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 provice 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 17, 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 and general managing partner
As General Partners, the Chief Executive Officer and General Managing Partner have 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 and General Managing Partner are especially vigilant in relation to the management of corporate risks.
In line with this system based on long-term responsibility, the Chief Executive Officer and General Managing Partner may not relinquish their status as General Partners without the prior approval of an Extraordinary Shareholders Meeting.
Their interests are therefore closely aligned with the long-term consequences of the Group’s management decisions.
Independence of the Surpervisory 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 2018, all of the Supervisory Board members except Michel Rollier and Cyrille Poughon qualified as independent. The table in section 4.3.2 h) of the 2018 Registration Document states whether or not each Supervisory Board member is considered as independent.
See the Corporate Governance Report on the Board’s work in 2018 in section 4.3 of the 2018 Registration Document (from page 120 to 133) for further details of the independence review process.