Danone // 2020 Universal Registration Document

6 corporate governance 6.3 Compensation and benefits of governance bodies DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 245 6.3 COMPENSATION AND BENEFITS OF GOVERNANCE BODIES Contents Compensation policy for corporate officers for 2021 245 General principles 245 Compensation policy for the Chairman of the Board of Directors (a non-executive corporate officer) for 2021 246 Compensation policy for executive corporate officers for 2021 247 Compensation policy for Directors 251 Report on the compensation of corporate officers and Directors for 2020 252 Compensation of the Chairman and Chief Executive Officer 252 Compensation for Directors 261 COMPENSATION POLICY FOR CORPORATE OFFICERS FOR 2021 The compensation policy for corporate officers is drawn up by the Board of Directors pursuant toArticles L.22-10-8 and seq . of the French Commercial Code and is subject to approval by the Shareholders’ Meeting. It defines all components of the fixed and variable compen- sation of the corporate officers and the decision-making process followed for its determination, revision and implementation. This policy does the following: • it complies with Danone’s corporate purpose: (i) the variable component of this compensation, most of which is paid in the form of shares, aligns the interests of the corporate officers with those of the shareholders, and (ii) the performance fac- tors taken into consideration include the long-term strategy of Danone as well as the relevant ESG criteria including criteria that reflect the Company’s social and environmental objectives as an Entreprise à Mission; • it contributes to its sustainability, insofar as it both encourages talent retention within the Company and fits into its long-term vision thanks to its variable component governed by targets assessed over time; • it forms an integral part of Danone’s strategy, thanks to per- formance objectives based on economic, financial, social and environmental indicators such as sales, recurring operating margin or its environmental commitments and achievements. General principles Principles for determining the compensation of corporate officers The compensation paid to Danone’s corporate officers is: • tied to the Company’s stated targets and performance; • balanced and in line with investors’ and shareholders’ expecta- tions and the circumstances of Danone’s employees; • subject to stringent conditions, aligned with shareholder interests and in line with best market practices; • consistent with the principles that Danone applies to its 1,600 se- nior executives worldwide; • determined by theBoard of Directors on the basis of theGovernance Committee’s recommendations and in compliance with the AFEP-MEDEF Code; • representative of the manager’s responsibilities; • determined in a general way, including, where applicable, all types of commitments such as indemnities or benefits due or likely to be due as a result of the officers assuming, terminating or changing their duties or after they perform these duties, such as severance pay and a non-compete indemnity for example; • fixed by taking into consideration the compensation and employ- ment terms of Danone’s employees. The application of these principles results in: • the preponderance of the component of officers’ compensation being subject to performance conditions; • a long-term shareholding compensation component in the form of Group performance shares (GPS); • the obligation requiring corporate officers andExecutiveCommittee members to hold DANONE shares resulting from the allotment of GPS, thereby aligning their interests with those of shareholders; • the capping of overall compensation. Role of the Governance Committee Danone’s compensation policy is regularly reviewed by theGovernance Committee (three-quarters of which is composed of independent Directors in 2020 and which is chaired by the Lead Independent Director). The Governance Committee reviews the best market practices, based on (i) a benchmark prepared by a specialized and objective firm and including large international companies listed in France (CAC 40), and (ii) a peer group (or “panel”) of leading global food and beverage groups. This panel is also used to determine the perfor- mance conditions for Group performance shares (GPS). At the date of this Universal Registration Document, it includes Unilever, Nestlé, PepsiCo, The Coca-Cola Company, General Mills, Kellogg Company, The Kraft Heinz Company and Mondelez International Inc. Danone is aiming to position the compensation for these officers between the median compensation and the third superior quartile of the benchmark CAC 40 index companies. The Governance Committee takes particular care to ensure that: • the compensation is such as to attract, retain and motivate talented individuals while remaining consistent with Danone’s employee compensation and employment terms and current market practices; • long-term performance-based compensation is sufficiently high relative to annual compensation, to encourage corporate officers to achieve high performance over the long term; • the performance criteria are stringent, complementary and stable such that they compensate long-term performance and ensure the alignment of shareholders’ interests, in line with the targets announced by Danone to the financial markets, with those of the management. In addition, these performance conditions reflect best compensation practices, such as “no payment under