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DANONE
REGISTRATION DOCUMENT 2015
Corporate Governance
6.3 Compensation and benefits of corporate officers and governance bodies
286
Executives' supplementary retirement plan
Executives' retirement plan
The corporate officers are covered by the defined benefit retirement
plan set up for certain executives classified as senior executives,
subject to the provisions of Article L. 137-11 of the Social Security
Code. This retirement plan, introduced in 1976 as a way to promote
loyalty among executives, was closed to all new beneficiaries on
December 31, 2003.
Principal terms of the plan
Eligibility for this plan is subject to the following conditions:
•
the group of potential beneficiaries is larger than just the corporate
officers since it concerns a collective contractual commitment
(see hereafter);
•
this eligibility is subject to the condition that the beneficiary is
performing his/her duties at Danone at the time of retirement,
it being specified that as an exception to this principle, in the
event of leaving Danone before the age of 55, the rights are
forfeited and that, only in the event of dismissal after the age of
55, would the benefit of the plan be maintained provided that the
beneficiary does not take up any employee position elsewhere.
This last provision, although consistent with applicable French
regulations, does not form part of the AFEP-MEDEF Code rec-
ommendations, however it enables the Company to protect all
beneficiaries against the risk of termination after the age of 55
and before they have reached retirement age;
•
beneficiaries must have at least five years of seniority at Danone;
•
this benefit is taken into account by the Nomination and
Compensation Committee and the Board of Directors when the
total compensation of each corporate officer is set;
•
the basis of calculation of the annuity corresponds to the average
of the base salaries and annual variable compensation received by
each beneficiary during the three full years of service at Danone
preceding retirement, and the seniority taken into consideration
includes the period corresponding to the termas corporate officer
(the “Base”). To take a purely theoretical example, if Mr. Franck
RIBOUD, who is not yet 62 years of age, were to retire in 2016, this
average of the base salaries and annual variable compensation
received for 2013, 2014 and 2015 would be €2,723,946;
•
the plans are covered by plan assetswith insurance companies; and
•
the increase in the potential rights is progressive each year
and represents only a limited percentage of the beneficiary's
compensation. Thus:
(i) the amount of the life annuity that would be attributed to Mr.
Emmanuel FABERwould correspond to: (i) 1.5%per year of senior-
ity (including the period corresponding to the term as corporate
officer) of the Base, for the portion of the Base falling between
three and eight times the French social security ceiling, and (ii)
3% per year of seniority (including the period corresponding to
the term as corporate officer) of this Base, for the portion that is
higher than eight times the ceiling (this amount will, however, be
capped on the basis of a maximum seniority of 20 years), less the
full amount of the retirement rights acquired by Mr. Emmanuel
FABER as a result of the implementation of Danone's non-con-
tributory supplementary retirement plan. As of December 31,
2015, Mr. Emmanuel FABER had 18 years of seniority. The overall
retirement package to which he may be entitled would provide
him with an amount equal to 54% of that portion of his compen-
sation exceeding eight times the French social security ceiling,
as defined above. Nevertheless, in the event that Mr. Emmanuel
FABER were to leave Danone before the age of 55, the potential
benefit from this plan would be fully canceled;
(ii) the amount of the life annuity that would be paid to Mr. Franck
RIBOUD increased by an additional 2% each year until reaching
the 65% cap in 2014, less the full amount of the retirement
rights acquired by Mr. Franck RIBOUD during his professional
life, including Danone's non-contributory supplementary retire-
ment plan. As of December 31, 2015, Mr. Franck RIBOUD had
34 years of seniority at Danone. As a result of the application of
the aforementioned cap, the overall retirement package to which
he may be entitled would provide him with an amount equal to
65%. This mechanism is fully in line with the recommendation of
the AFEP-MEDEF Code, to the extent that this plan was closed
to new beneficiaries on December 31, 2003 and that the limit of
45% of the reference revenue referred to in said code does not
apply to retirement plans closed to new beneficiaries (see sec-
tion 6.5
Statutory auditors' special report on regulated agreements
and commitments
); and
(iii) for each corporate officer, in the event of retirement without
satisfying the conditions necessary for obtaining the full-rate
social security pension, the annuity will be reduced by 1.25% per
quarter between the age at which he retired and the age at which
he would have received the full-rate social security pension; and
•
the taxes and social security charges applicable to the plan are
detailed as follows:
(i) no charge is owed by the beneficiary during the build-up
phase; and
(ii) an employer contribution at a rate of 24% is owed by Danone.
Collective nature of the plan
The executives' supplementary retirement plan is a collective
contractual commitment that benefits a large number of Danone
executives:
•
as of December 31, 2015, 125 executives who were classified as
senior executives and who were members of the French retire-
ment plan as of December 31, 2003 remained eligible for the plan
(excluding beneficiaries who had already liquidated their rights);
•
it should be noted that in 2009 more than 210 executives were
eligible for this plan.
In this context, any amendment to this collective contractual com-
mitment would require the individual agreement of each of the
125 people affected. Furthermore, entitlement to this collective
contractual commitment constitutes an established right for each
of these 125 beneficiaries which cannot be affected retroactively.