SAINT_GOBAIN_REGISTRATION_DOCUMENT_2017

Financial and accounting information 2017 Consolidated financial statements

assumptions relating to the average holding period of „ options, based on observed behavior of option holders; expected dividends, as estimated on the basis of historical „ dividend information dating back to 1988; a risk-free interest rate corresponding to the yield on „ long-term government bonds;

the effect of any stock market performance conditions, „ which is taken into account in the initial measurement of IFRS 2 share-based payment expense. The cost calculated using this method is recognized in the income statement over the vesting period of the options, which is four years.

Stock option expense recorded in the income statement amounted to €1 million in both 2017 and 2016. The fair value of options granted in 2017 amounted to €1 million. The table below summarizes information about stock options outstanding at December 31, 2017, after taking into account partial fulfillment of the performance criteria attached to certain plans:

Exercisable options

Non-exercisable options

Total options outstanding

Weighted average contractual life (in months)

Exercise price (in €)

Number of options

Number of options

Type of options

Exercise price (in €)

Number of options 1,185,015

Grant date

2008 2009 2010 2011 2012 2013

25.88 36.34 35.19 31.22 27.71 38.80

11 23 35 47 59 71

1,185,015 Subscription 654,514 Subscription

654,514

0 0

0 Subscription 0 Subscription

19,962 132,132

19,962 Subscription

132,132

Purchase

Subscription or purchase* Subscription or purchase* Subscription or purchase* Subscription or purchase*

2014

83

34.13

234,550

234,550

2015

95

39.47

224,950

224,950

2016

107

40.43

280,000

280,000

2017

119

49.38

284,500

284,500

TOTAL

1,991,623

1,024,000

3,015,623

*

2014, 2015, 2016 and 2017 plans: see above.

For subscription options, the sum received by the Company when options are exercised is recorded in “Capital stock” for the portion representing the par value of the shares, with the balance – net of directly attributable transaction costs – recorded under “Additional paid-in capital”. At December 31, 2017, 1,991,623 stock options were exercisable (at an average exercise price of €30.19) and 1,024,000 options (with an average exercise price of €41.26) had not yet vested. Performance shares and performance 4.4.3. unit grants The Group set up a worldwide share grant plan in 2009 whereby each Group employee was awarded seven shares. This plan ended in the first half of 2014. Since 2009, performance share plans have also been set up for certain categories of employees. These plans are subject to eligibility criteria based on the grantee’s period of service (service conditions) with the Group as well as performance criteria (performance conditions), which are described below. The IFRS 2 share-based payment expense takes into account these criteria as well as the lock-up feature. It is determined after deducting the present value of forfeited dividends on the performance shares and are recognized over the vesting period, which ranges from two to four years depending on the country.

Since 2012, performance unit plans have been set up for certain employees in France. These plans are also subject to service and performance conditions. The IFRS 2 share-based payment expense therefore takes into account these factors, as well as the fact that the units are cash-settled. IFRS 2 stipulates that for cash-settled share-based payment transactions, the granted instruments are initially measured at fair value at the grant date, then remeasured at the end of each reporting period, with the expense adjusted accordingly pro rata to the rights that have vested at the reporting date. The expense is recognized over the vesting period of the rights. Performance share plans a) Various performance share plans have been set up by Saint-Gobain since 2009. Four performance share plans were outstanding at December 31, 2017. The plans approved by the Board of Directors in 2014 and 2015 solely concern certain managerial-grade employees and senior managers of the Group outside France. The plans approved by the Board of Directors in 2016 and on November 23, 2017 concern managerial-grade employees and senior managers of the Group both within and outside France. All plans are subject to service and performance conditions. The vesting period for the plans is four years and the shares will be delivered the day after the end of the vesting period.

9

241 SAINT-GOBAIN - REGISTRATION DOCUMENT 2017