Michelin couv courteGB

Report of the Supervisory
Board Chairman
on operations, preliminary work and organization and on internal control procedures
To the Shareholders,
In my capacity as Chairman of the Supervisory Board and
pursuant to the Financial Security Law (Loi de Sécurité
Financière) of August 1, 2003, I am pleased to report on Board
operations, preliminary work and organization and on Group
internal control procedures in 2004.
I - Supervisory Board Organization and
Preliminary work
1. Supervisory Board Organization
The Supervisory Board is currently made up of six members.
The members are appointed by the Annual Shareholders’
Meeting for a term of five years exclusively from among
Shareholders who are not General Partners.
Four of the six Supervisory Board members are deemed
independent for the purposes of corporate governance as they
comply with the independence criteria set forth in the Board’s
code of conduct. These criteria meet relevant financial
authorities’ recommendations to ensure free judgment and
absence of vested interest. They preclude direct or indirect
relationship between Supervisory Board members and the
Company or its management.
2. Supervisory Board Mission
In accordance with applicable law and Company bylaws, the
Supervisory Board’s mission is that of ongoing monitoring of
Company management.
Under its code of conduct the Board is to assess the following:
• the annual and interim financial statements prepared by the
Managing Partners;
• the opportunity and quality of management decisions; and
• proper exercise of Shareholder rights.
3. Basis of the Supervisory Board’s Work
Under its code of conduct, the Supervisory Board is to base its
opinion on management briefs covering:
• Company earnings: from reviews and assessments by the
Managing Partners and the Chief Financial Officer;
• Main strategic projects;
• Risks;
• Relevant documentation on the Group’s markets, competitive
environment, strategy, operations and outlook.
Mandatory information for the benefit of the Supervisory Board
also includes:
• A quarterly management report on all relevant indicators at
each meeting;
• Regular updates on the most significant press releases and
financial analysts’ studies together with background
information.
4. Assessment of Supervisory Board Operations
Pursuant to the Board’s code of conduct, as each year,
I ensured that the Board assessed its own organization.
The members were asked to give their views and these were
discussed at the Board meeting of March 10, 2005. They noted
further improvement in the conditions in which the Board
fulfills its control function, and found this was due to two
factors: on the one hand, genuine and thorough exchanges
between the Board and the Managing Partners, based on
mutual confidence, and on the other hand, quality information.
The Audit Committee plays an important part in Supervisory
Board operations as it is in charge of making preliminary
reviews of corporate and consolidated financial statements on
its behalf. In 2004, the Board focused on risk identification,
management and monitoring. In future, the Audit Committee
will focus on financial risk.
Further to its assessment, the Board found that it was in a
position to fulfill its monitoring role constructively.
5. Report for Financial Year 2004
The Supervisory Board met on four occasions in 2004, each
session lasting on average five hours. The attendance rate was
96%.
On each occasion, the Board was presented a detailed review
of Group earnings and financial communication and
commented on them. On February 20, the Supervisory Board
examined consolidated and corporate financial statements for
the full year 2003 and on July 28, 2004 financial year 2004
interim accounts.
The Supervisory Board also benefited from the following
presentations by Heads of Group Operations followed by site
visits: