AFD_REGISTRATION_DOCUMENT_2017

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CORPORATE GOVERNANCE Compensation policy andbpractices

3.2.2.4 Early termination of the employment contract Compensation payments for early termination of an employment contract are defined in Heading V of the Staff Regulations. In addition to the particular cases referred to in Articlesb25, 28bandb30-3, an employee may be dismissed: 1bfor economic reasons; 2bon the grounds of professional incompetence; 3bby way of disciplinary action; 4bon the grounds of medical unfitness. For the following reasons for dismissal, compensation for dismissal is calculated on the basis of an average monthly salary defined as a twelfth of the compensation for the last 12bmonths: 1 Dismissal for economic reasons: Compensation for dismissal paid to an employee at the end of the notice period is equal to one and a half months of this average monthly salary per year of service up to the sixth year inclusively, and to one and three-quarter months of this salary for every year of service beyond the sixth year. For employees whose services were performed partly in French Overseas Departments and Collectivities and/or abroad and partly in mainland France, or vice versa, compensation is calculated on a pro rata basis in relation to the time spent in each of these postings, according to the following terms and conditions: P the portion of the compensation related to their services in mainland France is calculated on the basis of one twelfth of their annual reference salary in mainland France; P the portion of the compensation related to their services performed in French Overseas Departments and Collectivities and/or abroad, is calculated on the basis of one twelfth of the annual salary allocated to an employee ranked on the same salary point in the last posting in French Overseas Departments and Collectivities and/or abroad. The amount of the dismissal compensation may not be less than three times the average monthly salary nor more than 18btimes this salary. Only full months of service are taken into account to determine the dismissal compensation. 2 Dismissal on the grounds of professional incompetence: Compensation for dismissal paid to an employee at the end of the notice period is set by the Chief Executive Officer. However, this compensation may not be less than half of that provided in the event of dismissal for economic reasons.

P some employees receive a supplementary retirement allocation according to their retirement plan; P no employee (including directors) receives individual variable compensation, whether deferred or not (for example, bonus, shares, stock options etc.); P employees also enjoy employment benefits such as supplementary defined contribution retirement plans, health fees and insurance, and housing loans financed entirely or partly by AFD; P expatriate employees also enjoy several allowances related to their expatriate status. Finally, any employee on a fixed term or indefinite-term contract, whether full or part-time, who has three months’ service within AFD Group (excluding employees whose contracts were entered into locally and are not governed by French law), receives, in addition to their fixed compensation, an annual profit sharing component calculated using indicators related to the Group’s operations, cost control, efficiency and overall effectiveness. 3.2.2.3 Changes in compensation The arrangements for implementing the compensation policy place a significant emphasis on informing, consulting and negotiating with the unions. Compensation for AFD Group employees may be re-evaluated by (i) increasing the value of the salary point, (ii) and/or a general revaluation (or by job level) of salary points, (iii) and/or the award on an individual basis of salary points. General increases together with the budget for individual increases are negotiated on an annual basis during the Mandatory Annual Negotiations (NAO) and are subject to the framework of AFD’s supervisory ministries. There is a safeguard clause for salary point increases which ties the increase in AFD Group’s salaries to the increase in civil service salaries over a three-year period. An individual increase in basic salary agreed by Management is based on an assessment of an employee’s mastery of their position in accordance with the terms and conditions provided in HeadingbIII ChapterbII of the Staff Regulations on evaluations. Individual increases are distributed fairly between departments, job levels or men/women. For a promotion decision, a minimum number of salary points must be awarded according to the job level. An Employee-Management Committee enables employees to appeal in the event that they disagree with the Management’s decision or when an employee has not had an individual promotion for four full years.

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REGISTRATION DOCUMENT 2017

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