APC 2015 Annual Report Download - page 153

2015 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC 151
CORPORATE GOVERNANCE
3
INTERESTS AND COMPENSATION OFGROUP SENIOR MANAGEMENT
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7. Interests and compensation
ofGroup Senior Management
7.1 Group Senior Management (executive officers and members of the
Executive Committee) compensation policy
This section is included in the Chairman’s report to the board of
directors.
The general principles underlying compensation policy of Group
Senior Management and their individual analyses are reviewed
by the Governance and Compensation s Committee, who makes
proposals to the board of directors for executive directors, and by
the Human Resources and CSR committee which then informs the
board of directors, for members of the Executive Committee. You
are reminded that two- thirds of the members of the Governance and
Compensation s Committee are independent directors, including its
Chairman, Léo Apotheker.
Executive compensation set by the board of directors is aligned
with the Group’s global strategy which is based on fi ve pillars:
•organic growth and business development;
•margin increase;
•strong cash fl ow conversion ;
•attractive overall return for shareholders; and
•mission that Schneider Electric assigned to itself to become a
major player of sustainable development.
Therefore, criteria were used to defi ne variable part of Group Senior
Management’s compensation , either revenue growth, adjusted
EBITA operating margin, cash conversion rate, Total Shareholder
Return (TSR) and evolution of the Planet & Society Barometer,
refl ect each of these priorities. In order to incentivize management
on performance, variable compensation (STIP and LTIP) represents
a predominant part of their compensation package.
Group Senior Management’s compensation policy aims to :
•M otivate and retain Group Senior Management in a highly
competitive international market.
To motivate and retain senior management, the compensation
package must be competitive, particularly the elements relating
to salary, variable compensation , long-term incentives and
supplementary pension plans.
Schneider Electric operates at a global level and its main
competitors are international groups. Moreover, most of its Group
Senior Management members are based across the world,
regardless of their country of origin. For these executives, who are
essentially exposed to the international market, the Group’s aim is
to set their compensation package at the median level of a panel
of international companies. This international panel, selected with
the consultancy fi rm Mercer, comprises European or US based
companies, belonging to business sectors with similar profi les
to those of Schneider Electric. For Group Senior Management
members with high exposure to their national market, Schneider
Electric targets the third quartile of their national market based on
a panel of companies;
•R eward their individual and collective performance by aligning
overall compensation with Group’s results;
Schneider Electric’s policy is to give a signifi cant weighting
of variable parts in cash and shares, up to 80% for executive
offi cers and 70% for Executive Committee members.
Fixed and target variable parts for executive offi cers
80 %
Variable part
20 %
Fixed part
Fixed and target variable parts for Executive Committee
members
70 %
30 %
Variable par
t
Fixed part
The variable part of cash compensation, expressed in terms of
a percentage of the fi xed compensation, is linked to achieving
objectives set out at the beginning of the fi nancial year. It may vary
signifi cantly depending on the level of achievement which, with
a threshold of 0% and a target of 100%, may reach 200%. The
performance incentives are therefore of a distinctly random nature.
The variable part of share-based compensation may range from 0%
to 100% of stock grants depending on the achievement levels of
the performance conditions;
Overall compensation are aligned with Group’s results. This adaptation
of the variable part of cash compensation is due to the fact that
this part is linked to the company’s performance. The performance
taken into account is economic performance, with regard to organic
growth, profi tability and cash conversion, as well as with regard to
the achievement of the company program. It is the performance with
regard to CSR appreciated through the evolution of Planet & Society
Barometer .