Report on corporate governance
4
Compensation for the administration and management bodies
–
the maximum weighting of the changes in the number of Tier 1 +
Tier 2 incidents is 8% of the base salary. The maximum weighting
will be reached if the number of Tier 1 + Tier 2 incidents equals or
below 70 (compared to equal or below 100 in 2019). The weighting
of the parameter will be zero if the number of Tier 1 + Tier 2
incidents is equal to or higher than 125 (compared to 180 in 2019).
The interpolations are linear between these two points of
reference.
–
the return on average capital employed (ROACE), by
comparison, assessed as follows. The maximum weighting of the
ROACE criterion will be 20% of the base salary. TOTAL’s ROACE,
as published from the consolidated balance sheet and the income
statement, will be compared to the ROACE average of each of the
four peers (ExxonMobil, Royal Dutch Shell, BP and Chevron). The
ROACE is equal to the net adjusted operating income( divided by
the average of the capital employed (at replacement costs, net of
deferred income tax and non-current liabilities) of the start and end
of the fiscal year.
3)
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change in GHG emission on operated oil & gas facilities,
assessed through the achievement of a GHG (Scope 1 and Scope 2)
reduction emission target from 46 Mt CO e in 2015 to 40 Mt CO e in
2
4
–
the maximum weighting of the criterion is reached, i.e. 20% of the
base salary, if TOTAL’s ROACE is above 2% or more compared to
the average of the 4 peers’ ROACE;
2
2
025, corresponding to a reduction of 600 kt CO e/y, i.e. a target of
2
3 Mt CO e for 2020. The maximum weighting of the GHG criterion
2
–
–
the weighting of the criterion is zero if the TOTAL’s ROACE is under
is 10% of the base salary:
–
2% or more compared to the average of the peers’ ROACE;
the maximum weighting of the criterion is reached, i.e. 10% of the
base salary, if the GHG Scopes 1 and 2 emission on the operated
the interpolations are linear between these two points of reference.
oil & gas facilities reaches the target set at 43 Mt CO e in 2020
The Chairman and Chief Executive Officer’s personal contribution,
which may represent up to 40% of the base salary, is evaluated
based on the following criteria:
2
(
compared to 43.6 Mt CO e in 2019);
2
–
–
the weighting of the criterion is zero if the emissions are 1 Mt CO2e
above the set target;
the interpolations are linear between these points of reference.
–
steering of the hydrocarbon strategy (successful strategic
negotiations with producing countries, achievement of production
and reserve targets) and performance and outlook with respect
to Downstream activities (Refining & Chemicals/Marketing &
Services) for up to 15%;
development of the low-carbon Businesses (Integrated Gas,
Renewables & Power perimeter) for up to 10%;
CSR performance, notably the integration of climate issues in the
Group’s Strategy, the Group’s reputation in the domain of
Corporate Social Responsibility, as well as the policy concerning
all aspects of diversity, for up to 15%.
–
the return on equity (ROE) as published by the Group on the basis
of its balance sheet and consolidated statement of income assessed
as follows. The maximum weighting of the ROE criterion will be 30%
of the base salary:
–
–
–
–
–
–
the maximum weighting of the criterion is reached, i.e. 30% of the
base salary, if the ROE is higher than or equal to 13%;
the weighting of the criterion is zero if the ROE is lower than or
equal to 6%;
the weighting of the criterion is 50% of the maximum, i.e. 15% of
the base salary, if the ROE is 8%;
The Board decided to adapt for 2020 the assessment of the
personal contribution of the Chairman and Chief Executive Officer,
by introducing a specific criterion to the low-carbon strategy
implemented by the Group, with a maximum weighting set at 10%.
This criterion is a separate one from the first performance criterion
which remains relating to the hydrocarbon strategy, but which
include from now the performance and the outlook for Downstream
activities, with a maximum weighting remaining at 15%. The third
criterion, relating to the CSR performance, remained assessed
similarly, with a maximum weighting of 15%.
the interpolations are linear between these three points of
reference.
–
the net-debt-to-capital ratio. The maximum weighting of the net-
debt-to-capital ratio criterion is 30% of the base salary:
–
the maximum weighting of the criterion, i.e. 30% of the base
salary, is reached for a net-debt-to-capital ratio equal to or below
20%;
–
–
the weighting of the criterion is zero if the net-debt-to-capital ratio
is equal or above 30%;
the interpolations are linear between these two points of reference.
In the event of a significant change in the Group affecting the calculation
of the economic perimeters for the Group (change in accounting
standard, change in the policy of rating agencies, significant patrimonial
transaction approved by the Board of Directors…), the Board reserves
the right to calculate the parameters mutatis mutandis with justification
of the changes i.e., excluding exogenous extraordinary elements.
The new IFRS 16 accounting standard, applicable as of January 1,
019, led the Group to consolidate as from this date all leases in
2
the balance sheet and as counterpart to record the corresponding
financial debts as a liability in the balance sheet (before January 1,
2
019, only finance leases were consolidated).
The entry into force of this new accounting standard led to increase
the net-debt-to-capital ratio by 3.1% as of January 1, 2019.
Furthermore, the Board of Directors may exercise its discretionary
powers regarding the determination of the compensation of the
Chairman and Chief Executive Officer, pursuant to Articles L. 225-47,
paragraph 1 and L. 225-53, paragraph 3 of the French Commercial
Code, and according to Articles L. 225-37-2 and L. 225-100 of the
French Commercial Code, in the event of particular circumstances that
could justify that the Board of Directors adjusts, exceptionally and both
on the upside and the downside, one or more of the criteria that make
up his compensation to ensure that the results of the application of the
criteria described above reflect both the performance of the Chairman
and Chief Executive Officer and the performance of the Group either in
absolute terms or relative to the four peers of the Group, for the economic
criteria measured in comparison with these four peers.
As the Group discloses a net-debt-to-capital ratio with and without
the consideration of the financial debt corresponding to leases, the
Board of Directors decided to assess the net-debt-to-capital ratio
without considering the financial debt corresponding to the leases.
–
the pre-dividend organic cash breakeven, assessed as follows.
The maximum weighting of this criterion is 30% of the base salary.
The pre-dividend organic cash breakeven is defined as the Brent
price for which the operating cash flow before working capital
changes( (MBA) covers the organic investments . The ability of the
Group to resist to the variations of the Brent barrel price is measured
by this parameter:
1)
(2)
This adjustment would be made to the variable compensation of the
Chairman and Chief Executive Officer by the Board of Directors on
the proposal of the Compensation Committee, within the limit of the
variable compensation cap of 180% of the fixed compensation, after the
Board of Directors ensured that the interests of the Company and of its
shareholders are aligned with those of the executive director.
–
–
–
the maximum weighting of the criterion is reached, i.e. 30% of the
base salary, if the breakeven is below or equal to 30$/b;
the weighting of the criterion is zero if the breakeven is above or
equal to 40$/b;
the interpolations are linear between these two points of reference.
(
(
(
1) The operating cash flow before working capital changes is defined as cash flow from operating activities before changes in capital at replacement cost.
2) Organic investments: net investments excluding acquisitions, asset sales and other operations with non-controlling interests.
3) Adjustments items include special items, the inventory effect and the impact for change for fair value.
186
TOTAL Universal Registration Document 2019
