HERMÈS - 2018 Registration document

Corporate Governance

Supervisory Board’s report on corporate governance

SUPERVISORY BOARD’S REPORT ON CORPORATE GOVERNANCE

3.1

This report was drawn up in accordance with Article L. 226-10-1 of the French Commercial Code and the recommendations issued by the Financial Markets Authority (AMF). It was jointly prepared by the Chairman of the Supervisory Board, the CAG-CSR Committee, the Board Secretary and the functional departments concerned. It was approved by the Supervisory Board at its meeting of 19 March 2019.

THE COMPANY’S CORPORATE GOVERNANCE CODE

With each revision of the AFEP-MEDEF Code, the CAG-CSR Committee performs an exhaustive comparative analysis of the Company’s appli- cation of the AFEP-MEDEF Code’s recommendations, and reports to the Supervisory Board.

3.1.1

3.1.1.1 Corporate governance principles applied TheSupervisoryBoardofficially adopted theAFEP-MEDEF recommenda- tions on corporate governance in 2009, as it deemed these recommen- dations to be entirely in keeping with the Group’s corporate governance policy. The guidelines include the AFEP-MEDEF Corporate Governance Code for listed companies, revised in June 2018, and the recommen- dations from the HCGE (Corporate Governance High Committee), which further elaborate this code’s recommendations.

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Provisions of the AFEP-MEDEF Corporate Governance Code, revised in June 2018, not applied by virtue of the Company’s legal form or other reasons - newly complied with

3.1.1.2

The table below lists the provisions of the AFEP-MEDEF Code not applied by the Company. In line with the recommendations of the AMF, the provi- sions not applied on account of the Company’s legal formare singled out from those not applied for other reasons, with the corresponding expla- nations. We have also listed the changes made since the last revision of the AFEP‑MEDEF Code in June 2018 to ensure compliance therewith.

Provisions of the AFEP-MEDEF Code not applied due to the Company’s legal form Board meetings and committee meetings (Article 10.3) It is recommended that at least one meeting not attended by the Executive Corporate Officers be organized each year. Succession plan for Executive Corporate Officers (Article 16.2.2) The Appointments Committee (or an ad hoc committee) should design a plan for replacement of Executive Corporate Officers. This is one of the committee’s most important tasks even though it can, if necessary, be entrusted by the Board to an ad hoc committee. The Chairman may take part or be involved in the Committee’s work during the conduct of this task. Composition of the Compensation Committee (Article 17.1) It is recommended that the Chairman of the Committee be independent and that one of its members be an employee director.

Explanations

In view of the role of the Supervisory Board (described on page 153) in a société en commandite par actions (SCA – a partnership limited by shares), this provision of the AFEP-MEDEF Code does not apply.

The Company’s CAG-CSR Committee (see description starting on page 183) is not in charge of establishing the succession plan for the Executive Chairmen, a task that does not fall within the remit of the Supervisory Board in an SCA. In accordance with its rules of procedure, since 2016 the CAG-CSR Committee has been tasked with ensuring the existence of a succession plan for the Executive Chairmen, which it first did in 2017 with annual reviews thereafter (see page 139). In 2018, the CAG-CSR Committee also ensured there was a succession plan for the Chairman of the Supervisory Board and added this duty to its rules of procedure (see page 149). The Company’s CAG-CSR Committee (see description starting on page 183) is not tasked with setting the compensation of the Executive Chairmen, a task which falls within the remit of the Active Partner and not the Supervisory Board. The Supervisory Board therefore decided that it was not relevant for an employee representative to be a member.

2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL

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