The remuneration policy applicable to the Corporate Officers established in compliance with article L. 225-37-2 II of the French Commercial Code is described in its entirety in the 2019 Universal Registration Document (pages 178 to 186).
The remuneration policy was drawn up by the Board of Directors on February 10, 2020, upon the recommendation of the Remuneration Committee which had carried out in-depth analyses on the subject. It is in line, in terms of principles and structure, with the policy approved by the General Meeting of May 7, 2019 relating to Executive Officers. In accordance with article L. 225-37-2, I of the French Commercial Code(a) , this remuneration policy also applies, for the sections that affect them and in line with previous practices, to Directors of the Company.
(a) In its drafting pursuant to Ordinance No. 2019-1234 dated November 27, 2019.
The remuneration policy reflects the increased level of responsibility of the Group’s senior executive and is adapted to the Group’s context, remains competitive and is an incentive to promote the Group’s performance over the medium to long-term, in compliance with the Company’s interests and the interests of all the stakeholders.
This remuneration policy applies whether the Group’s senior Executive Officer acts as the Chairman and Chief Executive Officer or, if circumstances so require, the Chief Executive Officer of the Company. In such circumstances, a Chairman who does not also have the duties of Chief Executive Officer would receive fixed remuneration to the exclusion of any variable remuneration. Furthermore, if such a situation were to arise, the remuneration policy applicable to a Senior Executive Vice President would be determined on the basis of the policy applicable to a Chief Executive Officer of the Company, after taking account, however, of the difference in the level of responsibility, consistent with the earlier practices applied at the Company for this type of Executive Officer.
The variable remuneration and the long-term incentives (or “LTI”) cumulated continue to represent approximately 75% of the total annual remuneration. Thus, the fixed remuneration represents 25%, the variable remuneration 35% and the LTI 40% of the total annual remuneration (a greater relative weight given to the LTI).
The principles applicable to the annual variable remuneration are unchanged:
The criteria of the variable remuneration and the LTI performance conditions, set in line with the principal objectives of the NEOS company program reflect the Company’s commercial strategy and the Group’s ambition to achieve profitable long-term growth, while acting responsibly with regard to all stakeholders. With effect from 2020, in order to take into account remarks from shareholders and in keeping with the Group’s responsible growth approach, the LTI plans incorporate a new performance condition linked to the Group’s Carbon Intensity. The objective of this condition is consistent with the trajectory of the Group’s Climate objectives announced at the end of 2018 and which aim to reduce the Carbon Intensity by 30% between 2015 and 2025.
The performance conditions which apply to the long-term commitments (termination indemnity and collective pension insurance contract) are based on the gap between the ROCE and the WACC (average gap over three years) which makes it possible to measure the regular value creation.
The qualitative components of the annual variable remuneration incorporate the pursuit of long-term objectives related to safety, sustainable development, Human Resources and the preparation of the succession plans, thus supporting the Company’s long-term future.
The selection of the components for the remuneration of the Executives Officers is made by taking into account the conditions of remuneration and employment of the Company’s employees: in determining the variable remuneration (the objectives of the variable remuneration of the Executive Officers being reflected in those for the employees who have a variable remuneration) and the performance conditions of the LTI (that are identical for all the beneficiaries). These alignments provide for coherence of efforts in achieving the Company’s performance objectives. The importance given to the safety objectives helps implement a high-quality working environment for the employees that has a direct impact on their engagement and performance. The variable remuneration also incorporates objectives of talent development, the achievement of which requires in particular the implementation of programs for the training and development of employees.
Finally, the other principles which apply to the LTI are unchanged (the proration of the LTI in the event of the Executive Officer’s departure from the Group during the period of assessment of the performance conditions, the level of requirement of the objectives and the rules which are specific to the Executive Officers as described below).
Specifically for Benoît Potier, a collective pension insurance contract with individual and optional subscription is set up as from January 1, 2020, to replace the rights acquired under the defined benefit pension plan with effect from such date pursuant to the PACTE Law of May 22, 2019 and Ordinance No. 2019-697 of July 3, 2019 (see details below).
