PSA - 2019 Universal Registration Document

CORPORATE GOVERNANCE Compensation of company officers

Performance share award plan for 2020 (PlanLTI 2020)

The two performanceobjectivesrelate to Opel Vauxhall’sadjusted operatingincomeand operatingfree cash flow. Each performance objective accounts for 50% of the exceptional compensation calculation. This exceptionalcompensationis capped at 125% in the event of outperformance and endswiththe2020financial year. Moreover, Mr Michael LOHSCHELLER had benefited from the introductionof an exceptionalcompensationcomponent,linked to the implementationof the “PACE!”plan,in his capacityas Managing Director of Opel AutomobilesGmbH, and consequentlyas a key contributorto thesuccessof this plan. For information, provision is made for the allocation of this componentof compensation in the employmentcontractbetween Opel AutomobilesGmbH and Mr MichaelLOHSCHELLERand was ratified by the Supervisory Board of Peugeot S.A., upon his appointmentas memberof the ManagingBoard. The Supervisory Board has made the payment of this exceptionalcompensation conditionalupon the presenceof Mr MichaelLOHSCHELLERwith the Group throughoutthe 2019 and 2020 financial years and the “PACE” planobjectiveshavingbeingmet. In light of the resultsof the “PACE!”plan in the 2019 financialyear, at its meetingon 25 February2020,the SupervisoryBoardvotedto allocate exceptional compensation to Mr Carlos TAVARES and Mr Michael LOHSCHELLER. Targetslinkedto the componentsof compensationallocatedto the membersof the ManagingBoard in the reportingfinancialyear are statedin thetables below. A proposalfor the paymentof this exceptionalcompensationwillbe made tothe Shareholders’ General Meeting on 25June 2020. Retention plan The successof the plannedmergerof Groupe PSAandFCAwill rely on the commitmentof the Group’s key talents since most value creationfrom the operationwill lie in the executionof the merger andthe synergies it makes possible. The success of the operation is based on the Group’s ability to retaina numberof its employeeswho are directlyinvolvedwith the process,whereasthey have skills that are highly soughtafter in an extremely competitivemarket and this type of merger naturally ultimatelyresults instreamliningmanagement teams. Beingawareof the need to retainthe key talentsnecessaryfor the success of this project, at its meeting on 25 February2020 the Supervisory Board decided to propose the introduction of a principle of exceptionalcompensationin the 2020 compensation policy. This exceptionalcompensationwould take the form of a retentionplan for employeeswho are essentialto the mergerand the consolidation of thetwo groups. Basedon theirexperienceof similaroperations,themembersof the Board consider that these retention plans are an effective and standardmechanismfor limitingthe risksof departureand ensuring this fundamental stage for Groupe PSA runs as smoothly as possible. The SupervisoryBoard considers that members of the ManagingBoardandcertainkey employeesof Groupe PSAmustbe identified as essential to the success of the operation and the consolidation of the two groups. As such they would be beneficiaries of this plan. The implementationof this retentionplan would be subject to a conditionof presenceand performanceconditionsspecific to the merger. Compensationwould only be paid in the event that the merger is finalisedand under stringentpre-conditionsset by the Supervisory Board, which has establishedan ad-hoc committeeto overseethe merger.

At its meetingon 25 February2020,the SupervisoryBoarddecided to award performanceshares to membersof the ManagingBoard pursuant to the authorisation of the Shareholders’ Meeting on 24 April 2018 (22nd resolution). This free share allocationplan covers several hundred senior and executivemanagersand key talents of the Group, for a total of 3,100,000 shares(representing 0.34% of the share capital at 31 December 2019).Concerningawardsto membersof theManaging Board, the plan provides for the award of 130,000 performance shares to the Chairmanof the ManagingBoard and 60,000 such sharesto eachof theothermembersof theManagingBoard. The SupervisoryBoard has introduceda limit on the number of performanceshares to be granted to members of the Managing Board. The value of the shares on the date they are grantedmay not exceed60%of the sumof the fixedand variablecompensation. Conditionsfor allocatingshares to Mr MichaelLOHSCHELLERare set out in his employmentcontractwith Opel Automobiles GmbH, which stipulates a target allocation amount of €1 million. Definitive vestingwill be subject to three performance conditions: Automotiveadjustedoperatingmargin(2020-2022average)for n 70% ofshares allocated; Group World Automotive quality failure rate (2020-2022 n average) for 15% of shares allocated; level of CO 2 emissionsfrom vehiclessold in Europein 2020 and n 2021 for 15% of shares allocated. The vesting period is alignedwith a performanceperiod of three consecutive years (2020 to2022). Vesting is conditionalon presenceon the 31 Decemberpreceding the vestingdate. This plan does not include a lock-up period. Nevertheless,the members of the ManagingBoard are subject to an obligationto retainand refrainfromhedgingsharesin accordancewiththe Stock Market Codeof Ethics andGroupPolicy. Exceptional compensation The compensationpolicyfor executivecompanyofficersincludesa principleof allocatingexceptionalcompensationattributablein the event of exceptional circumstancesandprofits forGroupe PSA. Exceptional compensation linked tothe results of Opel Vauxhall’s “PACE!” recoveryplan Mr CarlosTAVARESand Mr MichaelLOHSCHELLERare entitledto an exceptionalcompensationcomponentlinked to results of the OpelVauxhall’s“PACE!” recovery plan. At its meetingon 24 October2017,the SupervisoryBoardproposed incorporatingan exceptional compensationcomponent into the compensation policies for Carlos TAVARES, Chairman of the ManagingBoard. In accordancewith the recommendationsof the AFEP-MEDEFCode, this proposalwas justifiedon the basis of the importance of Opel Vauxhall’s “PACE!” recovery plan, the commitment it requiresof Mr CarlosTAVARESand the difficultiesit presents. During the Shareholders’General Meeting of 24 April 2018, the shareholdersapprovedthe compensationpolicyfor theChairmanof the Managing Board including an exceptional compensation component, and they agreed to a four-part exceptional compensationplan, with each part being tied respectivelyto Opel Vauxhall’s2017, 2018, 2019 and 2020 financialyears,and subjectto performanceobjectiveslinked to Opel Vauxhall’s“PACE!”recovery plan beingmet.

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GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT