Principles and rules applied to determine the compensation and other benefits of the executive directors
The principles and rules applied to determine the compensation and other benefits received by the executive directors, which were approved by the Board of Directors on February 9, 2012, are reproduced below.
Based on a proposal by the Compensation Committee, the Board adopted the following principles for determining the compensation and other benefits of the executive directors:
- Compensation and benefits for the executive directors are set by the Board of Directors after considering proposals from the Compensation Committee. Such compensation must be reasonable and fair, in a context that values both teamwork and motivation within the Company.
- Compensation for the executive directors includes both a fixed portion and a variable portion. The fixed portion is reviewed at least every two years.
- The amount of variable compensation is reviewed each year and may not exceed a stated percentage of fixed compensation. Variable compensation is determined based on pre-defined quantitative and qualitative criteria that are periodically reviewed by the Board of Directors. Quantitative criteria are limited in number, objective, measurable and adapted to the Group’s strategy. Variable compensation is designed to reward short-term performance and progress towards medium-term objectives. The compensation is determined in line with the annual assessment of the performance of the executive directors and the Company’s medium-term strategy. The Board of Directors keeps track of the fixed and variable portions of the compensation of the executive directors over several years and in light of the Company’s performance.
- The Group does not have a specific pension plan for the executive directors. They are eligible for retirement benefits and pensions schemes available to certain employee categories in the Group under conditions determined by the Board. – Stock options and performance shares are designed to align the long-term interests of the executive directors with those of the shareholders. The allocation of options and performance shares to the executive directors is examined in light of all the forms of compensation of each person. The exercise price for stock options awarded is not discounted compared with the market price, at the time of the grant, for the underlying share. Stock options and performance shares are awarded at regular intervals to prevent any opportunistic behavior. The exercise of options and the definitive allocation of performance shares to which the executive directors are entitled are subject to performance criteria that must be met over several years. The Board puts in place restrictions on the transfer of a portion of shares held upon the exercise of options and the definitive allocation of performance shares, applicable to the executive directors until the end of their term of office. The executive directors may not be granted stock options or performance shares when they leave office.
- After three years in office, the executive directors are required to hold at least the number of Company shares set by the Board.
- The components of the compensation of the executive directors are made public after the Board of Directors’ meeting at which they are approved.
Chairman of the Board of Directors