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DANONE
REGISTRATION DOCUMENT 2015
Corporate Governance
6.3 Compensation and benefits of corporate officers and governance bodies
255
Principles applicable to long-term variable compensation of executives
Group performance shares
General principles
Danone's long-term variable compensation consists of Group
performance shares (Company shares subject to performance con-
ditions). Group performance shares were introduced to replace the
stock-option program that was therefore closed. Group performance
shares are granted to the corporate officers, Executive Committee
members and more than 1,300 Danone senior executives.
This long-term, performance-based incentive program is intended
to strengthen the commitment of beneficiaries to support Danone's
development and enhance the share value over the long-term.
The plan regulations prohibit Group performance shares benefi-
ciaries from hedging in any manner (i) their position with respect to
their right to receive Group performance shares, or (ii) their position
with respect to shares, which they have already received and which
are still subject to a holding period. For the corporate officers, the
prohibition of hedging extends to all DANONE shares or financial
instruments related to DANONE shares which they own or may be
in a position to own (see
Obligation to retain Company shares resulting
from grants of Group performance shares
section hereafter). In addi-
tion, each beneficiary of Group performance shares has personally
agreed not to use hedging instruments. To Danone's knowledge, no
hedging instruments have been used.
Authorization by the Shareholders' Meeting
The grant of GPS is authorized by the Shareholders' Meeting. Since
2013, this authorization is granted until the end of the current fiscal
year and is therefore subject to the approval of the shareholders
each year.
Cap on the number of Group performance shares granted
Danone's Group performance shares have always had a limited
impact in terms of capital dilution and ownership.
Group performance share grants are subject to a double cap, set
by the Shareholders' Meeting, limiting (i) the total number of Group
performance shares that may be granted, and (ii) the total number of
Group performance shares that may be granted to all the corporate
officers as follows:
Shareholders' Meeting
authorizing the Group
performance shares
4/22/2010
4/26/2012
4/25/2013
4/29/2014
4/29/2015
(b)
Maximum number of Group
performance shares that may
be granted
(a)
0.4%
0.4%
0.2%
0.2%
0.2%
Of which maximum number
of Group performance shares
that may be granted to all the
corporate officers
(a)
0.1%
0.1%
0.05%
0.05%
0.03%
(a) Expressed as a percentage of the share capital for the fiscal year in question, recorded at the close of the Shareholders' Meeting that authorized the plans.
This number of shares does not reflect potential adjustments that may be made in accordance with applicable legal and regulatory requirements and, where
applicable, contractual provisions calling for other adjustments in order to maintain the rights of holders of securities or other rights giving access to the
share capital.
(b) Authorization valid until December 31, 2015.
The new authorization subject to the approval of the Shareholders'
Meeting of April 28, 2016 stipulates that grants of Group perfor-
mance shares to the corporate officers may not exceed 0.03% of
the share capital (see section 8.3
Comments on the resolutions of
the Shareholders' Meeting
).
Grant by the Board of Directors
Group performance shares are granted each year by the Board of
Directors, at the recommendationof theNominationandCompensation
Committee, at consistent and regular periods. They are granted at
the end of July to the Executive Committee members (including the
corporate officers) and the senior executives. In addition, a second
grant intended for certain new employees occurs in October, if
necessary.
Review of the potential achievement of performance objectives by
the Board of Directors
The potential achievement of performance objectives is examined
by the Board of Directors after prior review by the Nomination and
Compensation Committee.
Valuation and recognition in the consolidated financial statements
Long-term variable compensation in the formof Group performance
shares is valued and accounted for in Danone's consolidated financial
statements pursuant to IFRS 2,
Share-based payment
(see Note 7.4
of the Notes to the consolidated financial statements).
Performance conditions
The performance conditions for Group performance shares are set in
advance at the beginning of the year and are described in the report
of the Board of Directors to the Shareholders' Meeting presenting
the resolution on Group performance shares.
They are determined by the Board of Directors at the recommen-
dation of the Nomination and Compensation Committee. They are
the same for all beneficiaries of Group performance shares, apply
to 100% of the Group performance shares granted and are based
on the following principles:
Stringent performance conditions, in line with Danone's current
environment
The performance conditions for Group performance shares consist
of two complementary criteria that are representative of Danone's
performance and adapted to the specific characteristics of its business:
(i) an external performance criterion, based on Danone's organic
sales growth compared to that of a panel of Danone's historical
peers, comprising leading international groups in the food and
beverage sector; and
(ii) an internal performance criterion, based on the change in
Danone's Trading operating margin.
These criteria correspond to the key indicators monitored by inves-
tors and analysts to measure the performance of companies in the
food and beverage sector.