Stretched targets to be set in the focus areas in the new PSP pave the way for the achievement of our purpose aspirations, and a clear methodology and sufficient data will ensure that these targets are appropriate. All the non-financial metrics used in the new PSP will be rigorously measurable and audited. The following chart reflects the proportion of contribution from the three focus areas of the Givaudan purpose. 80 % Creations Relative sales / Free cash flow 10 % Nature Net GHG emissions reduction (scope 1+2+3) 10 % People Senior leader diversity (women and high growth market representation) / Employee safety Creations performance criteria (80%) Following the 2020 review of the Company compensation plans, the Compensation Committee considered the appropriateness of the existing flavour and fragrance industry peer group used in PSP calculations to benchmark organic sales growth. The nature of the Company’s business has evolved in recent years with the acquisition of other businesses, and a new and broadened peer group was used for grants in 2021 to reflect this change: – Relative average sales growth as compared to the sales growth of two equally weighted selected peer groups; and – Cumulative free cash flow (FCF) margin, expressed as a percentage of cumulative sales. The structure of performance criteria calculation has been specifically designed to be challenging. As explained in section 3.7, these performance criteria from 1 January 2021 were complemented by non-financial criteria linked to the Givaudan purpose in the areas of net CHG emissions reduction, diversity and employee safety. For average sales growth, this is compared with two peer groups: – Peer Group 1 comprises companies from direct competitors in the flavour and fragrance industry and other consumer ingredient producers that publish sales in local currency. The peer companies currently included in the group are: DSM Nutrition, Kerry Taste & Nutrition, Firmenich, Hasegawa, IFF, Robertet, Sensient, Symrise and Takasago. – Peer Group 2 comprises publically listed companies which reflect our customer segments and whose respective sales are representative of the mix of Givaudan business: Coca-Cola, PepsiCo, Danone, Nestlé, Mondelez, Kraft Heinz, General Mills, Henkel, Unilever, Reckitt, L’Oreal, P&G, Colgate, Estée Lauder and Coty. The performance range for relative sales growth extends from –2% to 3% annualised sales growth versus both peer groups. Givaudan’s performance versus both groups is weighted equally and measured over the four-year performance period (2018 to 2020 and prior: –1.5% to 2.5% for the direct competitor peer group). In the case of FCF margin, final achievement is calculated as the average of the reported FCF margin for each of the four performance years. This means that Givaudan’s FCF for each year of the performance period is summed, and this cumulative result is divided by the sum of Givaudan’s sales in each year of the performance period. The assessment over four years ensures that the performance targets are stringent and reward sustained Company performance. The performance range extends from 9% to 17%. Target setting and testing against targets follows adherence to strict governance policies. Careful consideration is given to Givaudan’s performance and its projections. In addition, a reference test against historical achievements is conducted as depicted in table VII. Targets set for the 2021 PSP remain aligned with our 2021 guidance, and within the overall objectives. In addition to the factors already mentioned, the assessment and target setting take into consideration the impact of significant investments (in particular, recent acquisitions) and ensuring targets are appropriately challenging. Reflecting business and individual performance Governance Report Compensation Report Consolidated Financial Report Statutory Financial Report Appendix 29 Givaudan — 2021 Governance, Compensation and Financial Report