285 / 364
DANONE
REGISTRATION DOCUMENT 2015
Corporate Governance
6.3 Compensation and benefits of corporate officers and governance bodies
285
Severance pay of Mr. Franck RIBOUD
Since October 1, 2014, Mr. Franck RIBOUD, now Chairman of the
Board only, is no longer eligible for severance pay with respect to
his term of office.
Suspension of the employment contract of the corporate
officers
At the time of the renewal of their terms of office as Directors and at
the recommendation of theNomination andCompensationCommittee,
on February 22, 2016 the Board of Directors confirmed the position
taken by it in September 2014 and decided that the employment
contracts of Mr. Franck RIBOUD and Mr. Emmanuel FABER should
be maintained (although they should remain suspended), given their
age, personal situation and seniority as Danone employees. The
Board considered this arrangement relevant for corporate officers
with at least ten years of seniority at Danone in order to encourage
the principle of internal promotion and sustainable management
that Danone strives to implement, as terminating the employment
contract could, on the contrary, dissuade internal candidates from
accepting positions as corporate officers.
The Board believed that implementing the recommendations of the
AFEP-MEDEF Code to permanently terminate these employment
contracts would cause them to lose the rights and benefits gradually
acquired under their employment contracts during their careers at
Danone on the basis of seniority (i.e. 34 years for Mr. Franck RIBOUD
and 18 years for Mr. Emmanuel FABER) and actual service, particu-
larly the severance pay and long-termbenefits such as participation
in group plans, the total amount of which, in any case, would not
exceed the cap of two years of compensation (fixed and variable).
In addition, the Board noted that the French Financial Markets
Authority believes that a detailed explanation on the retention of
a corporate officer's employment contract can justify the non-im-
plementation of the recommendation of the AFEP-MEDEF Code.
Employment contract of the Chairman of the Board
As of December 31, 2015, Mr. Franck RIBOUD had been with Danone
for 34 years, including more than 18 years as Chairman and Chief
Executive Officer of Danone.
It should be noted that, at its July 21, 2004 meeting, the Board of
Directors had updated the conditions under which the employment
contract of Mr. Franck RIBOUD (which had been suspended on
August 26, 1994 when he was appointed as corporate officer of
Danone) would be resumed if his term of office ended, for whatever
reason, and established that:
•
the amount of time during which he exercised his duties as a
corporate officer for the benefit of Danone will be fully taken into
account with respect to seniority and his resulting rights within
the framework of his employment contract;
•
Danone agrees to offer hima position involving duties comparable
to those currently exercised by the members of the Company's
Executive Committee;
•
the annual compensation that will be paid to him cannot be less
than the total annual average compensation (gross base salary,
benefits in kind and bonus of any type) allocated to all members
of the Executive Committee during the 12 months preceding the
resumption of his employment contract; and
•
he will benefit from the supplementary retirement plan for ex-
ecutives based on his seniority as a corporate officer and under
his employment contract.
Employment contract of the Chief Executive Officer
Concerning Mr. Emmanuel FABER, the Board of Directors, at its
meeting on February 13, 2008, authorized an amendment to his
employment contract aimed at determining the conditions under
which his employment contract would be resumed (suspended
when he was appointed as a corporate officer of the Company),
assuming that his term of office had ended, for whatever reason.
This amendment stipulates that:
•
the amount of time during which he will have exercised his duties
as a corporate officer for the benefit of Danone will be fully taken
into account with respect to seniority and his resulting rights
within the framework of his employment contract;
•
Danone agrees to offer him a position involving duties compa-
rable to those currently exercised by the members of Danone's
Executive Committee;
•
the annual compensation that will be paid to him cannot be less
than the total annual average compensation (gross base salary,
benefits in kind and bonus of any type) allocated to all members
of the Executive Committee during the 12 months preceding the
resumption of his employment contract;
•
he will benefit from the supplementary retirement plan for ex-
ecutives based on his seniority as a corporate officer and under
his employment contract; and
•
the contractual indemnity due in the event of a breach of the
employment contract will be canceled.
Non-compete indemnities
The non-compete clause currently applicable to Mr. Emmanuel
FABER, Chief Executive Officer (there is no non-compete clause
applicable to Mr. Franck RIBOUD, Chairman of the Board) enables
Danone to either activate the clause for a period of 18 months in
exchange for gross monthly financial compensation paid to him
equivalent to 50% of his gross average fixed and target variable
compensation paid over the last 12 months (“Consideration for
non-compete clause”), or to release him from the clause with no
financial compensation.
This non-compete clause aims to protect Danone, and potential
non-compete indemnities constitute the necessary financial con-
sideration for the restrictions imposed.
Moreover, to avoid any aggregation of (i) the indemnity provided for by
Danone's collective agreement applicable to all Danone employees
(the “Indemnity for termination of employment contract”), (ii) the
indemnity due in certain instances of termination of the termof office
of a corporate officer, and (iii) the Consideration for the non-compete
clause, which would exceed twice the gross annual compensation
(comprising both fixed and variable compensation) and which
would therefore breach the recommendations of the AFEP-MEDEF
Code, the Board of Directors' meeting on February 10, 2010, upon
recommendation of the Nomination and Compensation Committee,
amended Mr. Emmanuel FABER's suspended employment contract
such that the non-compete clause may only be exercised by Danone
in the event of resignation, in which event neither an indemnity for
termination of the employment contract nor any indemnity due in
certain cases of termination of their term of office would be paid.