2.5 Remuneration and benefits of executive corporate officers

The new provisions of articles L. 226-8 et seq. of the French Commercial Code introduced by French Government Order no. 2019-1234 of 27 November 2019 concerning the remuneration of corporate officers in listed companies (“the Order”) provide for a single, strict legal framework for the remuneration of the Managing Partners and Supervisory Board members.
In accordance with its Articles of Association, Lagardère SCA does not grant any remuneration to its Managing Partners – Arnaud Lagardère and Arjil Commanditée-Arco – for the performance of their offices.
Similarly, Arnaud Lagardère and Arjil Commanditée-Arco do not receive any remuneration from any other entity included in the Company’s scope of consolidation within the meaning of article L. 233-16 of the French Commercial Code. In this specific context, the new legal framework does not apply to the Company’s Managing Partners.
However, in line with the Company’s constant objective of implementing best corporate governance practices and meeting shareholders’ expectations, it has been decided – in agreement with the General Partners and the Supervisory Board – to voluntarily extend the application of this legal framework to the Company’s executive corporate officers.
The purpose of this section 2.5 is therefore to present (i) the remuneration policy for the Company’s executive corporate officers and (ii) the components of the total remuneration and benefits paid during or allocated in respect of 2019 to these corporate officers. This remuneration policy and the components of the executive corporate officers’ remuneration packages will be submitted for shareholder approval at the Annual General Meeting to be held on 5 May 2020.
In applying the Afep-Medef Corporate Governance Code (the “Afep-Medef Code”) – which the Company uses as its corporate governance framework – Lagardère has opted to use a wide interpretation of the term “executive corporate officer” as it has always applied the corresponding recommendations contained in the Code, not only for Arnaud Lagardère, in his capacity as a Managing Partner of Lagardère SCA, but also for the Chief Operating Officers of Arjil Commanditée-Arco, Lagardère SCA’s other Managing Partner.
With a view to following best corporate governance practices, the Company has decided to continue to use the same wide interpretation for its voluntary application of the new legal framework, as this approach seems to reflect the intention of the European and French lawmakers to extensively cover the different components of executive remuneration in listed companies.
The descriptions and explanations that follow therefore concern:

• Arnaud Lagardère, in his capacity as Managing Partner of Lagardère SCA and Chairman and Chief Executive Officer of Arjil Commanditée-Arco, Managing Partner of Lagardère SCA;
• Pierre Leroy, in his capacity as Vice-Chairman and Chief Operating Officer of Arjil Commanditée-Arco, Managing Partner of Lagardère SCA;
• Thierry Funck-Brentano, in his capacity as Chief Operating Officer of Arjil Commanditée-Arco, Managing Partner of Lagardère SCA.

Arnaud Lagardère, Pierre Leroy and Thierry Funck-Brentano are “executive corporate officers” of the Company and are referred to as such below.

2.5.1 REMUNERATION POLICY FOR EXECUTIVE CORPORATE OFFICERS

2.5.1.1 UNDERLYING PRINCIPLES OF THE REMUNERATION POLICY FOR EXECUTIVE CORPORATE OFFICERS

Remuneration received by the executive corporate officers, as well as by the other members of the Executive Committee, is paid by Lagardère Capital & Management, which is their employer.
Overall, this remuneration represents the majority of the amount invoiced annually by Lagardère Capital & Management to Lagardère Ressources under the Service Agreement entered into between the two companies, pursuant to which the Executive Committee carries out its role of assisting the executive corporate officers with their duties.
The Service Agreement, described in more detail in sections 2.8.1 and 5.8 of this document, was duly authorised and approved under legal rules governing related party agreements and in this respect is reviewed in detail each year by the Audit Committee, Supervisory Board and Statutory Auditors of Lagardère SCA.

In accordance with the new legal framework introduced by the Order, the remuneration policy applicable to the Managing Partners was approved by the General Partners on the advice issued by the Appointments, Remuneration and CSR Committee and the Supervisory Board at their respective meetings on 25 February and 28 February 2020. The components of remuneration for the executive corporate officers for 2020 are determined, allocated, or decided in this context.
The contribution of the Supervisory Board and Appointments, Remuneration and CSR Committee, comprising only independent members, ensures that there are no conflicts of interest when preparing, reviewing and implementing the remuneration policy. This procedure will be identical for any subsequent revision of the remuneration policy.
Most of the principles underlying the remuneration policy for Lagardère SCA’s executive corporate officers were set in 2003. They have been applied consistently since that date, while evolving regularly in accordance with best corporate governance practices, in particular the recommendations of the Afep-Medef Code.
The aim of the remuneration policy is to achieve – through its various components – a fair balance, commensurate with the work performed and the level of responsibility, between a lump‑sum, recurring portion (annual fixed remuneration), and a portion directly related to the operating environment, strategy and performance of the Group (annual variable remuneration and performance shares).
Within the variable portion, a balance is also sought between the portion based on short-term objectives (annual variable remuneration contingent on performance for the year concerned) and the portion based on long-term objectives (free shares subject to performance conditions assessed over a minimum period of three consecutive years, with the vesting period followed by a holding period of no less than two years).
The aim of these performance share awards is to closely align the executive corporate officers’ interests with those of the Company’s shareholders in terms of long-term value creation. The underlying performance criteria applicable to both the annual variable remuneration and the performance shares are mainly quantitative financial criteria, which are key indicators of the Group’s overall health. These criteria are a way of assessing the Group’s intrinsic performance, i.e., its year-on-year progress, based on internal indicators that are directly correlated with the Group’s strategy.
The variable remuneration of the Group’s executive corporate officers is also contingent on quantitative non-financial criteria related to the Group’s key commitments under its Corporate Social Responsibility policy, which apply both to the short-term portion (annual variable remuneration) and the long-term portion (performance shares). The inclusion of these non-financial criteria is designed to encourage a model of steady, sustainable growth that mirrors the Group’s corporate values and respects the environment in which it operates.
With the exception of Arnaud Lagardère, the annual variable remuneration of executive corporate officers also includes a portion contingent on qualitative criteria, based on a set of specific priority targets assigned to them each year.
In addition, executive corporate officers have a conditional right to receive a supplementary pension in addition to benefits under the basic state pension system. This benefit is taken into account when calculating their overall remuneration. Lastly, on a very exceptional basis, bonuses may be awarded, under terms and conditions that always comply with best corporate governance practices.
In light of all these elements, executive corporate officers do not receive:

• multi-annual variable remuneration in cash;​
• remuneration for any office held within the Group;​
• benefits linked to taking up or terminating office;​
• benefits linked to non-competition agreements.​

Furthermore, Arnaud Lagardère, who is a major shareholder of Lagardère SCA, does not receive any free share awards or share options.
The principles, criteria and amounts of the executive corporate officers’ remuneration are regularly reviewed in order to (i) compare them against the practices of other issuers and peers in the Company’s industry, based on both public and private benchmarking reports, and to (ii) verify that they are in line with the latest corporate governance best practices (Afep‑Medef recommendations, AMF and HCGE reports, investors’ and consultants’ policies, etc.).
The remuneration policy for executive corporate officers also takes account of the remuneration and employment conditions of Company and Group personnel. Accordingly, around 40% of Group employees have a variable component in their overall annual remuneration. Similarly, in accordance with best corporate governance practices, the Lagardère SCA free share plans are not just restricted to executive corporate officers and senior managers. They also cover over 400 Group employees each year, notably young high-potential managers identified during the talent management process. In addition, for a portion of the beneficiaries of these plans, free shares are allocated subject to the achievement of the same performance conditions as those applicable to the executive corporate officers. As noted in the advice issued by the Supervisory Board and the Appointments, Remuneration and CSR Committee, the policy ensures reasonable, fair and balanced remuneration, with a strong correlation between the interests of the executive corporate officers and the interests of the Company, its shareholders and all of its stakeholders, in line with the Group’s strategy and its performance objectives.​
In accordance with the second paragraph of article L. 226-8-1, III of the French Commercial Code, exceptions may be decided as to the application of the remuneration policy by modifying, on the advice of the Appointments, Remuneration and CSR Committee, the objectives set for certain criteria applicable to the executive corporate officers’ annual variable remuneration or long-term incentive instruments, provided that any such modification is justified by exceptional circumstances, such as a change in accounting standards, a material change in scope, the completion of a transformational transaction, a substantial change in market conditions or an unexpected development in the competitive landscape. Any such modification of the objectives, which would aim to ensure that the application of the criteria continues to reflect the actual performance of the Group and of the executive corporate officer, would be made public and justified, notably with regard to the Group’s corporate and long-term interests. In all circumstances, the payment of variable remuneration remains subject to the approval of the shareholders.

2.5.1.2 COMPONENTS OF THE REMUNERATION POLICY FOR EXECUTIVE CORPORATE OFFICERS

The components described below are the same as those that were already applied in 2019.

2.5.1.2. SHORT-TERM REMUNERATION COMPONENTS​

A) Annual fixed remuneration​
Annual fixed remuneration is paid in 12 equal monthly instalments over the year.
The amount of this fixed remuneration reflects the responsibilities, skills and experience of each executive corporate officer, and is reviewed at relatively long intervals in accordance with the recommendations of the Afep-Medef Code
Arnaud Lagardère receives €1,140,729 in annual fixed remuneration, unchanged since 2009.
Pierre Leroy receives €1,474,000 in annual fixed remuneration, unchanged since 2011
Thierry Funck-Brentano receives €1,206,000 in annual fixed remuneration, unchanged since 2011.

B) Annual variable remuneration​
Annual variable compensation is calculated as a portion of a benchmark amount set for each executive corporate officer, based on a combination of specific, quantitative criteria – both financial and non-financial – directly correlated with the Group’s strategy.
For Arnaud Lagardère, his annual variable remuneration only takes into account these quantitative criteria.
For the other executive corporate officers, in addition to the quantitative criteria, a minority portion of their annual variable remuneration is based on qualitative criteria.
In accordance with article L. 226-8-2 of the French Commercial Code, the variable remuneration of the executive corporate officers can only be paid following the approval of the General Meeting of shareholders and of the General Partners.

Benchmark amounts and maximum amounts​
For Arnaud Lagardère – who receives neither variable remuneration based on qualitative criteria nor share options or performance shares – his annual variable remuneration is based on a benchmark amount of €1,400,000 (i.e., 123% of his annual fixed remuneration) which has remained unchanged for several years. His annual variable remuneration may not exceed 150% of his annual fixed remuneration.
For each of the other executive corporate officers, their variable remuneration is based on (i) a “quantitative portion” benchmark amount of €400,000 and (ii) a “qualitative portion” benchmark amount of €200,000, representing an overall benchmark amount of €600,000, which has remained unchanged for several years. Consequently, 66.66% of the annual variable remuneration (i.e., a clear majority) is based on quantitative criteria and 33.33% on qualitative criteria. For both of these executive corporate officers, their annual variable remuneration may not exceed 75% of their annual fixed remuneration, and the amount of the qualitative portion is capped at 25% of their annual fixed remuneration. The qualitative portion may not therefore represent more than 33% of their maximum annual variable remuneration.

Quantitative criteria​
The quantitative criteria underlying the executive corporate officers’ annual variable remuneration are as follows:

• two financial criteria (accounting for 75% of the benchmark amount), based on the following key indicators of the Group’s financial health: (i) recurring operating profit of the Group’s fully consolidated companies (the basis for the Company’s market guidance), and (ii) net cash from operating activities of fully consolidated companies, which represents cash from the Group’s operations;
• four non-financial CSR criteria (accounting for 25% of the benchmark amount, each with an equal weighting), related to the Group’s key commitments under its Corporate Social Responsibility policy, notably concerning gender equality, a reduction of the environmental impact of the Group’s activities, employee working conditions, and overall non-financial performance.

The financial criteria apply as follows:​
The 75% of the benchmark amount contingent on the financial criteria is indexed based on the arithmetic average of the following two inputs:

• The difference between the target growth rate for recurring operating profit of fully consolidated companies communicated as market guidance at the beginning of a given year (or the mid‑point of a range of values if the growth rate was expressed as a range of values in the market guidance), and the growth rate for recurring operating profit actually achieved for that year, calculated based on any rules set out in the market guidance.
  This difference is applied on a directly proportional basis in the event of a negative change and at a rate of 10% per percentage point difference in the event of a positive change; an underperformance therefore has a greater impact than an outperformance.
• The percentage difference between the amount of net cash from operating activities of fully consolidated companies as forecast in the budget and/or the Group’s forecast consolidated statement of cash flows for a given year, and the amount of net cash from operating activities of fully consolidated companies actually achieved for that year.
  This difference is applied on a directly proportional basis.

The arithmetic average of these two inputs may be impacted (downwards only) if there is a negative change in recurring operating profit of fully consolidated companies for a given year as compared with the previous year, by directly applying the negative change percentage to the factor resulting from the two previous criteria.

The non-financial CSR criteria apply as follows:​
The 25% of the benchmark amount contingent on the non-financial CSR criteria is indexed on the arithmetic average of the achievement rates obtained for each of the four criteria, for which minimum and target performance levels have been set. For each criterion:

• exceeding the target performance level corresponds to a 1.50 achievement rate;
• reaching the target performance level corresponds to a 1.25 achievement rate;
• not reaching the target performance level corresponds to a 0.75 achievement rate;
• not reaching the minimum performance level corresponds to a 0 achievement rate.

Each of the four criteria used must be relevant to the Group’s CSR roadmap and must be measurable and monitored over time using reliable systems, and be indicated in the Group’s non-financial statement on which the independent third party’s report is based, except for external criteria based on assessments performed by an independent third party.
The criteria themselves and the minimum and target performance levels for each criterion are set on the basis of proposals put forward by the Sustainable Development Department, further to discussion by the Appointments, Remuneration and CSR Committee and the Supervisory Board. The minimum and target performance levels must be demanding and consistent in terms of both the Group’s historic performance and changes in its operating environment, notably in connection with its strategic refocusing.
It should be noted that this system could evolve as from 2021: the Sustainable Development and CSR Department set up a working group at the beginning of 2020 with a view to creating an internal CSR index that will be used to track the Group’s nonfinancial strategy and performance. This composite CSR index will cover a broader range of indicators and will naturally be included among the criteria determining variable remuneration for executive corporate officers.

Qualitative criteria​
The qualitative criteria that apply to the executive corporate officers’ remuneration (with the exception of Arnaud Lagardère) are based on a set of specific priority targets related to the following two domains:

• rollout of the Group’s strategic plan;​
• quality of governance and management.​

The performance levels achieved in these two domains, each of which has an equal weighting when determining the qualitative variable portion of the remuneration of the executive corporate officers concerned, are directly assessed by Arnaud Lagardère based on reports prepared by the relevant technical departments.
The performance level achieved – which is also submitted for approval to the Appointments, Remuneration and CSR Committee and Supervisory Board – can raise or lower the benchmark amount, although the qualitative portion of annual variable remuneration may not under any circumstances exceed 25% of the executive corporate officer’s fixed remuneration for a given year.

2.5.1.2.B LONG-TERM REMUNERATION COMPONENTS

Performance share awards
With the exception of Arnaud Lagardère, executive corporate officers are awarded performance shares on a yearly basis. These awards are decided in the first half of the year, after publication of the Group’s results for the previous year. Their terms and conditions are set by the Appointments, Remuneration and CSR Committee in compliance with the recommendations of the Afep‑Medef Code. The terms and conditions in force are described below.

Number of performance shares awarded:

• the value of the performance share rights awarded each year to each executive corporate officer may not exceed one-third of that officer’s total remuneration for the previous year;
• the overall number of performance share rights awarded to all executive corporate officers may not represent more than 20% of the total free share awards authorised by the shareholders;
• furthermore, pursuant to the authorisation given by the Company’s shareholders, the performance shares awarded yearly to each executive corporate officer may not exceed 0.025% of the number of shares comprising the Company’s share capital. This cap has not been revised since 2009.

Holding period for vested performance shares:

• 100% of the vested shares must be held in a registered account (nominatif pur) for a period of two years. At the end of this two‑year period;
• 25% of the vested shares must be held in a registered account (nominatif pur) until the beneficiary ceases his duties as an executive corporate officer;
• 25% of the vested shares must be held in a registered account (nominatif pur) until the value of the Lagardère SCA shares held equals at least one year’s worth of the executive corporate officer’s gross, variable remuneration. This value is assessed each year based on (i) the average Lagardère SCA share price for the month of December of the previous year and (ii) the fixed and variable remuneration due in respect of the past year, with the theoretical maximum level being used for the variable portion;
• each executive corporate officer formally agrees not to enter into transactions to hedge risks associated with their performance shares during the holding period;
• at the close of the mandatory holding periods, the corresponding shares become transferable and can be traded under the terms and conditions established by law and regulations and in accordance with the black-out periods established by Lagardère SCA in its Confidentiality and Market Ethics Charter.

Vesting conditions:

• Performance conditionsIn order to factor in the changes in the Company’s profile arising from the strategic refocusing process, and with a view to always adhering to best corporate governance practices, the structure of the performance conditions applicable to the executive corporate officers’ performance shares was changed in 2019. In particular, it was decided to add a comparative external criterion and a criterion related to corporate social responsibility.
  The new performance conditions applicable since 2019 are based on the following criteria, which are key indicators used for the Group’s strategy and ensure that the beneficiaries’ interests are closely aligned with those of the Company and its stakeholders.
  The criteria are all quantitative criteria and are assessed over a minimum period of three consecutive fiscal years, including the fiscal year during which the performance shares are awarded (the “reference period”).
• for 40% of the performance shares awarded: the achievement during the reference period of a pre-defined average annual growth rate for recurring operating profit of fully consolidated companies (determined using the calculation method for the “Group recurring EBIT” market guidance).
  Group recurring EBIT is the Group’s key performance indicator and reflects its ability to increase its wealth through its commercial activities.
• for 20% of the performance shares awarded: the achievement during the reference period of a pre-defined cumulative amount of free cash flow excluding growth capex.
  This criterion, which reflects the Group’s capacity to finance its investments and pay dividends, is also a key indicator of the Group’s financial health.
  For each of these two objectives, the Managing Partners validate the following, with the approval of the Appointments, Remuneration and CSR Committee and the Supervisory Board:
  • the “target level” to be reached for 100% of the shares allocated to the objective to vest;
  • the “trigger level”, corresponding to the level (i) above which 0% to 100% of the shares allocated to the objective will vest (determined on a straight-line proportionate basis) and (ii) below which no shares will vest. The Trigger Level cannot be lower than 66% of the target level.

• For 20% of the performance shares awarded: the comparative positioning of Lagardère SCA’s Total Shareholder Return (TSR) during the reference period, measured as follows:
  • for 10% of the shares awarded, measured against the TSR of a panel of peer companies; and
  • for 10% of the shares awarded, measured against the TSR of the other companies in the CAC Mid 60 index.

TSR incorporates both changes in share price and dividends paid, and therefore reflects the value delivered to shareholders as compared with the value created by other investments available to them. Consequently, TSR is also a key performance indicator for the Group.
For each of the above-mentioned 10% portions, the shares awarded will vest in full if Lagardère SCA’s TSR during the reference period is at least equal to the reference panel’s TSR and no shares will vest if Lagardère SCA’s TSR is below the reference panel’s TSR.

• For 20% of the performance shares awarded: the achievement of a precise objective based on a quantitative criterion related to the Group’s key commitments under its Corporate Social Responsibility policy. This objective can for example concern gender equality, a reduction of the environmental impact of the Group’s activities, employee working conditions, or overall nonfinancial performance.

As is the case for the variable portion of the annual remuneration, both the criteria themselves and the target and trigger levels set for each criterion are approved by the Managing Partners on the basis of proposals put forward by the Sustainable Development and CSR Department as endorsed by the Appointments, Remuneration and CSR Committee and the Supervisory Board. Each criterion used must be relevant to the Group’s CSR roadmap, measurable and monitored over time using reliable systems, and subject to verifications by the independent third party.
For each annual performance share plan, further to discussion by the Appointments, Remuneration and CSR Committee and the Supervisory Board, the Managing Partners set the precise performance conditions and levels, in accordance with the principles described above. The performance objectives set must be demanding and consistent, both in terms of the Group’s historic performance and changes in its operating environment, notably in connection with its strategic refocusing.

• Presence condition

In order for the performance shares to vest, the executive corporate officer concerned must still be an executive corporate officer of Lagardère SCA three years after the award date.
If the executive corporate officer resigns, is dismissed or removed from office due to misconduct before the end of this three-year period, then his rights to the performance shares will be forfeited. However, if the executive corporate officer leaves due to a forced departure for reasons other than misconduct (death, disability, retirement or dismissal/removal from office for reasons other than misconduct), the rights to the shares will not be forfeited. In such a case the performance conditions will continue to apply in all circumstances.
The rights to free shares are not forfeited in these specific cases of forced departure because they are an essential component of the executive corporate officer’s annual remuneration and are awarded in consideration for duties performed in the year that the rights are awarded. Retaining these rights, which continue to be subject to achieving demanding long-term performance conditions, encourages the executive corporate officer to act in the long-term interests of the Group.
Consequently, all of the terms and conditions of the Company’s performance share awards fully comply with the recommendations in the Afep-Medef Code. This is the case for (i) the applicable performance conditions, which are solely based on quantitative criteria and combine internal and comparative criteria, and financial and non-financial criteria, all corresponding to key indicators for the Company’s strategy, and (ii) the other terms and conditions (number of shares, vesting period, holding period, etc.). All of these terms and conditions combined ensure that the performance share awards are a way of retaining the beneficiaries concerned and closely aligning their interests with those of the Company and its stakeholders.

2.5.1.2.C OTHER BENEFITS

A) Benefits in kind – business expenses
The executive corporate officers are provided with a company car, the potential personal use of which corresponds to a benefit in kind.
The executive corporate officers are also entitled to the reimbursement of business travel and business entertainment expenses incurred in connection with their executive duties.

B) Supplementary pension plan
A supplementary pension plan was set up by Lagardère Capital & Management on 1 July 2005 for executive corporate officers. This is a defined supplementary benefit plan as provided for in article L 137‑11 of the French Social Security Code (Code de la sécurité sociale) and article 39 of the French Tax Code (Code général des impôts). In accordance with French Government Order no. 2019-697 dated 3 July 2019, which reformed the statutory supplementary pension plan regime in France, this plan was closed to new entrants as from 4 July 2019, and benefits accrued under the plan were frozen as at 31 December 2019. No further benefits will be accrued under the plan as from that date.
The characteristics of this supplementary pension plan fully comply with the recommendations of the Afep-Medef Code.
Only employees or senior executives of Lagardère Capital & Management who were members of the Executive Committee were eligible for this plan.
The plan is a conditional benefit plan, and the pension will only be payable if the beneficiary is still with the company at retirement age, except in the event of (i) termination (other than for serious misconduct) after the age of 55 providing the beneficiary does not take up another post, (ii) long-term disability, and (iii) early retirement. In addition, beneficiaries are required to have been members of the Executive Committee for at least five years at the date that they retire. In the event of the beneficiary’s death, 60% of the pension is transferable to the surviving spouse.
Before the plan was frozen at 31 December 2019, its beneficiaries accrued supplementary pension entitlements at a rate equal to 1.75% of the benchmark remuneration per year of membership of the plan.
The benchmark remuneration corresponded to the average gross annual remuneration over the last five years (fixed + variable up to a maximum of 100% of the fixed portion). In addition, each annual remuneration could not exceed 50 times the annual limit defined by the French social security system i.e., a maximum amount of €2,026,200 in 2019. Each beneficiary’s benchmark remuneration was frozen at 31 December 2019.
As the number of years of plan membership used to calculate the benefit entitlements is capped at 20, the supplementary pension could not exceed 35% of the benchmark remuneration.
The pension entitlements are fully borne by the Company and this benefit is taken into account in determining the overall remuneration of executive corporate officers.
Under current social security laws (article L 137-11 of the French Commercial Code), the Company is required to pay a contribution equal to 32% of the amount of the benefits, at the time that such benefits are paid.
In addition to the tax and social security contributions applicable to pensions (levied at a rate of 10.1%, of which 5.9% is tax-deductible), under current tax and social security laws, the annuities that will be paid to the beneficiaries will also be subject to the specific contribution provided for in article L 137-11-1 of the French Social Security Code, before income tax withheld at source and any surtaxes on high incomes.

C) Termination benefit
The Company has not given any commitments to the executive corporate officers in relation to granting them any termination benefits.
However, as they are employees of Lagardère Capital & Management, the executive corporate officers (with the exception of Arnaud Lagardère) may be eligible for benefits in certain cases of contract termination, pursuant to the applicable laws, regulations and collective bargaining agreements.
In all circumstances, any benefits paid to the executive corporate officers may not exceed the cap of two years’ worth of fixed and variable remuneration recommended in the Afep-Medef Corporate Governance Code.

D) Extraordinary remuneration
Bonuses may be granted to the executive corporate officers in very specific and exceptional circumstances, notably in connection with one-off transactions requiring extensive involvement of the executive corporate officers, particularly when the impacts of such transactions, despite being extremely significant for the Group, cannot be taken into account in determining the variable portion of their remuneration.
The conditions of any exceptional bonus awards and payments are determined in accordance with best corporate governance practices. Any exceptional bonus award, which must be disclosed and justified in detail, may not in any case exceed 150% of the annual fixed remuneration of the executive corporate officer concerned.
Since 2011, the executive corporate officers (with the exception of Arnaud Lagardère) have only once been awarded a special bonus: in 2014, when the Group sold its stake in EADS and Canal+ France. The total amount of the bonuses paid to the Co-Managing Partners represented 0.1% of the proceeds from these divestments, of which 58% was paid over to shareholders and on average, represented 85.68% of the annual fixed remuneration of the Co-Managing Partners.

2.5.1.2.D SUMMARY PRESENTATION OF THE REMUNERATION STRUCTURE

As described above, the annual remuneration of the Company’s executive corporate officers is structured in compliance with best corporate governance practices. The principles underlying this structure are straightforward, stable and transparent, and they ensure that the interests of the executives are closely aligned with the interests of the Company and its stakeholders.
Arnaud Lagardère:
Arnaud Lagardère’s annual remuneration mainly comprises (i) fixed remuneration and (ii) variable cash remuneration that may not exceed 150% of his fixed remuneration. His variable remuneration is based on:

• quantitative financial criteria (75% weighting);
• quantitative non-financial CSR criteria (25% weighting).

As Arnaud Lagardère is a major shareholder of Lagardère SCA, owning 7.26% of its capital and 11.03% of the voting rights, he is naturally exposed to the Company’s share performance and therefore does not receive any free share awards or share options.

Pierre Leroy and Thierry Funck-Brentano:
The annual remuneration of the other executive corporate officers mainly comprises (i) fixed remuneration, (ii) variable cash remuneration, and (iii) performance share awards.
Their variable cash remuneration – which may not exceed 75% of their fixed remuneration – is based on:

• quantitative financial criteria (50% weighting);
• quantitative non-financial CSR criteria (16.67% weighting);
• qualitative criteria (33.33% weighting), it being specified that this qualitative variable portion may not exceed 25% of their fixed remuneration.

Performance share awards may not represent more than 33.33% of the overall remuneration (fixed and variable) of the executive corporate officers concerned, and the vesting of the shares is contingent on long-term performance (over three consecutive fiscal years). The applicable performance criteria – which are solely quantitative – correspond to:

• internal financial criteria (60% weighting);
• comparative financial criteria (20% weighting);
• non-financial CSR criteria (20% weighting).

2.5.2 TOTAL REMUNERATION AND BENEFITS PAID DURING OR ALLOCATED IN RESPECT OF 2019 TO THE EXECUTIVE CORPORATE OFFICERS

This section notably includes, with regard to the executive corporate officers, the information referred to in article L 225-37-3 of the French Commercial Code.

2.5.2.1 COMPONENTS OF REMUNERATION PAID OR ALLOCATED

The remuneration and benefits paid during or allocated in respect of 2019 to the executive corporate officers complied with the remuneration policy set out in section 2.5.2 above.

A) ANNUAL FIXED REMUNERATION
Arnaud Lagardère received €1,140,729 in annual fixed remuneration, unchanged since 2009.
Pierre Leroy received €1,474,000 in annual fixed remuneration, unchanged since 2011.
Thierry Funck-Brentano received €1,206,000 in annual fixed remuneration, unchanged since 2011.

B) ANNUAL VARIABLE REMUNERATION
Annual variable remuneration paid during 2019
As annual variable remuneration for a given year can only be calculated after the end of that year, it is paid during the following year.
Consequently, the variable remuneration due to the executive corporate officers in respect of 2018 was only paid in 2019.
The amounts of variable remuneration allocated in respect of 2018 and paid in 2019 were as follows:

• for Arnaud Lagardère: €1,628,200;
• for Pierre Leroy and Thierry Funck-Brentano: €723,900.

The allocation of these amounts of annual variable remuneration was put to the shareholders in an advisory “say-on-pay” vote at the 10 May 2019 Annual General Meeting, in accordance with recommendation 26 of the Afep-Medef Code. The shareholders issued a positive opinion on these amounts, with the following percentages of votes cast in favour: (i) 96.88% for the fourth resolution (Arnaud Lagardère), and (ii) 95.90% for the fifth resolution (Pierre Leroy and Thierry Funck-Brentano).

Annual variable compensation allocated in respect of 2019

• Quantitative portion of annual variable compensation

Financial criteria
For 2019, the achievement levels for the financial criteria described in section 2.5.2.2. A resulted in a factor of 1.12 being applied to the related benchmark amounts (versus 1.163 in 2018 and 0.932 in 2017). Consequently, the variable portion of the executive corporate officers’ remuneration based on quantitative financial criteria amounted to €1,176,000 (€1,050,000 x 1.12) for Arnaud Lagardère and €336,000 (€300,000 x 1.12) for Pierre Leroy and Thierry Funck-Brentano.

	Recurring operating profit of fully consolidated companies	Net cash from operating activities	Average
2019 guidance	+ 5 %
2019 budget		436,6 M€
2019 achievement	+ 5,63 %	513,6 M€
Difference	+ 0,63 point	+77,1 M€
Impact	+6,3 %	+17,7 %
Applicable factor	1,06	1,18	1,12
Change vs. 2018 recurring operating profit of fully consolidated companies			Positive
Final factor			1,12

Non-financial CSR criteria
For 2019, the achievement levels for the non-financial CSR criteria resulted in a factor of 1.125. Consequently, the variable portion of the executive corporate officers’ remuneration based on quantitative non-financial CSR criteria amounted to €393,750 for Arnaud Lagardère (€350,000 x 1.125) and €112,500 for Pierre Leroy and Thierry Funck-Brentano (€100,000 x 1.125).

Criteria	Minimum performance level	Target performance level	Level achieved	Achievement rate
Proportion of female executive managers by end-2019	41 %	43 %	44 %	1,50
Scope 1 and 2 CO2 emissions per million euros of revenue in 2019 (tCO2 eq)	16,2	14,6	15,6	0,75
Proportion of Group employees having an employee representative at end-2019	67 %	71 %	70 %	0,75
Percentile ranking in the Dow Jones Sustainability Index	80 %	86 %	87 %	1,50
Average				1,125

•  Exceeding the target performance level corresponds to a 1.50 achievement rate.
• Reaching the target performance level corresponds to a 1.25 achievement rate.
•  Not reaching the target performance level corresponds to a 0.75 achievement rate.
• Not reaching the minimum performance level corresponds to a 0 achievement rate.

As mentioned previously, the criteria themselves and the minimum and target performance levels were approved on the basis of proposals put forward by the Sustainable Development and CSR Department.
The first three criteria were selected because they embody the focal areas of the Group’s CSR policy (social, environmental and societal issues).
They are reported on each year in the Group’s annual report, which ensures their transparency. The first two criteria also form part of the quantitative “information considered the most important”, which is subject to the specific procedures carried out by the independent third-party in order to draw up its report on the Group’s consolidated non-financial statement.
The first criterion – concerning the proportion of female executive managers – is a key indicator for the Group’s performance in implementing its strategy of promoting diversity. It is a growth and creativity driver and has been one of the priority objectives of the Group’s CSR roadmap for many years. In addition, this criterion is fully in line with the general objective of gender diversity in senior management that is a central governance goal for modern-day companies.
The second criterion – Scope 1 and 2 CO₂ emissions per million euros of revenue (tCO₂ eq) – is a benchmark indicator for controlling the environmental impacts of operations, which represents an essential global objective for any company with a consistent CSR strategy. The criterion used covers Scope 1 and Scope 2 emissions, i.e., direct emissions from owned or controlled sources (from stationary combustion sources using gas and fuel oil for example) and indirect emissions from the generation of purchased energy (such as electricity and district heating), for all of the Group’s offices, points of sale, warehouses, live performance venues and other sites out of which it operates. These emissions correspond to elements over which the Group has real operational leverage and on which it therefore focuses as part of its CSR strategy.
The third criterion – the proportion of Group employees with an employee representative – is a key indicator of the quality of the Group’s labour relations, which is an essential component of its CSR policy. It fits seamlessly with the clear principle of seeking a permanent balance between financial targets and HR goals. Through this employee representative system, the Group can build up a steady flow of constructive dialogue with its people, notably concerning working conditions, the goals and challenges of the Group, and the business transformations it needs to undertake. The final criterion – the Group’s percentile ranking in the Dow Jones Sustainability Index – is an external criterion that gives an overall evaluation of the Group’s CSR performance and a comparison against other companies included in the index. Through this criterion, the Group’s internal assessment based on specific criteria can be rounded out by an objective overall external evaluation performed by a recognised expert in the sector, which also gives an insight into how the Group’s stakeholders view its CSR approach. Additionally, in the same way as the first three criteria, it provides transparency and ensures that the Group’s performance can be tracked over the long term.
For each of the four criteria, the minimum and target performance levels have been set in such a way as to create demanding and consistent objectives that factor in (i) the Group’s historic performance over the previous three years and (ii) changes in its operating environment, notably in connection with its strategic refocusing.
These same four criteria could be used for the variable remuneration allocated in respect of 2020, to avoid overly frequent reviews in accordance with the recommendations of the Afep-Medef Code. However, as indicated in the remuneration policy, the system may evolve as from 2021 following the Group’s creation of an internal composite index tracking its CSR performance.

Qualitative portion of annual variable compensation
In light of the achievements described below, Arnaud Lagardère deemed that the targets set for 2019 had largely been met with solid input from the executive corporate officers.
Based on this assessment, Arnaud Lagardère decided to apply a factor of 1.25 (versus 1.25 in 2018 and 1.166 in 2017). Consequently, the variable portion of Pierre Leroy and Thierry Funck-Brentano’s remuneration based on qualitative criteria amounted to €250,000 (€200,000 x 1.25) each.

Rollout of the Group’s strategic plan
During the year it sold its radio assets in South Africa, the digital businesses Boursier.com, Plurimedia and BilletReduc.com, its entire Television division (Mezzo, Gulli, Canal J, MCM, etc. and the related advertising sales brokerages), and its interests in Disney Hachette Presse and l’Usine.
The year 2019 saw another decisive step in the Group’s strategic refocusing, with the signature of an agreement to sell Lagardère Sports to H.I.G., which will enable it to concentrate all its efforts and resources on expanding Lagardère Publishing and Lagardère Travel Retail.
Concerning reinvestments, the acquisition of International Duty Free (IDF) – Belgium’s leading Travel Retail operator, also present in Luxembourg and Kenya – has cemented Lagardère Travel Retail’s positions as the world’s third-largest airport Duty Free operator and the European leader in Travel Retail.
Lastly, the Group carried out a number of major financing transactions in 2019, with over €250 million raised through a Schuldscheindarlehen private placement and a €500 million bond issue. The success of both of these issues confirms the confidence that investors have in the Group’s strategy.

Quality of governance and management
The priority objectives assigned to executive corporate officers in this second area were related to:

1. rolling out an organisational action plan to meet the Group’s strategic imperatives;
2. safeguarding the Group’s reputation and assets by implementing Compliance programmes.
   Concerning the first of these priority objectives, in 2019, the executive corporate officers actively carried out an in-depth restructuring of the Group’s Corporate departments, in terms of their roles and responsibilities, positioning and resources, and in light of the Group’s strategic refocusing and fast-changing operating environment.
   The preparatory stage of this restructuring was completed in early December 2019, with a presentation given to Lagardère SCA’s Supervisory Board on the restructuring plan, which is mainly based on:
   • refocusing the Corporate departments on the mandatory tasks inherent to Lagardère SCA’s role as a listed holding company;
   • optimising the Corporate departments’ organisational structure and support function costs;
   • increasing the resources and remit of the Finance, CSR and Risk/Compliance functions, in view of their significant oversight roles.

The “organisational” section of the restructuring plan – which will lead to the elimination of around 30% of the Corporate departments’ workforce – will be implemented on a staggered basis throughout the course of 2020 as part of a downsizing plan validated by the Group’s employee representative bodies and the French labour authorities in early December 2019. The “governance” section of the restructuring plan – which mainly involves increasing the resources and remit of the above-mentioned oversight functions through the creation of dedicated committees and a review of existing internal procedures – will also be carried out in 2020.
Regarding the second priority objective, in 2019 the Compliance Department continued its activities working closely alongside the divisions and Corporate departments.
Concerning anti-corruption measures, a corruption risk mapping process was carried out in 2019 and the divisions and Corporate departments were informed about the requirements set by the French Anti-Corruption Agency, as well as the risks related to the cross-border application of US anti-corruption laws. In addition, several training sessions were given on international economic sanctions, the instruction guide for division-level Compliance teams was rewritten, and reporting procedures were reinforced.
Lastly, the executive corporate officers oversaw the development of an alert reporting system set up under the aegis of the Compliance department, in co-ordination with the Corporate departments and an external service provider. This stand-alone, online system, is part of the Group’s overall ethics and compliance approach. It constitutes an alternative channel for reporting information that can then be relayed worldwide about highly varied subjects, such as anti-corruption measures, human rights, and environmental protection.

Summary of variable remuneration allocated in respect of 2019
The application of the quantitative and qualitative criteria described above led to the allocation of the following variable remuneration in respect of 2019, which will be paid in 2020 provided it is approved at the Annual General Meeting to be held on 5 May 2020.
 

	Weighting (% of benchmark amount)	Benchmark amount (in euros)	Maximum amount (% of fixed remuneration)	Achievement rate applied to the benchmark amount	Variable remuneration
					Amount to be paid (in euros)	(% of fixed remuneration)
Arnaud Lagardère
Quantitative financial criteria	75 %	1 050 000	150 %	1,12	1 176 000	103,09 %
Quantitative nonfinancial CSR criteria	25 %	350 000		1,125	393 750	34,52 %
Qualitative criteria	N/A	N/A	N/A	N/A	N/A	N/A
Total	100 %	1 400 000	150 %	1 569 750		137,61 %

 

	Weighting (% of benchmark amount)	Benchmark amount (in euros)	Maximum amount (% of fixed remuneration)	Achievement rate applied to the benchmark amount	Variable remuneration
					Amount to be paid (in euros)	(% of fixed remuneration)
Pierre Leroy
Quantitative financial criteria	50 %	300 000		1,12	336 000	22,79 %
Quantitative nonfinancial CSR criteria	16,67 %	100 000		1,125	112 500	7,63 %
Qualitative criteria	33,33 %	200 000	25 %	1,25	250 000	16,96 %
Total	100 %	600 000	75 %		698 500	47,39 %

 

	Weighting (% of benchmark amount)	Benchmark amount (in euros)	Maximum amount (% of fixed remuneration)	Achievement rate applied to the benchmark amount	Variable remuneration
					Amount to be paid (in euros)	(% of fixed remuneration)
Thierry Funck-Brentano
Quantitative financial criteria	50 %	300 000		1,12	336 000	27,86 %
Quantitative nonfinancial CSR criteria	16,67 %	100 000		1,125	112 500	9,33 %
Qualitative criteria	33,33 %	200 000	25 %	1,25	250 000	20,73 %
Total	100 %	600 000	75 %		698 500	57,92 %

 

C) PERFORMANCE SHARE AWARDS

On 14 May 2019, under the new authorisation granted by the Company’s shareholders in the twelfth resolution of the 10 May 2019 Annual General Meeting, Pierre Leroy and Thierry Funck‑Brentano were each awarded 32,000 rights to free shares, representing 0.024% of the total number of shares making up the Company’s share capital and a carrying amount of €524,480 under IFRS (corresponding to 23.86% and 27.18%, of their fixed and variable remuneration respectively for the previous year).
This award was made under the terms and conditions set out below, in accordance with the framework described above.

• Vesting period: the shares will vest on 15 May 2022, provided that the beneficiaries are still executive corporate officers of Lagardère SCA at midnight on 14 May 2022 (the “presence condition”).
• Holding period of vested shares: all of the shares must be held by their beneficiaries until 15 May 2024 (inclusive). Following this holding period, 50% of the shares must still be held in accordance with the Group’s remuneration policy.
• Performance conditions to be met for the period from 2019 through 2021:

Weighting (% of shares allocated to the objective)	Criteria	Minimum performance level	Target performance level	Vesting proportions
40 %	Average annual increase in Group recurring operating profit (Guidance definition – Recurring EBIT)	+3,3 %	+5 %	Vesting on a straight-line proportionate basis of 0% to 100% of the shares between the trigger level and the target level.
20 %	Cumulative amount of free cash flow excluding growth capex	€613 million	€900 million	Vesting on a straight-line proportionate basis of 0% to 100% of the shares between the trigger level and the target level.
10 %	Lagardère SCA’s average annual Total Shareholder Return (“TSR”) vs. the average annual TSR of a panel of 8 peer companies (Relx, Pearson, Mondadori, Bloomsbury, Dufry, Valora, WH Smith and Autogrill)	As this is a comparative criterion, the levels of the objectives for each portion will only be known and disclosed at the end of the reference period.		All shares vest if Lagardère SCA’s average annual TSR is at least equal to the reference panel’s average annual TSR. No shares vest if Lagardère SCA’s average annual TSR is below the reference panel’s average annual TSR.
10 %	Lagardère SCA’s average annual TSR vs. the average annual TSR of the other companies in the CAC Mid 60 index
20 %	Overall proportion of female executive managers at end-2021 This objective is a key indicator of the Group’s performance in terms of implementing its strategy of promoting diversity and gender balance, which is one of the five priority objectives in the Group’s CSR roadmap defined between the Company and all of its stakeholders. This key indicator will be measured, audited by an independent third party and published each year in the Group’s non-financial performance statement.	42 %	45 %	Vesting on a straight-line proportionate basis of 0% to 100% of the shares between the trigger level and the target level.

D) BENEFITS IN KIND – BUSINESS EXPENSES

In accordance with the remuneration policy, the executive corporate officers each had the use of a company car in 2019.
The value of this benefit-in-kind is based on the executive corporate officers’ potential personal use of their car, and corresponds to the following amounts:

• for Arnaud Lagardère: €18,616;
• for Pierre Leroy: €16,281;
• for Thierry Funck-Brentano: €13,644.

E) SUPPLEMENTARY PENSION PLAN
In 2019, the executive corporate officers had conditional rights to receive a future pension annuity under a supplementary pension plan governed by article L 137-11 of the French Social Security Code, as described in the remuneration policy. In accordance with French Government Order no. 2019‑697 dated 3 July 2019, which reformed the legal regime for professional supplementary pension plans in France, the benefits accrued under this plan have been frozen at the level attained at 31 December 2019, and no additional benefits will be accrued under the plan as from that date. No amounts were paid to the executive corporate officers under this plan in 2019. At 31 December 2019, the estimated amounts of the future pension annuities were €686,490 for Arnaud Lagardère and Pierre Leroy, and €669,144 for Thierry Funck-Brentano.

F) EXTRAORDINARY REMUNERATION
The executive corporate officers did not receive any extraordinary remuneration for 2019.

2.5.2.2 SUMMARY TABLES
The information and tables provided in this section show the remuneration of the Company’s executive corporate officers based on the new presentation format recommended in the Afep-Medef Code and AMF recommendation nos. 2012-02 and 2009-16.

Arnaud Lagardère

Summary of gross remuneration and benefits (before deducting social security contributions)
	Fiscal year 2018		Fiscal year 2019
	Amounts allocated	Amounts paid	Amounts allocated	Amounts paid
Fixed remuneration	1 140 729	1 140 729	1 140 729	1 140 729
Variable remuneration	1 628 200 (1)	1 304 800	1 569 750 (1)	1 628 200
Extraordinary remuneration	-	-	-	-
Remuneration allocated for offices held	-	-	-	-
Benefits in kind	18 616	18 616	18 616	18 616
Total	2 787 545	2 464 145	2 729 095	2 787 545

(1) As the variable portion of annual remuneration for a given year can only be calculated after the year-end, it is paid to the beneficiary during the following year.

Arnaud Lagardère, who is a major shareholder of the Company, has not been awarded any share options or free shares since his appointment as General and Managing Partner in 2003.

• Share options granted during the year: none.
• Share options exercised during the year: none.
• Performance share rights granted during the year: none.
• Performance shares that became available during the year: none.

Total remuneration and benefits, share options and performance shares granted
	Fiscal year 2018	Fiscal year 2019
Remuneration allocated for the year (details in previous table)	2 787 545	2 729 095
Value of multi-annual variable remuneration allocated during the year	None	None
Value of share options granted during the year	None	None
Value of performance share rights granted during the year	None	None
Total	2 787 545	2 729 095

Pierre Leroy

SUMMARY OF GROSS REMUNERATION AND BENEFITS (BEFORE DEDUCTING SOCIAL SECURITY CONTRIBUTIONS)
	Fiscal year 2018		Fiscal year 2019
	Amounts allocated	Amounts paid	Amounts allocated	Amounts paid
Fixed remuneration	1,474,000	1,474,000	1,474,000	1,474,000
Variable remuneration	723,900(1)	629,400	698,500(1)	723,900
Extraordinary remuneration	-	-	-	-
Remuneration allocated for offices held	-	-	-	-
Benefits in kind	16,281	16,281	16,281	16,281
Total	2,214,181	2,214,181	2,188,781	2,214,181

⁽¹⁾As the variable portion of annual remuneration for a given year can only be calculated after the year-end, it is paid to the beneficiary during the following year.

• Share options granted during the year: none.
• Share options exercised during the year: none.
• Performance share rights granted during the year: 32,000.

Performance share rights granted in 2019
Authorisation of AGM	Date of the plan	No. of share rights awarded	Carrying amount under IFRS	Vesting date	Date of availability	Performance conditions
10 May 2019	14 May 2019	32,000	524,480	15 May 2022	16 May 2024(1)	(2)

(1) Applicable to 50% of the vested shares. The shares corresponding to the remaining 50% are subject to additional holding conditions (see section 2.5.3.1.C above).

(2) See section 2.5.3.1.C above.

• Performance shares that became available during the year: 18,506.
  The mandatory holding period for the 37,012 performance shares which vested for Pierre Leroy on 1 April 2017 under the 26 December 2013 plan ended on 1 April 2019. According to the holding rules defined by the Supervisory Board in accordance with the applicable laws and with the recommendations of the Afep-Medef Corporate Governance Code, half of these shares are still subject to holding periods based on the valuation of Pierre Leroy’s share portfolio and the termination of his duties.
• Performance shares that vested during the year: 23,590.
  Of the 32,000 performance shares granted to Pierre Leroy under the 9 May 2016 plan, 23,590 shares (i.e., 73.72%) vested on 10 May 2019, following the application of the performance conditions provided for in the decision to award the shares.
  Achievement of the objective relating to growth in Group recurring operating profit:taux moyen de progression annuelle du Résop Groupe sur la période 2016-2018 : (13,51 % + 6,74 % + 2,14 %)/3 = +7,46 % ;
  • average annual growth rate for Group recurring operating profit between 2016 and 2018: (13.51% + 6.74% + 2.14%)/3 = +7.46%;
  • achievement rate of objective (7.46-5.14)/(7.79-5.14) = 87.55%.
    Achievement of the objective relating to net cash from operating activities of fully consolidated companies:
  • average annual amount of net cash from operating activities of fully consolidated companies between 2016 and 2018: (458 + 318 + 455) = €410 million;
  • achievement rate of objective (410 - 313)/(475 - 313) = 59.88%.

Total remuneration and benefits, share options and performance shares granted
	Exercice 2018	Exercice 2019
Remuneration allocated for the year (details in previous table)	2 214 181	2 188 781
Value of multi-annual variable remuneration allocated during the year	None	None
Value of share options granted during the year	None	None
Value of performance share rights granted during the year	599 040	524 480
Total	2 813 221	2 713 261

Thierry Funck-Brentano

Summary of gross remuneration and benefits (before deducting social security contributions)
	Fiscal year 2018		Exercice 2019
	Amounts allocated	Amounts paid	Amounts allocated	Amounts paid
Fixed remuneration	1 206 000	1 206 000	1 206 000	1 206 000
Variable remuneration	723 900 (1)	629 400	698 500 (1)	723 900
Extraordinary remuneration	-	-	-	-
Remuneration allocated for offices held	-	-	-	-
Benefits in kind	13 644	13 644	13 644	13 644
Total	1 943 544	1 849 044	1 918 144	1 943 544

(1) As the variable portion of annual remuneration for a given year can only be calculated after the year-end, it is paid to the beneficiary during the following year.

• Share options granted during the year: none.
• Share options exercised during the year: none.
• Performance share rights granted during the year: 32,000

Performance share rights granted in 2019
Authorisation	Date of the plan	No. of share rights awarded	Carrying amount under IFRS	Vesting date	Date of availability	Performance conditions
10 May 2019	14 May 2019	32,000	524,480	15 May 2022	16 May 2024(1)	(2)

⁽¹⁾ Applicable to 50% of the vested shares. The shares corresponding to the remaining 50% are subject to additional holding conditions
(see section 2.5.3.1.C above).
⁽²⁾ See section 2.5.3.1.C above.

• Performance shares that became available during the year: 27,759.
  The mandatory holding period for the 37,012 performance shares which vested for Thierry Funck-Brentano on 1 April 2017 under the 26 December 2013 plan ended on 1 April 2019. According to the holding rules defined by the Supervisory Board in accordance with the applicable laws, a quarter of these shares are still subject to a holding period until the termination of Thierry Funck-Brentano’s duties. Since the valuation of Thierry Funck-Brentano’s share portfolio is higher than one year of his fixed and variable remuneration, the holding period established in accordance with the recommendations of the Afep-Medef Corporate Governance Code and applicable to a quarter of the shares, no longer applies.
• Performance shares that vested during the year: 23,590.
  Of the 32,000 performance shares granted to Thierry Funck- Brentano under the 9 May 2016 plan, 23,590 shares (i.e., 73.72% of the total shares granted) vested on 10 May 2019, following the application of performance conditions provided for in the decision to award the shares:
  Achievement of the objective relating to net cash from operating activities of fully consolidated companies:
  • average annual growth rate for Group recurring operating profit between 2016 and 2018: (13.51% + 6.74% + 2.14%)/3 = +7.46%;
  • achievement rate of objective (7.46-5.14)/(7.79-5.14) = 87.55%.
    Réalisation de l’objectif de flux opérationnels consolidés Groupe :
  • average annual amount of net cash from operating activities of fully consolidated companies between 2016 and 2018: (458 + 318 + 455) = €410 million;
  • achievement rate of objective (410 - 313)/(475 - 313) = 59.88%.

Total remuneration and benefits, share options and performance shares granted
	Fiscal year 2018	Fiscal year 2019
Remuneration allocated for the year (details in previous table)	1 943 544	1 918 144
Value of multi-annual variable remuneration allocated during the year	None	None
Value of share options granted during the year	None	None
Value of performance share rights granted during the year	599 040	524 480
Total	2 542 584	2 442 624

Share options⁽¹⁾

	Plans expired
	2001 Plan	2002 Plan	2003 Plan	2004 Plan	2005 Plan	2006 Plan
Date of AGM	23 May 2000		23 May 2000 and 13 May 2003	11 May 2004		2 May 2006
Date of Board of Directors’ or Executive Board meeting (as relevant)	Not relevant to Lagardère SCA, which is a French partnership limited by shares Grant date = date of decision by the Managing Partners
Total number of shares under option(1)	1 271 740 (*)	1 313 639 (*)	1 453 451 (*)	1 577 677 (***)	1 736 769 (**)	1 919 029 (**)

 

	Plans expired
	2001 Plan	2002 Plan	2003 Plan	2004 Plan	2005 Plan	2006 Plan
O/w shares available for subscription or purchase by Managing Partners and members of the Supervisory Board(1):
Arnaud Lagardère	50 560	50 554	0	0	0	0
Pierre Leroy	30 336	30 333	40 444	50 433	62 345	62 350
Philippe Camus	20 224	20 222	30 333	30 336	50 000	50 000
Dominique D’Hinnin	30 336	30 333	40 444	50 433	62 345	62 350
Thierry Funck-Brentano	30 336	30 333	40 444	50 433	62 345	62 350
Start of exercise period	19 Dec. 2003	19 Dec. 2004	18 Dec. 2005	20 Nov. 2006	21 Nov. 2007	14 Dec. 2008
Option expiry date	19 Dec. 2008	19 Dec. 2009	18 Dec. 2013	20 Nov. 2014	21 Nov. 2015	14 Dec. 2016
Subscription or purchase price	46,48 € (*)	51,45 € ​(*)	51,45 (*)	41,64 € (***)	45,69 € (**)	44,78 € (**)
Number of shares vested at 28 February 2019	30 336 (2)	-	-	-	-	-

 

	Plans expired
	2001 Plan	2002 Plan	2003 Plan	2004 Plan	2005 Plan	2006 Plan
Total number of share options cancelled or forfeited:
Arnaud Lagardère	50 560	50 554	-	-	-	-
Pierre Leroy		30 333	40 444	50 433	62 345	62 350
Philippe Camus	20 224	20 222	30 333	30 336	50 000	50 000
Dominique D’Hinnin	30 336	30 333	40 444	50 433	62 345	62 350
Thierry Funck-Brentano	30 336	30 333	40 444	50 433	62 345	62 350

 

	Plans expired
	2001 Plan	2002 Plan	2003 Plan	2004 Plan	2005 Plan	2006 Plan
Share options(1) outstanding at end-2018:
Arnaud Lagardère	0	0	-	-	-	-
Pierre Leroy	0	0	0	0	0	0
Dominique D’Hinnin	0	0	0	0	0	0
Thierry Funck-Brentano	0	0	0	0	0	0

⁽¹⁾ Share purchase plans only.
⁽²⁾ Exercised by Pierre Leroy on 20 December 2005.
^(*) After adjustment on 6 July 2005.
^(**) After adjustment on 20 June 2014.
^(***) After adjustments on 6 July 2005 and 20 June 2014.

Historical information on performance share awards

	Plan 1	Plan  2	Plan 3	Plan 4	Plan 5	Plan 6	Plan 7	Plan 8	Plan 9	Plan 10
Date of AGM	28 April 09	28 April 09	28 April 09	28 April 09	3 May 2013	3 May 2013	3 May 2016	3 May 2016	3 May 2016	10 May 2016

 

	Plan 1	Plan 2	Plan 3	Plan 4	Plan 5	Plan 6	Plan 7	Plan 8	Plan 9	Plan 10
Date of grant(*)	31 Dec. 2009	17 Dec. 2010	29 Dec. 2011	25 June 2012	26 Dec. 2013	1 April 2015	9 May 2016	6 April 2017	16 April 2018	14 May 2019

 

	Plan 1	Plan 2	Plan 3	Plan 4	Plan 5	Plan 6	Plan 7	Plan 8	Plan 9	Plan 10
Total number of free shares granted(**)	50 000	116 000	104 000	115 017	115 017	96 000	64 000	64 000	64 000	64 000
Of which granted to:
Arnaud Lagardère (***)	-	-	-	-	-	-	-	-	-	-
Pierre Leroy	25 000	29 000	26 000	38 339	38 339	32 000	32 000	32 000	32 000	32 000
Philippe Camus	25 000	29 000	26 000	-	-	-	-	-	-	-
Dominique D’Hinnin	-	29 000	26 000	38 339	38 339	32 000	-	-	-	-
Thierry Funck-Brentano	-	29 000	26 000	38 339	38 339	32 000	32 000	32 000	32 000	32 000

 

	Plan 1	Plan 2	Plan 3	Plan 4	Plan 5	Plan 6	Plan 7	Plan 8	Plan 9	Plan 10
Vesting date	2 April 2012 2 April 2014	2 April 2013	2 April 20144	1 April 2015	1 April 2017	1 April 2018	10 May 2019	7 April 2020	17 April 2021	15 May 2022

 

	Plan 1	Plan 2	Plan 3	Plan 4	Plan 5	Plan 6	Plan 7	Plan 8	Plan 9	Plan 10
End of holding period(****)	2 April 2014	2 April 2015	2 April 2016	1 April 2017	1 April 2019	1 April 2020	10 May 2021	7 April 2022	17 April 2023	15 May 2024

 

	Plan 1	Plan 2	Plan 3	Plan 4	Plan5	Plan 6	Plan7	Plan8	Plan 9	Plan 10
Performance conditions	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes

 

	Plan 1	Plan 2	Plan 3	Plan 4	Plan 5	Plan 6	Plan 7	Plan 8	Plan 9	Plan 10
Number of shares vested at 29 February 2020	42 310	59 547	72 054	104 253	111 036	96 000	47 180	-	-

 

	Plan 1	Plan 2	Plan 3	Plan 4	Plan 5	Plan 6	Plan 7	Plan 8	Plan 9	Plan 10
Total number cancelled or forfeited	7 690	56 453	31 946	10 764	3 981	0	16 820	-	-
Arnaud Lagardère	-	-	-	-	-	-	-	-	-	-
Pierre Leroy	3 845	9 151	1 982	3 588	1 327	0	8 410	-	-
Philippe Camus	3 845	29 000	26 000	-	-	-	-	-	-
Dominique D’Hinnin	-	9 151	1 982	3 588	1 327	0	-	-	-
Thierry Funck-Brentano	-	9 151	1 982	3 588	1 327	0	8 410	-	-

 

	Plan 1	Plan 2	Plan 3	Plan 4	Plan 5	Plan 6	Plan 7	Plan 8	Plan 9	Plan 10
Performance shares outstanding at 2019(**)	-	-	-	-	-	-	-	64 000	64 000	64 000
Arnaud Lagardère	-	-	-	-	-	-	-	-	-	-
Pierre Leroy	-	-	-	-	-	-		32 000	32 000	32 000
Philippe Camus	-	-	-	-	-	-	-	-	-	-
Dominique D’Hinnin	-	-	-	-	-	-	-	-	-
Thierry Funck-Brentano	-	-	-	-	-	-	-	32 000	32 000	32 000

^(*) Since Lagardère SCA is a French partnership limited by shares, performance share awards are the responsibility of the Managing Partners and are only coordinated by the Supervisory Board.
^(**) After adjustment on 20 June 2014.
^(***) Arnaud Lagardère, Managing Partner, does not receive any performance shares.
^(****) Applicable to 50% of the vested shares. The shares corresponding to the remaining 50% are subject to additional holding conditions (see section 2.5.2.2.B above).

Other information

Executive corporate officers	Employment contract(1)		Supplementary pension plan		Indemnities or benefits receivable or likely to be receivable due to a termination or change of function		Indemnities receivable under a non-competition clause
	Yes	No	Yes	No	Yes	No	Yes	No
Arnaud Lagardère Position: Managing Partner Date of appointment: Renewed 11 March 2015 for a six-year period End of term of office: Renewed 11 March 2015 for a six-year period		X	X (2)			X		X
Pierre Leroy Position: Managing Partner(a) Date of appointment: End of term of office:	N.A. (1)		X (2)			X (3)		X
Thierry Funck-Brentano Position: Managing Partner(b) Date of appointment: End of term of office:	N.A. (1)		X (2)			X (3)		X

^(a) Deputy Chairman and Chief Operating Officer of Arjil Commanditée-Arco whose term of office as Managing Partner of Lagardère SCA was renewed on 9 March 2016 for a six-year period.
^(b) Chief Operating Officer of Arjil Commanditée-Arco, appointed in that capacity on 10 March 2010 for a six-year period and on 9 March 2016 for a further six-year period.
⁽¹⁾ The Afep-Medef Corporate Governance Code recommendations that company officers should not hold employment contracts with the company only apply to the following persons: Chairman of the Board of Directors, Chairman and Chief Executive Officer, Chief Executive Officer of companies with a Board of Directors, Chairman of the Management Board, Chief Executive Officer of companies with a Management Board and Supervisory Board, and Managing Partners of French partnerships limited by shares (SCA).
⁽²⁾ See section 2.5.2.2.C B) above.
⁽³⁾ See section 2.5.2.2.C C) above.

Fair pay ratios
French Government Order 2019-1234 of 27 November 2019 introduced the requirement for companies to disclose, in their corporate governance reports, the following information for each executive corporate officer:

• the ratios between (i) the remuneration of the officer and (ii) the average and median remuneration, on a full-time equivalent basis, of the Company’s non-executive employees;
• year-on-year changes in remuneration; the Company’s performance; the average remuneration, on a full-time equivalent basis, of the Company’s employees; and the above ratios, covering at least the past five years.

In addition to this legal requirement, the revised version of the Afep-Medef Code issued in January 2020 recommends that listed companies with a low number of employees publish this information based on a scope that is more representative of their overall payroll or workforce in France. The Code states that 80% of a company’s workforce in France can be considered as a representative scope. Lagardère SCA has less than ten employees, not including the executive corporate officers who are employed by Lagardère Capital & Management.
Consequently, the tables below set out the required disclosures concerning (i) the scope corresponding to Lagardère SCA, in compliance with the compulsory provisions of the Government Order, which have been applied on a voluntary basis, and (ii) the scope corresponding to all of the French companies exclusively controlled by Lagardère SCA within the meaning of article L 233-16 II of the French Commercial Code, in accordance with recommendation 26.2 of the Afep-Medef Code. The tables below show the remuneration paid or allocated during each year from 2015 to 2019 (i.e., including variable remuneration allocated in respect of the preceding year). The remuneration amounts presented include – for the executive corporate officers as well as employees – the fixed portions, variable portions, and extraordinary remuneration paid during the year stated, on a gross basis.
In accordance with Afep-Medef guidelines, they also include free shares awarded during the year, valued in accordance with IFRS. The value stated corresponds to their grant-date valuation and therefore does not actually represent the value of the shares that will effectively be delivered at the end of the vesting period, which will depend on (i) the Company’s share price on the delivery date and (ii) the achievement rate of the applicable performance conditions. For the Company’s seven free share plans for which the vesting period has expired, the average delivery rate of shares to executive corporate officers was 86.62%. For the 2015, 2016 and 2017 plans, this rate was 64%. In addition, the value of the shares at their delivery date still does not always reflect an amount paid to executive corporate officers since the shares cannot in any case be sold before the end of a minimum period of two years, and one-half of the shares remains subject to further holding periods. The amounts shown below do not, however, include the valuation of benefits-in-kind or, for employees, the components of employee savings plans (statutory and discretionary profit-shares, etc.), as details of these components cannot be provided for all of the employees included in the French scope.
Finally, the performance criteria presented are the financial criteria applied for calculating the executive corporate officers’ annual variable remuneration. Directly correlated with the Group’s strategy, these criteria – which are key indicators of its financial health and intrinsic performance – correspond to:

• the growth rate for recurring operating profit of fully consolidated companies, determined based on the rules defined in the Group’s market guidance; and
• net cash from operating activities of fully consolidated companies, which represents the cash generated by the Group’s operations.

As the remuneration amounts shown for each year are the amounts actually paid, these performance indicators are given each time for year Y-1, i.e., the year in respect of which they were assessed for the purpose of calculating the executive corporate officers’ variable remuneration for year Y.

Arnaud Lagardère

	2015	2016	2017	2018	2019
Remuneration paid or allocated during the year (in €)	2 404 929	2 851 822	2 851 822	2 445 529	2 768 929
Average remuneration paid or allocated during the year to Company employees (in €)	314 730	444 525	415 095	328 974	352 018
Ratio vs. the average remuneration of Company employees	8	6	7	7	8
Median remuneration paid or allocated during the year to Company employees (in €)	258 937	269 460	255 548	251 902	260 472
Ratio vs. the median remuneration of Company employees	9	11	11	10	11
Average remuneration paid or allocated during the year to Group employees in France (in €)	53 097	55 032	57 659	56 468	56 098
Ratio vs. the average remuneration of Group employees in France	45	52	49	43	49
Median remuneration paid or allocated during the year to Group employees in France(*) (in €)	48 462	50 985	51 771	50 535	50 745
Ratio vs. the median remuneration of Group employees in France(*)	50	56	55	48	55
Year-on-year increase in Group recurring operating profit (in %)	+2,769	+8,84	+13,5	+6,74	+2,14
Net cash from operating activities of fully consolidated companies in year Y-1 (in €m)	210	523,7	457,9	318,2	482,5

^(*) The median remuneration of Group employees in France and the corresponding ratio do not include the value of free shares as this component cannot be disclosed meaningfully for this extremely wide scope.

Pierre Leroy

	2015	2016	2017	2018	2019
Remuneration paid or allocated during the year (in €)	2 776 100 (*)	2 837 485 (*)	2 959 280 (*)	2 702 440 (*)	2 722 380 (*)
Average remuneration paid or allocated during the year to Company employees (in €)	314 730	444 525	415 095	328 974	352 018
Ratio vs. the average remuneration of Company employees	9	6	7	8	8
Median remuneration paid or allocated during the year to Company employees (in €)	258 937	269 460	255 548	251 902	260 472
Ratio vs. the median remuneration of Company employees	11	11	12	11	10
Average remuneration paid or allocated during the year to Group employees in France (in €)	53 097	55 032	57 659	56 468	56 098
Ratio vs. the average remuneration of Group employees in France	52	52	51	48	49
Median remuneration paid or allocated during the year to Group employees in France(**) (in €)	48 462	50 985	51 771	50 535	50 745
Year-on-year increase in Group recurring operating profit (in %)	42	44	43	42	43
Progression du Résop Groupe sur N-1 (en %)	+2,769	+8,84	+13,5	+6,74	+2,14
Net cash from operating activities of fully consolidated companies in year Y-1 (in €m)	210	523,7	457,9	318,2	482,5

^(*) Including 32,000 performance share rights valued in accordance with IFRS. The average overall delivery rate of shares awarded in 2015, 2016 and 2017 was 64%. Following delivery, the shares are in any case subject to a holding period of at least two years, and one-quarter of the shares are to be held until termination of his duties within the Group.
^(**) The median remuneration of Group employees in France and the corresponding ratio do not include the value of free shares as this component cannot be disclosed meaningfully for this extremely wide scope.

Thierry Funck-Brentano

	2015	2016	2017	2018	2019
Remuneration paid or allocated during the year (in €)	2 508 100 (*)	2 569 485 (*)	2 681 280 (*)	2 434 440 (*)	2 454 380 (*)
Average remuneration paid or allocated during the year to Company employees (in €)	314 730	444 525	415 095	328 974	352 018
Ratio vs. the average remuneration of Company employees	8	6	6	7	7
Median remuneration paid or allocated during the year to Company employees (in €)	258 937	269 460	255 548	251 902	260 472
Ratio vs. the median remuneration of Company employees	10	10	11	10	9
Average remuneration paid or allocated during the year to Group employees in France (in €)	53 097	55 032	57 659	56 468	56 098
Ratio vs. the average remuneration of Group employees in France	47	47	47	43	44
Median remuneration paid or allocated during the year to Group employees in France(**) (in €)	48 462	50 985	51 771	50 535	50 745
Ratio vs. the median remuneration of Group employees in France(**)	37	39	38	36	38
Year-on-year increase in Group recurring operating profit (in %)	+2,769	+8,84	+13,5	+6,74	+2,14
Net cash from operating activities of fully consolidated companies in year Y-1 (in €m)	210	523,7	457,9	318,2	482,5

^(*) Including 32,000 performance share rights valued in accordance with IFRS. The average overall delivery rate of shares awarded in 2015, 2016 and 2017 was 64%. Following delivery, the shares are in any case subject to a holding period of at least two years, and one-quarter of the shares are to be held until termination of his duties within the Group.
^(**) The median remuneration of Group employees in France and the corresponding ratio do not include the value of free shares as this component cannot be disclosed meaningfully for this extremely wide scope.

2.5.2.3 APPROVAL OF THE COMPONENTS OF REMUNERATION PAID DURING OR ALLOCATED IN RESPECT OF 2019 TO THE EXECUTIVE CORPORATE OFFICERS

Further to the Company’s voluntary application of the strict legal framework introduced by the Order, the fixed, variable and extraordinary components making up the total remuneration and benefits paid during or allocated in respected of 2019 to the executive corporate officers will, in accordance with article L 226-8-2, II of the French Commercial Code, be submitted to the approval of the Company’s shareholders at the Annual General Meeting to be held on 5 May 2020.
These components, which are described in detail in the preceding sections, are summarised below in the format recommended in the Afep-Medef Code.

Arnaud Lagardère

Components of remuneration put to the shareholders’ vote	Amounts paid in 2019	Amounts allocated in respect of 2019 (or accounting values)	Presentation
Annual fixed remuneration	€1,140,729	€1,140,729	The gross amount of Arnaud Lagardère’s annual fixed remuneration has not changed since 2009.
Annual fixed remuneration	€1,628,200 (amount allocated in respect of 2018, approved by 96.88% of the votes at the 10 May 2019 Annual General Meeting – 4th resolution)	€1,569,750	This annual variable remuneration is based solely on (i) quantitative financial criteria (75% weighting) and non‑financial CSR criteria (25% weighting). The financial criteria are related to the Group’s performance in 2019 (growth rate for Group recurring operating profit compared with the target growth rate for Group recurring operating profit communicated as market guidance, and net cash from operating activities of fully consolidated companies compared with the budget prepared at the start of the year. The average of the figures calculated based on these two criteria may be reduced, where appropriate, by applying the ratio between Group recurring operating profit in 2019 and that generated in 2018) (see section 2.5.3.1 of the Universal Registration Document). The non-financial CSR criteria are related to the Group’s 2019 performance concerning its priority commitments under its Corporate Social Responsibility policy (e.g., proportion of female executive managers, Scope 1 and 2 CO2 emissions per million euros of revenue, proportion of staff that have an employee representative, ranking in the Dow Jones Sustainability Index) (see section 2.5.3.1 of the Universal Registration Document). The achievement rates are applied to a benchmark amount of (i) €1,050,000 for the financial criteria (75% weighting) and (ii) €350,000 for CSR non-financial criteria (25% weighting). Arnaud Lagardère’s annual variable remuneration may not exceed 150% of his annual fixed remuneration. Based on the achievement rates attained in 2019 (1.12 for the financial criteria and 1.125 for the non-financial CSR criteria), Arnaud Lagardère’s annual variable remuneration amoun
Multi-annual cashsettled variable remuneration	N/A	N/A	Arnaud Lagardère does not receive any multi-annual cash-settled variable remuneration.
Share options, performance shares and other grants of securities	N/A	N/A	Arnaud Lagardère has not received any share options, performance shares, or other grants of securities since his appointment as Managing Partner in 2003.
Extraordinary remuneration	N/A	N/A	Arnaud Lagardère did not receive any extraordinary remuneration for 2019.
Remuneration for offices held	N/A	N/A	Arnaud Lagardère was not entitled to and did not receive any directors’ fees for 2019.
Benefits in kind		18 616 €	This corresponds to Arnaud Lagardère’s potential personal use of a company car.
Benefits linked to taking up or terminating office	N/A	N/A	Arnaud Lagardère is not entitled to any benefits of this nature.
Benefits linked to non-competition agreements	N/A	N/A	Arnaud Lagardère is not entitled to any benefits of this nature.
Supplementary pension plan	€0	€0	Arnaud Lagardère is a beneficiary of the defined benefit supplementary pension plan set up by Lagardère Capital & Management for members of the Executive Committee. The plan is a conditional benefit plan, and the pension will only be payable if the beneficiary is still with the Company at retirement age, except in the event of (i) termination (other than for serious misconduct) after the age of 55 if the beneficiary does not take up another post, (ii) long-term disability or (iii) early retirement. Arnaud Lagardère’s pension benefit entitlements vested at a rate of 1.75% of the benchmark remuneration per year of membership of the plan. The benchmark remuneration corresponds to the average gross annual remuneration over the last five years (fixed and variable up to a maximum of 100% of the fixed portion, and cannot exceed 50 times the annual ceiling used to calculate social security contributions (corresponding to a maximum of €2,026,200 in 2019)). As the number of years of plan membership used to calculate the benefit entitlements is capped at 20, the supplementary pension cannot exceed 35% of the benchmark remuneration. In accordance with French Government Order no. 2019‑697 dated 3 July 2019, which reformed the legal regime for professional supplementary pension plans in France, the benefits accrued under this plan have been frozen at the level attained at 31 December 2019, and no additional benefits will be accrued under the plan as from that date. At 31 December 2019, the estimated amount of Arnaud Lagardère’s future annuity, determined in accordance with the applicable regulations, is €686,490, representing approximately 24.63% of his total gross remuneration (fixed and variable) paid in 2019. No benefits were due or paid to Arnaud Lagardère under this plan for 2019.

Pierre Leroy

Components of remuneration put to the shareholders’ vote	Amounts paid in 2019	Amounts allocated in respect of 2019 (or accounting values)	Presentation
Annual fixed remuneration	€1,474,000	€1,474,000	The gross amount of Pierre Leroy’s annual fixed remuneration has not changed since 2011.
Annual fixed remuneration	€723,900 (amount allocated in respect of 2018, approved by 95.90% of the votes at the 10 May 2019 Annual General Meeting – 5th resolution)	698 500€	Pierre Leroy’s annual variable remuneration includes: a portion based on quantitative criteria, as follows: financial criteria (75% weighting) related to the Group’s performance in 2019 (growth rate for Group recurring operating profit compared with the target growth rate for Group recurring operating profit communicated as market guidance, and net cash from operating activities of fully consolidated companies compared with the budget prepared at the start of the year. The average of the figures calculated based on these two criteria may be reduced, where appropriate, by applying the ratio between Group recurring operating profit in 2019 and that generated in 2018) (see section 2.5.3.1 of the Universal Registration Document); non-financial CSR criteria (25% weighting) related to the Group’s 2019 performance concerning its priority commitments under its Corporate Social Responsibility policy (e.g., proportion of women executives, Scope 1 and 2 CO2 emissions per million euros of revenue, proportion of staff that have an employee representative, ranking in the Dow Jones Sustainability Index) (see section 2.5.3.1 of the Universal Registration Document); qualitative portion, corresponding to a set of priority targets related to two domains, each of which are given an equal weighting: the roll-out of the Group’s strategic plan and the quality of governance and management (see section 2.5.3.1 of the Universal Registration Document); Pierre Leroy’s annual variable remuneration is based on (i) a “quantitative portion” benchmark amount of €400,000 and (ii) a “qualitative portion” benchmark amount of €200,000, representing an overall benchmark amount of €600,000. Consequently, 66.66% of the annual variable remuneration (i.e., a clear majority) is based on quantitative criteria and 33.33% on qualitative criteria. Pierre Leroy’s annual variable remuneration may not exceed 75% of his annual fixed remuneration, and the amount of the qualitative portion is capped at 25% of his annual fixed remuneration. Consequently, the qualitative portion may not represent more than 33% of his maximum annual variable remuneration. Based on the achievement rates attained in 2019 (1.12 for the financial criteria, 1.125 for the non-financial CSR criteria and 1.25 for the qualitative criteria), Pierre Leroy’s annual variable remuneration amounted to 47.39% of his annual fixed remuneration in 2019.
Multi-annual cashsettled variable remuneration	N/A	N/A	Pierre Leroy does not receive any multi-annual cash-settled variable remuneration.
Share options, performance shares and other grants of securities	N/A	€524,480	In 2019 Pierre Leroy was awarded 32,000 rights to performance shares, representing 0.024% of the Company’s share capital. These performance shares will vest after three years, in 2022, provided that (i) Pierre Leroy is still an executive corporate officer of the Company on the vesting date, and (ii) the following performance conditions have been met for the period from 2019-2021: for 40% of the shares awarded: 5% average annual growth rate for Group recurring operating profit. The vesting trigger rate would be a growth rate of 3.3%, and for growth rates between 3.3% and 5% the number of vested shares would be determined on a straight-line proportionate basis (ranging from 0% to 100% of the shares allocated); for 20% of the shares awarded: cumulative free cash flow excluding growth capex of €900 million. The vesting trigger amount would be €613 million, and for cumulative amounts between €613 million and €900 million the number of vested shares would be determined on a straight-line proportionate basis (ranging from 0% to 100% of the shares allocated); for 20% of the shares awarded: Lagardère SCA’s average annual Total Shareholder Return (TSR) over the reference period compared against (i) the average annual TSR of a panel of eight competitor companies (Relx, Pearson, Mondadori, Bloomsbury, Dufry, Valora, WH Smith and Autogrill), for 10% of the shares awarded, and (ii) the average annual TSR of the other companies in the CAC Mid 60 index, also for 10% of the shares awarded. As this is a relative criterion, the target rates for each portion of shares awarded will only be known and communicated at the end of the reference period. For each portion, the shares will vest in full if Lagardère SCA’s TSR during the reference period is at least equal to the reference panel’s TSR and no shares will vest if Lagardère SCA’s TSR is below the reference panel’s TSR; for 20% of the shares awarded: reaching a 45% proportion of female executive managers by 2021. The vesting trigger rate would be 42% and for percentages between 42% and 45%, the number of vested shares would be determined on a straight-line proportionate basis (ranging from 0% to 100% of the shares allocated). Vested performance shares must be held for at least two years. Subsequently, a quarter of the shares must be held until Pierre Leroy has built up a portfolio of Lagardère shares whose value is at least equal to one year’s worth of his remuneration, and another quarter must be held for as long as he is with the Group. This performance share grant – which complied with the framework set by the Supervisory Board on 13 March 2019 – was carried out by the Managing Partners on 14 May 2019 using the authorisation given at the 10 May 2019 Annual General Meeting (12th resolution). Pierre Leroy did not receive any share options in 2019 and was not granted any securities other than the abovedescribed performance shares.
Extraordinary remuneration	N/A	N/A	Pierre Leroy did not receive any extraordinary remuneration for 2019.
Remuneration for offices held	N/A	N/A	Pierre Leroy was not entitled to and did not receive any directors’ fees for 2019.
Benefits in kind		16 281 €	This corresponds to Pierre Leroy’s potential personal use of a company car
Benefits linked to taking up or terminating office	N/A	N/A	Pierre Leroy is not entitled to any benefits of this nature.
Benefits linked to non-competition agreements	N/A	N/A	Pierre Leroy is not entitled to any benefits of this nature.
Supplementary pension plan	€0	€0	​Pierre Leroy is a beneficiary of the defined benefit supplementary pension plan set up by Lagardère Capital & Management for members of the Executive Committee. The plan is a conditional benefit plan, and the pension will only be payable if the beneficiary is still with the Company at retirement age, except in the event of (i) termination (other than for serious misconduct) after the age of 55 if the beneficiary does not take up another post, (ii) long-term disability or (iii) early retirement. Pierre Leroy’s pension benefit entitlements vested at a rate of 1.75% of the benchmark remuneration per year of membership of the plan. The benchmark remuneration corresponds to the average gross annual remuneration over the last five years (fixed and variable up to a maximum of 100% of the fixed portion, and cannot exceed 50 times the annual ceiling used to calculate social security contributions (corresponding to a maximum of €2,026,200 in 2019)). As the number of years of plan membership used to calculate the benefit entitlements is capped at 20, the supplementary pension cannot exceed 35% of the benchmark remuneration. In accordance with French Government Order no. 2019‑697 dated 3 July 2019, which reformed the legal regime for professional supplementary pension plans in France, the benefits accrued under this plan have been frozen at the level attained at 31 December 2019, and no additional benefits will be accrued under the plan as from that date. At 31 December 2019, the estimated amount of Pierre Leroy’s future annuity, determined in accordance with the applicable regulations, is €686,490, representing approximately 31.23% of his total gross remuneration (fixed and variable) paid in 2019. No benefits were due or paid to Pierre Leroy under this plan for 2019.

Thierry Funck-Brentano

Components of remuneration put to the shareholders’ vote	Amounts paid in 2019	Amounts allocated in respect of 2019 (or accounting values)	Presentation
Annual fixed remuneration	€1,206,000	€1,206,000	The gross amount of Thierry Funck-Brentano’s annual fixed remuneration has not changed since 2011.
Annual fixed remuneration	€723,900 (amount allocated in respect of 2018, approved by 95.90% of the votes at the 10 May 2019 Annual General Meeting – 5th resolution)	€698,400	Thierry Funck-Brentano’s annual variable remuneration includes: a portion based on quantitative criteria, as follows: financial criteria (75% weighting) related to the Group’s performance in 2019 (growth rate for Group recurring operating profit compared with the target growth rate for Group recurring operating profit communicated as market guidance, and net cash from operating activities of fully consolidated companies compared with the budget prepared at the start of the year. The average of the figures calculated based on these two criteria may be reduced, where appropriate, by applying the ratio between Group recurring operating profit in 2019 and that generated in 2018) (see section 2.5.3.1 of the Universal Registration Document); non-financial CSR criteria (25% weighting) related to the Group’s 2019 performance concerning its priority commitments under its Corporate Social Responsibility policy (e.g., proportion of women executives, Scope 1 and 2 CO2 emissions per million euros of revenue, proportion of staff that have an employee representative, ranking in the Dow Jones Sustainability Index) (see section 2.5.3.1 of the Universal Registration Document); a qualitative portion, corresponding to a set of priority targets related to two domains, each of which are given an equal weighting: the roll-out of the Group’s strategic plan and the quality of governance and management (see section 2.5.3.1 of the Universal Registration Document). Thierry Funck-Brentano’s annual variable remuneration is based on (i) a “quantitative portion” benchmark amount of €400,000 and (ii) a “qualitative portion” benchmark amount of €200,000, representing an overall benchmark amount of €600,000. Consequently, 66.66% of the annual variable remuneration (i.e., a clear majority) is based on quantitative criteria and 33.33% on qualitative criteria. Thierry Funck-Brentano’s annual variable remuneration may not exceed 75% of his annual fixed remuneration, and the amount of the qualitative portion is capped at 25% of his annual fixed remuneration. Consequently, the qualitative portion may not represent more than 33% of his maximum annual variable remuneration. Based on the achievement rates attained in 2019 (1.12 for the financial criteria, 1.125 for the non-financial CSR criteria and 1.25 for the qualitative criteria), Thierry Funk-Brentano’s annual variable remuneration amounted to 57.92% of his annual fixed remuneration in 2019.
Multi-annual cashsettled variable remuneration	N/A	N/A	Thierry Funck-Brentano does not receive any multi-annual cash-settled variable remuneration.
Share options, performance shares and other grants of securities	N/A	€524,480	In 2019, Thierry Funck-Brentano was awarded 32,000 rights to performance shares, representing 0.024% of the Company’s share capital. These performance shares will vest after three years, in 2022, provided that (i) Thierry Funck-Brentano is still an executive corporate officer of the Company on the vesting date, and (ii) the following performance conditions have been met for the period from 2019-2021: for 40% of the shares awarded: 5% average annual growth rate for Group recurring operating profit. The vesting trigger rate would be a growth rate of 3.3%, and for growth rates between 3.3% and 5% the number of vested shares would be determined on a straight-line proportionate basis (ranging from 0% to 100% of the shares allocated); for 20% of the shares awarded: cumulative free cash flow excluding growth capex of €900 million. The vesting trigger amount would be €613 million, and for cumulative amounts between €613 million and €900 million the number of vested shares would be determined on a straight-line proportionate basis (ranging from 0% to 100% of the shares allocated); for 20% of the shares awarded: Lagardère SCA’s average annual Total Shareholder Return (TSR) over the reference period compared against (i) the average annual TSR of a panel of eight competitor companies (Relx, Pearson, Mondadori, Bloomsbury, Dufry, Valora, WH Smith and Autogrill), for 10% of the shares awarded, and (ii) the average annual TSR of the other companies in the CAC Mid 60 index, also for 10% of the shares awarded. As this is a relative criterion, the target rates for each portion of shares awarded will only be known and communicated at the end of the reference period. For each portion, the shares will vest in full if Lagardère SCA’s TSR during the reference period is at least equal to the reference panel’s TSR and no shares will vest if Lagardère SCA’s TSR is below the reference panel’s TSR; for 20% of the shares awarded: reaching a 45% proportion of female executive managers by 2021. The vesting trigger rate would be 42% and for percentages between 42% and 45%, the number of vested shares would be determined on a straight-line proportionate basis (ranging from 0% to 100% of the shares allocated). Vested performance shares must be held for at least two years. Subsequently, a quarter of the shares must be held until Thierry Funck-Brentano has built up a portfolio of Lagardère shares whose value is at least equal to one year’s worth of his remuneration, and another quarter must be held for as long as he is with the Group. This performance share grant – which complied with the framework set by the Supervisory Board on 13 March 2019 – was carried out by the Managing Partners on 14 May 2019 using the authorisation given at the 10 May 2019 Annual General Meeting (12th resolution). Thierry Funck-Brentano did not receive any share options in 2019 and was not granted any securities other than the above-described performance shares.
Extraordinary remuneration	N/A	N/A	Thierry Funck-Brentano did not receive any extraordinary remuneration for 2019.
Remuneration for offices held	N/A	N/A	Thierry Funck-Brentano was not entitled to and did not receive any directors’ fees for 2019.
Benefits in kind		€16,281	This corresponds to Thierry Funck-Brentano’s potential personal use of a company car.
Benefits linked to taking up or terminating office	N/A	N/A	Thierry Funck-Brentano is not entitled to any benefits of this nature.
Benefits linked to non-competition agreements	N/A	N/A	Thierry Funck-Brentano is not entitled to any benefits of this nature.
Supplementary pension plan	€0	€0	​Thierry Funck-Brentano is a beneficiary of the defined benefit supplementary pension plan set up by Lagardère Capital & Management for members of the Executive Committee. The plan is a conditional benefit plan, and the pension will only be payable if the beneficiary is still with the Company at retirement age, except in the event of (i) termination (other than for serious misconduct) after the age of 55 if the beneficiary does not take up another post, (ii) long-term disability or (iii) early retirement. Thierry Funck-Brentano’s pension benefit entitlements vested at a rate of 1.75% of the benchmark remuneration per year of membership of the plan. The benchmark remuneration corresponds to the average gross annual remuneration over the last five years (fixed and variable up to a maximum of 100% of the fixed portion, and cannot exceed 50 times the annual ceiling used to calculate social security contributions (corresponding to a maximum of €2,026,200 in 2019)). As the number of years of plan membership used to calculate the benefit entitlements is capped at 20, the supplementary pension cannot exceed 35% of the benchmark remuneration. In accordance with French Government Order no. 2019‑697 dated 3 July 2019, which reformed the legal regime for professional supplementary pension plans in France, the benefits accrued under this plan have been frozen at the level attained at 31 December 2019, and no additional benefits will be accrued under the plan as from that date. At 31 December 2019, the estimated amount of Thierry Funck-Brentano’s future annuity, determined in accordance with the applicable regulations, is €669,144, representing approximately 34.67% of his total gross remuneration (fixed and variable) paid in 2019. No benefits were due or paid to Thierry Funck-Brentano under this plan for 2019.

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