SCH2017_DRF_EN_Livre.indb

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Corporate governance report Interests and compensation of Group Senior Management

In Summary The compensation granted to the Corporate Officers for the financial year 2017 reflects: E The exceptional Group business performance throughout the financial year, the extent of which could not be anticipated at the time the committee set the targets for the variable incentives; E The Corporate Officers’ individual performance results; and E Shareholders’ expectations.

7.3 Corporate Officers’ compensation policy for financial year 2018

Summary of the proposed changes Based on the Committee’s recommendation, the board decided in its meeting of February 14, 2018 to maintain the 2017 executive compensation pillars (see page 181 of this registration document). The 2018 compensation policy and criteria will also remain largely the same as in 2017, apart from the changes outlined in the table below.

Element

Overview of Decision

Rationale

Base Salaries

E Financial year 2017 base salaries to be increased by 5% for Mr. Tricoire and 12% for Mr. Babeau.

E The increase was decided with a view to rewarding the Corporate Officers for the high quality of their actions and initiatives, which enabled the Group to expand its offer and international exposure and to increase its competitiveness (in accordance with the principle “pay- for-performance”), and to keep the competitiveness of the Corporate Officers’ package in mind considering their skills and experience (in accordance with the competitiveness principle), while remaining within internal and external acceptance levels. E As regards Mr. Babeau, the increase of 12% also reflects his new responsibilities in the New Aveva Group. E The economic criteria, which are very closely aligned with shareholder interests, will now represent 84% of the total; placing more emphasis on this component further strengthens the relationship between pay and performance and also the readability of the Corporate Officers’ package. E Giving more weight to the objectives of the company program will further align the pay of the Corporate Officers with the Group strategy. E The 2017 maximum number of share grants were viewed as reasonable for the upcoming cycle.

Annual Cash Incentive Plan

E Transformational objectives of the Company Program increased to 30%, and individual objectives reduced to 10%. E Introduce the possibility to revise the targets in case the guidance is revised in the course of the year, to ensure a constant alignment of the objectives with the shareholders’ interests. E Maintained financial year 2017 maximum number of shares granted to both Corporate Officers. E Maintain the structure of the performance conditions reflecting a fair balance between financial indicators aligned to the perspectives shared with the market, and measurable criteria reflecting the Sustainability and Transformation objectives. E Maintained the prohibition of one-off payments that are not provided for in the compensation policy approved by the shareholders.

Long-Term Incentive

Discretionary Awards

E This practice has been continued as it helps to ensure Schneider Electric pays for performance.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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