SCH2017_DRF_EN_Livre.indb

3 Corporate governance report

Interests and compensation of Group Senior Management

Element

Overview of Decision

Rationale

Payment of non-compete Indemnity

E The board’s exclusive power to decide on the application or waiver of the non-compete agreement is strictly aligned to the AFEP/MEDEF corporate governance guidelines. Schneider Electric now abides by all the guidelines of the AFEP/MEDEF Code, with no exception.

E The principle, conditions, calculation formula and cap applicable to the determination of the non-compete indemnity, if any, would remain unchanged; however, besides being conditional upon the satisfaction of performance conditions, it will be subject to the board’s unilateral decision to enforce or waive the non-compete agreement at the time of departure of the concerned Corporate Officer. See Statutory Auditors’ special report on Regulated Agreements and Commitments pages 365 to 368 submitted to the shareholders for approval under the 4 th and 5 th resolutions. E In case of forced departure (as defined in the Regulated Agreements) and regarding the future stock options and performance share plans, the Corporate Officers are entitled to retain the number of stock options and shares granted to them and unvested at the time of their departure in proportion of their presence with the Company during the vesting period, unless the board decides to grant to the departing Corporate Officer the benefit of all such stock options or performance shares, provided however pre-set performance conditions are met (as detailed in the Statutory Auditors’ special report, pages 365 to 368).

Retention of Unvested Stock Options and Performance Shares

E While keeping flexibility to take a final decision at the time of departure of the Corporate Officer based on actual circumstances, as prescribed by the AFEP/ MEDEF corporate governance guidelines, the board has decided to follow the recommendation from the AMF and to give shareholders more visibility on the potential award. In no case can stock options or shares be retained in a context of non-performance.

The principles and criteria governing the compensation and benefits of all types granted to the Corporate Officers for 2018 as detailed in this section are submitted to the Shareholders for approval at the 2018 Shareholders' Meeting of April 24, 2018, under the 7 th and 8 th resolutions. In accordance with AFEP/MEDEF recommendation, the following table summarizes the compensation and benefits attributable (at target) for Messrs. Tricoire and Babeau for the financial year 2018: Reported compensation and benefits (as per AFEP/MEDEF methodology)

Jean-Pascal Tricoire Chairman & Chief Executive Officer

Amounts attributable for fiscal year 2018

Amounts due for fiscal year 2017

(in euros) A- Cash Compensation Base salary

1,000,000 1,300,000

950,000

Annual incentive (at target for 2018)

1,882,140

Attendance fees

0

0

Sub total (A) (cash compensation)

2,300,000

2,832,140

B- Benefits in kind Valuation of the performance shares granted

[60,000 shares]

3,219,240

Fringe benefit (car)

13,089

13,089

Sub total (B) (benefits in kind)

13,089 + [60,000 shares]

3,232,329

TOTAL (A) + (B) (PACKAGE WITHOUT PENSION) C- Pension cash benefit Complementary payment for pension building (fixed amount) Complementary payment for pension building (variable part) (at target for 2018)

2,313,089 + [60,000 SHARES]

6,064,469

191,600

182,000

249,080 440,680

361,000 543,000

Sub total (C) (pension cash benefit)

TOTAL (A) + (B) + (C) (CASH COMPENSATION, BENEFITS IN KIND AND PENSION CASH BENEFIT)

2,753,769 + [60,000 SHARES]

6,607,469

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

197