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2016 REGISTRATION DOCUMENT
HERMÈS INTERNATIONAL
140
CORPORATE GOVERNANCE
3
COMPENSATION AND BENEFITS PAID TO CORPORATE OFFICERS
These allocations have no connection with the beneficiaries’ executive
positions in the Company. They were made exclusively in accordance
with their respective employment contracts with the entities of the Group
indicated above.
No free shares were granted to the other members of the Supervisory
Board during the 2016 financial year.
3.4.4
ALLOCATION OF BONUS SHARES,
STOCK OPTIONS
3.4.4.1
General policies on granting bonus shares and
of stock options
Allocations of stock options and free allocations of shares form part of
the Hermès Group’s long-term compensation and loyalty policy. Such
allocations have historically been made at a multi-year rate (see com-
ments below on the plans in force); they are exceptional and have always
benefited a much wider population than that of the Corporate Officers
and Senior Executives of the Group.
Concerning freely allocated shares, in 2007, 2010, 2012 and in 2016,
these were allocated to all Group staff (subject to minimum seniority on
the allocation date) in France and abroad.
In accordance with the provisions of Articles L. 225-197-1
et seq.
of
the French Commercial Code
(Code de commerce),
these allocations
are always associated with conditions of presence, and conditions of
performance for some plans. With an objective of building long-term
loyalty, the 2007, 2010 and 2012 plans were associated with a ves-
ting period of four years for participants residing in France and six
years for participants abroad, and a mandatory retention period of the
shares thus acquired of two years for participants resident in France.
To harmonise the vesting conditions, the free shares allocated by the
Executive Management in 2016 were accompanied by identical vesting
periods for Group employees in France and internationally. In line with
its long-term strategy, the Executive Management has set the vesting
periods for these awards at four and five years respectively. However,
as permitted by the applicable law (Article L. 225-197-1
et seq.
of the
French Commercial Code
(Code de commerce)
) and in accordance with
the fifteenth resolution of the Annual General Meeting of 31 May 2016
(see below), no lock-up period was established, leaving each beneficiary
employee free to decide how long to hold the shares acquired.
3.4.4.2
Free share allocation plans in force
In accordance with Article L. 225-197-4 of the French Commercial Code
(Code de commerce),
we hereby report to you on free shares granted
during FY 2016.
The Executive Management has been authorised by the Extraordinary
General Meeting of 31 May 2016 to allocate bonus shares, on one or
more occasions, to some or all employees and/or Senior Executives
of the Company or companies affiliated therewith, by granting existing
shares in theCompany for no consideration. The condition of delegations
of authority still in force are shown on pages 266 to 269.
The total number of shares freely allocated under each of these autho-
risations and the total number of purchase options granted and not yet
exercised are limited to 2% of the number of shares in the Company on
the day of allocation, without taking into account those already granted
under previous authorisations.
Making use of these authorisations, the ExecutiveManagement in 2016
granted shares under democratic and selective plans, it being stipulated
that Axel Dumas, the sole natural person among the Executive Chairmen,
received no free shares under these two plans. You will find, in Table 11
on page 146, the details of the conditions of the free share allocation
plans (and notably the vesting period, the retention period and the condi-
tions of performance where applicable) and, in Table 12 on page 146,
the details of shares freely allocated to the 10 biggest beneficiaries who
are Non-Corporate Officers.
Bonus share allocations do not dilute the share capital because they
consist exclusively of existing shares in the Company. Their value as of
the allotment date, calculated using the method for recognition of the
shares in the consolidated financial statements, is shown in the notes to
the consolidated financial statements (Note 30.2, page 205).
Additional information on free share grants in 2016, on the general long-
termcompensationpolicy and other initiatives involving employees in the
Group’s performance are described in the “Social, environmental and
societal information” on pages 47 and 48.
3.4.4.3
Stock options
The ExecutiveManagement was authorised to grant stock options to cer-
tain employees and Corporate Officers of the Company and of affiliated
companies by the Extraordinary General Meeting. These delegations of
authority were not used in 2016. As shown in the tables on page 142,
there were no stock option plans existing as at 31 December 2016.
3.4.4.4
Stock subscription options
All stock subscription option plans lapsed in2009. No authorisation from
the General Meeting allows the Executive Management to grant stock
options.