At Michelin, corporate governance is a robust process focused on long-term responsibility.
The Michelin partnership limited by shares
Tire manufacturing is a capital-intensive industry in which the pace of technological innovation is relatively slow. Being able to deploy long-term strategies led by a stable, responsible management team acting in the shareholders’ best interests is a major advantage. Throughout its history, Compagnie Générale des Établissements Michelin (CGEM), the Group’s parent company, has been organized as a partnership limited by shares (SCA).
This partnership model has two partner categories:
- The Limited Partners or Shareholders provide capital, elect the members of the Supervisory Board and the Managing Partners and approve the financial statements presented by Management. Their liability is limited to the amount of their investment. All Michelin shares are registered, which enables the Group to better understand the expectations of its shareholders, who receive a return on their investment in the form of a dividend.
- The General Partners have unlimited personal liability for the partnership’s debts. They can be relieved of this liability only by decision of the shareholders in Extraordinary Meeting.
- The General Partners may be shareholders, but may not take part in any votes to elect Supervisory Board members or appoint Statutory Auditors.
- The General Partners receive a share of the Company’s profits in accordance with its bylaws, subject to shareholder approval at the Annual Shareholders Meeting.
Since May 11, 2012, Michelin has had two General Partners: Jean-Dominique Senard, Chief Executive Officer, and Société Auxiliaire de Gestion (SAGES), Non-Managing General Partner.
Role and responsibilities of the Chief Executive Officer
As a General Partner, the Chief Executive Officer has unlimited personal liability for Michelin’s debts. This offers shareholders a rarely found level of assurance that the Group is run in their medium- to long-term interests, particularly during times of volatile markets or economic crisis. It also means that the Chief Executive Officer is especially vigilant in relation to the management of corporate risks.
In line with this system based on long-term responsibility, the Chief Executive Officer may not relinquish his status as General Partner without the prior approval of an Extraordinary Shareholders Meeting.
His interests are therefore closely aligned with the long-term consequences of the Group’s management decisions.
Independence of the Supervisory Board
A majority of the members of the Supervisory Board must be independent and without any vested interests (i.e. with no relationship of any kind whatsoever with the Company or its management which might risk coloring the member’s judgment).
These independence criteria are exactly the same as those prescribed in the AFEP/MEDEF Code.
Based on these criteria, during 2016, all of the Supervisory Board members except Michel Rollier and Cyrille Poughon qualified as independent. The table in section 4.1.2 b) of the 2016 Registration Document states whether or not each Supervisory Board member is considered as independent. As from May 20, 2017, corresponding to the date on which Pat Cox have served for 12 years on the Supervisory Board, he is no longer qualified as independent member by the Supervisory Board.
See the Report of the Chairman of the Supervisory Board on the Board's work in 2016 in section 4.5 of the 2016 Registration Document (pages 125-139) for further details of the independence review process.
SAGES, a Non-Managing General Partner, guaranteeing the Company’s long-term viability
Société Auxiliaire de Gestion (SAGES) is a Non-Managing General Partner of CGEM and consequently has unlimited liability for the Company’s debts.
As SAGES is not a Managing Partner, it is not authorized to play any part in the Company’s management. However, if the position of CGEM’s Managing Partner falls vacant, SAGES will take on the Managing Partner’s role for an interim period and will be responsible for calling an Extraordinary Shareholders Meeting to elect a new Managing Partner.
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Did you know?
Compagnie Générale des Établissements Michelin traces its origins to Barbier, Daubrée et Cie, a partnership limited by shares set up on July 15, 1863 in Clermont-Ferrand, in the Puy-de-Dôme region of France.