SCH2017_DRF_EN_Livre.indb

3 Corporate governance report

Interests and compensation of Group Senior Management

7.1.2 Pillars of executive compensation Schneider Electric believes in rewarding all employees, including the Corporate Officers, for delivering strong performance, building shareholder value and helping the Group achieve its corporate goals. With this in mind, the Committee follows a rigorous process when making executive compensation decisions. This process is underpinned by 3 pillars, translated into 7 principles:

PAY FOR PERFORMANCE: To reward individual and collective performance by aligning the levels of compensation with the Group’s results

Prevalence of variable components: circa 80% for CEO and 75% for Deputy-CEO (at target)

PRINCIPLE 1

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Performance evaluated via economic and measurable criteria

PRINCIPLE 2

Financial and sustainability & transformational objectives fairly balanced and distributed between short term (STIP) and medium term (LTIP) components

PRINCIPLE 3

ALIGNMENT WITH SHAREHOLDERS’ INTERESTS, via

PRINCIPLE 4

Overweight of shares as part of the overall compensation package

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PRINCIPLE 5

Performance conditions aligned to shareholders’ expectations

COMPETITIVENESS: To motivate and retain executives in a competitive international market

To set the Corporate Officers’ compensation package ‘at target’ in the median range of the Company’s updated peer group

PRINCIPLE 6

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PRINCIPLE 7

To reference the CAC40 3rd quartile and the Stoxx Europe 50 median

In line with these pillars, Schneider Electric abides by the following executive compensation practices:

What Schneider Electric Does

What Schneider Electric Does not Do

E Link Corporate Officer pay to performance through short- and long-term variable pay E Base variable pay on primarily economic performance criteria that connect to the fulfillment of Schneider Electric’s Strategic Plan E Implement a robust shareholder engagement process E Ensure the independence of Committee members and the advisors who may report to them E Cap long-term incentive awards in terms of number of shares granted E Provide a cash-based pension benefit that is linked to performance E Require Corporate Officers to comply with stock ownership guidelines E Limit discretion to reviewing personal objectives

E No rewards for Corporate Officers without a link to performance E No excessive benefits in kind E No discretionary or “one off” payments to Corporate Officers E No defined-benefit “top hat” pension scheme

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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