Danone // 2020 Universal Registration Document

4 89 DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 4.1 Consolidated financial statements and notes to the consolidated financial statements Note 8. Number of employees, personnel costs and employee benefits Note 8.4. Group performance shares Group policy The Group has awarded long-term compensation in the form of Group performance shares (GPS) to around 1,600 directors and senior executives, as well as to the corporate officers. General principles applicable to Group performance shares The GPS are shares in the Company that are subject to performance conditions, set by the Shareholders’ Meeting for each plan. In the case of all outstanding plans, the performance conditions are based on aspects of Danone’s performance. The GPS are also subject to the employee continuing to be employed by Danone for four years. Group Performance Shares outstanding Year ended December 31 (in number of shares) 2019 2020 As of January 1 2,151,944 2,151,501 Maximum number (a) 2,212,646 2,236,479 Shares granted during the year 551,159 714,710 Maximum number (a) 578,923 750,484 Shares that lapsed or were canceled during the year (b) (103,989) (514,198) Shares delivered during the year (447,613) (407,864) As of December 31 2,151,501 1,944,149 Maximum number (a) 2,236,479 2,006,027 (a) If the continuous employment and performance conditions are fully met. (b) For the GPS granted in 2018, the Board of Directorsmust examine the level of achievement of the performance condition relating to sales growth in the second quarter of 2021. For the purposes of the 2020 consolidated financial statements, Danone has included, in the number of GPS that have lapsed during the year, those GPS likely to lapse due to the non-achievement of this performance condition, on the basis of information known as of the approval date by the Board of Directors (even if such shares’ cancellation has not yet been acknowledged by the Board). Accounting treatment Accounting principles The fair value of the GPS is calculated on the basis of assumptions made by theGroup’smanagement. The corresponding charge is spread over the vesting period (4 years). Since the performance conditions are based on internal performance, charges recognized in respect of shares that lapse due to the failure to achieve said performance conditions are written back in the income statement for the period in which it is probable they will lapse. The corresponding expense is allocated according to its function to the various headings in the consolidated income statement. In addition, the GPS are taken into account in the calculation of the diluted number of shares as described in Note 14.4 of the Notes to the consolidated financial statements. Valuation as of the grant date Year ended December 31 (in € per share, except for number of shares) 2019 2020 Number of shares granted 551,159 714,710 Fair value of shares granted (a) 66.7 53.2 Average DANONE share price 72.5 59.9 (a) Fair value as of the grant date. Expenses related to GPS including taxes Year ended December 31 (in € millions) 2019 2020 Group performance shares (28) (16) Total expense (28) (16) Note 8.5. Company Savings Plan General and accounting principles Danone regularly carries out capital increases reserved for Danone employees in France participating in a company savings plan. In addition, since 2019, Danone has also carried out capital increases reserved for employees of the foreign companies, on the basis of the authorization given by the Shareholders’ Meeting (“One Person, One Voice, One Share” program). The purchase price of the shares corresponds to 80% of the average DANONE share price over the 20 listing days preceding the meeting of the Board of Directors that approves the plan.