 Corporate Social Responsibility Group World Automotive quality failure rate Corporate Social Responsibility

Triple trigger threshold

Percentage ofthevariablepart

Thresholddistribution/Targets

Objectives

Typeofcriterion

Automotive division adjusted operating margin (30% ofthe Collective Group Targets) Operational free cashflow from manufacturing and sales companies (excluding restructuring and non-recurring items) (30% of Collective Group Targets)

Economicperformance

24%

Economicperformance

24%

CollectiveGroup targets

Profit (loss) for the period attributable to owners of the parent (20%of Collective Group Targets) Economicperformance

16%

Group sales points recommendation rate (10% ofthe Collective Group Targets) Group World Automotive quality failure rate (10% ofcollective Group targets)

Corporate Social Responsibility Corporate Social Responsibility

8%

8%

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GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT