MICHELIN - 2008 ANNUAL REPORT

A number of specific presentations were made to the Supervisory
Board by the Managing Partners or by top executives, including:
● The analysis of Group results by the Managing Partners;
● The product/market environment;
● The objectives and status of the Group’s strategy under the
Horizon 2010 Plan;
● The management and control of the different types of risk
relevant to the Company;
● Governance;
● Industrial strategy;
● Research and development.
The Supervisory Board has in particular dedicated a full working
session to a review of the Group’s strategy.
AUDIT COMMITTEE WORK
The audit Committee (1) is exclusively made up of independent
members:
● Mr. François Grappotte, Chairman of the Audit Committee,
Honorary Chairman of Legrand and Director of BNP Paribas;
● Mr. Eric Bourdais de Charbonniere, Member of the Supervisory
Boards of Oddo et Cie, Thomson SA, ING Group, and former
Chief Executive Officer of JP Morgan for France;
● Mr. Pierre Michelin, head of a Bull division;
● Mr. Benoît Potier, Chief Executive Officer of L’Air Liquide.
The Audit Committee performs the tasks of a specialized committee
that monitors all issues with respect to the preparation and control
of accounting and financial information pursuant to the new
articles L.823-19 and L.823-20-4° of the French Commercial Code
introduced by order n°2008-1278 of December 8, 2008.
The Audit Committee met on four occasions in 2008 (February 11,
April 21, July 25 and November 24). The attendance rate was 86%.
It focused on:
● Review of full-year 2007 and interim 2008 financial
statements;
● Review and evaluation of Internal Control;
● Analysis of the Group’ audit plan management;
● The Group’s risk map;
● The Statutory Auditors’ annual audit agenda.
During its meetings, the Audit Committee heard in particular
the Group’s head of Financial Operations and the heads of
Accounting Affairs, Internal Audit, Financial Operations Quality
and the Group’s Risk Manager.
The Audit Committee also met the Statutory Auditors and heard
their comments.
The Audit Committee’s Chairman reported to the Supervisory
Board on the Committee’s work on February 11, July 25 and
December 05, 2008.
COMPENSATION COMMITTEE WORK
(1) See the main provisions on page 147 of the Reference document.
(2) On December 8, 2008, the Board issued a press release to inform its Shareholders and investors of this situation.
Pursuant to its code of conduct, the Supervisory Board as a whole
performs the functions generally delegated to a Compensation
Committee.
The Compensation Committee met three times in 2008 (February
11, April 25 and July 25), with a 95% attendance rate.
In 2008, the Board reviewed the components of manager variable
pay policy as they relate to the Group’s performance. It also
advised the Managing Partners on stock option policy. It confirmed
that the 2007 operational and financial performance criteria to
determine payment (in 2008) of the variable compensation paid
to the Non-General Managing Partners had been attained, and
approved the compensation of Non-General Managing Partners
as well as Group Executive Council members for 2008.
To ensure an efficient assessment of the above compensation
policies, the Compensation Committee reviewed a benchmark
prepared by third party consultants.
In addition, with reference to the appointment policy, the
Committee also reviewed the composition of the Management
Partnership and of the Supervisory Board. The Supervisory Board
decided to draft a formal code of conduct for the Compensation
Committee (to become the “Compensation and Appointment
Committee“) setting forth its role in the Company’s appointment
policy.
Finally, the Board reviewed the position of the Managing Partners
with reference to the recommendations made by AFEP/MEDEF in
October 2008 concerning the compensation of listed companies’
executive directors.
Corporate Governance Statement
As a preliminary, the Supervisory Board notes that, during its
meeting of December 4, 2008, it reviewed the recommendations of
AFEP/MEDEF dated October 6, 2008 regarding the compensation
of listed companies’ executive directors.
The Board has considered that said recommendations were
complied with and that they were relevant to the Company’s own
corporate government approach (2) .
On the one hand, although these recommendations include all
the “managers of Limited Partnership by Shares companies“
in the list of officers concerned, from a legal and economic
standpoint, these recommendations do not directly apply to the
statutory share of profits paid to the Managing General Partner.
The amounts received by the Managing General Partner are solely
drawn from the statutory share allocated to the General Partners
which are:
● designed to compensate for the risk of joint and several liability
on their own assets for the Company’s liabilities,
● exclusively variable and based on the profit made in the previous
fiscal year,
● determined by the shareholders during the Annual Shareholders
Meeting.
The combination of legal and statutory provisions bars Managing
Partners from receiving any other form of compensation without
the prior specific approval of the Shareholders at a General
Meeting.
Other Information
Additional Information Consolidated Financial Statements The Managing Partners’ Report Michelin at a Glance
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