Saint Gobain - Registration document 2016

6 CORPORATE GOVERNANCE

2. Management and Directors’ compensation

2.3

COMPENSATION OF MEMBERS OF THE GROUP’S SENIOR

MANAGEMENT

management (see chapter 1, section 3) is set at a level consistent with compensation packages offered by comparable companies. It is determined and reviewed, among other things, based on the results of specific surveys Compensation paid to members of the Group’s senior from specialized consultants commissioned by senior management. compensation set at a reasonable proportion of total compensation, the purpose of which is to reflect the manager’s personal contribution to the Group’s growth and results. In addition to a fixed portion, it consists of a variable This principle has now been extended to all managerial staff. The performance objectives used are based on financial indicators such as Return On Investment (ROI) and Return On as developing a certain type of business or entering a new geographic market. Most often, a safety indicator is also applied. Capital Employed (ROCE), as well as personal objectives such In this way, management compensation is clearly linked to performance and to the achievement of objectives that Allocation policy 2.4.1 The objective of the Group’s long-term compensation policy is to retain and motivate the Group’s senior management, officers and employees, and to associate them with the Group’s performance, in particular through conditional allocations of stock options, performance shares or long-term strategy. performance units to reflect their fulfillment of the Group’s At the recommendation of the Nomination, Remuneration and Governance Committee, the Board of Directors authorizes the features of the stock option and performance share plans, as well as the identity of the beneficiaries, and approves the principle of long-term compensation plans in the form of performance units to be implemented, if need be, by the Chairman and Chief Executive Officer. These plans are subject to a service condition and to the strict internal and/or external performance criteria set by the Board (see below for details of each allocation). In 2016, these plans covered 1,896 Group officers and employees, in France and outside France, including high-potential managers and managers who have performed exceptionally well (193 grantees), key corporate and line Chief Executive Officer being described in chapter 6, section 2.2.3(c). executives in the Sectors and Delegations (1,663 grantees), members of the Group Liaison Committee excluding the senior management team (30 grantees) and senior management (10 grantees), with grants to the Chairman and 2.4

promotes a high level of personal commitment. Each manager’s compensation can fluctuate significantly from one year to the next, based on the results achieved. Gross compensation received by the members of senior management Committee (excluding the Chairman and Chief Executive Officer and long-term compensation) in 2016 from Group companies within and outside France, totaled €10.9 million in 2016 (2015: €13.4 million), including gross variable compensation of €3.2 million (2015: €3.3 million) and no termination benefits (€1.5 million in 2015). Pensions and other post-employment benefits (defined benefit obligations in respect of retirement bonuses and pensions) accruing to the members of the senior management Committee (including the Chairman and Chief Executive Officer) totaled €47.0 million at December 31, 2016 (December 31, 2015: €55.8 million). Group (particularly members of Group management) in Group companies other than Compagnie de Saint-Gobain are either reverted to their employer company, or paid directly to that company. Attendance fees allocated to Directors representing the nationalities and work in 51 countries. The beneficiaries of these plans belong to 59 different On November 24, 2016 the Board of Directors resolved that the origin of the shares of the 2016 stock options plan, new or existing shares, would be determined at its discretion no later than by the end of the vesting period. This plan represents 0.05% of the share capital and therefore has no material impact in terms of dilution. The performance share plan entitles beneficiaries to existing shares and therefore has no impact in terms of dilution. No performance unit plan was implemented during fiscal year 2016. stock options and performance shares. The members of the Liaison Committee were allocated both The other instruments designed to associate employees with business results are presented in chapter 8, section 2.3 and chapter 4, section 3.2.3. 2.4.2 Stock option plans have been set up by the Board of Directors every year since 1987. Under the authorization granted by the 13 th resolution of the General Shareholders' Meeting of June 2, 2016, at its meeting of November 24, 2016 the Board of Directors resolved to implement a stock option plan, following analysis and the Stock option plans recommendation of the Nomination, Remuneration and Governance Committee.

LONG-TERM COMPENSATION PLANS (STOCK OPTIONS, PERFORMANCE SHARES AND PERFORMANCE UNITS)

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SAINT-GOBAIN - REGISTRATION DOCUMENT 2016

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