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“Airgas” Performance Share Plans

At its meeting on July 29, 2016, the Board of Directors of L’Air Liquide decided on a specific grant of performance shares, separate from the future general annual plans for 2016 and intended to show the Company’s recognition for the work carried out by all of the teams that contributed to the Airgas acquisition.

Volume of grants

  • Executive officers
      Volume of performance shares IFRS value in EUR1 % of share capital
    Benoît Potier 20,000 1,494,710 0.006
    Pierre Dufour 10,000 747,355 0.003
     1. Definitive IFRS value following the closure of accounts for 2016
     
  • Other beneficiaries
    The Board of Directors also decided to grant 45,230 performance shares to 87 beneficiaries.

In total, it awarded 75,230 performance shares representing 0.022% of the share capital in terms of the number of shares to 89 beneficiaries.

“Airgas” Plan Regulations

  • Except with regard to the performance conditions set out below, the “Airgas France” and “Airgas World” Plan regulations are identical to those of the 2015 Plans and, in particular, the vesting and holding periods (“Airgas France” Plan: 3 years and then another 2 years; “Airgas World” Plan: 4-year vesting period without any holding period).

Performance conditions

  • All the shares awarded within the scope of the “Airgas” Plans are subject to performance conditions.
     
  • Such performance conditions are identical to those for the future general annual plans for 2016. These performance conditions, adopted by the Board of Directors on February 15, 2016 and modified as specified on March 24, 2016 in order to take into account the remarks of certain shareholders, are as follows:
    Weighting 65% 35%
    Of which 50% Of which 50%
    Performance conditions Average of annual growth rates in recurring earnings per share excluding foreign exchange impact and exceptional items for the period 2016/2017/2018 Total Shareholder Return, defined as the average annual growth rate of an investment in Air Liquide shares over the 3 financial years Total Shareholder Return vs. 2 benchmarks as follows:
    ½ CAC 40 – ½ peers over the 3 financial years
    Objective Level of growth set within a range of +6% to +10% per annum (the precise level will be communicated ex post) Total shareholder return of 8%, as already published

    0% if the Air Liquide rate of return is lower than the average of the two indexes

    50% if the Air Liquide rate of return is equal to the average of the two indexes

    100% if the Air Liquide rate of return is more than 3% higher than the average of the two indexes

    Change on a straight-line basis

    Achievement of performance conditions This information will be published in 2019
     
  • Recurring EPS
    Concerning the recurring EPS criterion, in order to take into account the impact of the Airgas acquisition and its financing, the principle was adopted:
    • of calculating the index on the basis of pro forma financial statements, which make it possible to take into account comparable data for the period concerned (2016, 2017, 2018),
    • of increasing the objective in terms of average annual growth over this period. This objective, which was previously set at +5% per annum, has thus been set at a level of growth within a range of +6% to +10% per annum. The precise level will be communicated ex post.
     
  • Total shareholder return (TSR)
    • The absolute TSR objective remains unchanged as compared to the previous plans, i.e. +8% as already published.
  • The objective with regard to the relative part of TSR is based on a performance equal to the average of the two indexes. The rate of achievement of the performance conditions will be 0% if Air Liquide TSR is lower than the average of the two indexes, 50% if it is equal to the average of the two indexes and 100% if it is more than 3% higher than the average of the two indexes, on the basis of a straight-line change. Any grant of shares for a performance lower than the average of the two indexes has therefore become impossible. The rate of achievement of the performance conditions will be recorded by the Board at the time of the adoption of the financial statements for the 2018 financial year. The objectives set for each performance condition will be made public ex post, at the end of the Board meeting determining the rate of achievement of the performance conditions. The result achieved and the percentage of performance shares acquired will also be communicated.

Specificities relating to the executive officers

  1. Within the scope of the sub-limits authorized by the Annual Shareholders’ Meeting for 38 months, the Board of Directors sets annual limits for grants to the executive officers, expressed (i) as a percentage of the capital and (ii) as a multiple of their remuneration.
    The Board of Directors has decided to set the following limits for all plans combined for 2016:
    • for all the executive officers: the limit relating to the total number of performance shares granted in 2016 (for all performance share plans combined) to the 2 executive officers is set at 0.017% of the capital (i.e. an amount significantly lower than the average sub-limit on grants set at 0.15% of the capital for 38 months by the Annual Shareholders’ Meeting of May 12, 2016)
    • for each executive officer individually: the limit relating to the total cumulative IFRS value of the stock options and performance shares granted in 2016 (for all stock option and performance share plans combined) to each executive officer is set at approximately 1.5 times the amount of his maximum gross annual remuneration.
  2. In addition, Benoît Potier and Pierre Dufour have made a commitment, for the duration of their terms of office, not to carry out transactions to hedge their risk with regard to the performance shares granted.
     
  3. Furthermore, the shareholding obligations set out below apply to this specific grant, like they do to the other grants:
    • Holding, in registered form, until the termination of their duties, a minimum quantity of shares corresponding to 50% of the capital gain on acquisition net of social charges and taxes calculated on the date of the definitive award of the performance shares. This percentage will be lowered to 5% as soon as the quantity of shares held represents, for all LTI plans combined, an amount at least equal to 3 times the executive officer’s fixed gross annual remuneration.
    • Furthermore, the internal rule defined by the Board of Directors since 2008, pursuant to which the executive officers must hold, in a registered account, a number of shares equivalent to twice the fixed gross annual remuneration for the Chairman and Chief Executive Officer and the amount of fixed gross annual remuneration for the Senior Executive Vice-President remains in effect. This obligation will remain in force until it is exceeded by the effect of the above-mentioned rules resulting from the French Commercial Code. The Board of Directors recorded that this shareholding obligation is complied with by each of the executive officers at July 1, 2016.