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Combined Shareholders' Meeting of April 28, 2016
8.3 Comments on the resolutions of the Shareholders' Meeting
DANONE
REGISTRATION DOCUMENT 2015
335
beneficiaries since December 31, 2003. This plan represents a de-
fined benefit retirement plan satisfying the characteristics of plans
referenced in Article L.137-11 of the French social security code.
Danone's commitment involves the payment of an annuity (with a
reversion option) calculated on the basis of the following:
•
the calculation basis for the annuity corresponds to the average
of annual base salaries and bonuses for the last three full years
of work at Danone before retirement, with the length of service
taken into account including the period corresponding to corporate
officer term (the “Basis”);
•
the amount of the annuity that would be paid to Mr. Emmanuel
FABER would correspond to (i) 1.5% per year of seniority (includ-
ing the corporate officer term) of the Basis, for the tranche of the
Basis between three and eight French social security ceilings, and
(ii) 3% per year of seniority (including the period corresponding
to the corporate officer term) of the Basis, for the tranche that is
higher than these eight ceiling levels;
•
in the event of retirement without satisfying the conditions neces-
sary for obtaining the full rate with respect to the social security
pension, a reduction of 1.25%per quarter between the age at which
the person retired and the age at which he would have received
his full rate social security pension will be applied to this annuity;
•
the annuity amount will nevertheless be capped on the basis of 20
years maximum seniority less the full amount of pension rights
acquired by Mr. Emmanuel FABER in the context of the supple-
mentary pension plan fully funded by the Company.
Mr. Emmanuel FABER currently has a total of 18 years' seniority at
Danone; his potential future benefits may therefore increase for an-
other two years (while Mr. Franck RIBOUD, whose potential benefits
reached their ceiling in 2014 and can no longer increase, that is not
subject to the provisions of the Macron law).
In accordance with the Macron law, the February 22, 2016 Board of
Directors' meeting, acting on the recommendation of the Nomination
and Compensation Committee, decided to (i) subject the annual
increase in Mr. Emmanuel FABER's retirement benefits to a per-
formance condition starting with the renewal of his term in 2016
and (ii) subject this increase in these conditional future retirement
benefits to the approval of the April 28, 2016 Shareholders' Meeting.
This decision by the Board was the subject of a special disclosure
on Danone's website.
This performance condition is identical to the one applicable to the
severance pay granted toMr. Emmanuel FABER in the event he should
cease to exercise the function of Chief Executive Officer. Namely, for
each fiscal year startingwith the April 28, 2016 Shareholders' Meeting,
the annual increase in his retirement benefits will depend on:
a) the arithmetic average of internal (“organic”) growth in the
Danone Group's net sales (the “Group's CA”) during that fiscal
year and the five previous fiscal years (the “Reference Period”);
b) the arithmetic average of internal (“organic”) growth in net
sales recorded by the Panel members (“CA of the Panel”) over
the Reference Period.
During the Reference Period (
i.e.
at the end of each fiscal year):
•
if the Group's CA is equal to or greater than the Median CA of the
Panel, the increase inMr. Emmanuel FABER's conditional retire-
ment benefits for the fiscal year will vest (provided that the other
conditions stipulated in the retirement plan have been fulfilled);
•
if the Group's CA is less than the Median CA of the Panel, Mr.
Emmanuel FABER will not qualify to receive an increase in con-
ditional pension benefits for that fiscal year (expressed as a
percentage of the Basis relative to the number of years' seniority);
For the application of these conditions, it is noted that:
•
the Group's CA refers to the arithmetic average internal (“or-
ganic”) growth in Group net sales over the Reference Period (on
a consolidated and like-for-like basis,
i.e.
excluding changes in
consolidation scope and exchange rates);
•
the CA of each Panel member refers to the arithmetic average
internal (“organic”) growth in net sales recorded by said Panel
member over the Reference Period (on a consolidated and like-
for-like basis,
i.e.
excluding changes in consolidation scope and
exchange rates);
•
the Panel CAs refer to the CAs of all members of the Panel;
•
theMedian CA of the Panel refers to the value of the CA of the Panel
member that divides the Panel CAs into two equal parts (
i.e.
such
that there are as many Panel members with a CA exceeding or
equal to theMedian as Panel members with a CA being less than or
equal to the Median), it being specified that if the Panel members
are an even number, the Median CA of the Panel will be equal to
the arithmetic average of the two central values of the Panel CA;
•
the Panel consists of eight benchmark international groups in
the food and beverage sector, namely Unilever N.V., Nestlé S.A.,
Kraft Heinz Company (Kraft Foods Group Inc. until 2014), Mondelez
International Inc., PepsiCo Inc., The Coca-Cola Company, General
Mills Inc. and Kellogg Company.
To ensure the comparability of CAs used, it is specified that:
•
restatementsmay bemade (such as corrections related to changes
in consolidation scope and exchange rates) to the strict extent
necessary in order to ensure that the method of calculating the
CAs of all Panel members and the Group's CA is consistent over
the Reference Period;
•
in the event that the audited accounting or financial results of one
of the Panel members are not published or are published late, the
Board of Directors may, exceptionally, exclude this member from
the Panel through a duly justified decision;
•
in the event that the audited accounting or financial results of two
or moremembers of the Panel are not published or are published
late, the Board of Directors will make a decision duly justified
at a later date, on the basis of the most recent audited financial
statements published by themembers of the Panel and by Danone
over the last five fiscal years for which financial statements were
published for all members of the Panel and for Danone;
•
the Board of Directors may, through a duly justified decision tak-
en at a later date, change the Panel members in the event of an
acquisition, absorption, dissolution, spin-off, merger or change
of activity of one or more members of the Panel, provided that it
maintains the overall consistency of the peer group.
Each year, prior to the Shareholders' Meeting held to approve the
previous fiscal year's financial statements, the Board of Directors
will issue a statement as to whether this performance condition has
been satisfied, based on the report of a financial advisor, and will
determine the increase in Mr. Emmanuel FABER's pension benefits
for said fiscal year, through duly justified decisions taken after a rec-
ommendation from the Nomination and Compensation Committee.
It should be noted that in all cases, the amount of the annuity that
would be paid to Mr. Emmanuel FABER will remain capped on the
basis of 20 years' maximumseniority, less the sumof pension benefits
vested by Mr. Emmanuel FABER in the context of the supplementary
pension plan fully funded by Danone.