Statutory auditors’ report on regulated agreements and commitments

This is a free translation into English of a report issued in French and is provided solely for the convenience of English-spea king readers. This report should be read in conjunction and construed in accordance with French law and the relevant professional auditing standards applicable in France.

General Meeting of Shareholders’ meeting to approve the financial statements for the year ended December 31, 2014 To the Shareholders,
In our capacity as statutory auditors of your Company, we hereby present our report on related party agreements and commitments.
It is our responsibility to inform you, on the basis of the information provided to us, of the terms and conditions of the agreements and commitments of which we were informed or became aware during our engagement. It is not our role to determine whether they are beneficial or appropriate or to ascertain whether any other agreements and commitments exist. It is your responsibility, in accordance with Article R. 225-31 of the French Commercial Code (“Code de commerce”), to assess the merit of these agreements and commitments with a view to approving them.
In addition, it is our responsibility to inform you, where appropriate, in accordance with Article R. 225-31 of the French Commercial Code (“Code de commerce”), of the agreements and commitments that were approved by the General Meeting of Shareholders during previousyears and were applicable during the period.
We performed the procedures we considered necessary in accordance with professional guidance issued by the French institute of statutory auditors (“Compnie nationale des commissaires aux comptes”) relating to this engagement. Our work consisted in verifying that the information provided was consistent with the documents from which it was derived.

1. Agreements and commitments subject to the approval of the General Meeting of Shareholders

Agreements and commitments approved during the period

In accordance with Article L. 225-40 of the French Commercial Code (“Code de commerce”), we have been informed of the following agreements and commitments previously approved by the Board of Directors.

Commitments concerning the pension plan

  • Director concerned:
    Rr Patrick Pouyanné, Chief Executive Officer.
  • Nature and purpose of the commitments:
    The corporate officers are entitled to the same retirement benefits and supplementary pension plan as other eligible employees of TOTAL.S.A.
  • Terms and conditions of the agreement or commitment:
    • Retirement benefit

      The Chief Executive Officer is entitled to a retirement benefit equal to that available to eligible members of the TOTAL Group under the French Collective Bargaining Agreement for the Petroleum Industry. The benefit amounts to 25% of the gross annual compensation (including both fixed and variable portions) for the twelve-month period preceding the executive director’s retirement.

      The payment of this benefit is subject to performance conditions. The performance conditions are deemed to be met if at least two of the following three criteria are satisfied:

      • the average ROE (Return on Equity) over the three years immediately preceding the year in which the officer retires is at least 12%;

      • the average ROACE (Return on Average Capital Employed) over the three years immediately preceding the year in which the officer retires is at least 10%;

      • the TOTAL Group’s oil and gas production growth rate over the three years immediately preceding the year in which the officer retires is greater than or equal to the average production growth rate of the four major competing oil companies: ExxonMobil,Royal Dutch Shell, BP and Chevron.

    • Defined-benefit supplementary pension plan

      The Chief Executive Officer also benefits from a defined-benefit supplementary pension plan, which was approved by the Board ofDirectors in a prior year. The plan is applicable to all employees of the TOTAL Group whose annual compensation is greater than eight times the ceiling for calculating French social security contributions. Compensation above this amount does not qualify as pensionable compensation under either government-sponsored or contractual pension schemes.

      To be eligible for this supplementary pension plan, set up and financed by TOTAL S.A., participants must meet specific criteria concerning age and minimum length of service (5 years). They must also still be employed by the Company upon retirement, unless they retire due to disability or take early retirement at the TOTAL Group’s initiative after the age of 55.

      With regard to the supplementary pension plan, the Board of Directors, during its meeting on December 16, 2014, decided to maintain the seniority vested by Mr Patrick Pouyanné in respect of his previous salaried positions with the Group since January 1, 1997. The plan provides participants with a pension equal to the sum of 1.8% of the portion of the reference compensation between eight and forty times the annual ceiling for calculating French social security contributions, and 1% of the reference compensation between forty and sixty timesthe annual ceiling for calculating French social security contributions, which is multiplied by the number of years of service (up to twenty years).The basis for calculation for this supplementary plan is indexed to changes in the French Association for Complementary Pensions Schemes (ARRCO) index.

      The sum of the supplementary pension plan benefits and external pension plan benefits (other than those constituted individually and on a voluntary basis) may not exceed 45% of the last three-year average compensation. In the event that this percentage is exceeded, the supplementary pension is reduced accordingly. 

       The commitments made to the Chief Executive Officer by TOTAL S.A. under the terms of the defined benefit supplementary pension plans and similar plans would, thus, as of December 31, 2014, represent a gross annual retirement pension estimated at €474,109, i.e. 27.73% of the gross annual compensation of Mr. Pouyanné composed of the fixed portion received as Chief Executive Officer (i.e., €1,200,000)and the variable portion previously paid in 2014 and due for fiscal year 2013 in respect of his previous duties as President of Refining & Chemicals(i.e., €509,700).

 

2. Agreements and commitments already approved by the Shareholders’ meeting

Agreements and commitments already approved in previous years

a) Which were applicable during the period

In accordance with Article R.225-30 of the French Commercial Law ("Code de commerce"), we have been informed of the following agreement, which was already approved in previous years by the Shareholders’ meeting, and which was applicable during the period.

Engagement concerning specific resources made available to the Honorary Chairman

  • Director affected by the agreement or commitment: 
  • Mr. Thierry Desmarest, director and Honorary Chairman of your Company.
  • Purpose of the agreement or commitment:
  • Company resources made available for use by the Honorary Chairman.
  • Terms and conditions of the agreement or commitment:  
  • In consideration of the representation missions of the Group which are entrusted to him, the following company resources are made available to the Honorary Chairman: an office, an administrative assistant, and a company vehicle with a driver.

b) Which were not applicable during the period

In addition, we have been informed of the continuance of the following commitments, regarding the retirement benefit, the supplementary pension plan and, under certain conditions, the severance benefit of Mr. Christophe de Margerie if his contract was terminated for removal from office or if his term of office was not renewed. These commitments were already approved by the Shareholders’ meeting in previous years and were not applicable during the period.

Agreements concerning the pension plan

  • Director affected by the agreement or commitment:
    Mr. Christophe de Margerie, Chairman and Chief Executive Officer.
  • Purpose of the agreement or commitment:
    The Chairman and Chief Executive Officer is entitled to the same retirement benefit and supplementary pension plan, as the concerned employees of TOTAL S.A.
  • Terms and conditions of the agreement or commitment:
    Retirement benefit

The Chairman and Chief Executive Officer is entitled to retirement benefit equal to those available to eligible members of the Group under the French National Collective Bargaining Agreement for the Petroleum. This benefit amounts to 25% of the gross annual compensation (including both fixed and variable portions) of the twelve-month period preceding the retirement of the Chairman and Chief Executive Officer.

The payment of this benefit is subject to performance conditions. These performance conditions are deemed to be met if at least two of the three following criteria are satisfied:

  • The average ROE (Return on Equity) over the three years immediately preceding the year in which the officer retires is at least 12%;
  • The average ROACE (Return on Average Capital Employed) over the three years immediately preceding the year in which the officer retires is at least 10%;
  • The Company’s oil and gas production growth rate over the three years immediately preceding the year in which the officer retires is greater than or equal to the average production growth rate of the four following companies: ExxonMobil, Shell, BP and Chevron.

– Supplementary defined-benefit pension plan

The Chairman and Chief Executive Officer also benefits from a supplementary defined-benefit pension plan which is applicable to all employees of the TOTAL Group whose annual compensation is greater than eight times the ceiling for calculating French social security contribution. Compensation above this amount does not qualify as pensionable compensation under either government-sponsored or contractual pension schemes.

To be eligible for this supplementary pension plan, set up and financed by TOTAL S.A., participants must meet specific age and length of service (5 years) criteria. They must also still be employed by the Company upon retirement, unless they retire due to disability or had taken early retirement at the Group’s initiative after the age of 55.

The plan provides participants with a pension equal to the sum of 1.8% of the portion of the reference compensation between eight and forty times the annual ceiling for calculating French social security contributions, and 1% of the reference compensation between forty and sixty times the annual ceiling for calculating French social security contributions, which is multiplied by the number of years of service (up to twenty years).The basis for calculation for this supplementary plan is indexed to changes in the French Association for Complementary Pensions Schemes (ARRCO) index.

The sum of the supplementary pension plan benefits and external pension plan benefits (other than those constituted individually and on a voluntary basis) may not exceed 45% of the last three-year average compensation. In the event this percentage is exceeded, the supplementary pension is reduced accordingly.

For the Chairman and Chief Executive Officer, the Group’s pension obligations are, as of December 31, 2013, the equivalent of an annual pension of 17.96% of his 2013 gross annual compensation (fixed portion for 2013 and variable portion for fiscal year 2012).

Commitments concerning the provisions applicable in case the Chief Executive Officer is removed from office or his term of office is not renewed

  • Director concerned by the commitments:
    Mr Patrick Pouyanné, Chief Executive Officer.
  • Nature and purpose of the commitments:
    If the Chief Executive Officer is removed from office or if his term of office is not renewed, he is eligible for a severance benefit.
  • Terms and conditions of the commitments:
    This severance benefit is equal to two years’ gross compensation.
    The calculation of this severance benefit will be based on the gross compensation (including both fixed and variable portions) for the twelve-month period preceding the date of termination or non-renewal of the Chief Executive Officer’s term of office.
    The severance benefit paid upon a change of control or a change of strategy decided by the Company is cancelled in the case of gross negligence or willful misconduct or if the Chief Executive Officer leaves the Company of his own volition, accepts new responsibilities within the Group, or may claim full retirement benefits within a short time period.
    Entitlement to this severance benefit is subject to performance conditions. These performance conditions are deemed to be met if at least two of the following three criteria are satisfied:
    • the average ROE (Return on Equity) over the three years immediately preceding the year of the Chief Executive Officer’s departure is at least 12%;
    • the average ROACE (Return on Average Capital Employed) over the three years immediately preceding the year of the Chief Executive Officer’s departure is at least 10%;
    • the Company’s oil and gas production growth rate over the three years immediately preceding the year of the Chief Executive Officer’s departure is greater than or equal to the average production growth rate of the four major  competing oil companies: ExxonMobil, Royal Dutch Shell, BP, and Chevron.

Agreements and commitments already approved by the General Meeting of Shareholders

Agreements and commitments already approved in previous years

a) Which were applicable during the period 

In accordance with Article R. 225-30 of the French Commercial Code (“Code de commerce”), we have been informed that the following agreement, already approved in previous years by the General Meeting of Shareholder, was applicable during the period.

Agreement concerning specific resources made available to the Honorary Chairman

  • Director concerned:
    Mr Thierry Desmarest, director and Honorary Chairman
  • Nature and purpose of the agreement:
    Company resources made available to the Honorary Chairman
  • Terms and conditions of the agreement:
    In consideration of the assignments entrusted to the Honorary Chairman to represent the TOTAL Group, the following company resources are made available to him: an office, an administrative assistant, and a company vehicle with a driver.

The Board of Directors’ decision of October 22, 2014 to appoint Mr Thierry Desmarest as Chairman of the Board automatically gave him the resources required to perform his duties. The decision terminated the related party agreement, previously approved by the Board of Directors, as of October 22, 2014.

b) Which were not applicable during the period

In addition, we have been informed of the continuance of the commitments, already approved by the General Meeting of Shareholders in prior years, that were not implemented during the period, regarding the retirement benefits and supplementary pension plan for corporate officers, and the provisions applicable in the event of termination or non-renewal of corporate office, which concerned Mr Christophe de Margerie, former Chairman and Chief Executive Officer.

The death of Mr de Margerie extinguished the Company’s commitment to pay a retirement benefit and a severance benefit in the event of forced departure resulting from a change in control or strategy, which had been granted to Mr de Margerie as Chairman and Chief Executive Officer. It also cancelled commitments to him under the defined-benefit supplementary pension plan.

Paris La Défense, March 2, 2015

The statutory auditors

French original signed by

KPMG Audit
Département de KPMG S.A.
Michel Piette
Valérie Besson

ERNST & YOUNG Audit
Yvon Salaün
Laurent Miannay