Translations

The DANONE executive compensation plan indexed on social and environmental criteria

1. Organizational Governance

Profit sharing

Sector Food-processing

Year 2009

Country France

Transmitter

Context

The Danone Group, a major player of the agri-food sector, is one of the pioneers of commitment to an approach of corporate social responsibility. The implementation of the Grameen Foods Ltd. project, in 2006, demonstrates this commitment.

The group's strategy, since 2008, is to refocus its activities on "la santé par l'alimentation au plus grand nombre" (health through many foods). Danone seeks to address emerging concerns of consumers, who aspire to live according to their environmental and social values. To strengthen the coherence of this strategy, it is essential that these values are reflected in the internal policy of the company.

Within this framework, led by Franck Riboud, CEO of the group, the executive compensation plan evolved to take into account environmental and social criteria in the calculation of bonuses.

Objectives

Matching group values with those of its customers
Confirming its position and commitment as a responsible company

APPROACH

The redesign of the calculation of bonuses impacts all executives of the group (900 executives). Before the redesign of the plan, 60% of the bonus was linked to economic performance, and 40% to management. Now, bonuses will be based on 3 criteria proportionately equal: 1/3 for economic performance, 1/3 for management and 1/3 for the societal criteria.

The financial criteria remain unchanged. They are based on the growth of the turnover, profitability and generated cash.

The managerial criteria are defined between the executive and his direct responsible supervisor, transparently with the human resources department. These criteria are individualized unlike the others.

Societal criteria consist of two parts:
- on the environmental front, the executives will be evaluated on the reduction of the amount of CO2 emitted by the activity for which they are responsible and on water consumption;
- socially, it is the rate of occupational injuries and the increase of the number of training hours that will serve as reference.