1 Combined Ordinary And Extraordinary General Meeting Paris, May 7, 2014 Palais des Congrès
1
Combined Ordinary And
Extraordinary General Meeting
Paris, May 7, 2014
Palais des Congrès
2
Combined Ordinary And
Extraordinary General Meeting
Hubert Sagnières
3
Quorum provisoire
ACTIONNAIRES ACTIONS
Votes par
correspondance
Présents et
représentés
Total
Quorum requis
- 20% du capital pour l’AGO
- 25% du capital pour l’AGE
- Taux de participation : %
4
Documents et renseignements prévus par les dispositions législatives
et réglementaires, déposés sur le bureau de l’Assemblée
1. L’avis préalable publié au BALO des 28 mars et 11 avril 2014 , l’avis de convocation publié au QUOTIDIEN JURIDIQUE le 18 avril 2014 et au BALO le 21 avril 2014, la copie de la convocation adressée aux actionnaires nominatifs, les copies des lettres adressées aux actionnaires nominatifs, les copies des lettres adressées aux Commissaires aux comptes et aux membres du Comité d’Entreprise d’Essilor avec les accusés de réception
2. La feuille de présence de l’Assemblée à laquelle sont annexés les pouvoirs des actionnaires représentés par des mandataires et les formulaires de vote par correspondance
3. Les documents adressés aux actionnaires sur demande avant l’Assemblée :
Ordre du jour et projets des résolutions
Rapport de gestion du Conseil d’administration
Rapport du Président
Rapport des commissaires aux comptes
Comptes sociaux et comptes consolidés
Rapport des commissaires au comptes sur l’augmentation de capital intervenue fin 2013,
au titre du Plan d’Epargne Entreprise
Tableau des mandats des administrateurs
Tableaux des délégations, pour réaliser des opérations sur le capital, en cours de validité
Bilan social
5
AGENDA
6
Agenda
1. Approval of the Company’s financial statements for the year ending
31 December 2013
2. Approval of the consolidated financial statements for the year ending
31 December 2013
3. Allocation of earnings and approval of the dividend
4. Approval of related party agreements in compliance with Articles
L.225-38 of the French Commercial Code
ORDINARY RESOLUTIONS
7
Agenda (continued)
5. Renewal of term of office: Mr Philippe ALFROID
6. Renewal of term of office: Mr Yi HE
7. Renewal of term of office: Mr Maurice MARCHAND-TONEL
8. Renewal of term of office: Ms Aïcha MOKDAHI
9. Renewal of term of office: Mr Michel ROSE
10. Renewal of term of office: Mr Hubert SAGNIÈRES
ORDINARY RESOLUTIONS
8
Agenda (continued)
11. Shareholders’ advisory vote on the compensation due or awarded
to Mr Hubert SAGNIERES, Chairman and Chief Executive Officer,
for 2013
12. Directors’ fees
13. Authorisation granted to the Board to buy back Company shares
ORDINARY RESOLUTIONS
9
Agenda (continued)
14. Authorisation granted to the Board to proceed with a reduction in
capital by cancellation of Company shares.
15. Authorisation granted to the Board to proceed with an increase in
the Company's capital by issuing shares reserved to the members
of a Company share savings plan, waiving the preferential
subscription right.
EXTRAORDINARY RESOLUTIONS
10
Agenda (continued)
16. Delegation of power granted to the Board of Directors to issue
securities giving immediate or later access to the Company’s
capital, preserving the preferential subscription right.
17. Delegation of power granted to the Board of Directors to issue
securities giving immediate or later access to the Company’s
capital, waiving the preferential subscription right, but with an
optional priority period.
EXTRAORDINARY RESOLUTIONS
11
Agenda (continued)
18. Delegation of power granted to the Board of Directors to increase
the amount of the issues of securities giving immediate or later
access to the Company’s capital in case of excessive demand.
19. Possibility of using shares issued without preferential subscription
rights in payment for one or several contributions in shares.
EXTRAORDINARY RESOLUTIONS
12
Agenda (continued)
20. Delegation of powers to the Board of Directors to increase the Company's capital by issuing shares and/or securities giving access to the Company's capital and/or issuing securities with rights to be awarded debt securities, in particular, to qualified investors or a limited circle of investors, in the framework of an offer, as outlined in Article L.411-2, II of the French Monetary and Financial Code, and therefore without preferential subscription rights
21. Delegation of power granted to the Board of Directors to implement the issue of Company shares and/or securities giving immediate or later access to the Company’s capital with suppression of preferential subscription rights, to set the issue price in accordance with rules set by the General Meeting up to a limit of 10% of the capital per year.
EXTRAORDINARY RESOLUTIONS
13
Agenda (continued)
22. General limitation on authorisations for proceeding with a security
issue giving access to the capital immediately or later,
with suppression of the preferential subscription right or reserved
for contributors in kind.
23. Delegation of power granted to the Board of Directors to increase
the Company’s capital by incorporating reserves, benefits,
premiums or other admissible forms of capitalisation.
EXTRAORDINARY RESOLUTIONS
14
Agenda (continued)
24. Amendment of Article 14 of the Articles to modify the duration of
the Directors’ term of office.
25. Amendment of Article 12 of the Articles to set the appointment
rules for Directors representing employees in accordance with the
provisions of the Law of 14 June 2013 on employment protection.
EXTRAORDINARY RESOLUTIONS
15
Agenda (continued)
26. Powers to carry out legal formalities relating to the resolutions
adopted by the Ordinary and Extraordinary General Meeting
EXTRAORDINARY RESOLUTIONS
2013 Performance
2014/2015 Perspectives
Laurent Vacherot
A solid core competency
2013: Another Year of Growth
2012 2013 Growth
€4,989m €5,065m Revenue (growth at constant exchange rates)
+5.4%
€893m €917m Contribution from operations(1)
As a percentage of revenue 17.9% 18.1%
+2.6%
36% 37% Volume market share +1pt
(1) Operating profit before compensation costs of share-based payments, restructuring costs, other income & expense and goodwill impairment
(2) Restated for 2013 one-off effect and net of currency effect
(3) Submitted to shareholder approval at the May 7, 2014 Annual General Meeting
Dividend per share(3) €0.88 €0.94 +6.8%
Earnings per share €2.80 €2.82 +0.7%
Adjusted earnings per share
€ 2.96(2)
18
2013 revenue growth by segment*
19
* like-for like and bolt-on acquisitions combined
+5.3%
+5.8%
+6.4%
Lenses & Optical
instruments
Readers /
Non-Prescription
Sunwear
Equipment
2013 revenue growth by region*
20
* like-for like and bolt-on acquisitions combined
North
America
+3%
Latin America
+20%
Europe
+1%
Asia/Pacific/
Middle East/Africa
+12%
Fast-Growing
Markets
+20%
Lenses & Optical
instruments +5.3%
Growth supported by three key development directions
21
1
3
6
12
5 1
Acquisitions and
Partnerships
Innovation
Global
development of
new business
activities
28 partnerships in 2013
-Readers
-Sunglasses
-Equipments
-Online
Controlled debt coverage to finance strategy execution
22
Good ratings of Essilor Group (Standard & Poor’s…)
Ratios in line with our ratings
Net debt / EBITDA
Net debt / Equity
Successful bond issue
Fast debt recovery
Robust Performance over the Past 4 Years
586
912
2009 2013
(1) Operating profit before compensation costs of share-based payments, restructuring costs, other income & expense and goodwill impairment
(2) Cash Flow = Operating cash flow excluding change in WCR
3 268
5 065
2009 2013
593
917
2009 2013
1,89
2,82
2009 2013
23
(in €m)
Cash Flow(2)
(in €m)
Revenue (in €m)
Contribution from operations(1)
(in €)
EPS
A robust first quarter
24
Stepped-up
expansion in Fast-
Growing Markets and
rebound in the US
Success of the Crizal
Prevencia and
Transitions Signature
lenses
Transitions Optical
and Coastal.com
integration
In € millions
Q1 2013 Like-for-like Growth
Organic Growth
Currency effect
Q1 2014
1 276
31
77 - 61
1 323
+ 2.4 %
+ 6.0 % - 4.8 %
+ 8.4 %
Share performance on 3 years: April 2011 - 2014
25 Updated information on the evening of 29 April
Essilor vs. Indices – Avril 2011/2014 YTD Essilor
Share Price
Variation
Since 3
years
+43.8%
Since 6
years
+92.8%
(1) Since April 2011
(2) Since April 2008
(2)
(1)
Dividend Per Share*: +6.8% to €0.94
129 137
147
172 177 185
198
0.62 0.66
0.70
0.83 0.85
0.88
0.94*
2007 2008 2009 2010 2011 2012 2013*
* Submitted to shareholder approval at the May 7, 2014 Annual General Meeting
26
37.5%
31.7%
33.5%
Payout ratio
Dividend per share (in €)
Total payout (in € millions)
Strengthening our core business Adding new sources of Growth
Five Key Areas of Focus for 2014/2015
28
2014-2015
Profitability
Sunwear
Transitions
Fast-Growing
Markets
Growth
Successfully Integrating Transitions Optical
29
Brand Worldwide Distribution
Premium/Mid-tier
Innovation
Lift the contribution margin(1) to c.19.5 %(2) by mid 2016
(1) Contribution from operations (operating profit before compensation costs of share-based payments, restructuring
costs, other income & expense and goodwill impairment) as a percentage of revenue
(2) Before Coastal.com and new strategic acquisitions
Fast-Growing Markets: 2.8b of revenues by 2018
30
Source : Essilor International
FGM revenues
€1.1b
2013
2018
€0.7b
2011
€2.8b
20 % p.a.
Shape the Internet channel for the benefit of the entire industry
31
Online Sales Growth A Fragmented Industry Technologies
Revenue in € billions
5.6
1.0
2005
2018
2%*
6%*
Source: Estin & Co
* As a percentage of the total optical retail market
CAGR: 14.2%
Mid-term perspectives
32
By mid-2016 • 2 years of Double Digit revenue growth
(1)
• With contribution margin(2)
from c.18% to c.19.5%(3)
By 2018
• Reach an organic growth of at least 5%
• Build strong business in Sun and Fast-Growing Markets
• Invest c. €100m per year to push major brands
• Develop a global online sales platform
• Leverage key existing capabilities of Essilor
(1) On average over two years
(2) Contribution from operations (operating profit before compensation costs of share-based payments, restructuring costs, other income &
expense and goodwill impairment) as a percentage of revenue
(3) Before Coastal.com and new strategic acquisitions
Strategy & Innovation
Paul du Saillant
Innovation at the heart of Essilor’s strategy since 160 years
34
Operational and management efficiency
Products and
Services
INNOVATE
Corporate social responsibility
Top &
Mid-tier
markets
DEVELOP
Acquisitions &
Partnerships
GROW
Demand
for Vision
Improvement
STIMULATE
Innovation, written into Essilor’s DNA
35
Cooperative roots
Culture of entrepreneurship
Pioneering through
breakthrough innovations in the
ophthalmic optics industry
Innovation embraces all dimensions of the company
36
Shareholder model
25% of our employees are
shareholders
Growth through acquisitions
and partnerships
+ 200 partners have joined the
group since 2005
New business models
+ 100 000 wearers of glasses
in 2013
37 Source Essilor estimates, United Nations
5.0
3.7
2013
2020
Urban population
In billion of people
2.2
1.8
2013
2020
Worlwide wearers
Long-term Growth Drivers in Optics Demography
In billion of people
Long-term Growth Drivers in Optics Visual Impairments
38
In billion of people
2.0
1.6
2013
2020
In billion of people
2.3
2.0
2013
2020
Presbyopia Myopia
Source Essilor estimates, United Nations
Long-term Growth Drivers in Optics Visual Health
39
In million of people
320
250
2013
2020
In million of people
120
100
2013
2020
AMD Cataracts
Source: Worldbank, United Nations, CIA, World Population Prospects, Epidemiological and Marketing studies, Essilor analysis
N.B.: Simplified Extrapolation Model of Cataract & AMD prevalence [Essilor Int., DMS, EL, Jan. 2013]
Innovation, a key driver for value creation
40
Services Solutions
Products
40% of turnover is generated by
products less than 4 years old
5 000 Patents
+ 100 New patents in 2013
+ €150 M invested in innovation
28 plants
+ 450 prescriptions laboratories
400 000 ECPs
An innovation strategy based on 3 key points…
41
CORRECTION PROTECTION PREVENTION
Deflect harmful Blue-Violet Light
UV protection
Varilux S: 5 to 40 % of market
penetration depending on
geographic areas
100 % of Crizal lenses in the
world have UV protection
rating with E-SPF
Crizal Prevencia : 12 % Crizal
sales in France in the 1st
quarter
… and affecting all market segments
42
PREMIUM MID-RANGE READERS / SUNGLASSES
• Varilux S, Varilux E
• Crizal Prevencia
• Optifog Smart Textile
• Nikon Seecoat Blue
• Transitions Signature
• Transitions Graphite Green
• Intuitiv
• I Relief
• M’Eye Fit tablet
• Xperio Gradient Polarized
• Polaroid Rx
A global organization supported by expertise of the best scientific, industrial and academic communities
43
Yesterday… today… tomorrow… Essilor is a pioneer
CUSTOMER
EXPERIENCE MYOPIA
AUGMENTED
REALITY
GLASSES
HEALTH SUN
2020
Progressive
lens
Organic
lens
Anti-reflective
lens
Photochromic lens
Digital
Surfacing
Personalization
Selective
filtration
1960
1990
2000
2010
45
Sun strategy
Eric Thoreux
Strong category growth ahead
46
Under-penetrated category Inherent drivers
KIDS
AGING
FASHION
EMERGING
MIDDLE
CLASSES
Source: Estin & Co estimates and analysis; Essilor International
Today Potential
% of world population owning
sunglasses
c25%
c85%
2011 2012
c10%
c50%
% of SunRx amongst eyeglass wearers
Potential Today
Potential Today
15 $ 300 $
Most Sunglasses Today do not Offer the Right Quality
150 $
Street Sales Mass Channels Specialty Retail
47
Sunglasses sold on the street can be harmful
Limited differentiation in vision quality whatever the price
Technologies exist to differentiate vision performance
Grow on the three segments
48
“INFORMAL TRADE”
PERFORMANCE
RSP > $100
12m units
RSP $5 - $100
510m units
RSP > $100
26m units
LUXURY FASHION
ENTRY/ MID-TIER
Retail
sell-out price
Functional use
49 Source: Essilor International
Essilor with the right capabilities
Frame scale /
Logistics 125 million eyewear purchased
Chinese partners
Core Essilor R&D
Rx Labs
Mass manufacturing
(clear prescription)
Brand portfolio
Rx Sun know-how
Sun Lens know-how
Consummer access Multi-channel presence
Sun actors parnerships
Costa, fastest growing performance brand in the USA
50
Bolon, first Chinese brand in mid-range segment
51
52
Ambition: a c1.1b€ total Sun business by 2018
Revenue in € billions
1.1
0.5
2013
2018
10%*
* As a percentage of total Group revenue
Hubert Sagnières
55 Source: Essilor estimate
billion
5.0
4.3
2013
2020
billion
Poor Vision is the World’s most widespread Handicap
Number of people requiring vision correction
in the world
In 2013, 4.3 billions of people need visual correction
56
1.8 billion correct their vision
2.5 billion have a bad vision
A solid business model
57
55,000 people
in 62 countries 18%-19 % ~ 10 % per year
Growth Profitability Human
resources
28 acquisitions in 2013 More than 100 patents filled
200 new products
Innovation Acquisitions
3 new countries:
Chili, Colombia and Nepal
Geographic
development
A responsible company
58
BOP Innovation Lab
Essilor’s mission
59
Improve life by improving sight
Governance
Hubert Sagnières
Essilor’s Governance
Board of Directors
Five Board Committees
Executive Committee
Employee shareholders
Shareholders
61
Members of the Board of Directors at December 31, 2013
Philippe ALFROID
Xavier FONTANET
Hubert SAGNIERES
Independent Directors
Benoît BAZIN
Antoine BERNARD
DE SAINT-AFFRIQUE
Yves CHEVILLOTTE
Mireille FAUGERE*
Louise FRECHETTE
Bernard HOURS
Maurice MARCHAND-TONEL
Olivier PECOUX
Michel ROSE
Valoptec
Maureen CAVANAGH
Yi HE
Aïcha MOKDAHI
Scheduled Board Meetings
Attendance rate in 2013: 95.8 %
* Resignation on March 27, 2014
63
Designation of an employee representative with vote on the Board of Directors
14 June 2013 law on employment protection: promoting inclusion of
employees’ perspective on company strategy.
Appointed by Essilor International’s Corporate Central Committee
for 3 years.
Eligibility conditions: French employee of the Group
At least 2 years’ service
Not holding any other office
Timetable:
07 May 2014 : AG to modify statutes
Before end of July : Call for candidates
28 Octobre 2014 : Appointment of Director representing employees
63
64
Renewal of appointment to the Board for 3 years:
M. Philippe ALFROID Essilor Board Director since May 1996
Former Chief Operating Officer of Essilor until his retirement
in June 2009
Renewal of appointment to the Board for 2 years*:
* subject to the adoption of resolution 24
M. Maurice MARCHAND-TONEL Essilor Board Director since November 2006
Senior Advisor at BearingPoint France SAS, Advisor
Director at Investcorp Bank B.S.C (USA)
M. Michel ROSE Essilor Board Director since May 2005
Previously, Deputy Managing Director (non executive)
of the Cement Division of Lafarge until May 2008
Board of directors – appointment renewal
65
Renewal of appointment to the Board for 3 years:
M. Yi HE Essilor Board Director since January 2010,
representing employee shareholders
Président of Essilor (China) Holding Company (Chine)
Ms Aïcha MOKDAHI Essilor Board Director since January 2007,
representing employee shareholders
Director Essilor Vision Foundation, Europe & Amera
M. Hubert SAGNIERES Essilor Board Director since May 2008
Chairman and Chief Executive Officer of Essilor since
January 2012, following position of Managing Director
(2010-2012)
Board of directors – appointment renewal
Essilor’s Governance
Board of Directors
Five Board Committees
Executive Committee
Employee shareholders
Shareholders
66
Audit and Risks Committee
Chairman of the committee: Yves Chevillotte
Members: Philippe Alfroid, Benoît Bazin, Antoine Bernard
de Saint-Affrique, Aïcha Mokdahi
Attendance rate: 95 %
Monitors the questions related to the elaboration and to the control
of accounting and financial information
67
Appointments Committee
Chairman of the Committee: Xavier Fontanet
Members: Yves Chevillotte, Maurice Marchand-Tonel, Michel Rose,
Associated to the committee’s work : Aïcha Mokdahi, Hubert
Sagnières
Attendance rate: 100 %
Reports on the functioning of the Board and prepares its evolution
68
Remunerations and Corporate Officers Committee
Chairman of the Committee: Michel Rose
Members: Bernard Hours, Maurice Marchand-Tonel, Mireille Faugère*
Attendance rate: 100 %
Accompanies the evolutions of governance and assists those
concerned
Makes recommendations to the Board which in turn decides on the
remuneration of company Directors in line with the AFEP-MEDEF code
Reviews the allocation of performance shares for all employees
69
* Resignation on March 27, 2014
70
Salary
25%
Annual
bonus *
25%
Long-term incentive**
50%
2013 compensation structure
75% performance-linked
* Target
** Allocation of performance shares valued according to IFRS norms
Rewarding annual and long-term performance
Earnings per share
Organic growth
Growth from bolt-on acquisitions
Personal objectives
40%
30%
10%
20%
Variable target =
100% of salary
2013 bonus structure
71
Long-term incentive: sustainable value creation and
entrepreneurial risk-taking
72
Vesting conditions Lock-up period
Employees Growth in the share price
Employees in France: shares freely transferable at the end of a period of 6 or 8 years Employees outside France: half of the shares freely transferable at the end of a period of 4 or 6 years
Additional conditions
Executive Committee + Achievement of Group annual performance targets
Chairman and Chief Executive Officer
+ Achievement of annual performance targets
+ At least one-third of shares - or the equivalent of two years' compensation - to be kept for as long as he remains Chairman and CEO
Principles : meritocracy, long-term commitment and loyalty
73
Beneficiaries: senior executives
Minimum 10 years’ service
Present in the company at retirement
Reference salary: 3 last years of salary and bonus
Maximum: 25% of reference salary
Fidelity supplementary defined pension plan
Summary of remuneration of Mr Hubert Sagnières for financial year 2013
74
2012 2013 Variation
Directors’ Fees - - -
Salary € 800k € 800k 0.0%
Target bonus € 800k € 800k 0.0%
% achievement 123% 106% -17 pts
Cash compensation € 1,784k € 1,648k -7.6%
Performance shares 45,000 45,000 0.0%
Deferred compensation
75
1. Fidelity supplementary defined benefit pension plan
2. No compensation for loss of office. Termination pay under the
employment contract suspended.
Strategy Committee
Chairman of the Committee: Hubert Sagnières
All Board Members
Attendance rate: 98.7 %
Meeting agenda prepared by a steering committee
76
Corporate Social Responsibility Committee
(new committee created in 2013)
Chairman of the Committee: Louise Fréchette
Members: Bernard Hours, Aïcha Mokdahi, Hubert Sagnières
Attendance rate: 100 %
Makes recommendations to ensure the Group responds better
to the economic and social challenges linked to its mission :
improving lives by improving sight
77
*voix consultative
Essilor’s Governance
Board of Directors
Five Board Committees
Executive Committee
Employee shareholders
Shareholders
78
An expert Executive Committee engaged in the service of the strategy and mission
79
Members of the Essilor Executive Committee
Improving the sight
of 4.3 billion people in the world
Essilor’s Governance
Board of Directors
Five Board Committees
Executive Committee
Employee shareholders
Shareholders
80
Over 15,000 internal shareholders of whom
7,500 members of Valoptec Association
North America
2,839
Latin America
706
Europe
2,654
Africa/Australia/
Middle-East/Asia
2,203
France
7,091
81
Employee shareholding: key to our culture and values
Essilor’s Governance
Board of Directors
Five Board Committees
Executive Committee
Employee shareholders
Shareholders
82
% of capital at the end of the year*
83
Shareholding structure increasingly international
* excluding employed shareholders
Europe
(excluding France
& United Kingdom)
Canada,
United States of America,
United Kingdom
Rest of the world France
2008 2013
41.5% 43.7%
48.1%
39.5%
8.6%
1.9%
12.3%
4.5%
84
Report by the Auditors
Christine BOUVRY
84
85
QUESTIONS / ANSWERS
86
Combined Ordinary And
Extraordinary General Meeting
Paris, May 7, 2014
Palais des Congrès