KERING : 2015 Report by the Chairman

Report by the Chairman of the Board of Directors

on its composition, the application of the principle of the balanced representation of women and men, on the conditions of preparation and organisation of the work performed by the Board, and on the internal control and risk management procedures implemented by the Company

Pursuant to Article L. 225-37, paragraph 6 of the French Commercial Code (Code de commerce) amended by Act No. 2008-649 of July 3, 2008, Ordinance No. 2009-80 of

January 22, 2009 and Act No. 2011-103 of January 27, 2011, the composition of the Board of Directors, the application of the principle of the balanced representation of women and men on the Board, and the conditions of preparation and organisation of the work performed by the Board of Directors and the internal control and risk management procedures implemented by the Company are reported hereinafter. This report specifies, in particular, the procedures relating to the preparation and processing of financial and accounting information for the

consolidated financial statements and the parent company financial statements. In addition, this report indicates any potential limitations set by the Board on the powers of the Chairman and Chief Executive Officer. The first part of this report was presented to the Appointments Committee on February 11, 2016 and the second part was the subject of deliberations by the Company's Audit Committee on February 15, 2016.

The Board of Directors approved the entire report at its meeting on February 18, 2016 in accordance with the provisionsof Article L. 225-37 of the French Commercial Code.

Membership of the Board of Directors

The Board is composed of Directors with wide and diversified experience, relating in particular to corporate strategy, finance, insurance, economics, the retail sector, industry, accounting, management and supervision of commercial and financial corporations. The Articles of Association provide for a renewable four-year term of office for Directors.

In order to avoid reappointing the entire Board simultaneously and to facilitate a smooth renewal process, the Combined General Meeting on May 7, 2009

adopted an amendment to Article 10 of the Company's Articles of Association implementing the staggered renewal of the Board of Directors.

After having considered the Board of Directors' report and the favourable opinion issued by the Company's Works Council, the Combined General Meeting on May 6, 2014 decided to amend Article 10 of the Articles of Association in order to establish the procedures for appointing Directors representing the employees in accordance with the French law dated June 14, 2013 in relation to job security.

The Board is currently made up of eleven Directors:

Participation in a committee End of Inde- Start 1st current

pendent Remune- Appoin- Strat. Sustain- term of term of

Name Position Age Director(1) Audit ration tments & Dev. ability office office Nationality

According to the criteria of the revised AFEP-MEDEF Code and the Board of Directors set out below.

Member of the Executive Board from 1993 to 2001 and the Supervisory Board from 2001 to 2005.

Member of the Supervisory Board until 2005.

Four non-voting Directors appointed by the Board of Directors for a term of four years pursuant to Article 18 of the Company's Articles of Association attend meetings of the Board of Directors, as required, on a consultative basis.

The Board has set up five Committees responsible for assisting it in performing its task: the Audit Committee, the Remuneration Committee, the Appointments Committee, the Strategy and Development Committee and the Sustainability Committee.

A detailed list of the Directors and the non-voting Directors is set out in a previous section of the Reference Document, on pages 136 to 146 and 154.

The composition of the Board of Directors did not change in 2015.

Conditions of preparation and organisation of the work of the Board of Directors

The Board of Directors performs the duties and exercises the powers granted to it by law and the Articles of Association.

It determines and assesses the strategy, objectives and performance of the Company and ensures their implementation. Subject to the powers expressly granted to Annual General Meetings and within the limit of the corporate purpose, the Board reviews all issues concerning the smooth running of the Company and acts on all matters over which it has authority.

The Board carries out the controls and verifications it deems appropriate.

The conditions of preparation and organisation of the work of the Board of Directors are defined by law, the Company's Articles of Association, the internal rules of the Board and the work of its specialised Committees. The Board has established internal rules for each committee.

Pursuant to its internal rules and the law, the Board of Directors meets at least four times a year. To enable Directors to prepare in the best possible way for the topics to be examined during the meeting, a comprehensive file is sent to them in due time ahead of the meeting; it includes, per topic addressed, the necessary information on all items on the agenda.

In line with the relevant regulatory requirements, the internal rules also set the rules applicable to Directors in relation to restrictions on trading in the securities of the Company, or more generally the Group, by establishing black-out periods:

• the Directors must refrain from trading directly or indirectly in the listed securities and financial instruments of the Company and the Group for a period of 30 calendar days preceding each of the periodic publications relating to the annual and half-year consolidated financial statements and 15 calendar days preceding each of the quarterly publications relating to consolidated revenue and ending at the close of the trading day following the publication of the relevant official press release. In no way does this black-out period replace the legal and regulatory provisions regarding insider trading with which each member of the Board must comply at the time he/she decides to trade, no matter when this might occur outside the defined black-out periods;

• the same obligations apply to each Director insofar as the Director has knowledge of inside information relating to any financial instrument listed on a regulated market, where the issuer of those financial instruments has an

insider relationship with the Group. Consequently, the internal rules require the reporting of all dealings in these securities.

The internal rules set the frequency and conditions of Board meetings and provide for meeting participation by videoconference and/or conference call.

They also establish the principle of regular assessment of the functioning of the Board and set the terms and conditions by which Directors' fees are allocated.

According to the internal rules, Directors are required to inform the Chairman of the Board of any conflicts of interest, or of any possible conflicts, between their duties towards the Company and their private interests and/or other duties, and they may not vote on any matters that concern them directly or indirectly.

The Chairman of the Board of Directors may ask the Directors at any time for a written statement confirming that they are not involved in any conflicts of interest.

In order to reinforce its methods of functioning and in the interest of good governance, the internal rules of the Board of Directors set forth and formally lay down the rules governing the organisation and operating methods of the Board as well as the missions of its five Committees: the Audit Committee, the Remuneration Committee, the Appointments Committee, the Strategy and Development Committee and the Sustainability Committee.

Executive Management may in all circumstances be heard within said Committees.

After the Combined General Meeting on May 19, 2005 adopted the new Articles of Association of Kering (then PPR), introducing governance by a Board of Directors, the Board of Directors opted to have the duties of Chairman and Chief Executive Officer held by one person, and maintained this option in May 2009. This choice has contributed to efficient governance in light of the organisation of the Kering group within which François- Henri Pinault is the Chairman and Chief Executive Officer of Kering, the Group's parent company. He is related to the controlling shareholder, is closely involved in conducting the Group's business and has in-depth knowledge and experience of this business. The management of the Luxury and Sport & Lifestyle Divisions is entrusted to the Chairman and Chief Executive Officer and to the Group Managing Director, respectively. The Chairmen and Chief Executive Officers of the main brands (Gucci and PUMA), as well as the Chief Executive Officer of

Kering's "Luxury - Watches & Jewellery" division, and the Chief Executive Officer of Kering's Luxury - Couture & Leather Goods' emerging brands are members of the Executive Committee and attend Board of Directors' meetings as non-voting Directors. They are all thus able to provide, at those Board meetings which they are invited to attend, their views and information concerning the Group's Divisions and brands so that the non- executive Directors and more generally the Board may be well-informed.

On the proposal of the Chairman and Chief Executive Officer, the Board of Directors' meeting on February 22, 2008 appointed a Group Managing Director (Directeur Général délégué) whose term of office was renewed on June 18, 2013 and who has the same powers with regard to third parties as the Chief Executive Officer. The Group Managing Director was appointed as Director by the Combined General Meeting on May 7, 2009 for a four-year term, renewed on June 18, 2013 for another four years.

The Chairman and Chief Executive Officer and the Group Managing Director both take part, on an equal level, in the work of the Board of Directors, 40% of whose members are independent Directors. The Board operates smoothly thanks to frequent meetings, the regular attendance of its members and the assistance of its specialised Committees, as described below.

In connection with the Board of Directors' statutory role of determining the business orientation of the Company and ensuring its implementation, and without prejudice to the legal provisions governing the authorisations required to be granted by the Board (related-party agreements, endorsements, suretyships and guarantees, divestments of shareholdings or sale of real property, etc.), the Company's Articles of Association provide that certain decisions of the Chief Executive Officer and Group Managing Director, by virtue of their nature or significance, require the prior approval of the Board of Directors:

matters and transactions that have a substantive effect on the strategy of the Group, its financial structure or its scope of business activity;

except in the event of a decision by the Annual General Meeting, issues of securities, regardless of the nature thereof, that are liable to cause a change in the share capital;

the following transactions by the Company or any entity controlled by the Group, insofar as they each exceed an amount set annually by the Board of Directors (which was €500 million in 2015):

• all investments or divestments, including the acquisition, sale or exchange of holdings in all existing or future businesses,

• all purchases or sales of Company real property.

These transactions are regularly submitted to the Board of Directors, which examines them carefully.

On October 22, 2008, the Board of Directors announced that it had examined and adopted, as a reference corporate governance framework, the AFEP-MEDEF recommendations of October 6, 2008 on the remuneration of executive corporate officers of listed companies and deemed that the corporate governance policies already implemented by the Company complied with all the aforementioned recommendations.

Accordingly, the Company now refers to the Corporate Governance Code of Listed Corporations resulting from the consolidation of the October 2003 AFEP and MEDEF report, the aforementioned January 2007 and October 2008 AFEP-MEDEF recommendations and the April 2010 AFEP-MEDEF recommendation concerning the strengthening of women representation within the boards, as amended in June 2013 and November 2015 ("the revised AFEP-MEDEF Code") and its November 2015 implementing guidelines, and has done so, in particular, for the preparation of this report. The revised AFEP- MEDEF Code is available in English on the AFEP website at http://www.afep.com/en/content/focus/corporate- governance-code-listed-corporations.