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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
336
Advisory opinion on the components of compensation of corporate officers
(14
th
to 15
th
resolutions)
Reminder of the principles of the Group's
compensation policy for corporate officers
Compensation for Danone's corporate officers is:
•
appropriate and balanced in its various components, while favoring
the award of a main part in the form of a variable multi-annual
compensation;
•
determined in line with that of other directors and senior exec-
utives of Danone's subsidiaries worldwide.
Compensation of the Chief Executive Officer
The Chief Executive Officer's compensation is divided into three
distinct components: annual compensation, variable multi-annual
compensation and variable long-term compensation, whose prin-
ciples are described hereafter.
The Nomination and Compensation Committee conducts an in-depth
study of best practices in the market on the basis of (i) a benchmark
prepared by an external consultant, whose objectivity was verified
by including large international companies listed in France (CAC
40), and (ii) a panel of eight leading international groups in the food
and beverage sector (the same panel as used for the performance
conditions of Group performance shares and severance pay for
corporate officers, and including Unilever N.V., Nestlé S.A., PespiCo
Inc., The Coca-Cola Company, the Kraft Heinz Company, Mondelez
International Inc., General Mills Inc. and Kellogg Company).
The Nomination and Compensation Committee determines the Chief
Executive Officer's compensation by taking into account:
•
on the one hand, that the mid-term and long-term portion is
sufficiently significant in relation to his annual compensation (to
motivate him to work in a long-term perspective);
•
on the other hand, that the portion subject to performance con-
ditions is also sufficiently significant when compared to the fixed
portion so as to ensure effective alignment of his interests with
the general interest of Danone and shareholders.
In addition, theNomination and Compensation Committee determines
this overall compensation by integrating the potential benefit that
comes from the supplementary pension plan.
The performance conditions are established so as to be both com-
plementary and stable over the long term. They are drawn up with
reference to Danone's objectives communicated to the market. In
addition, these performance conditions reflect compensation best
practices, such as the integration of internal and external performance
conditions, the latter being drawn up according to the “no pay below
median” principle. The Nomination and Compensation Committee
is therefore particularly careful to ensure that the performance
criteria for compensation are demanding and reward long-term
performance in line with market expectations.
The compensation policy implemented is based on simple, stable
and transparent principles: thus Group performance units have
been awarded since 2005 and Group performance shares since
2010. All the components of compensation of corporate officers,
as well as an assessment of whether they have been achieved,
are published on the Company's website and in the Registration
Document (see section 6.3
Compensation and benefits for corporate
officers and governance bodies
). Lastly, for several years, Danone
has communicated with shareholders regularly on this subject.
Mr. Emmanuel FABER's 2015 annual compensation consists of the
following items:
•
fixed compensation totaling €1 million, which is reviewed after
relatively lengthy intervals (this fixed compensation was reviewed
for Mr. Emmanuel FABERwhen he was appointed Chief Executive
Officer in September 2014 and has remained unchanged since
then; his compensation as Deputy General Manager was un-
changed since 2011) and takes into account both his experience
and level of responsibilities;
•
targeted annual variable compensation of €1 million repre-
senting 100% of his fixed compensation and able to reach a
maximum of 200% of his fixed compensation, with no minimum
or guaranteed floor.
The annual variable compensation was calculated on the basis of
performance conditions set previously and consisting of the following:
•
an economic, quantitative portion, established using targets dis-
closed by Danone to the market, representing 60% of the target
and with a variation range of between 0% and 120%, consisting
of the following items:
• for 25%, organic growth in net sales, with a variation range
of between 0% and 50% of the target;
• for 25%, increase in trading operatingmargin, with a variation
range of between 0% and 50% of the target;
• for 10%, free cash-flow in millions of euros, with a variation
range of between 0% and 20% of the target;
•
a social and societal portion, established with reference to
Danone's objectives (job security, employee training, develop-
ment of young talent, environmental parameters and societal
initiatives), representing 20% of the target and with a variation
range of between 0% and 40%, consisting of the following items:
• for 10%, achievement of “100,000 talents” development
program;
• for 10%, achievement of the main objectives related to the
definition and launch of the Danone 2020 program;
•
a managerial portion, calculated using objectives related to the
development of Danone's business (product innovations, market
share, market penetration in new regions and implementation of
strategic plans), representing 20%of the target andwith a variation
range of between 0% and 40%, consisting of the following items:
• for 10%, managing of Danone leaders teams;
• for 10%, achievement of the Executive Committee's annual
business priorities for 2015, with the same range.
At its February 22, 2016meeting, the Board of Directors, acting on the
recommendation of the Nomination and Compensation Committee,
determined the attainment level for Emmanuel Faber's annual vari-
able compensation. Regarding the economic, quantitative portion,
after validation of the financial components by the Audit Committee,
the Board of Directors determined that the rate of attainment of
the economic component was 115%, based on the achievement
of targets disclosed to the market, namely 4.4% net sales growth
on a like-for-like basis, +17 basis points rise in trading operating
margin on a like-for-like basis and a free-cash flow generation of
€1.529 million without exceptional items. Concerning net sales,
the Board of Directors considered that its progression, while being
very solid in view of the market context and the volatile economy