HERMÈS - 2018 Registration document

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Corporate Governance

Supervisory Board’s report on corporate governance

Incorporation of a qualitative CSR criterion in the variable component of 2020 compensation in respect of 2019 The Executive Management Board meeting of 18 March 2019 decided to apply a new CSR criterion, representing the Group’s firm and ongoing commitments to sustainable development, to a portion of the variable compensation of the two Executive Chairman. This criterion will be applied to 10% of the target variable compensation. The indicators relating to the CSR criterion relate to the following: s s decoupling between business growth at constant scope and exchange rates and the evolution of industrial energy consumption (quantifiable environmental criterion); s s actions implemented in favor of the territorial anchoring of the group in France and throughout theworld, excludingmajor cities (qualitative societal criterion);

s s Group initiatives in favor of gender balance (qualitative social criterion). The assessment of the amount of compensation subject to the “CSR” criterionwould be limited to a target of 100%, with no possibility of excee- ding that limit.

Each of the three indices mentioned above: s s shall count as one-third of the CSR criterion; s s shall have an annual reference period;

s s will be assessed on an annual basis, in terms of achievement, by the CAG-CSR Committee and a report will be sent to the Executive Management Board which has the power to decide on the actual compensation of the Executive Chairmen. This new way of structuring the variable component of compensation will be applied for the first time when assessing variable compensation owing for 2019, which is measured and paid in 2020

3.1.5.7 Compensation for the Active Partner Under the terms of Article 26 of the Articles of Association, the Company pays an amount equal to 0.67% of distributable profits to the Active Partner, which was as follows for the last two financial years:

2018

2017

Émile Hermès SARL

€8,297,743.18 €5,214,348.05

s s if a member is appointed during the year, the outgoing member and his or her replacement share the fixed component and the variable component is allotted based on attendance at meetings; s s members of Hermès International’s Executive Committee do not receive directors’ fees; s s employee representatives on the Supervisory Board do not receive directors’ fees. They include a fixed component (35.47% for the Board and 40% for the committees) and a variable component (64.53% for the Board and 60% for the specialised Committees) proportional to attendance at meetings. In keeping with these principles, at its meeting of 25 January 2019, the Supervisory Board distributed €575,230 out of the €600,000 allocated to directors’ fees and compensation by the General Meeting. The table 3 on pages 196 to 198 details directors’ fees and other com- pensation paid to members of the Supervisory Board in the last two financial years by Hermès International and the entities it controls as defined by Article L. 233-16 of the French Commercial Code. The members of the Supervisory Board of a société en commandite par actions (partnership limited by shares) may be bound to the Company by an employment contract with no condition other than that resulting from the existence of a relationship of subordination with the Company and the recognition of effective employment. MrFrédéricAfriat,theEmployeerepresentativeontheSupervisoryBoard, has an employment contract with the Hermès Group (Chief Accountant of Comptoir Nouveau de la Parfumerie, Hermès Parfums) and as such receives a salary unrelated to his position on the Board. Consequently, and for reasons of confidentiality, his salary is not disclosed.

Compensation of the Supervisory Board, Audit and Risk Committee and CAG-CSR Committee

3.1.5.8

Directors’ fees and compensation of members of the Supervisory Board

Supervisory Board members receive directors’ fees and compensation in a total amount that is approved by the General Meeting and that is apportioned by the Supervisory Board. Compensation paid to members of the Audit and Risk Committee and of the CAG-CSR Committee is deducted from the total amount of directors’ fees. TheGeneral Meeting of 6 June2017 raised the total amount of directors’ fees and compensation for the Supervisory Board to €600,000 to take into account the appointment of new members of the Board. The principles governing the distribution of and amount of directors’ fees are as follows: s s a fixed compensation component of €140,000 for the Chairman of the Board with no variable component as the Chairman attends all meetings; s s a fixed component of €10,000 and a variable component based on attendance of €18,200 for each Vice-Chairman of the Board; s s a fixed component of €10,000 and a variable component based on attendance of €18,200 for other Board members; s s a fixed component of €28,000, with no variable component, for the Chairmen of the Audit and Risk Committee and the CAG-CSR Committee; s s a fixed component of €5,200 and a variable component of €7,800, based on attendance, for the other members of the Audit and Risk and CAG-CSR Committees;

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2018 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL