2013-vinci-annual-report

D. Corporate governance
This chapter contains information pertaining both to the Report of the Chairman of the Board of Directors pursuant to Article L.225-37 of
the French Commercial Code and the Report of the Board of Directors pursuant to Articles L.225-100 and L.225-102 of the French Commercial
Code on corporate governance and remuneration.
1. The Afep-Medef code of corporate governance
At its meeting of 13 November 2008, the Board of Directors of VINCI decided that the Company would, as from financial year 2008, use the
Afep-Medef code as a frame of reference for preparing the report required by Article L.225-37 of the French Commercial Code. This corporate
governance code may be consulted in full on the Medef website (www.medef.com).
132 VINCI 2013 ANNUAL REPORT
In accordance with the rule of “comply or explain”, below are the criteria or recommendations of this code that the Company has set aside:
Criterion/recommendation set aside
Article 9.4 of the code stipulates that in evaluating whether a Director is independent,
that person “must not have been a Director for more than 12 years”.
Explanation
The Board of Directors has decided not to apply this criterion.
The Group’s most significant assets relate to multi-year contracts that are in effect over
a very long period of time (up to several decades in the case of concessions and publicprivate
partnerships, for example). The Board must have members with sufficient
experience and perspective on these activities to be able to appreciate the risks related
to new projects.
Experience of more than 12 years does not seem excessive in light of what is at stake,
and this length of time has no impact on the ability of the persons involved to carry out
their responsibilities independently.
At 31 December 2013, three of the 13 Directors had held their appointments for more
than 12 years. Two of them, Mr Saint Olive (the renewal of whose term as Director will
be proposed to the Shareholders’ General Meeting of 15 April 2014) and Mr Ferrero
(whose term as Director will expire at the close of this same Shareholders’ General
Meeting), are considered independent Directors. The third of these Directors is
Mr de Silguy.
Article 9.4 of the code stipulates that in evaluating whether a Director is independent,
that person “must not have been an employee or Director of the Group’s parent
company or of any company consolidated by VINCI at any time over the last five years.”
Article 23.2.5 of the code recommends that the performance criteria relating to
severance pay “must only allow for such payment to an executive if the departure is
imposed, whatever the form of this departure, and is also due to a change in control or
strategy.”
Article 10.3 of the code recommends that the Board’s assessment “must measure the
contribution of each Director to the work of the Board, based on his or her skills and
involvement during Board debates.”
Provided the Board member in question is otherwise considered independent, the
Board believes that the fact that he/she holds the position of Director of a subsidiary
controlled by the Group, or more generally an appointment as company officer in a
company not controlled by the Group (e.g. in a consolidated company accounted for
under the equity method), is an asset for the Board, and that this situation alone does
not make him/her less independent in his/her judgement.
In May 2010, the Company entered into a commitment making Mr Huillard (its
Chairman and Chief Executive Officer) eligible for severance pay in the event that the
Board terminates his appointment for any reason before its normal expiry (in 2014).
Mr Huillard could therefore receive severance pay (whose amount is tied to performance
criteria) upon the termination of his appointment before its normal expiry even if the
Board’s decision is not due to change in control or strategy. However, Mr Huillard would
not be eligible for severance pay in the event of resignation, retirement before the expiry
of his appointment or the non-renewal of his appointment at its expiry.
The Board plans to propose to the next Shareholders’ General Meeting in 2014 that a
similar measure be approved in connection with a new appointment.
The Company regularly evaluates the functioning of the Board of Directors with the
assistance of an outside consultant who meets individually with each member of the
Board to obtain his or her opinion. Nevertheless, there is no formalised system for
measuring the individual contribution of each Board member, as these contributions
vary from one meeting to another depending on the subjects discussed. All the
members of the Board have approved both the mix of skills on the Board and the
collegial manner in which the Board functions. In addition, the Board regularly reviews
its composition so as to ensure balance in the experience and skills of its members.
2. Organisation of VINCI’s corporate governance
The Board has opted for a mode of governance in which the functions of Chairman of the Board and Chief Executive Officer are combined.
The Company’s mode of governance has changed over the last 10 years. At certain times, the functions of Chairman and CEO have been
dissociated and at other times they have been combined. The decision has always been taken in the best interests of the Company given
the circumstances and operational imperatives of the Group. After a period of dissociation from 2006-10, the Board decided to combine
the functions of Chairman of the Board and Chief Executive Officer on 6 May 2010 after shareholders renewed Mr Huillard’s appointment
as a member of the Board. This decision, announced in November 2009, represented – and the Board believes it continues to represent – the
most appropriate choice for the Group given its operational and decision-making structure.
The VINCI Group is made up of a very large number of companies organised into operationally autonomous business lines (Motorways,
Concessions, Energy, Roads and Construction). Decisions on operations (signature and execution of contracts) or investment are taken by
the competent bodies in each entity. As part of the Group’s internal control system, supervision and control of significant commitments are
the responsibility of both Group Executive Management and the Board of Directors, the latter in accordance with its internal rules. As such,
the roles of Executive Management and the Board of Directors are of the same nature, i.e. operational and strategic management. In addition
to its role concerning accounting and financial matters, the Board is only called upon to examine transactions involving strategic issues or
those that exceed a certain threshold. These are presented by Executive Management following its own review. In this context, the Board
believes that uniting the functions of Chairman and CEO is particularly efficient. It also unifies and clarifies the Group’s top-level representation,
which makes the Group more responsive. The Board believes that the Group’s solid performance over the last two years, in a challenging
economic environment, has confirmed the soundness of its decision.