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Corporate governance report Interests and compensation of Group Senior Management

7. Interests and compensation of Group Senior Management

7.1 Group Senior Management compensation policy (Corporate Officers and members of the Executive Committee)

7.1.1 Executive compensation governance Schneider Electric Group (“Schneider Electric” or “Group”) follows a rigorous process for determining executive compensation. The general principles underlying compensation policy for corporate officers and their individual analyses are reviewed by the Governance and remunerations committee (the “Committee”), which makes proposals to the board of directors. The board is also informed regarding the compensation policy applying to other members of the Group Senior Management (namely, the other members of the Executive Committee, see section 7.5), through the report to the board of by Human Resources and CSR committee. To help the board in the decision process the Governance and remunerations committee as well as the Human Resources and CSR committee are entitled to call upon external experts for specific missions and analyses. More than 75% of the board is composed of independent directors as defined by the AFEP/MEDEF Code who contribute a breadth of expertise that is varied and specialized; 75% of the Committee is composed of independent directors, including its Chairman. Besides being independent and qualified, Schneider Electric’s directors participate actively in the work of the board. The attendance rate has exceeded 90%, 8 years of the last 10 years and reached 90% in 2017. As part of its preparatory work for its proposals to the board, the Committee: E Defines incentive plan criteria based on Schneider Electric’s executive compensation pillars and business strategy. Individual

qualitative and/or quantitative targets are determined at the beginning of the year in accordance with the goals of the strategic plan and individual performance objectives of each Corporate Officer. Based on circumstances and priorities, the targets also encompass risks raised by the Audit committee as well as the recommendations of the Human Resources and CSR committee; E Benchmarks Corporate Officer pay against the median of a peer group consisting of 24 French and international companies that are comparable to Schneider Electric in terms of market capitalization, revenue, industry or that represent a potential source of recruitment or attrition. This benchmarking is used as an indicator, not as a target, and is done ex-post for reference only; E Relies on its Chair and independent lead director to directly engage with shareholders to ensure their perspectives and feedback on Schneider Electric’s compensation policy and decisions are heard and considered in decision-making. This process guarantees consistency and balance between the compensation policy applied to the senior managers and the compensation policy applied to Corporate Officers. It also ensures that all members of the Group Senior Management, including the Corporate Officers, share the same objectives and priorities as well as the same rewards. From a process standpoint, in determining executive compensation the use of discretion is limited to reviewing personal objectives.

In making executive compensation decisions, the board considers: E Executive compensation pillars; E Group financial performance; E Corporate Officer performance relative to business objectives and business environment; E Complexity and scope of Corporate Officer roles and responsibilities; E Shareholders’ recommendations; E Input from external advisors (to ensure executive pay is competitive and appropriate) on a pluriannual basis; E Market pay practices and conditions; E Emerging best practices in executive compensation and governance.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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