Note 36 - Related parties
36.1 MANAGEMENT REMUNERATION
The total gross remuneration awarded to the members of Lagardère SCA’s Executive Committee for 2019 amounted to €9.6 million, and €15 million including related charges. The figure with charges includes a provision recorded for the supplementary pension plan. The corresponding figures for 2018 were €10.9 million and €16.9 million, respectively.
In 2019, none of these beneficiaries received attendance fees from any Group company. They were awarded 108,000 rights to free shares. In 2018, none of the beneficiaries received any attendance fees and they were awarded 108,000 rights to free shares.
36.2 RELATED-PARTY TRANSACTIONS
Transactions with Lagardère Capital & Management (LC&M)
Lagardère Capital & Management – which is controlled and chaired by Arnaud Lagardère, who is also General and Managing Partner of Lagardère SCA – is the material embodiment of the Group. LC&M provides an array of management resources and skills to both the Group and each of its component parts.
To accomplish its mission, LC&M employs the principal senior executives forming the Group’s Executive Committee. The role of the Executive Committee is to assist the Managing Partners in their duties, i.e., to determine the Group’s strategy and lead its development, and to take the resulting necessary management decisions and implement them globally at parent company level and in the Group’s different business activities. LC&M bears the entire cost of its senior managers’ salaries and the related overheads as well as the fees billed by any French and/or international consultants that they may work with.
LC&M carries out its mission within the framework of an agreement entered into with Lagardère Ressources (the entity responsible for managing all of the Group’s corporate resources) which the Supervisory Board approved on 12 March 2004 based on the recommendation of the Audit Committee. Since the inception of the agreement, the work performed has been described each year in the Statutory Auditors’ report on related party agreements and commitments, in accordance with the requirements of articles L. 226-10 and R. 226-2 of the French Commercial Code.
Since 2004, LC&M’s remuneration has equalled the amount of expenses incurred in carrying out its mission, plus a margin of 10%, capped in absolute value terms at €1 million. These expenses are examined each fiscal year by the Audit Committee, which issues an opinion on their changes and developments before submitting them to the Supervisory Board.
In accordance with the above-described basis of remuneration, in 2019 LC&M invoiced €19.2 million to the Group, compared with €21.0 million in 2018. After deducting expenses (remuneration of Executive Committee members, taxes on high earnings, payroll taxes, support costs reimbursed to the Group and outside resource costs), operating profit after tax under the above agreement stood at €0.7 million.
Other transactions
The other transactions with related parties in 2019 undertaken in the normal course of business took place under arm’s length conditions. In particular, Lagardère SCA has not identified any agreements, other than those relating to normal business operations and conducted under arm’s length conditions, entered into in 2019 directly or via an intermediary, between (i) any of the Managing Partners, any members of the Supervisory Board or any shareholders of Lagardère SCA owning more than 10% of the voting rights and (ii) any subsidiaries more than 50%-owned by Lagardère SCA directly or indirectly.