HERMÈS - 2019 Universal Registration Document

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CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SENIOR EXECUTIVE COMPENSATION

NOTE 32

A breakdown of total compensation paid to members of the Executive Committee and the Supervisory Board, in respect of their functions within the Group, is as follows:

2019 18.1

2018 14.8

In millions of euros

Short-term benefits

Post-employment benefits Other long-term benefits Share-based payments

2.9 0.2 4.3

3.4 0.2 2.2

TOTAL

25.4

20.5

Short-term benefits include compensation and bonuses paid to Executive Committee members during the year, as well as directors’ fees paid to members of the Supervisory Board. Share-based payments correspond to the amounts expensed in the year.

SHARE-BASED PAYMENTS

NOTE 33

The expense recognised in 2019 in respect of free share allocation plans totalled €114.1 million, compared with €72.0 million at end-2018.

Selective plan covering an overall allocation of 189,600 conditional 2) rights to receive free shares in favour of a number of Group executives. The vesting period for rights granted under this plan is four years. Transfer of ownership of all shares is subject to the condition that the beneficiaries are part of the Group’s workforce at the end of the vesting period. Furthermore, for 50% of the rights allocated, performance criteria (depending on the Group’s results in 2019 and 2020) must also be met. In order to determine the expense recognised, the performance conditions were considered as met for the 2019 and 2020 financial years. The main features of the allocation and the assumptions used to calculate the IFRS expense of the selective plan are as follows: share price on grant date: €635.00; s fair value of the share: €606.45, after taking into account a dividend s yield rate; discounted average turnover rate over the vesting period: 3.9% for s French and foreign employees, over four years. The IFRS expense (excluding employer tax) incurred during the 2019 financial year for the plan issue amounted to €13.8 million.

New plans 33.1 In accordance with the authorizations granted by the Combined General Meeting of Shareholders of 4 June 2019 in its fifteenth resolution, the Executive Management decided, on 1 July 2019, to allocate the free shares described below. Participatory plan covering an overall allocation of 310,944 1) conditional rights to receive free shares in favour of 12,956 Group employees. This allocation is broken down into two tranches, each relating to 50% of the rights allocated with vesting periods of four and five years respectively. Final vesting of the shares in each tranche is also subject to a presence condition – the beneficiary must be part of the Group’s workforce at the end of the respective vesting periods. The main features of the allocation and the assumptions used to calculate the IFRS expense of the participatory plan are as follows: share price on grant date: €635.00; s fair value of the share: €606.45 and €599.52 projecting out 4 and s 5 years respectively, after taking into account the dividend yield rate; discounted average turnover rate over the vesting periods: 11.5% s and 14.1% for French residents (over four and five years respectively) and 28.4% and 34.1% for foreign residents (over four and five years respectively). The IFRS expense (excluding employer tax) incurred during the 2019 financial year for the plan issue amounted to €17.0 million.

2019 UNIVERSAL REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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