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Combined Shareholders' Meeting of April 28, 2016
8.3 Comments on the resolutions of the Shareholders' Meeting
DANONE
REGISTRATION DOCUMENT 2015
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trading operating margin on a like-to-like basis. The Board
emphasizes that these two objectives are complementary in
nature and reflect the key indicators monitored by investors and
analysts to measure the performance of companies in the food
and beverage sector;
•
stability of performance conditions. The Board considers that
a certain degree of consistency in performance conditions is
an essential factor for long-term value creation. In that regard,
the Board of Directors proposes to shareholders performance
conditions that will continue to include growth in the Group's
sales and trading operating margin;
•
all 100% of the shares granted remain subject to performance
conditions.
The Board of Directors emphasizes its desire for performance
share grants to continue to adhere to governance principles and
best practices, which in addition to the aforementioned items
include the following:
•
involvement at every stage (allocation, review of fulfillment of
performance conditions, etc.) by theNomination andCompensation
Committee, entirely composed of independent Directors;
•
compliance with best market practices concerning ceilings,
applicable to GPS allocations as percentages of the share capi-
tal, as well as sub-ceilings for allocations to executive officers;
•
continuation by the Board of its policy for the allocation of “4+0”
GPS, applied since 2013 to corporate officers, as recommended
by the Nomination and Compensation Committee, henceforth
extended to all beneficiaries in order to increase the length of
the vesting period, thus conforming to financial market best
practices, notwithstanding shorter time periods now authorized
by law no. no. 2015-990 of August 6, 2015 (Macron law);
•
stability of allocation periods, with the main allocation generally
taking place yearly at the Board meeting convened to approve
the interim financial statements,
i.e.
at the end of July;
•
adherence to stringent ethical rules, including the prohibition
for beneficiaries who are members of the Executive Committee
to use any hedging instrument in respect of GPS and shares
stemming from GPS allocations, and the holding obligation of a
significant number of shares stemming from GPS allocations,
periodically set by the Board, until the termination of their duties
within the Company.
Description of the authorization
1. Nature of the authorization
We request that you authorize the Board of Directors, until
December 31, 2016, to freely allocate, subject to performance
conditions, shares of the Company, existing or to be issued, to em-
ployees or to certain categories thereof that it shall select among
eligible employees, and to corporate officers of the Company and of
affiliates of the Company within themeaning of Article L.225-197-2 of
the French commercial code. It should be noted that approximately
1,300 people benefit from such share allocations each year.
2. Maximum amount of the authorization
These allocations may not represent a number of existing or
newly issued shares exceeding 0.2% of Danone's share capital, as
determined at the end of the 2016 Shareholders' Meeting, which
corresponds to the same amount as that approved by the 2015
Shareholders' Meeting.
The nominal amount of the existing or newly issued shares allo-
cated under this authorization would apply to the limits of 35%
of the share capital set forth in the 20th resolution (non-dilutive
issuances with preferential subscription right) and of 10% of the
share capital set forth in the 21
st
resolution (dilutive issuances
without preferential subscription right, but with a priority period)
of the 2015 Shareholders' Meeting.
This number of shares does not reflect potential adjustments that
may be made in accordance with applicable legal and regulatory
requirements and, where applicable, to 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. Thus to
the extent that share allocation plans include adjustment clauses to
the number of shares granted in the event of transactions involving
the share capital during the vesting period, the application of these
adjustment clauses could result in the final number of allocated
shares exceeding 0.2% of the share capital.
3. Sub-ceiling for allocations to corporate officers
Shares allocated pursuant to this authorization may be allocated,
subject to performance conditions, to executive corporate officers,
but within themaximum limit of 0.03%of the Company's share capital
at the end of the 2016 Shareholders' Meeting (subject to the same
potential adjustments mentioned in point 2 above).
In 2015, a total of 36,000 performance shares were allocated to Mr.
Emmanuel FABER, Chief Executive Officer (only corporate officer
beneficiary to an allocation of shares), corresponding to 0.01% of
Danone's share capital and 5.6%of all performance shares allocated
by Danone in 2015.
4. Vesting period
4.1
The allocation of shares to their beneficiaries will become final
after a vesting period, the duration of which will be set by the Board
of Directors and shall not be less than three years.
4.2
In principle, the beneficiariesmust hold said shares for a duration
of at least two years after the final allocation of such shares. However,
if the vesting period for all or a part of one or more allocations is a
minimum of four years, the Board of Directors may not impose any
lock-up period for the shares in question.
4.3
Since July 2013, in order to increase the duration of the vest-
ing period, the Board of Directors decided to grant performance
shares solely in the form of “4+0”, corresponding to a vesting
period of four years and no lock-up period (rather than granting
performance shares in the form of “4+0” to non-French residents
and in the form of “3+2” for individuals domiciled in France for tax
purposes). Notwithstanding the provisions of French law 2015-990
of August 6, 2015 (Macron law), which reduced the vesting period
for shares subject to performance conditions, Danone decided to
maintain a four-year vesting period. Nevertheless, the corporate
officers and themembers of the Executive Committee remain subject
to the requirement that they hold a significant number of shares
stemming fromGPS allocations until the termination of their duties
(see section 6.3
Compensation and benefits for corporate officers and
governance bodies
).