KERING ESG PRESENTATIONJUNE 2020
SUMMARY
1. GROUP PRESENTATION & STRATEGY
2. GOVERNANCE
3. SUSTAINABILITY
4. PEOPLE
2KERING ESG PRESENTATION - JUNE 2020
SUMMARY
1. GROUP PRESENTATION & STRATEGY
2. GOVERNANCE
3. SUSTAINABILITY
4. PEOPLE
3KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020 5
… 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
“ ”
KERING ESG PRESENTATION - JUNE 2020 7
KERING ESG PRESENTATION - JUNE 2020
€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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
1. GROUP PRESENTATION & STRATEGY
2. GOVERNANCE
3. SUSTAINABILITY
4. PEOPLE
16KERING ESG PRESENTATION - JUNE 2020
KERING ESG PRESENTATION - JUNE 2020
GOVERNANCE
Kering’sgovernance
Kering’s strategy& performance
driving management compensation
17
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
OVERALL MATERIALITY OF KERING’S 15 MAIN RISK FACTORS
25
KERING ESG PRESENTATION - JUNE 2020
GOVERNANCE
Kering’sgovernance
Kering’s strategy& performance
driving management compensation
26
KERING ESG PRESENTATION - JUNE 2020
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
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)
KERING ESG PRESENTATION - JUNE 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
progressive performance conditions
NEW
Performance shares 80% 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
* 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
1. GROUP PRESENTATION & STRATEGY
2. GOVERNANCE
3. SUSTAINABILITY
4. PEOPLE
29KERING ESG PRESENTATION - JUNE 2020
CRAFTING TOMORROW’S LUXURY: OUR ROADMAP FOR 2025
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020 31
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 ESG PRESENTATION - JUNE 2020 32
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:
KERING ESG PRESENTATION - JUNE 2020 33
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
KERING ESG PRESENTATION - JUNE 2020 34
DIGITAL EP&L: OPEN SOURCING OUR RESULTS
KERING ESG PRESENTATION - JUNE 2020
https://kering-group.opendatasoft.com/pages/epl-map-2019/
35
- 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
KERING ESG PRESENTATION - JUNE 2020
LEADING CARBON COMMITMENTS AVOID + REDUCE, RESTORE + OFFSET
36
BUILDING RESPONSIBLE SUPPLY CHAINS
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020 39
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
KERING ESG PRESENTATION - JUNE 2020 40
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
KERING ESG PRESENTATION - JUNE 2020 41
SUMMARY
1. GROUP PRESENTATION & STRATEGY
2. GOVERNANCE
3. SUSTAINABILITY
4. PEOPLE
42KERING ESG PRESENTATION - JUNE 2020
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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
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KERING ESG PRESENTATION - JUNE 2020
1. CREATING DIVERSE LEADERSHIP IN ALL HOUSES
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KERING ESG PRESENTATION - JUNE 2020
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
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KERING ESG PRESENTATION - JUNE 2020
2. ADVANCING WORKPLACE EQUITY
STANDARDS OF CONDUCT FOR BUSINESSTackling Discrimination against Lesbian, Gay, Bi, Trans & Intersex People
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KERING ESG PRESENTATION - JUNE 2020
2. ADVANCING WORKPLACE EQUITY
Premio “Welcome, Working for refugee integration”, il riconoscimento che l’Agenzia ONU per I rifugiati (UNHCR)
Certificazione Top Employer Italia 2019
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KERING ESG PRESENTATION - JUNE 2020
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
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3. DEVELOPING TALENT
DEVELOPING TALENT WITH INTERNAL MOBILITY
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KERING ESG PRESENTATION - JUNE 2020
3. DEVELOPING TALENT
KERING CAMPUS ACCESSIBLE TO ALL
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KERING ESG PRESENTATION - JUNE 2020
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
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KERING ESG PRESENTATION - JUNE 2020
4. ENGAGING IN A GLOBAL DIALOGUE WITH OUR 38,000 EMPLOYEES
Health & Safety
Parental policy 2020
Ethics
Flexible work& Right to disconnect
Well-being at work policyGLOBAL STANDARDS
FOR EQUITY AND TRANSPARENCY
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KERING ESG PRESENTATION - JUNE 2020
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.
4. ENGAGING IN A GLOBAL DIALOGUE WITH OUR 38,000 EMPLOYEES
PARENTAL POLICY 2020: 14 WEEKS FOR ALL PARENTS
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4. ENGAGING IN A GLOBAL DIALOGUE WITH OUR 38,000 EMPLOYEES
TRANSPARENCY AND RESPONSIBILITY
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KERING ESG PRESENTATION - JUNE 2020
4. ENGAGING IN A GLOBAL DIALOGUE WITH OUR 38,000 EMPLOYEES
TRANSPARENCY AND RESPONSIBILITY
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KERING ESG PRESENTATION - JUNE 2020
4. ENGAGING IN A GLOBAL DIALOGUE WITH OUR 38,000 EMPLOYEES
COLLABORATION AND RECOGNITION
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KERING ESG PRESENTATION - JUNE 2020
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 PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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.
KERING ESG PRESENTATION - JUNE 2020
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.
KERING ESG PRESENTATION - JUNE 2020
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.
KERING ESG PRESENTATION - JUNE 2020
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
100% of bonus awarded
100% of bonus awarded
100% of bonus awarded
100% of bonus awarded
100% of bonus awarded
If achievement rate ≥ 125%
150% of bonus awarded
(maximum)
If achievement rate ≥ 125%
150% of bonus awarded
(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.
KERING ESG PRESENTATION - JUNE 2020
MULTI-ANNUAL VARIABLE REMUNERATION (LTI)
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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
remuneration for Y-1
Group Managing Director 80% of fixed remuneration year Y
(€1,200,000)+ effective annual variable
remuneration for Y-1
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
KERING ESG PRESENTATION - JUNE 2020
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
KERING ESG PRESENTATION - JUNE 2020
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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