combined ordinary and extraordinary general meeting · combined ordinary and extraordinary general...

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Combined Ordinary And

Extraordinary General Meeting

Paris, May 7, 2014

Palais des Congrès

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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

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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


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


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.


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.


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.


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.


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.


15

Agenda (continued)

26. Powers to carry out legal formalities relating to the resolutions

adopted by the Ordinary and Extraordinary General Meeting


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

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(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

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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

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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


Long-term Growth Drivers in Optics Visual Impairments

38


2.0

1.6

2013

2020


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…

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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

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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


Board of Directors


Executive Committee


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


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*


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


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


Board of Directors


Executive Committee


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


Board of Directors


Executive Committee


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


Board of Directors


Executive Committee


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



Paris, May 7, 2014

Palais des Congrès