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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
344
5. Conditionality of the definitive allocation of shares
The definitive allocation of shares either in existence or to be issued
will necessarily be subject to (i) the fulfillment of the performance
conditions to be determined by the Board of Directors in accordance
with the terms described hereafter (the “Performance Conditions”)
and (ii) a condition of continued employment within the Group (see
point 5.2 hereafter).
5.1 Performance conditions
The Performance Conditions applied by your Board would be as
follows:
(i)
These conditions are composed of two complementary criteria,
evenly weighted, indicative of Danone's performance and adapted
to the specific nature of its business, namely:
(a)
Comparison of the arithmetic average internal (“organic”) con-
solidated net sales growth (the “CA”) of Danone on a like-for-like
basis with that of a reference panel for a period of three years,
i.e
.
2016, 2017 and 2018:
•
if the Group's CA exceeds or is equal to the Median CA of the
Panel, the definitive allocation shall be 100%;
•
if the Group's CA is less than the Median CA of the Panel, the
definitive allocation will be 0%, in accordance with the “no pay
below median” principle.
Where:
•
the Group's CA refers to Danone's arithmetic average internal
(“organic”) consolidated net sales growth during the fiscal years
2016, 2017 and 2018 (on a consolidated and like-for-like basis);
•
the CA of each Panel member refers to the arithmetic average
internal (“organic”) net sales growth recorded by the saidmember
of the Panel during the fiscal years 2016, 2017 and 2018 (on a
consolidated and like-for-like basis);
•
the Panel CAs refers to the CAs of all members of the Panel;
•
the Median 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 the Median 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 CAs;
•
the Panel refers to eight benchmark multinational groups in the
food and beverage sector, namely: Unilever N.V., Nestlé S.A.,
PepsiCo Inc., The Coca-Cola Company, The Kraft Heinz Company,
Mondelez International Inc., General Mills Inc. and Kellogg
Company;
•
restatements (mainly adjustments of scope and/or foreign ex-
change effects) will be made only to the extent strictly necessary
in order to ensure the consistency of the calculation method for
the CAs of all Panel members and the CA of the Group over the
entire period under review;
•
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
of the Panel through a duly justified decision taken at a later date
that is mentioned in the Report of the Board of Directors to the
Shareholders' Meeting;
•
in the event that the audited accounting or financial results of two
or more members of the Panel are not published or published
late, the Board of Directors will make a decision duly justified at
a later date and described in the Report of the Board of Directors
to the Shareholders' Meeting, on the basis of the most recent
audited financial statements published by the members of the
Panel and by the Company over the three latest completed fis-
cal years for which financial statements were published by all
members of the Panel and by the Company;
•
the Board of Directors may, through a duly justified decision
taken at a later date and mentioned in the Report of the Board
of Directors to the Shareholders' Meeting, exclude a member of
the Panel in the event of an acquisition, absorption, dissolution,
spin-off, merger or change of activity of this member of the
Panel, provided that it maintains the overall consistency of the
peer group;
•
the Board of Directors must state whether this first performance
condition was attained, on the basis of a duly justified decision
taken at a later date and mentioned in the Report of the Board
of Directors to the Shareholders' Meeting, following a recom-
mendation by the Nomination and Compensation Committee,
and based on a report of a financial advisor;
(b)
The improvement in trading operating margin on a like-for like
basis, over a period of three years,
i.e.
the years 2016, 2017 and 2018:
•
if the change in trading operating margin on a like-for-like basis
and calculated over the three years (2016, 2017 and 2018) is equal
to or greater than +35 basis points, the definitive allocation will
be 100%;
•
if the change in trading operating margin on a like-for-like basis
and calculated over the three years (2016, 2017 and 2018) is
lower than +35 basis points, the definitive allocation will be 0%;
(ii)
Where:
•
the “trading operating margin”, “net sales” and the change on
a “like-for like basis” are financial indicators used by Danone
and not defined by IFRS and whose calculation is specified in
the financial press releases issued by the Company (see also
section 3.6
Financial indicators not defined by IFRS
);
•
the Board of Directors will need to state whether this second
performance condition has been fulfilled through a duly informed
decision made at a later date and mentioned in the Report of the
Board of Directors to the Shareholders' Meeting, upon the rec-
ommendation of the Nomination and Compensation Committee;
•
for all beneficiaries, provided that the condition of continued
employment at Danone is met (see point 5.2 below), 50% of the
shares will be definitively allocated subject to the fulfillment of
the Performance Condition related to sales growth, and 50%
will be allocated subject to the achievement of the Performance
Condition related to the trading operating margin.
5.2 Condition of continued employment at Danone
The beneficiary of a share allocation who leaves Danone before the
end of the vesting period may not retain his or her shares except
in the case of legally mandated early departure (including death
and disability) and in exceptional cases determined by the Board
of Directors.
Moreover, it should be noted that the GPS plans allocated as of
July 26, 2010 provide that all GPS beneficiaries may be exempted
from the conditions of continuous employment and performance
in the event of the Company's change of control (see section 7.10
Change of control
).