pursuant to the AFEP-MEDEF Code
At its meeting on February 16, 2015, the Board of Directors of Air Liquide adopted the components of remuneration of the executive officers¹.
On the basis of the financial statements drawn up for 2014, the Board of Directors set the amount of variable remuneration due to the executive officers for 2014.
For the record, in respect of 2014, the variable portion could amount to a maximum of 180% of fixed remuneration for the Chairman and Chief Executive Officer and a maximum of 130% for the Senior Executive Vice-President. It was conditional on:
The weight of each criterion expressed as a percentage of the fixed remuneration was as follows:
|Benoît Potier||Pierre Dufour|
|Total (expressed as a percentage of fixed remuneration)||180%||130%|
An assessment was made of the performance of the executive officers. The results obtained in 2014 were above the objective set for the criterion of recurring EPS and below the objective set for the ROCE criterion. The amount of the variable remuneration, as a percentage of the fixed remuneration, amounts to 67.6% for Benoît Potier and 52% for Pierre Dufour in respect of recurring EPS, and 28.8% for Benoît Potier and 19.2% for Pierre Dufour in respect of ROCE.
The performance of the executive officers with regard to the personal objectives was considered very good: the development efforts made in favour of high-potential young talents were pursued. Furthermore, in an uneven environment, the Group continued to make progress in line with the objectives set within the scope of ALMA 2015; the main financial balances were preserved with strict control of capital expenditure and a selective investment policy. The balance sheet is stronger with a decrease in the debt/equity ratio. Finally, with regard to CSR, safety has improved as shown by the further decrease in the lost-time accident frequency rate which fell from 1.62 in 2013 to 1.50 in 2014, and in terms of innovation, the modernisation of the Paris Innovation Campus and the construction of a new R&D centre in China were launched. The amount of the variable remuneration in respect of the personal objectives represents 61.2% of the fixed remuneration for Benoît Potier and 45% for Pierre Dufour.
In total, the amount of the variable remuneration as a percentage of the fixed remuneration amounts to 157.6% (out of a maximum of 180%) for Benoît Potier and 116.2% (out of a maximum of 130%) for Pierre Dufour.
The total amount of gross remuneration is therefore as follows:
|In thousands of euros (rounded off)||Benoît Potier||Pierre Dufour|
The total amount of fixed and variable remuneration for 2014 is +9.2% higher than in 2013 for Benoît Potier and +8.5% higher for Pierre Dufour corresponding to an average annual increase, over the period 2011-2014, of +1.8% and +1.6% a year respectively.
Pierre Dufour, who has taken charge of the management of the hub in Frankfurt, also receives an annual amount of 250,000 euros paid by the German subsidiary, which includes, in particular, for approximately one half, an amount corresponding to the benefits in kind (housing) from which he previously benefited under his employment contract in France.
The Board determined the amounts of fixed remuneration and the applicable principles for determination of the variable remuneration of Benoît Potier and Pierre Dufour for 2015, on the basis of several studies concerning the remuneration of executive officers, carried out by independent firms, both for the French market (French industrial groups of the CAC 40 and comparable groups; large French industrial and services groups) and for the international market.
It was decided that the amount of fixed remuneration would remain unchanged as compared to 2014:
|In thousands of euros||Benoît Potier||Pierre Dufour|
The Board decided that the variable remuneration for 2015 will continue to be based on the same financial criteria, the objectives (i) of increase in recurring net earnings per share, and (ii) of return on capital employed after tax (ROCE) of the Company being identical to those for previous financial years.
In addition to this there will be personal objectives including: (i) for 2/3, qualitative objectives, mostly shared by the 2 executive officers, related to management: organisation and strategy with the preparation of the 2016-2020 plan, preserving financial balances, progress in the evolution of the Group’s young generations and pursuit of the Corporate Social Responsibility objectives related, in particular, to safety, reliability, monitoring of the risk management process and the CO2 assessment; (ii) for 1/3, individual performance.
The weighting formula for the various components making up the variable remuneration and the maximum percentage of variable remuneration as compared to the fixed remuneration are unchanged for Benoît Potier; in order to remain competitive as compared to the reference markets (France, Germany, international), they are modified as follows for Pierre Dufour:
|Total (expressed as a percentage of fixed remuneration)||140%|
Neither Benoît Potier nor Pierre Dufour receive directors’ fees in respect of their duties as directors as long as they hold an executive office.
On the basis of the financial statements for the 2014 financial year submitted for the approval of the next Annual Shareholders’ Meeting, the Board of Directors recorded the rate of achievement of the performance conditions defined at the time of implementation of the stock option plan of September 27, 2012.
The 2012 stock option plan provided that the number of options that could effectively be exercised by the beneficiary of a conditional grant of options would depend on the level of achievement of:
Accordingly, the Board of Directors recorded that the total proportion of the options subject to conditions that could be exercised by the beneficiary was equal to 90.5%.
Due to the increase in the length of the period of calculation of the performance conditions with regard to ACAS plans for the conditional grant of shares to employees, the Board of Directors did not have to record the achievement of performance conditions concerning the 2013 plan at its meeting on February 16, 2015. For information purposes, the executive officers are not currently beneficiaries of conditional grants of shares.
Stock ownership obligations
Regulated agreements concerning Benoît Potier
1. Death and disability benefits plan
It was decided, in an overall logic of simplification (one unified plan instead of the two that currently exist) and ensuring the legal security of the various supplementary social protection schemes, effective as from January 1, 2015, to change the death and disability benefits plan set up for the benefit of all the personnel, in order to extend the basis for assessment of the contributions and benefits and to put an end, at the same time, to application of the death benefits plan for “senior managers”. From now on, one unified supplementary death and disability benefits plan is applied, covering all the personnel and the executive officers duly authorised to benefit from the plan, in which:
An insurance contract was entered into with an insurance company in this respect at the end of 2014 which specifies the limits of the incapacity/disability and death benefits for the same insured party.
Pursuant to a decision of November 20, 2014 made in accordance with the regulated agreements and commitments procedure, the Board of Directors authorised Benoît Potier, in respect of his duties as Chairman and Chief Executive Officer, to benefit, as from January 1, 2015, from this new unified death and disability benefits plan covering all the personnel. A report was made to the Board on February 16, 2015 on the implementation of this authorisation. In the light of the pooling of the risks covered, the amount of the annual contribution paid for Benoît Potier should amount to substantially less than the contribution paid up until now by the company within the scope of the death benefits plan for “senior managers".
2. Life insurance plan
Following the changes in the regulations, it was decided to transfer to the collective life insurance plan from which Benoît Potier benefits, from 2015 onwards, the payment of the contribution (assessed on the basis of the reference remuneration amounting to between 0 and 8 times the annual social security ceiling) paid up until then into the defined contribution pension plan for senior managers and executives, of which he is no longer a beneficiary. The financial impact of this extension is practically neutral for the Company. Pursuant to a decision made on November 20, 2014 in compliance with the regulated agreements and commitments procedure, the Board of Directors therefore authorised the extension of the life insurance plan to the bracket of reference remuneration amounting to between 0 and 8 times the annual social security ceiling. A report was made to the Board on February 16, 2015 on the effective implementation of this authorisation.
These agreements and the related Statutory Auditors’ special report will be included in the 2014 reference document. They will be put to the vote of the Annual Shareholders’ Meeting on May 6, 2015 in a specific resolution for Benoît Potier.
“Say on Pay”
The Board of Directors adopted the draft resolutions and the summary tables showing the elements of remuneration due or allocated to Mr Benoît Potier, Chairman and Chief Executive Officer, and Mr Pierre Dufour, Senior Executive Vice-President, respectively, in respect of 2014, which will be put to the advisory vote of the shareholders at the Annual Shareholders’ Meeting on May 6, 2015.
¹ For the sake of transparency and exhaustiveness, all references to the remuneration of Pierre Dufour in this document take into account his remuneration in respect of his offices in both France and Germany.