SCH2017_DRF_EN_Livre.indb

8 Annual Shareholders’ Meeting

Report of the board of directors to the Ordinary and Extraordinary Shareholders’ Meeting

Agreements regulated by articles L.225-38 and L.225-42-1 – Fourth to sixth resolutions We request that you approve and take note of the regulated agreements and commitments presented in the Statutory Auditors’ special report prepared in accordance with article L.225-40 of the French Commercial Code. These agreements mainly concern the reiteration and amendment of the status of Messrs. Jean-Pascal Tricoire and Emmanuel Babeau decided in furtherance of the renewal of their terms. We remind you that the terms of office of the Chairman and Chief Executive Officer and Deputy Chief Executive Officer Messrs. Jean-Pascal Tricoire and Emmanuel Babeau were renewed on April 25, 2017 by the board of directors in its meeting held at the end of the Annual Shareholders’ Meeting. Under the fourth and fifth resolutions , in accordance with article L.225-42-1 of the French Commercial Code pursuant to which the approval of agreements relating to the components of the corporate officers’ status is requested at each renewal of term of office, we request that you approve the reiteration and the amendment of the status of Messrs. Jean-Pascal Tricoire and Emmanuel Babeau as presented in the Statutory Auditors’ special report prepared in accordance with article L.225-40 of the French Commercial Code. Mr. Jean-Pascal Tricoire’s status, renewed and amended by the board of directors of April 25, June 18 & 19 and October 24, 2013 to include the new recommendations of the AFEP/MEDEF Code, were approved by the Annual Shareholders’ Meeting of May 6, 2014. The amendment of his status resulting from the board of directors’ decision of February 18, 2015 to remove the benefit of the supplementary defined-benefit pension scheme (article 39) granted to the Corporate Officers until then, was approved by the Annual Shareholders’ Meeting of April 21, 2015. Mr. Emmanuel Babeau’s status as approved by the Annual Shareholders’ Meeting of May 6, 2014 following its adoption by the board of directors on June 18 & 19 and October 24, 2013, was amended by the board of directors on February 18, 2015 to reiterate, in his capacity as Corporate Officer, the components of the status which he benefitted from under his employment contract with SEISAS before he resigned to comply with the decision of the board to cancel the Corporate Officers’ right to a defined-benefit pension scheme under article 39. His new status was approved by the Annual Shareholders’ Meeting of April 21, 2015. Since then, the status of Messrs. Jean-Pascal Tricoire and Emmanuel Babeau have been strictly aligned and amended twice by the board of directors: E the board of directors of April 25, 2017 in its meeting held at the end of the Annual Shareholders’ Meeting which approved the renewal of Mr. Tricoire’s term as a director, decided to renew and amend the status of the Corporate Officers to make it fully compliant with the recommendations of the AFEP/MEDEF Code and thus to put an end to the last deviation therewith that the Group had explained ( cf. registration document 2016 page 198): the board thus decided that the decision to enforce or to waive the non-compete agreement at the time of the Corporate Officer’s departure was, in all cases, to be decided solely by the board; E on February 14, 2018, the board decided to amend the Corporate Officers’ right to retain, in the case of involuntary severance, the benefit of stock-options and performance shares or free shares issued from future plans that would remain unvested or

unexercised: in principle, the Corporate Officer will be entitled to keep the benefit of such options and shares in proportion to his presence with the Group during the acquisition period of the option or share, it being however specified that in compliance with the AFEP/MEDEF Corporate Governance Code, the board will keep the flexibility to grant to the departing Corporate Officer, in the case where the forced departure is subsequent to a material change in Schneider Electric’s shareholder structure or to a reorientation of the strategy pursued and promoted by him until this time, and in all cases subject to specific performance conditions, the entirety of the options or shares previously granted. In such case, the board will have to motivate its decision. Therefore, under the terms of their respective status detailed in pages 206 and seq. of the Registration Document and subject to your approval of the fourth and fifth resolutions , Messrs. Tricoire and Babeau individually: E will be covered under the Schneider Electric SE and Schneider Electric Industries SAS employee benefit plan with health, incapacity, disability and death coverage, and, subject to performance conditions, will also be covered under the supplementary health, disability and death coverage available to the Group’s French executives as well as the Group individual accident insurance policies; E will be bound by a non-compete agreement, should they leave the company; this agreement lasts for 1 year and compensation is set at 60% of effective annual target compensation over the previous 12 months (fixed and variable portions, complementary payments for building-up a pension included), it being specified that the board will be entitled to unilaterally waive this non-compete agreement; E will be entitled, subject to performance conditions, to involuntary severance pay, capped at twice the arithmetic average of the effective annual compensation over the past 3 years, taking into account compensation provided for the non-compete agreement, if any, and provided that they resign, in particular, following a material change in Schneider Electric shareholders’ structure or a reorientation of the strategy pursued and promoted by them until that time; E will be entitled to retain, in case of involuntary departure and subject to performance conditions, all the stock-options and the performance or free shares allocated to them before February 14, 2018 and unvested or unexercised at the time of departure of the Corporate Officer; E will be entitled to retain, in case of involuntary departure, the stock-options and the performance or free shares allocated to them after February 14, 2018 and unvested or unexercised at the time of departure of the Corporate Officer, in proportion to their presence within the Group during the acquisition period of the option or share, unless the board decides, in a motivated resolution, to grant to the departing corporate officer, in the case where the forced departure is subsequent to a material change in Schneider Electric’s shareholder structure or to a reorientation of the strategy pursued and promoted by them, and in all cases subject to specific performance conditions, the entirety of the options or shares previously granted; E will be entitled to an annuity for the surviving spouse in the event of death or an annuity with reversion to the surviving spouse in the event of disability, provided that these risks occur before the end of their term of office or after the age of 55 in the event of departure from the company following redundancy or incapacity.

2017 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC

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