FISCAL YEAR BY SENIOR EXECUTIVES AND CLOSELY RELATED PERSONS 148
Criterion 8: not to represent shareholders with a controlling interest in the Company
2. COMPENSATION OF SENIOR EXECUTIVE OFFICERS
2.2. Compensation paid or awarded in respect of fiscal year 2017
2.2.1. Summary of compensation, options and performance shares granted to senior executive officers(a) Bernard Arnault – Chairman and Chief Executive Officer
(EUR) 2017 2016 Fixed and variable compensation due in respect of the fiscal year 3,339,947 3,351,629 Valuation of options granted during the fiscal year - - Valuation of bonus performance shares provisionally allocated during the fiscal year(b) 4,482,312 4,482,204
Antonio Belloni – Group Managing Director
(EUR) 2017 2016 Fixed and variable compensation due in respect of the fiscal year 5,556,802 5,556,802 Valuation of options granted during the fiscal year - - Valuation of bonus performance shares provisionally allocated during the fiscal year(b) 2,021,297 2,021,108
(a) Gross compensation and benefits in kind paid or borne by the Company and companies controlled, in addition to compensation and benefits in kind paid or borne by Financière Jean Goujon and Christian Dior, subject to the provisions of Article L.225- 37- 3 of the French Commercial Code, excluding directors’ fees.
(b) A breakdown of equity securities or securities giving access to equity allocated to senior executive officers during the fiscal year is set out in §2.2.5 below and the performance conditions that must be met for shares to vest are set out in §4.5 in the Management Report of the Board of Directors – Parent company: LVMH Moët Hennessy - Louis Vuitton.
Supplementary pensions
The members of the Group’s Executive Committee who are employees or senior executive oficers of French subsidiaries, and who have been members of the Committee for at least six years, are entitled to a supplementary pension provided that they liquidate any pensions acquired under external pension plans immediately upon terminating their duties in the Group.
This is not required however, if they leave the Group at the latter’s request after the age of 55 and resume no other professional activity until their external pension plans are liquidated.
This supplementary pension beneit is determined on the basis of a reference amount of compensation equal to the average of the three highest amounts of annual compensation received during the course of their career with the Group, capped at 35 times the annual social security ceiling (i.e. 1,372,980 euros as of December 31, 2017). The annual supplementary retirement beneit is equal to the difference between 60% of the reference remuneration amount (capped where appropriate) and all pension payments made in France (under the general social security plan and the ARRCO and AGIRC supplementary plans) and abroad. As of December 31, 2017, the total amount of pensions and the supplementary pension may not exceed 823,788 euros per year.
As a result of the aforementioned system, on the basis of compensation paid to the Chairman and Chief Executive Oficer and the Group Managing Director in 2017, the supplementary pension payable to them would not exceed 45% of the amount of their last annual compensation, in accordance with the recommendations set out in the AFEP / MEDEF Code. The supplementary pension only vests when retirement beneits are claimed.
Given the characteristics of the plan put in place by the Company and their personal circumstances, the supplementary pensions for which Bernard Arnault and Antonio Belloni may qualify no longer give rise to the annual vesting of additional beneits or, consequently, to a correlative increase in the Company’s inancial commitment.
Recipients’ potential beneits are funded by contributions paid to an insurer, which are deductible from the corporate tax base and subject to the contribution tax provided for under Article L.137- 11, I, 2°, a) of the French Social Security Code, the rate of which is set at 24%.
Increases in provisions for these supplementary retirement
beneits in 2017 are included in the amount shown for
post- employment beneits under Note 32.4 to the consolidated
inancial statements.
The Group’s ixed compensation policy aims to maintain a certain stability in the level of this portion of compensation. The variable portion of the compensation paid to senior executive oficers is based on the attainment of both quantiiable and qualitative targets. Quantiiable and qualitative objectives carry an equal weighting for the purpose of determining the bonus of the Chairman and Chief Executive Oficer; for the Group Managing Director, they are weighted two- thirds and one- third, respectively. The quantiiable criteria are inancial in nature and relate to growth in revenue, operating proit and cash low
as compared to the budget, with each of these items representing one- third of the total determination. The qualitative criteria are precisely established but are not made public for reasons of conidentiality. The method used for assessing performance has been reviewed by the Nominations and Compensation Committee. Given the choice made to keep ixed compensation amounts steady, the variable portion is capped at 250% of the ixed portion for the Chairman and Chief Executive Oficer and at 150% of the ixed portion for the Group Managing Director.
2.2.2. Summary of compensation paid to each senior executive officer(a) Bernard Arnault – Chairman and Chief Executive Officer
Compensation (EUR) Amounts due for the fiscal year Amounts paid during the fiscal year 2017 2016 2017 20 16 Fixed compensation 1,139,947 1,151,629 1,139,947 1,151,629 Variable compensation 2,200,000 2,200,000 2,200,000(b) 2,200,000(b) Exceptional compensation - - - - Directors’ fees(c) 116,413 115,345 102,659 115,345 Benefits in kind(d) 37,807 39,317 37,807 39,317 Total 3,494,167 3,506,291 3,480,413 3,506,291
Antonio Belloni – Group Managing Director
Compensation (EUR) Amounts due for the fiscal year Amounts paid during the fiscal year 2017 2016 2017 20 16 Fixed compensation 3,241,552 3,241,552 3,241,552 3,241,552 Variable compensation 2,315,250 2,315,250 2,315,250(b) 2,315,250(b) Exceptional compensation - - - - Directors’ fees(c) 87,245 87,245 87,245 87,245 Benefits in kind(d) 10,188 12,617 10,188 12,617 Total 5,654,235 5,656,664 5,654,235 5,656,664
(a) Gross compensation and benefits in kind paid or borne by the Company and companies controlled, in addition to compensation and benefits in kind paid or borne by Financière Jean Goujon and Christian Dior, subject to the provisions of Article L.225- 37- 3 of the French Commercial Code.
(b) Amounts paid in respect of the prior fiscal year.
(c) The rules for attributing directors’ fees at the Company are presented in §2.1.1 above.
(d) Benefit in kind: company car.
2.2.3. Summary of directors’ fees, compensation, benefits in kind and commitments given to other company officers(a) Members of the Board of Directors Directors’ fees Fixed Variable Exceptional (EUR unless otherwise stated) paid in compensation paid compensation paid compensation paid during the fiscal year during the fiscal year during the fiscal year 2017 2016 2017 2016 2017 20 16 2017 20 16 Antoine Arnault(b) (c) 77,500 71,875 750,000 912,200 300,000 150,000 - - Delphine Arnault(b) (c) 61,987 66,472 869,522 848,786 1,780,000(d) 1,596,000(d) - - Nicolas Bazire(b) (c) (e) 55,000 55,000 1,235,000 1,235,000 2,700,000 2,700,000 - - Bernadette Chirac 15,000 37,500 - - - - - - Charles de Croisset 112,500 106,875 - - - - 15,000(f) - Diego Della Valle 35,000 37,500 - - - - - - Clara Gaymard 45,000 33,750 - - - - - - Marie- Josée Kravis 56,875 61,875 - - - - - - Lord Powell of Bayswater 40,000 37,500 205,000(g) 205,000(g) - - - - Marie- Laure Sauty de Chalon 67,500 67,500 - - - - - - Yves- Thibault de Silguy 157,500 157,500 - - - - 15,000(f) - Natacha Valla 45,000 33,750 - - - - 15,000(f) - Hubert Védrine 56,875 37,500 - - - - - -
(a) Directors’ fees and gross compensationand / or fees and benefits in kind paid or borne by the Company and companies controlled, in addition to compensation and benefits in kind paid or borne by Financière Jean Goujon and Christian Dior, in accordance with Article L.225- 37- 3 of the French Commercial Code.
(b) The breakdown of equity securities or securities conferring entitlement to capital granted to senior executive officers during the fiscal year is presented in §2.2.5 below.
(c) Benefits in kind: company car.
(d) Of which 1,066,000 euros in 2016 and 1,200,000 euros in 2017 under a medium- term incentive plan.
(f) Other benefit: supplementary pension.
(f) As a member of the ad hoc Committee. See §1.3.4. above (g) In pounds sterling.
In addition, gross attendance fees paid by the Company to Advisory Board members in 2017 were as follows:
(EUR)
Paolo Bulgari 20,000 Albert Frère(a) 15,000 Pierre Godé(b) 35,000 Patrick Houël(c) 15,000 Felix G. Rohatyn(c) 5,000
(a) Of which 5,000 euros in respect of his Directorship.
(b) Of which 20,000 euros in respect of his Directorship and his role as Vice- Chairman of the Board of Directors, which expired on April 13, 2017.
(c) Term of office expired on April 13, 2017.
2.2.4. Options granted to and exercised by company officers during the fiscal year
Options granted to senior executive of the Company
See also §4.4 in the “Parent company: LVMH Moët Hennessy - Louis Vuitton” section of the Management Report of the Board of Directors for the allocation and holding arrangements.
No new option plans were put in place in 2017.
Options exercised by executive officers of the Company(a)
Recipients Company granting Date of Number Exercise price the options the plan of options (EUR) Bernard Arnault LVMH 05 / 10 / 2007 474,893 77.526 Christian Dior 01 / 31 / 2007 217,633 78.11
(a) After adjusting for the exceptional distribution of a dividend in Hermès International shares on December 17, 2014.
Options exercised by other executive officers of the Company(a)
Recipients Company granting Date of Number Exercise price the options the plan of options (EUR) Delphine Arnault Christian Dior 05 / 15 / 2008 7,463 67.31 ” 05 / 14 / 2009 3,501 47.88 Nicolas Bazire LVMH 05 / 14 / 2009 18,480 50.861 (a) After adjusting for the exceptional distribution of a dividend in Hermès International shares on December 17, 2014.
2.2.5. Performance shares allocated to company officers during the fiscal year
See also §4.5 in the “Parent company: LVMH Moët Hennessy - Louis Vuitton” section of the Management Report of the Board of Directors for the allocation and holding arrangements.
Shares allocated on a provisional basis during the fiscal year to company officers of the Company
Recipients Company Date of Date of Number of % of the share Valuation granting Shareholders’ the plan performance capital of shares the shares Meeting shares (EUR) Bernard Arnault LVMH 04 / 14 / 2016 10 / 25 / 2017 19,745 0.0039 4,482,312 Antonio Belloni LVMH 04 / 14 / 2016 10 / 25 / 2017 8,904 0.0017 2,021,297
Shares allocated on a provisional basis during the fiscal year to other company officers of the Company
Recipients Company Date of Number of
granting the plan performance the shares shares Antoine Arnault LVMH 10 / 25 / 2017 1,323 Delphine Arnault LVMH 10 / 25 / 2017 4,673 Nicolas Bazire LVMH 10 / 25 / 2017 8,904
Date of Shareholders’ Meeting 05 / 11 / 2006 05 / 11 / 2006 05 / 11 / 2006 Date of Board of Directors’ meeting 05 / 10 / 2007 05 / 15 / 2008 05 / 14 / 2009 Total Total number of options granted at plan inception(e) 1,679,988 1,698,320 1,301,770 4,680,078 o f which Company officers(a) 805,875 766,000 541,000 2,112,875 Bernard Arnault(b) 427,500 400,000 200,000 1,027,500 Antoine Arnault(b) 9,500 9,500 9,500 28,500 Delphine Arnault(b) 9,500 9,500 9,500 28,500 Nicolas Bazire(b) 142,500 142,500 100,000 385,000 Antonio Belloni(b) 142,500 142,500 100,000 385,000 o f which Top ten employee recipients(c) 311,544 346,138 327,013 984,695 Number of recipients 524 545 653 Earliest option exercise date 05 / 10 / 2011 05 / 15 / 2012 05 / 14 / 2013 Expiry date 05 / 09 / 2017 05 / 14 / 2018 05 / 13 / 2019 Subscription price(EUR)(d) 77.526 65.265 50.861
(a) Options granted to active company officers as of the plan’s commencement date.
(b) Company officers serving as of December 31, 2017.
(c) Options granted to active employees other than company officers as of the plan’s commencement date.
2.2.6.1. Share purchase option plans
No share purchase option plans were in effect in 2017.
2.2.6.2. Share subscription option plans
The terms and conditions of exercising options and, for the plan set up in 2009, the performance conditions related to exercising options are presented in §4.4 of the Management Report of the
Board of Directors. For plans set up between 2007 and 2009,if the Chairman and Chief Executive Oficer and the Group Managing Director decide to exercise their options, they must retain possession, in registered form and until the conclusion of their respective terms of ofice, of a number of shares representing a sliding percentage of between 50% and 30% (based on the remaining term of the plan) of the notional capital gain, net of tax and social security contributions, determined on the basis of the closing share price on the day before the exercise date.
Shares vested during the fiscal year to company officers of the Company(a)
Recipients Company granting Date of Number of
the shares the plan performance shares Bernard Arnault LVMH 10 / 23 / 2014 5,117 Christian Dior 10 / 16 / 2014 22,271 Antonio Belloni LVMH 10 / 23 / 2014 4,929 (a) After adjusting for the exceptional distribution of a dividend in Hermès International shares on December 17, 2014.
Shares vested during the fiscal year to other company officers of the Company(a)
Recipients Company granting Date of Number of
the shares the plan performance shares Antoine Arnault LVMH 10 / 23 / 2014 733 Delphine Arnault LVMH 10 / 23 / 2014 733 Christian Dior 10 / 16 / 2014 7,104 Nicolas Bazire LVMH 10 / 23 / 2014 4,929 (a) After adjusting for the exceptional distribution of a dividend in Hermès International shares on December 17, 2014.
2.2.6. Prior allocations of options
Date of Shareholders’ Meeting 04 / 18 / 2013 04 / 18 / 2013 04 / 16 / 2015 04 / 16 / 2015 04 / 14 / 2016 04 / 14 / 2016 Date of Board of Directors’ meeting 07 / 25 / 2013 10 / 23 / 2014 04 / 16 / 2015 10 / 22 / 2015 10 / 20 / 2016(a) 10 / 25 / 2017(a) Performance Performance Performance Performance Performance Performance Total
shares shares shares shares shares shares Total number of bonus
performance shares provisionally
allocated at plan inception(g) 397,406 307,548 73,262 315,532 310,509 346,490 1,750,747
of which Company officers(b) 78,572 19,235 41,808 46,990 43,462 43,549 273,616
Bernard Arnault(c) 17,968 4,606 10,012 14,626 13,528 19,745 80,485
Antoine Arnault(c) 1,644 659 1,432 2,093 1,936 1,323 9,087
Delphine Arnault(c) 1,644 659 1,432 2,093 1,936 4,673 12,437
Nicolas Bazire(c) 17,308 4,437 9,644 14,089 13,031 8,904 67,413
Antonio Belloni(c) 17,308 4,437 9,644 14,089 13,031 8,904 67,413
of which Top ten employee recipients(d) 69,606 36,280 31,454 61,858 57,734 120,378 377,310
Number of recipients 748 772 14 740 740 851
Vesting date 07 / 25 / 2016(e) 10 / 23 / 2017(e) 04 / 16 / 2018(e) 10 / 22 / 2018(e) 10 / 20 / 2019 10 / 25 / 2020(f)
Date as of which the shares may be sold 07 / 25 / 2018(e) 10 / 23 / 2019(e) 04 / 16 / 2020(e) 10 / 22 / 2020(e) 10 / 20 / 2019 10 / 25 / 2020(f)
Performance condition Satisfied Satisfied Satisfied Satisfied Satisfied Not
in 2017 applicable
in 2017
(a) The total number of bonus shares and performance shares in the plans launched on October 20, 2016 and October 25, 2017, stands at 360,519 shares and 364,992 shares respectively (see §4.5.1 in the “Parent company: LVMH Moët Hennessy-Louis Vuitton” section of the Management Report of the Board of Directors). No bonus shares were awarded to company officers.
(b) Total number of performance shares allocated to company officers serving as of the provisional allocation date.
(c) Company officers serving as of December 31, 2017.
(d) Performance shares allocated to employees – other than LVMH company officers – serving as of the provisional allocation date.
(e) Shares vest and become available on July 25, 2017; October 23, 2018; April 16, 2019 and October 22, 2019 for recipients who are not French residents for tax purposes.
(f) Shares vest and become available on June 30, 2024 or, where applicable, June 30, 2023 for shares subject to a condition specifically related to the performance of a subsidiary.
(g) For pre-2015 plans, before adjusting for the exceptional distribution of a dividend in Hermès International shares on December 17, 2014.
2.2.7. Prior allocations of performance shares