SCH2017_DRF_EN_Livre.indb

3 Corporate governance report

Interests and compensation of Group Senior Management

Furthermore, in order to strictly align the objectives assigned to the Corporate Officers and the expectations of the shareholders, the board reiterates the rule whereby the targets are set in line with the objectives communicated to the market at the beginning of the year. The board however decided that it may envisage, if the circumstances demand for it, revising the financial targets of the economic criteria in the course of the year in case of a change in the guidance to the market. The payment of the variable annual incentive will be conditioned upon the approval by the shareholders of the compensation granted to the concerned Corporate Officer. The Company does not operate a clawback policy. Long-term incentive: Performance Shares In order to align the interests of the Group’s executives to those of the shareholders, the board allocates performance shares to more than 2,000 beneficiaries who hold positions as Group executives under Plans No. 30 and 31. These shares will be subject to a set of performance criteria that are measured over the long-term and combine financial indicators (65%), relative return on investment with the TSR objective (15%) and sustainable development (20%). The total number of shares that will be granted in 2018 was set at 2.4 million shares.

Since 2016, the final allocation of performance shares has been determined by the achievement of the assessed targets over a three-year period, which strengthens the alignment of executive compensation to the shareholders’ long-term fundamental interests. Further, the shares in Plan No. 30, which are granted only to the Corporate Officers in consideration for their corporate office of Schneider Electric SE, will also be subject to a 1 year holding period on top of the 3 year vesting period. 100% of the allocation to the Group Senior Management is subject to performance conditions, pre-set by the board for each of the following objectives: E For 40%, a target operating margin of adjusted EBITA for the 2018–2020 period; E For 25%, a cash conversion target for the 2018–2020 period; E For 15%, a TSR target linked to Schneider Electric’s ranking in a panel of 12 companies by the end of 2020; and E For 20%, the average annual progress of the Planet & Society Barometer for the 2018-2020 period.

WEIGHT OF ECONOMIC CRITERIA

WEIGHT OF MESURABLE CRITERIA

20%

20%

20%

100%

100% 100%

80%

80%

80%

2018

2016 2017

2018

2016 2017

Measurable

Qualitative

Economic

Sustainability & individual

The target values of each of these objectives and the vesting rules are set by the board based on the guidance communicated to the market and will be detailed in the board’s report at the Shareholders’ Meeting once the acquisition period has lapsed.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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