MICHELIN - 2008 ANNUAL REPORT

Profit-sharing and variable pay programs were set up in different
countries and employee categories. For its managers in particular,
Michelin has a dynamic variable pay policy that recognizes the
achievement of individual objectives, long-term performance,
cooperation ability as well as common goals. For the sake of
consistency, Michelin’s manager compensation policy is governed
by similar rules and processes in the different countries.
Since pay scales are pegged to specific local criteria, reflecting
widely differing situations from country to country (inflation from
0.9% to 15.1%), an average figure would be quite meaningless.
For reference purposes, taking France (which has the largest
headcount with more than 28,000 employees as at December
31, 2008, including Euromaster) and where inflation ran at 1.0%,
pay increases in 2008 were as follows:
Production workers +3.2%
Administrative and technical staff +3.9%
Management +4.5%
(France numbers)
Equal opportunities for men and women
In each country, the average wage differential between men and
women is calculated for each employee category, for the three
levels of responsibility where women are most represented in
order to obtain an indicator as meaningful as possible. A weighted
average based on country’s headcount is then calculated for the
Group.
Group average pay differential between female and male
employees
Status
Differential
Production workers -3.12%
Administrative and technical staff -2.50%
Management -5.45%
The differential can be attributed to company seniority, thus
experience and responsibility, generally lower among women. In
addition, new hires generally at the beginning of their career are
replacing older employees who are retiring which make it difficult
to follow statistically. Pay policy and the methods of performance
evaluations are strictly identical for men and women in each
personnel category and country. Performance evaluations based
on anything other than professional criteria, listed in internal
policies, would be contrary with the group’s most fundamental
principles of equity.
Profit-sharing, bonuses, company savings programs
In addition to basic and variable pay pegged to individual and
corporate results, and in addition to overtime and compensation
directly related to the nature of work performed, where applicable,
Michelin’s employees enjoy different types of bonus depending on
local laws and practices. These include profit-sharing agreements,
employee health-insurance scheme, collective retirement savings
plan and company savings programs (with company contributions
up to 50% of employee contributions). Eighteen countries have
introduced such programs, benefiting more than 74,000 Group
employees. The levels of those complements vary widely from one
country to another and can account for up to 30% an individual’s
salary.
At Manufacture Française des Pneumatiques Michelin, a profit
sharing program was concluded with the trade unions for the
2008-2010 period. Multiple indicators are used to calculate
bonuses: these include the number and achievement rate of
progress ideas, reduction of the Group’s environmental footprint
per ton of tires produced (reduction in waste generated and
discharged, reduction in emissions of CO 2
and VOC – Volatile
Organic Compounds, reduced consumption of energy and
water), the frequency of accidents at the workplace, achievement
of production targets. The amount of the bonus, which is paid in
the first quarter of the following year, can account for up to 5%
of total salary.
The share of profit paid in 2008 in relation to 2007 profit sharing
entitlements amounted to approximately EUR 30 million, including
an exceptional payment of EUR 9 million, or on average 4.5% of
gross salary.
4. PROFESSIONAL RELATIONS, COLLECTIVE BARGAINING
The following countries have one or more branch agreement(s):
Belgium, Brazil, Colombia, France, Germany, Hungary, Italy,
Japan, Mexico, the Netherlands, Poland, Romania, Serbia, Spain,
Sweden, Thailand, the United Kingdom, and the USA. Overall,
these agreements apply to more than 62,000 employees, or
upwards of 95% of the headcount in the countries concerned.
In 2008, 1,969 official meetings were arranged with employee
representatives in 22 countries (2,044 in 20 countries in 2007).
These meetings, over and above the formal and informal
exchanges they gave rise to, led to multiple agreements.
In 2008, 48 branch agreements were signed with employee
representatives in 12 countries, applicable to nearly 53,000
employees. In several countries, collective agreements signed in
previous years were in force in 2008.
Examples of agreements signed in 2008:
Europe
Spain: agreement to exceptional flexibility measures during
periods of reduced activity (changes in the worked days, rest days,
stops); agreement to increase to five teams for the activity at the
Vitoria site and to three teams at Aranda, in order to increase
productivity;
France: at MFPM, modification in employer’s contribution to
PERCO collective retirement savings plan; at Pneu Laurent Tire,
agreement on the Estimated Management of Employment and
Competencies (GPEC), on training, agreement on the equality men/
women (wages, greater gender balance, conciliation professional
life/private life, maternity/adoption leave), on communication,
greater gender balance within the personnel representatives,
agreement on the elements of total compensation; at Kléber,
agreement on the means available to the personnel representatives
in the circumstances of the closure of activities at the Toul site;
Poland: Agreement on internal rules, rights and duties of the
employees, in coherence with the Labor Act;
United Kingdom: agreement on salary increases for production
workers for 2009 through 2011;
Serbia: general agreements on new hires, non competition,
employee guarantees, staffing and overstaffing, working hours,
break hours, vacation, pay, turnover.
164 2008 Michelin Annual Report