Combined General Meeting (behind closed doors) June 16, 2020 O P E - - PowerPoint PPT Presentation

Combined General Meeting (behind closed doors) June 16, 2020

O P E N I N G O F T H E G E N E R A L M E E T I N G 2 0 2 0

FRANÇOIS-HENRI PINAULT

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

A G E N D A A N D R E G U L ATO RY I S S U E S

ÉRIC SANDRIN

GROUP GENERAL COUNSEL

4

CONTENTS Introduction Full-year 2019 highlights & financial results analysis Creating value Sustainability Governance & Remuneration Conclusion Statutory Auditors’ report Vote on the resolutions

I N T R O D U CT I ON

FRANÇOIS-HENRI PINAULT

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

6

FULL-YEAR 2019 AND BEGINNING OF 2020 KEY HIGHLIGHTS

Another year of sustained profitable growth in 2019

• Revenue > €15 billion
• Record operating margin > 30%

First-quarter of 2020 heavily impacted by COVID-19 and marked by strong disparities

• A very promising start to the year for all our Houses
• Performance in our main markets affected by the

rapid spread of COVID-19

7

FULLY MOBILIZED AGAINST COVID-19 PANDEMIC

SUPPORTING OUR EMPLOYEES, OUR CONSUMERS AND SOCIETY

• Making health and safety of employees and clients our top priority
• Manufacturing medical equipment in Italy and France
• Masks and overalls in Gucci’s Italian workshop network
• Masks in the French workshops of Balenciaga and Yves Saint Laurent
• Importing masks from China for French and British health systems
• Supporting research on Covid-19 with a financial donation to Institut Pasteur
• Supporting innovative projects such as the “3D COVID” project, making bank
• f 3D printers available to the Public Hospitals of Paris
• Tackling the emergency needs through financial donations to:
• the Hubei Red Cross in China
• four major hospitals foundations in Italy in Kering’s Houses home regions
• the CDC Foundation in the US
• Backing initiatives supporting the fashion industry in the US
• Along with concrete initiatives from our Houses:
• Gucci, in support of the World Health Organization, and the Italian Civil

Protection Department

• Pomellato and Dodo through a crowdfunding initiative against domestic

violence in Italy

8

SUSTAINED GROWTH TRAJECTORY IN 2019

€3,211m

+15.1%

€4,778m

+19.6% 30.1% recurring

• perating margin

€15,884m

+16.2% reported +13.3% comparable

GROUP REVENUE GROUP RECURRING OPERATING INCOME (1) RECURRING NET INCOME, GROUP SHARE (2)

• 14%

EP&L intensity (3)

Full carbon neutrality achieved in 2019 (offsetting, Scopes 1, 2, 3 across all

• perations and supply chains)

38,068

as of Dec. 31, 2019 55% women managers within the Group

€1,521m

FREE CASH FLOW FROM OPERATIONS EMPLOYEES SUSTAINABILITY

(1) Following the first-time application of IFRS 16 in 2019, comparative data for 2018 has been restated... (2) Recurring net income, Group share: net income from continuing operations, Group share, excluding non-recurring items. In 2019, this item excludes the non-recurring tax expense relating to the tax settlement in Italy (3) 2015-2018

FULL-YEAR 2019 HIGHLIGHTS AND FINANCIAL RESULTS ANALYSIS

JEAN-FRANÇOIS PALUS

GROUP MANAGING DIRECTOR

19%

• f revenue

+7%* 33%

• f revenue

+14%* 6%

• f revenue

+6%* 34%

• f revenue

+20%* 8%

• f revenue

+6%*

North America Western Europe Asia Pacific Japan RoW

10

ANOTHER YEAR OF SUSTAINED PROFITABLE GROWTH IN 2019

€15,884m

+16.2% reported +13.3% comparable

13,665 15,884 2018 2019

+13.3%*

GROUP REVENUE (€m)

* % comparable growth (at constant scope and exchange rates)

€4,778m

up 19.6% from 2018 restated (IFRS 16) GROUP RECURRING OPERATING INCOME (€m) FCF of €1.5bn after CAPEX of €956m (6.0% of revenue) and one-off cash out Net financial debt at €2.8bn (excl. lease liabilities) FCF AND NET DEBT (€m) ENHANCED OPERATING MARGIN (€m)

11

ANOTHER YEAR OF SUSTAINED PROFITABLE GROWTH IN 2019

Revenue Recurring

• perating income

Recurring operating income reported change (%) Recurring operating income margin (%) Luxury Houses 15,383 5,042 +19.0% 32.8% Corporate & other 501 (264)

• 8.3%

n.a. Kering 15,884 4,778 +19.6% 30.1% * Restated IFRS 16 NET DEBT FCF FROM OPERATIONS 1,521 2018 reported 2018* 2019 2,955 3,551 2019 2,812 2018 1,711

3,995 4,778 2018** 2019

Group recurring operating income in €m and margin in %

• Sharp increase in EBIT and margin
• Group EBIT margin topping 30% for the first time ever
• Virtuous operating leverage

29.2% 30.1%

+90bp

2018* 2019

12

LUXURY HOUSES

In €m

2019

2018 Restated Change 2018 Reported Revenue

15,383 13,247 +16.1%* 13,247

Recurring operating income Margin (%) Adjusted margin IAS 17 (%)

5,042 32.8% 32.5% 4,238 32.0%

• +19.0%

+0.8pt +0.9pt 4,191

• 31.6%

Gross CAPEX As % of revenue

652 4.2% 610 4.6% +6.8%

• 0.4pt

610 4.6% In €m

Gucci Saint Laurent Bottega Veneta Other Houses

2019 Revenue Change* Comparable change** 9,628 +16.2% +13.3% 2,049 +17.5% +14.4% 1,168 +5.3% +2.2% 2,538 +20.3% +17.8% Recurring operating income Change* 3,947 +19.8% 562 +20.0% 215

• 14.3%

318 +42.1% Recurring operating margin 41.0% 27.4% 18.4% 12.5%

* vs. 2018 Restated from IFRS 16 * * At constant scope and exchange rates * +13.2% comparable

13

FINANCIAL PERFORMANCE

FY 2019 FY 2018 Restated IFRS 16 FY 2018 Reported

Revenue 15,884 13,665 13,665 Gross margin 11,775 10,198 10,198 Recurring operating income 4,778 3,995 3,944 Other non-recurring operating income and expenses Finance costs, net Income tax expense Share in earnings of equity-accounted companies (168) (310) (2,134) 42 (222) (294) (859) 12 (222) (207) (868) 12 Net income from continuing operations Net income from discontinued operations 2,208 126 2,631 1,095 2,659 1,095 Net income of consolidated companies Of which net income, Group share 2,334 2,309 3,726 3,688 3,754 3,715 Net income, Group share, from continuing

• perations excluding non-recurring items*

3,211 2,790 2,817 Net income, Group share, per share (in euro) Net income per share from continuing operations, Group share, excluding non-recurring items (in euro) 18.40 25.59 29.28 22.15 29.49 22.36

* In 2019, this item excludes the non-recurring tax expense relating to the tax settlement in Italy

In €m 1 2

Mainly PUMA contribution, based on Vara consensus

1

Mainly PUMA contribution: net income and net capital gain of €1.18bn

2

In €m

FY 2019 NET DEBT BRIDGE

14

CHANGE IN NET FINANCIAL DEBT

161 402 750 46

FCF from

• perations

1,342

IFRS 16 first application Net debt at December 31, 2018 Net debt at December 31, 2019 Net interest paid and dividend received Repayment of lease liabilities Net financial investments and other

2,812

• 79

1,711

• 1,521

Dividend paid Share repurchase

15

A SOLID FINANCIAL STRUCTURE

* of FY19 group revenue

SHAREHOLDERS’ EQUITY NET DEBT DEBT-TO-EQUITY RATIO CAPITAL EMPLOYED

€10,439m €2,812m 26.9% €13,251m

INVENTORIES RECEIVABLES OPERATING WORKING CAP PAYABLES

€2,959m €996m €3,146m 19.8%* €809m

in % in € (for the FY in reference) DIVIDEND PER SHARE

16

2019 DIVIDEND REVISED DOWNWARDS WITHIN THE CONTEXT OF THE COVID-19 OUTBREAK

4.00 4.60 6.00 10.50 8.00 2015 2016 2017 2018 2019

Proposed to June 16, 2020 AGM €3.50 per share interim dividend paid on January 16, 2020 €4.50 per share balance to be paid on June 25, 2020

• 30%
• vs. the dividend

initially proposed

49.6% 45.3% 40.1% 47.0% 31.3% 102.2% 57.1% 37.3% 47.8% 35.1%

2015 2016 2017* 2018 2019** in % of recurring net income, Group share in % of available cash flow

* 2017 data restated for IFRS 5 * * 2019 available cash flow excluding one-off tax settlement

DIVIDEND PAYOUT

17

STEADY SHAREHOLDER RETURN

* Target of 50% on average of recurring net income, Group share and available cash flow

SUSTAINED GROWTH AND FINANCIAL PERFORMANCE

STRONG SHARE PRICE APPRECIATION X4 between 2015 and 2019 DIVIDEND GROWTH LINKED TO GROUP PERFORMANCE Payout target

• f 50%*

EXCEPTIONAL DISTRIBUTION IN KIND

• f PUMA shares

≈ €36 per share as of May 16, 2018 STRONG PUMA SHARE PRICE APPRECIATION + c.60% from distribution until 2019 y/e SHARE REPURCHASE PROGRAM €570m between October 2018 and July 2019

300 350 400 450 500 550 600 650 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20

18

SHARE PRICE PERFORMANCE

Source: Euronext, as of June 5, 2020

(in €)

KERING SHARE PRICE PERFORMANCE VS. CAC40 INDEX (REBASED) SINCE JANUARY 1, 2019

Kering

• 8%

CAC 40

• 13%

Performance in 2019

+26%

Performance in 2019

+42%

• 80.0%
• 60.0%
• 40.0%
• 20.0%

0.0% 20.0% 40.0%

• 65%
• 50%
• 35%
• 20%
• 5%

10% 25% 40% 55%

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12 Week 13 % stores closed WW Retail sales Luxury (comp) 19

Q1 2020 REVENUE: HEAVY IMPACT FROM COVID-19

• Extreme monthly variations
• Starting with a strong January (up solid double digits)
• A difficult February (Asia Pacific store closures, tourism

decline in the region and Western Europe)

• Worsening situation in March (all stores closing gradually in

Europe and America, followed by central logistics and production facilities later in March)

• Comparable revenue decline led by Asia Pacific

AN UNPRECEDENTED QUARTER INCREASING PERCENTAGE OF RETAIL NETWORK CLOSED DURING Q1

* At constant scope and exchange rates

€3,203m

• 15.4% reported
• 16.4% comparable*

€3,066m

• 16.0% reported
• 16.9% comparable*

€137m

• /w Kering Eyewear €130m

+0.2% reported

• 1.3% comparable*

CORPORATE & OTHER LUXURY HOUSES GROUP REVENUE

C R E AT I N G VA L U E

FRANÇOIS-HENRI PINAULT

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

21

A UNIQUE GROWTH & PERFORMANCE MODEL

ORGANIC GROWTH & VALUE CREATION RESPONSIBLE, INNOVATIVE, QUALITY OF EXECUTION COMPETITIVE ADVANTAGE GROWTH PLATFORM CREATIVITY SUSTAINABILITY LONG-TERM FINANCIAL PERFORMANCE

2015-2019

REVENUE

X2.1 +20% CAGR

RECURRING OPERATING INCOME

x3.1 +33% CAGR

RECURRING OPERATING MARGIN

> +10pt

2025 ROADMAP

22

SUSTAINABILITY, PEOPLE AND INNOVATION

WE CARE

about our impact on the planet, on climate change,

• n natural resources by:
• Reducing our environmental footprint through -40% EP&L,
• 50% CO2 Science-Based Target
• Preserving our raw materials through 100% traceability and compliance with
• ur Kering Standards, with highest standards in animal welfare

WE COLLABORATE

for the good of our employees, suppliers, clients to:

• Preserve our industry’s heritage
• Instill diversity, achieve gender parity at all levels and pay equity
• Provide exceptional employment by being the preferred employer in Luxury

and developing progressive policies

WE CREATE

innovations to ensure our planet, our industry and our brands thrive for the long run by:

• Launching disruptive innovations and exploring new solutions towards

circular economy

• Empowering future generations

23

AN ENSEMBLE OF COMPLEMENTARY HOUSES UNITED BY A POWERFUL CULTURE

STEADY GROWTH RELAUNCH UNDERWAY

• Leverage full brand potential
• Sustaining high level of operating margins
• Substantial FCF generation,

normative Capex level

• Offering and distribution optimization
• Brand equity investment
• Gradual recovery of profitability

ENTERING A NEW GROWTH PHASE

• In-depth work on brand equity, product
• ffering, distribution network, supply chain
• Investments required in short term
• Significant operating leverage in medium term
• Untapped markets, expanded distribution

networks, broadened product offering

• Opex & Capex investments
• Margins to increase in short / medium term

SCALING UP

LOGISTICS AND SUPPLY CHAIN

ON TRACK WITH GROWTH PLATFORM DEVELOPMENT

INFORMATION SYSTEMS DIGITAL EMPOWERMENT

GROWTH PLATFORM

COMMUNICATIONS ECOMMERCE & CLIENT SERVICES CRM & DATA AI & INNOVATION

HR SALES & CLIENTS SUPPLY CHAI N DISTRIBUT I ON E-COMMERCE INTERNALISATION FINANCE

M A S T E R D A T A M A N A G E M E N T B U S I N E S S I N T E L L I G E N C E

E R P

24

PROCESSES & EQUIPMENT MORE SCALABLE FOOTPRINT NEW OPERATING MODEL

STRONG CASH FLOW GENERATION

• Optimize Working Capital
• Pursue Group

investments with Capex-to-sales ratio at c.6%

• Continued optimization
• f ROCE

25

FINANCIAL PRIORITIES

BALANCED CAPITAL ALLOCATION

• Consistent dividend

policy

• Ability to seize M&A
• pportunities
• Agile in returning

additional cash to shareholders

SUSTAIN ORGANIC GROWTH…

• Creative brands

resonating with customers

• Further market share

gains

• Unleash potential
• f our Houses according

to their maturity level

… AT SOLID PROFITABILITY LEVEL

• Invest for growth:

products, stores, client experience and engagement, talents, digital and omnichannel capabilities, communications

• Operating leverage

thanks to optimization

• f cost base relative

to scale

Agility to meet instant requests Balancing scale and personalization Seamless experience across channels and geographies

26

KERING IS WELL POSITIONED TO LEVERAGE THE NEW LUXURY ENVIRONMENT

A GLOBAL LUXURY GROUP WITH EXCEPTIONAL HOUSES DEVELOPING GROWTH PLATFORM TO SUPPORT OPERATIONS AND IMPROVE EFFICIENCY WITH SUSTAINABILITY AT THE HEART OF ITS STRATEGY

YOUNG AND GLOBAL CONSUMERS INCREASED DEMAND FOR TRANSPARENCY

Leading sustainability commitments

NUMEROUS TOUCHPOINTS NEW TECHNOLOGIES OMNICHANNEL AS A MUST A DEMAND-DRIVEN SUPPLY CHAIN

S U S TA I N AB IL IT Y

MARIE-CLAIRE DAVEU

CHIEF SUSTAINABILITY OFFICER & HEAD OF INTERNATIONAL INSTITUTIONAL AFFAIRS

29

WE CARE FOR OUR IMPACT ON THE PLANET, ON CLIMATE CHANGE, AND ON NATURAL RESOURCES

Reducing our environmental footprint

• 14% reduction of the overall environmental impacts in

environmental profit & loss account intensity between 2015 and 2018;

• 77% reduction of the GHG emissions linked to our stores and

implantations in intensity and 36% reduction of our emissions between 2015 and 2018;

• Carbon neutrality achieved as of 2018 (scope 1 to 3).

Preserving our raw materials

• 88% traceability for key raw materials in 2018;
• 100% responsible gold purchase for watches & jewelry;
• 68% alignment with our Kering social, environmental and animal

welfare standards across our supply chains in 2018. Protecting biodiversity

• First corporate partnership with IPBES, the Intergovernmental

Platform on Biodiversity and Ecosystem Services;

• Co-publication with the Cambridge Institute for Sustainability

Leadership (CISL) and Biodiversify of a report on biodiversity strategies.

30

WE COLLABORATE WITH PEOPLE ACROSS OUR BUSINESS ECOSYSTEM INCLUDING SUPPLIERS, EMPLOYEES & CLIENTS

Instill gender parity & diversity

• Gender parity and salary equality: 55% women managers

within the Group;

• Appointment of heads of diversity inclusion and talent at

Kering and Gucci. Provide exceptional employment

• Global parental policy, including 14 weeks baby leave;
• Exemplary working conditions for all our supply chains;
• 13,000 audits of suppliers between 2015 and 2019.

Empowering future generations & preserve our industry’s heritage

• Sustainability curriculums at educational institutes such as

the IFM-Kering sustainability chair;

• Suppliers’ platform, with training on Kering Standards;
• Craftsmanship and artisanal training programs.

31

WE CREATE INNOVATIONS TO ENSURE OUR PLANET, OUR INDUSTRY AND OUR BRANDS THRIVE FOR THE LONG-RUN BY LAUNCHING DISRUPTIVE INNOVATIONS

• Co-founding partner of the Fashion-Plug and Play

accelerator;

• Partnership with Plug and Play extended to China with

K Generation Award;

• 3,800 sustainable fabrics in the Materials Innovation Lab

library;

• Sustainable Innovation Lab (SIL) for watches & jewelry

established in January 2020;

• 119 startups identified through conferences, Fashion for

Good, our innovation labs, the K Generation Award and Kering innovation team.

AND ALSO…

32

Only Luxury group to be included in the CDP climate change A-list every year for 3 years Most sustainable company across the Luxury and fashion industries for 3 years in Corporate Knights Global 100 ranking Integrated report dedicated website 1.5 degree trajectory Internal guidelines on green fashion shows

G O V E R N A N C E

SOPHIE L’HÉLIAS

LEAD INDEPENDENT DIRECTOR

34

BOARD OF DIRECTORS BEFORE AGM

François-Henri Pinault Chairman and CEO Jean-François Palus Group Managing Director Sophie L’Hélias Lead Independent Director Yseulys Costes Independent Director Jean-Pierre Denis Independent Director Ginevra Elkann Independent Director Claire Lacaze Director representing employees Baudouin Prot Non-Independent Director Daniela Riccardi Independent Director Sapna Sood Independent Director Financière Pinault Represented by Héloïse Temple-Boyer Non-Independent Director

Term of office expires: 2020 Annual General Meeting Seeking reappointment, subject to shareholder approval

35

4 SPECIALIZED COMMITTEES

• Sapna Sood

(Chair)

• Jean-François Palus
• François-Henri Pinault
• Daniela Riccardi
• Sophie L’Hélias

(Chair)

• Financière Pinault, represented

by Héloïse Temple-Boyer

• Yseulys Costes
• Jean-Pierre Denis
• Ginevra Elkann
• Claire Lacaze
• Jean-Pierre Denis

(Chairman)

• Sophie L’Hélias
• Yseulys Costes
• Financière Pinault, represented

by Héloïse Temple-Boyer

• Financière Pinault, represented

by Héloïse Temple-Boyer (Chair)

• Yseulys Costes
• Sapna Sood
• Baudouin Prot
• Ginevra Elkann

BOARD OF DIRECTORS 9 meetings in 2019 - Attendance rate: 94%

Degree of independence: 75% Degree of independence: 80% Degree of independence: 60% Degree of independence: 50%

SUSTAINABILITY COMMITTEE REMUNERATION COMMITTEE APPOINTMENTS AND GOVERNANCE COMMITTEE

13 Committee meetings in 2019 - Attendance rate: 86%

AUDIT COMMITTEE

36

ASSESSMENT OF THE BOARD OF DIRECTORS

• Very positive view of how the Board and its

Committees operate

• Quality of the discussions during meetings and

high level of freedom of expression

• Satisfaction about the creation of the role of

Lead Independent Director

• Positive assessment of the strategy meeting, both

for the quality of the information provided and for the opportunity they create to interact with management

• Improvement avenues, such as further increasing

the diversity of expertise among Board member

ANALYSIS AND REFLECTION ON THE COMPOSITION OF THE BOARD

• Expansion of the expertise
• Better understanding of the markets
• Diversity of experiences
• Rejuvenation

37

PROPOSAL FOR THE APPOINTMENT OF NEW DIRECTORS

JEAN LIU

Independent Director President of DiDi Chuxing Age: 41 Chinese national Jean Liu will bring to the Board her extensive expertise in new technologies as well as her deep knowledge of the Chinese market

TIDJANE THIAM

Independent Director Former Chief Executive of Credit Suisse Group AG (July 2015 - February 2020) Age: 57 French and Ivorian national Tidjane Thiam will bring to the Board his in-depth financial expertise as well as his knowledge

• f global markets

EMMA WATSON

Non-Independent Director Actor and activist Age: 30 British national Emma Watson will bring to the Board her commitment to sustainable development and women’s issues

R E M U N E R AT IO N

ÉRIC SANDRIN

SECRETARY OF THE BOARD OF DIRECTORS

Gross amounts (in euros) François-Henri Pinault Chairman and CEO

2019 2018

Amounts awarded for the year Amounts paid during the year Amounts awarded for the year Amounts paid during the year Fixed remuneration 1,200,000 1,200,000 1,200,000 1,200,000 Annual variable remuneration 947,088 1,944,000 1,944,000 1,944,000 Multi-annual variable remuneration 9,870,405 2015 Plan: 11,153 KMUs awarded at €167 per unit, corresponding to a value of €1,862,551 at the date

• f the award. Exercized at €885 per unit

2016 Plan: 9,526 KMUs awarded at €166 per unit, corresponding to a value of €1,581,316 at the date

• f the award. Exercized at €988 per unit

9,411,688 Exceptional remuneration 2014 Plan: 9,900 KMUs awarded at €166 per unit, corresponding to a value of €1,643,400 at the date

• f the award. Exercized at €885 per unit

2018 Plan: 5,000 KMUs awarded at €581 per unit, corresponding to a value of €2,905,000 at the date

• f the award. Exercized at €988 per unit

8,761,500 4,940,000 Directors’ fees (Kering) 67,006 66,704 66,704 67,121 Directors’ fees (subsidiaries)

• 14,527

Benefits in kind 10,933 10,933 16,421 16,421 Total 2,225,027 17,573,325 3,227,125 21,873,974

39

REMUNERATION OF THE CHAIRMAN AND CEO IN 2019

ex-post vote

Gross amounts (in euros) Jean-François Palus Group Managing Director

2019 2018

Amounts awarded for the year Amounts paid during the year Amounts awarded for the year Amounts paid during the year Fixed remuneration 1, 223,045 1,223,045 1,221,296 1,221,296 Annual variable remuneration 816,699 1,685,818 1,685,818 1,597,998 Multi-annual variable remuneration 8,635,830 2015 Plan: 9,758 KMUs awarded at €167 per unit, corresponding to a value of €1,629,586 at the date of the

• award. Exercized at €885 per unit

2016 Plan: 8,448 KMUs awarded at €166 per unit, corresponding to a value of €1,402,368 at the date of the

• award. Exercized at €988 per unit

8,346,624 Exceptional remuneration 2018 Plan: 3,000 KMUs awarded at €581 per unit, corresponding to a value of €1,743,000 at the date of the

• award. Exercized at €988 per unit

2,964,000 Directors’ fees (Kering) 71,901 66,704 66,704 60,412 Directors’ fees (subsidiaries) 120,000 125,000 125,000 128,333 Benefits in kind 1,089,975 1,089,975 1,089,975 1,089,975 Total 3,321,620 15,501,166 4,188,793 12,733,844

40

REMUNERATION OF THE GROUP MANAGING DIRECTOR IN 2019

ex-post vote

41

2020 REMUNERATION POLICY OF THE CHAIRMAN & CEO AND THE GROUP MANAGING DIRECTOR

ex-ante vote

23%

Fixed remuneration

27%

Rémunération variable annuelle

= 120 % de la remuneration fixe

50%

Multi-annual variable remuneration (LTI)

= 100% of the fixed remuneration for year Y + annual variable remuneration due for Y-1

CHAIRMAN & CEO

44%

Multi-annual variable remuneration (LTI)

80% of the fixed remuneration for the year Y + annual variable remuneration due for Y-1

28%

Fixed remuneration

28%

Annual variable remuneration

= 100% of the fixed remuneration

GROUP MANAGING DIRECTOR

Initially proposed by the Board of Directors at its meeting on February 11, 2020

27%

Fixed remuneration

73%

Multi-annual variable remuneration (LTI)

= 100% of the fixed remuneration for year Y (€1,200,000) + effective annual variable remuneration for Y-1

CHAIRMAN & CEO

62%

Multi-annual variable remuneration (LTI)

80% of the fixed remuneration for the year Y (€1,200,000) + effective annual variable remuneration for Y-1

38%

Fixed remuneration

GROUP MANAGING DIRECTOR

Revised within the context of the Covid-19 outbreak (decided by the Board of Directors on April 21, 2020)

COMPONENTS AND STRUCTURE OF THE TOTAL REMUNERATION ALLOCATED TO DIRECTORS

42

2020 REMUNERATION POLICY OF MEMBERS OF THE BOARD OF DIRECTORS

ex-ante vote TOTAL REMUNERATION ALLOCATED TO DIRECTORS Unchanged since 2017 : €877,000

• despite the expected increase in the number of members on the Board of Directors following

2020 AGM

* The remuneration allocated to the Lead Independent Director is subject to the achievement of objectives defined in advance by the Board of Directors. For 2020, the objectives are the following:

• promote and maintain a good relationship between the Board and its shareholders and investors;
• participate in the assessment of the Board and its members;
• ensure that information is provided to non-executive Directors and facilitate communication among them by organizing meetings or discussions outside Board and Committee meetings, where

necessary;

• ensure the effective implementation of mechanisms to prevent and resolve potential conflicts of interest.

Minus special portions for:

• The remuneration of the Chairs of

the Audit, Remuneration, and Appointments and Governance Committees (€23,000 each)

• The Lead Independent Director

(€50,000 for 2020)* Coefficient: 1 by Board Membership, increased by 0.5 per Committee Coefficient:

• 1 per presence at each meeting
• f the Board
• 0.5 for each attendance of a

Committee meeting

40% FIXED 60% VARIABLE

€877,000

C O N C L U S I O N

FRANÇOIS-HENRI PINAULT

CHAIRMAN AND CHIEF EXECUTIVE OFFICER

S TAT UTO RY A U D I TO R S ’ R E P O RT

FRÉDÉRIC MOULIN

STATUTORY AUDITOR DELOITTE

45

CONTENTS

Statutory Auditors’ Reports to the Ordinary General Meeting

• Statutory Auditors’ Report on the financial statements of the Company
• Statutory Auditors’ Report on the consolidated financial statements
• Statutory Auditors’ Special Report on regulated-party agreements

Statutory Auditors’ Report to the Extraordinary General Meeting

• Statutory Auditors’ Special Report on the authorization to grant free shares, existing or to be issued

46

Ordinary General Meeting

REPORTS ON THE COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS

• Financial statements approved by the Board of Directors on February 11, 2020 based on information available

at that date concerning the COVID-19 health crisis in China

• Since this date, communication by your Board of Directors on events that have occurred and information

known after the closing date concerning the impacts of the crisis relating to the COVID-19 epidemic

• in Q1 2020 financial information published on April 21, 2020, and
• in the Risk Factors and Outlook sections of the Universal Registration Document published on

March 26, 2020 and the first update published on April 30, 2020 CONTEXT OF THE ACCOUNTS CLOSING

47

Ordinary General Meeting

REPORTS ON THE COMPANY AND CONSOLIDATED FINANCIAL STATEMENTS

Company financial statements

(First resolution)

Consolidated financial statements

(Second resolution)

References Pages 401 - 404 of the Universal Registration Document Pages 376 - 381 of the Universal Registration Document Purpose of our engagement Certification that the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December 31, 2019 and of the results of its operations for the year then ended in accordance with French accounting principles Certification that the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as of December 31, 2019 and

• f the results of its operations for the year then ended in

accordance with International Financial Reporting Standards as adopted by the European Union Key audit matters

• Valuation of long- term investments
• Tax risks and valuation of related liabilities
• Impairment tests on goodwill and intangible assets with

indefinite lives

• Valuation of inventories
• First-time application of IFRS 16, Leases, as of

January 1, 2019 (also the subject of a technical emphasis of matter in the first part of our report) Specific verifications No matters to report on the management report, on the information relating to corporate governance and on the benefits of corporate officers and commitments made in their favor No matters to report on the information presented in the Group management report

Unmodified opinion on the Company and consolidated financial statements

48

Ordinary General Meeting

ADDITIONAL REPORT

• The Special Report presents the support agreement for services provided by Artémis SAS, approved in previous

years and with continuing effect during the year;

• We were not advised of any new agreements authorized during the year subject to the approval of the

Shareholders’ Meeting. STATUTORY AUDITORS’ SPECIAL REPORT ON REGULATED-PARTY AGREEMENTS

(pages 405 - 406 of the Universal Registration Document)

49

Extraordinary General Meeting

SPECIAL REPORT

• Proposed authorization for the Board of Directors to make free grants of ordinary shares to employees and

executive corporate officers of the Company, with waiver of pre-emptive subscription rights (17th resolution) STATUTORY AUDITORS’ SPECIAL REPORT ON THE AUTHORIZATION TO GRANT FREE SHARES, EXISTING OR TO BE ISSUED We have no matters to report on the information presented in the Board of Directors’ report

V O T E O N T H E R E S O L U T ION S

51

APPROVAL OF THE 2019 FINANCIAL STATEMENTS, APPROPRIATION OF NET INCOME AND SETTING OF THE DIVIDEND (Resolutions 1 to 3)

(ordinary resolutions)

• Approval of the parent company financial statements for the year ended December 31, 2019

(1st resolution)

• Approval of the consolidated financial statements for the year ended December 31, 2019

(2nd resolution)

• Appropriation of net income for 2019
• Distribution of cash dividend of €8 (*) per share

(*) corresponding to an interim dividend of €3.50 per share paid on January 16, 2020, and a final dividend of €4.50

• Payment date: June 25, 2020

(3rd resolution)

52

EVOLUTION OF THE COMPOSITION OF THE BOARD OF DIRECTORS (Resolutions 4 to 9)

(ordinary resolutions)

• Reappointment of Jean-Pierre Denis as a Director

(4th resolution)

• Reappointment of Ginevra Elkann as a Director

(5th resolution)

• Reappointment of Sophie L’Hélias as a Director

(6th resolution)

• Appointment of Jean Liu as a Director

(7th resolution)

• Appointment of Tidjane Thiam as a Director

(8th resolution)

• Appointment of Emma Watson as a Director

(9th resolution)

53

SAY ON PAY (Resolutions 10 to 14)

(ordinary resolutions)

• Approval of the information referred to in Article L. 225-37-3, I of the French Commercial Code relating

to remuneration paid during or awarded for the year ended December 31, 2019 to corporate officers in respect of their duties as Directors (10th resolution)

• Approval of the fixed, variable and exceptional components of total remuneration and benefits in kind

paid during or awarded for the year ended December 31, 2019 to François-Henri Pinault, Chairman and Chief Executive Officer (11th resolution)

• Approval of the fixed, variable and exceptional components of total remuneration and benefits in kind

paid during or awarded for the year ended December 31, 2019 to Jean-François Palus, Group Managing Director (12th resolution)

• Approval of the remuneration policy for executive corporate officers

(13th resolution)

• Approval of the remuneration policy for corporate officers in respect of their duties as Directors

(14th resolution)

54

RENEWAL OF THE TERMS OF OFFICE OF STATUTORY AUDITOR (Resolution 15)

(ordinary resolution)

• Renewal of the terms of office of Deloitte & Associés as principal Statutory Auditor and BEAS as

substitute Statutory Auditor (15th resolution)

55

STOCK REPURCHASE PROGRAM (Resolution 16)

(ordinary resolution)

• Authorization to be given to the Board of Directors to purchase, retain or transfer

the Company’s shares (16th resolution)

Authorization Resolution number Period of authorization Characteristics Treasury shares cancellation Outstanding (April 2019) 18 months (October 2020) Maximum purchase price: € 580 Maximum of 10% of the share capital 16th resolution As of June 16, 2020 18 months (December 2021) Maximum purchase price: € 600 Maximum of 10% of the share capital

56

GRANT OF EXISTING SHARES AND/OR SHARES TO BE ISSUED TO EMPLOYEES AND/OR EXECUTIVE CORPORATE OFFICERS (Resolution 17)

(extraordinary resolution)

• Authorization for the Board of Directors to make free grants of ordinary shares of the Company

(existing or to be issued), subject, where applicable, to performance conditions, to beneficiaries or certain categories of beneficiaries among the employees and executive corporate officers of the Company and affiliated companies, entailing the waiver by shareholders of their pre-emptive subscription rights (17th resolution)

57

AMENDMENTS TO THE ARTICLES OF ASSOCIATION (Resolutions 18 to 22)

(extraordinary resolutions)

• Modification of the minimum number of shares that each Director is required to own and amendment
• f Article 10 of the Company’s Articles of Association (“Company management - Board of Directors”)

to comply with the provisions of the PACTE Law relating to Directors representing employees (18th resolution)

• Amendment of Article 11 of the Company’s Articles of Association (“Tasks and powers of the Board of

Directors”) to reflect the new provisions of Article L. 225-35 of the French Commercial Code (19th resolution)

• Amendment of Article 13 of the Company’s Articles of Association (“Deliberations of the Board of

Directors - Minutes”) to reflect the provisions of French law no. 2019-744 of July 19, 2019 relating to certain decisions that can be made by the Board of Directors via written consultation (20th resolution)

• Deletion of Article 18 of the Company’s Articles of Association (“Non-voting Directors”)

(21st resolution)

• Amendment of Article 17 of the Company’s Articles of Association (“Compensation of the Directors,

the Chairman, the Managing Director, the Assistant Managing Directors and the officers of the Board

• f Directors”) to comply with the provisions of the PACTE Law relating to the remuneration of

Directors, and deletion of references to non-voting Directors (22nd resolution)

58

POWERS FOR FORMALITIES (Resolution 23)

(ordinary resolution)

• Powers for formalities

(23rd resolution)