ACAS plans

Length

The length of the plan is 10 years and includes a 4-year waiting period during which the stock options cannot be exercised.

Exercise price

The exercise price is €97 (corresponding to the average of the opening trading prices for the Air Liquide share during the twenty trading sessions prior to the date of the Board of Directors’ meeting, rounded down to the nearest euro).

Performance conditions/condition of continued employment

The stock options allocated may only be exercised if the Company meets certain performance conditions.

On the Remuneration Committee’s recommendation, the Board decided that these performance conditions will be applicable from now on to all beneficiaries of stock options (members of the executive management, members of the Executive Committee, and any other beneficiary) for all the options granted.

Furthermore, in order to respond to the expectations of some of the Company’s shareholders, the Board decided to change the performance conditions as compared those under previous plans, in order to include an element of relative comparison in the Total Shareholder Return criterion. Thus, the number of stock options that may be exercised out of the total number of stock options granted under the 2014 plan will depend:

• (i) for 65% of the options granted, on the rate of achievement of an objective set by the Board, of growth in Group undiluted net earnings per share excluding foreign exchange impact and exceptional items (Recurring EPS) for financial year 2016 as compared to Recurring EPS for the 2013 financial year; and
• (ii) for 35% of the options granted,
• for 50% of the options referred to in paragraph (ii): on an objective with regard to Total Shareholder Return set by the Board, defined as the average annual growth rate of an investment in Air Liquide shares for financial years 2014, 2015 and 2016 (“AL TSR”);
• for 50% of the options referred to in paragraph (ii): the Total Shareholder Return from an investment in Air Liquide shares, reinvested dividends - source: Bloomberg (“B TSR”), compared to a reference index made up of:
• for half, the CAC 40 index, reinvested dividends (source: Bloomberg), and
• for half, the Total Shareholder Return of the companies in the industrial gas sector (the average of Air Liquide, Linde, Praxair and Air Products), reinvested dividends (source: Bloomberg).

This choice results from the wish, firstly, to take account of a request made by international investors, who are generally sensitive to outperformance as compared to the sector average, and secondly to take into account the proportion of French shareholders in the Group’s capital (55%), for whom the CAC 40 index remains a natural reference, as demonstrated by the correlation studies.

In summary the applicable performance conditions are as follows:

Percentage	65%	35%
Objective	Growth in net earnings per share excluding foreign exchange impact and exceptional items 2016 vs. 2013	50% Total Shareholder Return 2014/2015/2016	50% Total Shareholder Return vs. benchmark ½ CAC 40 – ½ peers 2014/2015/2016
Achievement	From 0% to 100% if the objective is achieved	Low objective 0%	High objective 100%

 

As regards EPS, the growth objective set takes account of the economic environment, historical growth and the Group’s medium-term ambitions. It is unchanged as compared with the 2013 plan. From the objective set, the grant decreases on a straight-line basis and no grant is made if there is zero growth in EPS.
For information purposes, over the last three years, the objective was extremely close to the rates of growth in EPS shown in the consolidated annual budgets presented to the Board of Directors.

With respect to Total Shareholder Return defined as the average annual growth rate of an investment in Air Liquide shares (AL TSR), the objective set is in line with past performance. It is unchanged as compared with the 2013 plan. From the objective set, the grant decreases on a straight-line basis, down to a lower limit which remains significantly higher than the rate of return on capital.

With respect to Total Shareholder Return from an investment in Air Liquide shares - source: Bloomberg (B TSR) as compared to the CAC 40 index and the sector, the median objective is based on a performance close to the average of the two indices.

The targets 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 at the time of adoption of the financial statements for the financial year concerned. The result achieved and the percentage of stock options/shares that vest will also be communicated.

Furthermore, a condition of continued employment in the Group at the time of exercise of the stock options is also defined, as was the case in 2013.

Beneficiaries

Executive officer beneficiaries

100,000 stock options and 57,000 stock options to subscribe for shares were granted to Benoît Potier and Pierre Dufour respectively within the scope of the 2014 Plan, numbers that are unchanged as compared to 2013; this represents in total 0.05% of the share capital.

For the executive officers, it should be noted that the total number of options granted in 2014 may not grant entitlement to a number of shares exceeding:

• for all the executive officers combined, 0.1% of the share capital (it being specified that a sub-limit on grants specific to the executive officers of 0.3% of the capital for 38 months was set by the Annual Shareholders’ Meeting on May 7, 2013);
• for each executive officer individually, on the basis of a valuation of the stock options in accordance with the IFRS standard, approximately the amount of the executive officer’s maximum gross annual remuneration for the same financial year.

In addition, the Board specifies that the executive officers are subject to an obligation to retain, until the end of their duties, a defined minimum quantity of shares resulting from each exercise of stock options, corresponding to 50% of the capital gain on acquisition. In addition, the executive officers are also subject to an obligation to hold a number of shares equivalent to twice the amount of fixed gross annual remuneration for the Chairman and Chief Executive Officer and to the amount of fixed gross annual remuneration for the Senior Executive Vice-President. At its meeting on September 22, 2014, the Board of Directors recorded that this holding obligation is complied with by each of the executive officers at July 1, 2014.

The Company’s corporate governance practices and all the components of the remuneration of the executive officers are set out in detail in Air Liquide’s 2013 Reference Document.

Other beneficiaries

The Board of Directors decided to enlarge the number of beneficiaries of stock options, to increase it from 727 to 849.

2014 Plan for the Conditional Award of Shares to Emplo

The conditional awards of shares to employees were made within the scope of plans providing for the following terms:

Length

France Plan: the length of the vesting period is 3 years and is followed by a 2-year holding period;

World Plan: the 4-year vesting period is maintained, without any holding obligation.

Performance conditions/condition of continued employment

For both plans, the Board has readopted the criterion of growth in recurring EPS calculated over 3 financial years, and decreasing on a straight-line basis, identical to that defined for stock options (see above). This performance condition applies to all the conditional shares awarded to employees. Accordingly, the number of shares that shall finally vest for the employees who are beneficiaries of the Conditional Share Award – ACAS – Plan will depend on the rate of achievement of the growth target set by the Board, in respect of recurring EPS for financial year 2016 as compared to recurring EPS for the 2013 financial year.

The Plan also provides for a condition of continued employment which must be met at the end of the vesting period.

Beneficiaries

The Board of Directors decided not to include any of the Company’s executive officers or any member of the Executive Committee in the list of beneficiaries of the 2014 Pl an for the Conditional Award of Shares to Employees. It confirmed that if one day such an award appears to be appropriate, if applicable, it would be made within the scope of a plan providing for a 3-year vesting period and performance conditions also covering a 3-year period, identical to those provided for in respect of stock options.

It was decided to enlarge the number of beneficiaries of conditional share awards, to increase it from 1,077 to 1,248.