Corporate Governance

Why is Michelin organized as a French partnership limited by shares (société en commandite par actions – SCA)?


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, who 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, who have unlimited personal liability for the Company's debts. They can be relieved of this liability only by decision of the shareholders in an 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 19, 2019 has two General Partners : Florent Menegaux, Managing General Partner 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 his management of corporate risks.
In line with this system based on long-term responsibility and commitment, the Chief Executive Officer may not relinquish his status as General Partner without the prior approval of shareholders in an Extraordinary Meeting. His interests are therefore closely aligned with the long-term consequences of the Group's management decisions.

Are Supervisory Board members independent?


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 may color the member's judgment). These independence criteria are exactly the same as those prescribed in the AFEP/MEDEF Corporate Governance Code for listed companies.
Based on these criteria, during 2015 and to this date, all of the Supervisory Board members except Michel Rollier and Cyrille Poughon have qualified as independent. The table in section 4.1.2 b) of the 2015 Registration Document states whether or not each Supervisory Board member is considered as independent.
See the Report of the Chairman of the Supervisory Board on the Board's work in 2015 in section 4.5 of the 2015 Registration Document (pages 118-120) for further details of the independence review process.


Does Michelin plan to set up a Shareholders Club?


We put this question to the Shareholders Consultative Committee, which found that the main purpose of a Shareholders Club is to identify shareholders and establish a direct channel of communication with them. Given that all Michelin shares are registered, we already know our shareholders and so do not need a Shareholders Club.

What is your dividend policy?


Part of being attentive to our shareholders is working to make their investment profitable. The goal of the Group's dividend policy is to pay out at least 35% of consolidated net income before exceptional (non-recurring) items.

A graph of the total shareholder return (TSR) is always displayed during shareholder meetings and presentations to investors. What exactly is this indicator?


The total shareholder return is a measure of a share's profitability over a given period. It reflects movements in the share price and dividends reinvested in the company. Dividends are a determining factor when evaluating a portfolio's performance. The TSR graph is used to show the profitability of the Michelin share relative to that of the CAC 40 TR (total return), which takes into account reinvested dividends.

Does Michelin plan to grant free shares?


Granting free shares is a traditional practice among some CAC 40 companies, but not at Michelin, where our aim is to increase the overall value of the company. Issuing free shares automatically leads to a reduction in the price per share and dilutes the value of the shares if the total market capitalization of the company remains the same. We prefer to increase the value of the Michelin share by raising the pay-out ratio or buying back shares.

Some companies issue a supplementary dividend to their most loyal shareholders. Is this the case for Michelin?


We are very concerned about treating our shareholders equally. A legal limit prohibits us from allocating a supplementary dividend to shareholders that hold over 0.5% of the capital. This means that many of our shareholders in France and around the world would not be eligible for a supplementary dividend if we had one. And that would be unacceptable.

Are Michelin shares an ethical investment?


In all our host countries, we are deeply committed to conducting our business with integrity. Results are not the only thing that matters; we also care about how they are achieved. The Michelin Code of Ethics is based on the Core Values expressed in the Michelin Performance and Responsibility Charter, namely respect for customers, people, shareholders, the environment and facts. Embracing these Core Values is the best way of ensuring the future success of our employees and our Group.


What is your policy for recycling tires?


As a tire manufacturer, it is our responsibility to implement effective solutions for recycling our end‑of‑life products. This involves either recovering energy from used tires or reusing the basic components after suitable treatment.

We work with the tire industry as a whole to offer sustainable, economical and logistically viable solutions to ensure our products are recycled to the greatest extent possible. We do this through shared organizations that take into account country-specific regulations and the existence and maturity of various processes.

Our goal is to become a leader in this crucial area.

Why is it sometimes hard to buy a new vehicle with Michelin fitments?


This question relates to original equipment passenger car tires; that is, tires equipping new vehicles. Tire manufacturers such as Michelin work in concert with carmakers to address the technical demands of future vehicles and thereby offer the best possible product. The carmaker is then free to choose one or more suppliers for one or more tire sizes. This sometimes results in several tire manufacturers being approved for the same vehicle, making it hard for consumers to choose or even know which brand of tire will be fitting their new vehicle when it leaves the assembly plant.

As a shareholder, do I receive a discount on Michelin tires?


We do not offer discounts to shareholders.

This practice would carry a tax risk for the shareholder because the government could well consider the discount to be a dividend in disguise, leading to a possible tax reassessment.

In addition to this risk, there are also the following issues to consider:

  • How to distinguish between loyal shareholders and opportunists who only hold a small number of shares until they receive their discount.
  • How to ensure fair treatment of shareholders who do not own a car and cannot benefit from this "loyalty bonus".

The impact of the product mix is often cited as an important factor for Michelin. What does this term cover?


Michelin sells thousands of products worldwide at varying margins. Improving the product mix means selling a greater number of more profitable tires.


All Michelin shares are registered. Could you explain why?


From the beginning, the Managing Partners wanted to offer Michelin shareholders access to an array of personalized services and information, regardless of how many shares they owned. For this reason, all shares issued by the Group's parent company, Compagnie Générale des Établissements Michelin, are in the form of registered shares. Unlike for bearer shares, Michelin is informed in real time of the names and addresses of holders of registered shares whenever they are traded.





What are the tangible benefits of holding registered shares?


As soon as your shares are registered, even if you buy only one, a permanent channel of communication opens between you and Michelin. As long as you hold at least one share, the following items will be delivered directly to your address at no charge:

  • Notice of the Shareholders Meeting several weeks prior to the meeting date. The notice may be delivered either by email or by standard mail, and is accompanied by the resolutions submitted for approval and a postal voting form.
  • Letters to Shareholders to inform you of Michelin's results, strategy deployment process, research, products and markets as well as information on the Michelin share.
  • Invitations to events, such as shareholder information meetings in nearby cities and wealth management conferences in which Michelin is taking part.





What is the difference between directly registered (nominatif pur) shares and indirectly registered (nominatif administré) shares?

Indirectly registered shares are held and managed by a financial intermediary for a fee.

Directly registered shares are held and managed by the issuing company – in this case, Michelin –creating a direct relationship with the shareholder. Michelin has delegated the administrative management of directly registered shares to Société Générale in the interests of offering optimal‑quality services, such as account consultation and online buy- and sell-order placement





How do I turn my indirectly registered shares into directly registered shares?


Simply send your request to the financial intermediary that holds your shares. You may be charged a transfer fee, depending on the institution. Once your shares are managed by the Individual Shareholder Relations Department, they are held for you at no cost.






Where online can I find information on Michelin results announcements and other events?






How sensitive are Michelin's results to fluctuations in the US dollar?


As the Group's financial statements are consolidated in euros, fluctuations in the US dollar/euro exchange rate can result in the following:

  • An immediate impact on sales invoiced in US dollars and converted into euros.
  • An immediate impact on the conversion into euros of the results of Group companies that publish their financial statements in US dollars.
  • A delayed impact on raw materials invoiced in US dollars and consumed outside countries where the US dollar is used. This delay is due to the amount of time that passes between the purchase and the consumption of the raw materials.

A 1-cent change in the annual average euro/US dollar exchange rate would result in a difference of between €15 million and €20 million in our operating income from recurring activities.

Our global footprint also exposes us to a number of other currencies.

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