pursuant to the AFEP-MEDEF Code
At its meeting on February 15, 2016, 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 2015, the Board of Directors set the amount of variable remuneration due to the executive officers for 2015.
For the record, in respect of 2015, the variable portion could amount to a maximum of 180% of fixed remuneration for the Chairman and Chief Executive Officer and a maximum of 140% 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%||140%|
An assessment was made of the performance of the executive officers. The results obtained in 2015 were below the objectives set for the criterion of recurring EPS and also for the ROCE criterion. The amount of the variable remuneration, as a percentage of the fixed remuneration, amounts to 61.1% for Benoît Potier and 47% for Pierre Dufour in respect of recurring EPS, and 22.05% for Benoît Potier and 17.15% for Pierre Dufour in respect of ROCE.
The performance of the executive officers with regard to the personal objectives was considered very good: preparation of the 2016-2020 strategic plan which will be presented after finalisation of the Airgas acquisition was successfully completed; the acquisitions in the Healthcare and industrial sectors, in addition to Airgas, and the start-ups, were completed without hitch. The main financial balances were preserved in an unstable environment, making it possible to pursue a selective investment policy for future growth while strengthening the Group’s financial structure, with strict control over capital expenditure. Attention was focused on identifying young managers who could take responsibilities and career progression for young high-potential talents within the framework of the changes in the Group’s organisation. Finally, with regard to CSR, safety was improved as shown by the decrease in the number of lost-time accidents which has fallen from 144 in 2014 to 138 in 2015 on the basis of a comparable scope, and in terms of innovation, an entity combining the new businesses and the digital organisation (IDST) was created. The amount of the variable remuneration in respect of the personal objectives represents 66.5% for Benoît Potier and 49.5% for Pierre Dufour.
In total, the amount of the variable remuneration as a percentage of the fixed remuneration amounts to 149.65% (out of a maximum of 180%) for Benoît Potier, -5.1% lower than the variable portion for 2014, and 113.65% (out of a maximum of 140%) for Pierre Dufour, -2.2% lower than the variable portion for 2014.
The total amount of gross remuneration is therefore as follows:
|In thousands of euros||Benoît Potier||Pierre Dufour|
The total amount of fixed and variable remuneration for 2015 is -3.1% lower than in 2014 for Benoît Potier and -1.2% lower for Pierre Dufour corresponding to an average annual increase, over the period 2012-2015, of +0.2% and +0.8% 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 2016, on the basis of several studies concerning the remuneration of executive officers, carried out by independent firms, both for the French market (large French industrial and services groups) and for the international market (Germany, United States).
In order to remain competitive as compared to the reference markets, it was decided to set the amount of the fixed remuneration, which has been unchanged since 2012 for Benoît Potier, and since 2014 for Pierre Dufour, as follows:
|In thousands of euros||Benoît Potier||Pierre Dufour|
This represents an increase of +6.8% as compared to 2015 for Benoît Potier, namely an increase of +1.7% a year since the last increase, and an increase of +3.8% as compared to 2015 for Pierre Dufour, namely an increase of +1.9% a year since the last increase.
The Board decided that the variable remuneration for 2016 will continue to be based on the same financial criteria, the objectives of (i) an increase in recurring net earnings per share, and (ii) return on capital employed after tax (ROCE) of the Company being identical to those for previous financial years, excluding the impact of the Airgas acquisition and its financing.
In addition to this there will be personal objectives including: (i) for two-thirds, qualitative objectives shared by the 2 executive officers which provide in particular for finalisation of the Airgas acquisition, its financing via the increase in capital in particular, and its integration, implementation of the 2016-2020 plan, preserving the Group’s main financial balances with the pursuit of a selective investment policy, supporting the young managers in their career progression and organising the succession plans; finally, continued pursuit of the Corporate Social Responsibility policy, in particular in terms of safety and reliability, and preparation for the CSR integration of Airgas; (ii) for one-third, 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 and Pierre Dufour.
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 adopted for the 2015 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 and performance share plans of September 26, 2013.
The 2013 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 94.9%.
The 2013 performance share plan (of which the members of the General Management and the Executive Committee were not beneficiaries) provided that, for all the performance shares awarded, the number of performance shares that would definitively vest would depend on fulfilment of the same performance condition relating to recurring EPS over 3 years as that applicable to the 2013 stock option plan as set out above (only one criterion).
Accordingly, the Board of Directors recorded that the proportion of performance shares definitively awarded to the beneficiary was equal to 92.1%.
After listening to the requests made by certain investors, the Board of Directors decided from now on to set the performance conditions for the stock option and performance share plans implemented in the autumn at the start of the year in order to have a reference period of three full years. On the recommendation of the Remuneration Committee, the Board of Directors, at its meeting on February 15, 2016, adopted the principle of readopting, for the 2016 stock option and performance share plans, the same criteria of recurring EPS and total shareholder return as for the previous plans;
In light of the exceptional nature of the Airgas transaction and the uncertain economic environment at the present time, the Board will make sure that these performance conditions remain relevant, serious and exacting at the time of grant.
No regulated agreement was submitted to the Board of Directors during the 2015 financial year.
In accordance with French law, the Board of Directors carried out the annual re-examination of the agreements entered into and authorised during previous financial years which continued to be performed during the last financial year. These agreements concern the supplementary pension/death and disability benefit/life insurance plans and the termination indemnities applicable to Benoît Potier and Pierre Dufour. On the recommendation of the Remuneration Committee, the Board of Directors decided to maintain the current authorisations in force.
The Statutory Auditors’ special report on regulated agreements and commitments will be included in the 2015 reference document. It will be proposed to the Annual Shareholders’ Meeting on May 12, 2016 that it place on record that this report does not mention any new agreement.
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 2015, which will be put to the advisory vote of the shareholders at the Annual Shareholders’ Meeting on May 12, 2016.
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.