Compagnie des Alpes - 2017 Registration Document

3 CORPORATE GOVERNANCE

Compliance with corporate governance recommendations

3.4 Compliance with corporate governance recommendations

Compagnie des Alpes has decided to refer to the consolidated version of the AFEP-MEDEF Code of Corporate Governance for Listed Companies dated November 2016, which can be viewed at www. medef.com. In accordance with the “comply or explain” rule and the

latest recommendations from that Code and the AMF, the following table specifies the recommendations of the Code that Compagnie des Alpes does not apply and explains the reasons.

Principles of the AFEP-MEDEF Code not followed by CDA

Detailed explanations

Obligation to hold shares (Article 22): The Board of Directors sets a minimum number of shares that the executive officers must hold in the form of registered shares until they leave office. This decision is reviewed at least once each time a term of office is renewed. The Board can use different references, such as:(i) annual remuneration, (ii) a specific number of shares, a percentage of the capital gain net of social security contributions, taxes and transaction-related fees, if concerning shares from stock options exercised or performance shares, (iii) a combination of these references. As long as this shareholding obligation is not fulfilled, the executive officers will devote a portion of stock options or performance shares granted to this obligation, as determined by the Board. This information appears in the Company’s annual report. Complementary retirement plans (Article 24.6.2): The complementary defined-benefit pension plans intended for senior executives and executive officers, are required to observe conditions that prevent abuse. These complementary pension plans are subject to the condition that the beneficiary is a corporate officer or employee of the company at the time they assert their rights to the pension in accordance with the applicable regulations. To prevent any abuse, and in addition to legal requirements, the following additional regulations have to be imposed (except in the case of plans that are closed to new beneficiaries, which can no longer be amended): P the group of potential beneficiaries must be significantly wider than the executive officers alone; P the beneficiaries must satisfy reasonable conditions, defined by the Board of Directors, relating to their seniority within the company, which must amount to at least two years, in order to benefit from payments under a defined-benefit pension plan; P demanding performance conditions permitting annual definition of the acquisition of conditional rights, according to applicable legislation; P the reference period taken into account for the calculation of the benefits must cover several years and any artificial increase in remuneration over this period for the sole purpose of increasing the benefits under the retirement plan is prohibited; P systems that create an entitlement, either immediately or after a limited number of years, to a high percentage of the overall final remuneration are therefore to be excluded; P the maximum percentage of the reference income to which the individual will be entitled under the complementary retirement plan may not exceed 45% of the reference income (fixed and variable remuneration payable for the reference period).

In December 2013, CDA incorporated this principle relating to the holding of shares by executive officers into its Charter, leaving it up to the Board to specify the terms that would apply. As yet the Board has not defined these terms, in particular the number of shares that must be held by its executive officers (it should be noted that these executive officers do not benefit from performance share or stock option plans under which they would potentially be required to hold a quota of the shares resulting from these plans). Nevertheless, taking into account the number of shares in the Company now held by the Chairman-Chief Executive Officer (almost 9,000) and, given that the Deputy Chief Executive Officer has invested the whole amount she received via profit-sharing plans in, 2014/2015, 2015/2016 and 2016/2017, in the investment fund consisting in the amount of 99% in CDA shares (and who will continue to do so for the current year), the Appointments and Remuneration Committee, which is aware of the difficulties for corporate officers of investing in Company shares in full compliance with the provisions of the French Monetary and Financial Code, has decided to delay the introduction of a more precise policy at this stage. CDA has set up a combined complementary retirement plan, comprising a defined-contribution pension plan and a defined-benefit pension plan. A l l h e a dqu a r t e r s s t a f f b e n e f i t f r om t h e c omp l eme n t a r y defined-contribution pension plan, including its executive officers. The defined contributions (individual accounts) are equal to 7% of the annual compensation for each beneficiary (capped at five times the social-security ceiling, or €196,140 on an annual basis in 2017). Contributions to the savings plan are split between the employer (4%) and employee (3%), notwithstanding the employee’s status and age. The defined-benefit pension plan, which is fully funded by CDA, is open to corporate officers, senior managers and category-CIII executives (72 individuals). This second plan allows beneficiaries who end their professional career within the Group to benefit, when they take their pension, from a retirement pension equal to 1% of their basic annual salary (last basic annual salary comprising fixed and variable parts) per year of seniority, up to a maximum of 10% of this compensation, less the pension received under the defined contribution plan. Upon retirement the beneficiary may opt to receive a life annuity with a 60% survivor pension. Although this defined-benefit plan does not adhere strictly to all the recommendations set out in the AFEP-MEDEF Code, Compagnie des Alpes believes that it is in keeping with the spirit of this code. The benefits under the scheme are not currently subject to a minimum seniority condition (recommendation: minimum of two years) and the reference remuneration on which the calculation of the benefits is based is the last basic annual salary (recommendation: multi-year period). The system set up does, however, respect all the other recommendations and remains well below authorised pension levels. Accordingly, potential rights, which do not increase with seniority, represent only 1% of the reference remuneration (compared to the 3% maximum authorised), and the ceiling that was set is only 10% of the reference remuneration (compared to the 45% maximum recommended by the AFEP-MEDEF Code). Consequently, this system rules out any possibility of beneficiaries obtaining a high percentage of their final salary if they have given only very few years of service to the Group.

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Compagnie des Alpes I 2017 Registration Document