KERING ESG PRESENTATION JUNE 2020€¦ · Balancing scale and personalization. Seamless experience...

KERING ESG PRESENTATIONJUNE 2020

SUMMARY

1. GROUP PRESENTATION & STRATEGY

2. GOVERNANCE

3. SUSTAINABILITY

4. PEOPLE

2KERING ESG PRESENTATION - JUNE 2020

SUMMARY


2. GOVERNANCE

3. SUSTAINABILITY

4. PEOPLE


LUXURY INDUSTRY CHANGED RADICALLY OVER THE PAST DECADEAND WILL CONTINUE TO DO SO

CAGR 2008-2019: +5%CAGR 2019-2025e: +2/+3%

159 147 167 186 207 212 219 245 244 254 262 281320-330

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2025e

In €bnSource: Bain/Altagamma, May 2020

PERSONAL LUXURY GOODS MARKET

Share of Chinese spendingSource: Bain/Altagamma, May 2020

Share by generationSource: Bain/Altagamma, May 2020

Gen Y

Gen X andBaby boomers

Gen Z4% 10-15%25%

35%40-

45%

2013 2019 2025e

20% 35%47-49%

2011 2019 2025e

KERING ESG PRESENTATION - JUNE 2020 4

Share of Online channelSource: Bain/Altagamma, May 2020

5% 12%28-30%

2013 2019 2025e

KERING COMPLETED ITS TRANSFORMATION…

KERING REVENUE BREAKDOWN

KERING LUXURY CHANNEL MIX

64%

0%

73%

5%

2008

Cfao (14%)

Conforama (16%)

Puma (12%)

Redcats (18%)

Luxury (17%)

Fnac (23%)

20192008

KERING LUXURY GEOGRAPHIC MIX

20192008

Europe(40%)

Asia Pacific(23%)

Japan(16%)

RoW(2%)

North America (19%)

WesternEurope

(32%)

Asia Pacific(34%)

Japan(8%)

RoW(7%)

North America (19%)

Offline retail as % of total salesOnline retail as % of total sales

Luxury €3.4bn

2019

Luxury Houses (97%)

Luxury Houses €15.4bn


… AND IS WELL POSITIONED TO LEVERAGE THE NEW LUXURY ENVIRONMENT

KERING ESG PRESENTATION - JUNE 2020

Agility to meet instant requests

Balancing scale and

personalization

Seamless experience across channels and geographies

A GLOBAL LUXURY GROUP WITH EXCEPTIONAL HOUSESDEVELOPING GROWTH PLATFORM TO SUPPORT OPERATIONS AND IMPROVE EFFICIENCY

WITH SUSTAINABILITY AT THE HEART OF ITS STRATEGY

YOUNG AND GLOBAL CONSUMERS

INCREASED DEMAND FOR TRANSPARENCY

Leadingsustainability commitments

NUMEROUS TOUCHPOINTS

NEW TECHNOLOGIES

OMNICHANNELAS A MUST

A DEMAND-DRIVEN SUPPLY CHAIN

6

Our ambit ion: to be the wor ld ’s

most inf luent ia l Luxury group

in terms of creat iv i ty,

susta inabi l i ty and long- term

f inancia l per formance

“ ”



€15.9 billion

KEY FIGURES AS OF DECEMBER 31, 2019

+13.3% comp growth

RECURRING OPERATING

INCOME

€4.8 billion

+19.6% yoy

FREE CASH FLOW FROM OPERATIONS

€1.5 billion

EMPLOYEES

38,068

WOMEN MANAGERS

55%of Group managers

SUSTAINABILITY

-29%EP&L intensity between

2015 and 2019

EMPOWERING OUR MAISONS

REVENUE

8


A UNIQUE GROWTH & PERFORMANCE MODEL

ORGANIC GROWTH& VALUE CREATION

RESPONSIBLE, INNOVATIVE, QUALITYOF EXECUTION

COMPETITIVE ADVANTAGEGROWTH PLATFORM

CREATIVITY

SUSTAINABILITY

LONG-TERMFINANCIAL

PERFORMANCE

2015-2019

REVENUE X2.1 +20% CAGR

RECURRING OPERATING INCOME

x3.1 +33% CAGR

RECURRINGOPERATINGMARGIN

> +10pt

9


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 offering, 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

10

A GROWTH PLATFORM ENCOMPASSING THREE KEY COMPONENTS


LOGISTICS AND SUPPLY CHAIN

INFORMATION SYSTEMS

DIGITAL EMPOWERMENT

GROWTHPLATFORM

COMMUNICATIONSECOMMERCE & CLIENT SERVICESCRM & DATAAI & INNOVATION

HR

SALES & CLIENTS

SUPPLY CHAIN

DISTRIBUT ION

E-COMMERCEINTERNALISATION

FINANCE

MA

ST

ER

DA

TA

MA

NA

GE

ME

NT

BU

SIN

ES

S IN

TE

LL

IGE

NC

E

E R P

PROCESSES& EQUIPMENT

MORESCALABLEFOOTPRINT

NEW OPERATING

MODEL

11


FINANCIAL PRIORITIES

STRONGCASH FLOW GENERATION

• Optimize Working Capital

• Pursue Group investments withCapex-to-sales ratioat c.6%

• Continued optimization of ROCE

BALANCEDCAPITALALLOCATION

• Consistent dividend policy

• Ability to seize M&A opportunities

• Agile in returning additional cashto shareholders

SUSTAINORGANIC GROWTH…

• Creative brands resonating with customers

• Further market share gains

• Unleash potentialof 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 optimizationof cost base relativeto scale

12


STEADY SHAREHOLDER RETURN

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

SUSTAINED GROWTH AND FINANCIAL PERFORMANCE

STRONGSHARE PRICE

APPRECIATIONX4

between 2015 and 2019

DIVIDEND GROWTH LINKED TO GROUP

PERFORMANCEPayout target

of 50%*

EXCEPTIONALDISTRIBUTION

IN KINDof PUMA shares≈ €36 per share

as of May 16, 2018

STRONGPUMA SHARE PRICE

APPRECIATION+ c.60% from distribution

until 2019 y/e

SHAREREPURCHASE

PROGRAM€570m betweenOctober 2018and July 2019

13


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

in %

in € (for the FY in reference)

DIVIDEND PER SHARE

4.00 4.606.00

10.50

8.00

2015 2016 2017 2018 2019

€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

14


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 of 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

15

SUMMARY


2. GOVERNANCE

3. SUSTAINABILITY

4. PEOPLE



GOVERNANCE

Kering’sgovernance

Kering’s strategy& performance

driving management compensation

17


A GROUP DEFINED BY ENTREPRENEURIAL SPIRIT

41.0% of capital57.7% of voting rights

53.1% 1.1%

4.8%

ArtémisInstitutional investors

Employee shareholders

Treasury shares

Individual shareholders

STABLE FAMILY SHAREHOLDING WITH LONG-TERM STRATEGY

STRONG INSTITUTIONAL INVESTOR BASE ALIGNED WITH THE GROUP’S WORLDWIDE PRESENCE

LISTED ON EURONEXT PARIS AND INCLUDED IN CAC 40, EURO STOXX 50 AND STOXX EUROPE 50 INDICES

% of share capital held at Dec. 31, 2019 (source: TPI)

18


MEMBERSHIP OF THE BOARD OF DIRECTORS FOLLOWING THE SHAREHOLDER’S MEETING OF JUNE 16, 2020

Jean LiuIndependent Director

Daniela RiccardiIndependent Director

Financière Pinault Represented by

Héloïse Temple-BoyerNon-Independent Director

Baudouin ProtNon-Independent

Director

Tidjane ThiamIndependent Director

Emma WatsonNon-Independent

Director*

Yseulys CostesIndependent Director

Jean-Pierre DenisNon-Independent

Director

Ginevra ElkannIndependent Director

François-Henri PinaultChairman and CEO

Jean-François PalusGroup Managing Director

Sophie L’HéliasLead Independent

Director

Claire LacazeDirector representing

employees

* The independence of Emma Watson will be reviewed and assessed by the Appointment and Governance Committee following her appointment as a Director at the June 16, 2020 AGM

19


BOARD FOCUSING ON INDEPENDENCE AND VARIETY OF EXPERTISE

(1) Following the Shareholders’ Meeting of June 16, 2020(2) Within the meaning of the Corporate Governance AFEP-MEDEF Code which Kering subscribes to, these percentages do not include Directors representing employees

TOTAL NUMBER OF DIRECTORS

INDEPENDENCE (2)

PROPORTION OF WOMEN (2)

AVERAGE AGE

2020 (1)

13

50%

58%

51

5

2007

9

56%

11%

60

3NATIONALITIES REPRESENTED

2012

12

50%

33%

52

4

20


DEPTH AND BREADTH OF DIRECTOR SKILLS

0 2 4 6 8 10 12 14

KERING’S DIRECTORS COLLECTIVELY REPRESENT A DEEP, DIVERSE MIX OF SKILLS AND EXPERIENCES THAT SUPPORT LONG-TERM VALUE CREATION

Corporate governance

Risk management

Corporate Social Responsibility

Marketing

Industry

Technology/Digital

Economics

Finance and accounting

Leadership

21


BOARD GOVERNANCE BEST PRACTICES

Compliance with recommendations of the Afep-Medef Code

Combination of management roles (Chairman of the Board and CEO) adapted to the Group’s shareholder structure • 60% of controlled companies

included in the CAC 40 have adopted the same governance

Lead independent director (Sophie L’Hélias) has the following prerogatives • Serves as the principal liaison

and facilitator between the independent directors and the Chairman and CEO

• Can add items to the agenda of the Board of Directors’ meetings

• Can convene non-executive director meetings (without the presence of the executive directors)

• Represents the Board for investor engagement on ESG issues in liaison with the Chairman

• Contributes to the good relationship and function of the Board

• Participates in the process of assessing the Board of Directors

Director Satisfaction reflected in the Board Assessments• Internal annual self-assessment

• Independent third-party assessment carried out every three years (latest assessment carried out in early 2019)

Complementary nature of the duties of the Chairman and CEO and the Group Managing Director

Strong commitment of Board’s Committees to corporate governance

Four-eye principle supporting management decision

Independence of Board’s Committees

22


BOARD GOVERNANCE

APPOINTMENTS & GOVERNANCE COMMITTEE

AUDIT COMMITTEE

REMUNERATION COMMITTEE

SUSTAINABILITY COMMITTEE

• Tidjane Thiam (Chairman)• Jean-Pierre Denis • Yseulys Costes• Financière Pinault, represented

by Héloïse Temple-Boyer• Sophie L’Hélias• Jean Liu

• Yseulys Costes (Chairwoman)• Financière Pinault, represented

by Héloïse Temple-Boyer• Jean-Pierre Denis• Tidjane Thiam• Sophie L’Hélias• Claire Lacaze

• Financière Pinault, representedby Héloïse Temple-Boyer (Chairwoman)

• Sophie L’Hélias• Ginevra Elkann• Baudouin Prot• Yseulys Costes

• Emma Watson (Chairwoman)• Jean-Pierre Denis• Sophie L’Hélias• Daniela Riccardi• François-Henri Pinault• Jean-François Palus

BOARD OF

DIRECTORSIndependence rate: 67%

Independence rate: 60%

Independence rate: 60%*

Independence rate: 33%

* Within the meaning of the Corporate Governance AFEP-MEDEF Code which Kering subscribes to, this percentage do not include Directors representing employees

23


BOARD GOVERNANCE – RISK OVERSIGHT

Approvalof the annualinternal audit plan

Review of internaland external audit activities

Reviewof internal control

Risk management& validation

of the risk mapping

Review of Compliance& GDPRAUDIT

COMMITTEE

24

RISK MAPPING

2019 Universal Registration Document – p.418


OVERALL MATERIALITY OF KERING’S 15 MAIN RISK FACTORS

25


GOVERNANCE

Kering’sgovernance

Kering’s strategy& performance

driving management compensation

26


REMUNERATION STRUCTURE FOR 2020 FOR EXECUTIVE CORPORATE OFFICERS

27

23%Fixed remuneration

27%Annual variable remuneration=120% of the fixed remuneration

50%Multi-annual variable

remuneration (LTI)= 100% of the fixed

remuneration for year Y + annual variable

remuneration due for Y-1

CHAIRMAN & CEO


remuneration (LTI)80% of the fixed

remuneration for the year Y + annual variable

remuneration due for Y-1


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



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


GROUP MANAGING DIRECTOR

REVISED WITHIN THE CONTEXT OF THE COVID-19 OUTBREAK (DECIDED BY THE BOARD OF DIRECTORS ON APRIL 21, 2020)


REMUNERATION STRUCTURE FOR 2020 FOR EXECUTIVE CORPORATE OFFICERS

28

CHAIRMAN & CEO GROUP MANAGING DIRECTOR

REVISED WITHIN THE CONTEXT OF THE COVID-19 OUTBREAK

BENEFITS IN KIND

FIXEDREMUNERATION

ANNUALVARIABLEREMUNERATION

MULTI-ANNUALVARIABLEREMUNERATION(LTI)

Voted at the 2020 AGMVoted at the 2019 AGM Voted at the 2020 AGMVoted at the 2019 AGM

€1,200,000

No performance condition

€960,000No performance condition

€1,200,000

No performance condition

€1,200,000No performance condition

120% of fixed remunerations when targets met Up to 162% of fixed

remuneration when targets exceeded (achievements of financial targets ≥ 150% and achievements of non-financial targets ≥ 100%)

€0

100% of fixed remunerations when target met Up to 135% of fixed

remuneration when targets exceeded (achievements of financial and non-financial targets ≥ 100%)

€0

KMUs 100% of fixed

remuneration year Y+ annual variable remuneration due for Y-1 Cumulative and

progressive performance conditions

NEW

Performance shares 100% of fixed remuneration

year Y (€1,200,000)+ effective annual variable remuneration for Y-1 Cumulative and progressive

performance conditions

See slide 69 for further details

KMUs 80% of fixed

remuneration year Y+ annual variable remuneration due for Y-1 Cumulative and


NEW

Performance shares 80% of fixed remuneration

year Y (€1,200,000)+ effective annual variable remuneration for Y-1 Cumulative and


See slide 69 for further details

* Jean-François Palus was previously (since July 1, 2013) based in London and received an annual residence allowance representing a total of GBP 900,000. Following the relocation of his activities to Paris on December 31, 2019, the residence allowance was discontinued from the same date.

Company car with a driver Company car with a driver Allowance for residence* Company car with a driver

SUMMARY


2. GOVERNANCE

3. SUSTAINABILITY

4. PEOPLE


CRAFTING TOMORROW’S LUXURY: OUR ROADMAP FOR 2025


2025 ROADMAP

WE CAREabout our impact on the planet, on climate change,on 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 our Kering Standards, with highest standards in animal welfare

WE COLLABORATEfor 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 CREATEinnovations 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

30

MATERIALITY: TARGETING OUR MAIN PRIORITIES


30% of the variable remuneration of the Chairman and CEO, and of the Group Managing Director:• 10% Sustainability:

operational implementation of the 2025 Sustainability Strategy

• 10% CSR: dissemination of a group-wide culture of performance and integrity

• 10% organization and talent management

OUR SUSTAINABILITY GOVERNANCE

INCENTIVES

MORE THAN

DEDICATED TO SUSTAINABILITY

60 PEOPLE


Kering is regularly awarded

and endorsed by both NGOs, financial and

extra-financial rating agencies in recognition of the Group’s sustainability strategy and

achievements

OUR EXTERNAL PERFORMANCE

ESG2017 2018 2019

DJSI Industry leader1st, 82/100 proforma

Silver rated3rd, 80/100

Silver rated4th, 81/100

CDP Climate A A A

CDP Forest A- (leather)A- (wood)

A- (leather)A- (wood)

A- (leather)A- (wood)

CDP Water B B B

Global 100 47th / 1001st of the luxury sector

2nd / 1001st of the luxury sector

23rd / 1001st of the luxury sector

KERING IS ALSO INCLUDED IN THE MAIN SRI INDICES:


THE EP&L, CORNERSTONE OF OUR ENVIRONMENTAL APPROACH

92% of our impacts lie within our supply chain

65% in raw material production step

We are on track on our 2025 reduction pathway to attain our 40% EP&L target in our own operations

and across the supply chain, achieving a 29% reduction in our EP&L intensity

between 2015 and 2019.

PROGRESS TOWARDS 2025 GOALS


DIGITAL EP&L: OPEN SOURCING OUR RESULTS


https://kering-group.opendatasoft.com/pages/epl-map-2019/

35

https://kering-group.opendatasoft.com/pages/epl-map-2019/

- 49.9% carbon intensity reduction between 2015 and 2019

85% renewable energy across the Group

19% CO2 savings per year through the Clean by Design program for textile mills

First group in the industry to become

carbon neutral within its own operations and across the entire supply chain

• Only Luxury group to reach A-list Climate Change

• 3 times since 2017

“Reduce all its GHG emissions related to its own operations and supply chain by 50% by 2025”

FIGHTING CLIMATE CHANGE


LEADING CARBON COMMITMENTS AVOID + REDUCE, RESTORE + OFFSET

36

BUILDING RESPONSIBLE SUPPLY CHAINS


3,441Gucci & Bottega Veneta

4,243

More than 93% in Europe, predominantly in Italy

Western Europe (90.6%): strong government presence, comprehensive and mature labor law, highly developed social dialogue

OUR SUPPLY CHAIN STRUCTURE

suppliers audits in 2019

All key suppliers to be audited every 2 years Our standards, a set of environmental and social clauses part of each contract

37

• Gobi Desert Cashmere Program

• Regenerated Cashmere

• ZQ & Responsible Wool Standard

• Animal welfare standards pilots

• Metal-free tanning: 24% of the Group’s leather goods purchases

• Traceability: 99% of Gucci leather traced back to slaughterhouse

• Materials Innovation Lab: A library of 3,800 certified ecological fabrics and fibers

BEYOND AUDITS: SUSTAINABLE RAW MATERIALS AND PROCESSES


Engaging with the industry

DEPLOYING OUR KERING STANDARDS

RJC Chain of Custody-certified, Fairtrade and Fairmined-certified artisanal gold

3 tons since its launch

100% of total gold used by Watches & Jewelry

Dedicated Materials Innovation Lab on Watches& Jewelry starting January 2020

KERING’S RESPONSIBLE GOLD PLATFORM

38

In 2018, Kering traced 88% of its key materials back to the country of origin at least

90% back to the slaughterhouse for leather

MITIGATE OUR ENVIRONMENTAL FOOTPRINT

TRACEABILITY

Partnership with Savory Institute to pioneer regenerative agriculture

First private sector partnership for biodiversity science with IPBES

SUSTAINABLE PRACTICES

Updating of our Standards on raw materials and manufacturing processes

Publication of our animal welfare guidelines

THE HIGHEST STANDARDS


Scale up innovative processes and launch raw material pilot projects in our Houses

Supporting our Houses’ sustainable sourcing through the Materials Innovation Lab

First assessment of the Kering Materials Circularity Index: 39% of our raw materials with potential for circularity are already circular

EMBED INNOVATION IN OUR ACTIONS

IN OUR VALUE CHAIN

Plug and Play – Fashion For Good to build business collaborations and invest in disruptive startups

Hack To Act: the first hackathon for sustainable Luxury

BEYOND OUR OWN BOUNDARIES

Launch of the K Generation Award to foster sustainable innovation in Luxury in China

AND IN ALL AREAS OF THE WORLD

K Generation AwardFor Those Crafting Tomorrow’s Luxury


Sharing our approach with many top tier schoolsHEC (France), Polimoda (Italy), Columbia University (US) or Tsinghua (China)

Launching Kering Chair on Fashion sustainability at IFM

ENGAGE AND GO BEYOND OUR INDUSTRY

WITH NEXT GENERATION

Fashion Pact: 63 leading global fashion and textile companies representing 250+ brands commit on climate, biodiversity and oceans

WITH INDUSTRY PEERS

Successful launch of our Massive Open Online Course on Luxury and Sustainability

Over 33,500 registrations in 151 countries

THROUGH AMPLIFICATION PLATFORMS

Combating Violence Against Women since 2008 through The Kering Foundation

WITH SOCIETY


SUMMARY


2. GOVERNANCE

3. SUSTAINABILITY

4. PEOPLE



KERING PEOPLE

2019 Universal Registration Document. Data as of December 31, 2019

38,068 PEOPLE

63%Women

37%Men

ALL

55%Women

45%Men

54%

EMEA

34%

APAC

12%

Americas

57%Retail

23%Offices

WORK PLACE

20%Production

1%BabyBoomers(1945-1960)

6%Generation Z(>1995)

66%Generation Y(1981-1995)

27%Generation X(1961-1980)12,240

hires63%Women

8,982departures

AGEMANAGERS

43


COMPANIES WITH “PEOPLE FIRST” STRATEGY HAVE TO FOCUS ON 10 SHIFTS

4Actively involve the boardin talent discussionsand succession planning

McKinsey: Transitioning to Talent First - August 2019

3Develop a strong enterprise focus on inclusion and diversity

5Ensure HRis a strategic business partner

1Identify the critical 2%of employeesand manage this talent like you manage capital

2Lift the performanceof the other 98% of employees

8Leverage tech and automation to drive efficiency and effectiveness

6Leverage datato make people decisions

9Support enterprise-wide agility and purposeful movement

10Become anagile business function yourself

7Develop tomorrow’s workforce

44


4Actively involve the executive committeein talent discussionsand succession planning

McKinsey: Transitioning to Talent First - August 2019

8Leverage tech and automation to drive efficiency and effectiveness

6Leverage datato make people decisions

9Support enterprise-wide agility and purposeful movement

3Develop a strong enterprise focus on inclusion and diversity

5Ensure HRis a strategic business partner

Become anagile business function yourself

Develop tomorrow’s workforce

1Identify the critical 10%of employeesand manage this talent like you manage capital

Lift the performanceof the other 90% of employees

PEOPLE FIRST – OUR READINESS ON THE 10 SHIFTS

90%10%

45


OUR PEOPLE VISION

BE THE PREFERRED EMPLOYERIN LUXURY

for responsible, ambitious individuals who wantto make a difference in an open and diverse environment

BUILD A “LOVED” AND RESPECTED MULTI-BRAND COMPANY,

joining strong Houses together with a shared culture and senseof purpose, which everyone understands and is committed to

Drive business& deliver results

Grow individually& collectively

Foster diversity& creativity

46


OUR RESPONSIBILITY TO OUR 38,000 PEOPLE

1

Creatingdiverse leadership

in all houses:in terms of geographic

and gender representation

2

Advancing equalityin the workplace:aiming to achievegender balance

at all levels by 2025

3

Developing Talent: investing in professional

development and continuous learning including substantial

investments in upskilling people in key areas such

as digital tools and platforms and reskilling

managers to riseto the challenge

of the generational shift

4

Engagingin a global dialogue with our 38,000 employees:

enabling themwith digital efficiency

and transparency, offering them advanced standards

for their well-being, like the Global Baby Leave

policy, and demonstrating sincerity in societal

engagements

47


1. CREATING DIVERSE LEADERSHIP IN ALL HOUSES

OUR COMMITMENT FOR 2025Increase diversity in key management positions, in terms of gender and geography, to better reflect our business footprint

DEVELOPMENT ACTIONS IN PLACE

• COMEX Mentoring for future female leaders

• EVE Program for emerging female talents Europe/Asia

• Appointment of Chief Diversity & Talent Officer

• Talent reviews by region and by function

• International mobility Europe-Asia-Americas

WHERE WE AREWomen at Kering account for:

55%Managers

58%Board of Directors

33%Kering Executive Committee

48


1. CREATING DIVERSE LEADERSHIP IN ALL HOUSES

49


2. ADVANCING WORKPLACE EQUITY

OUR COMMITMENT FOR 2025• Gender parity at all levels• Parity promotion rate for men and women• Pay equity

DEVELOPMENT ACTIONS IN PROGRESS• Integrate gender parity in recruitment process• New people survey on Diversity & Inclusion • Measure women’s representation in succession plans • Follow up promotion rate by gender • Salary gap analysis by country: global methodology by banding

in addition to local legislative requirements• Inclusive workplace: generational, LGBTQI, disabilities

95/100

FRANCE Equal Pay Index 2019

50



STANDARDS OF CONDUCT FOR BUSINESSTackling Discrimination against Lesbian, Gay, Bi, Trans & Intersex People

51



Premio “Welcome, Working for refugee integration”, il riconoscimento che l’Agenzia ONU per I rifugiati (UNHCR)

Certificazione Top Employer Italia 2019

52


3. DEVELOPING TALENT

TALENT DEVELOPMENT • Continuous performance feedback • Open ongoing career conversations for all• Reduce time in jobs for GenY and Z

TALENT MOBILITY• Boost internal mobility applications• Encourage international assignments • Customize career journeys

CONTINUOUS LEARNING• Kering Campus: platform accessible to all

180 modules, multi-language• Managers upskilling on performance,

continuous feedback, career conversations • Digital upskilling for all

53



DEVELOPING TALENT WITH INTERNAL MOBILITY

54



KERING CAMPUS ACCESSIBLE TO ALL

55


KERING PEOPLE SURVEY January 2019

24,600 respondents in 46 countries (82%)35 questions - IPSOS benchmarks

4. ENGAGING IN A GLOBAL DIALOGUE WITH OUR 38,000 EMPLOYEES

56



Health & Safety

Parental policy 2020

Ethics

Flexible work& Right to disconnect

Well-being at work policyGLOBAL STANDARDS

FOR EQUITY AND TRANSPARENCY

57


We are not just supporting men and same-sex partners by making it easier for them to take time away from work at this important moment in family life.

We believe this is a transformative change for women in every workplace, not just our own.

With their partners on hand to share the commitment of child-raising, it should have a powerful effect on the well-being of new mothers.

More importantly, in the future people considering women and men for roles or promotions will know that both women and men are equally likely to take time away from work to start a family. So there will be no risk in hiring a woman over a man.

This will be an important step in levelling the playing field for women everywhere.


PARENTAL POLICY 2020: 14 WEEKS FOR ALL PARENTS

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TRANSPARENCY AND RESPONSIBILITY




TRANSPARENCY AND RESPONSIBILITY

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COLLABORATION AND RECOGNITION

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A GROUP TRANSFORMATION POWERED BY TECHNOLOGY & PEOPLE

MINDSET &BEHAVIORS

ROLES

PROCESSES

SYSTEMS

ADVANCE TALENT MANAGEMENT

BOOST EMPLOYEE ENGAGEMENT

BUILD AN AGILE & BUSINESS-DRIVEN GROUP

ACCELERATEEXCELLENCE IN HR

ENABLED BY DIGITAL TECHNOLOGY

• Clear and constant HR vision

• Change via digital tools to review, align and implement new processes, roles and ultimately change mindset and behaviors

• Strong catalog of shared solutions(HRIS, HRSS)

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KERING ESG PRESENTATIONJUNE 2020

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APPOINTMENT OF JEAN LIU AS A DIRECTOR

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JEAN LIUIndependent DirectorPresident of DiDi Chuxing

Age: 41Chinese national

Jean Liu will bring to the Board her extensive expertise in new technologies as well as her deep knowledge of the Chinese market

Director expertise*:

Jean Liu is the President of DiDi Chuxing. Working with Cheng Wei, founder and CEO of DiDi, Jean led DiDi to become the world’slargest multi - modal mobile transportation platform delivering over 10 billion trips a year to 550 million users across Asia, LatinAmerica and Australia. She champions a more collaborative approach for the new tech sector to work with policymakers, publictransit bodies and the automotive industry to address the world’s mobility, environmental and employment challenges.Jean Liu is also an advocate for women’s empowerment in the tech and sharing economy sectors, in part through DiDi Women’sNetwork, the first women’s development program in the Chinese internet sector.Jean Liu was featured on Fortune’s Most Powerful Women International List from 2016 to 2019, and Finance Asia’s The Region’sTop Entrepreneurs list in 2019. She was included on the TIME 100 list of the world’s most influential people and was honored byAsia Society as an Asia Game Changer in 2017. In 2016, she was named on Fast Company’s World’s Most Creative People inBusiness List.Jean Liu received a bachelor’s degree from Peking University and a master’s degree at Harvard University, both in ComputerScience, and earned an honorary doctorate in Commercial Science at New York University. She is a founding member of theadvisory board of the Bloomberg New Economy Forum and a member of the Asia Society’s Board of Trustees.

* See slide 21 for the definition of each expertise


APPOINTMENT OF TIDJANE THIAM AS A DIRECTOR

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TIDJANE THIAMIndependent DirectorFormer Chief Executive of Credit Suisse Group AG (July 2015 – February 2020)

Age: 57French and Ivorian national

Tidjane Thiam will bring to the Board his in-depth financial expertise as well as his knowledge of global markets

Director expertise*:

* See slide 21 for the definition of each expertise

Tidjane Thiam has served as Chief Executive Officer of Credit Suisse Group AG from July 2015 to February 2020.

Throughout his career, Tidjane Thiam has led organizations in both the private and public sectors and developed projects and programs that stimulatebusinesses and economies. At Credit Suisse, progress continues building on a successful three year restructuring program recognized by Euromoneywith the “Banker of the Year” Award for Excellence in 2018. Under his leadership, Credit Suisse delivered in 2019 its highest profits since 2010. Histenure as Group Chief Executive of Prudential plc from 2009 to 2015 saw the firm’s market capitalization treble to more than USD 60 billion. He waselected Chairman of the Board of the Association of British Insurers, a role he held from 2012 to 2014. Prior, he held a variety of leadership roles atAviva from 2002 to 2007 including CEO of Aviva Europe and Executive Director.

From 1994 to 1999, Tidjane Thiam returned to Cote d’Ivoire to serve as a Cabinet Secretary, CEO of the National Bureau for Technical Studies andDevelopment, and represented Côte d’Ivoire vis-à-vis the World Bank/IMF. He led one of the largest and most successful emerging marketprivatizations and infrastructure development programmes. He was recognised as Global Leader for Tomorrow by the World Economic forum in 1997and included in the WEF’s world “dream cabinet” in 1999. Earlier in his career, Tidjane Thiam spent a decade with McKinsey and Company where hewas a partner. Tidjane Thiam is a member of the Group of Thirty (G30). In 2019, he became a member of the International Olympic Committee (IOC),and from 2014 to 2019 he served on the Board of Directors of 21st Century Fox. Tidjane Thiam was awarded the Chevalier of the French Legion ofHonour in 2011. He has been recognized on the ‘Time 100’ list in 2010. He is a graduate of the École Polytechnique and the École NationaleSupérieure des Mines de Paris, and holds an MBA with distinction from Insead. He received the degree of Doctor of Law, honoris causa, from theUniversity of Warwick.


APPOINTMENT OF EMMA WATSON AS A DIRECTOR

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EMMA WATSONNon-independent Director*Actor and activist

Age: 30British national

Emma Watson will bring to the Board her commitment to sustainable development and women’s issues.

Director expertise**:

* The independence of Emma Watson will be reviewed and assessed by the Appointment and Governance Committee after the June 16, 2020 AGM ** See slide 21 for the definition of each expertise

Emma Watson is a British actor and activist. She first came to the public’s attention playing Hermione Granger in the film adaptations of the HarryPotter book series, which enjoyed immense success worldwide. Twenty years later, she is one of the world’s most popular actors and best - knownactivists. Emma Watson’s filmography includes The Perks of Being a Wallflower, The Bling Ring, Noah and Disney’s Beauty and the Beast. She mostrecently starred in Greta Gerwig’s Little Women. In May 2014, she earned a degree in English Literature from Brown University.

Also in 2014, she was appointed a UN WOMEN Global Goodwill Ambassador and launched the HeForShe initiative aimed at involving men in thepromotion of gender equality. Her work on the HeForShe campaign earned her a place on the TIME 100 list of the world’s most influential people in2015. In 2016, she created Our Shared Shelf, a feminist book club. Emma Watson is part of the TIME’S UP Entertainment Steering Committee andbrought the movement to the UK, coordinating its launch at the UK Film BAFTAs in 2018 and building a network of hundreds of women from acrossthe industry. Her consultation with the women’s movement led to the establishment of a new UK Justice and Equality Fund, hosted by Rosa andlaunched by Emma Watson with a GBP 1 million donation. The fund aims to end cultures of harassment, abuse and impunity by resourcing expertorganisations in this field. Emma Watson has also helped launch new UK industry - wide guidelines on harassment and bullying with the British FilmInstitute (BFI), the British Academy of Film and TV Arts (BAFTA), and the Advisory, Conciliation and Arbitration Service (ACAS) and other leadingbodies. In 2019, French President Emmanuel Macron invited her sit on the G7’s advisory Gender Equality Council. Emma Watson is also a pioneer inadvocating for sustainable fashion and is a supporter of Good On You, a mobile app that allows consumers to check the sustainability credentials ofclothing brands. In 2018, she was invited to guest edit a Vogue Australia publication on sustainable development and responsible consumption.


REMUNERATION POLICY FOR EXECUTIVE CORPORATE OFFICERS INITIALLY DECIDED* FOR 2020 BY THE BOARD OF DIRECTORS ON FEBRUARY 11, 2020

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REMUNERATION STRUCTUREPortion of the global

compensation

BENEFITS IN KIND

FIXEDREMUNERATION

ANNUALVARIABLEREMUNERATION

Amounts Performance conditions

MULTI-ANNUALVARIABLEREMUNERATION(LTI)NEW: Performance shares

€1,200,000

Chairman & CEO:120% of fixed remunerations when targets metUp to 162% of fixed remuneration when targets exceeded (achievements of financial targets ≥ 150% and achievements of non-financial targets ≥ 100%)

Group Managing Director:100% of fixed remunerations when target metUp to 135% of fixed remuneration when targets exceeded (achievements of financial and non-financial targets ≥ 100%)

Chairman & CEO:100% of fixed remuneration year Y+ annual variable remuneration due for Y-1

Group Managing Director:80% of fixed remuneration year Y+ annual variable remuneration due for Y-1

→ Rewards the company’s overall long term performance

Chairman & CEO: Company car with a driverGroup Managing Director: Company car with a driver** N/A

Recurring operating income / free cash flow from operations / recurring operating margin

Restrictive conditions (cumulative and progressive):• If 3 criteria increase over the vesting period : 100% of the

performance shares vest• 2/3 criteria increase: 75% of the performance shares vest• 1/3 criteria increase: 50% of the performance shares vest• No criteria increase: no performance shares will vest

+ Number of vested performance shares adjusted upward or downward depending on the performance of Kering share price vs. a reference index (comprises of Burberry, Ferragamo, Hermès, LVMH, Moncler, Prada, Richemont and Swatch)

Financial targets (70%) Consolidated recurring operating income: 35%Consolidated free cash flow from operations: 35%

ESG targets (30%) Organization and talent management: 10%Corporate Social Responsibility: 10%Sustainability: 10%

No performance condition required

Chairman& CEO

23%

Group Managing Director

28%

27% 28%

50% 44%

** Jean-François Palus was previously (since July 1, 2013) based in London and received an annual residence allowance representing a total of GBP 900,000. Following the relocation of his activities to Paris on December 31, 2019, the residence allowance was discontinued from the same date.

* The remuneration policy for executive corporate officers for 2020 has been revised within the context of the Covid-19 outbreak (decision of the Board of Directors on April 21, 2020). See slides 27 & 28.


REMUNERATION POLICY FOR EXECUTIVE CORPORATE OFFICERS INITIALLY DECIDED* FOR 2020 BY THE BOARD OF DIRECTORS ON FEBRUARY 11, 2020

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ANNUAL VARIABLE REMUNERATION: PERFORMANCE CONDITIONS AND OVERALL ACHIEVEMENT PROCESS

70%

30%

Financial targets

Non-financial targets

Consolidated Recurring Operating Income

35%

Consolidated Free Cash Flow from Operations

35%

Organization & Talent management10%

CSR 10%

Sustainability 10%

TARGETS MET TARGETS EXCEEDEDChairman and

CEOGroup Managing

DirectorChairman and

CEOGroup Managing

Director

100% of bonus awarded






If achievement rate ≥ 125%


(maximum)

If achievement rate ≥ 125%


(maximum)

120% of fixed remuneration

100% of fixed remuneration

Up to 162% of fixed remuneration

Up to 135% of fixed remuneration

TOTAL ANNUAL VARIABLE

REMUNERATION

* The remuneration policy for executive corporate officers for 2020 has been revised within the context of the Covid-19 outbreak (decision of the Board of Directors on April 21, 2020). See slides 27 & 28.


MULTI-ANNUAL VARIABLE REMUNERATION (LTI)

69

HOW PERFORMANCE SHARES WORK

VESTING PERIOD (3 years)

Y Y+1 Y+2

Final vestingsubject to conditions

Grant of performance shares

Chairman & CEO100% of fixed remuneration year Y

(€1,200,000)+ effective annual variable


Group Managing Director 80% of fixed remuneration year Y

(€1,200,000)+ effective annual variable


Increase of recurringoperating income, free cash flow from

operations, or recurring operating margin over the past 3 years

& service conditions

• If 3 criteria increase over the vesting period : 100% of the performance shares vest• If 2/3 criteria increase: 75% of the performance shares vest• If 1/3 criteria increase: 50% of the performance shares vest

+ Number of vested performance shares adjusted upward or downward depending on the performance of Kering share price vs. a reference index (comprises of Burberry, Ferragamo, Hermès, LVMH, Moncler, Prada, Richemont and Swatch)

If none of the performance criteria increase over the vesting period, no performance shares will vest

CONDITIONS MET

CONDITIONS NOT MET

Amount of performance shares to be granted (grant value) Performance shares awarded are available

The Chairman & CEO and the Group Managing Director must hold, in registered form and throughout their term of office, a number of performance shares awarded = 2 years of their

annual fixed and variable remuneration at the date of delivery of the shares

Annual award for the Chairman & CEO and the Group Managing

Director capped at 20% ofthe total shares granted by the

Board of Directors duringeach fiscal year

COMPONENTS AND STRUCTURE OF THE TOTAL REMUNERATION ALLOCATED TO DIRECTORS


COMPENSATION FOR MEMBERS OF THE BOARD OF DIRECTORS FOR 2020

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TOTAL REMUNERATION ALLOCATED TO DIRECTORS

Unchanged since 2017: €877,000

→ Mechanical reduction of fees by 30% for each Director for 2020 thereby maintaining the Board’s total remuneration at the level of prior years notwithstanding the increase in the number of Directors.

* 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.

40% FIXED

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

60% VARIABLE

Coefficient: • 1 per presence at each meeting of

the Board• 0.5 for each attendance of a

Committee meeting€877,000


COMPREHENSIVE COMPLIANCE APPROACH

• Anti-corruption

• Duty of care

• GDPR

• Human Rights

• Anti-money laundering

• Competition

• Conflicts of interests

• Insider trading

• Tax

• Environment

• Governance

• Talent/HR

• Non-financialinformation law(DPEF)

• Anti-corruption policy and eight associated procedures: gifts and hospitality; entertainment and travel; third-party due diligence; due diligence for acquisition transactions; countries subject to sanctions; donations and sponsorship; interactions with public officials; conflicts of interest

• Code of Ethics

• Group supplier’s charter

• Compliance manualavailable in 8 languages

• Competition policy (adapted to local legislation) & procedure for participation in professional bodies

• Recommendations on AML in light of all applicable regulations to ensure full compliance

• Sustainability principles and Kering standards

• Anti-corruption risk mapping regularly updated

• Internal whistleblowingprocess

• Frequent third party due diligence

• Training sessions bothe-learning and on site

• Implement accountingcontrol procedures for full compliance with Sapin II law

• Audit process with dedicated checks of Kering Compliance Program implementation

• Hercules management system

• Tone at the Top by Group & brand CEOs

• Group Chief Compliance Officer& global network of Compliance Officers

• Promoting a strongCulture of Integrity(regular videosand messages from Kering top management)

SCOPE RULES PROCESSES CULTURE

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