The benefits in kind include the use of a company car as well as contributions to the unemployment insurance for company managers and corporate officers.
In accordance with the Group’s internal practice, the Chairman of the Board of Directors, like any other Executive Officer, does not receive any remuneration in respect of his office as Director, if he holds executive duties at L’Air Liquide S.A.
The Board confirmed that, in accordance with the principle adopted since 2016, the award of the LTI to the Executive Officer and the changes therein over time will be assessed in terms of the IFRS value (and not in terms of the volumes granted), for all stock option and performance share plans combined.
All the LTI granted are subject to a presence condition and performance conditions that apply to the both tools and are calculated over a period of three years. For the 2020 plans, they will depend on the Return on Capital Employed after tax (“ROCE”) and on the rate of Total Shareholder Return (TSR). The Board of Directors decided to add a new criterion linked to the reduction in Air Liquide’s Carbon Intensity, which represents 10% of the performance shares granted and which aims to reduce the Carbon Intensity by 30% between 2015 and 2025.
Within the scope of these sub-limits authorized by the Annual General Meeting, the Board of Directors sets lower annual limits for the grants to the Executive Officers. These limits remain unchanged, it being noted moreover that, in accordance with the remuneration policy referred to above, the grant of LTI represents approximately 40% of the Executive Officer’s total annual remuneration.
Since 2018, in the event of a departure from the Group during the period of assessment of the performance conditions(a) , the LTIs are the subject of a proration on the basis of the actual presence of the Executive Officer at the Group.
The Board of Directors takes into account, in the overall assessment and determination of the Executive Officers’ remuneration, the long-term commitments/agreements for the Executive Officers as follows: (i) a supplementary pension mechanism(b) , comprising specifically for Benoît Potier, with effect from January 1, 2020, a collective pension insurance contract subject to performance conditions, which from this date replaces the defined benefit pension plan, which applies to eligible senior managers and Executive Officers for the period up to December 31, 2019 (see details below), (ii) a collective life insurance plan, (iii) a death and disability benefits plan, (iv) commitments to pay an indemnity in the event of the termination of duties at the Company’s initiative, in certain circumstances, subject to performance conditions calculated over a three-year period, (v) entitlement to unemployment insurance for company managers and Corporate Officers, in the absence of an employment contract with the Group.
Pursuant to the PACTE Law and Ordinance No. 2019-697 of July 3, 2019, the supplementary pension plans which make the vesting of rights conditional upon the beneficiaries’ presence at the Company at the time of retirement can no longer grant a right to acquire supplementary conditional rights as from January 1, 2020. For the period up until this date, Benoît Potier’s rights under the defined benefit pension plan (“plan S”) will remain subject in their entirety to the pension plan regulations.
As from January 1, 2020, a collective pension insurance contract with individual and optional subscription has been established to replace the acquisition of rights under the defined benefit pension plan. The implementation of this new system for the benefit of Benoît Potier is subject to the approval of the General Meeting of May 5, 2020 as part of the remuneration policy (resolution 9).
Pursuant to this new mechanism, the amount paid by the Company shall be split between a payment to the insurer and a payment to Benoît Potier intended to cover the social security contributions and taxes due on the payments made to the insurer. This amount shall be paid in arrears every year for the period until the end of the executive office.
Benoît Potier cannot apply for the entitlements under this pension insurance contract before the age at which he becomes entitled to claim his pension entitlements under the French general social security scheme.
This new mechanism is specific to Benoît Potier and adapted to his individual situation in light of his seniority and the fact that the new mechanism is only intended to apply up until the end of his career as an Executive Officer. It is without prejudice to the mechanism which would apply in the future to a new Executive Officer.
This new mechanism represents the lower cost for the Company, over 20% less than that of the previous plan. For Benoît Potier, it simply supplements the rights accumulated under the existing plan and makes it possible to maintain rights which are equivalent to those which would have existed under such plan, if it had been possible to maintain this plan for Benoît Potier.
The gross annual contribution will amount to approximately 10% of the annual target fixed and variable remuneration for 2020, subject to the achievement of similar performance conditions to those of the defined benefit pension plan, which had been approved by the General Meeting of May 16, 2018 (10th resolution). Consequently, the amount of contributions for a fiscal year will depend on the average annual gap between the ROCE after tax and the WACC (net equity method), calculated for the last three fiscal years prior to the said fiscal year.
Finally, the new mechanism will be taken into account when determining the upper limit of 45% of the Reference Remuneration that applies to the defined benefit pension plan, this upper limit being not reached.
(a) For a reason other than resignation or removal from office for serious cause, which are cases that result in loss of LTIs.
(b) Which supplements the defined contribution pension plan which applies to all the employees and Corporate Officers.
