EUR 492.40 For Business Accounts Only

Etude de l'AG du 14/04/2017

In item 2.d, the Board proposes the distribution of a dividend of € 0.11 per share

totalling USD 160 million, despite a net loss of USD 236 million in 2016. We have concerns over the very high consolidated net debt of USD 19'734 million, corresponding to a debt-to-market capitalization ratio of 1.8 at the end of 2016. We also note that free cash flow (USD 914 million in 2016) decreased by 52.1% from 2015, despite 21.7% lower capital expenditures, which were reduced by 56.0% from 2013. As the proposed dividend distribution is fully covered by free cash flow, and taking into account that the Company has significantly reduced dividends in the last 2 years (-47.5% from 2014), we have opted to recommend approval and to express our concerns by opposing the authorization to buy-back shares (item 4).

We have concerns over the Company's corporate governance, as it does not respect the "one share - one vote" principle. Concerns may also arise from the € 495 million fi imposed by the European Commission in 2016 for anti-competitive behaviours of CN Industrial's subsidiary Iveco. There fore, we recommend opposing the discharge of the Board of Directors (item 2.e). Board of Directors (item 2.e).

In item 5, the AGM is called to a binding vote on the remuneration policy, as the Board  proposes to amend the policy for non-executive Directors, by eliminating the possibility to receive in full or in part their compensation in shares or stock options. We welcome the proposed amendment to the non-executive Directors' remuneration as it will eliminate any performance-related remuneration components. However, we strongly regret that no changes are proposed to the executives' remuneration policy. The variable remuneration significantly exceeds our voting policy limit of 300% of the base salary, given that the CEO's cash bonus is capped at 200% of the base salary and in June 2014 he was awarded performance shares worth USD 28'131'600 on the date of grant, equal to approximately 17.5 times his base salary. Furthermore, the executive Chairman's long-term variable remuneration is exclusively based on a retention share plan, which is not linked to any performance conditions. Therefore, we recommend opposition