Danone // 2020 Universal Registration Document

corporate governance 6.3 Compensation and benefits of governance bodies DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 248 Variable compensation Structure • annual variable compensation; • long-term variable compensation paid in cash and subject to performance conditions (GPU); • long-term variable compensation paid in the form of DANONE shares and subject to performance conditions (GPS). Long-term compensation in cash and shares represents, at the time of granting, about 50% of the overall compensation in value of executive corporate officers and cannot exceed 60% of this target compensation. The compensation policy does not provide for a specific clawback mechanism. In the event of extraordinary circumstances having a significant impact on the fulfillment of one or more performance criteria associated with the annual variable compensation of the executive corporate officer, such as a major event affecting the food and beverage sector or some of Danone’s key markets, the Board, on the recommendation of the Governance Committee, may adjust one or more annual variable compensa- tion criteria to ensure that implementation of the compensation policy is in line with the corporate officer’s performance and with Danone’s, either on an absolute basis or relative to its peers. This adjustment must remain within the annual variable compensation cap specified in the compensation policy. Any use of this extraordinary adjustment option will be disclosed to shareholders and duly justified, in particular in terms of how it aligns with the shareholders’ interests. In accordance with Article L.22-10-34 II of the French Commercial Code, this use remains subject to a binding vote by shareholders at the 2022 Shareholders’ Meeting, as the corresponding annual variable compensation can be paid only after approval by the Shareholders’ Meeting. Stringent performance criteria • directly and indirectly based on the Company’s objectives as announced to the market and consistent with its strategic roadmap to 2030; • mainly economic (60% for annual variable compensation, and 80% for long-term variable compensation); • also social, societal and/or environmental (20% for both annual variable compensation and long-term variable compensation); • and managerial (20% solely for annual variable compensation). Annual variable compensation Principles • is determined by the Board of Directors on the basis of the Governance Committee’s opinion and in accordance with the principles presented above, and is consistent with the duties and experience of the person concerned and with market practices; • is subject to performance conditions including quantifiable economic criteria and social/environmental and managerial criteria determined beforehand and in a precise and objective manner by the Board of Directors on the basis of the Governance Committee’s opinion; • has a target amount that may be up to 100% of the fixed compensation; • is capped at 200% of the fixed compensation; • has no minimum or guaranteed cap. Structure • quantifiable economic component based on Danone’s main financial targets such as sales growth, operating margin improvement and free cash flow generation; • measurable social and environmental component based on Danone’s objectives; and • qualitative managerial component determined on the basis of specific annual targets. Performance criteria • qualitative criteria are precisely defined and not made public for confidentiality reasons, in accordance with French Financial Market Authority recommendation DOC-2012-02 of February 9, 2012; • each quantitative criterion is precisely defined in terms of its achievement level and not made public for confidentiality reasons, in accordance with this French Financial Market Authority recommendation. In accordance with AFEP-MEDEF Code recommendations, the allocation of this performance-based variable compensation will be specifically disclosed at the close of the 2021 financial year. It will also be presented in the 2021 Universal Registration Document and will be paid only after approval by the Shareholders’ Meeting approving the accounts of the considered fiscal year.