APC 2015 Annual Report Download - page 300

2015 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC298
ANNUAL SHAREHOLDERS’ MEETING
8REPORT OF THE BOARD OF DIRECTORS TO THE COMBINED ANNUAL AND EXTRAORDINARY SHAREHOLDERS’ MEETING
Mr.Emmanuel BABEAU, Deputy CEO
Mr.Emmanuel BABEAU, Deputy CEO
I – Elements of compensation due or awarded for the past FY
Amounts submitted to the
vote Description
1) Fixed portion €550,000 Gross annual fi xed remuneration of €550,000 from January 1, 2015 to December 31,
2015 set by the Board of Directors on February 18, 2015. This compensation remains
unchanged since 2013.
2) Annual variable
portion
€542,208 The target variable portion amounts to 100% of fi xed compensation. The variable
portion may vary from 0 to 200% depending on achievement of objectives.
In 2014 the target variable portion amounted to 100%.
The board of directors of February 16, 2016 set the variable portion 2015 paid in
March2016 to 99 % of the fi xed portion, i.e. an achievement rate of 99% on a base 100.
This calculation was broken down as follows:
1) In connection with Group criteria (75%), the variable portion amounted to 77.3 % of
the fi xed portion, i.e. an achievement rate of 103% on a base 100;
Group criteria included:
• a Group economic criteria component. These criteria are based on organic sales
growth (15%), adjusted EBITA (15%) and cash generation targets (15%);
•a component comprising criteria that are (i) in line with the Schneider is O n company
program (25%), evaluated amongst other things through customer satisfaction
objectives (5%), services development (10%), the succession plan of key talents (10%)
development and succession plan of key talents (10%) as well as (ii) corporate social
responsibility assessed through trends in the Planet & Society barometer (5%);
2) With respect to individual objectives (25%), which are specifi c objectives and,
wherever possible, quantifi ed, the board set the variable portion at 21.25%, i.e. an
achievement rate of 85% on a base 100.
3) Complementary
payments
Complementary payments intended to take account of the fact that, following the
decision of the Board of Directors on February 18, 2015 to remove the benefi t from
Article 39 defi ned benefi t pension scheme for corporate executive offi cers, Mr. Babeau is
personally responsible to build up his additional pension.
To determine this authorized complementary remuneration, the board of directors relied
on the work of an independent expert, namely the fi rm TOWERS WATSON.
Besides, the Board of Directors also ensured that this payment was in line with
shareholders’ interests. Accordingly, as regards:
i) The exceptional component, which constitutes a one-off lump sum payment to
build up a pension, it provided that payment be made half in cash and half in the
form of company shares subject to acquisition/holding periods of fi ve years.
–These 2,325 free shares were granted under the French plan to Mr. Babeau in his
capacity as Deputy CEO of Schneider Electric SE.
–These 5,425 free shares were granted to under the International plan to
Mr. Babeau in his capacity as CEO of Invensys
This payment in share allows to correlate one-off lump sum to the company’s long-term
development through the evolution of its share price and to create a retention element.
ii) The annual complementary component, it provided a split it into a fi xed part and a
variable part dependent on performance criteria. This variable part is aligned in terms of
rate (target rate of 100% of the fi xed complementary part and variable part varying from
0 to 200%) and criteria of the annual variable part (see above).
Exceptional fi xed
payment
€870,000 and
€130,000 for 2,325 free
shares according to IFRS
valuation
€300,000 for 5,425 free
shares according to IFRS
valuation
Annual
complementary
fi xed portion
€124 000
All these complementary payments are intended to enable Mr. Babeau to build up his
pension. He formally agreed to redirect these complementary payments, net of taxes, to
investment vehicles devoted to fi nancing his additional pension.
The decision of the Board of Directors to remove the benefi ts of the two corporate
executive offi cers’ supplementary pensions has notably resulted in a provision reversal
of EUR 17 million in the 2015 accounts for corporate offi cers. It will generate substantial
savings for the company, and in turn for its shareholders, linked i) to the fact that the
level of complementary payments set by the board of directors leads to reducing by half
(52%) the gross value of what Mr. Babeau would have received from the supplementary
pension scheme that has been canceled and ii) savings then estimated at EUR18 million
in compulsory levies for the supplementary pensions of the two corporate executive
offi cers, supposing that they both retire on reaching the age of 62.