SOMFY - Annual financial report 2018

05 REPORT ON CORPORATE GOVERNANCE

REGULATED AGREEMENTS —

AGREEMENTS CONCLUDED BETWEEN A CORPORATE OFFICER OR SHAREHOLDER HOLDING MORE THAN 10% OF VOTING RIGHTS AND A SUBSIDIARY (EXCLUDING CURRENT AGREEMENTS) — Nil.

Please note that no regulated agreement concluded and authorised during previous financial years and with continuing effect during the financial year just ended is to be reported, and that no new agreements of the same nature as those referred to in Articles L. 225-86 and subsequent of the Commercial Code were concluded during the 2018 financial year. FINANCIAL AUTHORISATIONS — The Management Board benefits from the following authorisations: Date of AGM Date authorisation expires

Authorised amount

Used during the financial year ended 31 December 2018

Residual amount at 31 December 2018

1.5% of share capital on date of AGM Charged to the allocation of free shares 1.5% of share capital on date of AGM Charged to the allocation of SOs*

Extraordinary General Meeting 16 May 2018 Extraordinary General Meeting 24 May 2016

Authorisation to issue stock options

1.5% of share capital on date of AGM

15 July 2021

Nil

1.1158% of share capital on date of AGM

Authorisation to grant existing free shares

23 July 2019

**

Stock options. * Free allocation of 5,239 shares, representing 0.014% of the share capital, decided by the Management Board on 12 November 2018. **

It is further specified that the Management Board has a share buyback authorisation, granted by the Shareholders' Meeting of 16 May 2018 in its 11 th ordinary resolution, details of which are set out in the section on the buyback of own shares in the Management Board's management report, and an authorisation to cancel shares purchased by the company, granted by the General Meeting of 16 May 2018 in its 12 th extraordinary resolution. This latter authorisation covers a maximum of 10% of the share capital and is valid until 15 May 2020. It was not used during the 2018 financial year. The Management Board does not benefit from any delegation of authority or powers granted by the General Meeting in respect of increases in capital in relation to Articles L. 225-129-1 and L. 225-129-2 of the Commercial Code.

INFORMATION ON REMUNERATION

REMUNERATION POLICY — APPROVAL OF THE PRINCIPLES AND CRITERIA FOR

consistency : executive corporate officers' remuneration must be – determined in a manner consistent with that of other officers and employees in the company; clarity of the rules : the rules must be simple and transparent; – the performance criteria used to determine the variable part of remuneration, or, where applicable, the allocation of options or free shares, must be linked to the company's performance and correspond to its goals, be demanding, accountable and to the greatest extent possible, sustainable. They should be detailed without calling into question the confidentiality that may be justified for certain elements; reasonableness : the method determining the remuneration and – allocation of options or free shares must be balanced and take into account at the same time the company's general interest, market practices and officer performance; transparency : shareholders' annual information on the total – remuneration and benefits received by officers is conducted in accordance with applicable regulations. PRINCIPLES AND CRITERIA FOR THE DETERMINATION, APPORTIONMENT AND ALLOCATION OF THE ELEMENTS THAT COMPRISE THE TOTAL REMUNERATION AND BENEFITS OF ANY KIND PAYABLE TO THE MEMBERS OF THE MANAGEMENT BOARD These principles and criteria established by the Board, based on recommendations of the Remuneration Committee are as follows:

THE DETERMINATION, APPORTIONMENT AND ALLOCATION OF THE ELEMENTS THAT COMPRISE THE TOTAL REMUNERATION

AND BENEFITS PAYABLE TO THE MEMBERS OF THE MANAGEMENT AND SUPERVISORY BOARDS (SEE RESOLUTIONS 9 AND 10)

In the context of determining the total remuneration of executive corporate officers, the Supervisory Board, acting on a proposal from the Remuneration Committee, has taken the following principles into account in keeping with recommendation R13 of the Middlenext Code of Corporate Governance of September 2016: completeness : determination of remuneration received by – executive corporate officers must be complete: fixed components, variable components (bonus), stock options, free shares, attendance fees, pension terms and special benefits must be taken into account in the overall level of assessment of remuneration; balance between the elements of the remuneration : each – remuneration component must be substantiated and correspond to the company’s general interest; benchmark : the remuneration must be assessed, insofar as – possible, within the context of a business sector and the benchmark market, and be proportionate to the company's situation, while paying due attention to its inflationary effects;

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SOMFY – ANNUAL FINANCIAL REPORT 2018