Societe Generale : 2023 Compensation policies and practices report

The governance applied by the Group ensures a comprehensive and independent review of the compensation policy based on:

• An annual compensation review, coordinated by the
  Group Human Resources Division, involving the Finance
  Division and the Control Functions (risk and compliance) and proceeding in successive stages of validation up to the General Management level;
• A final validation of this policy by the Board of Directors after review and opinion of the Compensation
  Committee, both on the principles and parameters of evolution for the Group, as well as on the compensation policy for persons having a significant impact on the Group's risk profile.

The compensation policy is established in compliance with applicable regulations especially with European Directive 2019/878 (hereinafter "CRD V") of the European Parliament and of the Council of May 20th, 2019 and transposed in France by Order No. 2020-1635

of December 21, 2020 and the Order of December 22, 2020(1) for persons having a significant impact on the Group's risk profile (hereinafter "regulated population"). It is regularly reviewed:

• Externally, by the supervisory authorities;
• Internally, through an independent review conducted by the internal Audit Division.

With respect to the Chief Executive Officers, it also complies with the provisions of the French Commercial Code and the recommendations of the AFEP-MEDEF Corporate Governance Code.

Regarding the Group Corporate Officers (o/w Chief Executive Officers), the compensation policy is submitted ex-ante to the General Shareholders' meeting and its implementation is also subject to its approval, in accordance with the conditions defined by the French Commercial Code.

The remuneration policy complies with the provisions of the CRD V Directive, which came into force at the end of December 2020, notably through:

• The integration of the principle of gender neutrality and equal pay between male and female employees performing the same work or work of the same value;
• The definition of a regulated population scope CRD
  V 2023 in accordance with the Delegated Regulation
  (EU) 2021/923 of March 25, 2021. The 2023 CRD V regulated population has been defined on the basis of identification criteria specified in the EBA's regulatory technical standards (level of responsibility, impact on risk and level of total compensation);
• The approval from the General Shareholders' meeting of 20 May 2014 to increase the maximum variable/fixed compensation ratio of this population to 2:1 and the respect of this maximum for all CRD V regulated persons; In this regard, the 8th resolution of the Ordinary General Meeting of 20 May 2014 has been approved by 96.46% of voters.

The approach adopted in 2023 to define the regulated population and structure this population's variable remuneration complies with the CRD V Directive. Its

main components are as follows:

• Variable remuneration envelopes are determined by activity (BU/entities) based on:
• • the financial results after taking into account the cost of risk, the finance Division also ensuring that the total amount of the variable remuneration envelopes does not undermine the Group's ability to meet its objectives in terms of capital requirements;
  • the risk indicator related to the respect of the Risk
    Appetite Statement (RAS) limits;
  • the risk management and compliance with regulations, through an independent assessment process performed by the Risk and Compliance Divisions for the Global Banking and Investor Solutions (GBIS), Mobility, International Retail Banking and Financial Services (MIBS) and French Retail Banking
    (RPBI) business lines;
  • and qualitative factors such as market practices, the context and the conditions of exercise the activity.
• individual allocations taking into account an annual managerial evaluation of the achievement of quantitative and qualitative objectives known to the employee and including indicators related to risk management and compliance (in particular criteria related to regulatory compliance and, for the employees concerned, related to the business risk management, the respect for the interests and fair treatment of clients, the quality of services provided to clients and the respect of the rules governing the market integrity).

The Group tool dedicated to annual employee appraisal includes a mandatory Conduct and Compliance section, enabling the managers to take into account these criteria in the annual performance assessment. In addition, for certain populations, an independent assessment is carried out by the risk and compliance Divisions on risk management and observation of compliance rules.

• a variable remuneration structure in compliance with the regulation and including for the CRD V regulated population:
• • a deferral trigger threshold starting from €50K(2) of the global variable remuneration or one third of total remuneration;
  • an unvested component subject to conditions such as continued employment, financial performance, appropriate risk management and compliance to regulation. This component is vested over 4 years per quarter (25% per annual maturity) and over 5 years for Senior Management, with a deferral rate of at least 40% and a maximum of 70%(3) (i.e. above the minimum 60% threshold required by regulations for the highest levels of remuneration);
  • a portion of at least 50% of the total variable remuneration allocated in Societe Generale shares or instruments linked to the Societe Generale share (50% of the vested component and 50% of the unvested component).

Thus, the portion of the variable remuneration paid immediately in cash is no more than of 30% of the total variable remuneration (i.e. half of the vested component equal to a maximum of 60% of the total variable remuneration). The other half of the vested component is allocated in instruments linked to the Societe Generale share. The portion of remuneration paid immediately in cash may be limited to 15% for the highest variable remuneration (case in which the deferred component reaches 70% of the total variable remuneration).

• a minimum retention(4) period of one year on the portion in shares or other instruments from awards made in respect of the 2023 performance year.

• Jérôme CONTAMINE, Independent Director, Chairman of the remuneration Committee, member of the audit and internal control Committee;
• France HOUSSAYE, Director elected by employees, member of the remuneration Committee;

• Annette MESSEMER, Independent Director, member of the remuneration Committee, member of the Board of
  Directors' Risk Committee;
• Benoît DE RUFFRAY, Independent Director, member of the Nomination and Corporate Governance Committee, member of the Remuneration Committee.

CHIEF EXECUTIVE OFFICERS

• Preparation of the assessment of the financial and non-financial performances of the Chief Executive Officers and proposal to the Board on the award of remuneration in respect of 2023
• Proposal of the remuneration policy of the Chief Executive Officers (fixed and variable remuneration and long-term incentive)
• Proposal of the annual financial/non financial objectives of the Chief Executive Officers relating to the 2024 financial year
• Preparation of the work of the Board of Directors on the conditions of departure of the Chief Executive Officers and the conditions of employment of the new Chief Executive Officers
• Monitoring of the share ownership and holding obligations of the Chief Executive Officers

GROUP REMUNERATION POLICY AND REGULATION

• Guidelines on the 2023/2024 Group remuneration policy
• Deferred variable compensation schemes and long-term incentive plans
• Gender Equality Policy
• Proposal to the Board on the award of performance share plans
• Proposal of Employee Share Ownership Plan project for 2024
• Monitoring of the use of free share allocations
• Remuneration policy for the CRD V regulated population of the Group
• Review of how risks and compliance are taken into account into the remuneration policy
• Variable compensation pool for GBIS (Global Banking & Investor
  Services) and main businesses of the Group
• Monitoring of the fulfilment of the performance conditions applicable to the Group deferred remuneration and long-term incentive plans
• Resolution proposals related to remuneration for submission to the General Meeting of shareholders
• Review of the individual remuneration of the Group Chief Risk Officer, the Group Chief Compliance Officer and the Group Head of Inspection & audit
• Conclusions of the 2023 audit mission on the compliance of the 2022 remuneration policy
• Public report on 2023 Compensation Policies and Practices

The different divisions are involved in the process:

• The Group human resources Division (HRCO) ensures the overall coordination of the annual review process of the remuneration policy and its implementation. It works more specifically on the identification of the CRD
  V regulated population, in cooperation, with the human resources of each activity, the risk and compliance
  Divisions (See Part 2 - Chapter 2). It also monitors the implementation of the Gender Pay Gap policy(5).
• The finance Division (DFIN) is involved in determining the fixed and variable remuneration pools of the business lines in connection with the budgetary process and the financial indicators considered for the determination the variable remuneration pools. The finance Division ensures that the cost of risk generated by the business lines is adequately considered and that the total amount of variable compensation does not impede the Group's abilitytostrengthenitscapital(SeePart2-Chapter3-§1.1).
  It also participates in the process of determining deferred variable remuneration schemes (see Part 2 - Chapter 3 -
  §2) and assessing the fulfilment of financial performance conditions. The finance Department specifies the financial performance indicators and the thresholds on which the unvested variable remuneration is based. These indicators and thresholds are validated by the Board of Directors, after consulting the remuneration Committee.
• The risk Division (RISQ) and the compliance Division (CPLE) are involved in the process of reviewing the
  Group's variable compensation and more specifically the remuneration process of CRD V regulated population.
  These control functions assess risk and compliance management for the GBIS, MIBS and RPBI business lines
  (See Part 2 - Chapter 3 - §1.1). They give their opinion on how regulated staff take these aspects into account (see Part 2 - Chapter 3 - §1.2). The variable remuneration envelopes and the individual awards of certain specific populations take into account the ratings allocated by the control functions in the framework of their annual independent evaluation exercise based on quantitative (through specific risks and compliance indicators at BU level) and qualitative criteria that allow to highlight potential warnings. In particular, negative ratings lead to a decrease of teams or individuals' variable remunerations, down to zero. This process of independent evaluations carried out annually by the control functions at Group level is integrated into the annual compensation review process coordinated by human resources.

The risk division and the compliance Division are also involved in the annual review and validation of the Group's remuneration policy. They give their independent opinion to the Board of Directors' Risk Committee and the Remuneration Committee on how risks are accounted for in the remuneration policy. The Group Chief Risk Officer and the Group Chief Compliance Officer are involved in the meetings chaired by the General Management to give their opinion on the proposals for variable remuneration envelopes for the various activities and on the overall variable remuneration envelope at Group level.

In addition, they carry out second-level control tasks relating to remuneration.

The risk Division is also involved in the choice of financial indicators, in conjunction with the finance and the compliance Divisions, used to determine the envelopes of variable remunerations, in particular on GBIS. It also ensures that financial results were achieved in compliance with the Group Risk Appetite Statement (RAS) framework.

The compliance Division determines the key controls aimed to govern the Group's compensation systems with the input of the human resources Division and assesses the risks related to compliance with the rules and the various systems via the "Risk assessment" process.

• The legal Division (SEGL) acts as the legal watch on matters concerning the remuneration of persons regulated by banking and financial regulations and is responsible for providing the human resources
  Division with legal advice in relation to banking and financial regulations.
• The general inspection and audit Division (IGAD), in accordance with regulatory requirements, conducts each year a mission to assess the compliance of the remuneration policy with CRD V regulation.

The remuneration of the control functions (risk, compliance and inspection & audit Divisions) is determined as follows:

• The remuneration policy of the control functions staff is based on their own objectives and does not depend on the operations of the business lines they control;
• The level of their remuneration, and particularly the fixed remuneration, must be sufficient to attract and retain qualified and experienced staff and take into account market practices to ensure that it is set at an appropriate level for the tasks and level of responsibilities performed;
• The fixed remuneration should be predominant due to the nature of the responsibilities. The variable remuneration must therefore remain strictly below 100% of fixed remuneration for control functions;
• The fixed and variable remuneration pools in the framework of the annual compensation review of each of the Group's central control function (RISQ, CPLE,
  IGAD Service Units) are proposed by each head of the control Service Unit and validated by the member of the General Management in charge of their supervision;
• The evolution of the variable remuneration pools takes into account the evolution of the workforce and its structure, historical and target employees remunerations as well as the evaluation of their collective and individual performance, the contextual factors related to these functions (trends and market practices, tension on specialized functions or/and rare expertise, efforts and commitment required to achieve key control projects) and the evolution of the Group's results, irrespective of the results generated by the business or the activities they control;
• The allocation of the variable remuneration pool within each control function Divisions is based on the achievement of specific objectives set at the beginning of the year and specifically assigned to the control functions and their responsibilities. The assessment of the performance and the individual compensation of the staff members working in RISQ, CPLE and IGAD Divisions are determined by their managerial line within the division, which is independent of the operational units controlled;

• For the key managers in charge of a control function in local entities not belonging to RISQ or CPLE Divisions, the performance appraisal and the compensation are defined jointly by the Head of the independent control division (RISQ or CPLE) and the Head of the BU covering the entity or their representatives. In case of disagreement, the final decision is taken by the Head of the independent control division or its representative, except if contrary to local regulation.
• In addition, the individual remunerations of the Group heads of control functions Divisions (Head of risk, Head of compliance and Head of general inspection & audit of the Group) are reviewed by the remuneration Committee and validated by the Board of Directors.

This governance helps to ensure independence in the actions and decisions of the control functions with regard to the activities they control.

The annual assessment and remuneration of the IGAD staff members in charge of carrying out the ex post independent review of the compliance of Societe Generale Group remuneration policies and practices with CRD V rules are performed by IGAD division, which is strictly independent of the business lines and permanent control and operates as a hierarchically integrated division. A synthesis of the audit report is provided to the remuneration Committee and the Board of Directors' Risk Committee.

Apart from the annual individual compensation review process, a framework of delegation and management of remuneration applies to the entire Group.