HERMES_REGISTRATION_DOCUMENT_2017

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CORPORATE GOVERNANCE

SUPERVISORY BOARD’S REPORT ON CORPORATE GOVERNANCE

Provisions of the AFEP-MEDEF Code not applied for other reasons Proportion of independent members on the Audit Committee (Art. 15.1) The proportion of independent directors on the audit committee should be at least equal to two-thirds, and the committee should not include any executive Officer.

Explanations

The Supervisory Board determined that slightly less than two-thirds of the Audit Committee members are independent (60%, i.e. three out of five members). This situation was not detrimental to the Audit Committee’s operation. In the Audit Committee rules of procedure, which were adopted on 24 March 2010, the Supervisory Board stipulates that at least one-half of the seats on the Audit Committee be held by members who qualified as independent at the time of their appointment and throughout their term of office. In its 2014 report, the HCGE considers that an Audit Committee with, for example, three independent members out of five remains compliant with the spirit of the Code, provided that the Chairman is an independent member, as is the case for this Company. There are no immediate plans to increase the proportion of independent members of the Audit Committee to two-thirds but the Board will review the matter at each annual assessment. As indicated above, the proportion of independent members of the Audit Committee will temporarily fall from 60% to 40% in early 2019. The Company has agreed to make a severance payment to Axel Dumas under the conditions described in the explanatory statement on page 330. Given the importance of the Active Partner’s role in an SCA including the power to appoint and dismiss any Executive Chairman and the fact that it is represented by a legal entity, it was decided that any termination of Axel Dumas duties as Executive Chairman resulting from the replacement of the Executive Chairman of Émile Hermès SARL should be deemed a forced departure. The Supervisory Board accordingly considered that the deferred compensation commitment made for the benefit of Axel Dumas complied with the requirements of the AFEP-MEDEF Corporate Governance Code. It did not seem relevant for Executive Management to ask shareholders to vote on the compensation of the Chairman of the Supervisory Board insofar as he: s receives fixed compensation of €140,000 as set out in the Supervisory Board’s rules of procedure, deducted from the total amount of directors’ fees approved by the General Meeting;

Severance payment (Art. 24.5.1) The performance requirements set out by the Board for these benefits must be assessed over at least two financial years. They must be demanding and may not allow for the indemnification of a director, unless his or her departure is imposed, regardless of the form of this departure.

Consultation of shareholders on the compensation of the Chairman of the Supervisory Board (Art. 26.2)

s receives no other compensation of any kind whatsoever. Shareholders have previously been made aware of this information.

Corporate Governance Award Hermès International continued its long run of good form in the AGEFI Corporate Governance Grand Prix by winning first prize in the “Governance Dynamics” category in 2017. The purpose of these awards is to: s recognize issuers, Boards of Directors and Supervisory Boards, and management bodies that satisfy investors’ real expectations; s highlight corporate governance initiatives taken in order to consolidate investor confidence which is critical to the smooth functioning of the capital markets; s foster the implementation of corporate governance rules and practices. Prizes are awarded on the basis of the results of a one-round perception survey of financial professionals including governance specialists, institutional investors and analysts. The jury rewarded Hermès International for ensuring its continual growth by means of a multifaceted governance strategy, above all:

s a strong commitment in respect of the management succession plan, anchored in the Group’s values; s a specific training and evaluation programme for the members of its Supervisory Board;

s innovative tools such as the “Herboard” digital collaborative platform that allows all Board meetings to be held securely. The jury also commended the dedicated sustainable development strategic framework set up to transmit the Group’s know-how via numerous internal schools and its relations with suppliers and partners sharing a concern for protecting the environment.

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2017 REGISTRATION DOCUMENT HERMÈS INTERNATIONAL