Including Annual Financial Report,
Non-Financial Performance Statement,
Duty of Care Plan
UNIVERSAL
REGISTRATION
DOCUMENT2021
CoNTENTS
01
GROUP
PRESENTATION
AND STRATEGY
1
02
RISK
MANAGEMENT
50
03
CORPORATE
GOVERNANCE REPORT
68
04
NON-FINANCIAL
PERFORMANCE
148
05
FINANCIAL
PERFORMANCE
266
06
INVESTOR
RELATIONS
418
07
ANNUAL
SHAREHOLDERS
MEETING OF
MAY 13, 2022
438
08
TABLES OF
CONCORDANCE
468
This document is a free translation of the original French language
version. In case of discrepancies, the French version shall prevail.
The French language version of this Universal Registration Document
was filed on April 8, 2022 with the French securities regulator
(Autorité des Marchés Financiers - AMF), as the competent authority
under Regulation (EU) 2017/1129, without prior approval in
accordance with Article 9 of said Regulation.
The Universal Registration Document can be used when securities
are offered to the public or for their admission to trading on a
regulated market if it is completed by a note on the securities and, if
applicable, a summary and all of the amendments made to the
Universal Registration Document. The package is approved by the
AMF in accordance with EU Regulation 2017/1129.
The Annual Financial Report included in the Universal Registration
Document is a translation of the official version of the Annual
Financial Report in format ESEF (European Single Electronic
Format) and is available on the website www.michelin.com
0
Profile
3
Message from the Managing Chairman
4
Trends & challenges
6
Our All Sustainable strategy for 2030
10
Our business model
12
Expanding with tires
14
Expanding around tires
20
Expanding beyond tires
22
6 pathways to success
26
Governance
32
Michelin investor relations
38
Ethics, integrity and compliance
39
Risk management
40
Performance & ambitions
42
The Michelin share
47
Outlook
48
Group
presentation
and strategy
1
Motion
For Life
Offering everyone a better way forward is our
purpose. To achieve it, we are passionately
innovating, while constantly seeking the
right balance between personal fulfillment,
protection of the planet, and business and
financial performance. Our shared dream is to
be recognized as a leader in innovations that
have helped humanity conquer new frontiers.
As a world leader in
sustainable mobility
solutions,
Michelin improves
transportation performance
with high-tech tires and
state-of-the-art services,
while its guides,
itinerary planners and
recommendations
make travel easier
and more fulfilling.
In addition to mobility,
the Group is leveraging
its exceptional high-tech
materials expertise in
such future-facing markets
as sustainable flexible
composites, medical
applications, metal 3D
printing, and zero-emission
hydrogen fuel-cell systems.
PROFILE
35%
North
America
38%
Europe
27%
Other
regions
A GLOBAL
FOOTPRINT
SOUTH
AMERICA
8,000 employees
1 R&D center
6 production facilities
50 dealerships
NORTH AMERICA
24,000 employees
1 R&D center
38 production facilities
2,300 dealerships
66,000 employees
2 R&D centers
43 production facilities
3,200 dealerships
R&D
6,000
EMPLOYEES
8 COUNTRIES
DEALERSHIPS
7,900
PROPRIETARY OR
FRANCHISED CENTERS
30 COUNTRIES
PRODUCTION
123 FACILITIES
26 COUNTRIES
EUROPE
AFRICA
INDIA
MIDDLE
EAST
8,000 employees
1 R&D center
4 production
facilities
250 dealerships
ASIA
19,000 employees
4 R&D centers
32 production facilities
2,100 dealerships
sales
2021
PEOPLE
125,000 people in 177 countries
80% employee engagement rate
PLANET
29% sustainable materials rate
29% reduction in CO2 emissions vs. 2010(1)
PROFIT
€23,795 million in sales
10.3% return on capital employed (ROCE)
(1) Scopes 1 and 2.
People, Planet, Profit
EVERYTHING WILL BE
SUSTAINABLE AT MICHELIN
PROFILE
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
3
MESSAGE FROM THE MANAGING CHAIRMAN
Michelin delivered very good results in
extremely difficult circumstances in 2021,
while maintaining its priority focus on protec-
ting its employees.
Despite volatile markets, supply chain disrup-
tions, labor shortages and rising logistics, raw
materials and energy costs, we strengthened
our positions, improved our operating margins
and preserved our financial strength.
Sales rose by 16% over the year to €23.8
billion, while segment operating margin
improved to 12.5%, back in line with 2019
levels. Net income exceeded €1.8 billion.
Our global footprint and diversified business
base enabled us to capture the rebound in
local economies.
Our productivity gains, assertive pricing mana-
gement and higher value product mix success-
fully offset the approximately €1.2 billion in
additional costs.
I would like to express my deepest thanks to
all our employees for these results, which
once again demonstrated the strength and
resilience of our business model. We plan to
reward their engagement in these exceptional
circumstances, in particular with a substantial
increase in their bonuses for the year.
We would also like to thank our shareholders
for their support by recommending the
payment of a dividend of €4.50 per share,
compared with €2.30 in respect of 2020.
This fair sharing of our created value among
employees, shareholders and our sustainable
growth investments is in line with Michelin in
Motion, our All-Sustainable strategy.
More than
ever, we’re
leveraging
collective
intelligence
to find better
ways forward.
Unveiled in 2021, Michelin in Motion is
based on constantly seeking the right
balance between People, Planet and Profit,
i.e., between developing individuals, safe-
guarding the planet and driving business and
financial performance.
I firmly believe that tomorrow’s prosperity
can only be sustainable. That’s why we are
committed to addressing the legitimate
demands of all our stakeholders, by suppor-
ting the transition to a greener, more inclusive
economy while generating strong, sustainable,
profitable growth.
We’re going to take the Group to a whole new
level by fully expressing all our green innova-
tion capabilities, our expertise and our skills:
• with tires, where increasingly strict envi-
ronmental and road safety standards and
the growing popularity of electric mobility
are opening up new opportunities for our
technologies;
• around tires, where connected mobility is
enabling us to develop innovative services
based on a deep understanding of usage
practices and extensive data analytics;
• beyond tires, in high-tech materials (high-per-
formance flexible composites; biobased
We’re going to take
the Michelin Group
to the next level by
capitalizing on all our
and staking out positions in
new future-facing markets.
EDITO
sustainable
innovation
capabilities
4
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
and recycled materials), medical applications,
metal 3D printing and hydrogen mobility.
In all these segments, we will pursue our
strategy of acquisitions and partnerships to
do things better and faster, by combining
capabilities and capitalizing on synergies and
complementary strengths.
2023 and 2030 targets have been set for our
three People, Planet, Profit pillars and ambi-
tious objectives have been specified for 2050(1).
Progress towards them will be supported by
the transformations now under way.
• We are aligning our organizations and trai-
ning programs to ensure that everyone
feels capable of playing an active role in the
corporate community.
• We are constantly making it easier and
more satisfying for our customers to work
with Michelin.
• We are simplifying everything we can to
increase our agility, reduce our costs and
optimize our operations in ways that benefit
all our stakeholders.
• We are stepping up the pace of innovation,
particularly in high-tech materials that create
competitive advantage and offer attractive
growth prospects.
• We are unlocking all the value in our data
to improve our decision-making process
and deliver better solutions to our customers
and partners.
• We are shrinking the environmental foot-
print of our operations and products, while
engaging our suppliers and customers in
meeting this objective; we are investing in
the circular economy and in zero-emission
solutions; and we are strengthening our
positive impact on the planet.
More than ever, we are leveraging collective
intelligence and an ecosystem approach to
find better ways forward.
At a time when Europe and the entire world
are facing an extremely serious crisis, the
Michelin Group is totally dedicated to suppor-
ting all its employees and to meeting the
challenges the crisis poses for its global
business.
I am fully confident in Michelin’s ability to
weather this new crisis and to fulfill its ambi-
tions. Florent Menegaux
Our All Sustainable
approach positions us well
for achieving the transition
to a greener, more
inclusive economy.
FLORENT MENEGAUX
(1) Find out more on pages 13, 46, 47, 48 and 50.
MESSAGE FROM THE MANAGING CHAIRMAN
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
5
TRENDS & CHALLENGES
TRENDS
& CHALLENGES
The mobility of people and goods is an
intrinsic factor in economic and social
development, and the resulting needs are
growing in line with the world’s population.
This raises the question of how to meet these
needs while attenuating their impact on
climate, biodiversity, health and road safety.
In a world being rapidly reshaped by the
impacts of the pandemic, technology and
innovation will play a critical role in devising
sustainable solutions to meet the challenges
of mobility, successfully lead the green
transition to a more eco-friendly economy
and support more inclusive growth.
For Michelin, these challenges are also
opportunities to build competitive
advantage and address society’s
expectations by deploying its expertise
in future-facing markets around and
beyond tires.
In 2021, global battery-electric
car sales more than doubled from
2020 to 4.8 million units(1).
Thanks to its technologies, Michelin’s
share of the original equipment tire
market will remain, over a longer
period, more than twice as high
in the battery EV segment than
in the market as a whole.
(1) Source: EV volumes
6
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
Three-quarters of all tires are sold in the replacement market,
which is less cyclical than the original equipment segment.
Demand is being driven by growth in the world’s
population, to an estimated 8.5 billion people in
2030(1), and the need to meet their needs, as well as by
economic development and growth in travel and trade.
Kilometers traveled by cars alone, for example, are
expected to increase by more than 30% by 2030(2).
TIRES:
SOLID FUNDAMENTALS
CAR AND TRUCK TIRES:
FAVORABLE TRENDS
FOR HIGH-TECH TIRES
SUV(3) sales continued to
rise in 2021, when they
accounted for 45% of all
new car purchases. Battery
electric vehicles and plug-in
hybrids are also becoming
more popular. These larger,
heavier vehicles all require
higher performance tires to
attenuate their CO2 emissions
or increase their range.
In the freight and passenger
transportation segment,
the transition is gaining
momentum in a highly
competitive but also
increasingly regulated
operating environment.
In response, Michelin is
focusing on developing
innovative tires and services
that enable carriers to comply
with new emissions standards
and improve their operations.
SPECIALTY TIRES:
DEMANDING,
PROFITABLE MARKETS
Companies in the mining,
farming, construction, logistics
and air transportation
industries are facing
complex challenges in highly
demanding environments
where tires are business-
critical components.
Operators are looking for
advanced technological
solutions combining products
and services that improve
safety and productivity.
Growth in the world’s population(1)
(in billions of people)
Growth in the global car tire market
(by size; original equipment and replacement sales)
Increase in distances traveled
(in billions of kilometers – cars alone)
(1) 2019 World Population Prospects, United Nations.
(2) IHS Markit.
(3) Sport utility vehicles.
(4) 2018 World Urbanization Prospects, United Nations.
URBANIZATION RATE(4)
70%
IN 2025
2020
7.8
700m
more people
between 2020 and 2030
2022
2025
2030
7.9
8.2
8.5
Base = 100
19“ and over
18‘‘
17“ and under
90
128
180
2019
2020
2021
2022
2023
+16%
2019-23E
CAGR
+6%
2019-23E
CAGR
2020-2030
average growth rate
of 3%
2020
≈16
2022
2025
2030
≈21
TRENDS & CHALLENGES
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
7
Climate change, urbanization and the digital
revolution are driving the development of new
powertrains, new solutions and new uses.
THE CHANGING FACE
OF MOBILITY
REGULATORY CHANGES
Standards governing road
safety, CO2 and particle
emissions, noise pollution
and recycling are being
updated with more deterrent
penalties to support the
green transition. With stricter
CO2 emission standards, low
rolling resistance tires that
increase energy efficiency and
reduce emissions are gaining
in popularity with carmakers,
carriers and their customers.
ELECTRIC MOBILITY
New regulations and buyer
incentives are driving a faster
shift to electrification. At the
COP26 conference, around
30 countries, corporations
and carmakers pledged to
phase out internal combustion
engines, including for hybrid
vehicles and light trucks,
as early as 2035 in leading
markets and by 2040 globally.
Whether heavy or light,
EVs need tires with higher
technological content to
meet an array of demanding
requirements, such as
low rolling resistance to
increase range, robustness
and durability to bear
heavy batteries, and quieter
rolling noise. These trends
are also favorable for
hydrogen-powered electric
powertrains, which are well
suited to light trucks.
MORE SPECIALIZED,
MORE CONNECTED FLEETS
Driven by the pandemic,
services like online shopping,
last-mile delivery and pay-per-
use, on-demand vehicles are
encouraging the development
of specialized fleets (vans,
e-hailed vehicles, cars,
shuttles, scooters, bicycles),
fitted with robust, reliable and
connected tires. Connected
tires and the monetization
of their collected data are
supporting the development
of new business services for
fleet operators, infrastructure
managers, insurance
companies and dealerships.
≈ 45%
of vehicles sold in 2030
worldwide will
be battery-electric.
Source: Michelin.
36%
increase in the number
of commercial vehicles
in city centers by 2025,
led by the growing popularity
of online shopping.
Source: Accenture Research
01
TRENDS & CHALLENGES
8
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
The ongoing shift in global balances, the weaknesses revealed
by the health crisis, the emergence of new technologies and
the accelerating pace of digitalization all demand transformative
change, new skills and new management methods.
AN INDUSTRY
IN TRANSFORMATION
RESILIENCE AND AGILITY
The pandemic has highlighted
the vulnerability of overly
globalized supply chains.
To enhance their resilience
and agility, companies are
realigning their production
systems around shorter
chains, in a local-to-local
approach that will also help
shrink their carbon footprint.
SUSTAINABLE SOLUTIONS
In 2021, it took seven months
for the global population to
use up all of the resources
that Earth could produce in
a year(1). Climate change and
environmental degradation
are driving faster deployment
of eco-design processes,
renewable energies, zero-
waste programs and the
circular economy.
Innovative technologies
like green hydrogen and
biosourced or recycled
materials are emerging, while
start-ups are partnering
with large corporations
to mass produce new
sustainable resources.
INDUSTRY 4.0
The digital transformation
is impacting every aspect of
corporate life, as companies
seek to improve productivity,
flexibility, responsiveness
and their offering of
personalized solutions.
Digital simulation, virtual
reality, collaborative robotics,
additive manufacturing, the
Internet of Things, artificial
intelligence, data-driven
management and data
protection are all transforming
jobs, organizations and the
way we work and collaborate.
SKILLS AND SUPPORT
Key to successfully leading
these transformations is taking
a people-centric approach
to every project, supporting
employees in their career
development, facilitating
up-skilling, cross-functional
collaboration and working in
project mode, training people
for new jobs, stimulating
collective intelligence, and
making every employee’s work
and engagement meaningful.
(1) July 27, 2021. Source: Earth Day.
TRENDS & CHALLENGES
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
9
OUR ALL SUSTAINABLE STRATEGY FOR 2030
OUR ALL
SUSTAINABLE
STRATEGY
FOR 2030
MICHELIN IN MOTION
This vision engages the entire
Group in constantly seeking the
right balance between people,
the planet and business and
financial performance. Michelin
in Motion, our All Sustainable
strategy for 2030, translates this
vision into actionable initiatives
that foster a harmonious balance
between its three pillars:
People, Planet and Profit.
“Tomorrow’s
world can only be
sustainable.
I believe, we believe
that tomorrow,
everything will
be sustainable at
Michelin.”
FLORENT MENEGAUX
Business performance, employee
engagement and customer satisfaction are
all closely linked. Already a world leader in
workplace safety and employee engagement,
Michelin is committed to driving further
progress in these two areas, while setting
new standards in every type of diversity and
their inclusion. The Group wants to lead
the industry in creating value for its customers by delivering
an experience on a par with the quality of its products
and services. With its deep roots in every region,
Michelin consistently interacts with its host communities
as a responsible, supportive corporate citizen.
40%
SUSTAINABLE MATERIALS
USED IN OUR TIRES IN 2030
100% IN 2050
From responsible rubber farming
to sustainable mobility solutions,
Michelin is taking action both
up and downstream from its
operations to fight climate change,
conserve natural resources
and protect biodiversity.
The Group is committed to
setting the global standard for
the environmental footprint
of its manufacturing facilities,
which will be reduced by one third
in 2030 compared with 2020.
Michelin is also striving to cut CO2
emissions from its manufacturing
operations and energy use by 50%
between 2010 and 2030 and to
become carbon neutral by 2050(3).
The continuous improvement in
the energy performance of its tires
will help reduce emissions from
fitted vehicles in use(4). The Group
is actively deploying an ambitious
circular economy approach, with,
for example, the ability to reuse
everything in an end-of-life tire
by 2050.
It is also committed to raising
the proportion of biosourced or
recycled materials in its tires to
40% by 2030 and 100% in 2050.
People
ENGAGEMENT, SAFETY, CUSTOMER
SATISFACTION, DEEP LOCAL ROOTS
(1) See the Performance &
Ambitions section, p. 46.
(2) ROCE is calculated by dividing segment
operating income after tax (NOPAT)
by the value of economic assets.
(3) Scopes 1 and 2.
(4) Scope 3.
Planet
CARBON NEUTRALITY
AND SUSTAINABLE
MATERIALS
85%
OF EMPLOYEES
TO FEEL ENGAGED
IN 2030 (1)
To impel faster growth,
Michelin is leveraging all its
innovation capacity, expertise
and capabilities with, around
and beyond tires. It aims to
report average annual growth
of 5% between 2023 and
2030, with a return on capital
employed (ROCE) over the
period exceeding 10.5%(2).
The Group will continue to
expand, invest and innovate
with tires by (i) capturing
the faster growth in electric
car sales; (ii) focusing on
creating value in the road
transportation segment; and
(iii) capitalizing on its superior
products and services in the
specialty markets for mining,
earthmover, agricultural,
aircraft and two-wheel tires.
At the same time, Michelin
will drive strong expansion
in five ecosystems that are
expected to account for 20%
to 30% of its sales in 2030:
- around tires, with
services and solutions
based in particular
on connected objects
and the monetization
of collected data;
- beyond tires, with high-
performance flexible
composites, medical
applications, metal 3D
printing and hydrogen
mobility. By giving Michelin
opportunities to apply
its high-tech materials
science and process
engineering expertise
in other fields, these
businesses are opening up
new avenues of growth.
The success of this strategy
will be underpinned both by
the strength of the MICHELIN
brand and by the vitality of
the product/service portfolio,
which is being constantly
enhanced with a steady
stream of innovations.
Profit
AMBITIOUS, PROFITABLE, SUSTAINABLE GROWTH
20%
TO 30%
OF SALES FROM NON-TIRE
BUSINESSES IN 2030
OUR ALL SUSTAINABLE STRATEGY FOR 2030
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
11
OUR BUSINESS MODEL
HIGH-TECH MATERIALS
Sustainable flexible
composites, medical
applications, metal 3D
printing, hydrogen
mobility.
tires
beyond
…to drive
sustainable
growth...
We are mobilizing our
unique competitive
strengths...
Understanding usage patterns
This deep understanding nurtures Michelin’s
intimacy with customers and guides innovation
focused on meeting their expectations with
just the right products, services and solutions.
Materials science
The core of our know-how and expertise,
materials science enables us to deliver
increasing levels of performance
in the same product.
Process engineering complex products
For premium tires, innovation in production
processes goes hand in hand with product
innovation, an invaluable capability that is
now being effectively deployed in
our new non-tire businesses.
Employee engagement
In the company: 80% of employees engaged.
With customers: A Net Promoter Score of +39.
In host communities: 3,000 Group employees
involved in local volunteer programs.
Trust capital
MICHELIN is the world’s number one brand
of premium tires, with leadership based on
133 years of innovations that make all the
difference for our customers.
...in a fast-changing
environment offering
new opportunities...
Climate change and resource depletion
Population growth and urbanization
Electrification of mobility
Digitalization
Our
business model
12
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
AUTOMOTIVE,
ROAD TRANSPORTATION,
SPECIALTIES
SERVICES
AND SOLUTIONS
for fleet operators
and monetization
of collected data.
around
tires
...and evenly share
the created value
among People,
Planet, Profit
Employees
We believe that all types of diversity are a
valuable asset and seek to give everyone
the resources they need to grow in a safe
and motivating working environment.
Customers
Innovation enables us to improve safety
and performance for customers over
the long term, while steadily reducing
their environmental impact.
Suppliers
Our supplier relationships are governed
by transparency and a commitment
to moving forward together.
Environment
We are deploying assertive programs,
both upstream and downstream from our
operations, to fight climate change, conserve
natural resources and protect biodiversity.
Society
We are taking action to make mobility
safer, more efficient, more accessible
and more compatible with environmental
safeguards. We are contributing to the
vitality of our host communities.
Shareholders
In addition to its non-financial
performance, Michelin delivers robust,
value-creating business performance
and is committed to paying out around
half of consolidated net income before
non-recurring items in dividends.
with
tires
OUR PURPOSE
OFFERING EVERYONE
A BETTER WAY FORWARD
OUR AMBITION
people, planet, profit:
everything will be
sustainable at Michelin
For more information about the Group’s
commitments, see chapter 4, section 4.1,
SUSTAINABLE DEVELOPMENT GOALS.
OUR BUSINESS MODEL
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
13
EXPANDING WITH TIRES
Objectives
Offer products that deliver
long-lasting performance, and
which are increasingly aligned
with end-user expectations
and conditions of use.
Help drive the development
of sustainable mobility.
STRATEGY
Consolidate our market
share in high value-added
growth segments where
our technologies make a
difference. Step up growth in
very high-value specialty tires.
Produce as close to
customers as possible with
competitive, flexible, right-
sized Industry 4.0 factories.
Expand faster in Asia to
capture growing demand.
Provide excellent service
to customers by leveraging
synergies between online sales
and the dealership networks.
Broaden the services
portfolio for business
customers with on-site
audits and inspections,
preventive maintenance,
real-time tire management
and recycling solutions.
AN UNRIVALED
BRAND PORTFOLIO
PROPRIETARY
AND FRANCHISED
DEALERSHIP
NETWORKS
As the technological leader in tires and tracks, the Michelin Group
works closely with manufacturers to bring innovations to every
market. The world's best-selling brand of premium tires for retail
and business customers, the Group is also the world’s largest
manufacturer of sustainable tires, connected tires, and radial tires
for farm machinery, civil engineering applications and aircraft,
as well as the world leader in off-the-road mobility solutions.
EXPANDING
with
tires
14
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
TARGETED SEGMENTS
Fast growing segments, where we can offer
the best products and related services, such as
18-inch and larger, all-season, Super Sport, quiet,
self-repairing, hybrid and electric vehicle tires.
Motorists sensitive to the premium features of
MICHELIN products (safety, performance, durability),
who are identified through pervasive data mining.
OEMS fitting MICHELIN brand tires as original
equipment, which encourages brand loyalty
in replacement purchases.
Supporting emerging mobility trends and
soaring demand for electric vehicles.
PROGRESS MADE IN 2021
MICHELIN CrossClimate2:
safer, more economical and
longer-lasting in every season
Michelin’s new all-season tire
enables drivers to use the same
tires all year round, enjoying the
same high performance whatever
the weather. An outstanding feat
of production expertise, it was
available from launch in 105 sizes.
The all-season segment has seen
strong growth since Michelin
introduced the first summer
tire certified for winter use in
2015. It is expected to continue
to deliver double-digit gains in
Europe, particularly in France
where winter tires have become
mandatory in 48 departments.
MICHELIN Pilot Sport EV:
the first production tire
purpose-engineered for
electric sports cars
Packed with technologies
shaped by Michelin’s experience
acquired in Formula E racing,
the Pilot Sport EV extends range
by up to 60 kilometers, thanks
to its very low rolling resistance,
while offering optimal grip on
dry and wet roads, outstanding
resistance to wear and 20% less
perceptible road noise thanks to
MICHELIN AcousticTM technology.
Michelin expands its
e-commerce presence by
acquiring 100% of Allopneus
Michelin’s tire distribution strategy
is guided by a commitment
to offering retail customers a
smooth, seamless experience,
from seeking information online
to getting their tires fitted. As part
of this commitment, Michelin
acquired the 60% of shares it did
not already own in Allopneus,
France's leading online retailer of
tires and tire fitting services, with
3.6 million car tires sold each year
and 6,000 partner service centers.
Motorsports, a sustainable
innovation accelerator
Michelin has rolled out the first
range of tires designed entirely
by virtual means for the new
Le Mans Hypercar class in the
2021 FIA World Endurance
Championship (FIA WEC). The
championship includes several
rounds, including the Le Mans 24
Hours, where the first racing tire
made from 46% biosourced and
recycled materials took its first
laps, fitted on the H24 hydrogen-
powered prototype. By 2050,
all Michelin tires will be made
entirely of sustainable materials.
+50% Tires from premium
tiremakers release up to 50% more
wear particles than MICHELIN tires.
Thanks to its unrivaled expertise,
Michelin leads the way in
constantly improving its ability
to meet the difficult challenge of
delivering the right combination
of safety, longevity and a smaller
environmental footprint.
TRWP emissions:
Michelin vs. other
premium tiremakers
(g/1,000km per vehicle)
90
Michelin
Premium competitors
109
126
130
134
Source: ADAC Tyre abrasion, Dec. 2021.
Automotive
Operating
margin target
>12%
in 2023
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PROGRESS MADE IN 2021
Safer transportation in winter
The new MICHELIN X® MULTI™
GRIP tires demonstrate excellent
road handling on snowy, icy
and wet roads. Long-lasting and
fuel-efficient, they also reduce
trucking company costs and
impacts. Like all MICHELIN truck
tires, they can be regrooved and
retreaded twice, a feature that
triples their service lives, lowers
their cost per kilometer by around
40% and saves 70% of the natural
resources used to make a new tire.
Partnership with
Sennder, a leading digital
freight forwarder
By connecting shippers and
carriers, Sennder streamlines
processes for the former and
increases revenue for the latter,
while reducing industry emissions
by cutting out empty miles. The
12,500 trucks already affiliated
with the fast-growing digital
platform now have access to
the Group’s tires, maintenance
services and retreading services
on preferential terms, in a winning
partnership for carriers, Sennder
and Michelin and the planet.
The first-ever tires designed
for electric buses
The new MICHELIN X Incity EV
Z has all the qualities needed
to support the electrification
of city buses, including low
rolling resistance for increased
range, a load capacity of up to
eight tonnes to bear the heavy
batteries, greater longevity and
guaranteed safety, even on
snow-covered roads. The new
tires, which perform equally
well on conventional buses, are
available in a standard size to
facilitate fleet management.
A puncture-proof and
robust solution for last-mile
electric delivery trikes
After compact wheel loaders, golf
carts and small all-terrain vehicles,
Michelin X Tweel is entering the
fast-growing last-mile delivery
market. Presented on a Coaster
electric cargo trike, this airless
wheel and tire combination
ensures maximum uptime for
delivery personnel, completely
maintenance-free. Other benefits
include increased load capacity
and tread life, reduced rolling
resistance that extends the trike’s
range, and high cornering stability
for faster and safer delivery.
x 4 The number of electric buses
in use in Europe is expected to
increase from 8,500 to 35,000
within five years.
Source: ING.
100% In Europe, the light
truck line-up will be all-electric
for several leading carmakers
by 2030 and for all major
carmakers by 2040.
Source: IEA Global Outlook 2021.
TARGETED SEGMENTS
Premium OEMs, most of whose customers remain
loyal to the MICHELIN brand.
Trucking companies and fleet managers whose
demanding standards of efficiency and sustainability
are met by MICHELIN solutions.
Last-mile delivery and shared mobility fleets that require
energy-efficient, robust tires that offer long-lasting
performance.
Targeting value-creative
market segments.
Road
Transportation
Operating
margin target
>10%
in 2023
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TARGETED SEGMENTS
Mining, agricultural, construction and aircraft tires:
Operators demanding high productivity, machinery
uptime, safety and durability, by providing them with
advanced product/service solutions such as on-site
audits and inspections, predictive maintenance, real-time
performance tracking and end-of-life tire recycling.
Two-wheel tires: Everyday users and demanding
enthusiasts and racers, by offering tires seamlessly
aligned with their usage patterns to capture
the market’s growth and rising value.
PROGRESS MADE IN 2021
EARTHMOVER TIRES
A mining tire recycling plant
Michelin is building its first tire
recycling plant in collaboration
with Enviro, whose patented
technology enables everything in
an end-of-life tire to be recovered
for reuse in the form of new, high-
quality materials like carbon black,
pyrolysis oil, gas and steel. Based
in Chile’s Antofagasta mining
region, the plant will eventually
be able to recycle 30,000 tonnes
of tires collected directly from
customer premises each year.
After start-up in 2023, recycling
operations will gradually ramp
up to industrial scale, enabling
the Group to offer customers a
comprehensive recycling solution
to support the development
of a circular economy.
AGRICULTURAL TIRES
Productivity and soil protection
across the crop cycle
With the new MICHELIN AgriBib
Row Crop IF tires for medium
horsepower sprayers and tractors
and the MICHELIN TrailXBib for
trailers, spreaders and slurry
tankers, machines used in every
phase of the crop cycle can be
fitted with MICHELIN Ultraflex
technology that enables them to
operate at very low tire pressures.
This helps prevent soil
compaction, which in turn
improves crop yields, increases
productivity and saves fuel.
CONSTRUCTION AND
MATERIALS HANDLING TIRES
A double first for port operators
The first tire specifically designed
for automated guided vehicles
(AGVs), the MICHELIN X AGV EV
is also the first port tire to be EV
marked, attesting that its low
rolling resistance helps improve
energy efficiency and increase
battery life.
The tire comes with a patch
inside that allows for easy fixing
of the Michelin TPMS sensor
to monitor tire pressure and
temperature in real time.
Camso optimizes productivity
in construction operations
Camso is helping construction
companies improve productivity
with two new tires, the Camso
TLH 732+ for telehandlers and
the Camso CWL 532 for compact
wheel loaders, which is primarily
intended for the Japanese market.
Operating
margin target
>17%
in 2023
Building differentiation
with performance and
services.
Specialties
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Contactless, efficient, safe
on-site maintenance
In 2021, Solideal On-Site Service,
the on-site maintenance service of
Camso, the world leader in off-the-
road tires and tracks, delivered the
amazing performance of replacing
a customer tire every 57 seconds.
During the health crisis, SOS,
which operates 130 service
centers and 245 mobile units
in 17 countries, introduced
a contactless on-site forklift tire
replacement service.
In this way, it could safely
service its customers, even
during lockdowns, and enable
essential industries like
healthcare, food services and
energy to continue operating.
AIRCRAFT TIRES
Michelin partners with Hope
Aero to serve Flair Airlines
and becomes the exclusive
supplier to Air Premia
Michelin and Hope Aero will
provide Canada-based Flair
Airlines with a tire, wheel and
brake maintenance service
package based on MICHELIN
Air X NZG tires, which deliver
unmatched robustness, durability
and fuel efficiency. The same
tires will be fitted to the entire
fleet flown by Air Premia, a South
Korean start-up airline. They will
avoid the emission of 9 to 16
kilograms of CO2 per flight hour,
depending on the aircraft(1).
TWO-WHEEL TIRES
MICHELIN Wild Enduro Racing
Line: a winning MTB tire
Intended for riders looking to
squeeze every bit of potential
out of their Enduro bikes, the
new line has already proven its
worth with wins in some of the
world's most challenging races.
Michelin, the sole official
supplier of MotoGP tires
Dorna Sports and Michelin have
renewed their partnership in
the premier class of motorcycle
Grand Prix racing until at least
2026. MICHELIN will continue
to be featured at trackside and
will be the title sponsor of one
Grand Prix each season.
No. 1 The success of the
MICHELIN City Grip 2 tire has
consolidated Michelin’s leadership
of the European scooter tire market.
MICHELIN Scorcher
Adventure
was custom-designed for the Pan
America™ 1250, Harley-Davidson’s
first trail motorcycle.
Specialties
(1) Michelin North America for Flair September 14, 2021; Michelin Aircraft press kit for emissions.
Michelin equips around
one third of the world’s
commercial aircraft.
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An in-depth understanding
of usage patterns
We bring to market the
innovations that make a
difference, based on a thorough
understanding of our customers’
needs, their requirements and
how they use their vehicles.
This approach is built around an
iterative process of observation,
dialogue and analysis of data
collected by connected tires.
More than 200 field engineers help
focus our research on the areas
of greatest value to our customers.
Solid technological leadership
Not all tires are created equal.
We commit €600 to €700 million a
year to research, development and
process engineering programs.
As the source of major
technological breakthroughs,
Michelin holds an undisputed
lead in the most demanding
segments. Our materials science
expertise and ability to process
engineer complex products
mean that we can translate an
understanding of usage practices
into performa nce features for
customers, giving us a competitive
edge in all our business segments.
Effective market access
and services
We make it easy to purchase
our tires through any channel.
We offer services that enable
customers to get the most out of
their tires, make their travel easier,
and improve the performance
of our corporate customers.
Together, these factors
ensure customer satisfaction
and brand loyalty.
The strength of
the MICHELIN brand
The MICHELIN brand accounts
for 70% of consolidated sales.
Indicative of quality, safety and
superior performance, it is the best
known and most highly regarded
tire brand in Europe, North
America and China(1).
It enjoys high trust and loyalty
ratings among both OEMs and
retail and corporate customers.
The guides, maps and digital
services businesses help foster
and enhance the global appeal
of the MICHELIN brand.
Delivering
FOCUS
value
(1) Kantar, Brand Power Score (2021).
In 2021, Michelin continued to expand
in the most buoyant tire segments,
in line with its commitment to
delivering the right balance between
People, Planet, Profit. This growth
demonstrates that Michelin enjoys
a number of sustainable competitive
advantages, which customers clearly
recognize and value, and which
support and reinforce each other.
EXPANDING AROUND TIRES
Objectives
Offer high value-added
services based on a deep
understanding of usage
practices and data analytics.
Support the transition
to zero-emission fleets.
Capture opportunities
enabled by the Internet
of Things.
Expand our customer base
and geographic footprint.
STRATEGY
Tire as a service
Increase pay-per-use tire
sales and develop custom-
designed tire-related services.
Fleet management
Optimize fleet operations
and ease the transition to
electrification with data analytics.
Digital service
platform
Facilitate fleet access to
a wide selection of reliable
service providers.
IoT(1) & Data
Leverage, in new segments, our
collected mobility data and our
expertise in connected mobility.
SOLUTIONS
TAILORED TO EACH
CUSTOMER
Being the trusted
partner to transportation
professionals
EXPANDING
around
tires
As the market leader in connected tires and a major
partner in digital fleet management, the Michelin
Group offers its corporate customers services
and solutions that improve their performance,
simplify their maintenance, increase asset uptime,
enhance their safety performance, reduce their
costs and attenuate their environmental impact.
(1) The Internet of Things.
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MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
TARGETED SEGMENTS
Managers and operators of truck,
bus and coach fleets.
Managers and operators of corporate and commercial
vehicle fleets, particularly in built-up environments.
Users of connected mobility data.
PROGRESS MADE IN 2021
Michelin Connected
Fleet: an umbrella brand
for all the Group’s fleet
management solutions
With Masternaut in Europe,
NexTraq in North America and
Sascar in Latin America, MICHELIN
Connected Fleet already serves
70,000 customers in 48 countries.
The onboard telematics systems
installed in their 600,000
managed trucks, trailers and
other vehicles collect real-time
data from 300 million trips a
year. In-depth analysis of these
data enables Michelin Connected
Fleet experts to offer effective,
custom-tailored action plans to
fleet managers looking to optimize
asset use, reduce costs, improve
operating safety and reduce
their environmental impact.
MoveElectric is optimizing
the transition
By analyzing real-world mobility
data from vehicles in service,
MoveElectric, proposed by
Masternaut, enables corporate
fleet managers to accurately
assess the benefits of moving to
EVs, including greater efficiency,
lower carbon emissions and higher
margins. They can also identify
which vehicles to replace first and
optimize the roadmap to meet
regulatory deadlines on the way
to full fleet electrification by 2030.
Watèa: an all-in-one electric
mobility solution for light truck
fleets
In Europe, urban-based light truck
users will soon have to shift to
full electrification in compliance
with new regulations. In response,
Watèa was set up to make this
transition as simple and easy as
possible, by offering a customized,
all-in-one monthly subscription.
The solution includes a fleet
of EVs suited to the company’s
needs, the installation of on-site
recharging stations and access
to a public grid, an application
enabling drivers to monitor their
remaining range, personalized
services to optimize vehicle use
and improve productivity, and
long-term support. In all, a better
way forward to electric mobility.
Michelin partners with Arity
to make US roads safer
Michelin DDI has partnered
with Arity, a data analytics
company founded by The
Allstate Corporation, to help
managers of the world’s largest
road network identify risk
zones. This will be done by
combining Arity’s database of
driving behavior data collected
from more than 100 million
consumer connections – the
largest in the world – with Michelin
DDI’s driving behavior data
analytics. The resulting insights
will enable federal and local
departments of transportation
to prioritize capital projects to
improve road infrastructure.
TotalEnergies joins the
Better Driving Community
Initiated and led by Michelin DDI,
the Better Driving Community
ecosystem already included BNP
Paribas Cardif, CGI and Colas,
which all share a commitment
to leveraging data to co-
innovate for safer mobility(1).
The world’s
eighth largest
operator
1.1 million vehicles under contract.
An expanding
global market
Average growth in fleet
management services 15%
a year from 2020 to 2030.
(1) Michelin DDI website.
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EXPANDING BEYOND TIRES
Objectives
Establish positions
in profitable new, high-potential growth markets
by leveraging our expertise in sustainable
composite materials and products that offer
customers business-critical properties.
STRATEGY
The high-tech materials business
is organized around four divisions:
Sustainable flexible composites:
developing technologies, polymer components and
composite solutions capable of delivering long-lasting
high performance for demanding technical applications.
Medical applications:
expanding the range of biocompatible products, in particular
for use in regenerative medicine and cell therapy.
Metal 3D printing:
make the AddUp joint venture with Fives
a world leader in metal 3D printing.
Hydrogen mobility:
making the Symbio joint venture with Faurecia
a world leader in hydrogen mobility systems.
Michelin enjoys unrivaled expertise in high-tech
materials, from their properties and possible
combinations to their process engineering and
applications. Already a core factor in the unique
sustainable performance of the Group’s tires, these
capabilities are being enhanced and marketed
to customers in other industries through a
proactive policy of acquisitions, incubators and
partnerships as part of specialized joint ventures.
beyond
EXPANDING
tires
Leveraging our expertise
in high-tech materials.
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MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
FUTURE-FACING
MARKETS
HIGH-TECH,
SUSTAINABLE
FLEXIBLE COMPOSITES
Composite solutions
Polymer components
y
p
Sustainable materials
JOINT VENTURES
Medical applications
– with Altaris –
S O L E S I S
Metal 3D printing
– with Fives –
Hydrogen Mobility
– with Faurecia –
(1) Substances of Very High Concern.
(2) Wing Sail Mobility.
TARGETED SEGMENTS
Composite solutions for demanding
industrial applications: belts, conveyors,
high-performance polymer-based precision
parts, coated fabrics, inflatable solutions.
Polymer components offering differentiating
performance features: specialty
adhesives, composite reinforcing fibers.
Innovative production processes for
high-performance biosourced or recycled
materials for tires and other applications.
PROGRESS MADE IN 2021
ResiCare continues to realize
its potential
Incubated by Michelin, ResiCare
manufactures high-performance
SVHC-free(1) resins.
An initial mobile production unit
is now up and running at Michelin’s
Olsztyn plant in Poland, the main
supplier of the Group’s textile
reinforcements.
In the forest products segment,
ResiCare’s collaboration with
Allin has led to the market launch
of the world’s first eco-friendly
plywood, R’PLY, which is made
using Resi4FIT, an adhesive
composed of a non-toxic, entirely
biosourced reagent.
Michelin acquires AirCaptif,
a specialty manufacturer of
ultralight inflatable structures
French start-up AirCaptif offers
modular solutions that are quick
and simple to use, while weighing
ten times less than steel.
They are being marketed primarily
to customers in the aerospace,
medical, construction, leisure
and luxury goods industries.
AirCaptif has an innovation
platform and advanced materials
production capabilities.
Michelin's support will enable
it to step up its expansion
in new markets.
Fenner Precision Polymers
acquires Lumsden Corporation,
a conveyor belt and wire
cloth manufacturer, and
consolidates its leadership in
the specialty belting market.
The new unit primarily serves
customers in the food processing
and mining industries.
Improving merchant
ship fuel efficiency
Incubated by Michelin, the
WISAMO(2) project is an automated,
telescopic, inflatable wing sail
system capable of improving the
fuel efficiency of ro-ro ships, bulk
carriers, gas carriers and oil tankers
by 10% to 20%. The system can be
retro-fitted on in-service vessels.
It will first be fitted on a merchant
ship in 2022, when Michelin
expects it to go into production.
SUSTAINABLE FLEXIBLE
COMPOSITES
Strengthening our positions
across the value chain.
Sales target
€1.1
billion
in 2023
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Metal additive manufacturing
makes it possible to produce
complex parts, using a highly
flexible process and a minimum
amount of material, and helps
address critical supply chain
issues. Michelin has been
deploying this technology on an
industrial scale for many years,
acquiring the expertise that is
now being leveraged by AddUp,
a 50/50 joint venture created in
2016 with industrial engineering
specialist Fives. AddUp markets
a comprehensive range of metal
3D printing solutions comprising
machines and software(3),
consulting and training services,
and component design and
production. Its main markets
are the medical, aerospace,
luxury goods, machine tools
and automotive industries.
MEDICAL
APPLICATIONS
Leading-edge expertise
in biomaterials.
Solesis, which joined the
Group in 2018 with the
acquisition of Fenner,
develops and manufactures
biocompatible components for
use in regenerative medicine
applications and cell and gene
therapies. The company and
its subsidiaries, Secant Group,
Charter Medical and SanaVita
Medical, employ 360 people in
four production plants in North
Carolina and Pennsylvania.
PROGRESS
MADE IN 2021
A partnership to accelerate
Solesis’ speed of development
To quickly realize Solesis’ high
potential, Michelin sold a 51%
stake(1) in the company to a new
partner, Altaris, an investment
firm focused exclusively
on the healthcare industry.
At the same time, Michelin and
Solesis entered into a research
partnership to continue co-
developing biopolymers.
The new alliances will help drive
faster expansion in medical
technology markets, which are
growing by 10% to 20% a year
depending on the segment.
Sales target(5)
€100m in 2023
€500m in 2030
Potential market
≈ $10bn in 2030
30% CAGR, 2020-2030
(1) Based on an enterprise value
of USD 475 million.
(2) For powder bed fusion (PBF) and directed
energy disposition (DED) processes.
(3) l’Usine Nouvelle report of April 22,
2021 and the AddUP website.
(4) Total consolidated AddUp sales.
METAL 3D PRINTING
A comprehensive range of solutions for manufacturers.
PROGRESS
MADE IN 2021
A machine for Industry 4.0 systems(4)
The new FormUp 350 machine
stands apart for the speed and
power of its software and its
unparalleled array of possible
configurations. Modular and
scalable, it also delivers exceptional
levels of productivity while enabling
operators to work in complete
safety thanks to its automated
autonomous powder module.
AddUp, which has a production
base of 40 machines in Europe,
has opened a new six-machine
workshop in Cincinnati,
Ohio (United States).
30%
ANNUAL GROWTH
IN DEMAND FROM
2020 TO 2030
MOBILITY
EXPERIENCES
Guides, maps, mobile
applications and exclusive
offers that help nurture the
MICHELIN brand’s impact.
Demonstrating the Group’s
commitment to a more
sustainable world, the
MICHELIN Guide’s MICHELIN
Green Star award, which
honors chefs who are leading
the way in sustainability,
has been extended to
the United Kingdom.
Winemakers who have made
a strong commitment to
sustainable practices are now
recognized with the Robert
Parker Green Emblem.
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(6) Hydrogen fuel cells generate electricity from the chemical reaction between hydrogen (supplied from an onboard tank) and oxygen (from the air).
Emitting only water vapor, they can act as a primary or supplementary power source for all types of electric powertrains.
Refueling times and range for a fuel-cell fitted vehicle are comparable to those of an internal combustion vehicle.
(7) Symbio is a 50/50 joint venture.
(8) Total consolidated Symbio sales.
HYDROGEN
MOBILITY
A world leader in hydrogen fuel cell systems.
Together, hydrogen and
battery-powered electric
solutions will help achieve
zero-emission mobility.
In 2014, Michelin, which had
been involved in hydrogen
fuel cell(6) R&D since 2005,
acquired a stake in Symbio,
a pioneer in hydrogen fuel-cell
range extenders for battery-
powered EVs. In 2019, Michelin
purchased the remaining
shares in the company and
partnered with Faurecia(7) in a
commitment to making Symbio
a world leader in hydrogen-
powered mobility by combining
Michelin’s technological
capabilities with Faurecia’s
systems integration expertise.
PROGRESS
MADE IN 2021
New contracts and a new plant
New contracts signed in 2021
include one with Safra for
1,500 hydrogen buses and
another with Stellantis to equip
the carmaker’s first hydrogen-
powered commercial vehicles.
In addition, the company is
currently building a high-capacity
plant in Saint-Fons, near Lyon.
When it comes on stream in 2023,
it will be the largest facility of its
kind in Europe, with the ability
to produce up to 50,000 systems.
It will help create nearly
1,000 direct and indirect jobs,
including 300 in research and
innovation. By 2030, Symbio
aims to produce 200,000
hydrogen systems a year for
the automotive industry.
Sales target(8)
€200 million in 2025,
€1.5 billion in 2030.
Potential market
≈ €6.5 billion in 2030
40% CAGR, 2025-2030
France and Germany are planning
to invest €9 billion in the hydrogen
industry by 2030.
The future Symbio
plant in Saint-Fons
near Lyon, France.
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6 PATHWAYS TO SUCCESS
In Action
PUTTING THE ICARE(1)
LEADERSHIP MODEL
INTO PRACTICE
To make every employee feel like
a leader, Michelin North America
employees launched the ICARE
Leadership Network, whose on-
site ambassadors have organized
more than 100,000 events,
webinars, podcasts and contests
over the past 18 months,
including many at recently
acquired companies. A European
version of the inspiring initiative
is now being rolled out.
DIVERSITY IN ALL ITS FORMS
Since 2020, the Africa/India/
Middle East region has been
leading a project to address
the issue of disability in India,
where 64% of people with
disabilities are unemployed.
A partnership with Handicap
International provided
1,450 hours of training and
helped to deploy an equal
opportunity policy.
Since then, seven disabled
people have been hired
at the Chennai plant.
I Am Michelin
• Empowerment, which is practiced
across the Group, unleashes the spirit
of initiative, stimulates progress
and innovation, deepens the sense
of co-destiny and engagement, and
nurtures collective intelligence
through co-construction processes.
• To attract the talent we need today and
in the years ahead, we are broadening
the diversity of our teams and encouraging
everyone to enhance their skills, develop
their careers and help others to grow.
We consistently identify the talents,
capabilities and jobs that will enable us to
make a difference and drive faster growth.
50%
OF THE WORKFORCE
IS UNDER
40 YEARS OLD
7,000
PEOPLE HIRED
EVERY YEAR
MICHELIN IS REGULARLY VOTED ONE OF
THE BEST PLACES TO WORK(2). IN 2021, FOR
EXAMPLE, THE GROUP WAS TOP-RANKED
IN CHINA, SPAIN, FRANCE AND ROMANIA.
(1) Inspiring, Create trust, Awareness, Results, Empowerment.
(2) Ranked in the top three by benchmark studies in each country.
to strengthen our
competitive advantages
and fulfill our vision.
We are
leading
transformations
1•
FLORENT MENEGAUX
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MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
In Action
In Action
A B2B E-BUSINESS
SOLUTION CO-DESIGNED
WITH USERS
Michelin North America has
deployed a new online ordering
system co-developed with its
customers. More than 250 hours
of cooperative working enabled
the project team to design the
new solution, which streamlines
and simplifies interactions with
both wholesalers and retailers.
Outcomes include enhanced
visibility on available inventory
and optimized delivery times.
THE RIGHT SOLUTIONS
AT THE RIGHT TIME
Upgrades to the Group's CRM(1)
process and more effective
data structuring are enabling
Michelin's new loyalty program
in China to proactively meet
emerging customer expectations.
PUTTING
COLLECTIVE
INTELLIGENCE
TO WORK IN THE
SIMPLY PROGRAM
From diagnosis to
implementation,
the Simply program
involved more than
3,000 people in
Clermont-Ferrand,
France, and Greenville, South Carolina.
They compiled a total of 450 complex situations
addressed on a day-to-day basis, involving
17 corporate functions and cross-unit projects.
The simplification solutions were developed
in dedicated workshops attended by front-
line operators and union representatives.
The process has now been conclusively
identified as a best practice for resolving
a wide range of issues and is scheduled
for deployment across the Group.
CUSTOMER
FOCUS
AGILE MICHELIN
Michelin wants to provide customers
with an experience that reflects the
quality of its products and services.
This is why it strives to foster:
• A seamless customer relationship,
from purchase to after-sales service.
• An in-depth understanding
of each customer’s priorities
and needs, to craft and deliver
just the right solution.
• A trustworthy brand.
• The MICHELIN brand is renowned
for its innovation capabilities and
its commitment to supporting
sustainable development.
In response to an increasingly volatile,
unpredictable world, the Group is strengthening
its agility and competitiveness by:
• Building a world-class supply chain that is more
efficient, shorter and more sustainable.
• Streamlining and standardizing product
design and production processes
with the Simplexity program.
• Identifying what really matters to customers
and simplifying corporate and administrative
operations with the Simply program.
• Supporting new operations with
successful business models.
MORE THAN
3,000
INVOLVED TO SIMPLIFY
OUR WAY OF WORKING
(1) Customer Relationship Management.
2•
3•
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MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
27
In Action
INCUBATORS,
CHALLENGES AND
HACKATHONS
At Michelin, innovation
is being stimulated both
internally and externally.
The Group is extensively
involved in innovation
ecosystems, and has
set up an investment
fund for innovative
companies and offers
an incubation program(1)
for startups in Europe,
China and the United
States. In this way, it is
identifying and helping
to accelerate projects
and startups that will
support its future growth
in businesses around
and beyond tires.
MOVIN'ON,
THE GLOBAL
INNOVATION
ECOSYSTEM FOR
SUSTAINABLE
MOBILITY
Created at Michelin’s
initiative, Movin’On
brings together more
than 300 organizations
and companies across
60 countries. In 2021,
its governance body
was expanded to the
chief executive officers
of twelve leading
multinationals(2).
The new structure will
facilitate innovation
and experimentation
in the ecosystem’s
communities of
interest. Organized
around a given topic,
these working groups
are deepening our
understanding of the
issues and imagining
possible solutions
for meeting societal
needs and reducing
environmental impacts.
INNOVATION
ACCELERATION
Michelin has defined three pathways to
becoming as innovative in markets around
and beyond tires as it is with tires:
• Broadening the scope of application for its
expertise and harnessing its non-tire innovations.
• Leveraging its innovation capabilities and
shortening time-to-market by expanding
its networks, unleashing entrepreneurial
energy, and deploying new organizations,
methods and digital resources.
• Embedding materials and connected
services deep in its future advances, while
maintaining its leadership in tires.
(1) Michelin Ventures and the Incubator Program Office (IPO).
(2) Accenture, BNP Paribas, CMA CGM, DHL Supply Chain, Faurecia, Michelin, Microsoft, Renault, Solvay and Vinci.
4•
300
RESEARCH
PARTNERSHIPS
01
6 PATHWAYS TO SUCCESS
28
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
In Action
VOICE OF THE CUSTOMER
FOR NEW INSIGHTS
Developed by data, marketing
and quality experts, the Voice of
the Customer artificial intelligence
application analyzes the natural
language replies of people when
asked why they are satisfied or not
after purchasing a Michelin tire.
Applied to employee answers
to the Moving Forward Together
survey, the same algorithm
enables managers to respond
more effectively to comments
from their team members.
EQUIPPING MICHELIN PLANTS
WITH DATA LAKES(1)
By late 2021, more than 5,000 data
lake applications had been locally
developed for use in Michelin
production facilities, based on the
same, highly acclaimed solution.
Condition-based maintenance
is now widely deployed, enabling
machines to generate their own
service requests. Some 60% of
production cells already use the
Digital MDP (2) system, with full
roll-out across the manufacturing
base scheduled for 2022.
Virtual reality applications are
being used in the workshops,
particularly for training purposes.
A DATA-DRIVEN
COMPANY / CAPTURING
AND MINING DATA
Michelin wants to leverage the digital
transformation to do things better and faster
in every aspect of its business. This goal is being
pursued with three projects to digitalize.
• Our products and services, to improve product
efficiency and broaden the services portfolio
with increasingly personalized solutions.
• Our customer relationships, to streamline our
interactions and monetize all our collected data.
• Our business processes, to maximize the operating
performance of our research and development,
production and corporate support functions.
(1) Unlike simple data storage, data lakes are continuously replenished with raw data that can be retrieved in a variety of formats for analysis.
(2) The Managing Daily Performance visual management system, based on the graphical representation of data.
5•
6 PATHWAYS TO SUCCESS
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
29
In Action
ALL IN ACTION FOR
THE ENVIRONMENT
The Group has defined ambitious objectives to
reduce its environmental footprint and, in certain
cases, have a positive impact on the planet:
• Carbon neutrality: halve carbon emissions
from its production operations and energy use
by 2030(1) and become carbon neutral by 2050(2).
• Circular economy: ensure that 40% of the
materials used in its tires are sustainable
by 2030(3) and 100% by 2050.
• Water: reduce water withdrawals by 33%
by 2030 and have no impact on water
availability in local communities by 2050.
• Biodiversity: protect biodiversity across the
value chain and meet the objectives of its
Biodiversity Roadmap for the 2020-2030 period.
(1) (2) (3) Compared with 2010.
(4) Styrene is a component in synthetic rubber.
(5) The partnership involved the acquisition of a 20% shareholding.
(6) SBTi is a joint partnership between the United Nations Global Compact, the World Wide Fund for Nature (WWF), the World Resources Institute (WRI) and CDP.
It is dedicated to helping companies set greenhouse gas emissions reduction targets in line with the 1.5°C pathway.
(7) Airbus, AWS, Bureau Veritas, Carrefour, CMA CGM Group, Cluster Maritime Français, Crédit Agricole CIB, ENGIE, Faurecia, Michelin, PSA International,
Schneider Electric, Total Energies and Wärtsilä.
CO2 REDUCTION OBJECTIVES approved by
the Science Based Targets initiative (SBTi)(6).
PROCESS HEAT from the production machinery in
the Cataroux facility will be recovered to heat both
the plant and 3,000 homes connected to the Clermont-
Ferrand metropolitan area’s district heating network.
DECARBONIZING FREIGHT TRANSPORTATION
AND LOGISTICS is the ambition of the Coalition
for the Energy of the Future, an alliance
of 14 multinational corporations(7), has launched
its first seven projects in 2021.
4 billion
RECYCLED PLASTIC BOTTLES
COULD BE REUSED
IN THE MICHELIN TIRES
OF TOMORROW.
6•
LIFECYCLE ASSESSMENTS
AND ECO-DESIGN
Lifecycle assessments (LCAs) are
now being used to guide design
choices from raw materials to
recycling solutions. With its
4R strategy – Reduce, Reuse,
Recycle, Renew – Michelin is
using only what it needs and is
firmly engaged in the circular
economy. This means doing more
with less by designing lighter,
safer tires that deliver higher,
longer lasting performance, and
reducing their rolling resistance
to improve their in-use energy
efficiency. Already applied to
products in current production,
LCAs are beginning to be used
to assess service solutions.
PARTNERSHIPS FOR 100%
SUSTAINABLE TIRES
Michelin is helping to develop
innovative technologies that will
enable it to make its tires entirely
from sustainable materials by
2050. Examples include bio-
butadiene with Axens, IFPEN
and Tereos; styrene(4) from
waste plastics with Pyrowave;
micronized powders from recycled
tires with Lehigh Technologies;
carbon black, pyrolysis oil, gas
and steel from end-of-life tires
with Enviro(5); and bio-recycling
of PET plastics with Carbios.
Michelin is also producing eco-
friendly natural rubber with
Barito Pacific in Indonesia.
01
6 PATHWAYS TO SUCCESS
30
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
Every human activity has an impact
on the environment, society and
the economy, which is not always
measured in monetary terms. These
impacts, known as externalities, can
be positive or negative. To improve
stakeholder awareness of these
issues and the Group's ability to factor
them into its management, Michelin
is now valuing its externalities in
euros, in a process that will be further
expanded in the years ahead.
Valuing three externalities
The Group began by valuing three
negative externalities: (i) its CO2
emissions from all of Scopes 1
and 2 (production operations
and energy purchases) and part
of Scope 3 (transportation of
natural rubber, semi-finished
products and finished products
to dealerships); (ii) its use of
solvents generating volatile organic
compounds (VOCs); and (iii) its
water withdrawals, including both
consumption and discharges.
This initial valuation was
performed on the basis of volumes
in 2019, the last year before the
health crisis. Based on avoidance
costs, the total impact stood
at €508 million(1).
€300 million in capital
expenditure a year
Michelin is committed to reducing
the euro impact of these three
externalities by 7.5% by 2023(2),
despite the projected increase
in volumes over the period.
The levers used to achieve this
include (i) lowering consumption
and transitioning to clean energy;
(ii) deploying a more local-to-
local organization and shifting
to multimodal transport; (iii)
recycling and reusing water;
(iv) upgrading solvent-based
products and processes;
(v) digitalizing operations;
and (vi) instilling best practices.
More generally, the Group plans
to invest some €300 million a
year over the 2021-2023 period
to make its operations and
products more sustainable.
Michelin joins the
Value Balancing Alliance
To take its approach to the
next level, in late March 2021
Michelin joined the Value
Balancing Alliance, which
comprises around 20 multinational
companies representing
a variety of industries.
The Alliance is dedicated to
developing a methodology capable
of translating environmental
and social impacts into comparable
financial data. In this way, decision
makers and investors can access
comparable, easily understandable
metrics covering every aspect
of sustainable performance.
Valuing
FOCUS
our impacts
Developed by a Michelin
team, the WISAMO
inflatable wing sail will
improve the fuel efficiency
and carbon footprint
of cargo ships.
(1) For more information see section 4.1.4.5 of the 2021 Universal Registration Document.
(2) Based on the current scope of the tire business.
GOVERNANCE
MICHEL ROLLIER
CHAIRMAN OF
THE SUPERVISORY BOARD
FROM MAY 2013 TO MAY 2021
Over the past ten years,
Michelin has been
diligently enhancing the
quality and eff ectiveness
of its governance
practices, with continuous
improvement over time.
Michel Rollier helped
to create an open,
inclusive atmosphere
that enables us to freely
discuss important business
issues. I shall strive to ensure
that this spirit of openness,
fostered by the Board’s
diverse membership and
the quality and richness of
its deliberations, continues
to inspire the Managers.
BARBARA DALIBARD
CHAIR OF THE
SUPERVISORY BOARD
01
GOVERNANCE
32
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
THE MICHELIN
PARTNERSHIP
LIMITED BY SHARES
Michelin’s governance
is a solid, stable process
focused on the long-
term responsibility of its
executives, with a clear
separation of management
and supervisory powers.
Throughout its history,
Compagnie Générale des
Établissements Michelin (CGEM),
the Group’s parent company,
has been organized as a
partnership limited by shares
(SCA), overseen and led by a
balanced, robust and responsive
governance structure. The SCA
form of corporate organization
ensures that the deployment of a
long-term strategy is fully aligned
with shareholder interests. It
also fosters direct ties with each
shareholder, as all shares must
be registered. It is focused on
driving continuous improvement
in the Group’s governance system
and practices, in compliance
with the recommendations
of the AFEP/MEDEF Code(1).
The Managers
The company is administered
and led by the Managers,
who are initially elected by
shareholders at the Annual
Meeting for four-year terms.
As a General Partner, the
Managing Chairman has
unlimited personal liability
for Michelin's debts.
The Supervisory Board
The Supervisory Board exercises
permanent oversight of Michelin's
management and assesses its
quality every year on behalf of the
shareholders. It issues opinions
on the Group’s strategy, capital
expenditure, acquisitions and
disposals, the Group’s social
responsibility policies, and the
election or dismissal of Managers
and their compensation.
The Supervisory Board is currently
comprised of 11 members:
• nine members elected for
four-year renewable terms
by shareholders at the Annual
Meeting. They offer a broad set
of complementary skills, honed
by the solid business experience
acquired through working
with leading corporations;
• two members representing
employees, appointed by their
trade union. They attend
a training and induction
program that prepares
them to perform their duties
as effectively as possible.
Société Auxiliaire
de Gestion (SAGES)
As the Non-Managing General
Partner responsible for ensuring
the Company’s continuity of
leadership, SAGES participates,
with the Supervisory Board,
in the Manager succession
and compensation processes.
However, it is not involved
in management except in
the exceptional case when
there is no Managing General
Partner, and then only for a
maximum period of one year.
It is entitled to a share of the
income distributed among the
General Partners in accordance
with the provisions of the bylaws.
At least 80% of this share is set
aside to underwrite the unlimited
liability that SAGES shares with
the Managing General Partner.
(1) On December 7, 2020, Michelin met with investors to offer an in-depth look at its corporate governance. The presentation and a transcript of the meeting,
entitled Michelin, a robust and dynamic governance, may be found on the michelin.com website.
GOVERNANCE
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
33
THE MANAGERS AND
THE EXECUTIVE
COMMITTEE AT DECEMBER 31, 2021
The Managers are assisted by a nine-member Executive Committee.
1. Jean Claude Pats Executive Vice President, People • 2. Maude Portigliatti
Executive Vice President, High-Tech Materials • 3. Scott Clark Executive Vice President,
Automotive, Motorsports, Experiences and Americas Regions • 4. Serge Lafon Executive
Vice President, Specialties and Africa/India/Middle East, China, East Asia and Australia
Regions • 5. Lorraine Frega Executive Vice President, Distribution, Services & Solutions,
Strategy, Innovation and Partnerships • 6. Jean-Christophe Guerin Executive Vice
President, Manufacturing • 7. Bénédicte De Bonnechose Executive Vice President,
Urban and Long-Distance Transportation and European Regions • 8. Florent Menegaux
Managing Chairman • 9. Yves Chapot General Manager and Chief Financial Officer
• 10. Adeline Challon-Kemoun Executive Vice President, Engagement and Brands
• 11. Éric-Philippe Vinesse Executive Vice President, Research & Development
1
2
3
4
5
6
7
8
9
10
11
34
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
A CUSTOMER-CENTRIC
ORGANIZATION
THE GROUP
MANAGEMENT
COMMITTEE
The Managers
Executive Committee
The Group Management Committee
brings together members of the
Group Executive Committee and
the following units: Purchasing,
Audit, Internal Control and Risk
Management, Corporate & Business
Services, Finance, Legal Affairs,
Quality, Supply Chain, Strategy &
Information Systems, and the China
and North America Regions.
It cross-functionally manages
transformation, competitiveness
and diversity programs and the
integration of acquisitions. It also
manages the development of the
Corporate & Business Services
(CBS or shared services) unit and
the internal control, quality and
risk management processes.
Focused on identifying and meeting customer
needs, the Group’s organization is supported by an
employee empowerment process embraced at
every level and in every aspect of the business.
19
GLOBAL BUSINESS LINES
design solutions for
customers sharing
similar expectations.
6 Operating
Units provide their
expertise and support.
10 Regions
are responsible for
managing customer
relationships and
increasing sales.
1
LEAN CORPORATE UNIT
comprises departments
focused on their
strategic missions.
By providing deeper insight into
expectations and how they are
changing, stakeholder dialogue helps
Michelin to make better decisions.
Michelin actively encourages and
practices such dialogue locally, nationally
and globally. Since 2016, a Stakeholders
Committee has brought together
12 people representative of the Group's
leading stakeholders, including suppliers,
investors, unions, customers and NGOs.
Four continents are represented on
the Committee, which meets with the
Executive Committee for a full day at
least once a year to discuss the Group’s
sustainable development strategy.
Constructive
stakeholder dialogue
The Group Executive Committee focuses on
strategic issues and decisions, such as corporate
transformations (particularly the digital transition),
the business model, acquisitions, performance
management, brand strategy and sustainable growth.
Florent Menegaux and
Yves Chapot were re-elected
to new terms ending in 2026.
GOVERNANCE
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
35
(*) Excluding members representing employees.
1. Barbara Dalibard,
Chair
2. Thierry Le Hénaff,
Senior Independent
Member
3. Patrick de
la Chevardière,
independent member,
Chair of the Audit
Committee
4. Jean-Pierre Duprieu,
independent member,
Chair of the Compensation
and Appointments
Committee
5. Monique Leroux,
independent member,
Chair of the Corporate
Social Responsibility
Committee
6. Anne-Sophie
de la Bigne,
independent member
7. Aruna Jayanthi,
independent member
8. Wolf-Henning Scheider,
independent member
9. Jean-Michel Severino,
independent member
10. Jean-Christophe
Laourde,
member representing
employees
11. Delphine Roussy,
member representing
employees
11 MEMBERS
including
1 Senior Independent
Member
2 members
representing
employees
89%
ARE INDEPENDENT*
45% are women*
33% are non-French
nationals*
8 MEETINGS IN 2021
100% attendance rate
The Supervisory
Board
As of December 31, 2021, the Supervisory Board
had 11 members, including eight independent
members, two employee representatives, five women
and three non-French nationals. It met 8 times
in 2021 with an attendance rate of 100%.
1
10.
9.
2.
4.
3.
5.
7.
6.
1.
11.
AUDIT COMMITTEE
Patrick de la
Chevardière, Chair
Aruna Jayanthi
Monique Leroux
Wolf-Henning Scheider
COMPENSATION
AND APPOINTMENTS
COMMITTEE
Jean-Pierre Duprieu, Chair
Anne-Sophie de la Bigne
Thierry Le Hénaff, Senior
Independent Member
Delphine Roussy
CORPORATE SOCIAL
RESPONSIBILITY
(CSR) COMMITTEE
Monique Leroux, Chair
Anne-Sophie de la Bigne
Jean-Christophe Laourde
Jean-Michel Severino
Board Committees
8.
01
GOVERNANCE
36
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
2021 saw the departure of
Michel Rollier, Chairman of the
Supervisory Board since 2013
after having served as Managing
General Partner from 2005 to
2012 and Chief Financial Officer
before that. In accordance with
the announcement issued in
December 2020, the Supervisory
Board met after the close of
the Annual Meeting on May 21,
2021 and elected Barbara
Dalibard as its new Chair.
A member of the Supervisory
Board for 13 years, Barbara
Dalibard, 63, served as the
independent Chair of the
Compensation and Appointments
Committee from 2015 to 2020,
as Senior Independent Member
from 2017 to 2020 and as an
external member of the Group
Innovation Council from 2013
to 2020. A technology enthusiast,
since 2016 she has been Chief
Executive Officer of SITA, the
world's leading specialist in
air transport communications
and information technology.
Mr. Rollier was replaced as
a member of the Board by
Wolf-Henning Scheider, Chief
Executive Officer of Germany’s
ZF Friedrichshafen AG, one of
the world’s top ten automotive
equipment manufacturers.
He was elected in particular
due to his experience in
the automotive industry.
At the Meeting, shareholders
also ratified the appointment
of Jean-Michel Severino, Chief
Executive Officer of Investisseurs
et Partenaires, a specialist in
impact investing and a member
of the new Corporate Social
Responsibility Committee.
In 2020, the Supervisory Board
set up a third committee,
dedicated to corporate
social responsibility, and
was joined by a second
employee representative.
In 2021, the Board approved
two amendments to its
Bylaws, supported by the
General Partners, that:
• simplified the calculation of
the share of profits awarded
to the General Partners and
linked the amount attributable
to the Managers to the
objectives previously set by
the Supervisory Board.
• limited the share of profit
awarded to SAGES to the
amount attributable to the
Managers and stipulated
that free shares may be
awarded to the them.
With the new strategic plan for
2030 now underway, SAGES
proposed that the Supervisory
Board re-elect Florent Menegaux
and Yves Chapot as Managers
for new four-year terms,
expiring at the close of the 2026
Annual Meeting. The motion
was unanimously approved
by the Board in July 2021.
A WELL-PREPARED
SUCCESSION
MUTUALLY SUPPORTIVE,
CONTINUOUSLY IMPROVED
GOVERNANCE
A 3
rd
COMMITTEE
dedicated to corporate
social responsibility
BARBARA DALIBARD
has a solid
international
experience
and a real passion for
innovation
GOVERNANCE
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
37
MICHELIN INVESTOR RELATIONS
By investing in Michelin, our
shareholders not only become
part of an extraordinary human,
technological and industrial
saga that has been improving
mobility for more than 130 years,
they are also contributing to
the well-being of humanity.
They are also supporting a project
whose success is being driven
by an extraordinary capacity for
innovation, widely recognized
technological leadership, engaged
employees, a world-renowned
brand, and global expansion in
buoyant, diversified end-markets
around the world. And lastly, they
are sharing the All-Sustainable
vision in a commitment to creating
more value for everyone.
Michelin has more than
200,000 shareholders,
including nearly 140,000 private
investors, 62,000 employees
through the employee share
ownership plan and more than
4,100 institutional investors.
All of them hold their shares in
registered form, which supports
effective, high-quality shareholder
dialogue. The Group is committed
to giving employees a personal
stake in its performance, with
seven worldwide employee
share issues carried out since
2002 and the latest in 2020.
Through its recommendations,
the Shareholder Consultative
Committee has been steadily
enhancing communication with
private shareholders since 2003.
In 2021, the format was
streamlined with the creation
of a new Michelin Shareholder
Committee comprising six
members, half of whom are
private investors and the other
half employee shareholders.
Beginning in 2021, Michelin
intends to raise its payout ratio
to around 50% of consolidated
net income before non-recurring
items, instead of the previous 35%.
As of end-2021, a shareholder who
had invested €1,000 in Michelin
stock in 2011 and reinvested
all of his or her dividends
would have an investment
worth around €4,200, for a total
ten-year return of 324%(1).
Michelin regularly carries out
share buyback transactions only
to offset the dilution caused by
performance share grants and
employee share ownership plans.
MICHELIN
INVESTOR RELATIONS
Ownership structure
and voting rights
AT DECEMBER 31, 2021
SHARES OUTSTANDING
178,530,450
VOTING RIGHTS
OUTSTANDING
238,147,046
Shares held in the same
name for at least four
years carry double
voting rights.
(1) Before French withholding taxes.
(2) Of which 4% held by the Michelin
family via Mage Invest.
65.5
9.2
23.5
59.3
1.7
11.4
27.3
2.0
Share capital
Voting
rights
French institutional
investors(2)
Non-resident institutional
investors
Individual shareholders
Employee share
ownership plan
01
MICHELIN INVESTOR RELATIONS
38
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
ETHICS, INTEGRITY AND COMPLIANCE
Michelin has pledged to
uphold the United Nations
Global Compact and ensures
that its employees act in
accordance with the standards
of integrity and ethical behavior
that form the bedrock of
its corporate culture.
These values and standards
have been assembled into
a robust collection of easily
accessible, widely promoted
reference documents. Ethics
Committees have been set
up in each region. A database
allows everyone to access best
practices. Compliance with the
rules of conduct is regularly
audited and whistle-blowing
procedures are in place to enable
employees to anonymously and
securely report any violations.
Respecting people and
the environment
The Sustainable Development
and Mobility Department is part
of the Corporate Engagement
and Brands Department.
Michelin guidelines are derived
from the ISO 26000 (Social
Responsibility) and ISO 20400
(Sustainable Procurement)
standards. Supplier performance
is assessed by EcoVadis, an
independent company.
As one of the world’s leading
users of natural rubber,
Michelin pursues a sustainable
sourcing strategy, defined with
the support of the WWF and
built on the principles of zero
deforestation, the preservation of
threatened lands and ecosystems,
and respect for supplier
communities. More broadly, the
Group has defined a Biodiversity
Roadmap for the 2020-2030
period with measurable targets.
All of the production plants have
deployed an environment, health
and safety (EHS) management
system. 93% of them, accounting
for 99% of total tire output,
have been certified to ISO 14001
(environmental management)
standards. The Environment
and Prevention Management
System is also based on ISO 50001
(energy management systems)
and OHSAS 18001 (occupational
health and safety) specifications.
Around the world, Michelin is
committed to improving tire
standards and regulations
to make tires safer, facilitate
their recycling and combat
their planned obsolescence.
The Group lobbies responsibly
and complies with the highest
standards of transparency
applicable to relations between
companies and public authorities.
Responsible
transformations
In response to the ongoing
structural shifts in the global
tire market, Michelin is constantly
realigning its operations, with
all due care and respect for
the people and communities
concerned. Each of the impacted
employees is supported in
pursuing their careers both within
and outside the Group. Michelin
is also committed to repurposing
closed sites and to creating as
many new jobs as were eliminated,
either through growth in its new
business operations or through
programs to revitalize local labor
markets.
This same commitment is guiding
the plan to simplify and improve
the competitiveness of the Group’s
corporate, administrative and
manufacturing operations in
France. Initiated in January 2021,
the plan will lead to the elimination
of up to 2,300 jobs over three
years. Its implementation, which
will not entail any layoffs, is
based on a three-year framework
agreement and an innovative co-
construction and social dialogue
process with each facility and
operating unit concerned.
SHARED RULES AND
PRACTICES GOVERNING
ETHICS, INTEGRITY
AND COMPLIANCE
ETHICS, INTEGRITY AND COMPLIANCE
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
39
RISK MANAGEMENT
A ROBUST
RISK MANAGEMENT SYSTEM
A single corporate
department overseeing
Internal Audit, Quality,
Risk Management and
Internal Control activities.
While facilitating a shared
vision of the primary
risks and challenges,
this organization also
encourages cooperation
among teams across
the entire Group over
every time horizon.
An efficient crisis
management system.
Led by the Internal Audit,
Risk Management, Internal
Control and Quality
Department, the crisis
management system
is deployed among the
executive teams through
full-scale simulation
exercises and training
seminars. The Computer
Emergency Response
Team (CERT) tracks cyber
intrusions and stands ready
to respond quickly at all
times across all continents.
Global insurance
programs have been
arranged for the most
significant insurable
risks, including property
& casualty/business
interruption, liability,
accidental pollution
and cyber risk.
They cover all of the
Group’s majority-
owned subsidiaries.
Michelin has deployed an enterprise risk management
(ERM) system that complies with the reference framework
of the French securities regulator (AMF) and the international
professional standards of the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
The 11 highest-impact
risk factors specific
to the Michelin group
For more
information about
risks and how they
are managed,
see Chapter 2
Risk Management
and Chapter 4
Non-Financial
Performance,
materiality matrix
in the Universal
Registration
Document.
CSR issues
and the
materiality
matrix
To identify and
manage its main
social responsibility
issues, the Group uses
a materiality matrix
that reflects stakeholder
perceptions.
The matrix was revised
in 2021, updating how
issues are identified
and ranked(1).
Days
Weeks
Months
Years
Medium
High
Low
NET IMPACT
5- Cyber-attack
4- Physical impacts
of climate change
1- Inadequate management
of environmental impacts
7- Michelin image
and brand
6- M&A and major projects
9- Property security
11- Safety risks associated
with tire products
2- Manufacturing
business interruption
3- Supply chain
8- Risks related to pension
and other defined benefit plans
10- Loss of knowledge
and know-how
IMPACT TIMELINE ON THE GROUP'S VALUE
(1) See chapter 4, section 4.1 of 2021 URD.
01
RISK MANAGEMENT
40
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
In recent years, Michelin has completed
around 20 significant transactions,
including acquisitions, joint ventures,
equity stakes and partnerships, with
companies of all sizes. It has consistently
taken a pragmatic approach with the
same objective in mind: to combine
forces and build synergies to do things
faster and better.
Selective acquisitions.
During the year Michelin
strengthened its tire and tire
distribution business by (i)
expanding its portfolio and
creating the world’s leading
off-the-road tire manufacturer with
Camso; (ii) increasing capacity in
Indonesia to serve Southeast Asian
markets with Multistrada; and
(iii) broadening its online retailing
capabilities with BlackCircles and
Allopneus. In tire-related services,
the Group expanded its digital
fleet management operations with
Sascar, NexTraq and Masternaut.
In the non-tire segment, the
acquisition of Fenner has opened
up new fields of application
where the Group can harness its
expertise in high-tech materials.
Joint ventures between leaders.
To enhance the potential of its
member companies, Michelin
has formed a number of joint
ventures with other leaders,
based on the complementary
nature of their positions and
capabilities. Examples include (i)
TBC, a leading North American tire
wholesaler formed with Sumitomo;
(ii) AddUp, a leader in metal 3D
printing created with Fives; and
(iii) Symbio, now being expanded
with Faurecia to become a world
leader in hydrogen mobility.
Incubation and support for
high-tech start-ups. Michelin
is shortening time-to-market
for innovative technologies
in materials and sustainable
solutions by working with start-
ups, either to provide incubation
support (e.g., ResiCare, which
makes SVHC-free resins) or to
help engineer their production
processes (e.g., Carbios, Enviro
and Pyrowave, which offer
advanced recycling solutions).
An efficient selection,
integration and control process.
To manage these projects, a
governance system has been
set up under the responsibility
of the Managers, supported
by the Mergers/Acquisitions
department. Projects in excess
of €50 million are reviewed by
the Supervisory Board, which
issues an opinion ahead of
any binding letter of intent.
For each acquisition, an integration
plan is deployed under the
supervision of an Executive
Committee member. Twice a year,
the Managers report to the Board
on the integration of acquisitions
carried out over the preceding four
years. Their strategic fit, quality
of management and synergies
are all assessed according to
specific criteria, to ensure that
the expected value is effectively
created to help realize the robust,
profitable growth ambitions of
the Michelin in Motion strategy.
Building
FOCUS
SYNERGIES
PERFORMANCE & AMBITIONS
PERFORMANCE
& AMBITIONS
YVES CHAPOT
CHIEF FINANCIAL OFFICER
Our capital allocation policy
is designed to strike the right
balance between investing in
growth, maintaining a reasonable
amount of debt and sharing value
with our stakeholders.
42
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
Credit Ratings
AT DECEMBER 31, 2021
Standard
& Poor’s
Fitch
Moody’s*
Short term
A2
F2
-
Long term
A-
A-
A3
Outlook
Stable
Stable
Stable
Rating agencies confirms the
Group’s robust financial position
Non-financial ratings
AT DECEMBER 31, 2021
2021 RATINGS
CDP CLIMATE
A
CDP WATER
B
ECOVADIS
78/100
ISS ESG
B-
MSCI
AAA
VIGEO EIRIS
73/100
SUSTAINALYTICS
(risk rating)
Low risk
Michelin is a leading player
in sustainable mobility,
recognized by the non-financial
rating agencies
(*) Moody's ratings have not been solicited since July 2020.
PERFORMANCE & AMBITIONS
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
43
2030 Ambition
people
(1) Based on the 2021 scope of reporting, the 2020 rate was 82%, versus 83% as reported based on the 2020 scope.
(2) Number of accidents and cases of occupational illness recorded per 200,000 hours worked.
(3) IMDI: A composite metric that tracks diversity and inclusion in five areas: Gender balance, Identity, Multi-national management, Disability, and Equal opportunity.
SET THE STANDARD
FOR EMPLOYEE DIVERSITY
AND INCLUSION
Diversities and inclusion
IMDI DIVERSITIES & INCLUSION
MANAGEMENT INDEX(3)
2019
2020
2021
2030
-
62/100
67/100
80/100
SET THE GLOBAL STANDARD
IN WORKPLACE SAFETY
Workplace safety
Total Case Incident Rate(2)
2019
2020
2021
2030
1.43
1.19
1.29
<0.5
SET THE GLOBAL STANDARD
FOR EMPLOYEE
ENGAGEMENT, WITH A
RATE OF MORE THAN 85%
Employee
engagement rate(1)
2019
2020
2021
2030
80%
82%
80%
>85%
LEAD THE INDUSTRY
IN CREATING
CUSTOMER VALUE
Customer satisfaction:
Partner Net
Promoter Score
2019
2020
2021
2030
38
40.3
38.9
up 10 pts
vs. 2020
For more information:
download the ESG data spreadsheet
from our website
01
PERFORMANCE & AMBITIONS
44
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
2030 Ambition
planet
(1) Reduction in the rolling resistance of the Passenger car, Light truck and Truck tires.
(2) The “industrial - Michelin Environmental Performance” metric is a weighted indicator that tracks energy use, CO2 emissions, organic solvent use, water withdrawals,
and waste production.
(3) Renewable bio-based materials are made from raw materials derived from natural resources that are naturally replenished on a human timescale, such as biomass.
REDUCE CO2 EMISSIONS FROM
OUR PRODUCTION PLANTS BY
50% VS. 2030 TO BECOME
CARBON NEUTRAL IN 2050
ENSURE THAT 40%
OF THE MATERIALS USED IN
OUR TIRES ARE SUSTAINABLE
BY 2030 AND 100% BY 2050
SET THE GLOBAL STANDARD
FOR THE ENVIRONMENTAL
FOOTPRINT OF
MANUFACTURING FACILITIES
IMPROVE THE ENERGY EFFICIENCY
OF OUR PRODUCTS BY 10% BY 2030
TO HELP ACHIEVE CARBON
NEUTRALITY IN USE
Product/tire energy
efficiency(1)
2019
2020
2021
2030
-
100
100.5
up 10%
vs. 2020
SCOPE 1 and 2 CO2 emissions
PRODUCTION OPERATIONS AND ENERGY USE,
(in millions of tonnes of CO2, base 100 in 2010)
2010
2019
2020
2021
2030
3.88
2.92
2.46
2.67
1.94
100
75
63
71
down
50%
vs. 2010
Renewable (3) or recycled
materials used
in making a tire
2019
2020
2021
2030
26%
28%
29%
40%
Environmental footprint
of Michelin production
plants (i-MEP Michelin)(2)
2019
2020
2021
2030
100
not
consistent
92.6
down
one-third
vs. 2019
For more information:
download the ESG data spreadsheet
from our website
PERFORMANCE & AMBITIONS
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
45
Brand vitality indicator(2)
2020
2021
2030
Brand vitality
58
68
up 5 pts
vs. 2021
2030 Ambition
Maintain the strength
of the MICHELIN brand
Product/service vitality indicator(3)
2020
2021
2030
Product/service
vitality
33%
31%
>30%
2030 Ambition
Maintain the sustained pace of product
and service innovation
Return on
capital
employed
(%)
2030 Ambition
Continuously create value
between 2023 and 2030
with an ROCE of more
than 10.5% each year.
(1) Segment operating income.
(2) Single score composite indicator which summarizes the current vitality of the brand. It is based on five key indicators:
brand purpose, innovation, communication, brand experience and love.
(3) Share of products and services launched over the last three years in annual sales.
Structural free
cash flow
(in € millions)
Net debt
(as a % of equity)
€1.7bn
INVESTED IN 2021
PROFIT
Sales
(in € millions)
2030 Ambition
average annual growth in
sales of 5% between 2023
and 2030, with 20% to 30% of
sales generated by businesses
other than tire manufacturing
and distribution in 2030.
Operating
income(1)
(in € millions and
as a % of sales)
Net income
(in € millions)
2019
2020
2021
24,135
20,469
23,795
2019
2020
2021
3,009
12.5%
1,878
9.2 %
2,966
12.5%
2019
2020
2021
1,730
625
1,845
2019
2020
2021
10.0
6.0
10.3
2019
2020
2021
1,615
2,010
1,793
2019
2020
2021
39
28
19
01
PERFORMANCE & AMBITIONS
46
MICHELIN
2021 UNIVERSAL REGISTRATION DOCUMENT
THE MICHELIN SHARE
THE MICHELIN SHARE
According to statistics collected by Euronext Paris.
Traded on the
Euronext Paris
stock exchange
market capitalization
€25.7bn
at December 31, 2021
Average daily trading
volume
435,955
shares in 2021
Stock index
weightings
CAC 40: 1.47%
of the index at December 31, 2021
Euronext 100:
0.67% of the index
at December 31, 2021
SRI indices
Euronext Vigeo Eiris France 20,
Europe 120, Eurozone 120,
World 120 and FTSE4Good
Share
performance
Michelin share performance,
December 2016 –
December 2021
Share price
(in €)
2021
2020
2019
2018
2017
High
146.00
112.80
119.50
130.85
128.40
Low
103.30
68.00
83.74
82.68
98.93
Closing price, end of period
144.15
104.95
109.10
86.70
119.55
Change over the period
+37.35%
-3.80%
+25.84%
-27.48%
+13.10%
Change in the CAC 40 index
+28.85%
-7.14%
+26.37%
-10.95%
+9.26%
(in € per share,
except ratios)
2021
2020
2019
2018
2017
Net assets per share
83.9
70.8
74.1
67.8
62.7
Basic earnings per share
10.31
3.52
9.69
9.30
9.39
Diluted earnings
per share(1)
10.24
3.51
9.66
9.25
9.34
Price-earnings ratio
14.0
29.8
11.3
9.3
12.7
Dividend for the year
4.50*
2.30
2.00(3)
3.70
3.55
Payout ratio
42.0%
47.0%
19.5%
36.4%
36.0%
Yield(2)
3.1%
2.2%
1.8%
4.3%
3.0%
SHARE
INFORMATION
PER SHARE
DATA
Compartiment A
Eligible for the SRD deferred
settlement system
ISIN: FR 0000121261
Par value: €2
Traded in units of: 1
* Subject to approval by the Annual Meeting of May 13, 2022.
(1) Earnings per share adjusted for any impact on net income and average shares outstanding of the exercise of any dilutive instruments.
(2) Dividend/share price at December 31.
(3) Instead of the recommended €3.85, as a result of the Covid-19 crisis.
€144.15
Dec. 31, 2021
€98.03
Dec. 31, 2016
90
105
120
135
150
Dec.
2021
Jan.
2017
June
2017
Dec.
2017
June
2018
Dec.
2018
June
2019
Dec.
2019
June
2020
Dec.
2020
June
2021
THE MICHELIN SHARE
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
47
OUTLOOK
IN 2022
In 2022, in a still highly unsettled environment,
Passenger car and Light truck tire markets are
expected to expand by 0% to 4% over the year,
Truck tire markets by between 1% and 5%, and
Specialty markets by 6% to 10%. In this market
scenario, and barring any new systemic impact
from Covid-19(1),Michelin’s objective is to report
full-year segment operating income in excess
of €3.2 billion at constant exchange rates(2) and
structural free cash flow(3) of more than €1.2 billion.
IN 2023
The Group confirms
its 2023 targets:
• More than €3.3 billion in segment operating
income at January 2021 exchange rates
• A 13.5% segment operating margin
- >12% in Automotive and related distribution
- >10% in Road transportation
and related distribution
- >17% in Specialty businesses
and related distribution
• €3.3 billion in total 2022-2023
structural free cash flow
• A more than 10.5% ROCE
The Group is continuing to deploy its
simplification and competitiveness plans, but
with inflation running well above the recent-
year average, their delivered savings will not
be enough to offset rising costs, as announced
at the Capital Markets Day on April 8, 2021.
OVER THE PERIOD TO 2030
the Group expects to deliver
growth that is robust,
averaging 5% a year; profitable, with an ROCE
of at least 10.5% a year; and driven by tire-related
and other businesses, which at period-end will
represent 20% to 30% of consolidated sales.
Outlook
(1) Serious supply chain disruptions
or restrictions on freedom of movement
that would result in a significant
drop in the tire markets.
(2) See the presentation of the 2021
annual results on www.michelin.com.
(3) Structural free cash flow corresponds
to free cash flow before acquisitions,
adjusted for the impact of changes
in raw material prices on trade payables,
trade receivables and inventories.
48
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
REASONS TO INVEST
IN MICHELIN
Be a partner to
the world leader in
sustainable mobility,
i.e., mobility that is safer, more
efficient, more accessible and more
environmentally friendly.
Help fund the
growth of a Group
whose driving force
is innovation
for the benefit of everyone,
at a time when it is moving into
new future-facing businesses.
Feel a part
of MICHELIN,
a world-renowned French brand
with an extraordinary capital of
trust and affinity.
Own a stake in
a company whose
governance system
is sustainably robust,
engaged and responsible.
Support Michelin’s
All Sustainable vision
and share in the balanced value
created by combining financial,
employee, environmental and
social responsibility performance.
5
CHECK OUT THE VIDEO
“Reasons to invest
in Michelin”.
Scan the QR code
with your smartphone
to watch the video.
OUTLOOK
01
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
49
0
50
2
Risk
management
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
Already a world leader
in workplace safety and
employee engagement,
our aim is to continue
making further progress.
02
Risk
management
2.1
RISK FACTORS SPECIFIC
TO MICHELIN, DESCRIPTION
AND RELATED MANAGEMENT
SYSTEMS
52
2.2
CROSS-FUNCTIONAL RISK
MANAGEMENT PROCEDURES
62
2.2.1
Synchronization between Internal Audit,
Risk Management and Internal Control
62
2.2.2
Internal control process
62
2.2.3
Crisis management processes
63
2.2.4
Insurance coverage
63
2.3
INTERNAL CONTROL PROCESS
RELATING TO THE PREPARATION
OF ACCOUNTING AND
FINANCIAL INFORMATION
64
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
51
RISK MANAGEMENT
02
Risk factors specific to Michelin, description and related management systems
IMPACTS OF THE UKRAINE CRISIS ON THE RISK FACTORS
The impacts of the crisis in Ukraine, while not specific to the Group, have had the effect of exacerbating certain risks or families of risks
that are specific to the Group, such as the manufacturing business interruption and supply chain risks that are described in section 2.1.
This crisis does not call into question the scope or the classification of the risks specific to the Michelin Group that are described in
this chapter. Various key aspects of our ongoing risk management system have been very useful in minimizing the impacts of the
crisis, in particular:
▶a risk policy that explicitly prioritizes the protection of persons in all circumstances;
▶frequent crisis simulations, at all levels of the Group, that have allowed the Group to quickly put in place and activate the
various crisis units that have been necessary, with trained staff;
▶the business continuity management work that is carried out regarding supply and the production of the Group’s products and
services, as well as its support activities.
For a description of the impact on the Group of the recent events relating to the Ukraine crisis, at the date this Universal
Registration Document was filed, see Chapter 5.
2.1
RISK FACTORS SPECIFIC TO MICHELIN, DESCRIPTION
AND RELATED MANAGEMENT SYSTEMS
In today’s constantly evolving economic, competitive and
technological environment, anticipating and managing risks are
central to the success of Michelin's corporate strategy. Its
geographic reach and leadership position in the global tire
market, as well as the diversity of its business activities, mean
that the Group is exposed to a variety of risks, both endogenous
and exogenous. Strategic, financial, industrial, commercial,
environmental and people-related risks have been clearly
identified and are being managed in ways that minimize their
occurrence and impact. The Covid-19 crisis confirmed the
effectiveness
of
the
prevention,
protection
and
crisis
management measures that the Group has been implementing
for several years. It also led to increased awareness of the
importance of risk management at all levels of the organization.
The impacts of the crisis on the Group's operations throughout
2021 are discussed in the introductory section of the chapter 5
of this Universal Registration Document.
For Michelin, a risk corresponds to the possibility of an event
occurring whose consequences could affect its objectives,
financial position or reputation and also its stakeholders, in
other words, events or practices that have an impact on people,
the planet and society. All of these risks are reviewed by the
Michelin Group as part of its risk mapping process. To ensure
that risks are rigorously managed, the Group has set up a global
risk management process that complies with the most exacting
international professional standards such as COSO or the
reference framework of the French securities regulator, the AMF
and ESMA.
This process is continuously updated to reflect the latest
regulatory changes and risk management best practices. For
example, in order to refine the Group risk map, in 2020, a risk
materiality matrix was introduced. This matrix is described in
more detail in chapter 4 of this Universal Registration
Document. The risk management system will take into account
this materiality matrix in particular, to ensure that the
identification of risks is aligned with the expectations of our
stakeholders. As part of the continuous improvement process,
recently we have also formally defined a methodology to take
“double materiality” factors into account when assessing the
impact of the risks that are potentially concerned. This
methodological evolution will help the Group to assess more
accurately the effects not only on the Group itself, but also on
its external stakeholders, such as the environment and society as
a whole.
52
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
01
02
03
04
05
06
07
08
RISK MANAGEMENT 02
Risk factors specific to Michelin, description and related management systems
Since the 2020 Universal Registration Document and in
accordance with the requirements of Regulation (EU) 2017/1129,
Article 16, the selected risk factors are those factors that (i) have
been demonstrated to be specific to Michelin and (ii) have the
greatest net impact. The net impact corresponds to the gross
impact and all the risk mitigation measures deployed by the
Group including preventive, protection, crisis management, risk
transfer and risk governance measures. On this basis, 11 risks
have been selected for inclusion in this section in light of their net
impact on the Group. They include two risks – safety risks
associated with tire products and inadequate management of
environmental impacts – that have been identified as critical in
the materiality analysis. The 11 risk factors are presented in the
table and charts below:
1. By category. The analysis has been performed by placing the risks that have the greatest net impact at the top of each category.
Risk categories
Risk factors
Risks related to Michelin’s Strategy, Organization
and Governance
Inadequate management of environmental impacts
M&A and major projects
Michelin image and brand
Risks related to Michelin’s Operations and Business
Manufacturing business interruption
Supply chain
Physical impacts of climate change
Cyber attack
Property security
Knowledge retention
Product safety
Financial risks
Pension and other defined benefit plans
2. Based on their net impact and the impact’s duration. Impact scales are used to qualify the risk’s net impact on Michelin's
financial position or reputation. The financial impact that these risks could potentially have on operating income is measured using
the following risk rating scale:
• “High” = more than €400 million annual net impact,
• “Medium” = between €150 million and €400 million annual net impact,
• “Low” = less than €150 million annual net impact.
Strong
Very strong
Critical
Very
strong
Critical
Strong
STAKEHOLDER
EXPECTATIONS
27 - Responsible water management
IMPORTANCE FOR MICHELIN
2.5
3.0
3.5
4.0
3.0
3.5
4.0
26 - Waste management
25 - Protecting soil quality and biodiversity
24 - Responding to environmental damage
23 - Management of employee relations
22 - Employee volunteer service
18 - Transparency and access to information
17 - Local community development
21 - Fostering workplace well-being
20 - Developing employee skills
8 - Development of new services
and solutions in our new non-tire
businesses
1 - Employee health and safety
2 - Quality and safety of products and services
3 - Direct contribution to climate change
(Scopes 1 and 2)
4 - Environmental impact of raw materials
5 - Indirect contribution to climate change (Scope 3)
6 - Respect for human rights in the supply chain
7 - Sustainable procurement and responsible
supplier relationships
9 - Diversity and equal opportunity
10 - Business ethics
11 - Collaboration with our ecosystem
12 - Data protection
13 - Responsible governance
14 - Air quality
Social
Business
Environment
15 - Eco-design of our products and services
16 - End-of-life products
19 - Attracting and retaining talent
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
53
RISK MANAGEMENT
02
Risk factors specific to Michelin, description and related management systems
All 11 risks have a low probability of occurring. They are all in the “high gross impact/low probability” category, as shown below.
Due to the guidance issued by the European Securities Markets
Authority (ESMA) and France's securities regulator (AMF) on the
risk factors to be discussed pursuant to the European
prospectus regulation, only the main risk factors identified by
the Group are discussed in this chapter. Other identified risks
are discussed in other sections of the Universal Registration
Document.
▶The ten risks that are ranked highest in the materiality
matrix and would have the greatest net impact are
discussed in Chapter 4 of this Universal Registration
Document.
▶Market, innovation and competition risks are considered as
being medium or long-term trends that influence the Group’s
strategy and business model. They are discussed in chapter 1,
section Trends and challenges.
▶Other risks not specific to Michelin and/or whose net
impact is considered low due to the measures deployed
to address them are covered in the discussion of Michelin’s
financial performance in chapter 5:
• financial risks: liquidity risks, interest rate risks, currency
risks, counterparty risks,
• risk of default by dealers,
• raw materials risks,
• legal and tax risks.
Days
Weeks
Months
Years
Medium
High
Low
IMPACT NET
5- Cyber-attack
4- Physical impacts
of climate change
1- Inadequate management
of environmental impacts
7- Michelin image
and brand
6- M&A and major projects
9- Property security
11- Safety risks associated
with tire products
2- Manufacturing
business interruption
3- Supply chain
8- Risks related to pension
and other defined benefit plans
10- Loss of knowledge
and know-how
IMPACT TIMELINE ON THE GROUP'S VALUE
PROBABILITY / FREQUENCY
GROSS
IMPACT
HIGH IMPACT/
LOW PROBABILITY
Managed at Group level
Low impact/
Low probability
Managed by each individual
entity on a case-by-case basis
High impact/
High probability
None
Low impact/
High probability
Operational risks, subject to continuous
monitoring at entity level
54
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
01
02
03
04
05
06
07
08
RISK MANAGEMENT 02
Risk factors specific to Michelin, description and related management systems
Risk 1 – Inadequate management of environmental impacts
Risk factors
This risk concerns impacts on the Group that may be generated
by stakeholders in response to the Group's inadequate
management of its environmental impacts. It includes
environmental transition risks related to climate change (political
and legal, technological, market and reputation as defined in
the TCFD nomenclature) but also other environmental risks
(pollution, scarcity of resources, loss of biodiversity).
Specific nature of the risk
Mobility, which is at the center of the Group's corporate
mission, is a sector that has a significant impact on the
environment and climate change. As a result, it is heavily
regulated at both local and international levels, and is also
shaped by a continuous fast pace of technical and social
change. Recognizing the high expectations of stakeholders
and the Group’s leadership position, Michelin is firmly
committed to protecting the environment. These specific
issues lead to risks of:
▶failure
or
inability
to
comply
with
applicable
environmental regulations:
For
example,
regulations
concerning
products
(e.g.,
environmental labeling including rolling resistance or noise
performance, ban or restrictions on the use of chemical
substances) or their manufacture (e.g., plant operating
permits or emission standards, CO2 emissions allowance);
▶unpreparedness for scientific and social changes:
The mobility sector is particularly subject to rapid and far-
reaching changes and a failure to prepare for these changes,
whether scientific, technological or social, could have an
adverse effect on the Group’s leadership and image, as well
as on the attractiveness of its offers for customers and users
of its products and services. These risks include, for example,
a possible inability to substantiate our environmental
performance claims (sustainable material content in products,
CO2 emissions in our value chain), a possible delay in
discovering or deploying green technologies, or a possible
rejection of industrial activities by local communities;
▶non-compliance
with
the
Group's
environmental
commitments:
The Group is taking up its responsible industry leadership role
by pursuing an “All Sustainable” strategy. In line with this
strategy, the Group has made ambitious environmental
commitments (for example, net-zero emissions and tires
made entirely from sustainable materials by 2050). Failure to
meet these commitments could expose the Group (for
example, to the risk of losing stakeholder confidence, media
attacks, reputational damage, and inability to attract talents);
▶third-party challenges to the Group on environmental
issues:
This is a specific aspect of the “Michelin image and brand”
risk (risk 7). The challenges could concern each of the risks
described above or the Group’s possible chronic impact on
the environment. They could come from NGOs or the media,
but also from financial or ESG rating agencies, or directly
from members of the community.
Governance and risk management response
An Environmental Governance body has been set up to
provide assurance that environmental risks are under control
and that effective preventive or remedial measures are defined
and implemented whenever necessary.
The body is chaired by the Executive Vice President,
Manufacturing and the Executive Vice President, Research and
Development, who are both members of the Group Executive
Committee. It is led by the Group Environment and Prevention
Director and coordinated by the Sustainable Development
Director. Its members include representatives of the Standards
and Regulations Department, the Sustainable Development and
Mobility Department, the Materials and Business‑to‑Business
Research & Development Department, the Risk Management
Department, the Purchasing Department, the Safety & Security
and Environment Department, and the High-Tech Materials
Business Line.
An initial overall impact assessment was carried out for these
risks and validated by the Environmental Governance body in
2020. However, environmental transition risks have yet to be
assessed.
The main levers for controlling these risks that have already
been implemented can be summarized as follows:
▶a global environmental policy has been defined and
implemented, certain aspects of which have been shared with
the third-party organization (see chapter 4 and the Duty of
Care Plan);
▶stakeholders' issues, as discussed at meetings of the
Stakeholders Committee and reflected in regular updates to
the Materiality Matrix have been taken into account in the
policy;
▶a structured regulatory watch and internal control system has
been deployed to provide assurance that current and
emerging regulations are identified on a timely basis and
applied;
▶a system has been set up to monitor the deployment of the
policy – performance in relation to objectives is assessed
using appropriate indicators that are reviewed by the
Environmental Governance body;
▶long-term technological and social changes are taken into
account by anticipating and challenging the Group's
long‑term strategy based on four prospective scenarios;
▶a continuous and structured process of contact with external
stakeholders (NGOs, Customers, Suppliers, Investors) exists
through the Stakeholder Committee, partnerships with NGOs
(WWF) and the systematic consideration of issues or
controversies facing the Group.
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Risk factors specific to Michelin, description and related management systems
Risk 2 – Manufacturing business interruption
Risk factors
The Group’s tires are produced in two stages. First, semi‑finished
products are manufactured for use as components, which are
then processed and assembled to produce the finished products
that make up the different types of tires we sell. Consequently,
the risk of business interruption at a semi-finished product facility
could be significant, given that its output may be used by several
different finished product plants.
There are a variety of external and internal factors that could
give rise to business interruption for either type of production
facility. External factors include (i) pandemics, such as the one
related to Covid-19, (ii) natural disasters, particularly in high-risk
regions such as the United States (tornadoes) and Asia
(flooding), or even (iii) regulatory or geopolitical changes.
Internal sources of business interruption could include fire, IT
failures and other technical problems.
Specific nature of the risk
The business interruption risk at semi-finished product facilities
is especially important at Michelin due to our historical
manufacturing model. Under this model, semi-finished products
are mass-produced in Europe and North America at certain
plants that sometimes supply several different finished product
facilities. Consequently, if any of these semi-finished product
facilities were to be put out of action, this could affect several
finished product facilities.
Governance and risk management response
A governance structure is in place for the semi-finished part of
this risk – the Materials Steering Committee headed by the
Executive Vice President, Manufacturing, who is a member of
the Group Executive Committee.
To anticipate this risk, Michelin has set up a specific plan
focused on the following four action areas:
▶strategic selection of plant locations to limit the probability of
the risk occurring;
▶prevention, by stepping up training for plant staff,
conducting technical inspections and strengthening fire safety
measures;
▶protection, by keeping buffer inventory of replacement parts
for critical equipment, performing regular maintenance,
multi‑sourcing
finished-product
inputs,
developing
multi‑sourcing among component suppliers, and striking the
right balance between insourcing and outsourcing of
component production;
▶management, notably by deploying a Business Continuity
Management process for all production activities. This process
makes it possible to respond swiftly in the event of a crisis,
by quickly transferring a production line to another plant and
identifying critical products so that strategic decisions can be
made ahead of time.
This risk management system proved to be particularly useful
and effective during the Covid-19 crisis (see the introductory
section of chapter 5, which describes the impact of the health
crisis on the Group's operations).
Risk 3 – Supply chain
Risk factors
Every year, Michelin purchases nearly €14 billion worth of goods
and services from around 50,000 different suppliers. These
purchases may be broken down into three families:
▶raw materials, divided into eight categories: natural rubber,
monomers, elastomers, fillers, chemicals, oils and resins,
textile reinforcements and metal reinforcements;
▶industrial inputs, including engineering services for building
new plants and improving existing facilities;
▶services, primarily logistic, IT, advertising, consulting and
travel and transportation for our employees.
The Group is therefore exposed to a certain number of risk
factors related to the supply chain:
▶supply chain disruption, due to the fact that some raw
materials cannot be sourced close to the plants;
▶any imbalance between supply and demand can lead to
tighter markets, which in turn can create supply difficulties
for rare, high-demand or single-source raw materials;
▶the scarcity of certain components can make the Group
dependent on its suppliers. For example, consolidation in
commodity markets can exert pressure on the supply chain;
▶certain regulatory constraints – such as the tightening of
environmental regulations in Europe, the United States and a
number of emerging markets – can impact the operations of
some suppliers.
The Group is also exposed to the risk that one or more suppliers
may cease trading, which can happen for a wide variety of
reasons including financial difficulties, a deliberate decision to
withdraw from an insufficiently profitable business, termination
of production following acquisition by a competitor, or the
closure of a production facility as a result of a fire, explosion,
natural disaster, pandemic (such as the one related to Covid-19)
or geopolitical event.
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Risk factors specific to Michelin, description and related management systems
Specific nature of the risk
A tire includes more than a hundred different products, some of
which are highly specific chemicals, and their continuous
availability is critical to production. The risk of supplies being
interrupted is particularly acute for Michelin. This is because its
products are highly technical and customers expect them to
perform to consistently high standards throughout their period
of use, leading the Group to introduce procedures banning
supplier substitutions unless the impact on performance has
been tested.
Governance and risk management response
A governance body has been set up for this risk factor – the
Materials Steering Committee headed by the Executive Vice
President, Manufacturing, and the Executive Vice President,
Purchasing, who are both members of the Group Management
Committee. Meetings of the Materials Steering Committee are
also attended by the Executive Vice Presidents responsible for
the purchasing categories concerned.
To more effectively anticipate and prevent supply continuity
risks, procedures have been introduced to manage purchasing
across the Group at the most pertinent level, i.e., local, regional
or global. The procedures are also designed to anticipate and
manage risks more effectively. More generally, a variety of risk
management measures have been implemented across the
organization to deal with every type of supply chain risk. These
include training employees in this issue to improve risk planning,
conducting audits of critical suppliers’ business continuity plans,
signing multi-year contracts with the main suppliers, looking
for new suppliers, maintaining strategic buffer inventory for
critical products and seeking substitute products when certain
commodities become scarce.
This risk management system proved particularly useful and
effective during the Covid-19 crisis, which exacerbated this risk
(see the introductory section of chapter 5, which describes the
impact of the health crisis on the Group's operations).
Risk 4 – Physical impacts of climate change
Risk factors
As a global industrial player, the Michelin Group has significant interactions with the natural environment throughout the life cycle of
its products and services. These interactions expose it to physical risks related to climate change.
Specific nature of the risk
Michelin's global reach, in terms of both its industrial facilities and
its supply chain, exposes the Group to climate impacts that vary
according to geographic location. In light of the diverse range of
suppliers and the many interdependent factors necessary for the
manufacture of its products (infrastructure, energy, availability of
labor, transportation systems, etc.) the impacts of climate change
can be qualified as systemic. The systemic risk takes into account
external events that are not considered in relation to the supply
chain or manufacturing business interruption risks already
addressed above (see risks 2 and 3 above). It could occur, for
example, if staff were to be prevented from reaching their
workplaces due to extreme climate events (e.g., floods or heat
waves) or if important infrastructure were to be knocked out
(roads, ports, electricity, gas and co-generation networks). In
addition, the Group is the world's largest purchaser of natural
rubber and aims to increase the proportion of sustainable
materials in its tires. This increases the need for biosourced
products that are sensitive to the chronic effects of climate
change (drought, changes in growing conditions).
Extreme climate events could severely disrupt supplies,
production operations or demand, with major impacts in terms
of quantities, diversity of sources and duration. Chronic climate
change could have long-term effects on the availability or
quality of biosourced resources.
Governance and risk management response
A governance structure is in place to address this risk factor –
the Environmental Governance body presented in risk 1 above.
An initial pilot study to assess the vulnerability of certain Group
businesses was carried out in 2021 with the help of external
consultants. Its results will serve as a basis for defining a
vulnerability analysis methodology and applying it to all of the
Group's businesses in the coming years.
Risks affecting natural rubber supplies are already covered by a
plan to improve the supply chain’s resilience. The main levers of
this plan include: diversification of supply sources, varietal
selection and improvement programs, promotion of the most
resilient agricultural practices, monitoring changes in climate and
the public health situation in the production area, and using the
most efficient materials in our products and services (see section
4.1.1.2 c) A dedicated approach for natural rubber).
More generally, to manage risks related to the physical impacts
of climate change:
▶targets and plans exist to help mitigate climate change (e.g.,
net-zero emissions and tires made entirely from sustainable
materials by 2050);
▶the short-term risks of disruption to manufacturing
operations or to the supply chain are efficiently controlled. An
“Operational Continuity Plan” exists, covering all types of
disruptive events, not just those that are climate-related;
▶the Group’s crisis management capabilities reduce the
potential impact of major crises;
▶an internal audit of climate change risks carried out in 2021
identified
36
ecosystems
(suppliers,
plants,
logistics
warehouses) within a 100 ‑km radius that are particularly
critical for the Group's business. They will be the subject of
further climate risk analyses in the coming years.
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Risk factors specific to Michelin, description and related management systems
Financial risks associated with climate change and the low-
carbon strategy: The financial risk associated with the physical
risks discussed above is rated as “medium” (between €150 million
and €400 million annual net impact, see 2.1). The financial risk
associated with climate-related environmental transition risks is
rated as “high” (a conservative initial estimate puts the annual net
impact at more than €400 million, see 2.1). As transition risks are
emerging risks, they are subject to iterative assessments in terms of
climate scenarios and associated financial impacts. The reduction
of transition risks is based on the Group's low-carbon strategy,
presented in chapter 4.1.4.1.
Risk 5 – Cyber attack
Risk factors
Michelin’s business relies on state-of-the-art information
technology, systems and infrastructure (datacenters, servers and
networks). Like any organization using information technology,
the Group is exposed to the risk of cyber attacks. These now
represent a constant danger and the attacks are becoming
increasingly sophisticated. Over the past two years, the number
of attacks has increased significantly, especially ransomware
attacks. Our exposure to this risk increased during periods when
many of our employees were working from home. The
potential consequences of a cyber attack include business
interruption, threats to personal safety, theft of confidential
information, breaches of privacy and ransom demands.
Specific nature of the risk
Over the past ten years, we have extensively overhauled our
information technology and systems, building on both legacy
assets and those of the successive companies acquired. Our
broad geographic footprint and highly diverse business base,
product ranges and procedures all make for a complex
environment, with the result that our information system has
several thousand applications, a thousand or so main servers
and around 100 datacenters.
The areas of the Group exposed to the risk of cyber attacks are
expanding, due in particular to recent acquisitions, the
emerging use of connected technologies and objects by
operators in our plants and bring-your-own-device practices in
some countries.
Governance and risk management response
The Data, Digital, IT Governance body is responsible for dealing
with this risk factor. The body is chaired by the Group's General
Manager and co-chaired by the Executive Vice President,
Manufacturing, who is a member of the Group Executive
Committee. It is led by the Executive Vice President, Information
Systems
Security
and
includes
representatives
of
the
Information Technology, Security and Safety, Internal Audit and
Risk, and Manufacturing departments.
To deal with the above-described information technology and
systems risks, multi-year action plans have been prepared and
include the following measures: (i) closely tracking contractual
terms and conditions to be able to respond in the event of service
provider default, (ii) reinforcing the physical and logical security
of IT systems, (iii) systematically reviewing IT continuity needs and
putting in place IT recovery plans, and (iv) replacing obsolete
components with new ones or a solution combining several
applications. The internal auditors and internal controllers
regularly monitor and assess these measures to obtain assurance
that they are relevant, effective and correctly applied.
Intrusion tests are carried out very regularly to validate the
reliability of the Group’s detection and protection system. In
addition, the Group’s Computer Emergency Response Team
(CERT) stands ready to intervene at all times across all
continents.
Lastly,
awareness
campaigns
are
regularly
conducted for all Group employees and, in a more targeted
manner, for the categories of employees the most exposed to
this risk. Cybersecurity is becoming a real business issue,
including for our customers and partners. We have therefore
initiated the process to obtain TISAX certification, the gold
standard for cybersecurity in the automotive industry, for some
of our plants and product development units. TISAX certification
is the final step in the process to ensure the highest level of
data protection throughout the value chain.
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Risk factors specific to Michelin, description and related management systems
Risk 6 – M&A and major projects
Risk factors
The main risks inherent in our mergers and acquisitions (M&A)
activities and major projects in the core market, in technological
innovation projects for new components or new products and
services, and in major transformation or digitalization projects in
the areas of supply chain, customer relationship management
or people management, are:
▶risk of overestimating the value of the target;
▶pre-existing risks at the target company, such as ethical, tax,
environmental, legal, product liability and cyber risks;
▶risk that expected synergies may not be achieved;
▶risk of losing key employees;
▶risk of strategic misalignment with a joint venture partner;
▶risk of a project not being aligned with the Group's strategy,
or failure of a project to achieve its objectives on time and on
budget.
Specific nature of the risk
The Group has defined a strategic model organized around
three growth drivers “in the tire, around the tire, beyond the
tire”. These drivers are supported by Michelin's core business
and expertise in high-tech materials, in accelerating digitization
and our commitment to enhancing the customer experience.
Acquisitions help us achieve our strategic goals and we have
stepped up our efforts in this area since 2014, by acquiring
Sascar, Camso, Fenner, Multistrada and Masternaut, and
creating various joint ventures including TBC with Sumitomo
Corporation, Symbio with Faurecia, Add-Up with Fives and,
more recently, Solesis with Altaris. Our ability to meet our goals
depends on the success of these acquisitions and alliances. For
both M&A and major projects, it is essential that Group
resources are allocated to the right projects and the project
portfolio is managed efficiently.
Governance and risk management response
A governance system has been set up to manage the portfolio
of M&A projects, supported by a specific governance system for
each project, under the responsibility of the Managers,
supported by the Mergers & Acquisitions department. The M&A
process was significantly overhauled in 2021, based on the
findings of an internal audit and external benchmarks.
For each project, the risk of overestimating the value of the
target is attenuated by using a variety of valuation methods
(EBITDA multiples, discounted cash flow, ratios on similar deals)
and comparing their results, sometimes with the support of an
advisory bank. M&A projects in excess of €50 million are
submitted to the Supervisory Board for comment.
Each acquisition is subject to thorough due diligence with the
support of internal and/or external specialists. In this way, all of
the risks in the acquired company are identified so that the
Group can protect itself either by (i) deducting the financial cost
of the risks from the purchase price or (ii) covering the risks by
escrowing a portion of the proceeds corresponding to their
cost. Post-acquisition audits are performed for all material
acquisitions.
An integration plan led by an integration project manager is
designed and implemented under the supervision of a member
of the Group Executive Committee. The results are reported
using an appropriate procedure and are communicated to the
Supervisory Board twice a year.
To effectively manage the risks that may arise on major projects,
the Group has deployed a process to allocate the resources
required for their successful completion and a governance
system for the entire project portfolio, under the responsibility
of the Strategy Department. In addition, to ensure consistent
implementation,
standard
project
management
methods
defined at Group-level are used across the organization. Each
major project has its own governance framework, with
responsibilities allotted among the project owner, the project
manager and the project contributors. Coaches are also
assigned to major projects to support project managers in
leading the project and managing change. Non-M&A projects in
excess of €100 million are submitted to the Supervisory Board
for comment.
In addition, major projects are audited by the internal auditors.
Risk 7 – Michelin image and brand
Risk factors
Michelin has an excellent brand image, both in terms of its
products and services and as a company. However, like any
other well-known multinational corporation, it is exposed to
events and circumstances that could damage its brands and/or
reputation. In addition, the rapidly growing influence of social
media means that we are exposed to online reputational risk, at
a time when information is being openly and rapidly circulated,
in particular on the Internet.
Specific nature of the risk
In light of the MICHELIN brand’s image and reputation (the MICHELIN brand power score is nearly two times higher than that of its
nearest competitor), an attack on Michelin’s image and brand would have a serious adverse effect on the Group. It is vital to safeguard
our reputational equity, which is one of our major assets.
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Risk factors specific to Michelin, description and related management systems
Governance and risk management response
A governance structure is in place for this risk factor – the Brand
Council chaired by the Executive Vice President, Engagement and
Brands, who is a member of the Group Executive Committee.
The Engagement and Brands Department leads a full array of
measures to ensure that our brands and reputation are
protected. Among these efficient measures is a systematic,
ongoing intelligence process that analyzes online and other
media, to identify any initiatives or comments that could spiral
out of control and lastingly damage our image. In addition,
guidelines exist for social network users covering most aspects
(Employees, Influencers, Moderating, etc.). In 2021, a specific
training course on Social Selling was deployed.
The crisis management system also helps control reputational risk.
Risk 8 – Risks related to pension and other defined benefit plans
Risk factors
In certain Regions, employee benefit obligations include pension
and other defined benefit plans that represent a long-term
benefit payment obligation for the Group. These plans may be
partly or fully funded. The main factors that affect the amount
of the employee benefit obligation are returns on plan assets,
actuarial assumptions (including the discount rate), experience
adjustments, changes in legislation and plan amendments. An
adverse change in one or more of these factors could result in
an increase in the amount of the net obligation and
consequently
require
the
Group
to
make
additional
contributions to make up for the funding shortfall.
Specific nature of the risk
The Group’s pension and other defined benefit plans mainly concern North America and the United Kingdom. The total obligation for
pensions and other employee benefits amounted to €10.5 billion at December 31, 2021. At the same date, the related plan assets
totaled €7.5 billion.
Governance and risk management response
Governance for this risk factor is provided by the Global
Employee Benefit Board (GEBB), which is co-chaired by the
Deputy Chief Financial Officer and the Group Human Resources
Director, who are both members of the Group Management
Committee.
For details of provisions for employee benefit obligations and
the measurement and treatment of defined benefit plan risks,
see note 27 to the consolidated financial statements.
Risk 9 – Property security
Risk factors
The main property security risk is fire, both in production processes and in storage areas for raw materials and finished products.
However, very few significant fire incidents have been reported Group-wide.
Specific nature of the risk
Given the nature of our finished products, semi-finished products and raw materials, a fire or explosion could have health and safety
consequences and environmental impacts, as well as leading to the destruction of assets.
In line with our Group’s values, priority is given to protecting people (employees, service providers, local communities, etc.) and the
environment around our sites.
Governance and risk management response
A governance structure is in place for this risk factor – the Asset
Security Governance body. It is co-chaired by the Executive Vice
President, Manufacturing and the Executive Vice President &
Group Human Resources Director, who are both members of
the Group Executive Committee.
To manage this risk, Michelin developed the proprietary High
Protected Risk Michelin (HPRM) standard, which covers
prevention, protection, early detection and rapid response. A
corporate team of risk management experts oversees a network
of on-site correspondents to ensure that the standard is
properly applied. In addition, existing facilities are currently
being upgraded to HPRM standards. All new projects are
audited by an Environmental and Prevention expert for
HPRM‑compliance using a proprietary application. Feedback and
best practices are systematically shared across the organization
and formally documented. Thanks to effective application of
this standard, in the past decade no fire or other industrial
accident at any of Michelin’s sites worldwide has caused serious
damage to Group or third-party assets or the environment.
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Risk factors specific to Michelin, description and related management systems
Risk 10 – Loss of knowledge and know-how
Risk factors
One of Michelin’s competitive advantages stems from the ability
to sharply differentiate its products and services thanks to
continuous, sustained innovation. Consequently, protecting its
knowledge, expertise and any and all trade secrets is a key
factor in maintaining its leadership and driving its future
growth. This culture of protecting knowledge and know-how is
part of the Group’s DNA.
Specific nature of the risk
We invest heavily in innovation and protecting our knowledge
and expertise is essential in order to maintain the Group’s
technological leadership.
Sensitive information mainly concerns products, services,
materials, procedures, equipment, techniques and methods, as
well as design, testing and manufacturing data. However,
information about production, research, marketing and other
business strategies, as well as consumer and supplier databases,
also risks being lost or stolen.
The Group is exposed to risks in its cooperation with external
stakeholders,
including
consumers,
suppliers,
partners,
subcontractors and academic institutions.
Likewise, it is dependent on the information systems used to
store and share sensitive information. In addition, the Group has
to take into account the growing use of social networks and
the resulting risk of information leakage.
Governance and risk management response
A governance body is in place for this risk factor, chaired by the
Executive Vice President, Research and Development, and
co‑chaired by the Executive Vice President, Manufacturing –
both members of the Group Executive Committee – and
including representatives of the Information Technology and
Data, Security and Safety, Legal, Audit and Risk Management
departments.
To prevent the risk of Michelin know-how and/or expertise
being disclosed or lost:
▶data are classified and protected according to their level of
sensitivity. For example, Cloud Computing solutions are not
used for certain categories of data and encryption levels are
raised for certain other categories;
▶intellectual property is protected through our policy of
obtaining patents wherever this is possible or desirable based
on a broad vision of the secrets to be protected. Operating
markets are monitored to ensure that our intellectual
property rights are not infringed;
▶sensitive information and assets are also protected by physical
security systems;
▶experts within the Group who have the skills that are critical
for our operations are identified and afforded the recognition
needed to retain their talent.
Risk 11 – Safety risks associated with tire products
Risk factors
The tire activity is Michelin’s core business, in which it holds robust
leadership positions around the world and across every operating
sector: automotive, road transportation (bus and subway tires) and
specialty markets (two-wheel, aircraft, earthmover, agricultural,
construction and materials handling tires).
Like all tiremakers, if defects appear in our products during their
use or if they fail to comply with the applicable regulations, we
could be faced with liability claims or be required to recall the
products.
Specific nature of the risk
Michelin’s focus on customer needs and the quality of its products and services has built confidence in the MICHELIN brand and
contributed to the Group’s performance.
Although there have been no material events in recent years, should a safety failure occur, this would have a serious adverse effect on
the reputation of the MICHELIN brand.
Governance and risk management response
A governance structure is in place for this risk factor – the Product Performance Monitoring Board chaired by the Executive Vice
President, Quality, Audit and Risk Management. The Executive Vice President, Research and Development, the Executive Vice President,
Manufacturing and the Executive Vice Presidents responsible for the business lines concerned, who are all members of the Group
Executive Committee, are standing members of the Board.
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Cross-functional risk management procedures
All Group employees, at all points in the value chain, are
involved in managing these risks. As explained in the Group’s
mission statement, “Our priority, and our firm commitment, is
to offer our customers uncompromising quality”.
▶Product design and development projects are managed in
accordance with detailed project management procedures.
Products and services are described in specifications that
cover customer requirements and expressed needs, the
potential risks arising from the particular or extreme
conditions of use in a given region and all of the applicable
standards and regulations. The Research, Development,
Process Engineering and Quality functions are responsible for
performing robust simulations and tests on new products to
ensure that they comply fully with the design specifications.
▶The entire production process is subject to quality assurance
procedures designed to guarantee that the products comply
with Michelin’s exacting safety and performance standards.
▶A product/service performance monitoring process based on
the customer experience and customer satisfaction surveys
ensures that no signs of a problem go undetected, however
weak they may be.
The current processes have been certified by independent
organizations.
The Group has taken out specific insurance cover against the
risk of product recalls and liability claims. The Group’s insurance
program is described in section 2.2.4.
2.2
CROSS-FUNCTIONAL RISK MANAGEMENT PROCEDURES
Procedures are in place to manage cross-functional risks.
2.2.1
SYNCHRONIZATION BETWEEN INTERNAL AUDIT, RISK MANAGEMENT
AND INTERNAL CONTROL
Quality, Internal Audit, Risk Management and Internal Control
have been brought together within a single corporate
department, so that a complete part of the organization is
dedicated to risk management. This organization provides a
shared vision of the primary risks and challenges for the Group.
It also promotes efficient monitoring between the second
(Internal Control and Risk Management) and third (Internal
Audit) lines of defense across all time horizons and across all
Group units.
2.2.2
INTERNAL CONTROL PROCESS
Objectives of the internal control process
The Group’s internal control process has the following core
objectives:
▶application of the instructions and guidelines issued by the
Managers and the Group Executive Committee;
▶compliance with laws and regulations;
▶the proper functioning of internal processes, particularly
those relating to the protection of corporate assets;
▶the reliability of financial information.
It comprises a set of resources, procedures, practices and
actions aligned with the characteristics of the Group’s
businesses, which:
▶contribute to the control over its activities, the efficiency of its
operations and the efficient utilization of its resources;
▶enable the Group to assess all of its material operational,
financial and legal risks appropriately.
In general, the risk management process has been designed to
encourage informed, shared risk-taking in accordance with the
Group’s values of responsibility, integrity and ethical behavior.
Scope of the internal control process
The Group ensures that the internal control process is
implemented in every unit:
▶the system thereby covers substantially all of the Group’s
operations, including all Regions and business units
(manufacturing, sales and dealership networks). Following
each acquisition, an internal control process aligned with the
Company’s business and risks is deployed in each of the
acquired entities;
▶the process extends beyond accounting and financial controls
to cover all material risks. The areas covered include legal
compliance, product quality, procurement, IS/IT, health and
safety,
the
environment,
social
management
and
communications. Key controls are performed in the areas
identified in the Group's Code of Ethics as requiring specific
attention, in particular to prevent and detect risks of bribery
and corruption or influence peddling;
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Cross-functional risk management procedures
▶in order to manage this system in a cross-functional and
consistent manner across all Group activities, the Internal
Control Department has been integrated into the Corporate
Internal Audit, Risk Management, Internal Control and
Quality Department. An Internal Control network is organized
and led through the Quality Network, with training and
collaborative spaces made available to all the employees who
participate in the network.
A detailed description of the internal control process covering
the preparation of accounting and financial information is
provided in section 2.3.
2.2.3
CRISIS MANAGEMENT PROCESSES
Another cross-functional process concerns crisis management.
Given its size, the nature of its manufacturing and commercial
activities and its environmental and social responsibility,
Michelin is exposed in the course of its operations to a risk of
crises that could affect its business and, potentially, its
reputation. To foresee, plan for and effectively respond to any
such events, a crisis management system is in place and led by
the Corporate Internal Audit, Risk Management, Internal
Control and Quality Department.
The system’s underlying processes are regularly updated to
ensure maximum effectiveness and responsiveness. It is deployed
among the various management teams through large‑scale
simulation exercises and appropriate training seminars.
This risk management process was put to the test during the
Covid-19 pandemic, at all levels of the organization. It was
shown to be both effective and relevant, even during a crisis of
this magnitude. As part of a continuous improvement process, a
system was set up at Group level to formally report feedback.
2.2.4
INSURANCE COVERAGE
Some risks can be transferred to insurance companies in line
with the Group’s insurance strategy, with different solutions
used depending on the frequency of the risks concerned.
To cover high-frequency risks, integrated global insurance
programs have been arranged, to the extent possible, in the
insurance and reinsurance markets. These mainly concern
property & casualty/business interruption, liability, accidental
pollution and cyber risk insurance:
▶the property & casualty/business interruption insurance
program provides combined total coverage of €1.25 billion,
except for machinery insurance (€750 million) and natural
disaster insurance, for which the coverage limit may be lower
depending on the country;
▶the liability insurance program comprises three key coverage
areas:
• product liability for the manufacturing companies,
• service liability for the marketing and services companies,
• general business liability, offering direct coverage in
European Union countries and countries where the Group
operates manufacturing facilities, and umbrella coverage in
excess of local cover in all other countries;
▶a “pollution“ program provides environmental liability
coverage;
▶a “cyber risk” insurance program covers damages (including
additional operating costs) as well as damages to third
parties, with a combined limit of €100 million per year.
These programs cover all Group subsidiaries. The 50/50 joint
ventures are covered by separate insurance programs that are
independent from those of the two shareholders. For
companies in which the Group has a non-controlling interest,
the majority shareholder is responsible for purchasing
appropriate
insurance
cover.
For
joint
ventures
and
non‑controlling interests, the safeguard clauses included in the
Group’s insurance programs protect its interests up to the
amount of its investment.
To control insurance policy management and reduce costs by
pooling medium-frequency risks, the Group has set up a captive
insurance and reinsurance company to provide coverage in the
following areas, with limits commensurate with its resources:
▶property & casualty risks, with a €60 million limit per claim;
▶product liability in the United States and Canada, with limits of
$20 million per claim and $40 million per year;
▶product recall expenses, with limits of USD 25 million per
claim and USD 50 million per year;
▶cyber security risks, with a €5 million limit per claim and per year.
Total premiums paid to external insurance companies in 2021
amounted to €37.2 million, up €12.1 million from 2020. The
additional cost was due to the end of long-term insurance
policies, that had partially protected the Group from tougher
market conditions in a context marked by a very significant
increase of premiums on certain lines (property & casualty/
business interruption, corporate officers' liability, social, cyber)
and a reduction of capacities offered by insurers.
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Internal control process relating to the preparation of accounting and financial information
2.3
INTERNAL CONTROL PROCESS RELATING TO THE PREPARATION
OF ACCOUNTING AND FINANCIAL INFORMATION
Among the various objectives of the risk management and internal control system, this section focuses on the control activities related
to the process of preparing accounting and financial information.
PREPARATION AND PROCESSING OF ACCOUNTING AND FINANCIAL INFORMATION
The Managers are responsible for disclosing reliable financial
and accounting information. The Accounting, Consolidation,
Management
Control
and
Financial
Communication
Departments all contribute to the process of producing this
information.
The Group’s accounting teams generally report to the heads of
the Regions and Shared Service Centers, while its budget
controllers analyze the Group’s performance based on its three
reporting segments.
Consolidated financial reports are prepared monthly according
to the same overall process as for the annual financial
statements. The internal control procedures required to produce
reliable accounting information are defined at Group level and
implemented locally. These include a physical inventory of both
fixed assets and inventories, segregation of tasks and
reconciliation with independent sources of information.
A dedicated team is in charge of aligning accounting policies
throughout the Group, monitoring changes in applicable
financial reporting standards, updating accounting manuals for
all the subsidiaries and dealing with any issues they may raise.
Statutory and management accounting data are reported
simultaneously by the subsidiaries, and programmed controls
verify that the main indicators – such as revenue and operating
income – are consistent between the two sets of data. Statutory
accounting data received from the subsidiaries are checked for
consistency and then consolidated to produce the Group’s
financial statements.
Monthly changes in consolidated data are systematically
analyzed. Differences between forecast and actual management
accounting data are reviewed in detail every month by the
Group Executive Committee and the Business Lines.
At every interim and annual closing, the Regional Directors certify
in writing that, to the best of their knowledge, the separate
accounts submitted by the companies within their Region provide
a true and fair view of the results of their operations. This
statement specifically covers a number of issues that could
significantly affect the financial statements in the event of non-
compliance (e.g., applicable laws and regulations and contractual
provisions) or occurrence (e.g., disputes or fraud).
The Investor Relations Department, which forms an integral part
of the Corporate Finance Department, is responsible for
preparing and disclosing all of the Group’s financial information
to the investing community. Financial information is disclosed
in three main forms:
▶the Universal Registration Document;
▶financial press releases;
▶presentations to analysts and investors.
The design and preparation of the Universal Registration
Document
are
coordinated
by
the
Investor
Relations
Department and approved by the Managers, with significant
input
from
the
Group
Legal
Affairs
and
Sustainable
Development and Mobility Departments. The document
contains extensive, high-quality information drawn from
contributions by a range of specialists in the Group’s main fields
of operations.
Financial press releases are written by the Head of Investor
Relations; those that announce earnings are also reviewed by
the Audit Committee.
Presentations to analysts and investors are prepared by the
Investor Relations Department under the supervision of the
Corporate Finance Department.
MANAGEMENT OF ACCOUNTING AND FINANCE INTERNAL CONTROL
Group managers can detect any weaknesses in their internal
control processes through the systems used to manage their
operations. In addition, internal reviews are performed in the
units by their specialized experts. Information generated by the
management systems is analyzed by the budget control teams
and reported to the managers concerned for inclusion in the
scorecards used to manage their operations. A management
scorecard is also prepared for the Group Executive Committee,
enabling it to track the Group’s business month by month. On a
quarterly basis, similar reports are presented in an appropriate
format to the Supervisory Board. The Corporate Finance
Department is responsible for ensuring the relevance and
consistency of this management data.
The Corporate Digital Transformation and Information Systems
Department is in charge of overseeing IT policies and the
corresponding resources. The internal control procedures
contained in the Group’s Quality System include rules relating to
data access and protection, the development of applications, and
structuring and segregating development, process engineering
and production tasks.
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RISK MANAGEMENT 02
Internal control process relating to the preparation of accounting and financial information
RECURRING ASSESSMENTS OF THE ACCOUNTING AND FINANCIAL INFORMATION
PREPARATION PROCESS
Self-assessments
To ensure that the work carried out to comply with France’s
Financial Security Act delivers lasting improvements, the
Accounting and Financial Internal Control Department reports
to the Corporate Finance Department. It is responsible for
managing internal control processes and for overseeing work on
financial internal control, with a view to providing reasonable
assurance that the Group’s financial information is reliable and
that its assets are safeguarded.
It defines internal control standards, coordinates and sets up
internal
control
information
systems
and
day-to-day
management procedures in coordination with the Corporate
Internal Audit, Risk Management, Internal Control and Quality
Department.
It also assists the network of internal controllers in the Regions
and main areas of operation in implementing these systems and
procedures.
Its role includes:
▶standardizing internal control best practices and training
regional correspondents in their use;
▶regularly updating key risks by process;
▶defining key control issues in conjunction with the owners of
the processes concerned;
▶drafting control guidelines and manuals and preparing
internal control tests;
▶mapping the issues for which controls are applied in the
different Group organizations;
▶overseeing the regional managers and managers of
operational areas concerned;
▶structuring the internal control network;
▶interfacing with the other stakeholders in the relevant
processes, such as process owners, risk managers and internal
and external auditors;
▶advising on the implementation of transformation projects
and programs.
In 2017, the worldwide application for monitoring the entire
financial internal control process in place since 2009 was
upgraded based on a standard commercial software solution.
The new application continues to leverage the guidelines and
principles defined in previous phases undertaken since 2004.
The model will continue to be extended to cover additional
processes and legal entities.
Post-acquisition audits are performed for newly acquired companies
and sub-groups that are fully consolidated and an internal control
process deployment plan is prepared based on their respective
characteristics (manufacturing, sales or financial services
business, information system, geographic location, organization
and governance, materiality in Michelin’s consolidated financial
statements, control environment and culture).
An initial internal control self-assessment exercise is carried out
with the new teams, in order to meet their needs and help
them understand what the Group expects from their internal
control process. Action plans are drawn up with the teams
concerned in order to help them take ownership of the
approach and related tools.
The self-assessment system potentially encompasses the following
16 processes:
▶purchasing, from ordering to supplier payment;
▶sales, from customer order to payment;
▶credit management;
▶management of inventories (raw materials, semi-finished and
finished products, and spare parts);
▶inventory valuations;
▶financing and financial risk management;
▶management of intra-Group transactions (transfer pricing and
elimination of intra-Group balances);
▶information
systems
management
and
administration
(general IT testing);
▶accounts closing;
▶project and fixed asset management;
▶taxes;
▶people management (compensation, benefits and travel
expenses);
▶consolidation;
▶investor relations;
▶mergers/acquisitions/divestments;
▶management of customs affairs, including the Group’s
customs management processes, import/export management,
supervising freight forwarders, organizing delegations of
authority, customs documentation, etc.
At every company covered by the system, the key internal
control activities for each process are self-assessed and
improved by the line personnel concerned every year.
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RISK MANAGEMENT
02
Internal control process relating to the preparation of accounting and financial information
Internal Controller reviews
The key controls for every process are tested on every site at least once every four years and more often where necessary. The results
of tests conducted by internal controllers are shared with the external auditors of the Group’s companies, so that they can capitalize
on the findings and strengthen their own external audit procedures.
Action plans
In each company, action plans are prepared to address the identified
areas for improvement and are implemented by line personnel.
More generally, this approach is integrated into the continuous
improvement process, which is also supported by the findings of
the external and internal auditors. In addition, this self-assessment
and testing system is applied to the five core components of the
internal control process, as defined by the Committee of
Sponsoring Organization of the Treadway Commission (COSO):
control environment, risks assessment, control activity, information
and communication, and internal control management.
Action plans are generally scheduled for completion within two
years for 80% of compliance shortfalls, excluding information
system issues, which take longer to resolve and require more
resources. Provisional measures are taken in the interim.
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0
Corporate
governance
report
68
3
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
As the preferred
employer among interns
and work‑study trainees*,
hundreds of students join
us each year to learn about
our businesses, develop
their skills and contribute
to our mission.
* HappyIndex®Trainees 2022 France.
03
Corporate
governance report
3.1
ADMINISTRATIVE, MANAGEMENT
AND SUPERVISORY BODIES
70
3.1.1
An experienced, stable and responsible
management team
71
3.1.2
SAGES, a Non-Managing General Partner,
guaranteeing the Company’s long-term
viability
74
3.1.3
Strict separation between the Supervisory
Board (and its committees)
and Management
76
3.1.4
Interactions between the various
governance structures
95
3.1.5
Statements
96
3.2
SUPERVISORY BOARD
PRACTICES – ACTIVITIES IN 2021
96
3.3
MANAGEMENT AND SUPERVISORY
BOARD COMPENSATION POLICIES
FOR 2022
107
3.4
INFORMATION ABOUT THE
COMPONENTS OF COMPENSATION
PAID OR AWARDED TO THE
CORPORATE OFFICERS
115
3.4.1
Compensation of the members
of the Supervisory Board
115
3.4.2
Compensation of Michel Rollier, Chairman
of the Supervisory Board until May 21, 2021
116
3.4.3
Compensation of Barbara Dalibard,
Chair of the Supervisory Board
since May 21, 2021
116
3.4.4
Compensation package of Florent Menegaux,
Managing Chairman and General Partner
117
3.4.5
Compensation package of Yves Chapot,
General Manager
121
3.4.6
Compensation ratios of the Managers
and the Chair(man) of the Supervisory Board
125
3.4.7
Proposed resolution on the disclosures
mentioned in Article L. 22‑10-9-I
of the French Commercial Code
126
3.5
INDIVIDUAL COMPENSATION
PAID OR AWARDED TO THE
MANAGERS AND THE CHAIR(MAN)
OF THE SUPERVISORY BOARD
FOR 2021
127
3.6
OTHER INFORMATION ABOUT
COMPENSATION OF THE
EXECUTIVE OFFICERS
133
3.7
TOTAL COMPENSATION AWARDED
TO THE GROUP EXECUTIVE
COMMITTEE
141
3.8
TRADING IN MICHELIN SHARES
BY THE CORPORATE OFFICERS
AND THEIR CLOSE RELATIVES
IN 2021
141
3.9
PROCEDURE FOR ASSESSING
AGREEMENTS ENTERED INTO
IN THE NORMAL COURSE
OF BUSINESS
142
3.10
ARTICLES OF INCORPORATION,
BYLAWS AND SHAREHOLDER
PARTICIPATION AT GENERAL
MEETINGS
142
3.11
OWNERSHIP STRUCTURE
AND VOTING RIGHTS
144
3.12
FINANCIAL AUTHORIZATIONS
145
3.13
CHANGE OF CONTROL
147
3.14
STATUTORY AUDITORS’ REPORT,
PREPARED IN ACCORDANCE
WITH ARTICLE L. 22-10-78
OF THE FRENCH COMMERCIAL
CODE ON THE CORPORATE
GOVERNANCE REPORT
147
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03
Administrative, management and supervisory bodies
This report was prepared by the Supervisory Board on February 11, 2022, in application of Article L. 226-10-1 of the French
Commercial Code (Code de commerce).
3.1
ADMINISTRATIVE, MANAGEMENT AND SUPERVISORY BODIES
Tire manufacturing is a capital-intensive industry in which the
pace of technological innovation is relatively slow. It is therefore
essential to be able to devise long-term plans and follow them
through.
Throughout its history, Compagnie Générale des Établissements
Michelin (CGEM), the Group’s parent company, has been
organized as a partnership limited by shares (S.C.A.).
This partnership model offers three main advantages:
▶it aligns Group management decisions with shareholder
interests;
▶it guarantees clear segregation of management and
supervisory powers;
▶it fosters direct ties with each shareholder, as all shares must
be registered.
There are two partner categories.
First are the limited partners or shareholders, who provide
capital, elect the members of the Supervisory Board and the
Managers 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.
Second are the General Partners, among which Société
Auxiliaire de Gestion (SAGES) is a Non-Managing General
Partner of CGEM and, as such, ensures the sustainability of the
Company’s management. General Partners have unlimited
personal liability for the partnership's debts, to the full extent of
their assets. They can be relieved of this liability only by decision
of the shareholders in an 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, Michelin has had two General Partners:
Florent Menegaux, Managing Chairman and Managing General
Partner,
and
Société
Auxiliaire
de
Gestion
(SAGES),
Non‑Managing General Partner.
AN AGILE AND ROBUST GOVERNANCE STRUCTURE
Organized as a partnership
limited by shares
Compagnie Générale des Établissements Michelin (“Michelin”) has been organized
since its foundation as a partnership limited by shares (société en commandite
par actions – S.C.A.), a flexible legal framework.
With customized characteristics
Over the years, Michelin has crafted through this framework a unique and balanced
governance structure, that is a key driver of its sustainable long-term success,
robust corporate culture and shared values.
Continuously enhanced
Michelin constantly reviews and improves its governance and implements safeguards
to provide all the necessary controls and oversight to ensure shareholder protection
and convergence of interests between the different stakeholders.
Serving the Company
and its shareholders
This corporate structure provides stability and helps to protect the Company
against short-term pressure that could be detrimental to shareholder value.
The success Michelin has achieved since its creation is the best testament that its governance
has served the Company and its shareholders in an efficient manner.
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Administrative, management and supervisory bodies
THE PILLARS OF MICHELIN’S GOVERNANCE
3.1.1
AN EXPERIENCED, STABLE AND RESPONSIBLE MANAGEMENT TEAM
3.1.1.1
Members
Michelin is led by two Managers:
▶Florent Menegaux, General Partner elected by the Extraordinary Shareholders Meeting of May 18, 2018, and Managing Chairman;
▶Yves Chapot, General Manager elected May 18, 2018.
In accordance with the Company's Bylaws, Florent Menegaux's
term of office as Managing General Partner and Yves Chapot's
term of office as General Manager were renewed by a decision
of the Company's Non-Managing General Partner, Société
Auxiliaire de Gestion (SAGES), approved unanimously by the
members of Michelin's Supervisory Board at its meeting of
July 23, 2021, based on the favorable opinion of its
Compensation and Appointments Committee.
Pursuant to this decision, the terms of office of Florent Menegaux
and Yves Chapot will be renewed for a period of four years
beginning at the close of the next Ordinary Shareholders
Meeting on May 13, 2022, and ending at the close of the
Ordinary Shareholders Meeting to be held in the first half
of 2026 to approve the 2025 financial statements.
This decision was announced in a press release published on
October 5, 2021.
Managing
Chairman
and General
Partner
Florent Menegaux
Supervisory
Board
Chair:
Barbara Dalibard
Statutory
Auditors
Deloitte & PwC
General Manager
Yves Chapot
Strict segregation between management and the Supervisory Board
General Partners
With unlimited joint and personal liability
for the Company’s debts
Shareholders
(Limited Partners)
Liability proportionate
to their investment
Share ownership
and voting rights are detailed
in section 3.11
Non-Managing
General Partner
(SAGES)
Vincent Montagne (Chairman)
Ensures that the Company
is led by skilled
and efficient Managers
embodying Michelin’s values
MICHELIN OPERATIONS
Managers administer and manage the Company
Collaborate on Manager succession
planning and compensation;
make recommendations
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Administrative, management and supervisory bodies
FLORENT
MENEGAUX
Managing General Partner
Biographical details –
Professional experience
After graduating with a degree in finance, management and economics, Florent Menegaux joined Price
Waterhouse in 1986 as a consultant. He was soon appointed manager, specializing in interest rate risk control
and management for banks.
In 1991, Exel Logistics France, a logistics and transport company, offered him the position of Finance Director.
Six months later, he was promoted to Chief Executive Officer. From 1995 to 1996, Florent Menegaux was Chief
Executive Officer of the General Cargo Transport division for the Norbert Dentressangle group.
In 1997, Florent Menegaux joined Michelin as Commercial Director for Truck tires in the United Kingdom
and the Republic of Ireland.
In 2000, Michelin appointed him Sales Director for Truck tires Original Equipment and Replacement markets
for North America. In 2003, he became head of Truck tires for South America.
In 2005, he was appointed head of the Africa – Middle East Region.
In January 2006, Mr. Menegaux became responsible for the Group’s Passenger car and Light truck tire
Replacement Business Unit for Europe, before being appointed to the Group Executive Committee as Executive
Vice President, Passenger car and Light truck Product Line in 2008. He also oversees Michelin's Motorsports
activities and Materials business.
In December 2014, he was appointed Chief Operating Officer and then Senior Executive Vice President
of the Michelin Group in 2017.
In January 2018, he also assumed responsibility for overseeing the Group’s Business Departments,
andthe Manufacturing, Supply Chain and Customer Experience Operational Departments.
Florent Menegaux was appointed General Partner on May 18, 2018; he became Managing Chairman
of Compagnie Générale des Établissements Michelin on May 17, 2019.
Nationality:
French
Born in 1962
_________
Business address:
23, place des
Carmes-Déchaux
63000 Clermont-Ferrand
France
_________
First elected:
May 18, 2018
_________
Current term expires:
2022 (Annual
Shareholders Meeting
called to approve the
2021 financial
statements)
Number of
shares held at
December 31, 2021:
32,525(1)
Directorships and
other positions held
at December 31, 2021
▶Manager of Manufacture Française des Pneumatiques
Michelin
▶Managing General Partner of Compagnie Générale
des Établissements Michelin
▶Managing Chairman of Compagnie Générale des
Établissements Michelin
OTHER DIRECTORSHIPS
AND POSITIONS HELD
IN THE LAST FIVE YEARS
2017
None
2018-2021
▶Director of Michelin Lifestyle Limited
(until May 2018)
▶Managing Partner of Compagnie
Financière Michelin SCmA (CFM)
(until October 2020)
▶Manager of Manufacture Française
des Pneumatiques Michelin
▶Managing General Partner of Compagnie
Générale des Établissements Michelin
▶Managing Chairman of Compagnie
Générale des Établissements Michelin
(1) The Company’s Bylaws stipulate that the Managing General Partner must hold at least 5,000 shares.
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YVES
CHAPOT
General Manager
Biographical details –
Professional experience
Yves Chapot holds a degree as a certified public accountant.
After an initial work experience at the Arthur Andersen consulting and audit firm, Yves Chapot joined the Michelin
Group in 1992, assuming various management responsibilities within the internal audit team.
In 1997, he was appointed Chief Executive Officer for Taurus in Hungary. In 1999, he became Chief Financial
Officer for Europe.
From 2005 to 2012, he was responsible for Michelin China. From 2007 to 2009, he was also in charge
of the Passenger car and Light truck tire business for Asia.
In 2012, he was named head of Euromaster, before being appointed to the Group Executive Committee
as Executive Vice President, Distribution in December 2014.
In March 2017, he was appointed Executive Vice President for the Passenger car and Light truck Product Line.
In January 2018, Mr. Chapot became Executive Vice President, Automotive Business Lines, with oversight
responsibility for the Automotive B2C Global Brands, Automotive B2C Regional Brands, Automotive Original
Equipment Business Lines, and the following three regions: Africa, India & Middle East, East Asia & Australia,
and China.
Mr. Chapot was appointed General Manager of Compagnie Générale des Établissements Michelin on May 18, 2018.
Nationality:
French
Born in 1962
_________
Business address:
23, place des
Carmes-Déchaux
63000 Clermont-Ferrand
France
_________
First elected:
May 18, 2018
_________
Current term expires:
2022 (Annual
Shareholders Meeting
called to approve the
2021 financial
statements)
Number of
shares held at
December 31, 2021:
15,379
Directorships and
other positions held
at December 31, 2021
▶General Manager of Compagnie Générale des
Établissements Michelin
▶Chairman of Compagnie Financière Michelin Suisse
▶Chairman of Compagnie Financière Michelin
OTHER DIRECTORSHIPS
AND POSITIONS HELD
IN THE LAST FIVE YEARS
▶Director of Adaran (until April 2017)
▶Chairman of Euromaster Services &
Management (until April 2017)
▶Director of Blackcircles.com Ltd
(until June 2017)
▶Director of Blackcircles Holdings Ltd
(until June 2017)
▶Director (until December 2020) then
Chairman of Compagnie Financière
Michelin Suisse
▶Chairman of the Board of Directors
(until April 2021) then Chairman of
Compagnie Financière Michelin
▶General Manager of Compagnie
Générale des Établissements Michelin
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Administrative, management and supervisory bodies
3.1.1.2
Role and responsibilities
The Managers are responsible for administering and managing
the Company.
Their core responsibilities are to:
▶define and implement the Group’s strategy;
▶direct the Group’s business;
▶establish internal control and risk management procedures
and oversee their implementation;
▶approve the financial statements of the Company and the
Group;
▶define financial information policies;
▶prepare the various reports to shareholders.
The Group’s operations are organized into three reporting
segments (Automotive, Road Transportation and Specialties)
dedicated to serving their global markets with products and
services offered through 19 Business Lines.
Based on the needs identified by the Regions, the Business Lines
define their strategy for designing market-leading products and
services aligned with their competitive environment.
The 10 Regions are the direct points of contact with customers.
They represent the Group in the corresponding areas and are
responsible for customer satisfaction.
Operational support is provided by the following departments:
Research & Development, Manufacturing, Supply Chain,
Customer Experience, Purchasing, Corporate & Business
Services, Strategy, Innovation & Partnerships, Engagement &
Brands, Internal Audit, Risk Management, Internal Control &
Quality, Legal, Personnel, Finance, Safety & Security, Environment
and Digital Transformation & Information Technology.
The Managers are assisted by the Group Executive Committee
presented in Chapter 1 of the 2021 Universal Registration
Document. A Group Management Committee is responsible for
ensuring that the Executive Committee’s decisions are widely
embraced across the organization (see Chapter 1).
3.1.1.3
Liability
The Managing General Partner has unlimited personal liability
for
the
debts
incurred
by
Compagnie
Générale
des
Établissements Michelin. 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 Managers are
especially vigilant in their management of corporate risks.
Consistent with this long-term commitment, the Managing
General Partner may not relinquish his or her status as General
Partner without the prior approval of shareholders given at an
Extraordinary Meeting and of the Non-Managing General
Partner. He is therefore bound to assume the long-term
consequences of the Group’s management decisions.
3.1.2
SAGES, A NON-MANAGING GENERAL PARTNER, GUARANTEEING
THE COMPANY’S LONG-TERM VIABILITY
In application of CGEM’s Bylaws, Société Auxiliaire de Gestion (SAGES) is a Non-Managing General Partner of CGEM and
consequently:
▶has unlimited liability for the Company’s debts;
▶receives a portion of the Company's net income that is equal to the amount attributable to the Managing General Partner(s) in
respect of his/her/their annual variable compensation or in any form whatsoever (as mentioned in section 3.10.5).
3.1.2.1
Membership and organization
SAGES is a French société par actions simplifiée (joint stock
company) registered with the Clermont-Ferrand Trade and
Companies Registry under No. 870 200 466.
The Chairman of SAGES, Vincent Montagne, is its only
executive director.
SAGES has three groups of shareholders – members of the
Michelin family, current and former Michelin executives and
qualified persons from outside the Group – each of which has the
same proportionate shareholding and the same number of seats
on SAGES' Board of Directors.
3.1.2.2
Biographical details of the Chairman of SAGES at December 31, 2021
The Chairman of SAGES, Vincent Montagne, is its only executive director. His profile is given below.
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VINCENT
MONTAGNE
Chairman of Société Auxiliaire de Gestion (SAGES), Non-Managing General Partner
Biographical details –
Professional experience
Vincent Montagne holds a Master's degree in both Management and International Affairs from Paris Dauphine –
PSL University. At the age of 31, he took the helm of the Media-Participations group founded by his father and
became its Chairman and Chief Executive Officer. Under his stewardship, the group has become one of France’s
top publishing houses (and the no.1 in Belgium) and Europe’s leading publisher of comic books. In December
2017, he acquired La Martinière Groupe, including its subsidiary Le Seuil, and in July 2018, La Martinière Groupe
was merged into Média-Participations. Convinced that creative content is more important than the medium on
which it is presented, he led the transformation of Média-Participations into a multimedia group that is now active
in video games, digital and audiovisual media, and a major producer of cartoons. Mr. Montagne has been
Chairman of the Syndicat National de l'Edition since June 2012 and a director of Cercle de la Librairie since 2006.
He is a descendant of Edouard Michelin, who founded the Michelin Group with his brother André, and has been
Chairman of Mage-Invest, a family holding company with 250 family shareholders, since its creation in 2009.
His term of office expired at the close of SAGES’ Ordinary Shareholders Meeting in March 2022.
He is Chairman of Société Auxiliaire de Gestion (SAGES), Non-Managing General Partner of Compagnie Générale
des Etablissements Michelin, alongside Florent Menegaux, General Partner and Managing Chairman.
Nationality:
French
Born in 1959
_________
Business address:
57, rue Gaston-Tessier 75019 Paris
France
Number of shares held at December 31, 2021
▶9 shares owned directly
▶198,300 shares owned by SAGES
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3.1.2.3
Role and responsibilities
Société Auxiliaire de Gestion (SAGES) is a Non-Managing
General Partner of CGEM and, as such, is responsible for
guaranteeing the Company’s management continuity. It has
unlimited joint and several liability alongside the Managers for
third party claims arising from the financial consequences of the
Managers’ management. The General Partners can be relieved
of this liability only by decision of the shareholders in an
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.
As SAGES is not a Manager, it is not authorized to play any part
in the Company’s management. However, if the position of
CGEM’s Manager(s) were to fall vacant, SAGES would take on
the role of the Manager(s) for an interim period and would be
responsible for calling an Extraordinary Shareholders Meeting to
elect a new Manager.
SAGES plays a key role, alongside the Supervisory Board and its
Compensation and Appointments Committee, in the Managing
Partner succession planning and compensation processes
described in section 3.1.4 below.
To enable SAGES to assume its liability as Non-Managing General
Partner of CGEM, at least 80% of its distributable earnings
(derived mainly from the share of profits paid by CGEM in
accordance with CGEM’s Bylaws) is allocated to a contingency
reserve fund set up purely for the purpose of covering any losses
that may result from its liability as CGEM’s General Partner or, on
an exceptional, interim basis, as Manager. Up to 30% of the
reserve is invested in CGEM shares.
As part of the process to continuously modernize the Group’s
governance, the following changes were decided by SAGES and
included in its Bylaws in December 2020:
▶SAGES’
main
corporate
documents
(annual
reports,
management reports, Statutory Auditor’s reports(1), and
proposed resolutions submitted to the partners, which
contain information on (i) the terms of office and proposed
elections of directors and (ii) the categories and breakdown
of assets constituting the contingency reserve referred to
above) are sent to Michelin’s Managing General Partner;
▶any proposal to pay an annual dividend to SAGES’ partners
for an amount in excess of the cap specified in the Bylaws
shall be submitted to the Managing General Partner for prior
approval;
▶the Managing General Partner (or the Chair(man) of the
Supervisory Board if there is no Managing General Partner)
shall be consulted prior to approving any new partner of
SAGES and his or her designation as a director of the
Company;
▶any proposal to amend SAGES’ Bylaws to change its role and/
or change the indefinite several liability of the General
Partners shall be submitted to the Managing General Partner
for prior approval.
3.1.3
STRICT SEPARATION BETWEEN THE SUPERVISORY BOARD
(AND ITS COMMITTEES) AND MANAGEMENT
3.1.3.1
Supervisory Board
*
Excluding the employee representatives.
Members
In accordance with the applicable law and the Company’s
Bylaws, the Supervisory Board currently has 11 members,
including nine selected from among the shareholders and elected
by the Annual Shareholders Meeting for a term of four years(2) and
two representing employees.
General Partners may not take part in the vote. Supervisory
Board members may be re-elected. No more than one-third of
the Supervisory Board members may be aged over 75.
(1) The Statutory Auditor’s report on the annual financial statements is available from the Group’s website www.michelin.com.
(2) Five years for members elected prior to 2009. Certain members may be elected for a two- or three-year period in order to effectively stagger the terms of office of
Supervisory Board members.
89%
independent
members*
11
members,
of which 1 senior
independent
member
45%
women
members*
33%
non-French
nationals*
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As of December 31, 2021 and as of the date of this report, the
Supervisory Board had 11 members, and was in compliance with
Articles L. 226-4-1 and L. 22-10-74 of the French Commercial
Code concerning the balanced representation of men and
women on Boards of Directors and Supervisory Boards and
gender equality in the workplace, and the representation on the
Board of employees of the Company and the Group.
The Supervisory Board's internal rules stipulate that each
member must hold at least 400 shares(1) or 600 shares in the
case of the Chair(man).
Information about the compensation of Supervisory Board
members is presented in sections 3.3.3, 3.5.1, 3.5.2 and
3.6.1.4.
Overview of the Supervisory Board (as of December 31, 2021)
Member
Independent(1)
Committee(s)
First elected
Re-elected(2)
Current term
expires (AGM)(3)
Years on
the Board
Number of
shares held
Nationality
Age Gender
Barbara
Dalibard
-
2008
2013(2)
2015(3)
2019
2023
13
685
French
63
F
Jean-Pierre
Duprieu
Compensation
and
Appointments
2013
2016
2020
2024
8
510
French
69
M
Aruna
Jayanthi
Audit
2015
2019
2023
6
400
Indian
59
F
Anne-Sophie
de La Bigne
Compensation
and
Appointments
Corporate
Social
Responsibility
2013
2016
2020
2024
8
903
French
61
F
Patrick
de La
Chevardière
Audit
2020
-
2024
2
400
French
64
M
Jean-
Christophe
Laourde
Corporate
Social
Responsibility
2020
-
2024
1
81
French
46
M
Thierry
Le Hénaff
Compensation
and
Appointments
2018
-
2022
3
400
French
58
M
Monique
Leroux
Audit
Corporate
Social
Responsibility
2015(4)
2018
2022
6
1,000
Canadian
67
F
Delphine
Roussy
Compensation
and
Appointments
2020
-
2024
1
82
French
39
F
Jean-Michel
Severino
Corporate
Social
Responsibility
2020(5)
-
2022
1
400
French
64
M
Wolf-Henning
Scheider
Audit
2021
-
2025
-
400
German
59
M
: Chair(man)
: Senior Independent Member
: Member representing employees
(1) Based on the criteria set in the Supervisory Board’s internal rules which correspond to those recommended in the AFEP/MEDEF Corporate Governance Code
for listed companies.
(2) At the Annual Meeting of May 15, 2009, shareholders voted to reduce the term of Supervisory Board members from five years to four.
(3) At the Annual Meeting of May 17, 2013, shareholders voted to elect Supervisory Board members for terms of two, three or four years, so that their terms do
not all expire at the same time.
(4) Monique Leroux was appointed as a member of the Supervisory Board on October 1, 2015 to replace Laurence Parisot, who had resigned, for the remainder
of Ms. Parisot's term of office.
(5) Jean-Michel Severino was appointed as a member of the Supervisory Board on November 12, 2020 to replace Cyrille Poughon, who had resigned, for the
remainder of Mr. Poughon’s term of office.
(1) With the exception of members representing employees.
C
C
C
RE
S
C
RE
C
S
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Changes in 2021
The term of office of Michel Rollier, Chairman of the Supervisory
Board, expired at the close of the Annual Shareholders Meeting
held on May 21, 2021.
In December 2020, Michel Rollier announced that he did not
intend to stand for re-election and that the Supervisory Board
had unanimously chosen Barbara Dalibard to succeed him as
Chair of the Board when he stepped down.
The 2021 Annual Shareholders Meeting was also asked to ratify
Jean-Michelin Severino's appointment to the Supervisory Board
decided in November 2020 following the resignation of
Cyrille Poughon.
To strengthen its membership and fill the seat left vacant by
Michel Rollier’s decision to step down from the Board, the
Supervisory Board asked the Compensation and Appointments
Committee to define a candidate search strategy.
After examining these candidates' profiles in detail, the
Committee decided to recommend Wolf-Henning Scheider for
election.
Following this review, on the recommendation of the
Compensation and Appointments Committee, the Supervisory
Board decided (without the persons concerned taking part in
the decision) to recommend that the Annual Shareholders
Meeting:
▶ratify Jean-Michel Severino’s appointment to the Board for a
period ending on expiration of the term of his predecessor,
Cyrille Poughon (resolution of the Annual Shareholders
Meeting of May 21, 2021 adopted by a majority of 99.92%
of the votes cast);
▶elect Wolf-Henning Scheider for a four-year term (resolution
of the Annual Shareholders Meeting of May 21, 2021
adopted by a majority of 99.68% of the votes cast).
3.1.3.2
Role and responsibilities
The Company applies the recommendations set out in the Corporate
Governance Code for Listed Companies (“AFEP/MEDEF Code”,
revised version dated January 2020). In accordance with the
preamble to the Code, these recommendations are adapted as
necessary to reflect the Company’s organization as a
partnership limited by shares (“SCA”).
The Supervisory Board exercises permanent oversight of the
Company's management and assesses its quality on behalf of
the shareholders, presenting a report thereon at each Annual
Shareholders Meeting.
THE SUPERVISORY BOARD’S SPECIFIC ROLES AND RESPONSIBILITIES
SPECIFIC DUTIES OF THE SUPERVISORY BOARD
REGARDING THE GROUP’S STRATEGY
Regular review of the Group’s strategy
Periodic review of the Group’s:
• markets of operation,
• financial results and financial statements,
• organization and operations,
• risk management and internal control policies,
• compensation and appointment policies,
• corporate social responsibility policy;
Formal recommendation to the Managers for:
• significant investments,
• external growth transactions,
• divestitures,
• off-balance sheet commitments.
SPECIFIC DUTIES OF THE SUPERVISORY BOARD
REGARDING CORPORATE GOVERNANCE
Prior Board approval:
• Managers’ renewal,
• Managers’ dismissal and severance payments;
Prior Board recommendation to the shareholders:
• appointments of new Managers and of the Managing Chairman,
• General Managers’ compensation (policy, information) and Supervisory board members compensation;
Determination of Managers’ compensation performance criteria and assessment
of Managers’ achievement of compensation performance targets
Prior Board recommendation regarding:
• appointments and succession planning for members of the Executive Committee,
• diversity objectives within management bodies and corresponding action plans,
• compensation policy for members of the Executive Committee.
To enable the Supervisory Board
to effectively fulfill its oversight role,
its members receive quarterly reports
presenting key performance indicators,
as well as regular information such as
copies of the Group’s main press releases,
research reports published by analysts
who follow Michelin, and updates
on the Group’s markets.
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The recommendation provided under Article 1.9 of the AFEP/
MEDEF Code, according to which material transactions outside
the scope of the firm’s stated strategy should be subject to prior
approval by the Board of Directors, has to be adapted because
of the Company’s legal form as a partnership limited by
shares(1). With this type of partnership, the Managing General
Partners have unlimited personal liability. There is also a total
separation of powers between Managers, whether or not they
are General Partners, and the Supervisory Board, with the result
that the Supervisory Board has no legal authority to become
involved in managing the Company.
However, to (i) ensure that the Supervisory Board exercises
effective oversight of the Company’s management and
(ii) adhere to the spirit of the AFEP/MEDEF recommendation, since
2011 the Company has amended its Bylaws, as well as the
Supervisory Board’s internal rules(2).
The internal rules state that the Supervisory Board is responsible
for examining investment and external growth transactions,
off‑balance sheet commitments and asset disposals, and is
required to issue a formal opinion in cases where the
transactions are material for the Group due to their nature or
associated risks. For this purpose, “material” means transactions
representing at least €100 million, or at least €50 million in the
case of external growth transactions. This means that the
Supervisory Board is automatically consulted about all projects
that are material for the Group. Moreover, as it expresses an
opinion on such projects, it is clearly able to report to
shareholders thereon if appropriate.
(1) This exception to the full application of the AFEP/MEDEF Code's recommendations is mentioned in the table in section 3.2.8 prepared in accordance with the “comply
or explain” rule.
(2) Available from the Group’s website www.michelin.com.
Supervisory Board reviews all M&A strategic projects above €50m and issues a formal recommendation
Every quarter
The Supervisory Board
reviews the deal flows
Ad hoc Supervisory
Board meetings
on strategic M&A
project key milestones
Managers report to the Supervisory Board on acquisitions
carried out over the last four years. Every acquisition is assessed
based on the following criteria:
Every six months
Ad hoc
Strategic fit
Quality of management
Synergies
Target results
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3.1.3.3
Diverse profiles and experiences represented on the Board – Gender balance
on management bodies
Diverse profiles and experiences represented on the Supervisory Board
In line with the Group’s values, the Supervisory Board
consistently endeavors to propose candidates from diverse
backgrounds and cultures and with diverse experiences, so that
its membership is balanced and aligned with its role and
responsibilities.
The main terms of the diversity policy are proposed by the
Compensation and Appointments Committee. The policy is
applied by the Committee and the Supervisory Board to manage
Supervisory Board succession plans and for the assessment of
the Supervisory Board’s practices. The Committee and/or the
Supervisory Board can be assisted by recognized outside
consultants.
The Supervisory Board diversity policy for 2021 is described
below, as required by Article L. 22-10-10-2° of the French
Commercial Code.
Criteria
Objectives confirmed in 2021
Implementation method
2021 results
Age limit
No more than one-third of
Supervisory Board members
to be aged 75 or over.
No candidates aged 75 or over should
be proposed for election or re-
election at the Shareholders Meeting
if their election or re-election would
result in the one-third limit being
exceeded.
All members are under 75 years
of age.
Supervisory Board
gender equality
At least 40% of Board members
should be women, as required
by Article L. 22-10-74 of the French
Commercial Code.
Board to recommend that the
Shareholders Meeting re-elect
incumbent women members and
elect women candidates to replace
women who are stepping down.
The candidates recommended by
the Supervisory Board and elected
by the Annual Shareholders Meeting
had no impact on the proportion
of women on the Board, which is
unchanged at 45%, including Barbara
Dalibard who has been Chair of
the Supervisory Board since
May 2021.
Availability/
attendance
Members should demonstrate,
through their availability and
attendance rate at meetings of
the Board and Board Committees,
that they devote the necessary time
and attention to their duties (going
beyond the statutory requirements
and the requirements of the
AFEP/MEDEF Code concerning
multiple directorships).
From 2023, reduced number of board
directorships and chairmanships or
executive positions in other listed
companies.
The majority of each member’s
compensation is tied to his or her
attendance rate at meetings of the
Supervisory Board and its
Committees.
Incumbent Board members will not
be proposed for re-election if their
average attendance rate at scheduled
meetings was less than 85% over the
last three years of their term of office.
The attendance rate was 100% in
2021 for scheduled meetings of the
Supervisory Board and its committees.
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Criteria
Objectives confirmed in 2021
Implementation method
2021 results
Qualifications/
professional
experience/
international
outlook/adherence
to the Group’s
values
Board members should offer an
appropriate overall combination of
academic qualifications, professional
experience in the areas of
manufacturing, finance, internal
control, digital technology and
leadership of major international
listed groups, and adherence to
the Group’s values.
A specific objective for the period to
2023 is to consolidate/strengthen
the expertise in corporate social
responsibility and digital technologies
represented on the Board.
Decisions concerning candidates to be
proposed for re-election or election
to the Supervisory Board by the
Shareholders Meeting focus on
strengthening the qualifications and
experience represented by Supervisory
Board members in the areas of
executive management and new
technologies.
The Chair and the majority of
members of the Audit Committee are
selected for their academic
qualifications and international
experience in finance, internal control
and digital technologies
More detailed examination of CSR
issues by the Supervisory Board.
Recommendation and decision:
▶to ratify the appointment of
Jean‑Michel Severino to the Board
as a new member contributing in
particular his social environment,
human resources and governance
expertise;
▶to fill the seat left vacant
by Michel Rollier by electing
Wolf‑Henning Scheider to
the Board as a new member
contributing his knowledge of the
manufacturing industry as well as
of the automotive and sustainable
mobility sector.
Start of the work of the Corporate
Social Responsibility Committee
created in December 2020.
Increase in the proportion of foreign
nationals on the Board to 33%
(from 22% in 2020).
Size of the
Supervisory Board
Number of Supervisory Board
members should not exceed
the ten‑member cap specified in
the Bylaws (not including members
representing employees elected
in accordance with the law),
to guarantee Board efficiency
by fostering effective interactions
between members and between
the Board and the Managers.
No additional members to be
proposed for election at the
Shareholders Meeting, except
to comply with legal requirements.
No additional appointments
proposed.
Independence
At least 50% of Supervisory Board
members should be independent,
based on the definition in the AFEP/
MEDEF Code.
Incumbent independent members to
be proposed for election for as long
as they fulfill the independence
criteria (in particular, not to have
served on the Board for more than
12 years) or new independent
members to be proposed for election
to replace members who no longer
fulfill the independence criteria.
Recommendation and decision to
appoint Jean-Michel Severino and
Wolf-Henning Scheider as new
independent members of the
Supervisory Board, replacing two
non‑independent members.
Increase in the independence rate to
89% (from 78% in 2020, excluding
members representing employees).
Employee
representation on
the Supervisory
Board
The Supervisory Board includes two
members representing the employees
of the Company's French subsidiaries
versus eight members elected by
shareholders, exceeding the
requirement set out in the rules
resulting from France's PACTE Act
(Act No. 2019-486).
Participation of members representing
employees in the work of the
Supervisory Board and its
Committees.
Delphine Roussy is a member
of the Supervisory Board and its
Compensation and Appointments
Committee, and Jean-Christophe
Laourde is a member of the
Supervisory Board and its Corporate
Social Responsibility Committee.
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The experience and expertise contributed by each member of the Supervisory Board(1) as of the date of this Universal Registration
Document may be summarized as follows:
Gender balance on management bodies(2)
As for all corporate social responsibility issues, the CSR
Committee reviews the Group’s policies and ambitions in terms
of diversity and inclusion.
Michelin has launched a certain number of initiatives to make all
positions accessible to women and ensure gender wage parity.
Specific action plans have been launched in each of the Group’s
host regions to increase the number of women in management
positions, with a view to raising the proportion of women
managers to 35% by 2030. This plan is detailed in section
4.1.2.2 b) of this 2021 Universal Registration Document. Its
implementation led to measures to rebalance the membership of
the Group’s Executive Committee and other management bodies.
(1) Excluding members representing employees.
(2) The reporting scope for this information extends beyond the Company, which has fewer than five employees (none of whom are corporate officers).
General and International Management
Barbara Dalibard, Jean-Pierre Duprieu, Aruna Jayanthi,
Patrick de La Chevardière, Thierry Le Hénaff,
Monique Leroux, Wolf-Henning Scheider,
Jean-Michel Severino
Financial Expertise and M&A
Jean-Pierre Duprieu,
Anne-Sophie de La Bigne,
Patrick de La Chevardière,
Monique Leroux,
Jean-Michel Severino
8
5
3
3
2
4
Automotive and Mobility Sector
Barbara Dalibard,
Anne-Sophie de La Bigne,
Wolf-Henning Scheider
Manufacturing
Jean-Pierre Duprieu,
Patrick de La Chevardière, Thierry Le Hénaff
Materials
Patrick de La Chevardière,
Thierry Le Hénaff
Digital and innovation
Barbara Dalibard,
Aruna Jayanthi,
Wolf-Henning Scheider,
Jean-Michel Severino
Social Environment,
Human Resources and Governance
Aruna Jayanthi, Anne-Sophie de La Bigne,
Monique Leroux, Wolf-Henning Scheider,
Jean-Michel Severino 5
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Information about Supervisory Board members
Detailed information about each of the Supervisory Board members is presented below.
BARBARA
DALIBARD
Non-independent member of the Supervisory Board
Chair of the Supervisory Board(1)
Biographical details –
Professional experience
Barbara Dalibard was Chief Executive Officer of SITA, the world's leading specialist in air transport communications
and information technology, from 2016 to 2021.
She is a graduate of École Normale Supérieure, where she qualified to lecture in mathematics, a graduate
of École Nationale Supérieure des Télécommunications (ENST) and an honorary Corps des Mines engineer.
She has held varying roles in numerous companies in the field of new technologies.
After beginning her career at France Télécom group, Ms. Dalibard became the chair of Alcanet International,
a subsidiary of the Alcatel group, in 1998. She was then responsible for the France division of the Alcatel
CIT group, where she contributed to the development of ADSL and 3G.
At Orange, she played a key role in implementing RENATER, the first network based on Internet technology.
In 2003, she joined the Group’s Executive Committee and was the Chief Executive Officer of Orange Business
Services, a subsidiary located in 220 countries and regions.
Ms. Dalibard joined SNCF in 2010 and was appointed Chief Executive Officer of SNCF Voyageurs (the TGV,
Eurostar, Thalys businesses, etc.), then SNCF Voyageurs, which includes all of the group's passenger activities,
long-distance travel, TER, Transilien and train stations. She contributed to the development of electronic ticketing,
new passenger information applications and the “door-to-door” business. She launched OUIGO, the first low-cost
TGV, and the Ouibus long-distance coach subsidiary.
She also served as a member of the Board of Directors of Société Générale and as a member of the Supervisory
Board of Wolters Kluwer. She recently became a member of the Board of Directors of Rexel.
Ms. Dalibard is an Officer of the Légion d’honneur, Officer of the Ordre du mérite, member of the Académie
des Technologies and Doctor Honoris Causa of École Polytechnique de Montreal.
Nationality:
French
Born in 1958
_________
Business address:
Michelin
27, cours de l'Île-Seguin
92100 Boulogne-
Billancourt
France
_________
First elected:
May 16, 2008
_________
Current term
expires: 2023 (Annual
Shareholders Meeting
called to approve
the 2022 financial
statements)
_________
Number of
shares held at
December 31, 2021:
685
Directorships and
other positions held
at December 31, 2021
▶Non-voting member of the Supervisory Committee
of Castillon
▶Member of the Board of Directors of Rexel
Other directorships
and positions held
in the last five years
2017-2021
▶Chief Executive Officer
of SITA (until December 2021)
▶Non-voting member of the Supervisory
Committee of Castillon (since July 2021)
▶Member of the Board of Directors of
Rexel (appointed in December 2021)
(1) From May 2021.
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Administrative, management and supervisory bodies
JEAN-PIERRE
DUPRIEU
Independent member of the Supervisory Board
Chairman of the Compensation and Appointments Committee
Biographical details –
Professional experience
Jean-Pierre Duprieu was previously Executive Vice President of the Air Liquide group(1).
Between 2010 and 2016, he was a member of Air Liquide’s Executive Management team, in charge of supervising
the group’s European and Healthcare activities as well as corporate functions, including information systems
and Efficiency/Purchasing programs.
He is currently Chairman of the Board of Directors of Korian(1), Director of Groupe SEB(1) and member
of the Supervisory Board of Dehon S.A.
Nationality:
French
Born in 1952
_________
Business address:
Michelin
27, cours de l’Île-Seguin
92100 Boulogne-
Billancourt
France
_________
First elected:
May 17, 2013
_________
Current term
expires: 2024 (Annual
Shareholders Meeting
called to approve
the 2023 financial
statements)
_________
Number of
shares held at
December 31, 2021:
510
Directorships and
other positions held
at December 31, 2021
▶Chairman of the Board of Directors of Korian(1)
▶Independent Director of Groupe SEB(1)
▶Independent member of the Supervisory Board
of Dehon S.A.
Other directorships
and positions held
in the last five years
2017-2021
▶Director of Air Liquide Welding
(until July 2017)
▶Independent Director of Korian(1),
Chairman of the Compensation
and Appointments Committee and
member of the Audit Committee
(until September 2020)
▶Independent Director of Groupe SEB(1)
▶Independent member of the Supervisory
Board of Dehon S.A.
(1) Listed company.
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ARUNA
JAYANTHI
Independent member of the Supervisory Board
Member of the Compensation and Appointments Committee(1)
Member of the Audit Committee(2)
Biographical details –
Professional experience
From 2011 until the end of 2015, Aruna Jayanthi was Chief Executive Officer of Capgemini India, responsible
for overseeing all of the Capgemini group's operations in India, covering Consulting, Technology and Outsourcing
Services provided by some 50,000 employees.
In 2016, she became head of a new global Business Services Unit comprising ITOPS and BPO (Capgemini and IGATE).
In 2018, she was appointed to lead the Group’s operations in the Asia-Pacific and Latin America regions, before
becoming Managing Director of these Business Units. She is currently Head of Capgemini Latin America and Canada.
She is a member of the Group Executive Committee.
After obtaining a Master’s degree in finance management from the Narsee Monjee Institute of Management
Studies in Mumbai, Ms. Jayanthi held various IT services positions between 1984 and 2000 (including at clients’
offices in Europe and the United States), with Tata Consulting Services, Aptech and other companies.
She joined the Capgemini group in 2000.
Nationality:
Indian
Born in 1962
_________
Business address:
Capgemini Technology
Services India Limited.
Plot no. IT3IT4 Airoli
Knowledge Park TTC
Industrial Area, MIDC,
Navi Mumbai 400708
India
_________
First elected:
May 22, 2015
_________
Current term
expires: 2023 (Annual
Shareholders Meeting
called to approve
the 2022 financial
statements)
_________
Number of
shares held at
December 31, 2021:
400
Directorships and
other positions held
at December 31, 2021
▶Director of Equation Capital Partners LLP
▶Director of Capgemini Technology Services India
Limited
▶Director of Capgemini Saudi Limited
▶Director of Capgemini Brasil S.A.
▶Director of Capgemini Business Services
Guatemala S.A.
▶Director of Capgemini Business Services (China)
Limited
▶Director of Capgemini Hong Kong Ltd
▶Director of Capgemini Asia Pacific Pte Limited
▶Director of Capgemini Mexico,
S. DE R.L. DE C.V.
▶Director of Capgemini (Hangzhou) Co. Ltd
▶Director of Solcen Technologies Private Limited
Other directorships
and positions held
in the last five years
2017-2021
▶Director of Espire AS
(until April 2018)
▶Director of SBI Capital Markets Limited
(until September 2018)
▶Director of Capgemini Norge AS
(until May 2019)
▶Director and Chair of the Board of Directors
of Capgemini Sverige AB (until June 2019)
▶Director and Chair of the Supervisory Board
of Capgemini Polska Sp.z o.o.
(until August 2019)
▶Director of Capgemini Australia Pty Limited
(until June 2021)
▶Director of Capgemini Technology Services
India Limited
▶Director of Equation Capital Partners LLP
▶Director of Capgemini Saudi Limited
▶Director of Capgemini Brasil S.A.
▶Director of Capgemini Business Services
Guatemala S.A.
▶Director of Capgemini Business Services
(China) Limited
▶Director of Capgemini Hong Kong Ltd
▶Director of Capgemini Asia Pacific Pte Limited
▶Director of Capgemini Mexico, S. DE R.L.
DE C.V.
▶Director of Capgemini (Hangzhou) Co. Ltd
▶Director of Solcen Technologies Private Limited
(1) Until May 2021.
(2) Since May 2021.
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Administrative, management and supervisory bodies
ANNE-SOPHIE
DE LA BIGNE
Independent member of the Supervisory Board
Member of the Compensation and Appointments Committee
Member of the Corporate Social Responsibility Committee(1)
Biographical details –
Professional experience
Since 2008, Anne-Sophie de La Bigne has been Vice President in charge of Civil Affairs in the Public Affairs
Division, France, at the Airbus group(1).
Anne-Sophie de La Bigne began her career in 1983 as a financial controller with the Matra group before joining
the Strategy & Business Development Department of the Lagardère group, where she worked from 1985 to 1999.
She subsequently became Head of the Strategic Analysis Department at Aerospatiale Matra/EADS, a position
she held until 2001.
Between 2001 and 2006, she served as Vice President, Strategy and European Affairs, at Groupement
des Industries Françaises Aéronautiques et Spatiales (GIFAS) and, from 2006 to 2007, she was responsible
for international corporate relations in the EADS’ Public Affairs Division.
Nationality:
French
Born in 1960
_________
Business address:
Airbus
36, avenue
Raymond‑Poincaré
75116 Paris
France
_________
First elected:
May 17, 2013
_________
Current term expires:
2024 (Annual
Shareholders Meeting
called to approve
the 2023 financial
statements)
_________
Number of
shares held at
December 31, 2021:
903
Directorships and
other positions held
at December 31, 2021
▶Member of the Board of Directors of SIAE S.A.
▶Member of the Board of Directors of APAVE
and member of the Audit Committee
Other directorships
and positions held
in the last five years
2017
None
2018-2021
▶Member of the Board of Directors
of SIAE S.A.
▶Member of the Board of Directors
of APAVE and member of the Audit
Committee
(1) Listed company.
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Administrative, management and supervisory bodies
PATRICK
DE LA
CHEVARDIÈRE
Independent member of the Supervisory Board
Chairman of the Audit Committee(1)
Biographical details –
Professional experience
Patrick de La Chevardière is currently a director of Schlumberger(1) and until July 2019 was the Group's Chief
Financial Officer and a member of the Executive Committee of the Total group(1), where he spent his entire career.
Patrick de La Chevardière is a graduate of École Centrale. He began his career as a drilling engineer in
the Exploration and Production Division (1982-1989), before joining the Finance Department (1989-1995).
He subsequently served as head of the Operations and Subsidiaries Division (1995-2000), Asia Director in
the Refining and Marketing Division (2000-2003), Deputy Chief Financial Officer (2003-2008) and member
of the Management Committee (2005), and Chief Financial Officer and member of the Executive Committee
(from 2008).
Nationality:
French
Born in 1957
_________
Business address:
Michelin
27, cours de l’Île-Seguin
92100 Boulogne-
Billancourt
France
_________
First elected:
June 23, 2020
_________
Current term expires:
2024 (Annual
Shareholders Meeting
called to approve
the 2023 financial
statements)
_________
Number of
shares held at
December 31, 2021:
400
Directorships and
other positions held
at December 31, 2021
▶Director of Schlumberger(1)
Other directorships
and positions held
in the last five years
2017-2018
None
2019-2021
▶Director of Schlumberger(1)
(1) Listed company.
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Administrative, management and supervisory bodies
JEAN-CHRISTOPHE
LAOURDE
Non-independent member of the Supervisory Board representing employees
(non-executive)
Member of the Corporate Social Responsibility Committee(1)
Biographical details –
Professional experience
Jean-Christophe Laourde is an employee of Manufacture Française des Pneumatiques Michelin,
where he is Distribution Program Manager, B2C for the Southern Europe Region.
He began his career with the Michelin Group in 1998 and held a variety of positions in sales in France, before
becoming Forecast Manager for Supply Chain Europe. He has also held positions in Distribution Development
Management for France-Benelux.
In addition, he served as the central union representative for the CFE-CGC at Michelin in France between
2016 and 2020.
Nationality:
French
Born in 1975
_________
Business address:
Compagnie Générale
des Établissements
Michelin
23, place des
Carmes‑Déchaux
63000 Clermont-Ferrand
France
_________
First elected:
December 14, 2020
_________
Current term expires:
2024 (Annual
Shareholders Meeting
called to approve
the 2023 financial
statements)
_________
Number of
shares held at
December 31, 2021:
81
Directorships and
other positions held
at December 31, 2021
▶None
Other directorships
and positions held
in the last five years
2017-2021
▶None
(1) Since May 2021.
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THIERRY
LE HÉNAFF
Independent member of the Supervisory Board
Senior Independent Member of the Supervisory Board
Member of the Audit Committee(1)
Member of the Compensation and Appointments Committee(2)
Biographical details –
Professional experience
Thierry Le Hénaff is currently Chairman and Chief Executive Officer of Arkema(3).
After starting his career with Peat Marwick Consultants, in 1992 he joined Bostik, Total’s Adhesives Division,
where he held a number of operational positions in France and worldwide. In July 2001, he was appointed
Chairman and Chief Executive Officer of Bostik Findley, the new entity resulting from the merger of Total’s and Elf
Atochem’s Adhesives divisions. On January 1, 2003, he joined Atofina’s Executive Committee, with responsibility
for three divisions (Agrochemicals, Fertilizers and Thiochemicals) as well as three corporate departments. Then,
in 2004, he joined the Total group’s Executive Committee(3). He was named Chairman and Chief Executive Officer
of Arkema on March 6, 2006. He has sat on the Board of Directors of the École Polytechnique Foundation
since 2016.
Thierry Le Hénaff holds engineering degrees from École Polytechnique and École Nationale des Ponts et Chaussées,
and a Master’s degree in Industrial Management from Stanford University in the United States. He holds the titles
of Chevalier de l’Ordre national du mérite and Chevalier de l’Ordre national de la Légion d’honneur.
Nationality:
French
Born in 1963
_________
Business address:
Arkema
420, rue
d’Estienne‑d’Orves
92700 Colombes
France
_________
First elected:
May 18, 2018
_________
Current term expires:
2022 (Annual
Shareholders Meeting
called to approve
the 2021 financial
statements)
_________
Number of
shares held at
December 31, 2021:
400
Directorships and
other positions held
at December 31, 2021
▶Chairman and Chief Executive Officer of Arkema(3)
▶Chairman of the Board of Directors of Arkema France
Other directorships
and positions held
in the last five years
2017-2021
▶Chairman and Chief Executive Officer
of Arkema(3)
▶Chairman of the Board of Directors
of Arkema France
(1) Until May 2021.
(2) Since May 2021.
(3) Listed company.
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Administrative, management and supervisory bodies
MONIQUE
LEROUX
Independent member of the Supervisory Board
Member of the Audit Committee
Chair of the Corporate Social Responsibility Committee
Biographical details –
Professional experience
Companion of the Canadian Business Hall of Fame and Investment Industry Hall of Fame, Monique Leroux is a
company director. She sits on the Boards of Directors of Bell (BCE)(1), S&P Global (SPGI)(1) and Couche-Tard (ATD)(1).
She contributes to these boards and committees her wide-ranging experience, acquired for example as a partner
of EY (Canada) and as Chair of the Board and Chief Executive Officer of Mouvement Desjardins from 2008 to 2016.
Ms. Leroux is a member of the Order of Canada, an Officer of the Ordre national du Québec, a Chevalier de la Légion
d’honneur (France) and a recipient of a Woodrow Wilson Award (United States). She has been inducted as a Fellow
of the Canadian Order of Certified Public Accountants and Fellow of the Canadian Institute of Corporate Directors,
and has been awarded honorary doctorates from ten Canadian universities in recognition of her contribution to
the business sector and also to the community.
Ms. Leroux chaired Canada’s National Industrial Strategy Board in 2020 as part of a special mandate on economic
recovery and she also chaired the Board of Directors of Investissement Québec from 2016 to 2020.
Nationality:
Canadian
Born in 1954
_________
Business address:
Fiera Capital 1981
McGill College
Montréal (Québec)
H3A 0H5 Canada
_________
First elected:
October 1, 2015
_________
Current term expires:
2022 (Annual
Shareholders Meeting
called to approve
the 2021 financial
statements)
_________
Number of
shares held at
December 31, 2021:
1,000
Directorships and
other positions held
at December 31, 2021
▶Member of the Board of Directors of Couche-Tard(1)
▶Member of the Board of Directors of Bell/BCE(1)
▶Member of the Board of Directors of S&P Global(1)(2)
▶Other private and community activities:
• Part-time (non-executive) advisor to Fiera Capital
• Member of Lallemand (privately owned company)
• Member of non-profit organizations dedicated
to the arts and education
Other directorships
and positions held
in the last five years
2017-2021
▶Member of the Board of Directors of
Crédit Industriel et Commercial (CIC)
(until May 2017)
▶Chair of the Board of Directors of
Investissement Québec (until July 2020)
▶President of the International
Cooperative Alliance (ICA)
(until November 2017)
▶Member of the Board of Directors
of Couche-Tard(1)
▶Member of the Board of Directors of Bell/
BCE(1)
▶Member of the Board of Directors of S&P
Global(1)
▶Other private and community activities:
• Part-time (non-executive) advisor
to Fiera Capital
• Member of Lallemand (privately
owned company)
• Member of non-profit organizations
dedicated to the arts and education
(1) Listed company.
(2) Term expires in 2022.
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MICHEL
ROLLIER
Non-independent member of the Supervisory Board
Chairman of the Supervisory Board(1)
Biographical details –
Professional experience
Michel Rollier is Vice Chairman of the Board of Directors of Somfy S.A.(2) and Chairman of the Board of Directors
of Siparex Associés.
He began his career at Aussedat-Rey (part of the International Paper group) in 1971, initially occupying the post
of Financial Controller before going on to head up a business unit. He then held the position of Chief Financial
Officer between 1987 and 1994 and subsequently Deputy Managing Chairman from 1994 to 1996.
He joined Michelin in 1996 as Vice President, Financial & Legal Affairs and then served as Chief Financial Officer
and a member of the Executive Council from 1999 to 2005.
He was elected Managing General Partner by Michelin's shareholders on May 20, 2005, serving alongside
Édouard Michelin until Mr. Michelin's tragic death in 2006. Mr. Rollier stepped down as Managing General Partner
in May 2012.
He was subsequently a member and Chairman of the Supervisory Board from May 2013 until May 2021.
Nationality:
French
Born in 1944
_________
Business address:
Michelin
27, cours de l’Île-Seguin
92100 Boulogne-
Billancourt
France
_________
First elected:
May 17, 2013
_________
Current term expires:
2021 (Annual
Shareholders Meeting
called to approve
the 2020 financial
statements)
_________
Number of
shares held at
December 31, 2021:
24,392
Directorships and
other positions held
at December 31, 2021
▶Vice Chairman of the Board of Directors of Somfy S.A.(2)
▶Chairman of the Remunerations Committee of Somfy
S.A.(2)
▶Chairman of the Board of Directors of Siparex
Associés
▶Chairman of Association Nationale des Sociétés
par Actions (ANSA)
Other directorships
and positions held
in the last five years
2017-2021
▶Chairman of Plateforme de la Filière
Automobile (PFA) (until December 2017)
▶Chairman of the AFEP/MEDEF High
Committee on Corporate Governance
(until October 2018)
▶Vice Chairman of the Board of Directors
of Somfy S.A.(2)
▶Chairman of the Remunerations
Committee of Somfy S.A.(2)
▶Chairman of the Board of Directors
of Siparex Associés
▶Chairman of Association Nationale
des Sociétés par Actions (ANSA)
(1) Until his term expired in May 2021.
(2) Listed company.
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DELPHINE
ROUSSY
Non-independent member of the Supervisory Board representing employees
(non-executive)
Member of the Compensation and Appointments Committee(1)
Biographical details –
Professional experience
Delphine Roussy is an employee of Manufacture Française des Pneumatiques Michelin, where she is Head
of the Systems & Processes Division patents team within the Legal Affairs/Intellectual Property Department.
She is a graduate of Supélec and the Georgia Institute of Technology in Atlanta. In 2011, she joined the Michelin
Group after having had several positions in the field of intellectual property.
She was a member of the CFDT trade union’s advisory delegation to the Regional Economic, Social and
Environmental Council (CESER) for the Auvergne-Rhône-Alpes region from 2018 to 2020 and represented the
CFDT within the Michelin organization in various capacities (employee representative, member of the Committee
on Health, Safety & Working Conditions, trade union representative) between 2014 and 2020.
Nationality:
French
Born in 1982
_________
Business address:
Compagnie Générale
des Établissements
Michelin
23, place des
Carmes‑Déchaux
3000 Clermont-Ferrand
France
_________
First elected:
December 14, 2020
_________
Current term expires:
2024 (Annual
Shareholders Meeting
called to approve
the 2023 financial
statements)
_________
Number of
shares held at
December 31, 2021:
82
Directorships and
other positions held
at December 31, 2021
▶None
Other directorships
and positions held
in the last five years
2017-2021
▶None
(1) Since May 2021.
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Administrative, management and supervisory bodies
Wolf-Henning
Scheider
Independent member of the Supervisory Board
Member of the Audit Committee(1)
Biographical details –
Professional experience
Wolf-Henning Scheider has been Chairman of the Board of Management and Chief Executive Officer
of ZF Friedrichshafen AG, a German group that is a global leader in automotive, transportation and mobility
technologies, since 2018.
He studied at Saarbruck University and RWTH Aachen University, graduating in Business Administration and
Economics. He began his career with the Bosch group, holding various management positions in Germany and
several other countries, including France where he spent over four years. Between 2010 and 2015, he served as a
member of the Executive Committee of Robert Bosch GmbH, with overall responsibility for the Automotive group,
OEM sales, and Group Sales and Marketing. From 2015 to 2018, he was Chief Executive Officer of the Mahle group.
Nationality:
French
Born in 1962
_________
Business address:
Michelin
27, cours de l’Île-Seguin
92100 Boulogne-
Billancourt
France
_________
First elected:
May 21, 2021
_________
Current term expires:
2025 (Annual
Shareholders Meeting
called to approve
the 2024 financial
statements)
_________
Number of
shares held at
December 31, 2021:
400
Directorships and
other positions held
at December 31, 2021
▶Chairman of the Board of Management and Chief
Executive Officer of ZF
▶Member of the Board of Directors of VDA German
Association of the Automotive Industry
Other directorships
and positions held
in the last five years
2017-2021
▶Chief Executive Officer of the Mahle
group (until January 2018)
▶Chairman of the Board of Management
and Chief Executive Officer of ZF
▶Member of the Board of Directors
of VDA German Association of the
Automotive Industry
(1) Since May 2021.
(2) Listed company.
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Administrative, management and supervisory bodies
JEAN-MICHEL
SEVERINO
Independent member of the Supervisory Board
Member of the Corporate Social Responsibility Committee
Biographical details –
Professional experience
Jean-Michel Severino is a former student of École Nationale d’Administration. He graduated from ESCP Business
School and Institut d’Études Politiques in Paris, and has a Master’s degree in economics and a bachelor’s in law.
He is a member of the General Inspectorate of Finance and is a development director at the French Ministry
of Cooperation and Development, Vice-President East Asia at the World Bank and Chief Executive Officer
at the French Development Agency.
Since 2011, he has been Managing Partner then Chairman of the Supervisory Board of Investisseurs et Partenaires
(I&P), a fund management team specializing in financing for African SMEs.
He is Senior Independent Director and Chairman of the Governance Committee of Danone(1), a director and member
of the Audit Committee of Orange(1) and Chairman of the Board of Directors of Ecobank International (EBI SA).
He is also a Senior Fellow at the Foundation for Studies and Research on International Development (FERDI)
and a member of the French Academy of Technologies.
Nationality:
French
Born in 1957
_________
Business address:
Investisseurs
et Partenaires
9, rue Notre-Dame-
des‑Victoires
75002 Paris
France
_________
First elected:
November 12, 2020
_________
Current term expires:
2022 (Annual
Shareholders Meeting
called to approve
the 2021 financial
statements)
_________
Number of
shares held at
December 31, 2021:
400
Directorships and
other positions held
at December 31, 2021
▶Director and member of the Audit Committee
of Orange SA(1)
▶Senior Independent Director and member
of the Governance Committee of Danone SA(1)
▶Chairman of the Supervisory Board of Investisseurs
et Partenaires (I&P)
Other directorships
and positions held
in the last five years
2017-2021
▶Chairman of the Board of Directors
of EBI SA (until April 2021)
▶Managing Partner of Investisseurs et
Partenaires (I&P) (until October 2021)
▶Director and member of the Audit
Committee of Orange SA(1)
▶Senior Independent Director and member
of the Governance Committee
of Danone SA(1)
(1) Listed company.
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3.1.4
INTERACTIONS BETWEEN THE VARIOUS GOVERNANCE STRUCTURES
The shared objective of all members of the Company’s
governance, i.e., the Non-Managing General Partner (SAGES),
the Managers and the Supervisory Board, is to ensure
harmonious and efficient interactions in the interest of the
Group and its shareholders. This implies that tasks and
responsibilities are distributed among members in a manner
that
complies
with
the
Company’s
Bylaws
and
the
recommendations in the AFEP/MEDEF Code as applicable to
partnerships limited by shares. It is in this vein that the
participants in the governance system agreed upon the
following:
Succession process
In accordance with the Company’s Bylaws, each Manager is
appointed for an initial term of four years by the Shareholders
Meeting on the proposal of the Non-Managing General Partner
(SAGES), made after consulting the Supervisory Board. Their
appointment is subsequently renewable by decision of SAGES, with
the Supervisory Board’s agreement.
▶the Managing Partner succession process is led by SAGES,
which formally consults the Supervisory Board concerning its
proposals. A candidate selection process is submitted by
SAGES to the Managing Chairman and Managing General
Partner and to the Supervisory Board, presenting the different
selection phases, the selection criteria and an overview of the
various internal and external candidates;
▶the Supervisory Board, which oversees the work of the
Compensation and Appointments Committee in reviewing
the Executive Committee succession plans drawn up by the
Managers, presents the results of the review to SAGES
between 12 and 18 months before the start of the process
and ensures that the plans cover diverse profiles;
▶SAGES, the Managing Chairman and Managing General
Partner and the Supervisory Board agree on the selection
criteria for a future Manager and a recruitment firm is
selected by SAGES from a list drawn up by mutual
agreement, to support each step of the process.
Compensation process
▶Compensation policy:
• at the start of each financial year, the Managers present
proposals
to
the
Compensation
and
Appointments
Committee concerning the performance criteria and targets
to be used to determine their annual and long-term variable
compensation (performance shares). After discussing the
presentation with the Managers, the Committee analyzes
these proposals and examines all the components of the
Managers’
compensation,
taking
into
account
the
compensation and employment conditions of Michelin
employees, the practices of other CAC 40 companies and
relevant benchmarks,
• the Compensation and Appointments Committee shares its
conclusions with the Non-Managing General Partner
(SAGES) and presents its recommendations to the
Supervisory Board,
• the Supervisory Board discusses the recommendations of
the Compensation and Appointments Committee, and
decides on the criteria and objectives to be used to
determine
the
annual
and
long-term
variable
compensation of the Managers for the current year,
• the General Partners then meet to set the compensation
policy for the Managers for the current year and to
formalize, subject to adoption by the Ordinary Shareholders
Meeting of the corresponding resolutions: i) for the
Managing General Partner, by way of an agreement
between the General Partners, the portion of the earnings
for the current year that may be allocated to the Managing
General Partner as annual variable compensation within
the limits set by the Bylaws; and ii) for the General
Manager, by way of a decision of the General Partners, the
annual compensation components concerning him; said
agreement and decision taking into account and
integrating the performance criteria and annual variable
compensation objectives set by the Supervisory Board, after
consultation and deliberation by the latter,
• the Managing Chairman, after confirming the Non-Managing
General Partner's approval, submits the corresponding
draft resolutions to the Ordinary Shareholders Meeting in
compliance with the applicable regulations,
• once the compensation policy has been approved by the
Ordinary Shareholders Meeting, (i) for the Managing
General Partner, the General Partners sign an agreement
determining the share of consolidated net income
attributable to the Managing General Partner after
application of the criteria for determining his annual
variable compensation, and (ii) for the General Manager,
the General Partners sign the decision concerning his
annual compensation, including the definition of the
criteria and objectives applied to determine his annual
variable compensation,
• in the second half of the year, during the process to
determine the performance shares to be granted to
employees of Group companies, the Supervisory Board
decides on the conditions and criteria to be applied for the
granting of performance shares to the Managers by
decision of the General Partners. The Supervisory Board’s
decision takes into account the Company’s compensation
policy and the authorization given by the Shareholders
Meeting, in compliance with the applicable regulations.
▶Performance assessment:
• at
each
year-end,
the
Managers
report
to
the
Compensation and Appointments Committee on the
achievement of prior-year objectives used to determine
their annual and long-term variable compensation,
• the Compensation and Appointments Committee analyzes
the performance data, shares its conclusions with the Non-
Managing General Partner (SAGES) and presents its
recommendations to the Supervisory Board,
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• the Supervisory Board then discusses the results of the
Compensation and Appointments Committee’s analysis of
actual performance in relation to objectives and the
Committee’s recommendations,
• the Managing Chairman submits the compensation
packages and the corresponding proposed resolutions to
the Ordinary Shareholders Meeting and also seeks the
approval of the Non-Managing General Partner (SAGES), in
compliance with the applicable regulations.
• once the compensation components have been approved by
the
Ordinary
Shareholders
Meeting,
the
variable
compensation components are paid or delivered to the
Managers, with the Managing General Partner’s annual
variable compensation deducted from his share of
consolidated net income attributable to the General
Partners in accordance with the Company’s Bylaws.
3.1.5
STATEMENTS
The Managers and the members of the Supervisory Board do
not have any close family ties.
To the best of the Company’s knowledge, neither Michelin’s
Managers nor any Supervisory Board member has, in the past
five years, been (i) convicted of fraud, (ii) associated with a
bankruptcy, receivership or liquidation, (iii) the subject of any
official public incrimination and/or sanctions by statutory or
regulatory authorities (including designated professional bodies)
or disqualified by a court from acting as a member of the
administrative, management or supervisory bodies of an issuer
or from acting in the management or conduct of the affairs of
any issuer.
No Supervisory Board member and neither of Michelin’s
Managers has a service contract with the Company or any of its
subsidiaries.
There are no:
▶arrangements or understandings with major shareholders,
customers, suppliers or others, pursuant to which they were
selected as a Manager or as a member of the Supervisory Board;
▶conflicts of interest between the duties to the Company of
the Managers and their private interests and/or other duties;
▶conflicts of interest between the duties to the Company of the
Supervisory Board members and their private interests and/or
other duties(1);
▶restrictions accepted by these persons on the disposal of their
Michelin shares within a certain period of time, except for
those resulting from market abuse regulations and the
specific rules applicable to the Managers.
3.2
SUPERVISORY BOARD PRACTICES – ACTIVITIES IN 2021
3.2.1
GENERAL ACTIVITIES
In addition to the six initially scheduled meetings, the Board
held two further meetings in 2021, to (i) appoint its new Chair
and change the membership of its committees, and (ii) to
review the draft financial press release on sales for the third
quarter and the first nine months of the year.
The issues examined by the Supervisory Board – based on
presentations by the Managers or by members of the entities
concerned – were as follows:
▶update on the Group’s business and financial position:
• quarterly financial information, interim and annual results,
scorecards, corresponding press releases, recommended
dividend,
• internal control and risk management,
• integration of businesses acquired in recent years and
related synergies,
• acquisitions in progress (several meetings);
▶strategic overview:
• strategy seminar (several meetings): business review, map
of current transformations, acquisition projections, 2030
strategic plan,
• industrial and Digital Manufacturing strategy,
• tire market access strategy, hydrogen business strategy;
▶corporate officers’ compensation:
• results of the performance criteria used to determine the
Managers’ variable compensation for 2020,
• performance criteria to be used to determine variable
compensation for 2021 and performance share plan
criteria,
• Group compensation policies;
▶succession plan for the Managers:
• timeline,
• candidate assessment process and criteria.
(1) See detailed disclosures in the Corporate Governance Report presented in section 3.2.6 of the 2021 Universal Registration Document.
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▶membership and practices of the Supervisory Board and its
Committees:
• appointment of the new Chair of the Board,
• changes in the membership of Board committees,
• ratification by the Shareholders Meeting of the appointment
of a member of the Supervisory Board and examination of a
candidate for election to the Supervisory Board,
• integration of Board members representing employees in
the specialized committees,
• Supervisory Board members’ independence,
• self-assessment of the Board’s practices,
• preparation of the Corporate Governance Report and the
Annual Shareholders Meeting;
▶reports of the Audit Committee, Compensation and
Appointments Committee and CSR Committee.
Part of each Supervisory Board meeting took place behind
closed doors, without the Managers being present.
In addition, the independent members of the Board held an
executive session.
3.2.2
SUPERVISORY BOARD MEMBERS’ ATTENDANCE RATES
The Supervisory Board met eight times in 2021 – on February 12, April 13 and 14, April 22, May 21, July 23, October 4 and 5, October 22
and December 14.
Several meetings lasted a full day or more.
The overall attendance rate at Board and Committee meetings was 100% (excluding the meetings of May 21 and October 22, which
were not scheduled at the beginning of the year).
The attendance rates at Board and Committee meetings of the individual Board members are presented in the table below:
Supervisory Board members
Participation at meetings held in 2021
Supervisory Board
(6 meetings)(1)
Audit Committee
(4 meetings)
Compensation and
Appointments Committee
(3 meetings)(2)
Corporate Social
Responsibility Committee
(3 meetings)
Barbara Dalibard(3)
6/6
2/2
N/A
N/A
Jean-Pierre Duprieu
6/6
N/A
3/3
N/A
Aruna Jayanthi(4)
6/6
2/2
2/2
N/A
Anne-Sophie de La Bigne
6/6
N/A
3/3
3/3
Patrick de La Chevardière
6/6
4/4
N/A
N/A
Jean-Christophe Laourde(5)
6/6
N/A
N/A
1/1
Thierry Le Hénaff(6)
6/6
2/2
1/1
N/A
Monique Leroux
6/6
4/4
N/A
3/3
Michel Rollier(7)
3/3
N/A
N/A
N/A
Delphine Roussy(8)
6/6
N/A
1/1
N/A
Wolf-Henning Scheider(9)
3/3
2/2
N/A
N/A
Jean-Michel Severino
6/6
N/A
N/A
3/3
(1) Excluding unscheduled meetings (two meetings).
(2) Excluding unscheduled meetings (one meeting).
(3) Barbara Dalibard attended all the meetings of the Supervisory Board before and after her appointment as Chair of the Supervisory Board in May 2021, and all
the meetings of the Audit Committee up to May 2021, when she stopped being a member of this Committee.
(4) Aruna Jayanthi attended all the meetings of the Compensation and Appointments Committee up to May 2021, when she stopped being a member of this
Committee, and all the meetings of the Audit Committee from May 2021, when she was appointed to this Committee.
(5) Jean-Christophe Laourde attended all the meetings of the Corporate Social Responsibility Committee from May 2021, when he was appointed to this
Committee.
(6) Thierry Le Hénaff attended all the meetings of the Audit Committee up to May 2021, when he stopped being a member of this Committee, and all the
meetings of the Compensation and Appointments Committee from May 2021, when he was appointed to this Committee.
(7) In his capacity as Supervisory Board Chairman, Michel Rollier attended all meetings of the Supervisory Board until his term expired in May 2021.
(8) Delphine Roussy attended all the meetings of the Compensation and Appointments Committee from May 2021, when she was appointed to this Committee.
(9) Wolf-Henning Scheider attended all the meetings of the Supervisory Board from May 2021, when he was elected to the Board, and all the meetings of the
Audit Committee from May 2021, when he was appointed to this Committee.
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3.2.3
TRAINING FOR SUPERVISORY BOARD MEMBERS
All Supervisory Board members
As part of its training policy for Supervisory Board members,
during the year the Company once again organized a special
training program on the Group’s operations. The program gave
all of the Supervisory Board members an opportunity to acquire
or refresh their hands-on insight into how Michelin’s various
businesses are run.
The Board members paid a two-day visit to a tire production
plant in Italy during which they were able to see the new
generation robotic machines in action and appreciate the
advances made in terms of maintenance and the site's net-zero
carbon emissions strategy.
In addition, the Board members were given a detailed
presentation of the organization, multi-sector activities and key
projects in the Southern Europe region, which includes Spain,
Portugal, France, Benelux, Italy and Malta, representing
30,000 employees at 42 sites.
These topic-specific presentations, along with those made
during the year at Supervisory Board meetings by members of
executive management and their teams, are welcomed by
Supervisory Board members as a means of deepening their
understanding of all the challenges facing the Michelin Group.
Members representing employees
Internally, the members of the Supervisory Board representing
employees attended preparatory meetings prior to each
meeting of the Supervisory Board, which facilitated their active
participation in the Board's work.
Their internal training includes specific presentations by the
directors of the Group entities, including the Managers and
members of the Group Executive Committee, and by the Chair
and Secretary of the Supervisory Board. These presentations are
specially designed to provide the new members with a good
understanding of the Group’s businesses and its environment.
Externally, the members of the Supervisory Board representing
employees also continued participating in several external
training programs selected based on their specific needs as new
Supervisory Board members. These programs cover various
specific and general topics and are provided by leading training
organizations.
3.2.4
PREPARING RECOMMENDATIONS FOR THE ELECTION OF NEW SUPERVISORY
BOARD MEMBERS AND OTHER RESOLUTIONS TO BE PRESENTED AT THE 2022
ANNUAL SHAREHOLDERS MEETING
The Supervisory Board asked the Compensation and Appointments Committee to review the situation of members whose term was
due to expire.
The Committee’s procedures and recommendations are presented in the Supervisory Board’s report on the resolutions to be submitted
to the 2022 Annual Shareholders Meeting (see section 7.2 of this 2021 Universal Registration Document).
3.2.5
ACTIVITIES OF THE SENIOR INDEPENDENT SUPERVISORY BOARD MEMBER
Although, in a partnership limited by shares (société en
commandite par actions), none of the Managers (who are
equivalent to executive officers in a joint stock corporation) may
also serve as Chair(man) of the Supervisory Board, the Board
nevertheless decided to create the position of Senior Independent
Member.
This role, given to an independent Board member, mainly covers
the following responsibilities specified in the Board’s internal rules:
▶organize
executive
sessions
among
the
independent
members;
▶chair and lead the sessions;
▶report on his or her activities to the Board at least once a year;
▶meet with the Chair(man) of the Board to inform him or her
of all or some of the views or wishes expressed by the
independent members during executive sessions;
▶propose the inclusion of additional items on the agenda of
Supervisory Board meetings;
▶call and chair Supervisory Board meetings and set the agenda if
the Chair(man) of the Board is unable to perform this task;
▶meet with the Managing Chairman to inform him or her of
all or some of the views or wishes expressed by the
independent members during executive sessions, after
informing the Chair(man) of the Supervisory Board;
▶receive information about any material comments on
governance issues made by significant shareholders and
participate in communications with shareholders alongside the
Chair(man) of the Supervisory Board or the Managing Chairman.
Thierry Le Hénaff has served as Senior Independent Member
since July 2020(1).
In 2021, Mr. Le Hénaff organized and chaired one executive
session, held without any Managers (equivalent to executive
officers) being present. The main issues discussed during this
session were as follows:
▶topics suggested during Board meetings;
▶participation in the Committees of the Board;
▶allocation of responsibilities for examining risks between
the different Committees;
▶training requests.
(1) He took over from Barbara Dalibard, who was Senior Independent Member from 2017, when the position was created, to June 2020.
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In application of the Supervisory Board’s internal rules, during
the first half of 2022, Thierry Le Hénaff will report to the Board
on his activities during 2021.
In 2021, Thierry Le Hénaff helped to prepare the process for the
assessment by the Chair(man) of the Board on its practices and
those of its Committees (see report on the results of this
assessment in section 3.2.7).
3.2.6
REVIEW OF SUPERVISORY BOARD MEMBERS’ INDEPENDENCE
AND ANY CONFLICTS OF INTEREST
The Supervisory Board has chosen to refer exclusively to the
criteria listed in the AFEP/MEDEF Code for its assessment of its
members' independence. The AFEP/MEDEF Code recommends
that a majority of the members of the Supervisory Board should
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)(1).
The Supervisory Board’s internal rules also explicitly stipulate
that its members are required to inform the Supervisory Board
of any potential or existing conflict of interest and are banned
from taking part in the discussion and voting on the matters
concerned.
In the first phase, the Compensation and Appointments
Committee ensures that each Supervisory Board member has
formally declared, in relation to the provisions and abstention
obligations of the Board’s internal rules, that:
▶they have no close family ties with their fellow Supervisory
Board members;
▶they have not, in the past five years, been (i) convicted of
fraud, (ii) associated with a bankruptcy, receivership or
liquidation, (iii) the subject of any official public incrimination
and/or sanctions by statutory or regulatory authorities or
disqualified by a court from acting as a member of the
administrative, management or supervisory bodies of an
issuer or from acting in the management or conduct of the
affairs of any issuer;
▶they do not have a service contract with the Company or any
of its subsidiaries;
▶they have not been selected to serve as a corporate officer
pursuant to any arrangement or agreement with a principal
shareholder, customer, supplier or other stakeholder;
▶to the best of their knowledge, there are no restrictions on
the disposal within a certain period of time of their Michelin
shares, except for those resulting from insider dealing rules;
▶to the best of their knowledge, there are no conflicts of
interest between their obligations towards the Company in
their capacity as corporate officer and their personal interests
and/or other obligations.
Where applicable, the Committee also checks any notifications
given to the Board by its members.
In the second phase, to complete the earlier statements and
observations, the Committee:
▶checks that none of the Board members had been an auditor
of the Company during the past five years;
▶reviews the period served on the Supervisory Board by
members since they were first elected, in particular for
members who have served on the Board for 12 or more
years;
▶checks that no Board member has received any variable
compensation in cash or shares or any other performance-
based compensation from the Company or the Group.
In addition, the Committee examines whether any Board
member:
▶is or has been in the past five years an employee or executive
officer of the Company, or an employee or executive officer
of its parent or a company that the latter consolidates;
▶is an executive officer of a company in which the Company
holds a directorship, directly or indirectly, or in which an
employee appointed as such or an executive officer of the
Company (currently in office or having held such office for
less than five years) is a director;
▶is a customer, supplier, investment banker or commercial
banker:
• that is material to the Company or the Group, or
• that depends on the Company or the Group for a
significant part of its business.
In the third phase, the Committee reviews the situation of
Supervisory Board members who may personally conduct
significant amounts of business with the Company or be
involved with undertakings that may maintain significant
business relations with the Company.
In each case, the Committee starts by examining the nature of
the Supervisory Board member’s duties in the undertaking
concerned, particularly whether they hold a non-executive
position such as member of the Board of Directors or
Supervisory Board, whether they are qualified as independent
by
that
undertaking
and
whether
they
share
any
cross‑directorships with an executive officer of the Company.
Where a Board member holds an executive or management
position, the Committee examines the nature and scope of the
member's duties and, if the undertaking is a material competitor,
customer or supplier of the Company, assesses whether the
position may give rise to a conflict of interest between that
undertaking and the Company.
(1) When the Compensation and Appointments Committee assesses the independence of one of its members, that member does not take part in the Committee's
discussion and analysis of his or her situation nor in the Supervisory Board's decision regarding his or her independence.
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When considered necessary, the Committee then analyzes
individual situations based on (i) the type of relationship that
exists between the Company and the undertaking concerned
and (ii) the amounts represented by financial transactions
between the Company and the undertaking, applying different
materiality thresholds depending on the type of relationship
(revenues in relation to consolidated revenues, purchase
volumes, etc.).
The Compensation and Appointments Committee conducted an
independence review in early 2022. Its conclusions were
presented to the Supervisory Board, which discussed and then
adopted them. The review process can be summarized as follows.
The Committee examined the situation of Anne-Sophie de La Bigne
in light of her position with Airbus as Vice President in charge
of Civil Affairs in the Public Affairs Division France. The
Committee noted that (i) Ms. de La Bigne does not hold an
executive position at Airbus with responsibility for purchasing or
selling products or services and (ii) her area of responsibility is
limited to France.
The Committee nevertheless decided to examine the volume of
business conducted between Michelin and Airbus, as some of the
latter’s subsidiaries purchase products and/or services from Michelin.
Due to the structure of the aerospace markets served by
Michelin and the companies operating in these markets, the
Committee examined the revenues earned by Michelin in 2021
from the sale of products and services not only to Airbus
companies but also to these companies’ customers that own or
lease aircraft. The sales figure was then compared to Michelin’s
consolidated sales for 2021.
The comparison showed that the sales in question represented a
very limited part of the Group’s consolidated sales for the year.
Consequently, the Committee proposed considering that Anne-
Sophie de La Bigne's indirect business relationship with Michelin
by virtue of her position with the Airbus group was not material.
The Committee also examined the business relationship
between Michelin and the Capgemini group, whose Asia-Pacific
and
Latin
America
regions
have
been
headed
by
Aruna Jayanthi since 2018.
Transactions between the Capgemini group and Michelin for IT
consulting services represent only a very small proportion of
Michelin’s purchases, and their contribution to the Capgemini
group’s revenue is not material.
Consequently, the Committee proposed considering that Aruna
Jayanthi’s indirect business relationship with Michelin by virtue
of her position with the Capgemini group was not material.
In addition, the Committee examined the business relationship
between Michelin and Arkema, whose Chairman and Chief Executive
Officer is Thierry Le Hénaff.
Transactions between Arkema and Michelin represent only a
very small proportion of Michelin’s purchases and their
contribution to Arkema’s revenue is not material.
The Committee also examined a possible conflict of interest that
could result from the proximity of certain activities of Michelin’s
High-Tech Materials activities with Arkema’s Specialty Materials
business. Its assessment focused on Michelin’s flexible
elastomer composites and Arkema’s adhesives, advanced
materials and coating solutions.
After examining factors such as the businesses’ respective
characteristics, their maturity, their main scopes and target
applications/markets, the Committee decided that these factors did
not lead to the conclusion that Thierry Le Hénaff was permanently
exposed to a material conflict of interests.
In any event, if information about these businesses that was
considered sensitive for both groups was presented to the
Supervisory Board, Thierry Le Hénaff would step aside during
the communications, discussions and decisions concerned, in line
with the Board’s internal rules.
Consequently, the Committee proposed considering that Thierry
Le Hénaff’s indirect business relationship with Michelin by
virtue of his position with Arkema does not have a material
adverse effect on his independence and does not give rise to
any material conflict of interests.
The Committee examined a possible conflict of interest that
could result from the proximity of activities of Michelin's
Services & Solutions’ mobility businesses and certain mobility
products or services developed by ZF Friedrichshafen, whose
Chief Executive Officer is Wolf-Henning Scheider.
After analyzing the respective activities concerned, the
Committee decided that the factors covered by its analysis did not
lead to the conclusion that Wolf-Henning Scheider was
permanently exposed to a material conflict of interests.
In any event, if information about these businesses that was
considered sensitive for both groups was presented to the
Supervisory Board, Mr. Scheider would step aside during the
communications, discussions and decisions concerned, in line
with the Board’s internal rules.
Consequently, the Committee proposed considering that
Wolf‑Henning Scheider's position as Chief Executive Officer of
ZF Friedrichshafen did not affect his independence or give rise
to any conflict of interest.
Delphine Roussy and Jean-Christophe Laourde, Supervisory
Board members representing employees, are employees of MFPM.
The Supervisory Board considered that they could not be qualified
as independent because of the implicit requirement for them, as
Michelin employees, to demonstrate loyalty to the Group.
The Committee analyzed the situation of Barbara Dalibard,
Chief Executive Officer of SITA until December 2021 and Chair of
Michelin’s Supervisory Board since May 2021, based on the
independence criterion related to the period served on the Board.
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The Committee noted Barbara Dalibard’s independent mindset,
her experience and her conspicuous participation in the work of
the Board and its Committees(1). These qualities were the
decisive factors in the unanimous decision by Board members
to appoint her as Chair of the Supervisory Board when
Michel Rollier stepped down in May 2021.
The Committee considered that since Barbara Dalibard had
served on the Board for an uninterrupted period of twelve years
as of end-May 2020, she could no longer be considered as
independent for this reason alone.
Having
reviewed
the
Compensation
and
Appointments
Committee’s analyses, the Supervisory Board ruled that all of its
members – with the exception of the members representing
employees (Delphine Roussy and Jean-Christophe Laourde), and
Barbara Dalibard – are independent based on the criteria in the
AFEP/MEDEF Code. These independent members represent just
under 89% of total Supervisory Board members (excluding
employee representatives), a significantly higher proportion than
the 50% recommended in the AFEP/MEDEF Code, which states
that half of the Board members of widely-held corporations
without controlling shareholders should be independent.
3.2.7
ASSESSMENT OF THE SUPERVISORY BOARD'S PRACTICES
In 2021, a self-assessment exercise was conducted by the Chair
of the Supervisory Board and the Senior Independent Member.
The assessment was based on a series of one‑on‑one interviews
with Supervisory Board members and the Managers.
The following matters were covered:
▶Supervisory Board practices;
▶Supervisory Board membership;
▶experience and expertise represented on the Board;
▶the Board’s relations with the Managers, shareholders and
other stakeholders;
▶practices of the Committees of the Supervisory Board.
As is the case every year, a review of this assessment was
included on the agenda of the July 23, 2021 Supervisory Board
meeting. During this meeting, the results of the assessment
were presented to the Supervisory Board and the Managers by
the Chair of the Supervisory Board. This presentation was
followed by an exchange of views and a discussion among the
Supervisory Board members.
The following points were noted:
▶the Board's culture is perceived as being very positive;
▶the relationship with the Managers is very positive,
constructive and interactive, allowing for a real process of
continuous improvement;
▶the creation of the CSR Committee has been a success;
▶the reports presented to the Board by the Chairs of the
Committees are very satisfactory;
▶the new digital platform for use by Board members is very
satisfactory and the files are of a very high quality.
The assessment underscored the importance of:
▶maintaining the right balance between strategy/business
topics and time spent on presentations versus the ensuing
discussions;
▶making some changes to the structure of the documentation;
▶continuing to focus on putting the competitive environment,
risks and human resources management issues into
perspective.
The Supervisory Board members concurred with the proposal by
the Board’s Chair that a new external assessment should be
performed in 2022.
(1) Chair of the Compensation and Appointments Committee between 2015 and June 2020, Senior Independent Member between 2017 and June 2020, member
of the Audit Committee between July 2020 and May 2021.
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3.2.8
IMPLEMENTATION OF THE “APPLY OR EXPLAIN” RULE
In accordance with Article L. 22-10-10-4° of the French Commercial Code and paragraph 27.1 of the AFEP/MEDEF Code and
the corresponding implementation guidance, the Supervisory Board considers that it complies with the recommendations of the AFEP/MEDEF
Code, as adapted to the Company’s structure as a French partnership limited by shares (S.C.A.), which was adopted at the time of its
formation in 1863, except as explained below:
AFEP/MEDEF Code
recommendation
Explanation
Material transactions
outside the scope of
the firm’s stated strategy
should be subject to
prior approval by the
Board of Directors
(Recommendation 1.9,
first bullet point)
This recommendation in Article 1.9 of the AFEP/MEDEF Code (first bullet point) is not directly applicable because of
the Company’s legal form as a partnership limited by shares. With this type of partnership, the Managing General
Partners have unlimited personal liability and their powers are completely separate from those of the Supervisory
Board, with the result that the Supervisory Board has no legal authority to become involved in managing the
Company.
However, to (i) ensure that the Supervisory Board exercises effective oversight of the Company’s management and
(ii) adhere to the spirit of the AFEP/MEDEF recommendation, since 2011 the Company has amended its Bylaws(1)(2),
as well as the Supervisory Board’s internal rules(1).
These internal rules state that the Supervisory Board is responsible for examining investment and external growth
transactions, off-balance sheet commitments and asset disposals, and is required to issue a formal opinion in cases
where the transactions are material for the Group due to their nature or associated risks. For this purpose,
“material” means transactions representing at least €100 million, or at least €50 million in the case of external
growth transactions. This means that the Supervisory Board is automatically consulted about all projects that are
material for the Group. Moreover, as it expresses an opinion on such projects, it is clearly able to report to
shareholders thereon if appropriate.
This approach complies with the spirit and aims of the recommendation.
Termination of
employment contract
in the event of becoming
a corporate officer
(Recommendation 22)
Due to their status and specific responsibilities, under the long-standing compensation policy applied to Managing
General Partners, these partners cease to be covered by any employment contract that may have existed between
them and a Group company prior to becoming Managing General Partner. This rule applies even if they have
acquired considerable seniority with the Group.
In addition, Yves Chapot’s mandate as General Manager justifies suspending his pre-existing employment contract
with a Michelin Group company, for the following reasons:
▶Yves Chapot is not the most senior executive officer (Manager); he reports to the Managing Chairman who,
according to the Company’s Bylaws, defines the Managers’ areas of responsibility and any restrictions on their
powers, as well as setting their annual objectives;
▶the position of General Manager is therefore similar to that of a Chief Operating Officer or a member of
the Management Board of a joint stock corporation, who are not concerned by the AFEP/MEDEF Code’s
recommendation;
▶Yves Chapot has acquired considerable seniority, having worked for the Michelin Group without interruption
for over 29 years (since 1992);
▶if Yves Chapot were to cease to be a Manager, any compensation for loss of office or non-compete indemnity
due to him would be reduced if necessary so that the total amount payable – including the termination benefit in
respect of his suspended employment contract – would not exceed his final two years’ total compensation.
(1) Available from the Group’s website www.michelin.com.
Article 17 of the Bylaws states that “(...) The Supervisory Board is jointly and regularly informed about the Company’s situation and the key issues listed in the
Supervisory Board’s internal rules. The Supervisory Board reports to the Shareholders Meeting on the fulfillment of its duties (...)”.
The new Board members representing employees having completed their induction training in 2021, one of them (Delphine Roussy)
was appointed to sit on the Compensation and Appointments Committee in accordance with the wishes of the Supervisory Board
members(1). Recommendation 18.1 of the AFEP/MEDEF Code is now applied and the exception has therefore been removed.
(1) See disclosures in section 3.2.8 of the 2020 Universal Registration Document.
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3.2.9
AUDIT COMMITTEE(1)
3.2.9.1
Members(2)
The Audit Committee has at least three members appointed for
their full term as Supervisory Board members. At least two-thirds
of the members must be independent. Since May 2021(3), the
Audit Committee has comprised the following members:
▶Patrick de La Chevardière, independent member and
Committee Chairman;
▶Aruna Jayanthi, independent member;
▶Monique Leroux, independent member;
▶Wolf-Henning Scheider, independent member.
The qualifications and experience of the Audit Committee
members at December 31, 2021 have given them a deep
understanding of financial and accounting matters:
▶Patrick de La Chevardière is a director of Schlumberger and
was the Chief Financial Officer and a member of the
Executive Committee of the Total group from 2008 to 2019;
he is a graduate of École Centrale;
▶Aruna Jayanthi is the Managing Director of Capgemini's
Asia–Pacific and Latin America business unit and a member of
the Group's Executive Committee. She holds a Master’s
degree in Finance Management from the Narsee Monjee
Institute of Management Studies in Mumbai and has acquired
and extensive experience in the area of cybersecurity and
other IT risks;
▶Monique Leroux sits on the Boards of several companies. She
was previously a partner of EY (Canada) and served as the
Chair of the Board and Chief Executive Officer of Mouvement
Desjardins from 2008 to 2016. She is a Fellow of the Order
of Certified Professional Accountants of Quebec and of the
Canadian Institute of Corporate Directors;
▶Wolf-Henning Scheider is Chief Executive Officer of
ZF Friedrichshafen AG. He was a director and member of the
Executive Committee of the Bosch group from 2010 until
2015, then Chief Executive Officer of the Mahle group
between 2015 and 2018. He studied at Saarbruck University
and RWTH Aachen University, graduating in Business
Administration and Economics.
3.2.9.2
Role and responsibilities
The role of the Audit Committee is described in its internal
rules, available on the Group’s website www.michelin.com.
The Audit Committee assists the Supervisory Board in fulfilling
its oversight role. It operates as a specialized committee tasked
with addressing issues related to the preparation and control of
accounting and financial information in accordance with Articles
L. 823-19 and L. 823-20-4 of the French Commercial Code.
In 2021, the Chairman of the Audit Committee obtained
assurance that the Committee’s work in 2020 and 2021
enabled it to fulfill its remit as specified in French law and the
AFEP/MEDEF Code.
The Audit Committee’s rules of procedure are described in its
internal rules.
In view of the distance they may have to travel to attend
meetings and the other business commitments not only of the
Supervisory Board and Audit Committee members but also of
the members of Executive Management, the Audit Committee
conducts its formal review of the financial statements half a day
before they are presented to the Supervisory Board.
3.2.9.3
Activities in 2021
The Committee met four times in 2021 – on February 11, April 13,
July 22 and December 13 – with an attendance rate of 100%.
The main purpose of the meetings held in 2021 was to review:
▶the audited parent company financial statements for 2020, the
parent company projections prepared in accordance with French
law, and the audited consolidated financial statements for
2020, as presented by the Manager and Chief Financial Officer,
the Deputy Chief Financial Officer and the Senior Vice President,
Accounting. The Committee focused on reviewing asset
impairment tests, key figures and non-recurring events in 2020.
It noted that the audit of the accounts had gone smoothly. The
Statutory Auditors reported to the Committee on their audit,
noting that they would be issuing an unqualified opinion,
without any emphasis of matter, on both the separate and
consolidated financial statements. They also submitted their
written report to the Audit Committee;
▶the interim consolidated financial statements for the
six months ended June 30, 2021 and the information on the
parent company projections prepared in accordance with
French law, as presented by the Manager and Chief Financial
(1) At December 31, 2021.
(2) Biographical details and other information concerning the members of this Committee of the Supervisory Board are provided in section 3.1.3.3 of this 2021
Universal Registration Document.
(3) Between January and May 2021, its members were: Patrick de La Chevardière, independent member and Committee Chairman; Barbara Dalibard, non-
independent member (non-executive); Thierry Le Hénaff, independent member; Monique Leroux, independent member.
4
members
100%
attendance rate
100%
independence
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Officer, the Deputy Chief Financial Officer and the Senior Vice
President, Accounting. The Committee performed a detailed
review of the Group’s results for the first half of 2021 and
discussed with the Statutory Auditors the nature and
conclusions of their work. The Statutory Auditors reported to
the Committee on their review of the interim financial
statements for the six months ended June 30, 2021. Their
review report did not contain any qualifications or emphasis
of matter;
▶the financial information for the third quarter of 2021 and
related financial press release, as presented by the Manager
and Chief Financial Officer, the Deputy Chief Financial Officer
and the Senior Vice President, Accounting;
▶preparation of the 2021 accounts closing, as presented by
the Manager and Chief Financial Officer, the Deputy Chief
Financial Officer and the Senior Vice President, Accounting;
▶risk management and internal control systems (including self-
assessments, controls and the follow-up of action plans),
presented by the Deputy Chief Financial Officer, the Senior
Vice Presidents, Audit, Quality, Internal Control and Risk
Management, and the Head of Internal Control;
▶the internal audit plan and the audits carried out in 2021
(including audits of the physical impacts of global warming,
cybersecurity, the adjustments made to the audit plan in light
of the Covid-19 crisis and changes in the structure of the
internal auditors’ activities), presented at the quarterly
meetings by the Internal Audit Director;
▶in early 2022, the Committee met to review the audited parent
company financial statements for 2021, the parent company
projections prepared in accordance with French law, and the
audited consolidated financial statements for 2021, as presented
by the Manager and Chief Financial Officer;
▶the Committee’s work also covered the following areas:
• review of Information Systems (IS) risk management in
terms of architecture, cybersecurity, internal control and
data privacy, presented by the Information Systems
Director,
• the Simply Michelin simplification project, based on a
presentation by the Deputy Chief Financial Officer of the
project’s objectives, milestones and current deployment
status,
• the management of the portfolio of minority interests and
joint ventures, presented by the Managing Director and
Chief Financial Officer,
• the Purchasing function, its roles, organization and challenges,
presented by the Senior Vice President, Purchasing,
• international tax reform (Pillar 1 and Pillar 2) and the
Group's transfer pricing policy, presented by the Senior
Vice President, Tax and Customs Affairs.
The Chairman of the Audit Committee reported to the
Supervisory Board on the Committee's work on February 12,
April 13 and 14, July 23, and December 14, 2021.
3.2.10
COMPENSATION AND APPOINTMENTS COMMITTEE(1)
*
Excluding the employee representatives.
3.2.10.1 Members(2)
The Compensation and Appointments Committee must
comprise at least three members (including the Chair(man) of
the Committee) who fulfill the criteria for classification as
independent throughout their term as members of the
Supervisory Board.
Since May 2021(3), the Compensation and Appointments
Committee has comprised the following members:
▶Jean-Pierre Duprieu, independent member and Committee
Chairman;
▶Anne-Sophie de La Bigne, independent member;
▶Thierry Le Hénaff, independent member and Senior
Independent Member of the Supervisory Board;
▶Delphine Roussy, non-independent (non-executive) member
representing employees.
The new Board members representing employees having
completed their induction training, one of them (Delphine Roussy)
was appointed to sit on the Compensation and Appointments
Committee in accordance with the wishes of the Supervisory
Board members(4).
(1) At December 31, 2021.
(2) Biographical details and other information concerning the members of this Committee of the Supervisory Board are provided in section 3.1.3.3 of this 2021
Universal Registration Document.
(3) Between January and May 2021, its members were: Jean-Pierre Duprieu, independent member and Chairman of the Committee; Aruna Jayanthi, independent
member; Anne-Sophie de La Bigne, independent member.
(4) See explanation in section 3.2.8 of the 2020 Universal Registration Document.
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members
100%
attendance rate
100%
independence*
4
meetings
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3.2.10.2 Role and responsibilities
The role of the Compensation and Appointments Committee,
which is described in its internal rules available on the Group’s
website www.michelin.com, includes the following:
▶executive management appointments and compensation policy;
▶talent management, diversities and inclusion policy;
▶the policy concerning the appointment of Managers,
including career and succession plans, developed jointly with
the Non‑Managing General Partner (SAGES)(1);
▶the compensation awarded to the corporate officers (Managers,
the Chair(man) of the Supervisory Board and the other
Supervisory Board members), with the Managers’ compensation
discussed with the Non-Managing General Partner (SAGES)(4);
▶the
membership
of
the
Supervisory
Board
and
its
Committees, and the succession plan for the Chair(man) of
the Supervisory Board.
The Compensation and Appointments Committee’s rules of
procedure are described in its internal rules.
3.2.10.3 Activities in 2021
The Committee met four times in 2021 – on February 4,
April 13, July 23 and October 25. The overall attendance rate at
Committee meetings was 100% (excluding the July 23 meeting,
which was not scheduled at the beginning of the year).
The Committee’s work mainly covered the following issues:
▶succession plan for the Managers. The Committee examined
the proposal of the Non-Managing General Partner (SAGES)
to
renew
the
appointment
of
the
Managers
and
recommended that the Board renew the appointment of
each of the Managers for a period of four years(2);
▶review of corporate officers’ compensation. At the beginning
of 2021, the Committee analyzed and submitted to the
Supervisory Board its conclusions concerning the achievement
rates for the performance criteria applicable to the
performance-based components of compensation awarded
by the Company to the Managers and the Chair(man) of the
Supervisory Board for 2020, prior to these conclusions being
submitted to the General Partners (SAGES, Non-Managing
General Partner, and Florent Menegaux, General Partner and
Managing Chairman);
These compensation components were put to the vote at the
Ordinary Shareholders Meeting of May 21, 2021 in the 8th to
11th resolutions, which were each adopted by a majority of
over 96% of the votes cast.
Based on the Committee’s recommendation, the Supervisory
Board examined the amount of compensation awarded to its
Chairman and prepared and recommended the components
of his compensation to be put to the vote at the Annual
Shareholders Meeting of May 21, 2021. The corresponding
resolution (11th resolution) was approved by a majority of
99.90% of the votes cast.
The Compensation and Appointments Committee also
reviewed and proposed to the Supervisory Board the
components of the Managers’ 2021 variable compensation.
In early 2022, the Committee analyzed the various components
of the Managers’ compensation and noted the achievement
rates for the applicable performance criteria. It then presented its
conclusions and recommendations to the Supervisory Board;
▶review of Supervisory Board members’ independence and any
conflicts of interest. The Committee performed its annual review
of the Supervisory Board members’ independence, by
examining in particular whether there were any business
relationships between the members and Michelin that could be
qualified as material(3);
▶executive management succession plan. The Compensation and
Appointments Committee of the Supervisory Board periodically
reviews the succession plans and career plans of the Group’s
executive management team, the Managers and current or
potential future members of the Executive Committee, in order
to ensure a smooth succession to these positions when the time
comes or to deal with any crisis situation.
To the above ends, for several years now the Compensation and
Appointments Committee, led by its Chair(man), and with the
Senior Independent Supervisory Board Member, has analyzed the
performance
appraisals
of
key
executives
prepared
by
management with the assistance of an independent firm of
consultants. The Committee has held very instructive discussions
with these consultants that have enabled it to appreciate the
quality of their work;
▶succession plan for the Managers. In addition to reviewing
executive management succession plans, in 2021 the
Compensation and Appointments Committee, led by its
Chair(man) and in consultation with the Chairman of SAGES,
Non-Managing General Partner, reviewed the Manager
succession timeline, the candidate selection criteria and
assessment process and the succession implementation process;
▶talent management, diversities and inclusion. In 2021, the
Compensation and Appointments Committee reviewed the
changes in the membership of the Group Executive
Committee, the talent management policy and the action
plans to promote diversity and inclusion, not only at senior
management level but also throughout the Group;
▶recommendations concerning the re-election of Supervisory
Board members at the Annual Shareholders Meetings of
May 21, 2021 and May 13, 2022 At the Supervisory Board's
request, the Committee reviewed the proposed elections/re-
elections/ratification of Supervisory Board members.
The Committee’s work and its recommendations to the
Supervisory Board are described in detail in section 7.2 of the
2020 Universal Registration Document for the re-elections/
elections proposed at the Annual Shareholders Meeting of
May 21, 2021 and in the Supervisory Board’s report on the
proposed resolutions (see section 7.2 of this 2021 Universal
Registration Document) for the re-elections to be proposed at
the Annual Shareholders Meeting of May 13, 2022;
▶variable compensation policy. As in prior years, the Committee
reviewed the Group’s variable compensation and performance
share policies, as well as changes to these policies.
The Committee’s Chair(man) reported to the Supervisory
Board on the Committee’s work at the Board meetings on
February 12, April 13 and 14, July 23 and December 14, 2021.
(1) As explained in section 3.1.4 above.
(2) See section 3.1.1.1 above.
(3) See the detailed description in section 3.2.6 of this report.
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3.2.11
CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE(1)
*
Excluding the employee representatives.
3.2.11.1 Members(2)
The Corporate Social Responsibility Committee must comprise
at least three members (including the Chair(man) of the
Committee) who fulfill the criteria for classification as
independent throughout their term as members of the
Supervisory Board.
The members of the CSR Committee are:
▶Monique Leroux, independent member and Chair of the
Committee;
▶Anne-Sophie de La Bigne, independent member;
▶Jean-Christophe Laourde(3), non-independent (non-executive)
member representing employees;
▶Jean-Michel Severino, independent member.
3.2.11.2 Role and responsibilities
The role of the CSR Committee is described in its internal rules,
available on the Group’s website www.michelin.com.
The Committee’s remit covers the various aspects of corporate
social responsibility and it cooperates closely with the
Compensation and Appointments Committee and the Audit
Committee on cross-functional matters that are of interest to them.
The CSR Committee’s rules of procedure are described in its
internal rules.
3.2.11.3 Activities in 2021
The CSR Committee met three times in 2021 – on February 11,
April 12 and December 13 – with an attendance rate of 100%.
The Committee's work mainly covered the following issues:
▶Cross-functional issues:
• the CSR Committee reviewed the non-financial information
(including Key Performance Indicators) presented in the
Universal Registration Document and recommended certain
improvements, taking into account the Group's various
sustainability rankings,
• the Group's Duty of Care plan was reviewed by the
Committee,
• a regulatory watch system (European Taxonomy, draft
Corporate Sustainability Reporting Directive, Task Force on
Climate-related Financial Disclosures) was set up,
• the alignment of the Group's CSR disclosures with TCFD
principles; taking into account the work of the Audit
Committee, the CSR Committee examined materiality
assessments of CSR risks and their consistency with the
issues described in the materiality matrix;
▶In the area of environmental liability:
• when examining the alignment of the Group's CSR
disclosures with TCFD principles, the Committee reviewed the
plan to decarbonize its value chains, which is one of the
components of its climate strategy; the other components of
this strategy were examined by the Committee in early 2022,
• the Committee was informed of the process for preparing
the Group’s first report using the European Taxonomy in
early 2022,
• the Committee reviewed the negative environmental
externalities and the evaluation of their impact on the
Group's financial results,
• the Committee also made a positive recommendation
concerning the Group's involvement in the United Nations
Race to Zero initiative;
▶In the area of social responsibility:
• the Committee examined the analysis of the decent wage
policy’s deployment throughout the Group,
• the Committee was presented with the Group's Diversity &
Inclusion ambitions and policy, together with the related
indicators,
• the Committee reviewed the analysis of the Health &
Safety audit findings (excluding manufacturing), which
were presented to the Audit Committee in December
2021, and the corresponding action plan.
The Chair of the Committee reported to the Supervisory Board
on the Committee’s work on February 14, April 13 and 14, and
December 14, 2021.
(1) At December 31, 2021.
(2) Biographical details and other information concerning the members of this Committee of the Supervisory Board are provided in section 3.1.3.3 of this 2021
Universal Registration Document.
(3) Jean-Christophe Laourde joined the Committee in May 2021.
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members
attendance rate
100%
independence*
3
meetings
100%
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3.3
MANAGEMENT AND SUPERVISORY BOARD COMPENSATION
POLICIES FOR 2022
3.3.1
GENERAL PRINCIPLES
Since 2014, the compensation awarded to the Managers and the
Chair(man) of the Supervisory Board has been submitted to the
shareholders at the Annual Ordinary Shareholders Meeting and,
since 2020, following the method and on the basis specified in
the PACTE Act that came into force that year.
The General Partners and the Supervisory Board, based on the
recommendation of its Compensation and Appointments
Committee, will ask the Ordinary Shareholders Meeting of
May 13, 2022 to approve the 2022 Compensation Policy
applicable to (i) the Managers and (ii) the Supervisory Board.
The Compensation Policy applicable to the corporate officers is
prepared and revised in accordance with the relevant laws and
regulations.
Article L. 22-10-76-I of the French Commercial Code stipulates
that the Compensation Policy applicable to the corporate
officers must be compatible with the Company’s corporate
interests. It must contribute to its marketing strategy as well as
the long-term sustainability of the business. This Compensation
Policy establishes a competitive framework aligned with the
Group’s strategy and business environment. The policy is
designed to increase medium and long-term performance and
competitiveness and is therefore in the Group’s best corporate
interests in accordance with the AFEP/MEDEF code.
The policy contributes to the Company’s marketing strategy by
requiring the Group’s performance to be factored into the
calculation of variable compensation, in particular:
▶the Managers’ variable compensation (annual, long-term)
represents the predominant part of their total compensation;
and
▶the amount they receive in variable compensation depends
on the achievement of objectives related to the Group’s main
performance indicators, which also apply to the employees
of Group companies.
The policy contributes to the Company’s sustainability by
requiring the Group’s performance to be factored into the
calculation of variable compensation, in particular:
▶for each Manager:
• the performance indicators applicable to their variable
compensation
(annual
and
long
term)
focus
on
sustainability in line with the Group’s strategy,
• part of their long-term variable compensation consists of
performance shares that are subject to vesting conditions
linked to the achievement of performance objectives over
several years,
• the performance shares received when the vesting
conditions have been met may not be sold for as long as
they serve as a Manager;
▶for the Managing Chairman, the Compensation Policy takes
into account his position as General Partner with unlimited
joint and personal liability for the Company’s debts by
deducting his annual variable compensation from the
amounts due to the General Partners out of the Company’s
profits (if any);
▶for the members of the Supervisory Board, most of their
compensation as Supervisory Board member and, if
applicable, member of a Committee of the Board, is based on
their attendance rate at Board and Committee meetings,
which are scheduled at the start of the year.
In the decision-making process for the determination and
revision of the Compensation Policy, the Company has chosen
to take into account the compensation and employment
conditions of employees of its main French subsidiary,
Manufacture Française des Pneumatiques Michelin (“MFPM” or
the “Scope”)(1).
For 2022, the Managers have decided to share the quantitative
performance criteria and indicators defined by the Supervisory
Board
for
their
own
annual
and
long-term
variable
compensation with eligible employees of Group companies.
Conflicts of interest are avoided in the drafting, revision and
implementation of the Compensation Policy due to the
involvement of the Supervisory Board and the Compensation
and Appointments Committee, whose members are all
independent (excluding the member representing employees).
The procedures for managing conflicts of interest within the
Supervisory Board are described in section 3.2.6.
The General Partners, in the case of the Managers, or the
Supervisory Board, in the case of the members of the
Supervisory Board, may not depart (within the meaning of the
second paragraph of Article L. 22-10-76-III of the French
Commercial Code) from the Compensation Policy.
The 2022 Compensation Policy is the subject of two proposed
resolutions to be presented at the Ordinary Shareholders
Meeting to be called to approve the 2021 financial statements:
▶the 6th resolution concerning the policy applicable to the
Managers, presented in section 3.3.2 below;
▶the 7th resolution concerning the policy relating to the members
of the Supervisory Board, presented in section 3.3.3 below.
(1) The Company has very few employees (fewer than five, none of whom are corporate officers) and their compensation and employment conditions do not therefore
represent a relevant benchmark.
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3.3.2
COMPENSATION POLICY: THE MANAGERS
This section describes the components of the Compensation Policy for the Managers. These components are presented in a proposed
ordinary resolution approved by the General Partners and submitted for shareholder approval at the Ordinary Shareholders Meeting to
be called to approve the 2021 financial statements (6th resolution).
3.3.2.1
Principles for determining compensation
The compensation of the Managing Chairman and General
Partner is decided by the General Partners and is the subject of
a deliberation by the Supervisory Board. Then:
▶the annual variable compensation is deducted from the General
Partners’ Profit Share, as explained in section 3.3.2.3 below;
▶the long-term variable compensation is awarded in the form
of performance shares;
▶the fixed compensation is paid by a subsidiary of the Company
in exchange for his services as Chairman of that company.
The fixed and variable annual compensation of the General
Manager
and
his
long-term
variable
compensation
(performance shares) are decided by the General Partners and
are the subject of decisions by the Supervisory Board.
The Committee also reviews all amounts and benefits due,
awarded or to be awarded to the Managers for the previous
year by Group companies. As part of the review, the Committee
particularly verifies that the amounts paid or awarded to the
Managers are proportionate and consistent in terms of (i) the
Group’s performance and (ii) industry and market practice.
3.3.2.2
Fixed compensation
The
Compensation
and
Appointments
Committee
had
previously
noted
that
the
fixed
compensation
of
Florent
Menegaux
(€900,000.00)
and
Yves
Chapot
(€600,000.00) was, already at the date of determination in
2018 and unchanged since then, lower than the median fixed
compensation of their counterparts in the main French listed
groups(1). In addition, when it was set in 2018, the fixed
compensation of Florent Menegaux, Managing Chairman was
more than 22% lower than the fixed compensation of his
predecessor, determined in 2014.
In 2020, in light of the efforts required of Michelin Group
employees and other stakeholders during the Covid-19 health
crisis, the Managers’ fixed compensation was reduced by 25%
for the period during which employees were furloughed in 2020.
In 2021, in light of the economic crisis and the policy of salary
moderation decided for Group employees for 2020 and 2021,
the Managers informed the Committee that they did not want
the level of their fixed compensation to be raised in 2021.
The Committee made the following proposals(2):
▶to keep the Managers’ fixed compensation for 2021 at the
level applicable since 2018, i.e., €900,000.00 for Florent
Menegaux and €600,000.00 for Yves Chapot; and
▶to recommend that these amounts be revised in 2022.
The Committee examined in depth the conditions for revising
their fixed compensation in 2022 and considered the following
elements in particular:
▶concerning the principle of the decision:
• this measure, already mentioned by the Chair of the
Compensation and Appointments Committee at the
Annual Shareholders Meeting of June 23, 2020(3) and
proposed by the Committee in 2021, was recommended
by the Supervisory Board and then postponed to 2022, due
to the economic situation linked to the Covid-19 crisis,
• the fixed compensation of the Managers, as determined in
2018, was not increased at any point during their first term
(May 2018-May 2022); on the contrary, it was reduced by
25% in 2020 during the period when employees in France
were furloughed,
• the Supervisory Board and the Non-Managing General
Partner (SAGES) consider this increase to be justified in
light of the Managers’ achievements during their first term
of office, including:
• the
seamless
implementation
of
the
Managers'
succession plan,
• more
dynamic
governance
processes
with
the
Supervisory Board, as noted in the external consultants’
assessment of the Board’s practices, and with the
Non‑Managing General Partner (SAGES),
• the efficient management of the consequences of the
Covid-19 crisis,
• the preparation and launch of the Group's new
expansion strategy around and beyond tires and the
launch of the Group's transformation initiatives,
• the Managers' fixed compensation would be increased
only from the beginning of their second four-year term,
i.e., after the next Annual Shareholders Meeting in
May 2022, and would then remain unchanged for the
duration of their second term;
▶concerning
the
quantum
of
the
increase
in
fixed
compensation:
• Florent Menegaux, Managing Chairman and General
Partner: his fixed compensation would be raised to the
amount paid to his predecessor between 2014 and 2019,
i.e., €1,100,000.00 per year, resulting in an amount of
€1,016,670.00 for 2022 (rounded, with the new
compensation applied from June 1, 2022),
(1) Considering the convergent results of several studies carried out by leading compensation consultants on the compensation of equivalent categories of
Company executives of CAC 40 companies.
(2) See the Committee’s conclusions in section 3.3.2.2 of the 2020 Universal Registration Document.
(3) See the presentation by the Chair of the Compensation and Appointments Committee to the Annual Shareholders Meeting of June 23, 2020.
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• Yves Chapot, General Manager: his new fixed compensation
would amount to €770,000.00 per year, resulting in an
amount of €700,000.00 for 2022 (rounded, with the new
compensation applied from June 1, 2022),
• these changes should be considered in relation not only to
the fact that the Managers’ original fixed compensation
remained unchanged throughout their first term, but also
that their new compensation would remain unchanged
throughout their second term, i.e., until 2026,
• the proposed increases are of the same order of magnitude
as the average increase in the basic compensation of
Group employees over the same interval,
• the Managers’ new fixed compensation would correspond to(1):
• for Florent Menegaux, the median compensation of the
Chief Executives of CAC 40 companies,
• for Yves Chapot, the median compensation of the Chief
Operating Officers of CAC 40 companies.
3.3.2.3
Annual and long-term variable compensation
Shared principles
To engage Managers more deeply in the Company’s
performance and encourage them to act with its long-term
interests in mind, their variable compensation includes an annual
portion and a long-term portion, both of which are subject to
performance conditions.
This structure means that the Managers’ variable compensation
fluctuates partly in line with net income for the year and partly
on the basis of several additional performance conditions
related to factors that are essential for the deployment of
Michelin’s strategy to deliver sustainable growth.
The level and terms of the Managers’ compensation take into
account the positions of Managing Chairman and Managing
General Partner, as well as the difference in status between a
Managing General Partner and a General Manager.
Annual variable compensation
Florent Menegaux, Managing Chairman
and General Partner
In light of the General Partners’ unlimited joint and personal
liability for the Company’s debts, the General Partners are
entitled to a share of annual profit (the “Profit Share”)
determined on the basis defined in the Company’s Bylaws. This
means that their interests are fully aligned with those of the
shareholders, as they are paid Profit Shares only if the Company
makes a profit(2).
Allocation method
The Profit Share is defined in Articles 12 and 30 of the
Company's Bylaws, which state(3) that:
▶the portion of the Profit Share attributable to the Managing
General Partner(s) is determined by reference to the
objectives set in advance by the Supervisory Board;
▶the portion attributable to the Non-Managing General Partner
is equal to the portion attributable to the Managing General
Partner(s)
in
respect
of
his/her/their
annual
variable
compensation or in any other form whatsoever (including in
performance shares).
In all cases, the total Profit Share due to the General Partners is
capped at 0.6% of consolidated net income for the year.
Calculation method
▶at the beginning of each year, the Managers propose to the
Compensation and Appointments Committee performance
criteria and objectives that are consistent with the guidance
and information communicated to the market;
▶the Compensation and Appointments Committee analyses
the Managers’ proposals, taking into account:
• AFEP/MEDEF Code recommendation 25 concerning the
calculation principles and content of compensation
packages;
• the practices of the CAC 40 companies and appropriate
benchmarks;
• the compensation and employment conditions of Michelin
employees;
• the intrinsic variability of the Company’s profits;
• projected future profits; and
• the unusual nature of General Partner status.
▶the Compensation and Appointments Committee shares its
conclusions with the Non-Managing General Partner (SAGES)
and presents its recommendations to the Supervisory Board;
▶the Supervisory Board discusses the recommendations of the
Compensation and Appointments Committee and decides on
the performance criteria and objectives for the current year;
(1) Based on the convergent results of studies carried out by leading compensation consultants and analyzed by the Compensation and Appointments Committee.
(2) Substantially all of the Profit Share received by SAGES, Non-Managing General Partner, is credited to the contingency reserve set up in application of its Bylaws.
(3) The Bylaws were amended by the Extraordinary Shareholders Meeting of May 21, 2021 (15th and 16th resolutions, respectively approved by 98.39% and
98.37% of the votes cast) in order to simplify the method of calculating the Profit Share, limit the portion of the Profit Share attributable to the Non-Managing
General Partner (SAGES) and stipulate that free shares may be awarded to the Managers. Previously, the Profit Share defined in the Company’s Bylaws was
calculated on the basis of the Company’s net income for the year, less dividends received from its two main subsidiaries. The total amount due to the General
Partners was capped at 0.6% of consolidated net income for the year and the amount paid to the Non-Managing General Partner corresponded to the total
Profit Share less the amount paid to the Managing General Partner (see section 3.3.2.3 of the 2020 Universal Registration Document).
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▶the General Partners then meet to set the compensation
policy for the Managers for the current year and to formalize,
subject to adoption by the Ordinary Shareholders Meeting of
the corresponding resolutions i) for the Managing General
Partner, by way of an agreement between the General
Partners, the portion of the earnings for the current year that
may be allocated to the Managing General Partner as annual
variable compensation within the limits set by the Bylaws,
and ii) for the General Manager, by way of a decision of the
General Partners, the annual compensation components
concerning him; said agreement and decision taking into
account and integrating the performance criteria and annual
variable compensation objectives set by the Supervisory
Board, after consultation and deliberation by the latter;
▶the Managing Chairman, after confirming the Non-Managing
General Partner's approval, submits the corresponding draft
resolutions to the Ordinary Shareholders Meeting under the
conditions set out in the applicable regulations;
▶once the compensation policy has been approved by the
Ordinary Shareholders Meeting, the General Partners sign an
agreement covering the determination of the Profit Share and
formally recognizing that the criteria for determining the
Managing General Partner’s annual variable compensation
will be applied to calculate the portion of the Profit Share
attributable to him.
At each year-end, the Compensation and Appointments
Committee reviews the results for the applicable objectives and
presents its recommendations to the Supervisory Board.
The Supervisory Board confirms the Compensation and
Appointments Committee’s performance assessment and shares
this assessment with the Non-Managing General Partner.
The General Partners approve the components of the annual
and long-term variable compensation to be paid or delivered to
the Managing Chairman and General Partner based on the
Supervisory Board’s assessment of the achievement rate for the
performance objectives and criteria.
Annual variable compensation structure
The annual variable compensation of Florent Menegaux would
consist of two components:
▶a first component, calculated in a specific way because of his
financial and legal responsibility as General Partner, would be
equal to 4% of the maximum Profit Share. The same principle
is also used – after adjustment – to determine the General
Manager’s variable compensation;
▶a second component, with an overall weighting of 80%, would
be calculated on the basis of a percentage of his annual fixed
compensation and would be determined by the results of the
following performance criteria decided by the Supervisory Board:
• two quantitative criteria (each weighted at 25%):
• growth in segment operating income (SOI), and
• growth in structural free cash flow before acquisitions,
these criteria also apply to the General Manager and to all
Group employees who are eligible to participate in the bonus
scheme,
• five quantifiable qualitative criteria:
• deployment of the Group's transformations (10%
weighting),
• synergies achieved on the latest company acquisitions
(5% weighting),
• the level of the Total Case Incident Rate (TCIR) (with a
5% weighting),
• the percentage of women in the management group
(5% weighting),
• the level of CO2 emissions (Scopes 1 and 2 and
upstream/downstream transport activities in Scope 3)
(5% weighting).
These seven criteria would also be applied to the General
Manager and the following would be applied to each criterion: a
trigger point (below which no compensation would be due), a
target (if the target is met, 100% of the compensation for the
criterion would be payable), an outperformance tranche
(between 100% and 150% of the objective, with the
compensation prorated to the achievement rate for the
objective) and an intermediate tranche (between the trigger
point and 100% of the objective, with the compensation
prorated to the achievement rate for the objective);
▶the total annual variable compensation (i.e., the sum of the
first and second components) would be capped, as decided
by the Supervisory Board for the 2021 annual variable
compensation, at 150% of the reference fixed compensation.
For example, for fixed compensation of €1,016,670.00 for
2022, the total annual variable compensation would be
capped at €1,525,000.00, and would be deducted from the
Profit Share.
For reasons of confidentiality and business secrecy, and in particular
to avoid disclosing information about the Company’s strategy that
could be used by business competitors for their advantage, the
Supervisory Board has elected not to disclose details of the
performance targets set for these quantitative and quantifiable
criteria. However, to permit historical comparisons, the 2021
objectives set by the Supervisory Board for the quantitative
performance criteria are presented in section 3.4.4.2 of this report.
Yves Chapot, General Manager
Calculation method
The performance criteria and objectives applicable to the
General Manager would be determined and assessed in the
same way as for the Managing Chairman, except for the
specific features linked to the status of General Partner.
Annual variable compensation structure
Yves Chapot’s annual variable compensation would be
calculated on a basis equal to 100% of his 2022 fixed
compensation, with the same performance criteria as those used
to determine the Managing Chairman’s variable compensation,
as presented above:
▶three quantitative criteria:
• growth in net income (20% weighting), growth in segment
operating income (25% weighting),
• growth in structural free cash flow before acquisitions
(25% weighting),
• for a total amount equal to up to 70% of the base;
▶five quantifiable qualitative criteria:
• deployment of the Group's transformations (10% weighting),
• synergies achieved on the latest company acquisitions
(5% weighting),
• the level of the Total Case Incident Rate (TCIR) (with a
5% weighting),
• the percentage of women in the management group
(5% weighting),
• the level of CO2 emissions (Scopes 1 and 2 and upstream/
downstream transport activities in Scope 3) (5% weighting).
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The following would be applied to each criterion: a trigger
point (below which no compensation would be due), a target
(if the target is met, 100% of the compensation for the
criterion would be payable) an outperformance tranche
(between 100% and 150% of the objective, with the
compensation prorated to the achievement rate for the
objective) and an intermediate tranche (between the trigger
point and 100% of the objective, with the compensation
prorated to the achievement rate for the objective);
▶the total annual variable compensation would be capped, as
decided by the Supervisory Board for the 2021 annual variable
compensation, at 150% of the reference fixed compensation.
For example, for fixed compensation of €700,000.00 for 2022,
the total annual variable compensation would be capped at
€1,050,000.00.
For reasons of confidentiality and business secrecy, and in
particular to avoid disclosing information about the Company’s
strategy that could be used by business competitors for their
advantage, the Supervisory Board has elected not to disclose
details of the performance targets set for these quantitative and
quantifiable criteria. However, to permit historical comparisons,
the 2021 objectives set by the Supervisory Board for the
quantitative performance criteria are presented in section
3.4.5.2 of this report.
Long-term variable compensation: performance share rights
In order to align the Managers’ medium/long-term objectives
with the objectives assigned to the employees of Group
companies, this compensation takes the form of Michelin
performance share rights(1).
Among the changes adopted in 2020 to strike a better balance
between the People, Planet and Profit criteria, the weightings of
the performance criteria applicable to all employees participating
in the performance share plan were adjusted to raise the CSR
performance criterion from 30% in 2020 to 40% in 2021 (both
indicators combined), and lower the operational performance
criterion from 40% to 30% (both indicators combined).
The performance criteria are as follows:
Criteria
Weighting
Share price performance
Michelin share price to outperform the Stoxx Europe 600 index by between 0 points (threshold)
and 5 points (ceiling) between 2021 and 2024 (based on average closing prices for the period)
30%
Corporate social
responsibility performance
Industrial-Michelin Environmental Performance (i-MEP(1)) indicator to range between 87 points
(threshold) and 83 points (ceiling) in 2024
20%
Change in average employee engagement rate: average annual change to range between
0 points (threshold) and 1 point (ceiling) on a like-for-like consolidated basis over the years 2022,
2023 and 2024
20%
Operating performance
Average annual growth in revenue excluding tires and distribution(2) to range between
5% (threshold) and 10% (ceiling) between 2022/2021, 2023/2022 and 2024/2023
15%
Total consolidated return on capital employed (ROCE) (including acquisitions, related goodwill
and equity-accounted companies) to range between 10% (threshold) and 11% (ceiling) in 2024
15%
(1) Annual scope based on reported figures, including acquisitions from the fourth year of consolidation in the Group’s financial statements.
(2) At constant exchange rates and based on a comparable scope of consolidation.
For all criteria, fulfillment is calculated as follows:
▶if the minimum performance condition is not met, no shares
will vest;
▶if the minimum performance condition is met or exceeded,
shares will vest on a gradual and proportional basis up to a
certain ceiling.
The main specific characteristics of the performance share rights
that may be awarded to the Managers in 2022 are as follows:
▶the awards are decided annually by the Managing Chairman
on the proposal of the General Partners, after the
performance conditions and criteria have been determined by
the Supervisory Board;
▶the total performance share rights awarded to the Managers
during the period of validity of the above resolution approved
on June 23, 2020, will be capped at 0.05% of the Company’s
share capital on the date of the Shareholders Meeting at
which the resolution is adopted;
▶in addition, for the Managing Chairman, the performance
share rights granted in 2022 would be limited to 140% of his
2022 fixed compensation and for the General Manager, the
rights granted in 2022 would be limited to 120% of his 2022
fixed compensation; these levels correspond to the median
rates for their counterparts in CAC 40 companies(2);
▶the Managers will be required to hold 40% of the vested
shares for as long as they remain in office;
▶concerning the Managing Chairman and General Partner, the
vested performance shares would be delivered to him only if
Profit Share was distributed in respect of the year preceding
the one in which the shares were issued;
(1) Authorized by the Extraordinary Shareholders Meeting of June 23, 2020 (25th resolution approved by a majority of 97.02% of the votes cast), in application of
the criteria presented in section 7.1.1 of the 2019 Universal Registration Document and adapted by the 2021 Compensation Policy (see section 3.3.2.3 of the
2020 Universal Registration Document).
(2) Based on the Compensation and Appointments Committee’s analysis of the convergent results of several studies carried out by leading compensation
consultants.
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▶if a Manager ceases to hold this position:
• following his resignation or removal from office due to
mismanagement, all the performance share rights would
be forfeited,
• for any other reason, such as the expiration of his term or
due to disability or death before the end of the reference
period for determining the achievement rate for the
performance criteria, he would retain a number of
performance share rights initially awarded to him prorated
to the time served in office during the vesting period (or
the total number in the case of disability or death), and the
reference three-year period would continue to run, during
and beyond the end of his term.
3.3.2.4
Fringe benefits and directors’ compensation
Each Manager has a fringe benefit in the form of a Company car.
They do not receive any compensation (previously referred to as
attendance fees) for serving on the Board of the Company or
any Group subsidiaries.
As corporate officers of the Company or MFPM, Florent Menegaux
and Yves Chapot are covered by health and death/disability
insurance plans in the same way as the employees of the
Company or MFPM.
3.3.2.5
Stock options
No stock options are granted to the Managers by the Company or any Group subsidiaries.
3.3.2.6
Pension benefits
There is no specific supplementary pension plan set up for the
Managers or the Chair(man) of the Supervisory Board.
Florent Menegaux, in his capacity as Chairman of MFPM, and Yves
Chapot, in his capacity as General Manager of CGEM, participate
in the supplementary pension plan described in sections 3.4.4.5
and 3.4.5.5 of this 2021 Universal Registration Document.
In accordance with Government Order No. 2019-697 dated
July 3, 2019, this plan has been closed to new members since
July 4, 2019 and the vesting period was frozen at December 31, 2019.
Under the plan rules, the vested rights of the current two
Managers entitle them to capped pension benefits corresponding
to a 15% replacement rate.
If a Manager was no longer able to participate in the Michelin
Executive Supplementary Pension Plan, he could be given the
opportunity to either (i) participate in a new defined contribution
plan, or (ii) build up a pension fund by receiving an initial seed
capital award, in cash or shares, and annual payments.
The Managers participate in the PERO mandatory pension plan
in the same way as all employees of CGEM and MFPM.
3.3.2.7
Compensation for loss of office
In accordance with Article 13-2 of the Bylaws, if a Manager
were to be removed from office before the end of his term as a
result of a change of strategy or a change of control of the
Company, provided such removal was not due to gross
misconduct, he would be entitled to compensation for loss of
office to be decided by the Non-Managing General Partner,
SAGES, subject to the prior approval of the Supervisory Board.
The amount of any such compensation would not exceed the
equivalent of the Manager’s total compensation for the two
years preceding the year of his removal from office.
By decision of the Supervisory Board, it would be based on the
performance criteria used to determine his annual variable
compensation and would be calculated using the following
formula:
[Total compensation paid over the two years preceding the loss
of office] x [the average (in %) of the achievement rates for the
annual variable compensation for the three years preceding the
loss of office.]
The compensation for loss of office would be reduced, if
applicable, so that any other severance payments due to a
Manager would not result in his receiving an aggregate
severance package in excess of two years’ compensation, as
recommended in the AFEP/MEDEF Code.
3.3.2.8
Non-compete clause
In the same way as Michelin employees who have specific
expertise that needs to be protected to prevent its use by a
competitor in a manner that is detrimental to the Company’s
interests, each Manager is subject to a non-compete clause.
If the Company decided to apply this non-compete clause for a
period of up to two years, in line with the conditions described
in section 3.6.1.12 of this 2021 Universal Registration
Document:
▶Florent Menegaux, Managing General Partner and Managing
Chairman, would be entitled to a non-compete indemnity of
up to 24 months’ compensation based on his most recent
annual fixed compensation as Manager;
▶Yves Chapot, General Manager, would be entitled to a
non‑compete indemnity of up to 24 months’ compensation
based on the compensation defined in his suspended
contract of employment for the position held immediately
before his election as Manager. The terms of the
commitment would be amended in 2022 so that the above
baseline would be indexed to the average growth in
compensation of Michelin Executive Committee members
since his employment contract was suspended.
In accordance with Article R. 22-10-40-III of the French
Commercial Code, the above compensation would not be
payable if Florent Menegaux or Yves Chapot retired on leaving
the Group.
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In accordance with the AFEP/MEDEF Code:
▶the Company may waive application of this clause;
▶if compensation for loss of office were to be awarded as
provided for above (see “Compensation for loss of office”
above), the non-compete indemnity would be reduced or
withheld entirely, if necessary, so that the Manager’s
aggregate severance package, including the non-compete
indemnity referred to above, would not exceed the equivalent
of the aggregate of his last two years’ compensation.
3.3.2.9
Exceptional compensation
There are no plans to award any exceptional compensation to either of the Managers.
3.3.2.10 Employment contract
Due to his status and specific responsibilities, under the applicable
Compensation Policy the Managing General Partner ceases to be
covered by any employment contract that may have existed
between him and a Group company. This rule applies even if he
has acquired considerable seniority with the Group.
Consequently, Florent Menegaux no longer has an employment
contract with the Company or any of its subsidiaries since he
became Managing General Partner of the Company(1).
In addition, Yves Chapot’s mandate as General Manager
justifies suspending his pre-existing employment contract with a
Michelin Group company for the following reasons:
▶Yves Chapot is not the most senior executive officer
(Manager); he reports to the Managing Chairman who,
according to the Company’s Bylaws, defines the Managers’
areas of responsibility and any restrictions on their powers, as
well as setting their annual objectives;
▶the position of General Manager is therefore similar to that of
a Chief Operating Officer or a member of the Management
Board of a joint stock corporation. The AFEP/MEDEF Code
does
not
recommend
terminating
these
executives’
employment contracts;
▶Yves Chapot has acquired considerable seniority, having
worked for the Michelin Group without interruption for over
29 years (since 1992);
▶if Yves Chapot were to cease to be a Manager, any
compensation for loss of office or non-compete indemnity
due to him would be reduced or canceled if necessary so that
the total amount payable – including the termination benefit
in respect of his suspended employment contract – would
not exceed his final two years’ total compensation.
3.3.2.11 Proposed resolution on the Compensation Policy for the Managers
At the Ordinary Shareholders Meeting called to approve the 2021 financial statements, shareholders will be asked to approve the
following resolution:
6th resolution
Approval of the Compensation Policy applicable
to the Managers
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22‑10-76-II of the
French Commercial Code, approves the Compensation Policy
applicable to the Managers drawn up by the General Partners, as
presented in the Corporate Governance Report set out in sections
3.3.1 and 3.3.2 of the Company’s 2021 Universal Registration
Document.
(1) This adaptation to the full application of the AFEP/MEDEF Code’s recommendations is mentioned in the table in section 3.2.8 prepared in accordance with the
“comply or explain” rule.
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3.3.3
COMPENSATION POLICY: MEMBERS OF THE SUPERVISORY BOARD
This section describes the components of the Compensation
Policy applicable to the members of the Supervisory Board.
These components are presented in a proposed resolution
approved by the General Partners that will be submitted for
shareholder approval at the Ordinary Shareholders Meeting
called to approve the 2021 financial statements (7th resolution).
Concerning the members of the Supervisory Board, the Bylaws
state that the Ordinary Shareholders Meeting may award a fixed
annual amount to the Supervisory Board, to be allocated by the
Board
among
its
members
in
accordance
with
the
Compensation Policy that it has drawn up.
The compensation components were determined by the
Supervisory Board on the recommendation of its Compensation
and Appointments Committee.
3.3.3.1
Compensation for service as members of the Supervisory Board
At the Ordinary Shareholders Meeting of May 17, 2019, the
total compensation payable to Supervisory Board members was
set at €770,000.00 (12th resolution, adopted by a majority of
99.15% of the votes cast).
Due in particular to the increase in the number of Supervisory
Board members (with the addition of two new members) and
the creation of a new Corporate Social Responsibility
Committee (CSR Committee), it was not possible to pay in full
the compensation per Supervisory Board member defined in the
2021 Compensation policy.
To take these changes into account, the Compensation and
Appointments Committee recommended that the Supervisory
Board present to the Annual Shareholders Meeting of
May 13, 2022 a resolution to increase the total amount of
compensation
awarded
to
the
Supervisory
Board
to
€950,000.00 as of 2022. The rules concerning the allocation of
this amount would be unchanged from those specified in the
2021 Compensation Policy:
▶allocation of a basic amount to each member (€45,000.00);
▶allocation of additional amount no. 1 to each member who
sits on a Committee of the Supervisory Board and participates
in its work (€15,000.00);
▶allocation of additional amount no. 2 to each member who
serves as Chair of a Committee of the Supervisory Board and
participates in its work, (€30,000.00 or €35,000.00 for the
Chair of the Audit Committee) (recipients of this additional
amount no. 2 are not entitled to additional amount no. 1 for
their participation in the Committee’s work);
▶allocation of additional amount no. 3 to the Senior
Independent Member of the Supervisory Board (€15,000.00);
▶allocation of additional amount no. 4 to the Chair(man) of
the Supervisory Board (€75,000.00), who is not entitled to
additional amounts nos. 1, 2 or 3;
▶allocation of additional amount no. 5 to Supervisory Board
members who live outside Europe on a permanent basis
(€10,000.00, prorated to their physical attendance at
meetings of the Board and its Committees).
Payment of 60% of the total amount receivable (basic amount
and any of the additional amounts defined above) will depend
on the member’s attendance rate at meetings of the
Supervisory Board and of any Committees of which he or she is
a member, based on the meeting schedule established at the
start of the year.
The attendance rate and the corresponding allocation of annual
compensation for a given year will be prepared by the
Compensation and Appointments Committee then approved by
the Supervisory Board during the first quarter of the following
year.
The compensation will be paid (including to the Chair(man) of the
Supervisory Board) during the first half of the year following the
one to which it relates, provided that the resolution on the
disclosures required by Article L. 22-10-9 of the French Commercial
Code has been approved by the Annual Shareholders Meeting
called to approve the financial statements for the year preceding
the one to which the compensation relates.
3.3.3.2
Other compensation
As the Supervisory Board members do not hold any other positions within the Company or the Michelin Group, they do not receive
any other compensation from the Company or its subsidiaries.
3.3.3.3
Proposed resolution on the Compensation Policy for members
of the Supervisory Board
At the Ordinary Shareholders Meeting called to approve the 2021 financial statements, shareholders will be asked to approve the
following resolution:
7th resolution
Approval of the Compensation Policy applicable
to members of the Supervisory Board
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-76-II of
the French Commercial Code, approves the Compensation
Policy applicable to the members of the Supervisory Board, as
presented in the Corporate Governance Report set out in
sections 3.3.1 and 3.3.3 of the Company’s 2021 Universal
Registration Document.
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3.4
INFORMATION ABOUT THE COMPONENTS OF COMPENSATION
PAID OR AWARDED TO THE CORPORATE OFFICERS
3.4.1
COMPENSATION OF THE MEMBERS OF THE SUPERVISORY BOARD
No variable compensation was paid to Supervisory Board members
in 2021.
The 2021 compensation policy for Supervisory Board members was
presented to the Ordinary Shareholders Meeting of May 21, 2021
and was approved by a 99.75% majority of the votes cast.
Information about the members’ attendance rates at meetings
of the Supervisory Board and its Committees in 2021 is provided
in section 3.2.2 of this 2021 Universal Registration Document.
The following table shows:
▶amounts paid in 2020 in respect of services to the Board in 2019;
▶amounts awarded for services to the Board in 2020, paid in 2021;
▶amounts paid in 2021 in respect of services to the Board in 2020;
▶amounts awarded for services to the Board in 2021, not yet paid.
Supervisory Board
members
2021(1)
2020(1)
Amount awarded (in €)
Amount paid (in €)
Amount awarded (in €)
Amount paid (in €)
Barbara Dalibard(2)
91,153
80,000
80,000
90,000
Olivier Bazil(3)
N/A
35,500
35,500
80,000
Jean-Pierre Duprieu
71,963
62,500
62,500
60,000
Aruna Jayanthi
57,570
70,000
70,000
70,000
Anne-Sophie de La Bigne
71,963
65,000
65,000
71,250
Patrick de La Chevardière(4)
76,760
44,500
44,500
N/A
Jean-Christophe Laourde(5)
51,573
9,000
9,000
N/A
Thierry Le Hénaff
71,963
68,330
68,330
56,727
Monique Leroux
86,355
80,000
80,000
70,000
Cyrille Poughon(6)
N/A
47,250
47,250
60,000
Michel Rollier(7)
47,975
120,000
120,000
112,800
Delphine Roussy(5)
51,573
9,000
9,000
N/A
Wolf-Henning Scheider(8)
33,582
N/A
N/A
N/A
Jean-Michel Severino(9)
57,570
17,750
17,750
N/A
TOTAL
770,000(10)
708,830(11)
708,830(11)
670,777
(1) The compensation indicated consists solely of fixed compensation for services as Supervisory Board member. No variable compensation was paid for these
services and no other compensation was awarded or paid.
(2) Chair of the Supervisory Board since May 2021.
(3) Supervisory Board member until June 2020.
(4) Supervisory Board member since June 2020.
(5) Supervisory Board member since December 2020.
(6) Supervisory Board member until October 2020.
(7) Chairman and member of the Supervisory Board until May 2021.
(8) Supervisory Board member since May 2021.
(9) Supervisory Board member since November 2020.
(10) The amounts awarded in respect of 2021 have been determined in application of the 2021 Supervisory Board Compensation Policy approved by the Ordinary
Shareholders Meeting of May 21, 2021 (7th resolution adopted by a majority of 99.84% of the votes cast).
(11) The amounts paid in 2021 were awarded in respect of 2020 out of the total annual compensation of €770,000 decided by the Ordinary Shareholders
Meeting of May 17, 2019 (12th resolution adopted by a majority of 99.15% of the votes cast).
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3.4.2
COMPENSATION OF MICHEL ROLLIER, CHAIRMAN OF THE SUPERVISORY
BOARD UNTIL MAY 21, 2021
The Compensation and Appointments Committee of the Supervisory Board has reviewed all the components of the compensation
paid or awarded to Michel Rollier, Chairman of the Supervisory Board until his term as Supervisory Board member expired on
May 21, 2021. The review was based on the 2021 Compensation Policy.
3.4.2.1
Compensation for serving on the Supervisory Board
In 2021, Michel Rollier received a total of €120,000.00.00 in
respect of 2020.
Under the 2021 Compensation Policy, Michel Rollier is in line to
receive €47,975 in 2022 in respect of the period served on the
Supervisory Board in 2021.
No variable compensation was paid or awarded to Michel Rollier
during or in respect of 2021.
Information about Michel Rollier’s attendance rate at meetings
of the Supervisory Board and its Committees in 2021 is provided
in section 3.2.2 of this 2021 Universal Registration Document.
3.4.2.2
Other compensation
No other compensation was paid or awarded to Michel Rollier during or in respect of 2021.
3.4.3
COMPENSATION OF BARBARA DALIBARD, CHAIR OF THE SUPERVISORY
BOARD SINCE MAY 21, 2021
The Compensation and Appointments Committee of the Supervisory Board has reviewed all the components of the compensation
paid or awarded to Barbara Dalibard in her capacity as Chair of the Supervisory Board since May 21, 2021 when she was elected to
this position by her fellow Supervisory Board members. The review was based on the 2021 Compensation Policy.
3.4.3.1
Compensation for serving on the Supervisory Board
Under the 2021 Compensation Policy, Barbara Dalibard is in line
to receive €91,153.00 in 2022 in respect of 2021, including
compensation for her service as Chair of the Supervisory Board
for the period from May 2021.
No variable compensation was paid or awarded to Michel Rollier
during or in respect of 2021.
Information about Barbara Dalibard's attendance rates at
meetings of the Supervisory Board and its Committees in 2021
is provided in section 3.2.2 of this 2021 Universal Registration
Document.
3.4.3.2
Other compensation
No other compensation was paid or awarded to Barbara Dalibard during or in respect of 2021.
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3.4.4
COMPENSATION PACKAGE OF FLORENT MENEGAUX, MANAGING CHAIRMAN
AND GENERAL PARTNER
In his capacity as General Partner of CGEM(1), Florent Menegaux
has unlimited joint and personal liability for CGEM’s debts. As
consideration for this liability, the General Partners each receive a
portion of the Company’s profits as provided for in the Bylaws.
As consideration for this liability, the General Partners each
receive a portion of the Company's profits as provided for in the
Bylaws. This means that their interests are fully aligned with those
of the shareholders, as they are paid this consideration only if the
Company makes a profit.
The Compensation and Appointments Committee of the
Supervisory Board has reviewed all the components of the
compensation paid to Florent Menegaux in 2021 or awarded to
him in respect of 2021, pursuant to the 2021 Compensation
Policy. This policy is described in the Corporate Governance
Report reproduced in the 2020 Universal Registration Document(2)
and was presented to the Annual Shareholders Meeting of
May 21, 2021 by the Chair of the Compensation and
Appointments Committee (the “2021 Compensation Policy”)(3).
COMPENSATION PAID TO FLORENT MENEGAUX IN 2021
3.4.4.1
Fixed compensation
In application of the 2021 Compensation Policy, the fixed compensation received by Florent Menegaux, unchanged since his election
by the Annual Shareholders Meeting of May 18, 2018, was €900,000.00(4).
3.4.4.2
Annual variable compensation
Florent Menegaux’s annual variable compensation has been determined in application of the 2021 Compensation Policy and is
deducted in full from the General Partners’ 2021 Profit Share(5).
ANNUAL VARIABLE COMPENSATION
(Illustrative example of the breakdown of the relative weighting of each of the criteria (excluding consolidated net income)
corresponding to the maximum achievement of all the objectives and not to the 2021 results)
(1) At December 31, 2021, the Company had two General Partners: Florent Menegaux, Managing Chairman, and SAGES, Non-Managing General Partner (see
section 3.1.2 of this 2021 Universal Registration Document).
(2) See sections 3.3.1 and 3.3.2 of the 2020 Universal Registration Document.
(3) See the information/presentations on the May 21, 2021 Annual Shareholders Meeting on the Company’s website www.michelin.com.
(4) Compensation paid by Manufacture Française des Pneumatiques Michelin (MFPM) in consideration of his role as General Manager of the Company.
(5) See the 2nd resolution presented to the Annual Shareholders Meeting of May 13, 2022. The Profit Share is fixed in the Company’s Bylaws and is capped at
0.6% of consolidated net income for the year (see sections 3.3.2.3 and 3.10.5 of this 2021 Universal Registration Document).
Annual
variable
compensation
Long-term
incentive bonus
Fixed
compensation
11%
35%
54%
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Quantitative criteria
Quantifiable and qualitative
criteria
Consolidated
net income
Segment operating income
Structural free cash flow
Deployment of
6 transformation programs
Employee safety
Acquisition synergies
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The achievement rates for the criteria that determine the amounts due in respect of annual variable compensation are as follows:
Quantitative criteria
Segment operating income (SOI,
based on 2020 exchange rates
and consolidation scope)
Annual structural
free cash flow
Level
of consolidated
net income
Indicator
Amount
Amount
Amount
Target
Threshold: €2,400m
Target: €2,800m
Ceiling: €3,000m
Threshold: €800m
Target: €1,000m
Ceiling: €1,100m
4.00%
Indicator: 2021 Actual
€3,108m
€1,793m
€1,845m
Maximum value (% of the Profit Share)(1)
8.00%
8.00%
4.00%
Achievement rate
8.00%
8.00%
4.00%
(1) The maximum value, if the SOI and free cash flow targets are met, is capped at 16% of the Profit Share.
Quantifiable qualitative criteria
Deployment of the six
transformations
CSR/TCIR(1)
Acquisition synergies(2)
Maximum value (% of the Profit Share)
2.00%
1.00%
1.00%
Achievement rate
1.32%
0%
1.00%
(1) Total Case Incident Rate.
(2) Scope: Camso, Fenner, Multistrada and Masternaut (based on 2020 exchange rates).
Overall achievement rate
18.32%/20%(1)
Amount awarded (in €)
1,350,000.00(2)
As a % of the reference fixed compensation
150.00%
(1) Florent Menegaux would be awarded the maximum 20% of the Consolidated Calculation Base for this component only if all the objectives were achieved in
full.
(2) Based on the achievement rates for the performance criteria, Florent Menegaux’s theoretical annual variable compensation amounts to €2,028,097, reduced
to an actual amount of €1,350,000 after applying the cap of 150% of his reference fixed compensation (€900,000).
All quantitative and qualitative objectives were set at the start of
2021 and were not adjusted during the year.
The Compensation and Appointments Committee carefully
reviewed achievement rates for each of the quantitative and
qualitative criteria. Concerning the quantifiable qualitative
criteria, the Committee’s conclusions were as follows:
▶for the “Deployment of the six transformations” criterion, the
Committee noted that the objectives had been met, based on
the new strategic dashboard evidencing:
• changes in the Balanced Score Card in line with
expectations,
• deployment of the People, Profit, Planet strategy,
• advances in the Group’s strategic diversification;
▶for the Corporate Social Responsibility criterion (Total Case
Incident Rate, measuring improvements to the safety of
Michelin Group employees), the Committee noted that the
objective had not been met, with the TCIR at 1.29;
▶for the criterion concerning implementation of the synergies
created by the integration of Camso, Fenner, Multistrada and
Masternaut, the Committee noted that total synergistic
benefits of €122 million had been obtained in 2021,
representing a significant increase compared to 2020
synergies.
In conclusion of its analysis, the Committee recommended to
the Supervisory Board that cumulative actual performance in
relation to these quantifiable qualitative criteria should be rated
as 18.32% versus a maximum of 20.00%. Given the
Calculation Base of €11,070,402.00 (0.60% of consolidated net
income for the year), Florent Menegaux’s theoretical annual
variable compensation therefore amounts to €2,028,097.00.
reduced to an actual amount of €1,350,000.00 after applying
the cap of 150.00% of his reference fixed compensation.
After
discussing
the
matter
during
its
meeting
on
February 11, 2022, the Supervisory Board approved the
Compensation and Appointments Committee’s recommendations,
which were then also approved by the General Partners.
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3.4.4.3
Long-term variable compensation granted in 2021: performance share rights
DEFERRED VARIABLE COMPENSATION
(Illustrative example of the breakdown of the relative weighting of each of the criteria, corresponding to the maximum achievement of
all the objectives and not to the 2021 results)
On November 17, 2021, 8,397 performance share rights were
awarded to Florent Menegaux. The book value of these rights at
December 31, 2021 was €727,106.88 (based on IFRS 2) and
the rights represented less than 0.0048% of the total Michelin
shares outstanding at the year-end.
This award was:
▶authorized in an extraordinary resolution of the Annual
Shareholders Meeting of June 23, 2020(1);
▶made on the proposal of the General Partners in application
of the conditions and criteria determined by the Supervisory
Board, as presented in the 2019 and 2020 Universal
Registration Documents(2), and in application of the 2021
Compensation Policy.
In application of the 2021 Compensation Policy, the award is
subject to the following specific rules:
▶the Managers are required to hold 40% of the vested shares
for as long as they remain in office;
▶the award is limited to 100% of the Manager’s fixed annual
compensation for that year;
▶in addition, performance share rights awarded to the
Managers during the period of validity of the above-
mentioned resolution (38 months) may not exceed the
equivalent of 0.05% of the Company’s capital; this is a
specific sub-cap applicable to the Managers within the overall
cap of 0.9% applicable to all beneficiaries as mentioned
under the abovementioned resolution;
▶concerning Florent Menegaux, Managing Chairman and
General Partner, the vested performance shares would be
delivered to him only if Profit Share was distributed in respect
of the year preceding the one in which the shares are issued.
In accordance with AFEP‑MEDEF Code recommendation
No. 25.3.3, the equity risk on the performance shares has not
been hedged by Florent Menegaux and will not be hedged at
any time during the holding period.
(1) 25th resolution approved by a majority of 97.02% of the votes cast.
(2) See section 7.1.1 of the 2019 Universal Registration Document and section 3.3.2.3 of the 2020 Universal Registration Document (2021 Compensation Policy).
Quantitative criteria
Growth in the Michelin share price
compared with that of the Stoxx
Europe 600 index
Growth in revenue
(excluding tires
and distribution)
Return on capital
employed (ROCE)
industrial - Michelin
Environmental Footprint
(i-MEP)
Change in the employee
engagement rate
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The performance criteria are presented below.
Criteria
Weighting
Interim results
2021 vs. 2020
Share price performance
Michelin share price to outperform the Stoxx Europe 600 index by between
0 points (threshold) and 5 points (ceiling) between 2020 and 2023 (based
on average closing prices for the period)
30.00%
+11.3 points
2021
Corporate social
responsibility
performance
Industrial-Michelin Environmental Performance (i-MEP(1) indicator
of between 92 points (threshold) and 88 points (ceiling) in 2023
20.00%
92.6 points
Change in average employee engagement rate: average annual change
of between 0 points (threshold) and 1 point (ceiling) on a like-for-like
consolidated basis over the years 2021, 2022 and 2023
20.00%
-2.0 points
Operating performance
Average annual growth in revenue excluding tires and distribution(2)
of between 3% (threshold) and 8% (ceiling) between 2021/2020,
2022/2021 and 2023/2022
15.00%
7.70%
Total consolidated return on capital employed (ROCE) (including
acquisitions, related goodwill and equity-accounted companies)
of between 10% (threshold) and 11% (ceiling) in 2023.
15.00%
10.30%
(1) Annual scope based on reported figures, including acquisitions from the fourth year of consolidation in the Group’s financial statements.
(2) At constant exchange rates and based on a comparable scope of consolidation.
For all criteria, fulfillment is calculated as follows:
▶performance below threshold: no shares will vest;
▶performance between the threshold and the ceiling: vesting rate pro rated to the achievement rate;
▶performance equal to or greater than the ceiling: all the shares will vest.
3.4.4.4
Fringe benefits, stock options and directors’ or Supervisory Board members’
compensation
In line with the 2021 Compensation Policy, in 2021 Florent
Menegaux did not receive (i) any compensation in his capacity
as a member of the Board of Directors or Supervisory Board of
the Company or any controlled entities, (ii) any benefits other
than those listed above, or (iii) any stock options of the
Company or any controlled entities.
Mr. Menegaux has a fringe benefit in the form of a Company
car (see the table in section 3.6.1.2).
3.4.4.5
Pension benefits
There is no specific supplementary pension plan set up for the
Managers or the Chair(man) of the Supervisory Board.
In his capacity as Chairman of the subsidiary MFPM,
Mr. Menegaux participates in the supplementary pension plan
set up for MFPM and CGEM senior executives (the Michelin
Executive Supplementary Pension Plan).
As required by Article D. 22-10-16 of the French Commercial
Code, this plan, governed by Article L. 137-11 of the French
Social Security Code (Code de la sécurité sociale) and Article 39
of the French General Tax Code (Code général des impôts), is
described below:
▶as of their retirement date, participants must have served for
at least five years as a senior executive to be eligible for
benefits;
▶1.50% of benefits vest each year, entitling participants to an
annuity representing a replacement rate of up to 15.00% of
the reference compensation (annual average of the best three
years of compensation out of the last five years preceding the
beneficiary’s retirement). In accordance with the government
order dated July 3, 2019, no rights have vested since
December 31, 2019;
▶the replacement rate including benefit entitlements under
compulsory plans is capped at 35.00%;
▶an evaluation is carried out in accordance with Group
accounting policies;
▶benefit entitlement is conditional on participants ending their
career at MFPM as an executive employee or corporate
officer, in accordance with Article L. 137-11 of the French
Social Security Code;
▶70.00% of the prior year’s benefit obligation is funded
through a contribution to an insured plan.
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Mr. Menegaux’s reference compensation for 2021 was made
up solely of the annual fixed compensation paid by MFPM.
Based on the assumptions in Article D. 22-10-16 of the French
Commercial Code introduced by Decree No. 2019-1235, the
estimated gross annual pension payable to Mr. Menegaux
under this plan amounts to €135,000.
The benefit represented by the Company’s contributions to the
plan is taxed at the rate of 24%. The actual gross replacement
rate represented by pension benefits paid under the plan will be
well below the 45% ceiling recommended in the AFEP/MEDEF
Code.
In consideration of his position, Florent Menegaux participates
in the PERO mandatory supplementary pension plan in the same
way as all employees of CGEM and MFPM.
3.4.4.6
Compensation for loss of office
No compensation for loss of office was paid to Yves Chapot in 2021(1).
3.4.4.7
Non-compete clause
No non-compete indemnity was paid to Florent Menegaux in 2021(1).
3.4.5
COMPENSATION PACKAGE OF YVES CHAPOT, GENERAL MANAGER
The Compensation and Appointments Committee of the
Supervisory Board has reviewed all the components of the
compensation paid to Yves Chapot in 2021 or awarded to him
in respect of 2021 in his capacity as General Manager, pursuant
to the 2021 Compensation Policy. This policy is described in the
Corporate Governance Report reproduced in the 2020
Universal Registration Document(2) and was presented to the
Annual Shareholders Meeting of May 21, 2021 by the Chair of
the Compensation and Appointments Committee (the “2021
Compensation Policy”)(3).
COMPENSATION PAID TO YVES CHAPOT IN 2021
3.4.5.1
Fixed compensation
In application of the 2021 Compensation Policy, Yves Chapot’s fixed compensation, unchanged since his election by the Annual
Shareholders Meeting of May 18, 2018, was €600,000 in 2021.
3.4.5.2
Annual variable compensation
In application of the 2021 Compensation Policy and as
recommended by the Supervisory Board, the General Partners
have set Yves Chapot’s annual variable compensation based on
150% of his fixed compensation for 2021 as General Manager
(the “Calculation Base”) and six performance criteria. Three of
these are qualitative criteria accounting for 80/100 and three
are quantifiable qualitative criteria accounting for 20/100.
Mr. Chapot will be awarded the maximum amount if the
cumulative achievement rate for the six criteria is 100 out of 100.
(1) See detailed disclosures in section 3.6.1.12 of the 2021 Universal Registration Document.
(2) See sections 3.4.1 and 3.4.2 of the 2020 Universal Registration Document.
(3) See the information/presentations on the May 21, 2021 Annual Shareholders Meeting on the Company’s website www.michelin.com.
Long-term
incentive bonus 12%
Annual
variable
compensation
40%
Fixed
compensation
48%
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ANNUAL VARIABLE COMPENSATION
(Illustrative example of the breakdown of the relative weighting of each of the criteria, corresponding to the maximum achievement of
all the objectives and not to the 2021 results)
The achievement rates for the criteria that determine the amounts due in respect of annual variable compensation are as follows:
Quantitative criteria
Segment operating income (SOI,
based on 2020 exchange rates
and consolidation scope)
Annual structural
free cash flow
Level of
consolidated
net income
Indicator
Amount
Amount
Amount
Target
Threshold: €2,400m
Target: €2,800m
Ceiling: €3,000m
Threshold: €800m
Target: €1,000m
Ceiling: €1,100m
Threshold: €1,050m
Target: €1,250m
Ceiling: €1,350m
Indicator: 2021 Actual
€3,108m
€1,793m
€1,845m
Maximum value(1)
40
40
20
Achievement rate
40
40
20
(1) If all the objectives were achieved in full, the result would however be limited to 80.
Quantifiable qualitative criteria
Deployment of the six
transformations
CSR/TCIR(1)
Acquisition synergies(2)
Maximum value (out of 20)
10
5
5
Achievement rate
6.6
0
5
(1) Total Case Incident Rate.
(2) Scope: Camso, Fenner, Multistrada and Masternaut (based on 2020 exchange rates).
Overall achievement rate
91.60/100(1)
Amount awarded based on quantifiable qualitative criteria (in €)
824,400
As a % of the reference fixed compensation
137.4%
(1) Mr. Chapot will be awarded the maximum amount if the cumulative achievement rate for the six criteria is 100 out of 100.
All quantitative and qualitative objectives were set at the start of
2021 and were not adjusted during the year.
The Compensation and Appointments Committee carefully
reviewed achievement rates for each of the quantitative and
qualitative criteria. Concerning the quantifiable qualitative
criteria, the Committee’s conclusions were as follows:
▶for the “Deployment of the six transformations” criterion, the
Committee noted that the objectives had been met, based on
the new strategic dashboard evidencing:
• changes in the Balanced Score Card in line with
expectations,
• deployment of the People, Profit, Planet strategy,
• advances in the Group’s strategic diversification;
▶for the Corporate Social Responsibility criterion (Total Case
Incident Rate, measuring improvements to the safety of
Michelin Group employees), the Committee noted that the
objective had been met, with the TCIR at 1.29;
▶for the criterion concerning implementation of the synergies
created by the integration of Camso, Fenner, Multistrada and
Masternaut, the Committee noted that total synergistic benefits
of €122 million had been obtained in 2021, representing a
significant increase compared to 2020 synergies.
Quantitative criteria
Quantifiable and qualitative
criteria
Consolidated
net income
Segment operating income
Structural free cash flow
Deployment of
6 transformation programs
Employee safety
Acquisition synergies
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In conclusion of its analysis, the Committee recommended to
the Supervisory Board that cumulative actual performance in
relation to these quantifiable qualitative criteria should be rated
as 91.60/100. Given the Calculation Base, Yves Chapot’s annual
variable compensation for 2021 amounts to €824,400.00.
After
discussing
the
matter
during
its
meeting
on
February 11, 2022, the Supervisory Board approved the
Compensation and Appointments Committee’s recommendations,
which were then also approved by the General Partners.
3.4.5.3
Long-term variable compensation granted in 2021: performance share rights
DEFERRED VARIABLE COMPENSATION
(Illustrative example of the breakdown of the relative weighting of each of the criteria, corresponding to the maximum achievement of
all the objectives and not to the 2021 results)
On November 17, 2021, 5,598 performance share rights were
awarded to Yves Chapot. The book value of these rights at
December 31, 2021 was €484,737.92 (based on IFRS 2) and the
rights represented less than 0.0032% of the total Michelin
shares outstanding at the year-end.
This award was made in application of the 2021 Compensation
Policy, pursuant to the proposal made by the General Partners
and after the Supervisory Board had determined the vesting
terms and conditions applicable to the total award. It was
authorized by the Extraordinary Shareholders Meeting of
June 23, 2020(1) and complied with the criteria set out in the
2019 and 2020 Universal Registration Documents(2).
In application of the 2021 Compensation Policy, the award is
subject to the following specific rules:
▶the Managers are required to hold 40% of the vested shares
for as long as they remain in office;
▶the award is limited to 100% of the Manager’s fixed annual
compensation for that year;
▶in addition, for the period of validity of the above-mentioned
resolution (38 months), performance share rights awarded to
the Managers may not exceed the equivalent of 0.05% of
the Company’s capital; this is a specific sub-cap applicable to
the Managers within the overall cap of 0.9% applicable to all
beneficiaries as mentioned in said resolution.
In accordance with AFEP‑MEDEF Code recommendation
No. 25.3.3, the equity risk on the performance shares has not
been hedged by Yves Chapot and will not be hedged at any
time during the holding period.
(1) 25th resolution approved by a majority of 97.02% of the votes cast.
(2) See section 7.1.1 of the 2019 Universal Registration Document and section 3.3.2.3 of the 2020 Universal Registration Document (2021 Compensation Policy).
Quantitative criteria
Growth in the Michelin share price
compared with that of the Stoxx
Europe 600 index
Growth in revenue
(excluding tires
and distribution)
Return on capital
employed (ROCE)
industrial - Michelin
Environmental Footprint
(i-MEP)
Change in the employee
engagement rate
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The performance criteria are presented below.
Criteria
Weighting
Interim results
2021 vs.
2020
Share price performance
Michelin share price to outperform the Stoxx Europe
600 index by between 0 points (threshold) and
5 points (ceiling) between 2020 and 2023
(based on average closing prices for the period)
30%
+11.3 points
2021
2022
2023
Corporate social
responsibility
performance
Industrial-Michelin Environmental Performance
(i‑MEP(1) indicator of between 92 points (threshold)
and 88 points (ceiling) in 2023
20%
92.6 points
Change in average employee engagement rate:
average annual change of between 0 points
(threshold) and 1 point (ceiling) on a like-for-like
consolidated basis over the years 2021, 2022
and 2023
20%
-2.0 points
Operating performance
Average annual growth in revenue excluding tires
and distribution(2) of between 3% (threshold)
and 8% (ceiling) between 2021/2020, 2022/2021
and 2023/2022
15%
7.7%
Total consolidated return on capital employed (ROCE)
(including acquisitions, related goodwill and equity-
accounted companies) of between 10% (threshold)
and 11% (ceiling) in 2023.
15%
10.3%
(1) Annual scope based on reported figures, including acquisitions from the fourth year of consolidation in the Group’s financial statements.
(2) At constant exchange rates and based on a comparable scope of consolidation.
For all criteria, fulfillment is calculated as follows:
▶performance below threshold: no shares will vest;
▶performance between the threshold and the ceiling: vesting rate pro rated to the achievement rate;
▶performance equal to or greater than the ceiling: all the shares will vest.
3.4.5.4
Fringe benefits, stock options and directors’ or Supervisory Board members’
compensation
In line with the 2021 Compensation Policy, in 2021 Yves Chapot did not receive (i) any compensation in his capacity as a member of
the Supervisory Board of the Company or any controlled entities, (ii) any benefits other than those listed above, or (iii) any stock
options of the Company or any controlled entities.
Yves Chapot has a fringe benefit in the form of a company car (see the table in section 3.6.1.3).
3.4.5.5
Pension benefits
There is no specific supplementary pension plan set up for the
Managers or the Chair(man) of the Supervisory Board.
In his capacity as General Manager of CGEM, Yves Chapot
participates in the supplementary pension plan set up for MFPM
and
CGEM
senior
executives
(the
Michelin
Executive
Supplementary Pension Plan).
As required by Article D. 22-10-16 of the French Commercial
Code, this plan, governed by Article L. 137-11 of the French
Social Security Code and Article 39 of the French General Tax
Code, is described below:
▶as of their retirement date, participants must have served for
at least five years as a senior executive to be eligible for
benefits;
▶1.5% of benefits vest each year, entitling participants to an
annuity representing a replacement rate of up to 15% of the
reference compensation (annual average of the best three years of
compensation out of the last five years preceding the
beneficiary’s retirement);
▶in accordance with the government order dated July 3, 2019,
no rights have vested since December 31, 2019;
▶the replacement rate including benefit entitlements under
compulsory plans is capped at 35%;
▶an evaluation is carried out in accordance with Group
accounting policies;
▶benefit entitlement is conditional on participants ending their
career at MFPM as an executive employee or corporate
officer, in accordance with Article L. 137-11 of the French
Social Security Code;
▶70% of the prior year’s benefit obligation is funded through
a contribution to an insured plan.
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Yves Chapot’s reference compensation for 2021 in his capacity
as General Manager was made up of his annual fixed
compensation and his annual variable compensation.
Based on the assumptions in Article D. 22-10-16 of the French
Commercial Code introduced by Decree No. 2020-1742, the
estimated gross annual pension payable to Mr. Chapot under
this plan amounts to €146,416.
The benefit represented by the Company’s contributions to the
plan is taxed at the rate of 24%. The actual gross replacement
rate represented by pension benefits paid under the plan will be
well below the 45% ceiling recommended in the AFEP/MEDEF
Code.
As General Manager of CGEM, Yves Chapot participates in the
PERO mandatory supplementary pension plan in the same way
as all employees of CGEM and MFPM.
3.4.5.6
Compensation for loss of office
No compensation for loss of office was paid to Yves Chapot in 2021(1).
3.4.5.7
Non-compete clause
No non-compete indemnity was paid to Yves Chapot in 2021(1).
3.4.6
COMPENSATION RATIOS OF THE MANAGERS AND THE CHAIR(MAN)
OF THE SUPERVISORY BOARD
Background
The changes in management structure described below have
affected the calculation of management compensation ratios:
▶Florent Menegaux has been Managing General Partner since
May 2018 and Managing Chairman since May 2019;
▶Yves Chapot has been General Manager since May 2018;
▶Barbara Dalibard has been Chair of the Supervisory Board
since May 2021;
▶Jean-Dominique Senard was Managing Chairman and
General Partner during the reporting period, until May 2019;
▶Michel Rollier was Chairman of the Supervisory Board during
the reporting period, until May 2021.
Unlike the corporate officers of joint stock corporations, a
Managing General Partner of the Company (which is organized as
a partnership limited by shares), who may also be the Managing
Chairman, has unlimited personal liability for the Company’s debts
in the event that the Company is unable to honor its commitments,
and he can only be relieved of this liability by decision of the
Extraordinary Shareholders Meeting. This exceptional liability
justifies the payment of specific compensation.
The Company has very few employees (fewer than five, none of
whom are corporate directors). The ratios of the Managers’ pay
and of the Supervisory Board Chair's pay to that of the
Company's employees are therefore not meaningful.
Accordingly, the Company has nonetheless chosen to disclose
these ratios for its main French subsidiary, Manufacture
Française des Pneumatiques Michelin, which employed over
79% of the Michelin Group’s total workforce in France at
December 31, 2021.
This subsidiary is engaged in manufacturing, sales, and research
and development activities and also hosts the vast majority of
Michelin Group’s corporate departments.
The methodology and scope of the information presented are
identical to those used for the report prepared for 2020(2).
The two performance indicators selected at the level of the
Michelin Group are total sales and segment operating income
(“SOI”) excluding changes in exchange rates, which measures
the performance of the Group’s operating segments.
The ratios presented below have been calculated in such a way
as to disclose information related to the function, in order to
guarantee, as far as possible, the relevance and consistency of
comparative information across the entire reporting period.
They are based on the fixed and variable compensation paid
during the years indicated to employees who were present
throughout the year, as well as on the performance shares
awarded in those years, measured at fair value.
For the Chair(man) of the Supervisory Board, the increase in the
ratio in 2021 was solely due to the fact that the compensation
paid in 2020 was reduced due to the application of attendance
rules (the Chairman missed one Board meeting in 2020). There
was no increase or change in the rules for the distribution of
Supervisory Board compensation among its members.
In addition, for the General Manager, the increase in the ratio in
2021 is due to an increase in the variable compensation paid to
him in 2021 in respect of 2020.
(1) See detailed disclosures in section 3.6.1.12 of the 2021 Universal Registration Document.
(2) By applying the “Guidelines on Compensation Multiples” published by the AFEP in February 2021.
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RATIOS PRESENTED IN APPLICATION OF ARTICLE L. 22-10-9-I, PARAGRAPHS 6 AND 7, OF THE FRENCH COMMERCIAL CODE
2021
2020
2019
2018
2017
PERCENTAGE CHANGE IN THE COMPENSATION OF THE CHAIR(MAN)
OF THE SUPERVISORY BOARD(1)
6.4%
28.7%
-2.7%
0.0%
32.4%
Percentage change in the average compensation of employees
2.6%
2.9%
2.9%
1.6%
4.6%
Ratio versus average employee compensation
2.1
2.1
1.7
1.8
1.8
Percentage change in the ratio versus the previous year
0%
26.5%
-5.1%
-1.7%
26.2%
Ratio versus median employee compensation
2.8
2.7
2.1
2.3
2.3
Percentage change in the ratio versus the previous year
3.7%
26.8%
-5.3%
-2.6%
27.6%
PERCENTAGE CHANGE IN THE
MANAGING CHAIRMAN’S COMPENSATION(2)(3)(4)(5)
-6.5%
-37.6%
8.1%
15.0%
38.5%
Percentage change in the average compensation of employees
2.6%
2.9%
2.9%
1.6%
4.6%
Ratio versus average employee compensation
42.9
47.1
77.6
73.8
65.3
Percentage change in the ratio versus the previous year
-8.9%
-39.3%
5.1%
13.2%
32.4%
Ratio versus median employee compensation
55.9
61.0
99.8
94.8
84.7
Percentage change in the ratio versus the previous year
-8.4%
-38.9%
5.3%
12.0%
33.6%
PERCENTAGE CHANGE IN THE
GENERAL MANAGER’S COMPENSATION(3)(4)(5)
28.6%
33.0%
69.6%
-
-
Percentage change in the average compensation of employees
2.6%
2.9%
2.9%
1.6%
4.6%
Ratio versus average employee compensation
31.5
25.1
19.5
11.8
-
Percentage change in the ratio versus the previous year
25.5%
29.0%
64.8%
-
-
Ratio versus median employee compensation
41.0
32.6
25.0
15.2
-
Percentage change in the ratio versus the previous year
25.8%
30.2%
65.2%
-
-
COMPANY PERFORMANCE(6)
Growth in segment operating income (SOI) (excluding currency effect)
-33.4%
6.5%
11.0%
5.6%
9.5%
Growth in sales (excluding currency effect)
-12.6%
7.8%
4.1%
6.2%
0.4%
(1) The increase in the ratio in 2021 is solely attributable to the fact that the compensation paid in 2020 had been reduced in application of the attendance rules
(absence of the Chairman at one Board meeting during that year).
(2) Only information relating to the position of Managing Chairman and General Partner is presented given that the specific role of Managing General Partner
was exercised over a limited period.
(3) The compensation paid to Managers for functions held during only part of the year (new Manager or Manager who was not replaced) has been annualized.
(4) Deferred long-term compensation paid to Managers who no longer held the positions concerned during the reporting period has not been taken into account.
(5) In 2020 and 2021, the reference amount for variable compensation includes the book value of performance share rights awarded to the Managers for those
years (for the first time in 2020).
(6) To permit meaningful comparisons with the compensation paid in a given year, which depends to a significant extent on the prior year’s results, the values
the values taken into account for a given year correspond to the results achieved in the prior year.
3.4.7
PROPOSED RESOLUTION ON THE DISCLOSURES MENTIONED IN ARTICLE
L. 22‑10-9-I OF THE FRENCH COMMERCIAL CODE
In accordance with the applicable laws and regulations, at the
Ordinary Shareholders Meeting, the General Partners and the
Supervisory Board will submit to shareholders the required
disclosures concerning the compensation paid or awarded in
2021 to the corporate officers.
The resolution to be presented to the Annual Shareholders
Meeting of May 13, 2022 concerning all the disclosures
contained in sections 3.4.1 to 3.4.6, is set out below.
8th resolution
Approval of the disclosures concerning the corporate
officers’ compensation packages
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-77 I of
the French Commercial Code, approves the disclosures
mentioned in Article L. 22-10-9 I of the Code, as presented in
the Corporate Governance Report set out in sections 3.4.1 to
3.4.6 of the Company’s 2021 Universal Registration Document.
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3.5
INDIVIDUAL COMPENSATION PAID OR AWARDED
TO THE MANAGERS AND THE CHAIR(MAN)
OF THE SUPERVISORY BOARD FOR 2021
In addition to the resolution presented in section 3.4.7 above, the Ordinary Shareholders Meeting will be asked to adopt the following
individual resolutions concerning the Chair of the Supervisory Board and each of the Managers.
3.5.1
VOTE BY SHAREHOLDERS AT THE ORDINARY SHAREHOLDERS MEETING
OF MAY 13, 2022 ON THE COMPENSATION PACKAGE OF BARBARA DALIBARD,
CHAIR OF THE SUPERVISORY BOARD SINCE MAY 2021
This section presents the components of the compensation paid or awarded in 2021 to Barbara Dalibard in her capacity as member
then Chair of the Supervisory Board.
Compensation
components put
to the vote
Amounts
paid in 2021
Amounts awarded
in respect of 2021
Presentation
Compensation as
Supervisory Board
member
€80,000.00
€91,153.00
The amount paid in 2021:
▶was awarded in respect of 2020 out of the total annual
compensation allocated to the Supervisory Board by
the Ordinary Shareholders Meeting of May 17, 2019
(12th resolution adopted by a majority of 99.15%
of the votes cast)(1).
The amount awarded in respect of 2021:
▶is included in the total annual amount decided by the
Ordinary Shareholders Meeting of May 17, 2019;
▶has been determined in accordance with the 2021
Compensation Policy for the members of the Supervisory
Board, as described in the 2020 Universal Registration
Document (section 3.3.3) and approved by the Ordinary
Shareholders Meeting of May 21, 2021 (7th resolution,
adopted by a 99.84% majority of the votes cast).
Annual variable
compensation
N/A
N/A
N/A
Deferred variable
compensation
N/A
N/A
N/A
Exceptional
compensation
N/A
N/A
N/A
Stock options,
performance shares
and other long-term
compensation
(stock warrants, etc.)
N/A
N/A
N/A
Fringe benefits
N/A
N/A
N/A
Compensation for loss
of office
N/A
N/A
N/A
Non-compete
indemnity
N/A
N/A
N/A
Supplementary pension
benefits
N/A
N/A
N/A
N/A: Not applicable.
(1) As Barbara Dalibard was elected Chair of the Supervisory Board after the Annual Shareholders Meeting of May 21, only the compensation of the Chairman in
office until that meeting was presented for a vote.
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Individual compensation paid or awarded to the Managers and the Chair(man) of the Supervisory Board for 2021
At the Ordinary Shareholders Meeting of May 13, 2022, shareholders will be asked to approve the following ordinary resolution:
11th resolution
Approval of the components of the compensation paid
or awarded to Barbara Dalibard for the year ended
December 31, 2021
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-77 II of
the French Commercial Code, approves the fixed, variable and
exceptional compensation making up the total compensation
and
fringe
benefits
paid
during
the
year
ended
December 31, 2021 or awarded in respect of that year to
Barbara Dalibard, Chair of the Supervisory Board from
May 21, 2021, as set out in section 3.5.1 of the Company’s
2021 Universal Registration Document.
3.5.2
VOTE BY SHAREHOLDERS AT THE ORDINARY SHAREHOLDERS MEETING
OF MAY 13, 2022 ON THE COMPENSATION PACKAGE OF MICHEL ROLLIER,
CHAIRMAN OF THE SUPERVISORY BOARD UNTIL MAY 2021
This section presents the components of the compensation paid or awarded to Michel Rollier for 2021 in his capacity as Chairman of
the Supervisory Board until May 21, 2021.
Compensation
components put
to the vote
Amounts
paid in 2021
Amounts awarded
in respect of 2021
Presentation
Compensation as
Supervisory Board
member
€120,000.00
€47,975.00
The amount paid in 2021:
▶was awarded in respect of 2020 out of the total annual
compensation allocated to the Supervisory Board by
the Ordinary Shareholders Meeting of May 17, 2019
(12th resolution adopted by a majority of 99.15% of
the votes cast).
The amount awarded in respect of 2021:
▶is included in the total annual amount decided by the
Ordinary Shareholders Meeting of May 17, 2019;
▶has been determined in accordance with the 2021
Compensation Policy for the members of the Supervisory
Board, as described in the 2020 Universal Registration
Document (section 3.3.3) and approved by the Ordinary
Shareholders Meeting of May 21, 2021 (7th resolution,
adopted by a 99.84% majority of the votes cast).
Annual variable
compensation
N/A
N/A
N/A
Deferred variable
compensation
N/A
N/A
N/A
Exceptional
compensation
N/A
N/A
N/A
Stock options,
performance shares and
other long-term
compensation (stock
warrants, etc.)
N/A
N/A
N/A
Fringe benefits
N/A
N/A
N/A
Compensation for loss
of office
N/A
N/A
N/A
Non-compete
indemnity
N/A
N/A
N/A
Supplementary pension
benefits
N/A
N/A
N/A
N/A: Not applicable.
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At the Ordinary Shareholders Meeting of May 13, 2022, shareholders will be asked to approve the following ordinary resolution:
12th resolution
Approval of the components of the compensation paid
or awarded to Michel Rollier for the year ended
December 31, 2021
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-77 II of
the French Commercial Code, approves the fixed, variable and
exceptional compensation making up the total compensation
and
fringe
benefits
paid
during
the
year
ended
December 31, 2021 or awarded in respect of that year to
Michel Rollier, Chairman of the Supervisory Board until May 21,
2021, as set out in section 3.5.2 of the Company’s 2021
Universal Registration Document.
3.5.3
VOTE BY SHAREHOLDERS AT THE ORDINARY SHAREHOLDERS MEETING
OF MAY 13, 2022 ON THE COMPENSATION PACKAGE OF FLORENT MENEGAUX,
MANAGING CHAIRMAN AND GENERAL PARTNER
This section presents the components of the compensation paid or awarded to Florent Menegaux for 2021 in his capacity as
Managing Chairman.
Compensation
components put
to the vote
Amounts
paid in 2021
Amounts awarded
in respect of 2021 OR
Provision set aside
in 2021 OR Simulation
Presentation
Fixed compensation
€900,000.00
€900,000.00
The amount awarded in 2021:
▶has remained unchanged since Florent Menegaux’s election
by the Annual Shareholders Meeting of May 18, 2018;
▶was determined in accordance with the 2021
Compensation Policy, as described in the 2020 Universal
Registration Document (section 3.3.2.2) and approved
by the Ordinary Shareholders Meeting of May 21, 2021
(6th resolution, adopted by a 90.68% majority of the
votes cast).
Annual variable
compensation
€581,161.00
€1,350,000.00
(Amount that may be
awarded in respect of
2021 in application of
the 2021 Compensation
Policy, payable in 2022)
The amount paid in 2021:
▶was due for 2020 and was determined in accordance
with the 2020 Compensation Policy, as described in the
2019 Universal Registration Document (section 3.4.2.4.1)
and approved by the Ordinary Shareholders Meeting of
May 21, 2021 (9th resolution, adopted by a 97.63%
majority of the votes cast);
▶is the subject of detailed disclosures in section 3.4.3.2
of the 2020 Universal Registration Document.
The amount awarded in respect of 2021:
▶was determined in accordance with the 2021
Compensation Policy, as described in the 2020 Universal
Registration Document (section 3.3.2.3) and approved by
the Ordinary Shareholders Meeting of May 21, 2021
(6th resolution, adopted by a 90.68% majority of the
votes cast);
▶is the subject of detailed disclosures in section 3.4.4.2
of this 2021 Universal Registration Document.
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Compensation
components put
to the vote
Amounts
paid in 2021
Amounts awarded
in respect of 2021 OR
Provision set aside
in 2021 OR Simulation
Presentation
Deferred variable
compensation
€180,000.00
N/A
The amount paid in 2021:
▶was due for 2018 and was determined in accordance
with the 2018 Compensation Policy, as described in
the 2017 Registration Document (section 4.4.1 a) 2.2)
and approved by the Ordinary Shareholders Meeting
of May 17, 2019 (7th resolution, adopted by a 98.29%
majority of the votes cast);
▶is the subject of detailed disclosures in the 2018
Registration Document (section 4.4.5.b) and the 2020
Universal Registration Document (section 3.6.2.1).
Exceptional
compensation
N/A
N/A
N/A
Stock options,
performance shares
and other long-term
compensation (stock
warrants, etc.)
N/A
€727,106.88
(book value at December
31, 2021 – determined
in accordance with
IFRS 2 – of the
8,397 performance
share rights awarded
in November 2021)
This award was made in application of:
▶the 2021 Compensation Policy, as described in the 2020
Universal Registration Document (section 3.3.2.3) and
approved by the Ordinary Shareholders Meeting of
May 21, 2021 (6th resolution, adopted by a 90.68%
majority of the votes cast);
▶the 25th resolution of the Annual Shareholders Meeting
of June 23, 2020 (see pages 395 et seq. of the 2019
Universal Registration Document), adopted by a 97.02%
majority of the votes cast.
This amount is the subject of detailed disclosures in
section 3.4.4.3 of this 2021 Universal Registration
Document.
Compensation as a
Director/Supervisory
Board member
N/A
N/A
N/A
Fringe benefits
€9,985.00
€9,985.00
Company car (accounting value)
Compensation for loss
of office
No compensation paid
No compensation
awarded
This component:
▶is an integral part of the 2021 Compensation Policy, as
described in the 2020 Universal Registration Document
(section 3.3.2.7) and approved by the Ordinary Shareholders
Meeting of May 21, 2021 (6th resolution, adopted by a
90.68% majority of the votes cast);
▶is the subject of detailed disclosures in section 3.6.1.12
of this 2021 Universal Registration Document.
Non-compete
indemnity
No indemnity paid
No indemnity awarded
This component:
▶is an integral part of the 2021 Compensation Policy, as
described in the 2020 Universal Registration Document
(section 3.3.2.8) and approved by the Ordinary Shareholders
Meeting of May 21, 2021 (6th resolution, adopted by a
90.68% majority of the votes cast);
▶is the subject of detailed disclosures in section 3.6.1.12
of this 2021 Universal Registration Document.
Supplementary pension
benefits
No benefits paid
No benefits awarded
This component:
▶is an integral part of the 2020 Compensation Policy,
as described in the 2020 Universal Registration Document
(section 3.3.2.6) and approved by the Ordinary
Shareholders Meeting of May 21, 2021 (6th resolution,
adopted by a 90.68% majority of the votes cast);
▶is the subject of detailed disclosures in section 3.6.1.12
of this 2021 Universal Registration Document.
N/A: Not applicable.
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Individual compensation paid or awarded to the Managers and the Chair(man) of the Supervisory Board for 2021
At the Ordinary Shareholders Meeting of May 13, 2022, shareholders will be asked to approve the following ordinary resolution:
9th resolution
Approval of the components of the compensation paid
or awarded to Florent Menegaux for the year ended
December 31, 2021
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-77 II of
the French Commercial Code, approves the fixed, variable and
exceptional compensation making up the total compensation and
fringe benefits paid during the year ended December 31, 2021
or awarded in respect of that year to Florent Menegaux,
Managing General Partner and Managing Chairman, as
presented in the Corporate Governance Report set out in
section 3.5.3 of the Company’s 2021 Universal Registration
Document.
3.5.4
VOTE BY SHAREHOLDERS AT THE ORDINARY SHAREHOLDERS MEETING
OF MAY 21, 2021 ON THE COMPENSATION PACKAGE OF YVES CHAPOT,
GENERAL MANAGER
This section presents the components of the compensation paid or awarded to Yves Chapot for 2021 in his capacity as General
Manager.
Compensation
components put
to the vote
Amounts
paid in 2021
Amounts awarded
in respect of 2021 OR
Provision set aside
in 2021 OR Simulation
Presentation
Fixed compensation
€600,000.00
€600,000.00
The amount awarded in 2021:
▶has remained unchanged since Yves Chapot’s election
by the Annual Shareholders Meeting of May 18, 2018;
▶was determined in accordance with the 2021 Compensation
Policy, as described in the 2020 Universal Registration
Document (section 3.3.2.2) and approved by the Ordinary
Shareholders Meeting of May 21, 2021 (6th resolution,
adopted by a 90.68% majority of the votes cast).
Annual variable
compensation
€516,900.00
€824,400.00
(Amount that may be
awarded in respect of
2021 in application of
the 2021 Compensation
Policy, payable in 2022)
The amount paid in 2021:
▶was due for 2020 and was determined in accordance
with the 2020 Compensation Policy, as described in the
2019 Universal Registration Document (section 3.4.2.4.1)
and approved by the Ordinary Shareholders Meeting of
May 21, 2021 (10th resolution, adopted by a 96.13%
majority of the votes cast);
▶is the subject of detailed disclosures in section 3.4.4.2
of the 2020 Universal Registration Document.
The amount awarded in respect of 2021:
▶was determined in accordance with the 2021
Compensation Policy, as described in the 2020 Universal
Registration Document (section 3.3.2.3) and approved
by the Ordinary Shareholders Meeting of May 21, 2021
(6th resolution, adopted by a 90.68% majority of
the votes cast);
▶is the subject of detailed disclosures in section 3.4.5.2
of this 2021 Universal Registration Document.
Deferred variable
compensation
€150,000.00
N/A
The amount paid in 2021:
▶was due for 2018 and was determined in accordance with
the 2018 Compensation Policy, as described in the 2017
Registration Document (section 4.4.1 a) 2.2) and approved
in an ordinary resolution of the Annual Shareholders
Meeting of May 17, 2019 (8th resolution, adopted
by a 98.30% majority of the votes cast);
▶is the subject of detailed disclosures in the 2018 Registration
Document (section 4.4.7.b) and the 2020 Universal
Registration Document (section 3.6.2.2).
Exceptional compensation
N/A
N/A
N/A
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Compensation
components put
to the vote
Amounts
paid in 2021
Amounts awarded
in respect of 2021 OR
Provision set aside
in 2021 OR Simulation
Presentation
Stock options, performance
shares and other long-term
compensation (stock
warrants, etc.)
N/A
€484,737.92
(book value at
December 31, 2021 –
determined in
accordance with IFRS 2
– of the 5,598
performance share rights
awarded in November
2021)
This award was made in application of:
▶the 2021 Compensation Policy, as described in the 2020
Universal Registration Document (section 3.3.2.3) and
approved by the Ordinary Shareholders Meeting of
May 21, 2021 (6th resolution, adopted by a 90.68%
majority of the votes cast);
▶the 25th resolution of the Annual Shareholders Meeting of
June 23, 2020 (see pages 395 et seq. of the 2019 Universal
Registration Document), adopted by a 97.02% majority
of the votes cast.
This amount is the subject of detailed disclosures in section
3.4.5.3 of this 2021 Universal Registration Document.
Compensation as a
Director/Supervisory
Board member
N/A
N/A
N/A
Fringe benefits
€9,757.00
€9,757.00
Company car (accounting value)
Compensation for loss
of office
No compensation
paid
No compensation
awarded
This component:
▶is an integral part of the 2021 Compensation Policy, as
described in the 2020 Universal Registration Document (section
3.3.2.7) and approved by the Ordinary Shareholders Meeting
of May 21, 2021 (6th resolution, adopted by a 90.68%
majority of the votes cast);
▶is the subject of detailed disclosures in section 3.6.1.12
of this 2021 Universal Registration Document.
Non-compete
indemnity
No indemnity paid
No indemnity awarded
This component:
▶is an integral part of the 2021 Compensation Policy, as
described in the 2020 Universal Registration Document
(section 3.3.2.8) and approved by the Ordinary Shareholders
Meeting of May 21, 2021 (6th resolution, adopted by
a 90.68% majority of the votes cast);
▶is the subject of detailed disclosures in section 3.6.1.12
of this 2021 Universal Registration Document.
Supplementary pension
benefits
No benefits paid
No benefits awarded
This component:
▶is an integral part of the 2020 Compensation Policy, as
described in the 2020 Universal Registration Document
(section 3.3.2.6) and approved by the Ordinary Shareholders
Meeting of May 21, 2021 (6th resolution, adopted by
a 90.68% majority of the votes cast);
▶is the subject of detailed disclosures in section 3.6.1.12
of this 2021 Universal Registration Document.
N/A: Not applicable.
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At the Ordinary Shareholders Meeting of May 13, 2022, shareholders will be asked to approve the following ordinary resolution:
10th resolution
Approval of the components of the compensation paid
or awarded to Yves Chapot for the year ended
December 31, 2021
Having noted the agreement of the General Partners and considered
the report of the Supervisory Board, the Annual Shareholders
Meeting, in application of Article L. 22-10-77 II of the French
Commercial Code, approves the fixed, variable and exceptional
compensation making up the total compensation and fringe benefits
paid during the year ended December 31, 2021 or awarded in
respect of that year to Yves Chapot, General Manager, as presented
in the Corporate Governance Report set out in section 3.5.4 of the
Company’s 2021 Universal Registration Document.
3.6
OTHER INFORMATION ABOUT COMPENSATION
OF THE EXECUTIVE OFFICERS
3.6.1
SUMMARY INFORMATION CONCERNING THE EXECUTIVE OFFICERS
The data and tables in this section:
▶present the compensation of the corporate officers of the
Company;
▶have been prepared in accordance with the AFEP/MEDEF
Code (January 2020);
▶comply with AMF recommendation No. 2012-02 (revised) on
“corporate governance and executive compensation in
companies
that
refer
to
the
AFEP/MEDEF
Code
–
Consolidated
presentation
of
the
recommendations
contained in the AMF’s annual reports”.
3.6.1.1
Compensation, stock options and performance shares awarded to executive officers (in €)
(based on Table 1 in the AFEP/MEDEF Code)
Florent Menegaux, General Partner and Managing Chairman
with unlimited personal liability for the Company’s debts
2021
2020
Compensation awarded for the year
2,259,985.00
1,489,788.00
Value of stock options granted during the year
0
0
Value of performance shares granted during the year
727,106.88(1)
673,051.63
Value of other long-term compensation plans
0
0
TOTAL
2,987,091.88
2,162,839.63
Reference CGEM consolidated net income
1,845,066,544.00
625,441,868.00
(1) Book value (IFRS 2) at December 31, 2021 of the performance share award described in section 3.4.4.3 of this 2021 Universal Registration Document.
Yves Chapot, General Manager
2021
2020
Compensation awarded for the year
1,434,157.00
1,126,544.00
Value of stock options granted during the year
0
0
Value of performance shares granted during the year
484,737.92(1)
448,701.09
Value of other long-term compensation plans
0
0
TOTAL
1,918,894.92
1,575,245.09
(1) Book value (IFRS 2) at December 31, 2021 of the performance share award described in section 3.4.5.3 of this 2021 Universal Registration Document.
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3.6.1.2
Compensation paid and awarded to Florent Menegaux (in €)
(based on Table 2 in the AFEP/MEDEF Code)
Florent Menegaux, General Partner and Managing
Chairman with unlimited personal liability for the
Company’s debts
2021
2020
Awarded
Paid
Awarded
Paid
Fixed compensation(1)
900,000.00
900,000.00
900,000.00
843,750.00(2)
Annual variable compensation
1,350,000.00(3)
581,161.00
581,161.00(4)
1,038,759.43(2)
Exceptional compensation
0
0
0
0
Compensation as a Director/Supervisory Board member
0
0
0
0
Fringe benefit (car)
9,985.00
9,985.00
8,627.00
8,627.00
TOTAL
2,259,985.00
1,491,146.00
1,489,788.00
1,891,136.43
Reference CGEM consolidated net income
1,845,066,544.00
625,441,868.00
625,441,868.00
1,730,043,108.00
(1) Compensation paid by Manufacture Française des Pneumatiques Michelin (MFPM), a controlled entity, in consideration of his role as General Manager of the
Company.
(2) After reduction decided due to the consequences of the Covid-19 crisis.
(3) Gross amount, calculated based on the achievement rate for the applicable performance criteria, subject to approval of the corresponding resolutions by
CGEM shareholders at the Annual Meeting of May 13, 2022 (see section 3.5.3).
(4) Amount calculated based on the achievement rate for the applicable performance criteria and approved by CGEM shareholders at the Annual Shareholders
Meeting of May 21, 2021.
3.6.1.3
Compensation paid and awarded to Yves Chapot (in €)
(based on Table 2 in the AFEP/MEDEF Code)
Yves Chapot, General Manager
2021
2020
Awarded
Paid
Awarded
Paid
Fixed compensation
600,000.00
600,000.00
600,000.00
562,500.00(1)
Annual variable compensation
824,400.00(2)
516,900.00
516,900.00
348,776.14(1)
Exceptional compensation
0
0
0
0
Compensation as a Director/Supervisory Board member
0
0
0
0
Fringe benefit (car)
9,757.00
9,757.00
9,644.00
9,644.00
TOTAL
1,434,157.00
1,126,657.00
1,126,544.00
920,920.14
(1) After reductions decided due to the consequences of the Covid-19 crisis.
(2) Gross amount, calculated based on the achievement rate for the applicable performance criteria, subject to approval of the corresponding resolutions by
CGEM shareholders at the Annual Meeting of May 13, 2022 (see section 3.5.4).
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3.6.1.4
Compensation received by the non-executive corporate officers
(based on Table 3 in the AFEP/MEDEF Code)
Supervisory Board members
2021(1)
2020(1)
Amount awarded
(in €)
Amount paid
(in €)
Amount awarded
(in €)
Amount paid
(in €)
Barbara Dalibard(2)
91,153
80,000
80,000
90,000
Olivier Bazil(3)
N/A
35,500
35,500
80,000
Jean-Pierre Duprieu
71,963
62,500
62,500
60,000
Aruna Jayanthi
57,570
70,000
70,000
70,000
Anne-Sophie de La Bigne
71,963
65,000
65,000
71,250
Patrick de La Chevardière(4)
76,760
44,500
44,500
N/A
Jean-Christophe Laourde(5)
51,573
9,000
9,000
N/A
Thierry Le Hénaff
71,963
68,330
68,330
56,727
Monique Leroux
86,355
80,000
80,000
70,000
Cyrille Poughon(6)
N/A
47,250
47,250
60,000
Michel Rollier(7)
47,975
120,000
120,000
112,800
Delphine Roussy(5)
51,573
9,000
9,000
N/A
Wolf-Henning Scheider(8)
33,582
N/A
N/A
N/A
Jean-Michel Severino(9)
57,570
17,750
17,750
N/A
TOTAL
770,000(10)
708,830(11)
708,830(11)
670,777
(1) The compensation indicated consists solely of fixed compensation for services as Supervisory Board member. No variable compensation was paid for these
services and no other compensation was awarded or paid.
(2) Chair of the Supervisory Board since May 2021.
(3) Supervisory Board member until June 2020.
(4) Supervisory Board member since June 2020.
(5) Supervisory Board member since December 2020.
(6) Supervisory Board member until October 2020.
(7) Chairman and member of the Supervisory Board until May 2021.
(8) Supervisory Board member since May 2021.
(9) Supervisory Board member since November 2020.
(10) The amounts awarded in respect of 2021 have been determined in application of the 2021 Supervisory Board Compensation Policy approved by the Ordinary
Shareholders Meeting of May 21, 2021 (7th resolution adopted by a majority of 99.84% of the votes cast).
(11) The amounts paid in 2021 were awarded in respect of 2020 out of the total annual compensation of €770,000 decided by the Ordinary Shareholders
Meeting of May 17, 2019 (12th resolution adopted by a majority of 99.15% of the votes cast).
3.6.1.5
Stock options granted during the year to executive officers by the issuer and any other
Group company (based on Table 4 in the AFEP/MEDEF Code)
No stock options were granted by the Company to the executive officers during the year.
No stock options have been granted to the Managers since 2012.
Plan no.
and date
Type of options
(purchase or
subscription)
Value of the options
calculated by the
method used for the
consolidated financial
statements
Number of
options granted
during the year
Exercise
price
Exercise
period
Florent Menegaux
-
-
0
0
-
-
Yves Chapot
-
-
0
0
-
-
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3.6.1.6
Stock options exercised during the year by executive officers
(based on Table 5 in the AFEP/MEDEF Code)
No stock options were exercised by the Company’s executive officers in 2021.
Plan no. and date
Number of options
exercised during the year
Exercise price
Florent Menegaux
-
0
-
Yves Chapot
-
0
-
3.6.1.7
Performance shares granted during the year to the executive officers by the issuer
and any other Group company (based on Table 6 in the AFEP/MEDEF Code)
13,995 of the 319,622 performance share rights given on November 17, 2021 pursuant to the authorization given at the
June 23, 2020 Annual Shareholders Meeting were granted to the Managers and the Chair(man) of the Supervisory Board.
Plan no.
and date
Number of
performance share
rights granted
during the year
Value of the
performance shares
calculated by the
method used for the
consolidated financial
statements
Vesting date
End of
lock‑up
period
Performance conditions
Florent
Menegaux
Plan 15 of
November 17,
2021
8,397
€727,106.88
November 17,
2025
November 17,
2025
Detailed information is provided
in section 6.5.4.3 “Interim
fulfillment of performance
conditions under the
November 17, 2021
performance share plan”
Yves
Chapot
Plan 15 of
November 17,
2021
5,598
€484,737.92
November 17,
2025
November 17,
2025
Detailed information is provided
in section 6.5.4.3 “Interim
fulfillment of performance
conditions under the
November 17, 2021
performance share plan”
3.6.1.8
Performance shares granted to executive officers for which the lock-up period ended
during the year (based on Table 7 in the AFEP/MEDEF Code)
Plan no. and date
Number of
performance shares
for which the lock-up
period ended during
the year
Vesting conditions
Florent
Menegaux
Plan 8 (Excellence Management) dated
November 14, 2017 (performance shares
granted in his capacity as an employee of a
Group company, prior to becoming a
corporate officer)
5,314
Detailed information is provided in section 6.5.4.3
“Fulfillment of performance conditions under the
November 14, 2017 performance share plan”
Yves
Chapot
Plan 8 (Excellence Management) dated
November 14, 2017 (performance shares
granted in his capacity as an employee of a
Group company, prior to becoming a
corporate officer)
3,679
Detailed information is provided in section 6.5.4.3
“Fulfillment of performance conditions under the
November 14, 2017 performance share plan”
3.6.1.9
Past awards of stock options – Information about stock options
(based on Table 8 in the AFEP/MEDEF Code)
See the table in section 6.5.3.1 below.
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3.6.1.10 Past awards of performance shares – Information about performance shares
(based on Table 9 in the AFEP/MEDEF Code)
See the table in section 6.5.4.3 below.
3.6.1.11 Deferred variable compensation awarded to executive officers
(based on Table 10 in the AFEP/MEDEF Code)
See the table in section 3.6.2 below.
3.6.1.12 Managers' employment contracts, supplementary pension benefits and other benefits
(based on Table 11 in the AFEP/MEDEF Code)
Employment contract
Supplementary
pension benefits
Benefits or advantages due
or likely to be due as a
result of terminations or
changes of office
Non-compete
indemnity
Executive officer
Yes
No
Yes
No
Yes
No
Yes
No
Florent Menegaux
Position: Managing Chairman and
General Partner
Start date of term of office: 2018
Expiration of term of office: 2026
X(1)
X(2)
X(3)
X(4)
Yves Chapot
Position: General Manager
Start date of term of office: 2018
Expiration of term of office: 2026
X(5)
X(2)
X(3)
X(6)
(1) Florent Menegaux resigned from the position that was the subject of his pre-existing employment contract.
(2) Defined benefit pension plan set up for senior executives of MFPM and CGEM. For detailed explanations, see sections 3.4.3.5 and 3.4.4.5. In accordance with
Government Order No. 2019-697 dated July 3, 2019, the supplementary pension plan set up for MFPM and CGEM senior executives (the Michelin Executive
Supplementary Pension Plan) has been closed to new members since July 4, 2019 and the vesting period was frozen at December 31, 2019.
(3) Benefit defined in the CGEM Bylaws:
– set by the Non-Managing General Partner with the endorsement of the Supervisory Board; – only payable in the event of forced departure due to a change
of strategy or of control; – capped at two years' fixed and variable compensation (this cap includes any other benefits payable on termination of office such as
a non-compete indemnity);
– subject to performance conditions (see section 3.3.2.7).
(4) Indemnity payable in his capacity as an executive officer of MFPM:
– with the possibility for the Supervisory Board to waive implementation of the non-compete clause;
– capped at 24 months’ worth of the most recent fixed compensation paid to him by MFPM;
– deducted, where appropriate, from the cap equal to two years’ fixed and variable compensation applicable to all termination benefits, including
compensation for loss of office payable in the event of a forced departure due to a change in the Company's strategy or control (for detailed explanations, see
section 3.3.2.8).
In accordance with Article R. 22-10-40-III of the French Commercial Code, the non-compete indemnity would not be payable if the person concerned retired
on leaving the Group.
(5) Suspended employment contract with MFPM.
(6) Indemnity payable under his suspended employment contract with MFPM:
– with the possibility for the Supervisory Board to waive implementation of the non-compete clause;
– capped at 24 months’ worth of the most recent aggregate compensation paid to him by MFPM;
– deducted, where appropriate, from the cap equal to two years’ fixed and variable compensation applicable to all termination benefits, including
compensation for loss of office payable in the event of a forced departure due to a change in the Company’s strategy or control (for detailed explanations, see
section 3.3.2.8).
In accordance with Article R. 22-10-40-III of the French Commercial Code, the non-compete indemnity would not be payable if the person concerned retired
on leaving the Group.
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3.6.2
LONG-TERM INCENTIVE BONUSES AWARDED TO EXECUTIVE OFFICERS
IN RESPECT OF PERIODS PRIOR TO 2021
3.6.2.1
Long-term incentive bonuses awarded to Florent Menegaux in respect of periods prior to 2021
Cash-settled long-term incentive bonus awarded in 2019
This compensation awarded for 2019 was presented at the Annual Shareholders Meeting of June 23, 2020 and approved
by a majority of 95.75% of the votes cast (9th resolution).
Criteria
Growth in the Michelin share
price compared with that of the
CAC 40 index over the 2019-
2021 period
Michelin
Environmental
Footprint
(as measured by
the MEF indicator)(1)
Change in the
Employee
Engagement Rate
(as measured by the
annual Moving
Forward Together
survey)
Growth in segment
operating income (SOI), in
€ millions (based on current
business scope and comparable
accounting methods, excluding
changes in exchange rates)
Type
Financial performance
Environmental and
CSR performance
Environmental and
CSR performance
Business performance
Weighting (as a % of
the Profit Share)
11%
4%
4%
11%
Calculation method
Average of the share prices for the
second half of 2018 compared to
the average of the share prices for
the second half of 2021 (closing
prices quoted on Euronext Paris)
Average decrease in
the indicator between
2018/2019, 2019/
2020 and 2020/2021
Average growth in the
indicator between
2018/2019, 2019/
2020 and 2020/2021
Average growth in the indicator
between 2018/2019,
2019/2020 and 2020/2021
Maximum objective
If the gain in Michelin’s share price
is at least 15 points more than
the gain in the CAC 40, the
achievement rate will be 100%
and the maximum 11% of the
maximum potential bonus
will be received.
If the change in
average MEF over
three years is less
than -1.5 pts, the
achievement rate will
be 100% and the
maximum 4% of the
maximum potential
bonus will be received
If the improvement in
the average
engagement rate
exceeds 1.5 pts, the
achievement rate will
be 100% and the
maximum 4% of the
maximum potential
bonus will be received
If average annual growth in
segment operating income
exceeds €200 million, the
achievement rate will be 100%
and the maximum 11% of the
performance shares for this
objective will vest
Target objective
If the gain in Michelin’s share price is
between 0 and 15 points more than
the gain in the CAC 40, the result
will be: (gain in the Michelin share
price – gain in the CAC 40 index) x
(11%/15)
If the change in
average MEF over three
years is between
‑1.1 pts and -1.5 pts,
the target will be partly
achieved and 3% of
the maximum potential
bonus will be received
If the change in
average MEF over
three years is between
-0.5 pts and -1.0 pts,
the target will be
partly achieved and
1.5% of the
maximum potential
bonus will be received
If the improvement in
the average
engagement rate is
between 0.1 pts and
1.5 pts, the target will
be partly achieved
and the bonus will be
determined on a
straight line basis
If the average growth in
segment operating income
is between €100 million and
€200 million, the target will be
partly achieved and the bonus
will be determined on a
proportionate basis
Trigger point
If the gain in Michelin’s share price is
less than the gain in the CAC 40,
the achievement rate will be 0%
If the change in
average MEF over
three years exceeds -
0.5 pts, the target will
not be met
If the improvement in
the average
engagement rate is
less than 0.1 pts, the
achievement rate will
be 0%
If average annual growth in
segment operating income is
less than €100 million, the
target will not be met
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Criteria
Growth in the Michelin share
price compared with that of the
CAC 40 index over the 2019-
2021 period
Michelin
Environmental
Footprint
(as measured by
the MEF indicator)(1)
Change in the
Employee
Engagement Rate
(as measured by the
annual Moving
Forward Together
survey)
Growth in segment
operating income (SOI), in
€ millions (based on current
business scope and comparable
accounting methods, excluding
changes in exchange rates)
Actual indicator
▶Growth in the Michelin share price(2)
= 38.98%
Growth in the CAC 40(2) = 29.95%
The average engagement rate is
9.03%, giving an achievement rate
of 6.6% out of 11% for this
criterion
2019 = -0.5 pts
2020 = +0.1 pts
2021 = -2.5 pts
The average
engagement rate is
‑0.97 pts, giving an
achievement rate of
1.50% out of 4%
for this criterion
2019 = +1.0 pts
2020 = +2 pts
2021 = -2.0 pts
The average
engagement rate is
0.33 pts, giving an
achievement rate of
0.67% out of 4%
for this criterion
2019 = +€163 million
2020 = -€1,006 million
2021 = +€1,224 million
The growth differential is €127
million, giving an achievement
rate of 2.95% out of 11%
for this criterion
Base amount
Profit Share payable out of distributable income for 2021
Cap and eligibility
conditions
▶Capped at 2.5x annual fixed compensation for 2019, i.e., €2,250,000 (indicative amount)
▶Subject to the availability and amount of Profit Share for distribution in 2022 out of 2021 profit, after deducting annual
variable compensation due for 2021
Payment year
2022
Amount due
€1,299,726(3)
Commitment
Commitment to invest in Michelin shares 20% of the long-term incentive bonus received at the end of the three-year period
and to retain these shares for as long as Mr. Menegaux remains in office, after which the shares may be sold on a phased
basis over four years
(1) Michelin Environmental Footprint (MEF) indicator: energy use, water withdrawals, CO2 emissions, volatile organic compound emissions, amount of waste
produced and amount of waste landfilled.
(2) Average share price for the second half of 2021 compared to the average share price for the second half of 2018.
(3) By agreement between the General Partners, the amount is determined in accordance with the conditions decided in 2019, on the basis of 0.6% of the
Group's 2022 consolidated net income.
Based on the characteristics of this long-term incentive bonus
and the aggregate bonus criteria achievement rate of 11.72%
versus a maximum of 30% observed by the Compensation and
Appointments Committee (see above table), the Supervisory
Board noted that the gross long-term incentive bonus
amounted to €1,299,726.00 (rounded, before withholding tax).
This bonus will be payable in 2022 after the 2021 financial
statements have been approved by the Ordinary Shareholders
Meeting of May 13, 2022.
Mr. Menegaux is committed to investing 20% of the incentive
bonus in Michelin shares, which he will continue to hold for as
long as he remains in office, with any subsequent sales to be
carried out on a phased basis over four years.
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3.6.2.2
Long-term incentive bonuses awarded to Yves Chapot in respect of periods prior to 2021
Cash-settled long-term incentive bonus awarded in 2019
This compensation awarded for 2019 was presented at the Annual Shareholders Meeting of June 23, 2020 and was approved by a
majority of 96.47% of the votes cast (10th resolution).
Criteria
Growth in the Michelin share
price compared with that of
the CAC 40 index over the
2019-2021 period
Michelin Environmental
Footprint (as measured
by the MEF indicator)(1)
Change in the Employee
Engagement Rate (as
measured by the annual
Moving Forward
Together survey)
Growth in segment operating
income (SOI), in € millions
(based on current business scope
and comparable accounting
methods, excluding changes
in exchange rates)
Type
Financial performance
Environmental and CSR
performance
Environmental and CSR
performance
Business performance
Weighting
35%
15%
15%
35%
Calculation
method
Average of the share prices for
the second half of 2018
compared to the average of the
share prices for the second half of
2021 (closing prices quoted on
Euronext Paris)
Average decrease in the
indicator between 2018/
2019, 2019/2020 and
2020/2021
Average growth in the
indicator between 2018/
2019, 2019/2020 and
2020/2021
Average growth in the indicator
between 2018/2019, 2019/2020
and 2020/2021
Maximum
objective
If the gain in Michelin’s share
price is at least 15 points more
than the gain in the CAC 40, the
achievement rate will be 100%
and the maximum 35% of the
maximum potential bonus will be
received.
If the change in average
MEF over three years is less
than -1.5 pts, the
achievement rate will be
100% and the maximum
15% of the maximum
potential bonus will be
received
If the improvement in the
average engagement rate
exceeds 1.5 pts, the
achievement rate will be
100% and the maximum
15% of the maximum
potential bonus will be
received
If average annual growth in
segment operating income
exceeds €200 million, the
achievement rate will be 100%
and the maximum 35% of the
performance shares for this
objective will vest.
Target
objective
If the gain in Michelin’s share
price is between 0 and 15 points
more than the gain in the CAC
40, the result will be: (gain in the
Michelin share price – gain in the
CAC 40 index) x (35%/15)
If the change in average
MEF over three years is
between -1.1 pts and
‑1.5 pts, the target will be
partly achieved and 10%
of the maximum potential
bonus will be received
If the change in average
MEF over three years is
between -0.5 pts and
‑1.0 pts, the target will be
partly achieved and 5%
of the maximum potential
bonus will be received
If the improvement in the
average engagement rate is
between 0.1 pts and 1.5
pts, the target will be partly
achieved and the bonus will
be determined on a
straight line basis
If the average growth in segment
operating income is between
€100 million and €200 million,
the target will be partly achieved
and the bonus will be determined
on a proportionate basis
Trigger
point
If the gain in Michelin’s share
price is less than the gain in the
CAC 40, the achievement rate
will be 0%
If the change in average
MEF over three years
exceeds -0.5 pts,
the achievement rate
will be 0%
If the improvement in the
average engagement rate
is less than 0.1 pts,
the achievement rate
will be 0%
If average annual growth in
segment operating income is less
than €100 million, the
achievement rate will be 0%
Actual
indicator
Growth in the Michelin share
price(2) = 38.98%
Growth in the CAC 40(2) =
29.95%
The average engagement rate is
9.03%, giving an achievement
rate of 21.07% out of 35%
for this criterion
2019 = -0.5 pts
2020 = +0.1 pts
2021 = -2.5 pts
The average engagement
rate is -0.97%, giving an
achievement rate of 5.00%
out of 15% for this
criterion
2019 = +1.0 pts
2020 = +2 pts
2021 = -2.0 pts
The average engagement
rate is 0.33%, giving an
achievement rate of 2.50%
out of 15% for this criterion
2019 = +€163 million
2020 = -€1,006 million
2021 = +€1,224 million
The growth differential is
€127 million, giving an
achievement rate of 9.39%
out of 35% for this criterion
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Trading in Michelin shares by the corporate officers and their close relatives in 2021
Criteria
Growth in the Michelin share
price compared with that of
the CAC 40 index over the
2019-2021 period
Michelin Environmental
Footprint (as measured
by the MEF indicator)(1)
Change in the Employee
Engagement Rate (as
measured by the annual
Moving Forward
Together survey)
Growth in segment operating
income (SOI), in € millions
(based on current business scope
and comparable accounting
methods, excluding changes
in exchange rates)
Base
amount
€600,000.00 (2019 fixed compensation)
Ceiling
120% of the annual average of the annual variable compensation paid to Mr. Chapot for 2019, 2020 and 2021
Payment
year
2022
Amount due €227,774 (rounded)
(1) Michelin Environmental Footprint (MEF) indicator: energy use, water withdrawals, CO2 emissions, volatile organic compound emissions, amount of waste
produced and amount of waste landfilled.
(2) Average share price for the second half of 2021 compared to the average share price for the second half of 2018.
Based on the characteristics of this long-term incentive bonus
and the aggregate bonus achievement rate of 37.96% versus a
maximum of 100% observed by the Compensation and
Appointments Committee (see above table), the Supervisory
Board noted that the gross long-term incentive bonus
amounted to €227,774.00 (rounded, before withholding tax).
This bonus will be payable in 2022 after the 2021 financial
statements have been approved by the Ordinary Shareholders
Meeting of May 13, 2022.
3.7
TOTAL COMPENSATION AWARDED TO THE GROUP
EXECUTIVE COMMITTEE
In 2021, the members of the Group Executive Committee
(excluding
the
Managers)
received
aggregate
gross
compensation of €7,584,025.00 (including €1,383,598.00
corresponding to the variable component for 2020 paid during
the first half of 2021). In 2020, the aggregate gross
compensation
received
by
Group
Executive
Committee
members totaled €5,324,236.00 (including €1,566,295.00
corresponding to the variable component for 2019 paid during
the first half of 2020). The Group Executive Committee
members do not receive any compensation as members of the
Boards of any Group companies.
3.8
TRADING IN MICHELIN SHARES BY THE CORPORATE OFFICERS
AND THEIR CLOSE RELATIVES IN 2021
Managers
Florent Menegaux
5,314 performance shares received without consideration on
November 14, 2021 (performance shares granted in 2017 in his
capacity as an employee of a Group company, prior to
becoming a corporate officer).
Yves Chapot
3,679 performance shares received without consideration on
November 14, 2021 (performance shares granted in 2017 in his
capacity as an employee of a Group company, prior to
becoming a corporate officer).
Supervisory Board
Delphine Roussy
72
shares
acquired
on
November
14,
2021
without
consideration under the performance share plan.
Wolf-Henning Scheider
400 shares acquired on March 24, 2021 at a unit price of
€124.50.
Jean-Michel Severino
400 shares acquired on January 25, 2021 at a unit price of
€110.65.
To the best of the Company’s knowledge, no other transactions
in the Company’s shares were carried out by the Managers,
Supervisory Board members or their close relatives during the
year.
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Procedure for assessing agreements entered into in the normal course of business
3.9
PROCEDURE FOR ASSESSING AGREEMENTS ENTERED
INTO IN THE NORMAL COURSE OF BUSINESS
In accordance with Article L. 225-39 of the French Commercial
Code, referring to Article L. 226-10-1 of said Code, the
Supervisory Board has established a procedure for the regular
review of agreements entered into in the normal course of
business, in order to obtain assurance that they are on arm’s
length terms. The persons directly or indirectly concerned by any
of these agreements do not participate in the review. The
procedure is performed by members of the Legal Department
who refer to the regulatory framework governing these types of
agreement.
3.10 ARTICLES OF INCORPORATION, BYLAWS AND SHAREHOLDER
PARTICIPATION AT GENERAL MEETINGS
The Bylaws, in French and English, can be downloaded from the Company's website (www.michelin.com).
3.10.1
GENERAL PARTNERS (ARTICLE 1 OF THE BYLAWS)
▶Florent Menegaux, Managing Chairman;
▶Société Auxiliaire de Gestion – SAGES (registered in the Clermont-Ferrand Trade and Companies Register under number 870 200 466),
a simplified joint stock company chaired by Vincent Montagne (see the presentation and role of this company, section 3.1.2).
3.10.2
CORPORATE PURPOSE (ARTICLE 2 OF THE BYLAWS)
All operations and activities directly or indirectly linked to the
production, manufacture and sale of rubber, at all stages of
manufacture, in all forms and for all uses.
All industrial, commercial and financial operations, related in
particular to:
▶tires, tire components, tire accessories and manufactured
rubber in general;
▶mechanical engineering in all its applications, and in
particular motor vehicles and industrial vehicles, components,
spare parts and accessories;
▶the production, sale and use of natural or synthetic chemicals
and their derivatives, in particular the various sorts of
elastomers, plastics, fibers and resins, and generally all
activities and products of the chemicals industry, especially as
related to the products and operations described above;
▶the filing, acquisition, use, transfer or sale of any intangible
property rights, and in particular patents and related rights,
trademarks and manufacturing processes relating to the
corporate purpose.
To be carried out directly, as well as through equity interests, the
creation of new companies, joint ventures (sociétés en partitipation)
and economic interest groups (groupements d’intérêt économique),
contributions,
partnerships
(commandites),
the
subscription,
purchase or exchange of securities, or interests, in all businesses
whose activities relate to the aforementioned purposes, or by way of
merger or otherwise.
And generally, all commercial, industrial, real estate, securities
and financial transactions related directly or indirectly in whole
or in part to any of the purposes specified above or to any
similar or related purposes.
3.10.3
MANAGERS (ARTICLE 10 OF THE BYLAWS)
The Company is led by a Managing Chairman and managed by one or more Managers, who are individuals and who may or may not
be General Partners.
3.10.4
FISCAL YEAR (ARTICLE 29 OF THE BYLAWS)
The Company's fiscal year begins on January 1 and ends on December 31.
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Articles of incorporation, Bylaws and shareholder participation at General Meetings
3.10.5
STATUTORY ALLOCATION OF PROFITS (ARTICLES 12 AND 30 OF THE BYLAWS)
Allocation to the General Partners of a share of net income (the
Profit Share) calculated as follows:
▶the portion of the Profit Share attributable to the Managing
General Partner(s) is determined by reference to the
objectives set in advance by the Supervisory Board;
▶the portion attributable to the Non-Managing General Partner
is equal to the portion attributable to the Managing General
Partner(s)
in
respect
of
his/her/their
annual
variable
compensation or in any other form whatsoever (including in
performance shares).
In all cases, the total Profit Share due to the General Partners is
capped at 0.6% of consolidated net income for the year.
Net income comprises net revenue for the year less general and
administrative costs and all other expenses of the Company,
including any depreciation, amortization and provisions deemed
necessary. Net income remaining after the allocation to the
General Partners, plus any retained earnings brought forward
from the prior year, is attributable to shareholders.
The shareholders may decide to make deductions from this
attributable net income to be used, as recommended by the
Managing Chairman, to create or increase one or more reserve
or contingency funds, over which the General Partners shall not
have any rights.
3.10.6
SHAREHOLDER PARTICIPATION AT GENERAL MEETINGS
Notices of Meeting (Article 21 of the Bylaws)
Notices of Meeting are issued in such form and with such advance notice as is prescribed by law.
Conditions of attendance (Articles 22 and 24 of the Bylaws)
Shareholders may attend General Meetings regardless of how many shares they own, provided such shares are fully paid up and are
registered in the Company’s share register at least three days before the date of the Meeting.
Exercising voting rights – attribution of double voting rights (Article 22 of the Bylaws)
Owners or proxies of owners of fully paid-up shares registered
in the name of the same holder for at least four years shall have
two votes per share, without limitation.
In the event of a capital increase paid up by capitalizing
reserves, income or additional paid-in capital, the resulting
bonus shares distributed in respect of registered shares carrying
double voting rights shall similarly carry double voting rights.
Transfer through inheritance, liquidation of marital assets, inter
vivos transfers to a spouse or to a relative in the ascending or
descending line shall not result in the loss of double voting
rights or a break in the qualifying period described above.
Shares transferred for any other reason shall lose their double
voting rights ipso jure.
Statutory disclosure thresholds
The Bylaws do not provide for any disclosure to the Company when certain shareholding thresholds are exceeded.
Further information is provided on the Company’s website www.michelin.com.
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Ownership structure and voting rights
3.11
OWNERSHIP STRUCTURE AND VOTING RIGHTS
At December 31, 2021:
▶share capital: €357,060,900;
▶shares outstanding: 178,530,450 all fully paid up;
▶voting rights outstanding: 238,147,046.
SHARE OWNERSHIP
(at December 31, 2021)
VOTING RIGHTS
(at December 31, 2021)
At December 31, 2021, 178,530,450 shares were held by the public, corresponding to 100% of the voting rights.
As of December 31, 2021, to the best of the Company’s knowledge:
▶BlackRock Inc. held 4.99% of the share capital and 3.76% of the voting rights;
▶Mage Invest held 4.22% of the share capital and 6.24% of the voting rights;
▶no other shareholder directly or indirectly holds more than 5% of the capital and voting rights;
▶there are no shareholders’ agreements or pacts.
There has been no material change in the Company’s ownership structure over the last three years.
23.6%
French
institutional
investors
9.2%
Individual
shareholders
65.5%
Non-resident
institutional
investors
1.7%
Employee share
ownership plan
27.3%
French
institutional
investors
11.5%
Individual
shareholders
59.2%
Non-resident
institutional
investors
2.0%
Employee share
ownership plan
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Financial authorizations
3.12
FINANCIAL AUTHORIZATIONS
3.12.1
GRANTED BY THE ANNUAL SHAREHOLDERS MEETING OF JUNE 23, 2020
Issuance of shares and share equivalents with pre-emptive subscription rights
Corporate action
Resolution
Duration
(expiration date)
Maximum issue
amount, based on
a share price of €145(1)
(in €)
Maximum aggregate
par value of shares
(in €)
Utilization
during
the year
Issuance of shares and/or securities
carrying rights to shares
16th
26 months
(August 2022)
▶€9.13 billion
(ordinary shares)
▶€2.50 billion(4)
(securities carrying
rights to shares)
€126 million(2)(3)
(less than 35%
of issued capital)
None
Issuance of new shares by capitalizing
reserves
20th
26 months
(August 2022)
€5.80 billion
€80 million
None
(1) CGEM share price at December 31, 2021, rounded up to the nearest whole number.
(2) With the aggregate par value of shares issued in connection with all of the authorized transactions not to exceed €126 million, excluding any shares issued
under the 20th resolution (23rd resolution).
(3) This amount may be raised by up to 15% if the issue is oversubscribed, subject to the ceilings set respectively in the 16th, 17th and 18th resolutions
(19th resolution).
(4) With the aggregate nominal amount of all debt securities, with or without rights to shares, authorized by the 16th, 17th, 18th and 19th resolutions not to
exceed €2.5 billion (23rd resolution).
Issuance of shares and share equivalents without pre-emptive subscription rights
Corporate action
Resolution
Duration
(expiration date)
Maximum issue
amount, based on
a share price of €145(1)
(in €)
Maximum aggregate
par value of shares
(in €)
Utilization
during
the year
Issuance of shares and/or securities
carrying rights to shares
17th
26 months
(August 2022)
▶€2.54 billion
(ordinary shares)
▶€2.50 billion(4)
(securities carrying
rights to shares)
€35 million(2)(3)
(less than 10%
of issued capital)
None
Issuance of shares and/or securities
carrying rights to shares through an offer
governed by Article L. 411-2 of the French
Monetary and Financial Code (Code
monétaire et financier)
18th
26 months
(August 2022)
▶€2.54 billion
(ordinary shares)
▶€2.50 billion(4)
(securities carrying
rights to shares)
€35 million(2)(3)(5)
(less than 10%
of issued capital)
None
Issuance of ordinary shares in connection
with a stock‑for-stock offer or in payment
of contributed assets
21st
26 months
(August 2022)
€2.54 billion
€35 million(5)
None
(1) CGEM share price at December 31, 2021, rounded up to the nearest whole number.
(2) With the aggregate par value of shares issued in connection with all of the authorized transactions not to exceed €126 million, excluding any shares issued
under the 20th resolution (23rd resolution).
(3) This amount may be raised by up to 15% if the issue is oversubscribed, subject to the ceilings set respectively in the 16th, 17th and 18th resolutions
(19th resolution).
(4) With the aggregate nominal amount of all debt securities, with or without rights to shares, authorized by the 16th, 17th, 18th and 19th resolutions not to
exceed €2.5 billion (23rd resolution).
(5) Amount to be included in the maximum total capital increase authorized under the 23rd resolution.
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Financial authorizations
Employee share issues and/or issue of shares to the Managers and the Chair(man)
of the Supervisory Board
Corporate action
Resolution
Duration
(expiration date)
Comments
Utilization during
the year
Issuance of new ordinary shares
22nd
26 months (August 2022)
Less than 2%
of issued capital
None
Share grants and performance share plans 25th
38 months (August 2023)
▶Performance conditions
over three years
▶Capped at 0.9%
of issued capital
Issuance of
588,960 rights(1)
(1) Please refer to sections 6.5.4 and 6.5.5.
Share buyback program
Corporate action
Resolution
Duration (expiration date)
Comments
Utilization during
the year
Share buyback program
5th
18 months (December 2021)
▶Statutory limit of 10%
of issued capital
▶Maximum purchase price:
€180
Buyback of
8,032 shares(1)
Share cancellations
24th
24 months (June 2022)
10% of the current capital
None
(1) See section 6.5.6.
3.12.2
GRANTED BY THE ANNUAL SHAREHOLDERS MEETING OF MAY 21, 2021
Share buyback program
Corporate action
Resolution
Duration
(expiration date)
Limitations
Utilization during
the year
Share buyback program
5th
24 months (May 2023)
▶Statutory limit of 10%
of issued capital
▶Maximum purchase
price: €180
None
Share cancellations
14th
18 months
(November 2022)
10% of issued capital
None
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Statutory Auditors’ report, prepared in accordance with Article L. 22-10-78 of the French Commercial Code
on the Corporate Governance Report
3.13
CHANGE OF CONTROL
Because the Company is organized as a société en commandite
par actions (partnership limited by shares), any shareholder
gaining control of the capital and corresponding voting rights
could not exercise control over the Company without the
approval, in accordance with the Bylaws, of the Non-Managing
General Partner and/or, as the case may be, all of the General
Partners and/or the Supervisory Board, which would be required
to make the following decisions:
▶election of new Managers;
▶amendment of the Bylaws;
▶election of new General Partners.
3.14 STATUTORY AUDITORS’ REPORT, PREPARED IN ACCORDANCE
WITH ARTICLE L. 22-10-78 OF THE FRENCH COMMERCIAL CODE
ON THE CORPORATE GOVERNANCE REPORT
In accordance with French professional auditing standard NEP 9510(1), the Statutory Auditors’ review of the Supervisory Board’s
Corporate Governance Report, pursuant to Article L. 225-235 of the French Commercial Code, is described in the Statutory Auditors’
report on the annual financial statements presented in section 5.3.3 herein.
(1) Norme d'exercice professionnel 9510 (approved by the government order of October 1, 2018 published in France's Journal Officiel, edition no. 0232, on
October 7, 2018) on the subject of the Statutory Auditor's procedures relating to the management report, other documents on the audited entity's financial
position and financial statements and information included in the Corporate Governance Report, as communicated to the members of the governance body
called on to approve the financial statements.
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0
Non-Financial
performance
148
4
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
As the world leader
in sustainable and
connected tires,
we support emerging
mobility trends through
increasingly safe,
efficient and long-lasting
solutions.
04
Non-Financial
performance
METHODOLOGY
150
Definition of content and scope of reporting
150
Reporting cycle and period
150
Indicators
150
Fair, verifiable data
153
4.1
SUSTAINABLE DEVELOPMENT
AND MOBILITY REPORT
153
Introduction – Michelin sustainable development
and mobility
153
4.1.1
Ethics and compliance
159
4.1.2
Human rights
178
4.1.3
Employee health and safety
200
4.1.4
The Environment
207
4.1.5
Summary table of employee data
249
4.2
NON-FINANCIAL STATEMENT
250
4.2.1
Identification of the main risks
250
4.2.2
Table of Concordance – Non-Financial
Statement
251
4.2.3
Table of Concordance – Other CSR Issues
254
4.2.4
Report by one of the Statutory Auditors,
appointed as an independent third party,
on the consolidated non‑financial statement
256
4.3
DUTY OF CARE PLAN
260
4.3.1
Methodology
260
4.3.2
Table of concordance
261
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04
Methodology
METHODOLOGY
.SDG 12.6.
DEFINITION OF CONTENT AND SCOPE OF REPORTING
The Michelin Group consists of Compagnie Générale des
Etablissements
Michelin
(CGEM),
a
French
société
en
commandite par actions (partnership limited by shares) listed on
the Euronext Paris stock exchange. As such, in every host
country around the world, it applies the corporate social
responsibility (CSR) reporting standards defined by French
legislation.
This report therefore complies first and foremost with the
provisions of the French Commercial Code (Code de commerce),
which in its Articles L. 225-102-1 and L. 22-10-36 requires every
company that is publicly traded in France (or which has an
average of more than 500 employees under permanent work
contracts and (i) more than €20 million in total assets or (ii) more
than €40 million in annual net revenue) to include in its
management report a non-financial statement, disclosing how
the company manages the social and environmental impact of its
business operations, as well as the impact of these operations
with regard to upholding human rights and preventing
corruption and tax evasion.
To strike the right balance between regulatory compliance, meeting stakeholder expectations (as increasingly
expressed in emerging international reporting standards) and maintaining readability, the report is organized into
two sections. The first, the Sustainable Development and Mobility Report, offers a common core of content
addressing the shared expectations of all our stakeholders. This is followed by the Non-Financial Statement (4.2) and
the Duty of Care Plan (4.3), which are presented in the form of concordance tables, whose disclosure categories
specifically refer to the related paragraphs in Chapter 1 above and the Sustainable Development and Mobility Report below. In
particular, this report has been prepared in accordance with the Core Option for GRI compliance reporting(1) (see the
concordance tables on page 476 below) and the Sustainability Accounting Standards Board’s Auto Parts standard, on page
483. In addition, since 2018, the Michelin Group has been gradually applying the guidelines of the TCFD (Recommendations of
the Task Force on Climate-related Financial Disclosures) report of June 29, 2017, see page 222.
REPORTING CYCLE AND PERIOD
The reporting cycle is annual, with this year's reported data covering the 12 months from January 1 to December 31, 2021.
INDICATORS
Based on the ambitious new objectives and targets set for 2030,
certain key performance indicators have been defined. For
comparative purposes, historical data for these new indicators
are presented over the past two years.
For the other key indicators, which have not changed,
performance data are still reported over the past five years.
General scopes of reporting
The scope of reporting is the same as the “constant scope of
reporting” described in the Universal Registration Document, i.e.,
all of the Group’s consolidated units with the exception of
companies acquired in the last four years or whose impact
falls short of the materiality threshold defined for the
externalities
under
consideration.
Depending
on
the
performance indicators and the issues at stake, different
materiality thresholds may be applied. In these cases, the
applicable scopes of reporting will be specified below.
Employee relations indicators
Michelin has redefined its employee information reporting process in compliance with Articles L. 225-102-1, L. 22-10-36 and
R. 225‑105 et seq. of the French Commercial Code.
(1) GRI 101-3: “This option indicates that a report contains the minimum information needed to understand the nature of the organization, its material topics and
related impacts, and how these are managed.”
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Methodology
Data collection tools and reporting scope
Applications
Workday personnel management software has been used to
manage employee data in the main consolidated companies
since 2019.
Scope of reporting
Workforce numbers are consolidated at Group level. In recent
years, the Michelin Group has made significant acquisitions,
whose employee data are now being seamlessly integrated into
the Group's Personnel Department information systems. Most
of the employee information analyzed in compliance with
Article R. 225-105 of the French Commercial Code (workforce
numbers, working hours, health & safety data, labor relations,
training, equal opportunity) concerns all of the Group's
consolidated units except for the dealership networks and
companies acquired in recent years(1), i.e., 79.53% of all
employees on payroll, versus 74.6% in 2020. This corresponds
to the scope of reporting in the Group’s human resources
management software or what was previously referred to as
the “Ambitions 2020” scope. The significant increase in the
percentage of the workforce covered by reported data attests to
the progress made in the management of employee
information. Unless otherwise specified, these data concern
employees under all types of work contracts, except interns,
apprentices and work-study trainees.
A summary table of 2021 employee data is presented in
section 4.1.5.
The annual Moving Forward Together(2) employee engagement
survey is conducted in the One Michelin scope of reporting,
which includes all the companies in the management scope of
reporting plus any subsidiaries that have been owned by the
Michelin Group for more than two years(3).
Indicator consolidation method
Data were reported by the country organizations and companies in
accordance with corporate guidelines. These guidelines describe, for
every Michelin host country and member company, the process for
compiling the information required by Article R. 225-105 of the
French Commercial Code. They also specify the implementation and
outside audit procedures that ensure that the process is managed
efficiently and consistently across the organization. Lastly, they define
the indicators or cite the references in which they are defined. Each
country organization is responsible for the fairness and accuracy of
the reported data. As part of a continuous improvement process, the
Corporate Personnel Department audits the data on a monthly basis
to ensure their accuracy and consistency.
Certifications
ISO 45001: 2018 Occupational health and safety management
systems.
▶9 certified facilities(4).
Societal indicators
The Group’s engagement with local communities, through its employees and its Foundation, is designed to meet three objectives:
development of the local economy, the personal growth of people in the community, and road safety. The resources allocated by the Group
to community outreach programs and their real-world impact are reflected in the monetary value of the financial assistance provided, the
time devoted by employees, the number of people benefiting from the programs, and the number of jobs created with Michelin’s support.
Environmental indicators
The environmental impact of Michelin facilities
Since 2021, the industrial - Michelin Environmental Performance
indicator (i-MEP) has replaced the previous MEF indicator, which
enabled Michelin to manage and demonstrate the steady reduction
in its environmental impact from 2005 to 2020. The change was
prompted by the progress made over that period. The new
indicator was defined to reflect the following main factors:
▶the progress made since 2005: landfilled waste is no longer
tracked;
▶changes in certain areas, such as the increased use of
renewable energies;
▶alignment with the Group’s objectives: volatile organic
compound (VOC) use is now measured.
In this way, the i-MEP will improve tracking of the sustained
progress the Group hopes to drive over the 2021-2030 period.
The base year is 2019, which was deemed more representative
than 2020 due to the impact of the health crisis.
The new indicator is calculated based on data for each of the
five components expressed in units per tonne of semi-finished
and finished product output. As a result, its ratios are not
comparable to the ratios used during the MEF period
(2005‑2020), which were based solely on finished product
output. This change means that the indicator now more
accurately reflects the diversity of the Group's manufacturing
operations.
Basic components and weighting of i-MEP:
(1) Ares, Air Captif, BlackCircle, Camso, CVB, Euromaster, Eurowheel, Fenner, Ihle, Klinge, Lehigh, Masternaut, Mon Tour en France, Multistrada, Nextraq, Oliver
Rubber, PTG, Rodaco, Sascar, Seva, Tablet, Teleflow, Tplus, Tyredating and Wine Advocate.
(2) Also referred to as the MFT survey.
(3) Historical data have all been restated to ensure that inter-year comparisons are meaningful.
(4) The number of certified facilities is steadily increasing, in line with customer expectations and standards.
Components
Weighting
20
Energy use
20
CO2 emissions
20
Amount of waste generated
Organic solvent
use
20
Water withdrawals x water
stress
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Methodology
Methodological note
The formula for calculating the i-MEF is as follows. By definition, the 2019 Group i-MEP is equal to 100 (2020 was deemed to be less
representative due to the impact of the health crisis).
Data collection tools and reporting scope
Applications
Data are reported in the same format by every site around the
world via a networked application. The reported indicators are
defined and standardized in a reference guide that is used
during internal audits and independent reviews.
Scope of reporting
In 2021, the scope of i-MEP reporting covered 77 production
plants, natural rubber processing facilities and Technology
Centers having a material impact on the environment. Data are
collected for the 12 months from January 1 to December 31 of
each year.
If a new facility is opened, it tracks i-MEF data after completing
a one-year break-in period. In the case of closure, the facility is
removed from the MEF at the end of the calendar year in which
it closed. The environmental data for these facilities are included
in the MEF until the last month of reported production. In
2021, two new plants were added to the scope (Cilegon in
Indonesia and Mesquite in Mexico) and three were removed
following their closure (La Roche-sur-Yon in France, Dundee in
the United Kingdom and Bamberg in Germany).
Recently acquired businesses are gradually integrated into the
Group indicator through a process based primarily on aligning
and consolidating their data. Using this process, data from
CAMSO’s operations were aligned and consolidated in 2021,
resulting in an impact estimated at 3% of the Group’s i-MEP
components. To validate these contributions, the same data will
be reported on a parallel track in 2022. Also in 2022, Fenner's
operations will be reviewed according to a similar alignment
and consolidation process.
Certifications
ISO 14001: 2015 Environmental management systems.
▶93.3% of production facilities have been certified, covering
98.6% of tire output.
ISO 50001: 2018 Energy management systems.
▶4 certified facilities;
▶energy performance improvement system based on lean
manufacturing principles and compliant with ISO 50001;
▶deployed in 97% of the production facilities in the i-MEF
scope of reporting.
The Group’s carbon footprint
Since 2014, Michelin has used the CDP Climate Change
questionnaire to disclose its annual CO2 emissions in the three
scopes defined in the core Greenhouse Gas Protocol
documents: “The Greenhouse Gas Protocol: A Corporate
Accounting and Reporting Standard (revised edition)”(1) and its
supplement Corporate Value Chain (Scope 3) Accounting and
Reporting Standard(2):
▶Scope 1: emissions from fixed or mobile sources that are
owned or controlled by the Company;
▶Scope 2: emissions from the generation of purchased
electricity, heating, cooling and steam consumed by the
Company;
▶Scope 3: emissions that are a consequence of the activities of
the Company, but occur from sources not owned or
controlled by the Company. The standard specifies 15 activity
categories, of which 12 correspond to the Group’s value
chain. Of these, 11 are required in public reporting, and one
is optional. The latter concerns emissions from the use of sold
products(3) that indirectly consume fuel or electricity, such as
tires. Reported data cover total expected lifetime CO2
emissions from the use of relevant products sold in the
reporting year by companies controlled by the Michelin
Group, as defined in the financial consolidation principles.
In accordance with the GHG Protocol, Scope 1, 2 and 3
inventory is calculated for an overall base corresponding to the
Group’s consolidated financial reporting, with the calculations
for each Scope based on GHG Protocol methodologies and
guidelines. The salient methodological points are as follows:
▶Scopes 1 and 2: Calculations are based on primary data from
the facilities’ energy bills and standardized CO2 emission
factors. The method of calculation is documented in an
internal standards manual. Results are issued as part of the
i‑MEP indicator tracking process. Emissions excluded from
inventory data account for less than 5% of Scope 1 and
Scope 2 greenhouse gas emissions;
(1) World Business Council for Sustainable Development and World Resources Institute.
(2) World Resources Institute and World Business Council for Sustainable Development, September 2011.
(3) Examples include apparel (requires washing and drying), food (requires cooking and refrigeration), and soaps and detergents (require heated water).
Reporting year
energy use (GJ/t of SF + FP) x 20
Group
energy use 2019 (GJ/t of SF + FP)
Reporting year CO2
emissions (t/t of SF + FP) x 20
Group CO2
emissions 2019 (t/t of SF + FP)
Reporting year water stress x
water withdrawals (cu.m/t of SF + FP) x 20
Group water stress x
water withdrawals 2019 (cu.m/t of SF + FP)
Reporting year
organic solvent use (kg/t of SF + FP) x 20
Group organic
solvent use 2019 (kg/t of SF + FP)
Reporting year
waste generated (kg/t of SF + FP) x 20
Group
waste generated 2019 (kg/t of SF + FP)
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▶Scope 3: Calculations are based on secondary data,
assumptions made in the absence of certain data, and current
state-of-the-art CO2 emission factors found in the main
databases (e.g., www.ecoinvent.org). The method of
calculation is documented in an internal standards manual.
Because it is difficult to obtain reliable primary data outside
the boundaries of operational control, the estimated
uncertainty of the results ranges from ±10% to ±30%,
depending on the activity category. Data in the categories
subject to a CO2 emissions reduction target are updated
annually. Overall Scope 3 emissions data, including all 12 of
the relevant corporate value chain activities (out of 15), are
updated periodically. They were last updated in 2020 for the
2020-2022 reporting cycle. All of the 2020 Scope 3
calculations were audited in accordance with ISAE 3000 by
an independent third party, which expressed moderate
assurance that the calculations were made in compliance
with the protocols mentioned above.
FAIR, VERIFIABLE DATA
For the fifteenth consecutive year, Michelin's CSR data were
reviewed by PricewaterhouseCoopers Audit, the Statutory
Auditors designated as an independent third party. In 2021, for
the third time, their review was conducted in accordance with
the enabling decree of August 9, 2017, which defines
guidelines for independent third parties in performing their
review of the Non-Financial Statement. Following the review,
PricewaterhouseCoopers Audit issued a report attesting to the
presence, fairness and compliance of the required information.
4.1
SUSTAINABLE DEVELOPMENT AND MOBILITY REPORT
INTRODUCTION – MICHELIN SUSTAINABLE DEVELOPMENT AND MOBILITY
Approach
Michelin’s “All Sustainable” vision informs everything the Group does to fulfill its purpose of “offering everyone a better way forward.”
In particular, it ensures that all of the improvement objectives and targets are addressed at every stage in the definition and
deployment of the Group’s strategy.
Governance
The Group’s CSR governance system is based on the guidelines in the ISO 26000 (Social Responsibility), ISO 14001 (Environmental
Management) and ISO 20400 (Sustainable Procurement) standards.
Oversight by the Group Management Committee (CDG)
The Group Management Committee tracks progress on
sustainable development and mobility at dedicated meetings
held twice a year.
The Committee includes all the members of the Executive
Committee, as well as the heads of the following functions:
Legal, Purchasing, Finance, Information Systems, Internal
Control, Audit and Quality, Strategy, Supply Chain, Corporate
and Business Services, China Region and North America Region.
Led by the Corporate Vice President, Sustainable Development
and Mobility, these sessions verify that steady progress is being
made towards the Ambitions targets and validate the strategic
objectives of the Ethics Committee and the Environment,
Human Rights and Employee Health & Safety governance
bodies, including the management of the Group's non-financial
risks and their internal control.
A CSR Supervisory Board committee
In 2020, the CGEM Supervisory Board decided to set up a CSR
Committee to analyze in detail the issues involved in Michelin’s
corporate
social
responsibility
and
to
support
Board
deliberations and recommendations and Manager decisions in
this area.
The membership, responsibilities, procedures and deliberations
of the CSR Committee in 2021 are presented in section 3.2.11
Corporate Social Responsibility Committee (CSRC).
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Coordinated management of the all-sustainable approach
Challenges and performance
In line with the latest guidance issued by the European Securities Markets Authority (ESMA) on the risk factors to be reviewed
pursuant to the revised European prospectus directive, some of the main CSR risk factors identified by the Group are not covered
in the “Risk Management” section (see section 2.1 Risk factors specific to Michelin, description and related management
systems). This is because these risks, which have long been addressed by Michelin, have been effectively attenuated by the
prevention systems in place across the Group. Moreover, while most of the issues raised by these risks are already considered to
be among the Group priorities in its materiality matrix, they do not seem to be necessarily specific to Michelin, within the
meaning of Regulation (EU) 2017/1129 of the European Parliament.
Materiality matrix
As part of its social responsibility commitment, the Group has
plotted a materiality matrix. This exercise has helped to
strengthen the robustness and relevance of the main identified
issues and to enhance the Group’s overall risk management
process.
The various risk factors are now reviewed from a double
materiality perspective, so that their impacts on the Group and
on outside stakeholders are assessed symmetrically.
The materiality matrix serves as a frame of reference in
identifying the main CSR risks that structure this Non-Financial
Statement.
The new materiality matrix presented below is based on the
findings of a survey conducted by an outside consulting firm in
2021. It involved outside stakeholders and Michelin employees
in six countries (Brazil, China, the United States, France, Germany
and India) representative of the Group's operations. The process
involved four phases:
▶inventorying the key CSR issues;
▶defining the methodology and identifying stakeholders;
▶surveying the stakeholders;
▶building the materiality matrix.
The
issues
were
selected
based
on
general
trends
(demographics, transportation, consumer spending patterns,
growth or decline in resources, etc.), benchmarks, specific
features of the transportation industry, and issues identified in
the previous matrix.
In addition to a survey of some 120 Michelin employees,
41 interviews were conducted remotely or in person with a
variety of Group stakeholders, including investors, suppliers,
union representatives, industry associations, customers, business
partners, legislators and academics.
The 2021 materiality matrix plots the Group’s 27 core CSR
issues, including seven new ones added during the year (attracting
and retaining talent, managing labor relations, data protection,
eco-designing products and services, end-of-life products,
responding to environmental damage, and sustainable sourcing
and responsible supplier relations).
N-
GROUP EXECUTIVE
COMMITTEE (GEC)
GROUP MANAGEMENT
COMMITTEE (GMC)
Decisions
Recommendations
Supervisory Board
Corporate Social
Responsibility Committee
(CSRC)
Operational Committees
Corporate
Stakeholder
Committee
Environment
Human
Rights
Health
and Safety
Ethics
Committee
Governance
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The new matrix has revealed:
▶a general convergence among outside stakeholders and
Michelin Group employees concerning the relative importance of
the issues;
▶support for the 3P (People, Profit, Planet) approach, with
both internal and external stakeholders expecting the
Michelin Group to address every aspect of sustainable
development.
Taking a more detailed look, the matrix highlights the
importance of:
▶carbon emissions, in environmental issues;
▶an employee-focused approach (health, safety, diversity and
inclusion, and improved talent retention), in labor relations issues;
▶ethics and product quality, in business issues.
MATERIALITY MATRIX
Of these 27 issues, the Group initially selected the 10 most
critical (shaded in darker blue in the matrix). These issues were
then expressed as risks.
The new non-financial risk map plots the risks according to
their impact timeframe and their net impact on outside
stakeholders.
The risks and their remediation plans are discussed below in the
following sub-sections:
▶ethics and compliance;
▶human rights;
▶employee health and safety;
▶the environment.
Note that, given its specific features and impact on the Group,
the “tire product safety” risk is also addressed in Chapter 2(1).
(1) See Chapter 2.
Strong
Very strong
Critical
Very
strong
Critical
Strong
STAKEHOLDER
EXPECTATIONS
27 - Responsible water management
IMPORTANCE FOR MICHELIN
2.5
3.0
3.5
4.0
3.0
3.5
4.0
26 - Waste management
25 - Protecting soil quality and biodiversity
24 - Responding to environmental damage
23 - Management of employee relations
22 - Employee volunteer service
18 - Transparency and access to information
17 - Local community development
21 - Fostering workplace well-being
20 - Developing employee skills
8 - Development of new services
and solutions in our new non-tire
businesses
1 - Employee health and safety
2 - Quality and safety of products and services
3 - Direct contribution to climate change
(Scopes 1 and 2)
4 - Environmental impact of raw materials
5 - Indirect contribution to climate change (Scope 3)
6 - Respect for human rights in the supply chain
7 - Sustainable procurement and responsible
supplier relationships
9 - Diversity and equal opportunity
10 - Business ethics
11 - Collaboration with our ecosystem
12 - Data protection
13 - Responsible governance
14 - Air quality
Social
Business
Environment
15 - Eco-design of our products and services
16 - End-of-life products
19 - Attracting and retaining talent
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Materiality matrix issue
Risks identified in the CSR map
Concordance
1 – Employee health and safety
9 – Employee and contractor health and safety
4.1.3 Employee health and safety
2 – Quality and safety of products
and services
8 – Tire product safety
4.1.1.3 Guaranteeing the quality of our products
and services
3 – Direct contribution to climate
change (Scopes 1 & 2)
6 – Climate change impact of our Scope 1 & 2
operations
4.1.4.1 a) Transition plan: decarbonizing our
operations/Scopes 1 & 2: reaching net zero emissions
in the manufacturing operations by 2050
4 – Environmental impact of raw
materials
4 – Non-climate change-related impact
of our raw materials on the environment
4.1.4.2 Enhancing the circularity of our products
5 – Indirect contribution to climate
change (Scope 3)
3 – Climate change impact of our suppliers
(Scope 3)
1 – Climate change impacts from the use
of our products (Scope 3)
4.1.4.1 a) Transition plan: decarbonizing
our operations
Scope 3: aiming for carbon neutrality in the supply
chain with raw materials and components vendors
Scope 3: reducing emissions from our logistics
operations
4.1.4.1 b) Transition plan: company strategy
/Opportunities and risks/Designing ultra-energy
efficient products
6 – Respect for human rights
in the supply chain
2 – Supplier failure to respect human rights
4.1.1.2 Demonstrating our CSR commitments
through responsible procurement policies
7 – Sustainable sourcing and
responsible supplier relations
5b – Non-compliance with our Supplier
Relations Code of Conduct
4.1.1.2 Demonstrating our CSR commitments
through responsible procurement policies
8 – Developing products and services
beyond tires
Strategic risk addressed in section 2
2.1 Risk factors specific to Michelin, description
and related management systems/Risk 6: M&A
and major projects
9 – Diversity and equal opportunity
7 – Discrimination
4.1.2.2 Instilling an inclusive culture of diversity
and preventing discrimination
10 – Business ethics
5a – Ethical violations
4.1.1.1 Ensuring ethical business practices
Weeks
Months
Years
Decades
Medium
High
Low
NET IMPACT
5 a - Unethical behavior
5 b - Non-compliance with our
supplier relations code of conduct
4 - Non-CC environmental impacts
of our raw materials
1 - Impact of the use of our products
on climate change (Scope 3)
7 - Discrimination
6 - Impact of our operations
on climate change (Scopes 1 and 2)
9 - Employee and contractor health and safety
2 - Supplier non-respect
of human rights
3 - Supplier impacts
on climate change (Scope 3)
8 - Tire product safety
TIMESCALE OF IMPACTS
Social
Business
Environment
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Indicators
At the 2021 Capital Markets Day, Michelin presented its
12 ambitious, measurable objectives for 2030, known as
Ambitions(1) and structured around the 3Ps (People, Profit and
Planet).
To support continuous improvement in its performance, eight
of these categories relate to non-financial aspects (see
Chapter 1).
Managed on an annual basis, these objectives are enabling the
Group to drive continuous improvement in all its financial,
environmental, employee and social responsibilities, as embodied
in its “All Sustainable” vision.
In addition to these Ambitions, Michelin has long deployed
clearly defined processes and meaningful indicators capable of
tracking and improving its corporate social responsibility
performance. The outcomes of the most important of these
processes and indicators are presented in this report.
Non-Financial Statement: Michelin, a recognized All Sustainable approach
A wide variety of indices, labels and ratings regularly assess the Group.
To assess its environmental, social and governmental (ESG) performance as objectively as possible, the Michelin Group tracks the
ratings and scores assigned to it by the leading internationally recognized non-financial rating agencies.
SUSTAINALYTICS
MSCI
CDP
ECOVADIS
ISS-OEKOM
VIGEO EIRIS
LOW RISK
AAA
A and B
Platinum
B-
73/100
Their 2021 ratings attest to the progress made by the Group.
▶SUSTAINALYTICS (ESG RISK RATING): Michelin improved its
overall rating from 15.2 to 12.5 taking it from 11th to 9th
place in the global Automotive components industry;
▶MSCI: MSCI upgraded Michelin’s rating to the maximum
AAA, recognizing the Group as best-in-class in the
Automotive industry for its robust approach to managing
product quality and environmental performance;
▶CDP: In 2021, the CDP, an independent non-financial rating
organization, awarded Michelin a score of A based on its
assessment that the Group had demonstrated exceptional
leadership in tackling the challenges of climate change. The
rating recognizes the quality of the Group’s governance, its
long-term strategy and its results. The CDP has recognized
the Michelin Group as a leader in engaging its suppliers in
reducing CO2 emissions by designating it CDP Supplier
Engagement Leader 2021;
▶ECOVADIS: Michelin retained its 78/100 score, along with its
Platinum Medal rating for its CSR commitment and leadership
(awarded to the top 1% of rated companies);
▶ISS ESG: Michelin retained its B- rating and PRIME status,
thereby continuing to rank in the top decile across all the
rated industries;
▶VIGEO EIRIS: Michelin was once again awarded the highest
A1+ ESG Rating by Vigeo Eiris (Moody's), with a five-point
improvement in its overall score, to 73/100. This ranked
the Group at the top of the 39 companies assessed in the
Automotive sector. According to Vigeo Eiris, Michelin
“demonstrates an advanced commitment and ability to
integrate ESG factors into its strategy, operations and risk
management”. The Group also earned a score of 100/100 for
the rating's “Environmental strategy” aspects.
Michelin has also maintained its presence the Euronext Vigeo
Eiris index (France 20, Europe 120, Eurozone 120, World 120)
and the FTSE4Good index.
Helping to meet the United Nations Sustainable Development Goals
By measuring its actions against the United Nations Sustainable
Development Goals (SDGs), Michelin hopes to respond more
effectively to rising stakeholder expectations for better CSR
communication, and to gain greater insight into its future challenges.
In the same way as the content of this Sustainable Development
and Mobility Report (Chapter 4), the Growth and Value Creation
Model presented in Chapter 1 correlates the Group’s commitments
for 2030 with the main objectives of the related SDGs.
This approach is presented in more detail on the Group’s
corporate website: https://www.michelin.com/en/sustainable-
development-mobility/performance-transparency/un-
sustainable-development-goals/.
Since 2020, Michelin has participated in a working group on the
UN SDGs with all the member companies of the Tire Industry
Project (TIP), which accounts for more than 60% of the world’s
tire production. In 2021, a roadmap identifying the tire
industry’s main impacts, along with the levers for action that
member companies can activate across their value chain, was
issued to align their contribution with the framework offered by
the UN SDGs.
(1) See Chapter 1.
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SUSTAINABLE DEVELOPMENT GOALS
Customers
Employee
well‑being and
development
Financial
performance
Product
performance
Responsible
industry
Local communities
4.1.2.5 b, c, d
seen Michelin.com
4.1.2.5
4.1.1.3
4.1.3
4.1.1.3
4.1.4.4
4.1.2.5 c, d
4.1.2.4
4.1.2.5 c, d
4.1.2.2 a, b
4.1.2.5 c, d
4.1.4.4 f
4.1.4.4 c
4.1.2.1
4.1.2.2 b
Chapitre 5
4.1.4.2
4.1.4.3
4.1.2.5 b
4.1.4.2
4.1.4.4
4.1.2.5
4.1.2.2
4.1.2.5 c, d
4.1.1.4
4.1.2.5 d
4.1.4.2 d
4.1.4.2 c
4.1.4.4 e
4.1.4.1 b
4.1.4.4 c
4.1.4.1.a
4.1.4.4 f
4.1.1.2 c
4.1.4.3
4.1.4.4
4.1.2.5 c, d, e, f
4.1.1.1 b
4.1.2.1 a
4.1.2.5 g
Contribution to the objective:
Low
Moderate
High
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4.1.1
ETHICS AND COMPLIANCE
Michelin is formally committed to respecting ethical standards and fighting corruption.
The Group has set up a dedicated organization to address ethical and compliance issues.
Organization
The Group Ethics Committee is chaired by the General
Manager,
who
also
represents
the
Corporate
Finance
Department. It also includes eight other standing members
representing the Customer Experience Operational Department,
the Sustainable Development and Mobility Department, the
Corporate Internal Audit, Risk Management, Internal Control
and
Quality
Department,
the
Purchasing
Operational
Department, the Corporate Legal Department (with two
representatives, the Group General Counsel and the Chief
Compliance Officer), the Corporate Information Systems
Security, Safety & Security and Environment Department, and
the Corporate Personnel Department.
The Ethics Committee meets at least four times a year, with the
remit to:
▶promote a culture of ethics and compliance throughout the
Group and in its relations with third parties;
▶define the Group’s ethics and compliance strategy and its
effective, consistent deployment in the regional organizations
and every Group member company;
▶approve the Group’s anti-corruption compliance program,
the resulting key procedures and the initiatives required to
drive continuous improvement across the program.
The corporate organization is supported by a local organization
structured around Ethics Committees in each Region chaired by
the Regional Presidents (each responsible for managing local
ethical risks) and a global network of ten Ethics Correspondents
tasked with instilling the values and principles of the Code of
Ethics, deploying training initiatives and ensuring the proper
application of the procedures. The Ethics Correspondents work
closely with the Regional General Counsels, while also meeting
together regularly to support effective deployment of the
anti‑corruption
compliance
program
in
the
regional
organizations.
In 2021, a Chief Compliance Officer was appointed to
prevent and manage risks of non-compliance in such areas as
corruption and influence peddling, competition rules, privacy
and personal data, the environment, ethics, harassment and fraud.
4.1.1.1
Ensuring ethical business practices SDG 16.5
Risk of ethics violations
Michelin pays particular attention to the risk of ethics violations and expects every employee to act consistently with integrity, in
respect of the internal and external standards that have underpinned its corporate culture for over a century. Any conduct that
runs counter to these values could constitute an ethics violation.
Note that the Ethics risk family includes a risk factor specifically addressing the social responsibility of Group suppliers (see
section 4.1.1.2).
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4.1.1.1 a) Establishing a global ethical framework
Code of Ethics
The Group’s ethical standards are expressed in the Michelin
Code of Ethics, which applies to all Group employees without
exception, as well as to people working on Group sites or on
behalf of a Group entity. Initially published in 2010 and updated
in 2014 and 2020, the Code of Ethics was reviewed and
expanded in 2021, in particular to strengthen the Group’s
commitments in areas like human rights and the environment,
while responding more effectively to employee questions and
making the Code easier to read.
Specifically, the new Code of Ethics:
▶reiterates the Group’s values and fundamental guiding principles;
▶tells employees how to respond to the most frequently
encountered situations;
▶clearly expresses the behaviors to adopt in line with Group
values and procedures (“Dos/Don’ts” section);
▶deals with more complex situations and explains the course
of action to be taken (“Practical Cases” section);
▶provides a list of experts to consult in case of doubts (“Whom
to contact” section);
▶proposes a list of additional documents to explore issues in
more depth (“References” section).
The principles of the Code of Ethics are described in four
categories: “At Work,” “Doing Business,” “External Interactions”
and “My Work and the Environment.” They cover 25 issues,
some of which are addressed by specific procedures presented
elsewhere. Personal data protection, for example, is covered by
more detailed guidelines in the Group Personal Data Protection
Directive and its supporting documents.
Now subtitled “Acting Ethically Every Day,” the Code of
Ethics is prefaced by a statement from the Managers
emphasizing the Group's commitment to ethics, which is based
on the ethical behavior of each employee, acting as an
“ambassador of Michelin’s values.” Translated into 21 languages,
the Code can be downloaded from the Group’s intranet sites
and a dedicated website (https://ethics.michelin.com). An easier
to read digital format is also available in twelve languages, with
versions in the other Group languages being finalized.
Deployment of the revised 2021 Code of Ethics was supported
by dedicated e-learning modules, videos and events organized
both by the Group and by the regional organizations in their
member countries.
Compliance control
Compliance with the rules of conduct in the Code of Ethics is
ensured through the application of internal procedures and
verified during internal control and audit assignments.
Alert mechanisms and procedures
Since 2021, a single Group-wide whistleblowing system has
been deployed in every Group entity, replacing the regional
alert mechanisms that had been in place since 2005. Available
in thirty languages, the system may be accessed by Group
employees, contractor employees and temporary workers, as
well as by customers, suppliers, service providers and other
outside stakeholders via a hotline and a secure website hosted
by an independent company. The system allows whistleblowers
to anonymously and confidentially report any behavior, practice
or situation that allegedly violates applicable laws, internal
procedures or the Group’s values and principles as set out in the
Code of Ethics. As stated in the Code, possible violations may
also be reported through traditional channels, such as the
Personnel Department, the Safety & Security Department, the
Legal Department, a manager, the occupational physician or a
regional Ethics Correspondent. All of the reports are
consolidated in the Group’s alert hotline and regularly
presented to the Corporate Ethics Committee.
ALERT MECHANISM STAKEHOLDERS
Reported alerts are analyzed according to the Group-wide
procedures defined by the Corporate Information Systems
Security, Safety & Security and Environment Department. Based
on the reported information, the Department decides whether
to conduct internal investigations, which may subsequently, if
the alleged violations are substantiated, lead to action plans
with remedial measures and/or disciplinary sanctions up to and
including dismissal. The regional Ethics Committees apply the
internal procedures in their geographical scope of operations.
In 2021, a total of 1,226 cases of alleged non-compliance(1)
were reported across the Group, but not all of them were
substantiated. Of the total, 28% were unfounded, 8% lacked
sufficient information for an investigation to be launched and
32% resulted in remedial and disciplinary measures including
dismissals(2). None of these cases had a material impact on the
Group.
(1) Scope: Group personnel. Alerts reported at year-end could still be in process.
(2) Of the total, 1% were duplicates. Among the cases resulting in remedial and disciplinary action, some concerned situations where non-compliance was not
substantiated, but which were still addressed with measures to improve control procedures or internal processes.
Ethics Hotline
Legal Affairs
Ethics Correspondent
Occupational Medicine
A manager
Personnel Department
Safety & Security Department
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CASES BY ISSUE
CASES BY REGION
4.1.1.1 b) Taking a firm stand against corruption
Attesting to the Group’s commitment to deploying a policy
of zero tolerance for any form of corruption, a clear,
practical Anti-Corruption Code of Practice was issued to all
employees and outside partners in 2015 and updated in 2020.
The Code is designed to raise employee awareness of actions
that could be construed as bribery or corruption, by providing
examples and indicating the course of action when confronted
with such events or situations. In particular, it deals with such
issues as bribes, kickbacks and payoffs, the use of agents and
brokers, payments for favors or other inducements, charitable
or political contributions, gifts and invitations.
The 2021 Code of Ethics reaffirms the principles that should
govern the decisions of any employee confronted with a
situation that could be construed as corruption.
During
the
year,
Michelin
continued
to
improve
its
anti‑corruption compliance program by:
▶reiterating the commitment of senior management in the
2021 Code of Ethics;
▶developing a specific Group-level corruption risk map;
▶reinforcing the third-party due diligence process (including
specific anti-corruption due diligence prior to any merger or
acquisition);
▶continuing and expanding the training curriculum with a
mandatory online anti-corruption course and dedicated
classroom courses for people in the most exposed positions;
▶revising the internal ethics and compliance procedures,
covering in particular details of the anti-corruption compliance
program, gifts and invitations, and conflicts of interest;
▶strengthening the accounting controls procedures.
4.1.1.1 c) Responsible tax management
Michelin’s tax policies are defined and implemented in line with
its operating objectives in responsible and sustainable business
development. In this regard, the Group’s primary responsibility is
to ensure that it fulfills all of its international, regional and local
tax obligations, in both the spirit and the letter of the law.
Moreover, Michelin has defined its own fundamental guidelines,
in a commitment to securing its positions and ensuring that the
Group fairly pays all of the taxes due in its host communities.
This is why Michelin systematically interprets tax legislation in
compliance with both the law and the legislator’s intent,
without taking advantage of any possible loopholes.
The Group also recognizes the need and the value of nurturing
trustworthy relationships with tax authorities. As a result, the
Group Vice President of Tax Affairs and members of his network
foster, nurture and maintain ongoing, transparent relationships
with tax authorities at every level, to ensure that all of the
disclosures required by law are easily accessible and shared on a
timely basis.
In 2019, for example, the Group signed a partnership agreement
with the French tax authorities, under the “relationship of trust”
framework set up by the Budget Ministry, whereby we will
transparently share any major events likely to have a tax impact.
Naturally, the Group's tax policies strongly condemn all forms of
tax evasion and expressly forbid management from taking
advantage of tax regimes deemed to be prejudicial or
non‑transparent. Similarly, Michelin does not engage in any
transaction, financial or otherwise, that would have the effect
of evading taxes or of optimizing its corporate tax liability
without generating any other operational or economic benefit.
Tax risk management policies are based on:
▶a transfer pricing policy deployed in accordance with the
latest OECD guidelines, with compensation of Group units
determined on an arm’s length basis, with fair compensation
for key functions;
▶application of the transfer pricing policy across the entire Group,
with understandable, transparent information systematically
provided as requested by the local tax authorities;
13%
5%
28%
3%
9%
19%
8%
15%
Protection of goods
Employee relations
Confidentiality
Non-compliance with internal policies
Harassment
Discrimination
Environment and safety
Business ethics
8%
10%
Africa, India,
Middle East
49%
North America
12%
South America
Asia
21%
Europe
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▶protection of shareholder value by implementing a full range
of procedures to mitigate the risk of double taxation of
profits, involving the use of all forms of recourse, as
necessary, including internal recourse, governing authorities
and arbitration;
▶the assurance that all of the tax positions taken are consistent
with the Group’s core values, including respect for facts, the
environment and people;
▶a preference for solutions that avoid unnecessarily complex
tax analyses, to reduce the risk of divergent interpretations
that may lead to tax disputes, while improving transparency.
All tax risks are tracked specifically by the Tax Affairs
Department, under the supervision of the Corporate Finance
Department. The system for managing these risks is also
governed by the Group’s tax policies.
4.1.1.1 d) Protecting employee privacy and personal data
Michelin pays special attention to protecting the right to privacy
and the personal data of customers, employees, job applicants,
shareholders and suppliers.
As part of this commitment, the Group has deployed a
governance system, based on a network of local privacy
managers and privacy champions that tracks compliance with
applicable legislation, including the European Union’s General
Data Protection Regulation (EU) 2016/679 (GDPR). To drive
continuous improvement, Michelin is now encouraging every
subsidiary, regardless of location, to apply these same personal
data protection principles. In addition, it has issued binding
corporate rules concerning the transfer of personal data outside
the European Union.
Lastly, personal data protection is an integral part of the
Group’s internal control process and is periodically audited
internally.
4.1.1.2
Demonstrating our CSR commitments through responsible procurement policies
.SGD 2.3, 2.4, 8.4, 10.1, 12.6, 12.8, 15.2 and 15.5.
The primary conduit for expressing Michelin’s social
responsibility commitments to suppliers is the Purchasing
Department. Its mission is to guarantee the availability of
products and services the Group needs by selecting suppliers
that meet our technical and cost requirements, as well as our
expectations concerning environmental and social issues. The
Department helps to improve the competitiveness of the
operating units, while embodying the core values presented in
the Michelin Performance and Responsibility Charter and the
Group’s Code of Ethics. Today, these aspects are closely
associated with the concept of duty of care.
The Purchasing Department is structured around four
procurement
categories:
raw
materials,
natural
rubber,
industrial goods and services. At around €14 billion in 2021,
purchases represented close to 60% of consolidated sales for
the year.
Michelin is demonstrating its social and environmental
responsibility through its supplier relationships. In recent years,
the Group has assertively pursued a responsible purchasing
commitment with suppliers, who not only meet its quality, cost,
deadline and reliability standards, but also pledge to
continuously improve their human rights and environmental
performance.
Risk factors
Among other objectives, the Responsible Purchasing policy is designed to mitigate the impact of the following risks:
▶supplier failure to respect human rights;
▶the climate change impact of our suppliers(1);
▶the impact of our raw materials on the environment;
▶non-compliance with the Supplier Relations Code of Conduct.
(1) See section 4.1.4 The Environment.
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4.1.1.2 a) Governance and organization
Clearly defined policies
In April 2021, Michelin published its Sustainable Purchasing Policy, which defines the Group’s main responsible sourcing
guidelines and commitments, covering such issues as the environment, human rights and ethics. It may be downloaded from
https://purchasing.michelin.com/en/sustainable-purchasing/.
The Policy is built on three of the Michelin Purchasing Department’s fundamental reference documents:
▶the Michelin Purchasing Principles, which were published in 2012, updated in 2017 and thoroughly revamped in late 2020.
These Principles are grounded in Michelin's values and international commitments through the fundamental conventions of the
International Labour Organization, the United Nations Global Compact and the OECD Guidelines for Multinational Enterprises.
They express, in particular, the environmental, social and ethical standards and performance expected of Michelin suppliers,
which is why they are included in all of the Group’s procurement contracts and in its general terms and conditions of purchase;
▶the Supplier Relations Code of Conduct, which was issued in early 2021 to Group employees involved in supplier relations.
It is an integral part of the Group's Code of Ethics;
▶the Sustainable Natural Rubber Policy (see section 4.1.1.3 c).
A global organization
The Group has around 45,000 suppliers located on every
continent, while the Purchasing Department has some
750 employees based across the Group’s different geographies.
The Purchasing Department is seamlessly integrated into the
Group’s CSR Governance mechanisms. The Chief Procurement
Officer is a member of the Environment and the Human Rights
Governance bodies and the Ethics Committee. Reporting
directly to this position is a Sustainable Development and
Mobility Manager, who participates in the Group’s operational
committees dealing with the circular economy, greenhouse gas
emissions, biodiversity, human rights and ethics. The responsible
purchasing process is coordinated at the corporate level and
managed in each purchasing category and each Region, with
the support of a global Responsible Purchasing network. The
Chief Procurement Officer is also a member of the Group
Management Committee.
A continuous, award-winning process
The Group's assertive commitment to responsible procurement
is reflected in the performance improvement initiatives led year
after year, the suite of dedicated indicators tracked by
department teams, and the continuous training buyers receive in
CSR issues. Recently acquired companies are integrated into the
Group’s purchasing processes gradually, following their own
timetable.
After pledging to uphold France’s “Responsible Supplier
Relationships” Charter in October 2012, Michelin earned the
French government’s label of the same name in June 2014. On
June 25, 2019, Michelin was awarded the Responsible
Supplier Relations and Procurement Label at a ceremony at
the French Ministry for the Economy and Finance in Paris. The
label recognizes French companies that have demonstrated the
ability to foster balanced, sustainable relations with their
suppliers. The label was awarded to Michelin again in 2020
and 2021.
In April 2019, Michelin’s purchasing practices were certified as
mature with regard to the new international ISO 20400
“Sustainable Procurement” standard. Issued by an approved
third-party
organization,
the
certificate
attests
to
the
demonstrated
effectiveness
of
the
Group’s
responsible
procurement practices.
Lastly, following its CSR audit by EcoVadis in July 2021, Michelin
was awarded a score of 80/100 in Responsible Purchasing,
ranking the Group among the top 1% of suppliers rated
in the “Manufacture of Rubber Products” category.
The score also recognized the dedicated commitment to
responsible procurement practices of all of the Group’s
purchasing teams and their internal partners.
In addition, Michelin encourages a similar commitment among
suppliers, by honoring some of them with Michelin Supplier
Awards based on five criteria: Sustainability, Innovation,
Quality, Risk Management and Support provided during the
crisis. At the 2021 event in September, nine suppliers were
celebrated for their performance.
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4.1.1.2 b) Identifying categories and countries at risk and assessing suppliers
Identifying categories and countries at risk
To supplement the Group's risk map, the Purchasing
Department has mapped its social responsibility risks in the
supply chain. The map ranks purchasing categories according to
their CSR risks in four areas: the Environment, Human Rights,
Health & Safety and Business Ethics. Aggravating factors, such
as the complexity of the supply chain, have also been taken into
account. This exercise also identified the sourcing countries
with high environmental and human rights risks, based on
the Verisk Maplecroft database.
The resulting risk map is regularly updated, including a
top‑to‑bottom revamp in 2020.
The mapping exercise helps to prioritize the scheduling of CSR
performance reviews and the deployment of preventive
measures
aligned
with
each
purchasing
category’s
characteristics and environment(1).
Of all the purchasing categories, natural rubber warrants the
most attention to both its environmental and its societal impacts
because, generally speaking, it is 90% sourced from Asia and 85%
from smallholders, usually of farms of less than four hectares. In
addition, its supply chain is complex and fragmented. As a result, a
dedicated approach has been devised for natural rubber,
which is described in detail at the end of this section.
Supplier assessments
Since 2012, Michelin has assessed its key suppliers’ CSR
performance in a variety of ways, depending on the issues
involved.
Desktop reviews
Michelin has commissioned CSR rating company EcoVadis to
conduct desktop reviews of how its leading suppliers stand in
21 CSR indicators tracking their performance in the
environment, labor relations & human rights, business ethics
and responsible procurement.
DEPLOYMENT(2)% OF PURCHASE SPEND COVERED BY ECOVADIS SUPPLIER REVIEWS
By purchase category
▶around 65% of Group procurement
▶around 95% of natural rubber procurement
▶around 95% of other raw materials procurement
By high-risk country (for raw materials)
▶≥95% of sourcing in countries that pose a risk with regards to environmental protection
▶≥95% of sourcing in countries that pose a risk with regards to human rights abuses
In 2021, Camso, which has been consolidated since
January 1, 2019, started to perform CSR assessments of its most
at-risk suppliers. The process will be extended to Multistrada
suppliers in 2022.
Every year, desktop reviews are being performed in additional
risk categories, with a focus on those identified during the
mapping phase as being insufficiently covered.
(1) For more information, see the Duty of Care Plan.
(2) Excluding newly acquired companies.
2017
2018
2019
2020
2021
422
547
513
654
604
715
697
828
817
965
Number of suppliers assessed for CSR compliance
Number of suppliers confirmed in compliance with Group
CSR standards
% of suppliers confirmed in compliance with Group CSR standards
77%
78%
84%
85%
84%
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Along with the deployed corrective actions, the careful
attention paid to the assessments by both the Group’s
purchasing teams and its suppliers is helping to drive steady
progress. By year-end 2021, for example, of the approximately
760 suppliers with an assessment track record, 65% had
improved and 20% had maintained their score. Lastly, of the
suppliers whose low scores in previous assessments had
prevented them from being “confirmed”(1) as compliant with
Michelin
standards,
64%
had
delivered
the
expected
performance over the year.
Tracking and follow-up
Suppliers who fall short of confirmed compliance must implement
a CSR performance improvement plan, whose progress is
tracked by the purchasing teams. To manage the deployment of
these remedial action plans more effectively, an indicator was
introduced in 2019 to determine the percentage of suppliers who
were requested to implement a plan and who actually created
such a plan or implemented remedial actions.
Successful deployment is systematically confirmed by a
follow‑up review. Results deemed to be structurally insufficient
or a lack of engagement with sustainable development issues
may lead the Purchasing Department to revise or terminate its
contractual relationship with the supplier. Such a decision is
always made by consensus, after discussing all of the potential
consequences.
Self-assessment questionnaires
In 2018, a CSR self-assessment questionnaire was prepared and
issued to front-line Purchasing Department teams, who may ask
suppliers to complete it whenever they deem it necessary,
either during the tender phase or while the contract is in effect.
The questions measure the maturity of a supplier’s CSR
practices, which can be used as a selection criterion if
warranted. The questionnaire is used only for suppliers whose
CSR performance is not assessed by desktop reviews.
On-site audits
To support supplier compliance with its Quality standards and the
Purchasing Principles, Michelin has introduced a “supplier
quality system audit procedure” (ESQF). Aside from quality
issues, it also addresses the application of the health, safety,
environmental and human rights standards stipulated in or
derived from the Michelin Purchasing Principles.
In performing an ESQF, Michelin auditors go on-site to assess
the supplier’s compliance with Michelin Purchasing Principles in
such areas as environmental stewardship, respect for human
rights, health & safety standards and the supply chain.
Several questions on the ESQF evaluation form have been
changed to yield a fuller picture of the supplier’s environmental
and employee relations performance.
Following an ESQF, Michelin auditors assign a separate score for
compliance with the Purchasing Principles. If it is less than
80%, the supplier is deemed to have failed the audit and is
required take the identified corrective measures and improve
overall performance with a continuous improvement process.
The initial score will later be reassessed in light of the actions
implemented by the supplier. Depending on the audit findings,
Michelin may terminate the supplier’s contract. In addition to
ensuring compliance with Michelin Quality standards and
Purchasing Principles, the audit is intended to help suppliers
drive sustainable improvement over time.
Note: a dedicated CSR assessment and risk mapping exercise
has been deployed for natural rubber suppliers (see section
4.1.1.3 a).
Levers for action deployed and dedicated CSR risk
procedures
Cross-functional levers for action deployed
Enhancing the professionalism of employees and
stakeholders
Considerable resources have been deployed to enhance the
professional skills of the procurement teams and to make
purchasing processes more efficient. In particular, the training
program for purchasing teams comprises a series of dedicated
Sustainable Procurement modules. In 2020, the classroom
module was transformed into a set of online training courses, to
ensure that high-quality training is available at any time for
teams around the world. By the end of 2021, the sustainable
procurement curriculum included 13 modules, some of which
are mandatory for all buyers and others that may be more
appropriate for certain categories or countries. As of year-end,
the mandatory modules had been attended by nearly
200 people worldwide, in addition to the 712 people trained
since 2011 via the classroom/webinar module.
Addressing CSR issues in appropriate purchasing processes
CSR issues are fully integrated into the Group’s procurement
strategy, in particular in the case of certain high-risk categories.
This can result in purchases being consolidated and sourced
from a limited number of specifically approved suppliers.
Buyers are increasingly encouraged to factor CSR criteria into their
calls for tender. These criteria may concern the CSR performance of
both the potential vendor and its products, services or solutions.
They
address
three
critical
issues:
climate
change
and
CO2 emissions; the circular economy and natural resources; and
ethics and people. To support buyers in this process, a guidebook
and an e-learning module were created in 2021.
Supplier transparency concerning CSR issues and their CSR
performance is also addressed in the Supplier Relationship
Management (SRM) process, in particular when suppliers are
segmented and during the regular meetings that drive the
process forward.
Diversifying the supplier base
Michelin operates globally, but it consistently strives to source
locally, as well as from sheltered work centers and social
enterprises, in addition to the major international suppliers
who meet its exacting requirements and embrace the
principles of sustainable development.
In 2021, procurement from sheltered work centers and
social enterprises was particularly encouraged in France
with the creation of a dedicated intranet page, a training
module, a directory and a video shared over several
communication channels.
(1) “Confirmed” status corresponds to an overall EcoVadis score of at least 45.
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Critical materials [SASB TR-AP-440a.1]
The term critical material – defined as any substance whose use
is highly necessary but whose supply is subject to risk –
generally refers to certain ores and rare earths. Very few are
used in tire manufacturing. At Michelin, they are managed in
accordance with the system in place to manage supply risk for
all types of raw materials, which deploys a dedicated risk
management response for any material identified in the
mapping exercise as posing a particular risk (see section 2.1,
Risk 5 - Supply chain). These responses include signing
multi‑year contracts, seeking new suppliers, maintaining
strategic buffer inventory, finding substitute products, and, in
the case of conflict minerals, maintaining duty of care
procedures (see paragraph below).
Climate change impact of our suppliers
The Group has taken a proactive approach to determining
which purchasing categories and suppliers represent the largest
sources of greenhouse gas emissions (GHG). These suppliers are
actively encouraged to initiate, expand or step up their
commitment to reducing their GHG emissions (see section
4.1.4.1 a) Transition plan: decarbonizing our operations/
Scope 3: reducing emissions from our logistics operations).
Impact of our raw materials on the environment
Circular economy
To support the Group’s commitment to using sustainable
materials, the main raw materials suppliers have been requested
to submit a roadmap for developing materials made from
renewable or recycled sources. (see section 4.1.4.2 Enhancing
the circularity of our products/Increment the use of sustainable
materials).
In the other purchasing categories, a wide variety of initiatives
are underway to support the circular economy. Examples
include
purchasing
refurbished
replacement
parts
for
automated machinery, using more eco-friendly marketing
materials and replacing laptops less frequently. Other initiatives
are addressing raw materials packaging, for example by testing
reusable pallets.
Biodiversity
Purchasing is also a stakeholder in the Group’s biodiversity
initiatives, for example by getting natural rubber and raw
materials suppliers involved in the Science-Based Targets
Network (SBTN(1)) survey in 2021-2022 or by engaging
landscaping service providers in the programs to reduce the use
of pesticides and herbicides (see section 4.1.4.3 Supporting
biodiversity).
Supplier failure to respect human rights
Supplier assessments
In 2021, a dedicated indicator was introduced in supplier CSR assessments to track their labor relations and human rights
performance. As of year-end, 89% of assessed suppliers were confirmed as compliant with Michelin’s labor relations and human
rights standards.
Conflict minerals
Michelin diligently tracks the origin of certain minerals used in its products, even though the quantities are very small. Commonly
referred to as “conflict minerals,” they include gold, tin, tantalum and tungsten. Since 2019, Michelin has also included cobalt in
this approach.
The Group exercises its duty of care by applying the related OECD recommendations and using the applications developed by the
Responsible Minerals Initiative (RMI). The materials and components used in Group products that contain these minerals or their
derivatives have been identified and their suppliers are periodically requested to submit the RMI reporting template. These forms
and inventories are then verified for compliance with the RMI lists. For all these minerals, the submitted templates enable Michelin
to verify that the reporting supplier works with RMI-approved smelters.
Chemicals
The Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulation, which the European Union
introduced to attenuate the adverse impact of chemical substances on human health and the environment, stipulates that
manufacturers and importers of more than one tonne of a given chemical per year must register the substance with the European
Chemicals Agency (ECHA). Producers must identify and manage the risks associated with the chemicals they make and market in
the EU, demonstrating to the ECHA how the substance can be safely used and informing users of the proper risk management
procedures.
Michelin complies with this registration requirement as a manufacturer or importer of chemicals or articles containing chemicals
and verifies that the chemicals or articles it uses have been registered by the suppliers.
(1) SBTN: Building on the momentum of the SBTi, the SBTN is working to enable companies and cities to set targets for climate and nature.
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Non-compliance with the Supplier Relations Code of Conduct
The Supplier Relations Code of Conduct and dedicated training module
The Supplier Relations Code of Conduct was prepared in early 2021, replacing the content published in the previous
version of the Michelin Purchasing Principles. It is an integral part of the Group’s Code of Ethics and applies not only to buyers,
but also to any Group employee involved in supplier relations.
To ensure compliance with ethical guidelines, a dedicated online training module was developed in 2017 and updated in 2021 to
reflect the new Code of Conduct. It has been rolled out across the Purchasing organization and among internal partners in
contact with suppliers. It reviews current legislation and expected behavior, in line with the Michelin Purchasing Principles, and
offers certain recommendations. Since late 2017, the module has been completed by more than 6,300 people. Additional
training may be offered in the various regional organizations.
On-time payment of supplier invoices
Michelin pays careful attention to the timely payment of supplier invoices and offers a variety of effective invoicing solutions,
including electronic invoicing in PDF or EDI file formats. A new unified global invoice processing platform currently being
deployed will offer new paperless solutions. Blocked invoices are tracked weekly, as are open invoices with a close due date or
whose receipt has not been inputted into the information system. A payment schedule dashboard displays a number of
indicators, including the percentage of invoices paid on time (91.7% worldwide in 2021), as well as related sub-indicators to give
advance warning of potential problems. Following a review, appropriate actions are taken with the purchasing department,
internal partners or the suppliers. Suppliers who submit late invoices are contacted to raise their awareness of the issue and avoid
settlement delays.
MFPM was included in the list of socially responsible companies published in April 2020 by the French Ministry for the Economy
and Finance’s crisis committee on payment terms, which recognizes companies that pay particular attention to settling supplier
invoices.
Mediation with suppliers
Since 2012, suppliers can use the Purchasing Department website to contact the customer-supplier relations mediator with
respect to any alleged or observed violation of the Michelin Purchasing Principles. The mediator intervenes only when suppliers
have failed to resolve the issue with their usual contacts in the Group. Over the 2017-2021 period, suppliers have requested
mediation at most twice per year. These cases generally concerned invoice payment problems or disputes, which were quickly
resolved by the mediator.
4.1.1.2 c) A dedicated approach for natural rubber
Paying special attention to natural rubber suppliers
As one of the world’s leading purchasers of natural rubber, a
critical raw material in tire manufacturing, Michelin is especially
attentive to its rubber-tree farming upstream, and is committed
to responsible, sustainable management of natural rubber
production.
Of the 30 million people who depend on rubber-tree farming
for a living worldwide, six million are village smallholders, who
produce 85% of the world’s output on small farms generally
covering less than four hectares.
Michelin was recently ranked No. 1 by SPOTT, a natural
rubber ESG disclosure platform, with a score of nearly 82%.
This was Michelin’s first assessment by SPOTT, which found that
the Group led the global rubber industry in sustainability
disclosure and performance.
Partnering with the WWF and nurturing dialogue
with civil society
To preserve rubber and manage its impacts, the World Wildlife
Fund (WWF) and Michelin have been working together since
2015 to transform the natural rubber market by instilling more
sustainable practices across the entire value chain.
At the same time, Michelin is continuing to consult regularly
with
both
stakeholders
and
the
leading
civil
society
organizations involved in these issues. Every two years, for
example, the Group brings together civil society organizations
to report on the progress made across the natural rubber value
chain and to discuss possible pathways to further improvement.
The last information and consultation meeting was held in Paris
in February 2020. In addition to these biennial forums, Michelin
regularly works with NGOs, researchers, academics and
government agencies on natural rubber sustainability issues.
In addition, the Group is involved in several think tanks
exploring ways to prevent imported deforestation. In France, it
is actively engaged in the talks being led by the French Ministry
for the Ecological and Inclusive Transition to define a strategy to
counter imported deforestation (see also section 4.1.2.5 a).
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Sustainable natural rubber policy
Michelin was the first tire manufacturer to publish a commitment
to sustainable, responsible natural rubber production and
procurement. In addition to issuing its Responsible Natural
Rubber Procurement Policy in 2015, the Group formalized its
public commitments in its Sustainable Natural Rubber Policy
issued in 2016 and updated in early 2021, which has been
recognized as aligned with GPSNR(1) guidelines.
Drafted with input from environmental and human rights NGOs
and other stakeholders, the Sustainable Natural Rubber Policy is
now a contractual reference document for Group suppliers.
Downloadable from the Michelin purchasing website(2), the
policy precisely defines the conditions for farming natural
rubber, both in terms of the environment (zero deforestation,
protection and preservation of peatlands, High Conservation
Value areas and High Carbon Stock areas), and in terms of
social responsibility and human rights (working conditions, free,
prior and informed consent of the local communities, etc.).
Michelin expects every stakeholder across the supply chain to
embrace socially and environmentally responsible practices, so
as to maintain rubber tree farming in a virtuous cycle of
progress.
The Policy explains in detail the five core commitments that
Michelin intends to fulfill and promote:
▶Respect all stakeholders in the natural rubber production
chain, by promoting conflict resolution related to land
ownership and improving working conditions and living
environments.
▶Make rubber tree farming environmentally friendly, by
combating deforestation and controlling the potential impact
of rubber cultivation on fauna and flora.
▶Take action to improve farming practices, by helping to
instill more efficient practices across the natural rubber
production chain, especially among village smallholders, in a
commitment to increasing agricultural yields.
▶Encourage the careful use of natural resources by
increasing the material efficiency of natural rubber used in
tires. Michelin is constantly developing new technical
processes that optimize the use of rubber in its products.
▶Make rubber tree farming a source of better
governance practices. Michelin is an engaged stakeholder
in the rubber tree farming industry, communicating
transparently, refusing all forms of corruption and interacting
with local and international stakeholders.
Since 2016, the policy has been included in every Michelin
supply contract. In addition, Michelin encourages its suppliers to
implement policies aligned with GPSNR recommendations.
Assessing stakeholders across the supply chain
CSR practices in the Group's natural rubber supply chain are
assessed differently depending on the stakeholder:
▶for our direct suppliers, desktop reviews are submitted to
EcoVadis and on-site audits are performed;
▶for our direct suppliers’ production facilities and upstream
supply chain, risks are mapped using the RubberWay®
application and deforestation risks are analyzed.
EcoVadis desktop reviews
The Group’s natural rubber suppliers have been participating in
EcoVadis reviews of their social responsibility and environmental
performance since 2013. If their results fall short of
compliance, remedial action plans are deployed. In 2021,
desktop reviews covered the vast majority of our rubber
suppliers, representing around 95% of our spending on natural
rubber inputs. The CSR maturity of suppliers representing some
80% of total spend was confirmed as compliant with Michelin
standards, which corresponds to 83% of the spending covered
by the reviews (see section 4.1.1.3 b).
On-site audits
A dedicated team performs on-site audits of every facility
supplying natural rubber to the Group. These audits
primarily focus on quality performance, but also cover CSR
issues, such as the environment (water treatment, etc.) and
employee health and safety. Every facility is audited every year
or every other year, for a total of around 140 per year.
Follow‑up audits are systematically conducted, with remedial
action plans mandated in the event of shortcomings. Due to
pandemic-related travel restrictions in 2021, most of the year’s
on-site audits were performed virtually using video technology.
Supply chain risk assessments
To understand and mitigate deforestation, human rights and other
risks in its natural rubber supply chain, Michelin is systematically
deploying a variety of risk assessment tools and systems.
Developed in 2017, the RubberWay® risk-mapping system uses
a mobile app to map environmental and social risks in the natural
rubber supply chain. Supply chain stakeholders, including raw
rubber processing plants, brokers, large plantations and
smallholders, are asked to respond to a questionnaire about their
practices in such areas as human rights, the environment,
agricultural training and market transparency.
The inputted data are then analyzed and summarized on an online
platform to create a map highlighting the areas of potential social
and environmental risk. The results are shared with direct Michelin
suppliers and can be used to prepare improvement plans or deploy
mutually designed risk mitigation projects.
(1) The Global Platform for Sustainable Natural Rubber (GPSNR).
(2) https://purchasing.michelin.com/en/sustainable-natural-rubber-policy/.
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In 2019, a joint venture was formed with Continental AG and
software publisher SMAG to make RubberWay® a stand-alone
solution, accessible to every natural rubber stakeholder. This
opens the way to its broader use by other tiremakers and OEMs,
thereby driving faster take-up of sustainable practices across
the natural rubber industry.
SOURCED RUBBER VOLUMES COVERED
BY THE RUBBERWAY® APPLICATION
NUMBER OF COMPLETED RUBBERWAY® QUESTIONNAIRES
(CUMULATIVE)
The app is currently deployed in Indonesia, Thailand,
Côte d'Ivoire, Ghana, Nigeria, Liberia and Brazil.
Michelin has requested that suppliers start by deploying the
RubberWay® app in their production facilities and with their
own direct suppliers, with the goal of mapping 80% of the
natural rubber volumes sourced from these channels by
2022 (pushed back from 2021 due to the pandemic).
Deployment was slowed in 2021 by the Covid-19 crisis, so that
64%(1) of volumes had been mapped by year-end.
However, the application is most impactful at the farmer level.
Given their vast numbers (around six million worldwide), Michelin
wants enough of them participate in the RubberWay® mapping
exercise to ensure that it is representative of their farming
practices. By the end of 2021, it was felt that this minimum
representativeness had been reached for 41%(2) of Michelin’s
sourced volumes, out of a targeted 80% by 2025.
The results and risks identified to date are presented in the
2015-2020 report referenced below.
The gains are transparently reported on the Michelin
Purchasing(3) website.
Aware of the specific risks of deforestation, Michelin is working
with the WWF on a comprehensive review of such risks in its
suppliers’ sourcing regions, based on input from the natural rubber
processing plants. In 2021, all of the major sourcing countries
were covered by a preliminary analysis, which will now be adjusted
on a more granular level with updated data sets and field feedback
via interviews with suppliers. Processing plants identified as high
risk in the preliminary analysis will also be prioritized for
commitments.
Frontline initiatives
Deployment of the RubberWay® app is enabling Michelin to
identify, analyze and prioritize risks specifically by supplier and
geography. In the case of deforestation, the Group is engaging
with suppliers, while also seeking opportunities to address the
risks directly in the field in priority jurisdictions.
The Committed Actions for Smallholder CApacity DEvelopment
(CASCADE) project in Sumatra, Indonesia, is improving working
conditions and living standards for 1,000 village planters and
their families, while upgrading their environmental and social
practices. Developed using RubberWay® data, the four-year
project combines in-person instruction with a digital training
solution to improve accessibility and the ability to measure
impacts. Agricultural training is helping the farmers become
more economically resilient by increasing their rubber yields and
diversifying their income streams. The project is also highly
focused on social and environmental training, including courses
in human and workers’ rights and training in environmentally
friendly farming practices. The latter include reducing the use of
agrochemical inputs, agroforestry practices, environmental
training for deforestation-free farms and testing a carbon
sequestration model. This is the first natural rubber project to
encompass the entire supply chain, from village smallholders
and partners to a natural rubber processor, a tire manufacturer
and a carmaker.
CASCADE’s holistic training model and digital training solution
can easily be adapted for use in other regions and communities.
In 2021, a process to identify appropriate geographies led to
the design of the RIVER project, which will be launched in 2022
to develop the skills of 6,000 village farmers and their families in
Sri Lanka, where rubber tree farming plays an important role in
local livelihoods.
(1) The rate is calculated based on the volume of natural rubber sourced in the prior year.
(2) The rate is calculated based on the volume of natural rubber sourced in the prior year.
(3) https://purchasing.michelin.com/en/sustainable-natural-rubber-policy/.
2020
2021
2018
2019
0
20
40
60
80
25%
7%
45%
20%
55%
30%
64%
41%
Deployment with production plant direct suppliers
Deployment with village smallholders
2015
2019
2020
2021
11,278
27,365
42,053
52,267
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Michelin's global natural rubber network, which includes
processing plants and a producing region focused on research
and development in Brazil and joint ventures in Africa and
Asia, gives it unrivaled expertise that it can leverage to deploy
projects and initiatives in support of responsible natural rubber
farming.
Examples include the program to grow selected high-yield
rubber tree seedlings for sale to farmers, the training of around
90,000 farmers a year to transfer skills in best farming practices,
and the campaign to promote good environmental practices.
Programs have also been deployed to prevent malaria, AIDS and
other diseases and to provide wider access to medical care,
education and housing. The SIPH joint venture located in West
Africa has set up programs of the kind described above, on
both the environmental and human fronts.
In 2003, the Group implemented a program in Salvador de
Bahia, Brazil. Since then, the teams of agronomists at our
experimental research farm have made significant contributions
to the spread of best farming practices and the development of
new rubber tree species resistant to a disease endemic to South
America that is having a severe impact on rubber-tree farming
across the region. The nearby 3,400-hectare Michelin Ecological
Reserve (REM) has become one of the best-protected areas of
the Atlantic Forest and a haven for biodiversity (see
section 4.1.4.3 Supporting biodiversity).
In 2015, Michelin formed the RLU joint venture to develop new
rubber plantations, protect primary forests and restore
ecosystems on Sumatra (71,000 hectares) and in East
Kalimantan (18,000 hectares). Undertaken in partnership with
the WWF, this project has led to the creation of more than
4,000 jobs and protected thousands of hectares of high
environmental value tropical forest and local wildlife, such as
Sumatran elephants and tigers and the Bornean orangutan(1).
In all, the environmental conservation projects being carried out
either directly in Brazil or through our joint ventures in Africa
and Indonesia covered more than 34,000 hectares in 2021.
Michelin
is
also
seeking
opportunities
to
work
with
multi‑stakeholder programs to address risks across the natural
rubber supply chain. In 2021, it pledged funding for a
smallholder capacity-building project in Thailand under the aegis
of the GPSNR (see below). The three-year project is
empowering smallholders to enhance their livelihoods and
diversify their sources of income with agroforestry practices,
while delivering positive environmental outcomes.
The Global Platform for Sustainable Natural Rubber
(GPSNR)
Michelin and its partner WWF are working together to
encourage key rubber-tree farming stakeholders to take action
to make responsible natural rubber production the norm. This
commitment
played
a
key
role
in
setting
up
the
multi‑stakeholder Global Platform for Sustainable Natural
Rubber (GPSNR).
This independent platform is designed to lead improvements in the
socio-economic and environmental performance of the entire
natural rubber industry. It was impelled by the Tire Industry
Project (TIP), which brings together Michelin and ten other tire
manufacturers under the auspices of the World Business
Council for Sustainable Development (WBCSD). GPSNR brings
together stakeholders from across the natural rubber value chain,
including farmers, processors and brokers, tiremakers and other
users, automakers and civil society, with the participation of a large
number of NGOs.
As one of three tire industry representatives and chair of the
Executive Committee until year-end, Michelin was again one of
the most active GPSNR members in 2021, when it impactfully
participated in five of the six working groups (Strategy &
Objectives, Smallholder Representation, Capacity Building,
Shared Responsibility, Traceability & Transparency). It was also
recognized for its rigorous contributions to the GPSNR’s
sustainability monitoring standards and theory of change, which
were presented at the 2021 General Assembly.
For more information, please visit www.gpsnr.org.
To find out more: 2015-2020 results, the 2025 roadmap
and indicators
More
extensive
information
about
our
natural
rubber
commitments may be found on the dedicated Michelin
Purchasing website(2), which presents the following documents,
generally
organized
around
four
themes:
people,
the
environment, farmers and stakeholders.
▶the latest version of the Sustainable Natural Rubber Policy;
▶the Sustainable Natural Rubber Progress Report 2015-2020;
▶the Sustainable Natural Rubber Roadmap 2020-2025;
▶a set of comprehensive, regularly updated indicators that
track progress on the sustainable natural rubber policy.
(1) Royal Lestari Utama, 2020 Sustainability Report: https://www.rlu.co.id/sustainability.
(2) https://purchasing.michelin.com/en/sustainable-natural-rubber-policy/.
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4.1.1.3
Guaranteeing the quality of our products and services SDG 3.6 and 11.2
Offering our customers the finest quality products and services in each market segment we decide to serve
Safety risks associated with tire products
Tires are still Michelin’s core business, in which it holds robust leadership positions around the world and across every operating
segment: automotive, road transportation (bus and subway tires) and specialty markets (two-wheel, aircraft, earthmover,
agriculture, construction and materials handling tires).
Like all tiremakers, if defects were to appear in its products during their use or if they failed to comply with applicable regulations,
Michelin could be faced with liability claims or be required to recall the products.
Specific nature of the risk
Michelin’s focus on customer needs and the quality of its products and services has built confidence in the MICHELIN brand and
contributed to the Group’s performance.
Although there have been no material events in recent years, should a safety failure occur, this would have a serious adverse
effect on the reputation of the MICHELIN brand(1).
Michelin Quality
Since its founding, Michelin has always nurtured a powerful
quality culture. Enhancing the mobility of people and goods
requires an uncompromising attitude towards the safety and
quality of every product and service. Every Group employee, at
every point in the value chain, is trained and engaged in
delivering Michelin Quality to his or her customers.
The product and service quality governance system comprises:
▶a Corporate Internal Audit, Risk Management, Internal
Control and Quality Department, which reports to the
Group’s management bodies;
▶a Quality Network at the operations level, comprising the
Quality Departments in the business lines, operating units and
regional organizations.
The governance system defines the Group’s quality policies,
including quality guidelines and standards underpinning its
ability to sustainably deliver high value-added products and
services to its customers and nurture their trust, as well as the
trust of all of its other stakeholders.
In each of the major areas of quality control – raw material and
component procurement, product and service design and
product manufacturing – the quality teams are empowered to
perform their role and mission independently, including when
deciding to bring a new product to market or to recall a product
that does not comply with Group quality standards.
Product/Service Safety Training
Every employee in operations that could potentially have an
impact on safety is trained in product/service safety practices. In
the design offices, the training curriculum for design engineers
is informed by a culture of risk management. The validation and
certification earned after completing the courses attest that
they have acquired the requisite knowledge and expertise,
which are then regularly monitored by management and
specialized experts in each discipline. Internal control campaigns
assess the training’s compliance with risk management
guidelines and safety and regulatory standards.
In the production workshops, safety protocols are the building
blocks of the “Cardinal Rules of Quality” that are applied across
the Michelin manufacturing base. During induction training,
the Rules are taught to all newly hired production operators,
who are tested prior to taking up their positions to ensure that
they have understood each one and how it is implemented.
Regular refresher courses are also offered. Employees pay
careful attention to the Cardinal Rules of Quality, which are
continuously assessed by management, especially during on-site
visits. Any form of non-compliance triggers an appropriate
management response. Retraining is periodically offered and
regular information keeps everyone alert and aware. For the
most sensitive positions, certification is awarded only after
independent validation by the Quality Department, thereby
ensuring that the employee has acquired the requisite skills.
Dedicated control plans are in place to ensure that these
capabilities are tracked and maintained over the long term.
Training in the Cardinal Rules of Quality and Quality Culture are
audited by an internal control process.
Quality managers act as customer risk management experts. In
particular, the Design Quality Assurers and the Manufacturing
Operations Quality Managers are trained in Product Safety and
Compliance in accordance with prevailing standards.
Supplier quality assurance
With regard to suppliers, Product/Service Safety standards are
factored into raw materials specifications. Suppliers agree to
ensure that these standards are properly understood and
applied by their employees, with compliance verified during
supplier audits.
Revised in 2020 and integrated into the Michelin Purchasing
Principles, the Supplier Quality Assurance process specifies how
Michelin intends to apply its quality policies in its supplier
relations and in managing the quality of purchased products
and services. The process of selecting suppliers, and then
monitoring their performance, involves more than 200 supplier
quality system audit (ESQF) procedures and on-site technical
inspections performed by experienced Michelin quality auditors
and/or technical experts in each field(2). The audit framework is
based on Michelin standards that reflect the ISO 9001:2015 and
IATF 16949:2016 quality standards and the specifications of
OEM customers. Following each audit, Michelin auditors assign
a score to the supplier, who must agree to take any corrective
action required in response to the audit findings. If necessary, a
follow-up audit or technical inspection is scheduled.
(1) See section 2.1 Risk factors specific to Michelin, description and related management systems/Risk 11: Tire product safety.
(2) See section 4.1.1.2 Demonstrating our CSR commitments through responsible procurement policies.
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Quality management system
The annual audit plan is validated and tracked by a governance
body comprising representatives from the Purchasing, Quality,
Technical and Manufacturing departments.
In the case of product design and manufacturing, the Michelin
Quality Approach is defined and instilled into every aspect of
these processes by a quality organization supported by a quality
management system. This approach is designed to manage and
continuously improve how the Group operates to guarantee
quality throughout the design and production of its products
and services and, more generally, fulfill its customer promises. It
defines the fundamental practices that are integrated into
employee training so that they are understood and applied by
everyone in their respective areas of responsibility.
The Michelin Group’s quality standards are based on the
industry’s
highest
international
standards
and
strictest
legislation
covering
consumer
health
&
safety
and
environmental protection.
To verify the compliance of its quality management system,
Michelin
regularly
seeks
certification
from
independent
organizations. As such, all of its tire manufacturing plants and
support processes have been certified to ISO 9001: 2015.
In response to automaker customers, the plants that
manufacture and deliver original equipment tires have been
certified to IATF 16949: 2016, which specifically describe the
development and production processes for auto parts.
Safety trials and tests
Products designed and manufactured by the Group are
extensively tested and assessed to ensure that they meet all the
safety standards defined by Michelin in addition to regulatory
standards.
In the case of regulations, the Group performs the tests defined
in applicable legislation to earn initial approval of its products
and ensure their long-term conformity of production (CoP).
In 2021, for example, the Group performed several thousand
regulatory tests, representing a run-time of more than
255,000 hours(1).
▶Annual CoP control plans addressing all the regulations in
force in the markets served by the Group(2) are prepared for
each production unit(3). Implementation of these plans and
their outcomes are tracked internally by the Quality
Department
and,
if
necessary,
externally
by
government‑mandated bodies at their request.
Drawing upon its technical expertise and market intelligence,
the Michelin Group has also defined its own safety standards
for each type of product and each usage category. These
standards are approved and reviewed quarterly by dedicated
steering committees, made up of the technical and quality
managers concerned. All of them are expressed in internal
standards manuals that refer to the corresponding tests
approved for CoP control. To offer customers products that
meet
Michelin’s
highest
safety
standards,
more
than
1,950,000(4) hours of safety testing are conducted every
year(5) on the Group’s tracks or in its laboratories.
Most of these regular tests are performed by the Group. For this
purpose, Michelin has a network of material measurement
laboratories and tire testing centers in Europe, Asia and the
United States, which are all certified to the NF EN ISO/CEI 17025
standard.
Customer training and support
Another significant focus of the Group’s quality standards is to
ensure that Michelin-delivered products and services are aligned
with customer usage conditions. The marketing and sales
teams constantly strive to understand customer needs and the
potential risks arising from unusual or extreme conditions of use
in the geographies where the products and services are sold.
Their feedback is noted in the specification sheets and
addressed by the research and development teams. Advice and
support in the proper use of products and services is provided
through technical brochures and training, including an ongoing,
Michelin-led program of customer training courses.
Monitoring markets and responding to quality events
Michelin has also deployed a system for constantly tracking the
real-world performance of its products and customer service in
order to detect even the most latent issues and respond quickly
and effectively if necessary. This system is based on:
▶Customer rooms, located close to key markets and equipped
with all the necessary capabilities, that capture customer
dissatisfaction and then respond, as quickly as possible, with
initiatives that effectively fulfill the customer promise. If
necessary, they can hand the problem over to the Quality
Platforms;
▶Quality Platforms, generally organized by product segment,
that oversee the tracking of in-market product performance.
They review all available information and data to assess any
impacts on the safety of product users. This information may
come from outside, via the customer rooms or other sources,
such as in-use safety incident reports, or from in-house, via
alerts from the design, manufacturing or test teams.
(1) Estimated hours of testing based on 2019 data.
(2) Such as the various UNECE regulatory standards (R30, R54, R75, R106, R109, R117, R2017/2400, etc.) applied in China, India, Indonesia, Thailand, the United
States, Brazil and the Gulf States.
(3) Because it depends on the number of products in production, the number of products tested and tests performed can vary from one year to the next.
(4) Estimated hours of testing based on 2019 data.
(5) Including safety tests requested by our OEM customers.
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In a situation where a product or service designed and/or
manufactured and/or marketed by the Michelin Group and/or
bearing one of the Group’s brands exposes customers to a
potential or proven safety risk, the appropriate Quality Platform
will initiate a dedicated process, defined and supervised by the
Corporate Quality Department, to assess the potential impact
on customer safety. If need be, a decision may be made to recall
the product from the market to ensure customer safety. Such
voluntary recalls are consistently carried out in compliance with
legislation applicable at the date of the decision.
In 2021, across the entire Group, all its brands and all its tire
products, four voluntary recalls were issued, concerning
30,856 products of the total 200 million or so manufactured
every year by the Group [SASB TR‑AP‑250a.1].
The two most significant recalls concerned:
▶around 30,500 passenger car tires sold primarily in Europe,
which were recalled in late 2021 in association with a car
manufacturer. In certain vehicle/tire configurations, excessive
wear can occur and lead to a loss of pressure;
▶44 passenger car tires sold mainly in North America and
Europe, which were recalled in late 2021 in association with a
car manufacturer. Tread cracking was detected on a test car
tire, which could, under extreme use, lead to a loss of pressure.
All of the recalls were issued voluntarily as a preventive measure
and carried out in a fully transparent manner. Each one
specified the model number, date of manufacture and other
information enabling the recalled product to be easily identified,
as well as a description of the defect, an assessment of the
risks, an identification of the root causes and the corrective
actions taken. Where applicable, regulatory authorities were
informed in full compliance with prevailing legislation and
guidelines.
Stakeholders such as automakers, wholesalers, dealer networks
and customers were also informed through appropriate
channels. During each recall campaign, a multidisciplinary team
managed deployment of the action plan in accordance with
Group procedures. To assess the recall’s effectiveness, the
campaign is continuously and systematically tracked by the
Quality Department.
Customer Promise Guarantee
The Quality Approach has been enhanced by the Customer
Promise Guarantee, which is designed to deliver total customer
satisfaction. Applied to every aspect of the business, it ensures
that the Group:
▶knows its customers and markets;
▶develops products and solutions aligned with their needs;
▶fulfills its commitments in implementing its solutions;
▶clearly communicates its Promises to customers;
▶detects shortfalls and responds quickly;
▶measures customer satisfaction.
These six steps could not be implemented without the
foundation underpinning the Customer Promise Guarantee:
management’s unflagging commitment, employee capabilities,
demanding standards, reliable data and trustworthy indicators.
Since 2016, the Group has used the Net Promoter Score® (NPS®)
as an indicator to measure customer satisfaction and, if
needed, to take corrective action to improve it.
Because Michelin serves a very diverse customer base –
consumers, businesses, truck fleets, vehicle rental companies,
mining companies, airlines, carmakers, tire dealers, auto
accessory
dealers,
wholesalers
and
high-tech
materials
customers – it was decided to create two new composite
indicators:
▶the “End Customer” NPS, a weighted average of the
consumers and business customers macro-clusters;
▶the “Partner” NPS, a weighted average of the OEMs and
dealers macro-clusters.
OUR OBJECTIVE:
The Group is committed to increasing the Partner NPS by ten
points and the End Customer NPS by five points by 2030
compared to 2020.
In 2021, the Partner NPS declined by 1.4 points, to 38.9 from
40.3 in 2020, as an improvement in the OEM NPS was offset by
a clear deterioration in the dealer NPS due to difficulties in our
dealer supply and delivery chain.
The End-Customer NPS will not be released this year due to (i) a
steep drop in the Fleet NPS response rate, which rendered the
score immaterial, and (ii) a change of provider in one of the
regions,
which
had
an
unanticipated
impact
on
the
End‑Customer NPS.
In addition, the impact of every employee’s engagement in
delivering Michelin Quality to customers may be measured by
the many awards, distinctions and ratings presented to Michelin
by customers, leading specifiers and agencies polling consumer
satisfaction with regard to product quality.
In North America, for example, for the 18th consecutive year,
Michelin earned top scores in the annual J.D. Power® Original
Equipment Tire Satisfaction Study. The study measures tire
owner satisfaction in four key performance factors: tire wear,
tire ride, tire traction/handling and tire appearance. In 2021, US
respondents ranked Michelin highest in the luxury, passenger
car, performance sport and truck/utility tire categories. Michelin
has won a total of 97 J.D. Power® awards since the study began
in 1989, more than any other tire manufacturer.
Michelin has also been honored for its overall performance by a
number automotive customers. In China, for example, Beijing
Benz, Hongqi Automobile and GAC have presented the
Michelin Group with Supplier Excellence Awards.
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4.1.1.4
An active role in ensuring consumers’ safety on the road and safeguarding
the environment
Tire and road wear particles
Factoring in the environmental impact of its business activities is
a major concern at Michelin. That’s why the Group is
proactively engaged with the tire industry in analyzing the
potential impacts from tire and road wear particles (TRWP), the
mixture of tire tread and road surface debris generated by the
friction between tires and the road.
Since 2006, Michelin has been working to deepen our
knowledge of these particles, in particular as part of the
research being led by the Tire Industry Project (TIP)(1) to collect,
characterize and understand both their composition and flow,
as well as their potential impact on the environment and human
health.
In addition, Michelin continues to carefully track the research
being conducted worldwide that could serve to enhance current
scientific knowledge. A wide variety of studies conducted by
the TIP and other research organizations are providing
converging signals that TRWPs account for a small percentage
of total urban air pollution particles. Moreover, according to a
recent study commissioned by the tire industry, only 2% to 5%
of TRWP released into the environment reach estuaries and
potentially the marine environment(2).
In 2020, the TIP publicly released its TRWP research studies at
https://www.wbcsd.org/Sector-Projects/Tire-Industry-Project/
Resources/Tire-Road-Wear-Particles-Papers.
The CEOs of the TIP member manufacturing companies decided
to add to existing knowledge by launching a new cycle of
TRWP research projects for the 2020-2021 period, addressing
areas such as:
▶sampling of TRWP presence in different environmental
compartments (air, rivers, soil, estuaries) and modeling TRWP
fate in the environment;
▶analyzing the degradation of TRWP;
▶investigating the potential health impacts from long-term
exposure to TRWP;
▶similar research is being pursued by the European Tyre and
Rubber Manufacturers Association (ETRMA), which in July
2018 launched the Tyre and Roadwear Platform, a
multi‑stakeholder platform, facilitated by CSR Europe,
dedicated to sharing scientific knowledge and co-designing
mitigation options to reduce the environmental impact of
TRWP.
Working with representatives from governments, academia,
non-governmental organizations and industries, it seeks to
foster open, inclusive dialogue among all stakeholders, in order
to holistically explore the TRWP challenge.
Lastly, it is already possible to start making a positive
contribution to reducing TRWP releases, both collectively and
individually.
Collectively, by defining a standardized test and using it to
remove the worst performing tires from the market by
enforcing tire abrasion thresholds. To support regulation that
would limit acceptable levels of particle releases from all tires
worldwide, Michelin and other ETRMA members are helping to
define a standardized TRWP emissions testing method.
Individually, by developing innovations that enable the Group to
design tires that help to further reduce TRWP emissions.
Regardless of any ongoing studies, Michelin has always led the
way in using materials more efficiently. This process has driven a
steady reduction in TRWP emissions from its tires. The Group
is committed to further reducing overall particulate
emissions from its new tire families.
(1) Tire Industry Project: Launched in 2005, the Tire Industry Project is a voluntary initiative dedicated to addressing the tire industry’s sustainability challenges and
issues. It currently comprises 11 of the world’s leading tiremakers: Bridgestone Corporation, Continental AG, Cooper Tire & Rubber Company, The Goodyear
Tire & Rubber Company, Hankook Tire Company, Kumho Tire Company, Inc., Groupe Michelin, Pirelli Tyre SpA., Sumitomo Rubber Industries, Ltd., Toyo Tire &
Rubber Company Ltd., and Yokohama Rubber Co., Ltd. The TIP operates under the auspices of World Business Council for Sustainable Development (WBCSD).
(2) This research is available to the public at https://www.tyreandroadwear.com/.
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PARTICULATE EMISSIONS ARE BEING REDUCED WITH EACH NEW RANGE(1)
(1) DEKRA studies in 2020 (MARK20B, MRK20E) and 2021 (MARK21E).
In December 2021, the Allgemeiner Deutscher Automobil-Club
(ADAC)(1) for the first time carried out a comprehensive study to
determine whether tires with lower TRWP emissions are less
safe, by measuring tire abrasion from around 100 tire models of
different sizes and comparing the releases to the results of
braking distance tests on dry, wet and, for winter tires, snowy
roads.
Analysis of the ADAC results shows that MICHELIN often ranked
first as the brand releasing the fewest particles per kilometer,
on average, among all the tires tested, while still delivering
excellent performance in the safety-relevant categories.
TRWP EMISSIONS: MICHELIN VS. OTHER PREMIUM
TIREMAKERS
Source: ADAC, Dec. 2021*
*
Tyre wear particles in the environment, ADAC, Dec. 2021 – 100 sizes tested.
Minimum performance standards
European legislators have introduced minimum tire-performance
standards, as specified in Regulation (EC) No. 661/2009 and
United Nations’ ECE Regulation 117. The Michelin Group
supported the introduction of these regulations, offering data
and other input to help define the minimum performance levels.
These standards cover:
▶rolling resistance;
▶noise;
▶wet grip.
They are designed to limit a tire’s environmental impact and
improve road safety. Introduced in 2012 for all new products,
the legislation has been gradually extended, in precisely defined
phases, to products already on the market. Compliance of new
Passenger car, Light truck and Truck tires is verified by
government technical services when the product is certified.
Stricter rolling resistance thresholds derived from Regulation
No. 117 have been applied in the European Union since
November 2016. Standards setting an even higher level of
balanced performance in the above three factors have been
proposed by the tire industry to the European Union for
application in 2024-2026.
The setting of regulated performance levels, which was originally
a European initiative, is now being extended via UNECE
Regulation No. 117, in legislation passed by countries that signed
the UN's 1958 agreement concerning uniform technical
prescriptions for wheeled vehicles. Since then, many countries,
such as Turkey, Israel, Brazil and Russia, have introduced similar
legislation and Japan is planning to do so by 2024.
(1) Tyre wear particles in the environment, ADAC Dec. 2021 (https://assets.adac.de/image/upload/v1639663105/ADAC-eV/KOR/Text/PDF/Tyre_wear_particles_
in_the_environment_zkmd3a.pdf).
MICHELIN
MICHELIN
CrossClimate 2
Pilot Sport 5
MICHELIN
-20%
e.Primacy
-13%
-20%
vs.
MICHELIN
Primacy 4
vs.
MICHELIN
CrossClimate +
vs.
MICHELIN
Pilot Sport 4
Premium competitors
average
90
126
109
130
134
125
MICHELIN
Per vehicle
Unit: g/1,000km
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Among the countries that did not sign the 1958 agreement, the
United States and India have decided to introduce at some
future date the same type of standards to protect the
environment and improve consumer safety. Other countries, like
China, South Africa, Morocco, Thailand and the Gulf States,
are also discussing such measures. In each of these countries,
Michelin has been supportive of the application of these
standards and when requested, is helping to define the
minimum requirements.
Tire labeling
In its Communication of October 19, 2006 entitled “Action Plan
for Energy Efficiency: Realising the Potential”, the European
Commission demonstrated the possibility of a 20% reduction in
the EU’s total energy consumption between now and 2020 by
presenting a list of targeted actions, including an energy
performance labeling system for tires. Introduced by Regulation
(EC) No. 1222/2009, such a system became mandatory in 2012
for passenger car and van tires. Following a review procedure
that began in 2016, a new version of the regulation was
proposed by the European Commission in May 2018 and
approved in 2019. Among other upgrades, it would improve
consumer awareness by having the “3PMSF snow” and “ice”
icons displayed on the label and technical information registered
on a publicly accessible database. Label information will be
extended in the future to other performance parameters, such
as the rolling resistance of retreaded tires or tire abrasion, as
soon as suitable testing methods are available. This new labeling
regulation was published in second-quarter 2020 and came
into effect on May 1, 2021.
Other countries have introduced similar regulations for certain
tire categories. In each one, the Michelin Group, when
requested, helped to define the terms.
In 2021, the Group did not incur any fines or penalties for
non‑compliance with regulations and/or voluntary codes
concerning product and service information and labeling [GRI
417-2].
The impact of tires on vehicular CO2 emissions
The rolling resistance of Passenger car, Light truck or Truck tires
accounts for 15% to 30% of an internal combustion vehicle’s
fuel consumption and therefore its CO2 emissions, depending on
its size, use and how it is driven. This is why Michelin is
encouraging the use of vehicular carbon emission assessment
methods that are precise enough to accurately ascertain the
contribution of the various non-powertrain factors, including tire
rolling resistance(1). For example, Michelin helped to promote a
metric measuring actual emissions for very low rolling resistance
tires, which was included in the latest UNECE regulation. This
approach would encourage greater transparency from suppliers
and more competition on technical issues.
Passenger and freight vehicles
In the United States, the Environmental Protection Agency (EPA)
and the National Highway Traffic Safety Administration
(NHTSA) have issued Phase 2 of their greenhouse gas emissions
and fuel efficiency standards for medium and heavy-duty
engines. The standards, which have been in effect since the
2018 model year, are becoming stricter every year. On
November 12, 2021, however, the regulation’s scope of
application was changed when the U.S. Court of Appeals, D.C.
Circuit ruled that the EPA and the NHTSA did not have the
authority to regulate trailers pulled by hauling trucks. As a
result, the Phase 2 regulations can no longer be applied to
trailers. However, all other types of motor vehicles listed in the
regulation must continue to comply with the law.
These standards stipulate that, before certification, a new
vehicle must be tested for compliance using the Greenhouse
Gas Emissions Model (GEM) simulation tool, one of whose
variables is the tires' rolling resistance.
In Europe, the Vehicle Energy Consumption Calculation Tool
(VECTO) developed for the European Commission serves as the
basis for Regulation (EU) No. 2017/2400 on the determination
of CO2 emissions and fuel consumption of heavy-duty vehicles.
The regulation, which will be gradually applied to heavy trucks
manufactured from January 1, 2019, takes into account the
energy performance of a vehicle’s different components,
including tire rolling resistance. The latter is certified by approval
authorities and regularly measured during the production
conformity testing process.
A proposal to extend the regulation and the VECTO simulation
tool to buses, coaches and heavy vans has been in discussion
since late 2018, for application in July 2022.
European authorities have defined maximum CO2 emissions levels,
measured based on the initial standards.
By participating in a technical capacity in the different working
groups, Michelin is facilitating the introduction of calculation
models and procedures that accurately reflect vehicle fuel
efficiency in actual use by taking into account the impact of
tires and a range of other variables.
Passenger car tires
The level of CO2 and harmful emissions from light vehicles can
also be measured by the new Worldwide Harmonized Light
Vehicles Test Procedures (WLTP), defined by the United Nations
with input from India, Japan, Russia, the European Union and
many other countries. Michelin encouraged the working group to
factor in the influence of tire rolling resistance in ways as close as
possible to actual driving conditions. The new procedures, whose
phase-in across the EU began in September 2017, will provide a
more accurate measurement of CO2 emissions from vehicles in
actual use.
(1) See 4.1.4.1 b) Transition plan: company strategy/Opportunities and risks/Designing ultra-energy efficient products.
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Winter tires
Many countries, particularly in Europe, now require drivers to fit
winter tires on their vehicles, either for a given period or when
demanded by weather conditions, or else in particular regions
or at particular times. However, while these rules generally
stipulate that only manufacturer-marked Mud and Snow (M+S,
M.S. or M&S) tires may be mounted, such markings do not
correspond to the tire’s demonstrated performance in snowy
conditions. Michelin is urging that national highway codes be
amended with an obligation to fit only winter tires marked with
the Three-Peak Mountain Snow Flake (3PMSF) symbol, which
means that they have demonstrated minimum required snow
grip. Germany introduced this rule in March 2017, Sweden in
2019, and France in 2021 through its “Mountain Law”.
Worn tire performance
The existing minimum standards for rolling resistance, noise and
wet grip concern the measured performance of new tires.
However, newness is fleeting and a tire’s performance evolves as
it wears. In the case of rolling resistance and noise, for example,
performance remains the same and sometimes actually improves
with wear, so it makes sense to define their minimum standards
on the basis of a new tire, as is currently the case. On the other
hand, a tire’s wet grip declines as it wears. In 2019, the EU
approved the introduction of a regulation governing the wet-grip
performance of worn tires. Michelin is participating in the United
Nations working group that is developing the regulatory method
for introducing a minimum wet grip performance standard on
worn tires still within the legal wear limit, so as to ensure that
tires
deliver
at
least
minimum
acceptable
performance
throughout their useful lives.
Compliance with materials standards
A multidisciplinary team of experts continuously tracks changes
in regulations governing chemicals, the environment and health,
enabling the Group to factor them into its strategic planning
and product design processes.
Michelin supports the standardized use of RFID chips to track tires
Embedding a unique RFID tag into every tire will ultimately
enable the entire industry to track its products across their life
cycles, from manufacture to recycling, thereby improving the
management of their environmental impact and the safety risks
due to manufacturing defects. The technology can also transmit
a variety of tire data that could play a critical role in developing
new sustainable mobility solutions based on connected tires. For
all these reasons, Michelin is actively encouraging the ISO
standardization of RFID-based tire identification systems, so as
to facilitate widespread take-up of the technology. In addition,
it is offering other tiremakers its intellectual property through an
attractively priced licensing program. It is also supporting the
introduction of standardized access to digital tire data, in order
to promote the development of new services that will help to
make mobility more sustainable.
An active private-sector stakeholder in safe mobility partnerships
The UN Global Plan for the Decade of Action for Road Safety
2021-2030 is spurring the global road safety community to
respond differently and reduce the number of road traffic
deaths and injuries by at least 50% by 2030. Making safety the
focal point will advance the global agenda to deepen the
commitment of governments, the private sector and NGOs to
implementing measures that can significantly reduce road
casualties.
Recognizing that by 2030, around 70% of the world's population
is likely to live in built-up urban areas, it is essential to invest in
safe mobility.
In line with its tradition of forming partnerships, Michelin has
pursued its global commitments with organizations as diverse as
the United Nations Road Safety Collaboration (UNRSC), the
Global Road Safety Partnership (GRSP), the FIA High Level Panel
for Road Safety and Youth for Road Safety (YOURS). Michelin is
also continuing to participate actively in the global Sustainable
Mobility for All (SuM4All) initiative led by the World Bank,
where Michelin is the only private sector representative on the
Steering Committee. As part of the initiative, Michelin helped
create a safe mobility working group through its Corporate
Foundation in 2021, to devise more effective policies and
initiatives to encourage this core component of sustainable
mobility.
With the support of the FIA and its local automobile clubs,
Michelin successfully deployed a number of programs around
the world in 2021:
▶in Argentina, Michelin’s Responsible Driver campaign
received the 2021 “Let's Fight for Life” award from NGO
Luchemos por la Vida for promoting and improving road
safety awareness and education. The campaign had more
than eight million views, with five average viewers and a
learning rate of 35% thanks to Twitch live streaming and
Instagram filters designed to get young people to answer
questions about driving behavior and best practices;
▶in Thailand, the distribution of 2,000 helmets for young
drivers, “Driving License for Young Riders” and “Safe
Mobility to Heroes” were organized in partnership with the
FIA and the Government of Thailand. The FIA safe mobility
campaign attracted 14,000 views at the “Michelin 2 Wheel
Virtual Event” by delivering safety-related content and games
on Michelin and partner platforms;
▶in China, the national “Safety, We Act Together” survey sent
out more than 3,000 questionnaires on safe, sustainable
urban mobility in more than 200 cities. Their findings, which
offered significant insights to local authorities, positioned
Michelin as a leader in safe mobility with the “Changing
District Public Welfare Partner for Safe Mobility” award. The
livestreamed awards event garnered 221,000 views and
2,000 commitments during the 90-minute rebroadcast;
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▶in India, a TV advertising campaign promoting safe mobility
practices was aired on the “Autocar Show”, a popular
program for car enthusiasts on the Times Network, India’s
most influential television network. The ads ran on 18 original
episodes and 18 reruns on four news channels with an
estimated audience of 397,000 people and an estimated
13.78 million impressions;
▶in the United States, a video game-based campaign was
deployed to reach young drivers and teach them tire safety
rules.
The United Nations Road Safety Fund (UNRSF), whose long-term
mission is supported by both member States and private
stakeholders, has elected Michelin to its Steering Committee as
a representative of the private sector. UNRSF-funded road safety
projects are designed to expand and improve key aspects of
national road safety systems in low and middle-income
countries, while ensuring that the ultimate beneficiaries are
millions of their citizens, especially children and other vulnerable
road users.
VIA, the independent road safety education program developed
by the Total Foundation and the Michelin Corporate
Foundation, has been deployed in around 450 schools in
31 countries. It takes an innovative instructional approach
focused on life-affirming messages and the acquisition of safe
ways to behave in traffic. In France, the pilot program managed
by Michelin in Clermont-Ferrand has been attended by
400 students in three schools since November 2021.
4.1.2
HUMAN RIGHTS
Ensuring respect for human rights SDG 8.7, 17 and 16
4.1.2.1 a) Employee relations standards and responsibilities
Michelin makes every effort to uphold human rights in all
its businesses and in every host community. Its employee
relations are governed by the highest standards and
aligned with the universal principles of human rights and
international labor conventions.
A vision grounded in international principles
As a signatory to the United Nations Global Compact since
2010, Michelin constantly strives to uphold its ten principles to
the best of its ability. It also abides by the OECD Guidelines for
Multinational Enterprises and the United Nations Guiding
Principles on Business and Human Rights. Across the globe, the
Group is committed to supporting compliance with the
International Labour Organization’s fundamental Conventions,
particularly in relation to freedom of association and protection
of the right to organize, the elimination of discrimination in
employment and occupation, the elimination of forced labor
and the effective abolition of child labor.
These principles have also inspired the Group’s internal
reference documents, particularly the Michelin Performance and
Responsibility Charter, the Code of Ethics, the Anti-Corruption
Code of Practice and the Michelin Purchasing Principles. Widely
promoted among the Group's employees worldwide, these
documents have been translated into the Group's main working
languages and are available for consultation at any time on
each country organization's intranet site.
To enhance its expertise and capitalize on best practices, in
2017, Michelin also joined the Businesses for Human Rights
(Entreprises pour les droits de l'homme – EDH) association,
which comprises around 20 French companies involved in these
issues. In addition, the Group is a member of the Global Deal
initiative, which promotes social dialogue and decent work
around the world, and of the Business 4 Inclusive Growth
initiative in cooperation with the OECD. Since late 2020,
Michelin has also chaired the Human Rights Club of the Global
Compact France network.
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4.1.2.1 b) Organization and ambitions
A governance body led by senior management
The Group’s human rights policies, objectives and strategy are
validated twice a year by the Human Rights Governance
Body, which is chaired by the Executive Vice President & Chief
Personnel Officer (a member of the Group Executive
Committee). Other governance members include the Executive
Vice Presidents of Manufacturing and Engagement and Brands
(both members of the Group Executive Committee), the Chief
Procurement Officer, the General Counsel and the Vice
Presidents of Public Affairs, Sustainable Development and
Mobility, Internal Control and Safety & the Environment.
Note that health and safety issues are managed by a separate
organization, the Employee Health and Safety Governance
Body. The Human Rights Governance Body is supported by
input from a multidisciplinary Operational Committee
comprising representatives from the corporate departments in
charge of Sustainable Development and Mobility, Purchasing,
Personnel, Internal Control, Risk Management, Employee
Relations, Public Affairs, Diversity & Inclusion and, since late
2021, Compliance. Meeting ten times a year, it prepares an
annual action plan engaging Michelin in a continuous
improvement process.
Clearly defined expectations in each human rights issue
After conducting human rights impact studies in six countries
until 2018, the Group has been reviewing every aspect of each
issue since 2019, so that measures to prevent and manage the
identified risks can be sustainably embedded in its business
processes. In 2021, a new version of the Code of Ethics set
out
the
expected
practices
regarding
discrimination,
harassment, child labor, forced labor, impact on local
communities, health and safety, privacy and personal data
protection. In each area, action principles are clearly specified
and illustrated with practical examples. They are also
cross‑referenced to recommendations issued by leading
international organizations, such as the ILO Conventions.
In addition, in 2021, a new harassment policy was added to the
six Personnel Department policies.
For the first time, ambitious objectives for decent wages
and a universal social protection floor were defined
following an in-depth review of these issues in every
operating region around the world.
2030 objectives and their performance indicators
In 2020 and 2021, significant efforts were made to define the Group’s human rights objectives for 2030 and to support each one with
ambitious 2030 indicators and targets for the years to come. The nine objectives are as follows:
In 2030, we want to be
Internally
Externally
A company to which everyone contributes
and in which everyone is respected
1 – A company where everyone feels safe at
work
3 – A company whose supply chain ensures
decent work for every employee
2 – A company offering a decent wage and
supportive employee benefits
A company in which everyone can feel
engaged, fulfilled and their authentic selves
4 – A company where employees constantly
improve their employability
5 – A company that allows diversity to flourish
in all its forms
6 – A company in which everyone feels like an
owner/stakeholder
7 – A company where employees are
motivated/engaged
A company that operates in harmony with its
stakeholders
8 – A company that listens to the opinions of
internal stakeholders
9 – A company that blends harmoniously into
its environment and is beneficial for its local
host communities
Indicators tracking performance towards the nine objectives
Several new indicators have been devised to measure progress towards the objectives, including a Diversities & Inclusion
Management Index (IMDI) that tracks five diversity metrics(1).
Note that some of the newly defined indicators do not yet have any prior-year comparatives.
(1) See section 4.1.2.2 Instilling an inclusive culture of diversity and preventing discrimination.
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Objective
Indicator
2021
2020
2019
2030 Objective
1 – A company where
everyone feels safe at
work, both physically and
psychologically
TCIR
1.29
1.19
1.43
<0.5
Well-being indicator
76%
80%
2 – A company offering a
decent wage and
supportive employee
benefits
% of employees receiving a decent wage
in each host country
95%
-
-
100% in 2025
% of employees covered by a floor of such
benefits as health insurance, disability/
death insurance and parental leave for
birth/adoption
New in 2021
-
-
75% in 2025 and
100% in 2030
3 – A company whose
supply chain ensures
decent work for every
employee
% of suppliers assessed that comply with
the Group’s human rights standards
89%
86%
85%
≥95%
% of natural rubber volumes used by the
Group covered by human rights
assessments of a representative sample of
farmers (via the RubberWay® application)
41%
30%
20%
80% from 2025
Number of village smallholders whose
working conditions and standards of living
have improved as a result of remediation
projects
New in 2021
-
-
30,000
4 – A company where
employees constantly
improve their
employability
% of employees who respond positively to
the Moving Forward Together survey
question: “I have real opportunities to
develop my skills at Michelin.”
74%
73%
-
85%
5 – A company that
allows diversity to flourish
in all its forms
IMDI, a composite indicator that tracks
inclusion and diversity (see section
4.1.2.2 b)
67
62
-
80/100 points
6 – A company in which
everyone feels like a
stakeholder
% of employee shareholders
49.8%
-
-
Maintain a rate of
>50%
7 – A company where
employees are engaged
Engagement rate
80%
82%
80%
>85%
8 – A company that
listens to the opinions of
internal stakeholders
% of employees who respond positively to
the Moving Forward Together survey
question: “I feel like my opinion matters
and my ideas are taken into account in my
company.”
69%
-
-
80%
9 – A company that blends
harmoniously into its
environment and is
beneficial for its local host
communities
% of employees involved in local volunteer
programs
2.5%
-
< 10% in the
legacy scope
of reporting
20%
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A granular human rights risks map
In 2021, these risks were prioritized according to their impact in
the new materiality matrix(1). The human rights risks correspond
to the risks plotted in the labor relations section of the
non‑financial risk map (also presented below).
The Group's identified human rights risks concern:
▶employee health and safety (see section 4.1.3 Employee
health and safety);
▶harassment and discrimination (see section 4.1.2.2 Instilling an
inclusive culture of diversity and preventing discrimination);
▶freedom of association (see section 4.1.2.3 Promoting
responsible social dialogue);
▶product safety (see section 4.1.1.3 Guaranteeing the quality
of our products and services);
▶protecting employee privacy and personal data (see section
4.1.1.1 Ensuring ethical business practices);
▶child labor (see below, Decent work-related risks now being
assessed);
▶forced labor (see below, Decent work-related risks now being
assessed);
▶potentially negative impacts on local communities (see section
4.1.2.5 f) Addressing the risk of potentially negative impacts of
our business on local communities);
▶a decent wage (see section 4.1.2.3 b) Offering fair
compensation and benefits).
Note that this year corruption risks have been discussed only in
the “Business Ethics” section (see section 4.1.1.1).
A deeper understanding of several issues in 2021
In 2021, Michelin pursued its review of employee compensation
across the Group with the support of independent expert Fair
Wage Network, in a commitment to ensuring that all employees
are paid a decent wage(2). A study was also launched to
eventually offer every employee a high-quality universal social
protection floor(2).
Harassment issues also received special attention in 2021,
with the creation of an international project team to strengthen
the processes for preventing harassment and handling
complaints. More than 20 initiatives were prepared and
deployed in each geography and 10 regional internal control
issues were defined to ensure compliance. A video message
from the Managing Chairman reaffirmed the Group’s zero
tolerance for any form of harassment anywhere in the world
and encouraged every employee to report violations to the
Group hotline. An e-learning module was designed and
distributed, with the goal of having every employee take part.
By the end of 2021, it had been viewed by approximately
59,000 people, or nearly half the consolidated workforce.
Employees in every region have been trained in how to conduct
a harassment investigation and processes are now in place to
ensure consistency in the decisions made based on the findings.
Decent wage-related risks now being assessed
in the contracting chain
The mapping exercise for supplier human rights risks was
completely overhauled in 2020 to rank purchasing categories
according to their human rights risks. When cross-referenced
with the analysis based on sourcing countries posing human
rights risks, this category analysis enabled us to prioritize
supplier assessments and deployment of preventive actions (see
section 4.1.1.3 b). Supplier CSR risks, which had been included
in the Group risk mapping exercise in 2019, were the subject of
an initial assessment in 2020. The Group’s whistleblowing
system was also opened to suppliers, with a direct link posted
on the Purchasing Department’s website.
Suppliers are generally assessed with desktop reviews, which
assign them an overall score and separate scores by issue,
including a dedicated score in “labor and human rights”
performance. More rarely, they may be asked to respond to
self-assessment questionnaires (see section 4.1.1.3). In 2021, an
indicator was introduced to track supplier human rights
compliance, with the 2030 objective that 95% of assessed
active suppliers earn the expected score.
To address human rights risks in the natural rubber supply
chain, the RubberWay®(3) mobile application deployed by the
Group in seven countries since 2017 has gathered
information from 48,212 rubber tree farmers on such issues
as income, working hours, working conditions and child labor.
Following a more in-depth analysis by district to identify the
highest risk regions, a project to improve farmers’ living and
working conditions named CASCADE was launched in late
2020 in Indonesia with mission-driven company Ksapa. The
four-year project combines classroom and online training for
farmers and their families in such areas as new income sources,
workers’ rights, crop diversification and health and safety. The
courses were developed in 2021 and rolled out in the final
quarter, enabling the first 125 planters and their families to be
trained.
(1) Presented in section 4.1.
(2) See section 4.1.2.3 b) Offering fair compensation and benefits.
(3) See section 4.1.1.2 c) A dedicated approach for natural rubber/The RubberWay® application.
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4.1.2.2
Instilling an inclusive culture of diversity and preventing discrimination
.SDG 4.3, 4.4, 4.5, 5.1, 5.5, 8.5, 8.6, 10.2 and 10.3.
Discrimination risks
Every person is unique and contributes to diversity. Respecting individuals in all their uniqueness is the basis of the Group’s
diversity and inclusion policy. Diversity comes in many forms, including gender, age, culture, religion, social background,
disability, sexual orientation, union membership, family situation, political opinion and physical appearance.
Michelin’s approach to diversity and inclusion is guided by three intentions: (i) that its teams be representative of all the
diversity found in their local host communities; (ii) that each person be treated fairly and feel free to express their
authentic self and uniqueness; and (iii) that diversity be experienced in a spirit of inclusion and tolerance, so that it can
also help to drive collective performance.
Reflecting and supporting these intentions, Michelin does not tolerate any form of discrimination anywhere in the Group,
with respect to anyone or for any reason whatsoever, including in cases allowed by local practice or custom. Employees have
access to recourse in every country.
4.1.2.2 a) A comprehensive, worldwide commitment
Policies and objectives
First deployed in 2005, the Group’s diversity process was
formally described in an initial policy document in 2018. This
was followed in 2021 by a new Diversities & Inclusion Policy
that sets out guidelines for the entire Group, as well as an
objective for 2030. Progress towards the objective is being
measured by the Diversities & Inclusion Management Index
(IMDI), a composite indicator comprising 12 sub-indicators in
five metrics: gender diversity, identity, multi-national management,
disability and equal opportunity in promotions. Each of the five
metrics is weighted equally in calculating the Index.
In addition, the Code of Ethics, which was updated in 2021,
emphasizes Michelin’s commitment to combating all forms of
discrimination, specifies a number of sensitive situations (hiring,
promotions, training, various employee benefits, etc.), cites
12 discrimination criteria as examples and describes real-world
situations demonstrating conduct to be encouraged or avoided.
Governance and organization
Diversity management is built on a multi-level global
organization. Led by the Corporate Vice President, Sustainable
Development and Mobility, the process is managed by a
Steering Committee comprising the Executive Vice President,
Personnel and the heads of Training, Hiring, Employee Relations
and Sustainable Development. The guiding objectives are
approved by the Human Rights Governance body.
An international Diversities & Inclusion network brings
together around 20 Diversity Managers from each of the host
countries and/or regions. They support managers and Personnel
Department employees, especially development partners and
recruiters, one of whose objectives is to promote diversity.
Team initiatives around the world
Impelled by the Group, a wide range of programs and initiatives
have been undertaken in the country organizations, including:
▶diversity charters signed in Romania (2018), Poland and
Hungary (2016), and France and Spain (2018);
▶company-wide agreements signed in France;
▶employee workshops to design solutions for supporting
diversity in France and the United States;
▶Diversity Weeks organized in Northern Europe and India;
▶local
networks
formed
in
the
United
States
(11
community‑based business resource groups), Europe (WoMen
Forward since 2014) and Northern Europe;
▶diversity and inclusion pages on country and regional
intranets, video messages from leading regional executives
addressing the issue, and partnerships with local associations
and cultural and educational institutions in France, the United
States, Mexico and other countries.
Training to encourage inclusion and attenuate the risk
of discrimination
A variety of training and sensitivity programs are being led to instill
a culture of diversity and inclusion and to encourage everyone to
treat people solely on the basis of their skills, avoiding any bias
based on prejudice or discriminatory stereotypes. In particular, a
half-day bias and stereotype awareness seminar has been
offered for all Group managers since 2020. By year-end 2021, all
managers in North and South America had attended the session,
along with another 2,000 people mainly in Europe (of which 680 in
France). Roll-out will continue in 2022 in Europe and Asia.
The seminar expands on other sensitivity training offered by the
country organizations, in alignment with local practices and
cultures. Examples include Brazil, where 360 managers (85% of
the total) had attended a diversity e-learning course by year-end
2021, and France, where managers and supervisors must
attend training in non-discriminatory behavior before taking up
their positions.
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Annual internal control campaigns
The Group regularly performs internal control campaigns that act
as a continuous diagnostic system, backed by mandatory action
plans. They ensure that human resources processes are
non‑discriminatory and that action plans are addressing the
identified risks. Audited risks include discriminatory wording in
individual recruitment files (job offers, applicant interview reports,
etc.) and pay gaps based on identified discriminatory criteria.
Listening to employee concerns and opinions
By participating in the ninth annual worldwide “Moving
Forward Together: Your Voice for Action” survey, employees
were able to express their opinions about diversity and inclusion
issues. Their answers to the three questions addressing these
issues showed an improvement in their perceptions in 2021.
Lastly, throughout the year, employees around the world are
encouraged to submit progress ideas capable of improving
diversity and inclusion.
4.1.2.2 b) Targeted initiatives in the five areas of diversity
The introduction of a new composite diversity indicator in 2020 underscores the importance that Michelin attaches to every aspect of
this issue. Each of its five metrics is expected to progress towards its 2030 objective.
2020 and 2021 Group IMDI figures(1):
IMDI 2020
IMDI 2021
2030 IMDI
objective
62
67
80/100 points
The five IMDI metrics
2021 score
2020 score
Gender equality in the workplace
58.7
55
Identity (age, religion, sexual orientation, etc.)
73
68
Multi-national management
76.6
69.5
Disability
63.2
53.3
Equal opportunity
64.1
63.4
Attesting to the Group’s commitment to this objective, all the
metrics (gender balance, identity, multi-national management,
disability, equal opportunity) in the IMDI diversity and inclusion
indicator improved in 2021, raising the aggregate score to
67/100 from 62. Deployment of a bias and stereotype training
course attended by thousands of employees and the
appointment of disability ambassadors in eight geographies
have, among other benefits, helped to support wider
acceptance of diversity across the Group. In the case of gender
diversity, the percentage of women in management positions
continued to climb in 2021, to nearly 29% by year-end.
Management also became increasingly multi-national in the
growth regions, with the percentage of local top managers
rising to 83% from 79%, and in the Operations and Strategy
Group comprising the Group’s 100 most senior executives,
where it improved to 35% from 30% over the year.
GENDER EQUALITY IN THE WORKPLACE
Group objective: “Achieve gender balance among Group managers and, by 2030, aim to set the gender balance benchmark in our
industry.”
Issue
Indicator
2021 score
2020 score
Ambition 2030
Gender equality
in the workplace
% of women in positions of responsibility rated N or above
28.9%
28.2%
35%
% of women in positions of responsibility rated G or above
17.2%
15.5%
35%
Pay gap between men and women in categories 1 to 4
2.58%
2.58%
<2.2
The percentage of women employees continued to
increase in 2021, standing at 19.8% at year-end, led by
hiring programs and steadily upgraded workstation ergonomics.
Although, much like in the automotive industry as a whole,
women accounted for just 13.6% of production operators in
2021 (excluding the dealership networks), they were better
represented among technical staff (32.1%) and, to a lesser
extent, in management and supervisor positions (28.9%). In
2021, more than 39% of new hires were women in the
administrative employees, technicians, supervisors and
managers categories.
(1) Composite indicator calculated in number of points out of a possible 100.
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WOMEN AS A PERCENTAGE OF EMPLOYEES AT DECEMBER 31, 2021
Percentage of women by
employee category and region
Production
operators
Administrative
employees and
technicians
Managers and
supervisors(1)
Total
GRI Indicator
North America
14.9%
38%
26%
19%
GRI 102-08
South America
12.2%
29.4%
30.2%
16.8%
Europe
13.5%
29.9%
29.3%
20.1%
Africa/India/Middle East
10.7%
36.3%
28.7%
24.1%
Asia (excluding India)
13.2%
43.6%
31.8%
20.4%
GROUP TOTAL
13.6%
32.1%
28.9%
19.8%
GRI 102-08
(1) Employees with a level of individual responsibility of A to N, according to the Hay method used by the Group.
Supported by a multi-year improvement plan, three Executive
Committee members are leading the Group’s progress in hiring
and promoting women in Marketing & Sales, Research &
Development and Manufacturing. Every year, the Regional
Presidents set measurable annual targets, backed by action plans.
Making Group jobs more appealing to women
To increase manufacturing’s appeal to women, Michelin is
pursuing a large number of initiatives on several continents in
conjunction with academia, including plant tours for high
school teachers and their students and meetings with inspiring
women role models. In 2020, the Group launched a “Women in
Motion” program that enables women employees to volunteer
as job ambassadors, to help enhance the appeal of these jobs to
women. This commitment to promoting manufacturing jobs to
women is gradually being extended to other departments with
a low percentage of women, such as marketing and sales,
R&D, IS/IT and digital technology.
With the same objective of attracting more women to the
shopfloor, the production plants are deploying a variety of
programs to improve workstation ergonomics and break
rooms, with particular attention to women's changing rooms.
In addition, in Poland, the agricultural tire production line at the
Olsztyn plant has upgraded the ergonomics and organization
of the tire inspection station, with the goal of being 50%
staffed with women.
Michelin is also committed to facilitating work-life balance
with a variety of supportive benefits, including flextime
arrangements, working from home (see section 4.1.3.5 a),
daycare facilities and nursing rooms, financial aid for childcare,
service centers and “Family Day” events.
Increasing the percentage of women in management
and on executive bodies
A dedicated action plan is being pursued in every region to
increase the number of women in management. The
percentage of management and supervisory positions held by
women(1) has risen steadily since 2013, from 22.5% to 28.9% in
2021. To maintain this momentum and break the glass ceiling,
the objective is now to reach 35% by 2030, along with a
second target of having woman account for 35% of so-called
“Group Manager” positions(2) versus 17.2% in 2021.
At January 1, 2021, four of the 11 Executive Committee
members were women, as were seven of the 20 members of
the Group Management Committee. At December 31 2021,
among the 11 members of the CGEM Supervisory Board, four
were independent and one was non-independent. Within its
Compensation and Appointments Committee, chaired by a
man, two of the four members are women(3). The CSR
Committee is chaired by a woman.
Ensuring wage equality worldwide
Closing gender pay gaps is one of the objectives assigned every
year to the Personnel Department managers in the countries
concerned. A specific method for calculating wage data has
been used worldwide since 2012, enabling comparisons
between the pay levels of men and women in positions of
equivalent responsibility. In 2021, the overall gender wage
gap stood at -2.58%, unchanged from 2020, based on a
sample of 37,446 people with the same level of responsibility(4).
In France, as part of a company-wide agreement negotiated in
2020, an independent study by researchers at the French
National Institute of Demographic Research (INED) found that
the residual value of the like-for-like gender pay gap was less
than 1% in every employee category.
Lastly, since early 2019, MFPM has calculated and disclosed its
Gender Equality Index, which stood at 99/100 in 2021.
In 2021, Michelin Spain received an award from the Spanish
Ministry for Equality in recognition of its efforts to reduce
gender inequality in the workplace.
▶Identity (the sum of an individual’s personal characteristics,
such as age, sexual orientation, ethnicity or religion);
Group objective: “Enable every person to be who they really
are and to bring their authentic selves to work.”
(1) Employees with a level of individual responsibility of A to N, according to the Hay method used by the Group.
(2) Employees with a level of individual responsibility of A to G, according to the Hay method used by the Group.
(3) See also section 3.1.3.3 Diverse profiles and experiences represented on the Board – gender balance on management bodies.
(4) Employees in categories 1 to 4. The sample did not include production operators.
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2020
Ambition 2030
Moving Forward Together survey question: “In my workplace, I am treated with
respect, regardless of who I am or what my position is.”
84%
83%
>80%
Moving Forward Together survey question: “In my workplace, I believe that
people are treated fairly (for job assignments, promotions, etc.) regardless of
their background, personal characteristics or other differences.”
65%
62%
>80%
Difference between the highest score in an age category and the lowest score
in an age category on the Moving Forward Together survey question: “I can
fulfill my career objectives at Michelin.”
3 points
No difference
among the age
categories
Michelin seeks to encourage people to express their differences
so that they can feel at ease in the corporate community. To
enhance everyone’s ability to embrace a multitude of
differences, the Group organizes bias and stereotype sensitivity
training (see section 4.1.2.2 a).
Since 2020, Michelin has also been revamping a coaching
program, initially intended for women, that will now be open to
any employee (and not just high potentials) who feels like they
are facing a glass ceiling because of who they are.
In the United States, diversity issues related to ethnic origins are amply addressed, particularly as part of the hiring and
onboarding process. A wide array of proactive programs and processes are in place to alleviate the under-representation of
women and Black, indigenous and people of color (BIPOC) communities among Group employees.
Employee demographics are also regularly reviewed to ensure that minority groups are represented in line with levels observed in
comparable companies. These reviews have led to purpose-driven initiatives to diversify internal and external hiring pools and
develop employee career opportunities.
Moreover, in 2020, North American management responded to racial tensions by forming a strategic action team called RISE to
combat racism within the company, the local community and across the country. In 2021, the team primarily focused on
increasing the diversity composition of the workforce through hiring practices, publishing a Diversities & Inclusion report with
detailed demographic data, and completing roll-out of the Group’s unconscious bias training program. Also during the year, a
strategic partnership was formed with the International African American Museum in Charleston, South Carolina.
Religion in the workplace
To provide managers with appropriate responses and minimize
the risk of discrimination against religious people, a guide to
religion in the workplace has been issued in France.
Distributed in the French production plants upon request since
2018, the guide was updated in 2021 with an online
questionnaire. In addition, all of the French plant personnel
managers were given sensitivity training in religious issues. In
2020, the guide was adapted for use in Germany, in accordance
with national law and specific concerns from German
employees.
▶Multi-national management:
Group objective: “All of the Group’s host country
nationalities and cultures are represented in all the corporate
functions in the operating regions and at headquarters, in
line with the geographical footprint of each business. In each
country and region, more than 80% of management
positions are held by locals”.
2021
2020
Ambition 2030
% of employees with a level of responsibility from A to I working in a growth
region who signed their first employment contract in that growth region
83.2%
78.8%
80%
% of non-French nationals among the Group’s 100 most senior executives
35%
30%
50%
Michelin is committed to nurturing the emergence of a highly
skilled global team of local managers. Particular attention is paid
to fostering the emergence of local managers in the growth
regions of South America, Southeast Asia, China, India, the
Middle East and Russia. In 2021, 83.2% of managers in the
growth regions were locals (see section 4.1.5 Summary table
of employee data).
With the introduction of the new IMDI index, Michelin is taking
its objective to the next level by aiming for half of its 100 most
senior executives to be non-French nationals by 2030 In 2021,
the percentage was 35%.
▶Disability:
Group objective: “Michelin offers career paths to people of
all abilities, in accordance with its talent development policy”.
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2020
2030 Objective
Percentage of country organizations with more than 1,000 employees
with at least 2% of the workforce recognized as disabled
38.5%
46.7
100%
Percentage of country organizations that have appointed an Ambassador
with expertise in workplace disability issues
88%
60
100%
The new IMDI indicator, one of whose five metrics is disability,
underscores the importance of this issue in managing diversity
across the Group, even though cultural attitudes and legislation
may vary from one country to another.
Michelin has long pursued a commitment to hiring people with
disabilities and retaining employees who become disabled at
some point in their careers. It also systematically strives to meet
or exceed legally mandated quotas wherever they exist.
Michelin’s Personnel Department regularly meets with national
disability stakeholders to deepen its understanding of these
issues, so that in turn it can raise employee awareness of how
to support people with disabilities.
In most host countries, the Personnel Department identifies
avenues to improvement and implements action plans. Michelin
Germany has formed a partnership with the myAbility
organization and in 2021 deployed a program to hire students
with disabilities. In France, MFPM signed a company-wide
disability agreement with the unions in January 2021, and an
action plan is being implemented to address six core issues:
hiring
and
onboarding,
retention,
training,
awareness,
communication and securing procurement from sheltered work
centers and social enterprises. The entire process is being led by
23 disability employment officers in Group facilities as part of a
Handicap taskforce. In all, disabled employees made up 6.89%
of the French workforce in 2020, once again exceeding the
legally mandated quota of 6%. Due to the postponement of
the reporting deadline, the 2021 figure, reflecting the impact of
initiatives deployed during the year, cannot be calculated until
mid-2022.
In 2019, the Group signed an international partnership
agreement with Handicap International (Humanity &
Inclusion) designed to develop worldwide expertise in the hiring
and retaining of people with disabilities. In 2020 and 2021, the
Chennai production plant in India carried out a broad-based
project to support the hiring and inclusion of disabled people.
Among the outcomes were the drafting of an equal opportunity
policy aligned with local legislation, the provision of 1,450 hours
of disability sensitivity training for around 50 managers and the
permanent hiring of seven disabled people.
▶Equal opportunity
Group objective: “Every employee can develop his or her
talents in the company, regardless of where they started at
Michelin. As a manufacturing company, Michelin pays
particular attention to promoting production operators
(category 5)”.
2021
2020
2030 target
Percentage of category 1 to 4 employees who began their careers
as category 5 (production operators)
13.8%
13.4%
20%
Percentage of managers (NRI A to N) promoted from within
72.7%
73.9%
80%
Promoting from within is one of the Group’s core values. This is
why the new IMDI indicator includes a target for the career
development of people hired as production operators, with
progress measured by two sub-indicators.
Michelin also strives to support the social inclusion of
disadvantaged people in its host neighborhoods.
In France, MFPM has been deploying a program since
2019 in 1,514 disadvantaged neighborhoods in French
cities, leading results-oriented initiatives such as hiring refugees
for maintenance positions, mentoring young people from
disadvantaged urban neighborhoods and helping to hire people
alienated from the workforce.
4.1.2.3
Promoting responsible social dialogue SDG 8.5, 8.8 and 10.4
Michelin’s identity and philosophy have always impelled
the Group to engage in an assertive social dialogue
process, which it sees as a driver of sustainable
performance. The Duty of Care Plan and the risk mapping
exercise cover the quality of social dialogue as an issue, with the
risks to the Group primarily concerning employer attractiveness,
skills and employee engagement (see section 4.1.2.4 Supporting
employee growth and development).
In 2015, Michelin issued a policy that recognizes the
positive contribution of freedom of association, collective
bargaining and staff representation independent of
management, which are a source of proposals and ensures
that employees' fundamental needs are taken into account in
every host community. Its application around the world is
overseen by a Group Director of Social Development, who is
also tasked with improving social dialogue where it falls short of
Group standards. As a result of these efforts, significant
improvements have been made in recent years in several host
countries, particularly Thailand and Brazil. In addition, every
manager receives training in the legal aspects of labor relations.
Compliance with Policy commitments is also verified by an
internal control process.
In a commitment to enhancing the effectiveness of the social
dialogue process in all of its host communities, in line with their
particular features and characteristics, Michelin has been a
member of the Global Deal since 2017 and actively participates
in its French platform set up by the Ministry of Labor.
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It was in this same spirit that in late 2019 Michelin announced it
was setting up a Global Works Council. Through such an
economic, social and environmental observatory, the Group
hopes to encourage a social dialogue process commensurate
with its image and capable of driving its overall performance. In
this way, the Global Works Council was created in early 2020
with 39 employee representatives from all the Group’s
operating regions.
It first met on June 28 and 29, 2021, both in person and via
video conference due to the health conditions at the time. The
speakers reviewed in detail Michelin’s 3P strategy (People,
Profit, Planet) through the prism of social dialogue issues and
the Group’s plans for a universal social protection floor and
other objectives. Each presentation was then discussed in
breakout working groups (see section 4.1.2.3 b).
4.1.2.3 a) An assertive social dialogue process
Demonstrating the intentions of the new policy
The notion of social dialogue, which implies, in particular, sharing
key issues more broadly and deeply so as to encourage the entire
workforce to participate in defining strategy, is gradually informing
all of the Group’s management practices. The Group provides all
the information stakeholders need to form an objective, reasoned
opinion and express it with confidence as part of the social
dialogue process. The structure and content of this information are
negotiated with employee representatives and comply with legal
obligations in each country.
Restructuring is a fact of business life, an exceptional, yet in
certain circumstances unavoidable, event that must be
undertaken to maintain the Company’s viability. Michelin is also
a member of Business for Inclusive Growth (B4IG). In this
regard, should restructuring be necessary, the Group takes care
to ensure that all of the affected employees are reassigned or
outplaced, while easing the impact on local communities with,
in particular, revitalization initiatives. In addition, Group policy
specifies that the project must be announced as soon as
possible and carried out in accordance with the procedures
negotiated with employee representatives.
In every country, meetings are periodically organized to share, in
line with standard French practices, detailed financial and social
information among local executives, line managers and
employee representatives. Transparently explaining the issues so
that they are understood by all parties creates conditions
conducive
to
much
more
responsible
dialogue
during
negotiations.
In France, talks initiated in 2019 concerning the industrial
diagnostic reviews performed in the country’s 15 production
facilities (see the 2019 Universal Registration Document)
enabled each one to roll out a genuine co-construction process
in early 2021. Employees, their representatives and local
management came together to submit informed proposals to
improve plant competitiveness with the full support of every
stakeholder, as part of the France 2021-2023 simplification and
competitiveness project.
After completing the diagnostic reviews and defining the
simplification drivers, a very broad spectrum of employees
remained actively involved, in a spirit of co-construction, to
determine the conditions for implementing the projects.
Paralleling this social dialogue process, negotiations with the
French employee representatives resulted in a framework
agreement on (i) the terms and conditions of the annual
Collective Settlement Agreements (RCCs) and (ii) measures to
support employees in their career development and retraining.
The agreement also specified the co-construction methodology for
working with employee representatives and unions during the
three-year project (2021-2023).
An increasingly mature social dialogue process
and workplace environment in every Region
In Western Europe, conditions in the Passenger car and Truck
tire markets have forced the Group to reconfigure its
manufacturing footprint, in particular by terminating production
operations at the plants in La Roche-sur-Yon in France and
Bamberg in Germany announced in 2019. Nevertheless,
responsible social dialogue has been constantly maintained with
employee representatives, so that everyone can work together to
jointly define the most effective procedures for implementing
the restructuring process (see section 4.1.2.3 c).
To date, 76% of the 858 impacted Bamberg employees have
found a solution through retirement, transfer to another Group
facility, outplacement and/or a career change after in-house
retraining. The same is true for 80% of the 619 impacted La
Roche-sur-Yon employees.
The quality of social dialogue was also maintained in Brazil and
Thailand, as seen in the findings of the 2021 engagement survey.
The health crisis, which spread around the world, also revealed
a very deep social cohesion across all our geographies, by
strengthening ties between local management and employee
representatives and increasing the frequency of their discussions
to review appropriate responses. As expressed by the Executive
Committee, the Group clearly made safeguarding employee
health the absolute priority focus of every decision. In particular,
whenever
conditions
prevented
employees
from
being
effectively protected against the pandemic, this commitment led
the Group to implement dedicated organizational measures,
whose related procedures were readily discussed with employee
representatives. In the case of operations that were strategic
for civil society (to supply equipment for emergency vehicles,
the subway, military applications, etc.), certain manufacturing
units were able to run 24/7 thanks to the dedication and hard
work of everyone involved in defining the employee health
protection procedures.
Listening to employees via the annual
engagement survey
Employee engagement is an important driver of operational
excellence and the ability to meet the Group’s performance
objectives. Michelin has set the particularly ambitious objective
of becoming a world-class leader in this area by reaching and
maintaining an 85% employee engagement rate. The annual
“Moving Forward Together: Your Voice for Action” survey
measures the engagement rate and employee feelings about
their work, in light of the seven aspects of the Group's
employee value proposition. It was conducted across the Group
for the ninth year in a row in 2021, with more than
93,000 employees participating. This represented an 87%
response rate, a one-point increase on the prior year (One
Michelin scope of reporting). Employee confidence in the survey
illustrates how managers are increasingly using it to support
dialogue in their teams and drive continuous improvement. Such
a high response rate also ensures the credibility of the findings.
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In 2021, the overall employee engagement rate declined by two
points, to 80%, which nevertheless remained an excellent score
when compared with Michelin’s peer group.
Among the survey’s 12 chapters, seven increased their score,
four were unchanged and one saw a decline. The engagement
rate demonstrated the very good perception that employees
had of the Group's management of the health crisis. Once
again in 2021, simplification emerged as a key employee
expectation.
Encouraging employees to submit Progress Ideas
First introduced in 1927, Michelin's pioneering participatory
innovation process, now known as InnovaGo, offers every
employee the opportunity, spontaneously and at any time, to
help drive continuous improvement across the Group by
suggesting a Progress Idea or an Innovation Idea.
A Progress Idea offers a solution to improve working methods
or solve a problem; an Innovation Idea opens the path to a new
service or product for customers or outside stakeholders.
Managers are expected to encourage their team members to
submit these ideas and make them a reality.
The results attest to the success of the Progress Idea system in
the Group, with more than 23,200 employees submitting at
least one idea in 2021, or 32% of the workforce that had
access to the process. Of the total 57,950 ideas received in
2021, more than 18,800 were implemented during the
year, delivering improvements in areas of special interest to the
Group, such as safety, quality, working conditions, cost savings,
diversity and the environment.
Telling and owning the Michelin story
In 2021, the Group wanted to engage every employee in taking
greater ownership in their workplace by playing a bigger role in
the Group’s story, in ways that give fresh meaning to its
initiatives and responses to new challenges.
For the first time, the Michelin Narrative tells, in a short and
simple format, what the Group is and where it is going.
Starting from today’s issues and challenges, the story sheds light
on Michelin’s focus on sustainable growth, its 2030 Michelin
in Motion strategy and its key success drivers, while insisting
on the role of a united, engaged, forward-looking corporate
community. To encourage affinity and engagement, the
Narrative was shared by word of mouth among employees
rather than being distributed through the usual channels. Some
chapters were then revised in greater detail through dedicated
processes, to enable everyone to understand more clearly the
transformations underway and our growth territories with,
around and beyond tires.
Constant, careful attention to employee feedback underscored
their appreciation for this simple process, as well as for the clear
messages and the outlook they inspire.
However, the story is not over yet. Since October 2021 and until
mid-2022, employees are working together in a collective
intelligence process to define the final chapter in the Michelin
Narrative, known as the corporate dream for 2050.
4.1.2.3 b) Offering fair compensation and benefits
Compensation, payroll taxes and other employee benefits
Employee benefits expense amounted to €6,445 million in 2021.
Total employee
benefits expense
in 2021 (in € millions)
Production
operators
Administrative
employees and
technicians
Management
staff
Provisions and
provision reversals
for pension
obligations
Taxes and
provisions
Group
6,445
2,324
2,388
1,308
19
406
For the entire Group, the allocation of employee benefit costs by function (wages and salaries, payroll taxes, etc.) is presented in
Note 7 “Employee benefit costs” in section 5.2 Consolidated financial statements for the year ended December 31, 2021.
Ensuring that compensation reflects each employee’s
performance and level of responsibility
Michelin is committed to offering every employee compensation
that is personalized, fair and market-competitive, and that
reflects his or her individual performance and level of
responsibility. Compensation policies are implemented with a
long-term view, taking into account each person’s professional
development, so as to enable people to advance according to
their abilities and the needs of the Group. Compensation is also
carefully aligned with evolving market conditions and local
practices.
In every host country, compensation is competitively set and
raised with a constant eye on achieving the right balance
between employee satisfaction and financial performance.
In 2019, the Group decided to upgrade its variable
compensation policies, in a commitment to:
▶enhancing its ability to attract and retain talented employees
in every host country;
▶empowering and incentivizing everyone to meet our growth
challenges;
▶encouraging collaborative working methods;
▶giving everyone a stake in the Group’s earnings and sharing
created value more equitably.
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The new system will be founded on the following basic principles:
▶a similar system for everyone, regardless of job position or
business, level of responsibility or country;
▶bonuses comprising the following components:
• a Group Bonus for every employee, depending on how
well the Group meets its objectives,
• a Team Bonus, depending on how well shared objectives
are met, thereby encouraging people to work more
collaboratively;
▶the bonuses will be indexed to the Group's results and if the
objectives are exceeded, over performance will be rewarded;
▶bonus amounts will be defined for each level of responsibility
and aligned with job market practices in each country.
The new policy has been gradually rolled out to all Group
employees since 2020, with deployment continuing apace in
2022. In France, since January 1, 2020, all employees,
regardless of category, have been eligible for variable
compensation in three tiers: a Group Bonus tied to the Group's
earnings, a Team Bonus tied to performance in meeting shared
objectives, and a discretionary profit-sharing bonus.
Integrating CSR performance criteria into executive
compensation
Tasked with helping to define Group strategy and its execution,
the Strategic Operations Group (GOS) comprises the Group’s
100 most senior executives, including the Managers, the
members of the Group Executive Committee (CEG) and the
members of the Group Management Committee (CDG).
These members receive a portion of their annual compensation
in the form of performance share rights, whose number
depends on the member’s:
▶level of responsibility;
▶country of posting (or of origin in the case of expatriates);
▶performance
against
objectives,
including
managerial
performance (ICARE model(1)).
The performance condition is based on three closely related
criteria reflecting different aspects of Michelin's People, Profit
and Planet strategy, which are presented in detail in Chapter 6
Investor relations (see section 6.5.4 Share grants and
performance shares).
If all of the performance criteria are fully met, the granted rights
would represent no less than 20% of the fixed compensation
of these employees.
Guaranteeing a living wage for all employees
In 2020, Michelin worked with independent expert Fair Wage
Network to develop a methodology to analyze employee
compensation in its member companies. In 2021, it embarked
on a new phase to verify and guarantee that all employees are
paid a living wage, i.e., compensation that is high enough to
support a decent standard of living by enabling them and their
families to pay for food, housing, education, healthcare and
other basic needs. After analyzing the compensation of more
than 95% of Group employees, the review confirmed that all
of them are paid at least the equivalent of the living wage
benchmarks defined by the Fair Wage Network.
The review process, which is becoming a key component in the
Group’s compensation policy, will be pursued in 2022.
Offering a variety of supplementary compensation
Depending on the country and local labor market practices,
employees may be offered various forms of supplementary
compensation. In France, for example, the 2020-2022
discretionary profit-sharing agreement renegotiated with the
trade unions is structured in two tiers:
▶the first defines the profit-sharing framework applicable by
each company;
▶the second defines specific profit-sharing criteria for each
plant or office, such as the achievement of production
targets, the reduction in material waste and the digital
certification rate. These profit-shares, which are paid in the
first quarter of the following year, can amount to up to 8%
of an employee’s salary.
Employee benefit policies reflecting Michelin’s social
responsibility
Employee benefit policies, concerning mainly post-retirement
benefits, insurance and health care coverage, reflect Michelin’s
social responsibility commitment. National benefit systems are
supplemented to ensure that employees enjoy competitive
benefits in most host countries.
Benefit policies and plans are continually updated in response to
changes in the economic and legal environment.
In 2021, Michelin also launched a study with a view to creating
a universal social protection floor, so as to offer every
employee and their family a set of basic social protection
benefits throughout their career at Michelin, supplementing
public benefit systems wherever necessary.
The floor would cover three core benefits: childcare, family
support in the event of death, and high-quality, affordable
health care.
Implementation studies will continue in 2022 ahead of a phased
roll-out through 2025.
At the same time, the operating regions have also identified
improvements in local benefit systems to support employees in
the areas of mobility, education and the family.
Protecting employees from the financial consequences
of an accident or illness
Michelin is continuing to deploy and upgrade systems to
safeguard employees, as well as their spouses and children,
against the potentially significant financial consequences of an
illness or an accident. In most countries, healthcare plans cover
medical expenses and insurance coverage guarantees an income
in the case of short- or long-term disability or death.
(1) ICARE: Inspiring, Create trust, Awareness, Results, Empowerment.
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A wide range of proactive workplace health and safety
initiatives are being assertively deployed (see section 4.1.3.3 a
Systematically monitoring employee health, to prevent and
manage occupational illnesses) and public health campaigns on
such topics as nutrition and vaccinations are regularly
conducted on-site.
Supplementing national pension systems
With life expectancy on the rise, a growing number of countries
have national pension systems that may not be sufficient to
meet employees’ expectations. In response, in certain countries,
Michelin has implemented systems that provide employees with
additional post-retirement income, in accordance with their
length of service.
For more details concerning Michelin pension plans, please refer to
Note 27 “Employee benefit obligations” in section 5.2 Consolidated
financial statements for the year ended December 31, 2021.
Enabling every employee to become a shareholder
on preferential terms
Michelin regularly offers employees opportunities to purchase
shares of company stock on preferential terms through
recurring
employee
share
ownership
plans.
Following
completion of the seven employee savings plans set up since
2002, a total of 62,118 Group employees in almost
50 countries around the world are now shareholders. At
December 31, 2021, they owned 1.7% of the Company’s
issued capital.
4.1.2.3 c) Transparency: information concerning redundancy plans, job retention initiatives
and retraining, placement and support programs during the year
France
1. The La Roche-sur-Yon plant
On October 10, 2019, MFPM announced its plan to close the La
Roche-sur-Yon plant in France before the end of 2020, which
would also have a direct impact on the semi‐finished products
workshop at the Cholet plant.
An agreement on job retention initiatives was signed with a
majority of trade union representatives on January 23, 2020 and
implemented on April 1, 2020. At that time, 613 jobs were
eliminated at the La Roche‐sur‐Yon plant and 68 in the
semi‐finished products workshop at the Cholet plant.
As of December 31, 2021, 94 employees had opted for early
retirement, 128 had accepted a transfer within the Group and
479 had been outplaced. Of the employees who took retraining
leave with the support of an outplacement firm, 61% have found
a job or started their own business and 22% are still being
assisted by the firm in finding a job or starting their own business.
A three-year revitalization agreement signed with the French
government on June 30, 2020 will help to create 613 new jobs.
By year-end 2021, authorities had approved applications to
support 479 jobs, of which 184 had been created.
Separately, Michelin began working with leading public-sector
stakeholders in the region to devise a project to transform the
site into a multi-purpose center of excellence, combining
manufacturing, research and training activities focused on
sustainable energy, innovative mobility solutions and other
future-facing technologies. The project is underpinned by the
same principles as applied in the revitalization of the Dundee
and Bamberg sites.
2. Three-year project to transition the manufacturing
and corporate and administrative operations
On January 6, 2021, Michelin announced a strategic project to
transition its operations in France over the 2021-2023 period,
specifying that it would not entail any dismissals for ETO
reasons.
To implement the project, Michelin and the unions signed the
ADAPT France 21-23 framework agreement on April 27, 2021,
defining the support measures for all impacted employees,
whether they wish to remain with the Group or prefer to pursue
their careers elsewhere.
Under its terms, the parties will negotiate mutually agreed
annual severance packages (RCCs), which will be used to
support the changes in the workforce and jobs resulting from
the project over the next three years.
For employees who volunteer to leave the Group, support
measures include early retirement opportunities open to all
eligible employees and an outplacement program.
The 2021 RCC agreement, signed on June 7, 2021, provided for
up to 538 voluntary early retirements and up to 146 voluntary
outplacements in the group of companies comprising
Manufacture Française des Pneumatiques Michelin (MFPM),
Michelin Travel Partner (MTP), Pneu Laurent (PLA) and Simorep
& Cie (CSM).
As of December 31, 2021, 525 employees had requested early
retirement and 112 had opted for outplacement.
The 2022 RCC agreement, signed on January 10, 2022, provides
for up to 339 voluntary early retirements and up to 194 voluntary
outplacements in the same group of companies.
Italy
In Italy, as part of the Group-wide initiatives being pursued
over the 2021-2023 period (e.g., the Simply project for office
facilities and the competitiveness programs for production
plants), the following measures were taken in 2021:
▶termination of inner tube production at the Cuneo plant by
year-end was announced in June. The 41 people concerned
are being assisted in finding a transfer or outplacement
solution;
▶organizational changes in the offices and plants were
supported by company-wide early retirement agreements,
which concerned 106 people in 2021.
Germany
Bamberg/Hallstadt plant
The gradual closure of the plant in Bamberg, Germany by early
2021 was announced on September 25, 2019, when the facility
had 858 people on payroll. A redundancy plan was negotiated
and signed in March 2020.
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As of December 31, 2021, 534 employees had left Michelin and
most of them, despite the Covid-19 situation, had found
employment elsewhere. Currently, there are 189 people being
supported in their job search by a transitional employment
transfer agency and 76 who will retire at year-end 2022.
Tire production operations were terminated on December 17, 2020,
with a team of 65 employees remaining on-site until late 2022
to support the repurposing process.
A project to revitalize the site is now under way with the goal of
creating new jobs, stimulating the local economy in the Bamberg
area, and supporting the transition to a low-carbon economy.
On December 17, 2021, one year after the last tire rolled off the
line, a new company, Cleantech Innovation Park GmbH (CTIP),
was formed in cooperation with the city of Hallstadt and the
district of Bamberg to serve as a home for sustainable
technology companies, R&D institutions and universities. The
State of Bavaria has also announced it will provide funding for
the revitalization project.
4.1.2.4
Supporting employee growth and development SDG 4.3, 4.4 and 4.5
Michelin’s strategy for the years ahead is built on four pillars:
innovating with passion, growing to serve our customers,
improving competitiveness across the board, and moving
forward together (with mutual commitments between the
Company and its employees). Michelin needs to refresh and
adapt its capabilities to drive its growth in emerging markets,
replace employees who are nearing retirement age, especially in
the mature markets, and support its diversification. This means
upgrading current skill-sets, and incorporating new ones,
transferring knowledge and expertise, and encouraging
employee mobility, both geographically and across businesses.
For these reasons, maintaining our appeal as an employer and
enhancing our induction, training and skills development
initiatives for new hires will act as key enablers over this period.
Moreover, in a fast-moving competitive environment, being
unable to attract and retain talent worldwide or effectively
transfer our culture and expertise represents a significant risk that
could prevent us from meeting our objectives.
Redefined in 2016, the Personnel function is now tasked with
fostering an environment conducive to:
▶the development of marketable skills, employee fulfillment and
employee engagement;
▶the performance of empowered, capable teams, which in
turn contributes to the performance of the entire Group;
▶the fulfillment of Michelin’s social responsibility vision.
In 2018, the entire employee and team management and
development process was overhauled, based on a new skills
management system that any employee can openly access,
depending on his or her workstation and job. This new
approach is having a major impact on the empowerment and
engagement that employees and teams demonstrate as they
drive the Group’s performance, while also enhancing everyone’s
sense of fulfillment.
To support this transformation, in 2018 the Group distributed a
set of six policies dedicated to core Personnel Department
processes that provides a framework for Department initiatives
and ensures that the processes:
▶foster cohesion and fairness by respecting people and facts;
▶underpin our employer brand and value proposition, and
ensure sustainable employability for everyone;
▶comply with national legislation and international standards.
The policies concern Hiring, Employee Development, Employee
and Team Compensation, Diversities & Inclusion, Employee
Relations, and Health, Safety and Quality of Worklife.
The primary strategic indicator used to measure the
outcomes is the annual employee engagement rate, as
determined by the findings of the Moving Forward Together
survey. In 2021, the rate stood at 80%, down two points
year‑on-year but still an encouraging result given the 85%
target in 2030.
In parallel with the revamp in 2018 of the employee
management system and the related migration to the new
Workday HR information system, the new “Managing and
Developing People and Skills” process was rolled out in every
unit.
To support the Group's expansion, proactively manage its
constantly evolving skills requirements and adjust to conditions
in its local labor markets, the momentum generated by the new
process is being sustained by a strategic workforce planning
system managed by the Group Competency Managers, each of
whom is in charge of one skill-set (competency). These
managers are led by a Central Coordinator, who in turn is
supervised by the Corporate Executive Vice President, Personnel.
Lastly, the Personnel Department’s role is now focused on
advising, supporting and ensuring the implementation of local
enabling policies and procedures. In terms of organizational
structure, this has led to the creation of two new positions,
Development Partner and Skills Manager.
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Workforce overview
The worldwide workforce rose slightly in 2021, ending the year at 124,767 employees(1), compared with 123,642 at December 31, 2020.
The weighting of the respective operating regions remained unchanged. France accounted for 15% of the workforce, with more than
18,733 full-time equivalent employees nationwide.
NUMBER OF EMPLOYEES AT DECEMBER 31, 2021
Africa, India,
Middle East
North America
South
America
Asia
(excluding India)
Europe
Group total
EMPLOYEES ON PAYROLL, consolidated companies, under any form of work contract, EXCLUDING TEMP AGENCY WORKERS
2021
7,750
23,538
8,490
19,108
65,881
124,767
2020
7,467
22,627
8,443
18,787
66,318
123,642
FULL-TIME EQUIVALENT EMPLOYEES OF CONSOLIDATED COMPANIES, excluding interns, work-study trainees, apprentices and TEMP AGENCY WORKERS
2021
7,735
22,386
7,753
19,062
61,478
118,414
2020
7,445
21,247
7,707
18,761
62,295
117,454(1)
(1) The sum of the figures rounded up or down to the nearest whole number generates a one-FTE difference.
4.1.2.4 a) Human resources planning and development
For the new skills development process to work, units and
employees should be informed and advised about the talents
and skills needed both immediately and over the next three to
five years. This means being able to accurately foresee the
emergence of new jobs and skill-sets, and how they will
inevitably evolve in response to the ever-faster transformation of
our ecosystem. The growing speed of these changes is having a
major impact on operating conditions in every Group business,
increasing the need to encourage a behavioral shift to greater
agility, responsiveness and cooperation.
Aware of these challenges, in 2020, Michelin prepared an
upgrade to its strategic workforce planning (SWP) process for
implementation in 2021. The process consists of identifying the
Group’s skills and workforce needs over the coming five-year
period and recommending action plans to address them with
hiring, reskilling and upskilling solutions.
Carried out in the form of major projects at both the operating
region level and in the Michelin Group business units, it covers
job families for which the Group Competency Managers have
identified issues requiring a response (due to a new
organization, significant changes in a job family or skill needs, a
strategic issue raised by the Group Executive Committee, etc.).
The ultimate goal of the Strategic Workforce Planning process is
to have the right number of skills in the right place at the right
time and the right cost, so that Michelin can realize its
ambitions in current and future markets.
AGE PYRAMID
SENIORITY
Contract employees
In 2021, contract employees represented 4.1% of full-time equivalent employees, compared with 4.2% in 2020.
(1) Including the dealership networks and recently acquired companies.
>= 65 years
55-64 years
45-54 years
35-44 years
25-34 years
<=24 years
0.5%
11.7%
25.2%
30.8%
25.7%
6.0%
>20 years
16-20 years
11-15 years
6-10 years
3-5 years
<=2 years
24.9%
11.2%
14.4%
18.3%
16.3%
14.8%
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4.1.2.4 b) Employer appeal, promoting from within, team succession plans
The new hiring policy introduced in 2018 reaffirmed the
following vision: “The Michelin Employer Brand is a factor of
differentiation in hiring the people the Group needs, in addition
to promotions and transfers from within the organization”.
In 2021, each of the more than 10,000 people hired under
permanent contracts during the year attended an induction
program that guided them through their first days on the job
and gave them first-hand insights into Michelin's culture and
history. The program is also designed to deepen both their
knowledge of the Group’s values and their understanding of its
strategy, organization and operating procedures. Experienced
through seminars tailored to each employee category, the
induction process encourages the development of communities
and the ability to work collaboratively.
Michelin consistently prefers to promote from within. In
2021, as in 2019, 72.7% of managers had come up
through the ranks after being promoted one or more times
after their induction period. In addition, potential reviews serve
as a basis for effectively managing the people most likely to
progress within the organization.
Employee movements as of December 31, 2021
NEW HIRES
New hires under permanent work contracts.
The number of new hires nearly doubled in 2021, to
10,241 from 5,116 in 2020, primarily due to the inclusion of
employees of newly acquired companies in the Group’s human
resources management software. Of the new hires, more than
26% were women.
SEPARATIONS BY REASON
Separations in 2021
Resignation
Dismissal/
termination
by mutual
agreement
Retirement
Death
Total
Group
6,133
2,151
1,888
117
10,289
Scope: Employees under permanent work contracts, excluding the dealership networks and recently acquired companies.
The three main reasons for separation are resignations, dismissals and terminations, and retirement.
In all, the Group's attrition rate stood at 9.5% for the year.
4.1.2.4 c) Employee growth and development
A core component of the employee development policy, job
mobility is now defined as a “differentiating factor needed to
fulfill the Group's strategic vision. It is an indispensable lever for
developing people, enriching their experience and improving
their ability to take on broader responsibilities, for their own
benefit and for the benefit of the Group”. Offers of job mobility
are based on potential reviews that assess behavior, results and
skills.
The system deployed in 2018 ensures that employees are fully
and transparently informed of the performance standards,
development aspects and mobility opportunities for a given
posting or job, in alignment with the needs of the Group's
organizations and business lines and their own personal
aspirations.
4,280
974
2,935
545
1,507
South
America
Europe
Africa,
India,
Middle East
North
America
Asia,
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Team succession plans are now being managed by the team
leader, and “underwritten” by the Personnel Department in a
support role. As a result, keeping everyone aware of job
vacancies is the cornerstone of the Job Posting process, which is
now being deployed across the Group as part of the Workday
human resource information system.
In addition, a continuous skills development process has been
introduced with three objectives:
▶ensure that the person has the critical skills required for the
job, thanks to certification by their manager;
▶enable the person to improve their job performance, so as to
increase their contribution to the performance of their team
or unit;
▶guide the person in their career development and offer them
opportunities to move to a new posting, job or job family.
At Michelin, we believe that successfully adapting to changes in
the workplace depends on a company’s ability to prepare its
employees for the jobs of tomorrow. This is the reasoning
behind the “Manufacture des Talents”, a Group talent factory
that is being created to support employees in their career
development or retraining. The new organization will be
dedicated to enhancing the employability of every employee by
encouraging them to embrace a lifelong learning culture and
enabling them to acquire the job skills they need today and into
the future.
The Manufacture des Talents will be based in a number of
regions around France, starting with a 2,500 sq.m center in
Clermont-Ferrand, which will open in 2022 for Michelin
employees and later for the general public. Participants will be
offered a unique learning experience focused on innovation,
excellence and inclusion, built around both training courses (job
skills and practices) and services (educational design, career
guidance, etc.).
4.1.2.4 d) A division of roles to support the process
Michelin is committed to “enabling every employee to take an
active role in managing his or her career and professional
development, with the support of line managers.”
Each team has been assigned a Local Development Partner (PDP)
and a network of Local Competency Managers (LCM), who all
work together with team managers to cover the risk of a “skills
gap”:
▶the Development Partner, each team’s initial contact person,
whose primary mission is to support managers in leading the
personal and professional development of their team
members. In terms of risk management, he or she ensures that
Group policies are effectively applied on-site, at the front line.
Depending on the circumstances, he or she is qualified to
examine any Personnel-related appeals or requests;
▶the Competency Manager, who is an expert both in skills
management and in his or her job family. He or she supports
the development partners in ensuring that the new skills
management system is being properly deployed and used by
managers and employees.
4.1.2.4 e) Enhancing skills through training
Despite a global environment that remained complicated by the
pandemic, investment in employee development and growth
moved back in line with 2019 outlays (pre-Covid-19) in 2021.
Group employees completed 4.3 million hours of training
during the year, lifting the percentage of training hours per
total hours worked to an estimated 2.6%, compared with 2%
in 2020. The number of hours delivered online also continued
to rise, by more than 30% over the year. To deliver this average
investment of 44 hours of training per person on payroll, the
Learning & Development function comprises 928 full-time
professionals, of whom nearly half are dedicated to training
production
operators.
The
“InTouch
Learn”
learning
management system lets employees directly access both global
and local training courses and content. Managers are
automatically informed when one of their employees signs up
for a course. Everyone is therefore free to choose the courses he
or she needs, in compliance with local rules.
4.1.2.5
Encouraging employee and corporate engagement in local communities
.SDG 8.3, 10.2 and 11.4.
Michelin believes that the relationships with all its
stakeholders, especially the communities near its facilities,
are of paramount importance. As part of this holistic vision,
the Group is involving all of its suppliers in the community
engagement process, requiring them to meet its own high
standards and supporting them through outreach.
The Group is also deeply involved in developing and
promoting its host communities, by respecting and
addressing
their
expectations
and
interests.
This
commitment is manifested in job creation initiatives, training
programs, a significant proportion of local sourcing, the
payment of local income and other taxes, support for the
preservation of each community’s natural and cultural heritage,
and financial support for projects led by NGOs, associations and
other players.
These actions significantly enhance Michelin’s impact in all its
locations, thereby contributing to initiatives undertaken to
prevent the risk of diminished attractiveness as an employer.
To coordinate these objectives more effectively, the Group has
organized three major worldwide action programs: Michelin
Volunteers (formerly Local Community Engagement), Michelin
Development and the Michelin Foundation.
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4.1.2.5 a) Dialogue with stakeholders
By “stakeholders”, Michelin means the people or groups
of people who are impacted by its business or who may
impact it in return, so that corporate strategy reflects
their
needs
and
expectations.
Building
trust-based
relationships with stakeholders is an opportunity for the Group
to improve its ability to foresee and purposefully challenge its
social responsibility commitments.
Michelin has long nurtured continuous dialogue with all its
stakeholders,
including
customers,
investors,
employee
representatives, suppliers, public authorities, local communities,
international organizations and NGOs. For example, the associated
Group departments organize specific meetings every year with
each category of stakeholders, led by one or several engagement
managers.
Within the Group, the Sales, Marketing, Investor Relations,
Purchasing, NGO Relations, Public Affairs, Employee Relations
and Personnel Management departments, as well as plant
communication managers, are responsible for taking into
account and responding constructively to the expectations of
their stakeholders. To this end, the departments regularly
contact and meet with Group stakeholders throughout the year,
at both the corporate and local levels.
A corporate committee
The Corporate Stakeholder Committee is made up of
independent members from outside the Group who are
representative of the Group’s key stakeholders. They are selected
by a Steering Committee, which is also tasked with organizing
meetings and events. Its members include one of the two
Managers of the Group, the Executive Vice Presidents of
Engagement and Brands and Urban and Long-Distance
Transportation and the Presidents of the European Regions, all of
whom are members of the Group Executive Committee.
Members of the Corporate Stakeholder Committee are chosen for
their ability to represent the Group’s various stakeholders, as well
as for their expertise, geographic origin and interest in sustainable
development issues. They are appointed for renewable three-
year terms.
The Committee offers advice and support in assessing the
alignment of Michelin’s sustainable development strategy with
outside needs and expectations.
In 2021, it comprised 12 standing members from around the
world who are representative of the Group’s key stakeholders,
i.e., a supplier, two customers, a trade union, two NGOs, an
investor, an international organization, a philosopher, a leading
urban mobility transformation researcher, a Latin American
transportation expert, and a representative of the new
economy. These members hail from Europe, Asia, North
America and Latin America.
On September 29, 2021, the Committee gathered for its sixth
annual meeting with members of the Group Executive
Committee, which was held online given the prevailing health
conditions. Discussions focused on two main issues, the “All
Sustainable” approach and the Group’s strategic vision for
2050, with the conclusions reported to a new online plenary
meeting in January 2022.
4.1.2.5 b) Creating local jobs and businesses with Michelin Development
More than
40,000
jobs created with the support
of Michelin Development, of which
29,000 in France
since 1990
Supporting local companies with expertise
and funding
Michelin is actively involved in creating jobs through its Michelin
Development business. The only organization of its kind, with a
uniquely flexible approach, Michelin Development provides
local companies with expertise and technical support in a wide
variety of areas, including industrial organization, workplace
safety, energy efficiency, quality management, sales and
marketing, finance, hiring, international expansion, information
technology, the supply chain and export sales.
This support can be backed by funding in the form of subsidies
or five-year, low-interest, collateral-free loans, designed to create
leverage with individual or institutional investors, thereby kick-
starting a dynamic process of local job creation.
The start-ups supported in 2021 covered a very diverse array of
businesses. Projects in any industry are eligible for support as
long as they are sound and their champion is competent and
motivated.
Over the past 30 years, Michelin Development has helped to
create more than 39,500 jobs in France, Spain, Italy, the United
Kingdom, Canada and the United States.
A sustained, active presence in local labor markets
in France
Since it was formed in 1990, Michelin Development has helped
to create more than 29,000 jobs in France. Formerly known as
SIDE, it operated as a subsidiary before being merged into
MFPM in 2015.
Most of Michelin Development’s activities in France involve
spontaneous support for local jobs. In 2021, Michelin
Development France signed 70 agreements that committed
Michelin to supporting the creation of 1,145 jobs in local
companies, backed by around €4.3 million in loans and
subsidies granted during the year.
In 2021, a little under half of its financial commitments were
dedicated to production plants being reorganized that were
covered by revitalization agreements. This was the case in the
Clermont-Ferrand region, where the revitalization agreement
signed in 2018 following the elimination of 970 positions at
Group headquarters came to an end in 2021 after meeting its
target. Similarly, closure of the La Roche-sur-Yon plant in late
2019 was supported by a revitalization agreement to create
613 jobs, of which 184 had been filled by the end of 2021.
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During the year, the supported SMEs and SOHOs created jobs in
a very wide variety of sectors, including:
▶in Tours, the opening of a “Café Joyeux,” part of a chain
offering local companies fast food and catering services
based on a profitable business model. Some 80% of its
employees are people with cognitive disabilities;
▶in Saône-et-Loire, the production of straw-insulated timber
frames whose environmental and economic performance
exceeds traditional materials. The frames are built nearby
with local raw materials and labor, in a circular economy
approach;
▶in Clermont-Ferrand, participation in a “zero unemployment”
project offering social support and assistance to the long-
term unemployed, with the creation of suitable jobs and non-
competitive activities in the region (bio-waste management,
wastepaper sorting and collection, etc.);
▶in the Vendée, the manufacture of stamped joinery fastening
systems, with a strong social responsibility commitment to
attract and retain employees. The facility features solar
canopies on parking lot shade roofs, a “tiny forest,” and
sheep groundskeeping.
Applying a similar approach in many countries
Since 2002, similar business development organizations have been
set up in other countries.
Michelin Development's operations in Spain are managed by
Fundación Michelin España Portugal, which supported the
creation of 153 jobs in 22 companies in 2021. Since 2004,
Michelin Development has committed more than €8.5 million
locally, enabling the creation of 4,350 jobs in over
680 companies based in labor markets around the Group’s four
Spanish plants.
In Italy, Fondazione Michelin Sviluppo helped to create 47 jobs
in innovative start-ups and SMEs in 2021, bringing the total to
around 2,500 since the program began in 2005. €56,000 in
funding was granted directly to companies during the year, for
a total of €2.4 million over the 17 years in operation. In
addition, another €30,000 was contributed to social initiatives
promoting regional growth and land-use development in 2021.
The latter concerned seven companies, fewer than in 2020 but
still a significant number given the difficult situation during the
year. In all, 330 companies have been supported since 2005.
In the United Kingdom, following the announcement in
November 2018 that it was phasing out tire production at its
Dundee plant, Michelin approached local public authorities with
a plan to co-construct an ambitious project to transform the
site. In December 2018, a memorandum of understanding was
signed between Michelin, Dundee City Council and Scottish
Enterprise, Scotland's national economic development agency.
In June 2019, the three parties became equal shareholders in a
new company, Michelin Scotland Innovation Parc (MSIP), which
acquired the Dundee site’s 32 hectares of land and buildings on
January 1, 2021 with funding provided equally by the Scottish
public authorities and Michelin. Today, the site is striving to
become a center of excellence for sustainable mobility and low-
carbon energy, built on five pillars: manufacturing, start-ups,
research and development, starter and refresher training, and
shared services. The revitalization project’s business model is
based on leasing the land and buildings and providing support
services. As of year-end 2021, nine tenants were already
operating on the site. The medium-term objective is to recreate
850 jobs, the same number as the jobs lost when the plant was
closed.
4.1.2.5 c) Participating harmoniously in local community life through our employees
Michelin has a long tradition of social engagement, with a wide
range of philanthropic and community outreach initiatives
conducted locally and regionally by the plants, the country
organizations, the Regions and, since 2014, the Michelin
Foundation.
In place since late 2013, the policy encouraging employees to
get involved in their local communities was revised in 2021 and
new guidelines were drafted and distributed. Now known as
Michelin Volunteers, the new policy defines eligible initiatives
more precisely than before, to distinguish them more clearly
from the Group’s business activities. It also heightens the
emphasis on employee participation in such initiatives, with a
Group-wide target of 20% of employees involved in 2030.
This goal reflects the Group's active support for volunteer
initiatives that benefit local communities, which serve as a
vector of engagement and pride, while also helping employees
to stretch their capabilities in areas different from their daily
jobs. Parallel to launching the updated policy, Michelin
introduced a new reporting process for the initiatives,
based on an internal web platform which, thanks to easy access
from any Michelin facility, means that a large amount of data
can be acquired, which in turn facilitates data consolidation at
Group level.
Reported numbers declined in 2021, reflecting both the revised
approach, which narrowed the scope by eliminating certain
initiatives, and the global pandemic which, for the second year
in a row, curtailed opportunities for volunteering. Nevertheless,
the commitment remained strong on every continent, with
nearly 3,000 employees – or 2.5% of the global workforce –
participating in initiatives in every region around the planet. The
main initiatives concerned health and education (30% of
projects each), followed by emergency aid (11%), safe mobility
(10%), diversity and inclusion (6%) and environmental
protection (5%).
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In all, Michelin employees donated around 12,000 hours of
their time to projects that benefited some 16,000 people in
local communities around the world. Examples include:
▶reducing food waste in Japan, with the savings used to
purchase cereals that were donated to NGOs and
distributed to poor families;
▶planting 50 empress trees to support carbon absorption and
biodiversity in Italy;
▶fundraising to finance physical therapy and education for
disabled children in India;
▶leading a program to clean up trash, plant flowers and spread
mulch on the grounds of an elementary school in the United
States;
▶leading a waste collection and recycling campaign on the
shores of a lake in Russia.
In
addition,
€3.3
million
was
donated
to
local
communities during the year, of which approximately
10% for the fight against Covid-19.
4.1.2.5 d) The Michelin Foundation: demonstrating our corporate culture and values
€14 million
allocated in 2021 by the Michelin
Foundation to
104 projects
The Michelin Foundation supports outstanding, innovative
projects aligned with the Group’s humanist culture and values
of respect, consistent with its business and meaningful to
Michelin employees.
The Foundation has a three-tier governance system:
▶the Board of Directors, which defines the overall priorities
and rules on projects valued at €100,000 or more. Chaired by
the Group’s Managing Chairman, Florent Menegaux, it
includes Executive Committee members, an employee
representative and three outside experts;
▶the Selection Committee, which approves projects valued
at between €5,001 and €99,999. It comprises eight members
representative of the Group's operations or major corporate
functions;
▶the Executive Director, who may directly approve any
project valued at €5,000 or less. He or she manages the
Foundation’s activities with the support of the Deputy
Director and a small team.
The combined value of the 104 projects financed by the
Foundation in 2021 came to nearly €14 million.
Over the past eight years, more than 520 innovative projects
have emerged thanks to the support of the Michelin
Foundation.
They are described on the Foundation’s website, https://
fondation.michelin.com/en/
Projects supported by the Michelin Foundation in 2021
included:
▶WWF Brazil
WWF Brazil is committed to fighting deforestation and helping
to preserve natural resources in the Amazon rainforest by
supporting circular economy projects that benefit local
communities.
▶Nova Scotia Nature Trust
Home to extensive natural heritage, Canada is helping to
preserve its Nova Scotia region through the Nova Scotia Nature
Trust and the groundbreaking “Twice the Wild” program,
which was supported by an urgent call for every citizen to get
involved in protecting the environment and preserving
biodiversity.
▶SUM4ALL
Since 2019-2020, the Foundation has supported the Sustainable
Mobility for All (SuM4All) initiative led by the World Bank,
which brings together more than 55 public and private-sector
organizations pursuing a shared commitment to mobility that is
greener, safer, more accessible, and more efficient, particularly
in the Global South.
In 2021, the Foundation sponsored a pilot SuM4All project to
improve the mobility of women in South Africa, with
diagnostics and an action plan to identify and attenuate gender-
based discrimination.
▶ASM Omnisports
Sports are important for health and education, as well as an
essential factor in human development. These values, which are
demonstrated by ASM, a pioneering health and sports club in
Clermont-Ferrand, continue to be shared and supported by the
Michelin Corporate Foundation.
▶La Sauvegarde de l’Art Français
As part of the “Largest Museum in France” campaign,
employees at eight Michelin plants in France sought out
neglected artworks in their regions, resulting in eight being
selected for restoration with the support of the Michelin
Corporate Foundation.
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4.1.2.5 e) Fostering relations with environmental protection associations
Whenever appropriate, Michelin fosters close ties with
environmental protection associations and organizations. These
initiatives concern not only the production facilities or the
Technology Center but also office facilities. Michelin also forges
partnerships with local, national and international associations,
in particular to support biodiversity (see section 4.1.4.3
Supporting biodiversity).
In 2021, Michelin pursued the cooperation agreement with the
World Wildlife Fund (WWF) signed in 2015 and renewed in
2018 to promote sustainable natural rubber around the world.
The Group is a founding member and active supporter of the
Global Platform for Sustainable Natural Rubber (GPSNR), a
multi-stakeholder platform that encourages best practices
across the natural rubber value chain. In addition to the WWF,
several other NGOs are actively participating in the platform’s
activities, including Birdlife International, the International
Federation of Human Rights Leagues, the Forest Stewardship
Council, Global Witness, Mighty Earth, the Rainforest Alliance
and EarthWorm. Lastly, the Group nurtures attentive dialogue
with a wide variety of national and local NGOs to help protect
the environment and encourage the development of good
practices,
particularly
in
the
fight
against
imported
deforestation.
4.1.2.5 f) Addressing the risk of potentially negative impacts of our business on local communities
While its plants and other facilities deliver benefits to local
communities, the Group is aware that they can also have
potentially negative impacts.
In 2019, action principles designed to prevent any risk of a
negative impact on local communities were defined based on
four situations: when a new production plant is being built,
when it is being operated, when it is closed down and when
rubber plantations are bought and managed. Key principles
included identifying possible negative impact risks, deploying
remedial action plans, maintaining dialogue with neighboring
stakeholders, introducing a complaints mechanism, focusing on
hiring locally and training people in the local community. The
WWF was consulted on the draft project.
One result is that new plant construction projects now include
local community impact studies, covering such areas as access to
land and respect for the community’s cultural heritage.
Independent studies of this type have been performed in India,
Indonesia and Mexico, resulting in recommendations that were
followed by the Group. In Mexico, for example, before
construction began on a new tire plant, the study found a risk
concerning land rights in the local community. The Group then
determined that it had the legal right to acquire the land and
made sure that the project was beneficial to local economic
development. In particular, it helped to finance the renovation of
local public infrastructure and the creation of a vocational school.
4.1.2.5 g) Making a public commitment to supporting sustainable mobility
Transitioning to a low-carbon economy with low-carbon mobility for people and goods requires systemic change at every level of
society. Recognizing that the challenges facing institutions, civil society and the private sector are collective in nature, Michelin has
long been committed to bringing together a wide range of stakeholders to address such sustainable mobility issues as minimizing
its environmental footprint (GHG emissions, noise and air pollution), optimizing its efficiency, protecting people’s health and
safety and ensuring universal access(1).
In 2021, Michelin strengthened its commitment to its various global institutional partnerships, and is now internationally
recognized as one of the leading champions of sustainable mobility, even in areas outside its core tire business.
This active engagement raised Michelin’s visibility at headline international events throughout the year, which, as in 2020,
were forced to go virtual by the Covid-19 pandemic. These included the annual Transforming Transportation summit organized
by the World Bank and the World Resources Institute in February; the 2021 International Transport Forum in May, which focused
on transport innovation issues; and COP27, hosted by the United Kingdom in Glasgow in November.
Another highlight of 2021 was the Group’s decision to join the global Race to Zero campaign, one of the main thrusts of
the UK Presidency’s initiatives ahead of hosting the COP26 summit. The campaign is encouraging businesses to commit to setting
targets in line with a 1.5°C pathway, as defined in the latest IPCC report, so that the public and private sectors can converge in
speeding the transition. In joining Race to Zero, Michelin signed the Business Ambition 1.5 campaign being led by the SBTi in
partnership with the UN Global Compact, which is now acting as a core commitment in structuring its strategy.
Concerning the international institutional partnerships, the Group was reappointed as the only private-sector representative on
the steering committee of the Sustainable Mobility for All (SuM4All) consortium, where it hopes to engage the
World Bank‑led initiative in results-oriented projects in the Global South. In 2021, for example, Michelin continued to support a
SuM4All-managed pilot project in South Africa with the active involvement of its local teams, despite the particularly challenging
health situation. In addition, the Group has directed funding from the Michelin Corporate Foundation to perform a
comprehensive diagnosis of gender issues in the South African transportation system. The findings will be used in 2022 to
prepare a sustainable mobility action plan, in close liaison with national authorities and with the assistance of the Development
Bank for Southern Africa in raising the necessary financing.
(1) Policy goals defined by the Sustainable Mobility for All (SuM4All) Consortium led by the World Bank.
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In 2021, the Michelin Group also expended its role in the Transport Decarbonisation Alliance (TDA), a coalition of the “3Cs”
(Countries, Cities/Regions and Companies) that are driving the transition towards cleaner mobility with their mutual commitment
to devising real-world solutions for a net-zero emissions transportation industry by 2050, particularly in the freight segment.
The freight industry and, more broadly, corporate supply chains were also the issue in Michelin’s commitment, in 2021, to
sustainably participate in a community of interest led jointly by the Institute for Sustainable Development and
International Relations (Institut du Développement Durable et des Relations Internationales − IDDRI) and the
Sustainable Low Carbon Transport (SLoCaT) NGO, focusing on the challenges of decarbonization and the systemic transformation
of freight transportation of supply chains.
Lastly, through its Corporate Foundation, Michelin is continuing to support the initiatives undertaken by the Transport Coalition of
Climate Chance, an association of non-state actors committed to the climate. In particular, it is backing the project to build national
transport roadmaps in a number of emerging economies or countries in the Global South, such as Morocco, India, Côte d'Ivoire and, in
2021, Senegal.
The Movin’On Summit: stepping up its commitment to taking sustainable mobility from ambition to action
Created and inspired by Michelin, Movin’On is the world’s leading strategic foresight and co-innovation ecosystem focused on
sustainable mobility.
Movin'On emerged from a common vision, shared by all its members, that mobility is the very heart of human development
but it has to be sustainable. Based on the principle that no single stakeholder can meet current or future challenges alone,
Movin’On gathers a wide range of public organizations, companies, associations and individuals around its vision and gives them
the resources they need to innovate together to develop new sustainable mobility solutions. Today, the Movin’On ecosystem
brings together more than 300 organizations from 60 different countries and, since 2021, its governance has been shared among
several leading global corporations.
In 2021, Movin’On represents:
▶the introduction of a shared governance structure, in a commitment to stepping up and broadening the impact of Movin’On
initiatives around the world. Eleven chief executives of leading global corporations have agreed to join Movin’On’s governance
team alongside Florent Menegaux;
▶more than 800 participants in the second edition of the Digital Meetings, which enabled partners and experts to initiate
Movin'On Communities of Interest or review progress on their projects;
▶a redesigned Movin'On Summit with a unique four-day phygital experience from June 1 to 4, webcast worldwide from
Montreal, Paris and Singapore and attended by over 14,500 participants from 88 countries;
▶the launch of the Movin'On Startup Booster, a new concept that leveraged a collaborative process and the ecosystem’s
powerful network to provide 12 start-ups with individual support before, during and after the Summit, aligned with each one’s
needs;
▶the creation of “Mobility Stories,” a podcast channel dedicated to sustainable mobility.
Movin’On LAB
At the heart of the ecosystem approach to sustainable mobility innovation is the Movin'On LAB, a “think and do tank” that
brings together leading stakeholders to plan, co-innovate and influence the mobility of the future.
They are helping to foster a continuous process of innovation and international collaboration within communities of interest,
where they can forge and validate a shared vision, develop their strategies and propose innovative sustainable mobility solutions.
More than 300 organizations are working with Movin’On LAB Communities of Interest. In 2021, 15 new Communities of Interest
were established.
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4.1.3
EMPLOYEE HEALTH AND SAFETY
Risks related to the health and safety of employees and contractors
Michelin directly employs more than 124,700 people worldwide and also uses temporary employment agencies and
subcontractors. These people work in a very wide variety of environments, primarily in industrial facilities – where they use
machines and equipment that range from manual to fully automated, depending on the type of product manufactured and the
model of the machines – but also in logistics and services operations and dealerships.
Given the nature of our business, Group employees and temporary agency workers face a very diverse array of risks and
obligations, depending on whether they work in a production plant or an office, on the road or behind a desk. For example,
shopfloor employees are exposed to risks related to:
▶site equipment and organization (mechanical and electrical risks, installation ergonomics risks);
▶the general working environment (heat, working at heights, psychosocial risks, and exposure to country-specific risks such as
political instability, terrorism or kidnappings);
▶exposure to chemicals;
▶industrial accidents and natural disasters;
▶handling tires.
Office-based, itinerant and sales personnel are exposed to:
▶business travel risks (accidents and health risks);
▶psychosocial risks, especially as working from home becomes more prevalent during resurgences of the Covid epidemic.
These risks can have an impact on the health, well-being, and even the physical integrity of Michelin employees and other people who
work in Group facilities. They are addressed by applying dedicated preventive and mitigation measures.
4.1.3.1
Employee health and safety governance
The Employee Health and Safety Governance body is chaired
by the Executive Vice President & Chief Personnel Officer and
co-chaired by the Executive Vice President, Manufacturing,
who are both members of the Group Executive Committee.
Led by the Group Health Coordination Director, the body also
comprises standing members representing the Corporate
Safety & Environment Department, the Corporate Internal
Audit, Risk Management, Internal Control and Quality
Department, the Corporate Legal Department, the Sustainable
Development and Mobility Department and the Head of the
Distribution business unit.
The Governance body meets twice a year to manage the
Group‑wide employee health and safety process. It determines
the related policies, objectives and strategies, and ensures that
appropriate resources are allocated to drive the timely,
successful completion of the action plans defined and deployed
to meet the objectives.
4.1.3.2
Health, safety and quality of worklife policies
In full alignment with its fundamental value of respect for
people, Michelin is actively deploying a comprehensive range of
health, safety and quality of worklife policies, as described in:
▶the 2011 Health and Safety Declaration;
▶the 2018 Health, Safety and Quality of Worklife Policy,
the updated version of the Health Policy;
▶the
2021
Environment,
Prevention
and
Security
Guidance Letter.
The Health and Safety Declaration states that “above all
else, Michelin’s wish is to ensure safe and healthy
conditions for everyone working in the Group”. For
Michelin,
these
conditions
include
the
physical
and
psychological well-being of employees, the quality of the
working environment, and a healthy work-life balance.
These commitments are based on the recommendations
issued by key international organizations, such as the UN,
the ILO and the OECD, and prevailing standards and
legislation,
including
ISO
26000
and
the
French
Commercial Code.
The Health, Safety and Quality of Worklife Policy defines the
Group's fundamentals and vision, in alignment with its
transformation objectives for 2030 and 2050.
The Environment, Prevention and Security Guidance Letter
specifies the short- and medium-term targets for fulfilling that
vision, while setting the guidelines that every unit must follow.
The Group’s risk management procedures are also being
applied to employee health, safety and well-being, as part of a
disciplined continuous improvement process.
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The policies are set out and implemented through the
Environment and Prevention Management System, which
is based on the international ISO 14001 and ISO 45001
standards. Its application by every employee across the Group
is delivering consistent outcomes and continuous improvement
in performance. The various risks and opportunities have been
identified and their impacts assessed. Prevention, protection and
response procedures have been defined and implemented and
are periodically assessed to manage their impacts. The entire
system is regularly audited.
Every Michelin facility is staffed with risk prevention
professionals, such as OSH experts, ergonomists and hygienists,
and health care providers, like doctors and nurses.
These professionals share best practices and leverage acquired
experience at a regional, national and Group-wide level, as part
of a continuous improvement process.
In the production operations, the Environment and Prevention
Management System is an integral part of the operational
excellence fundamentals of the Michelin Manufacturing Way
(MMW) management system, which identifies and promotes
good manufacturing practices.
In this way, a full array of improvement drivers are being
activated across the organization. Mandatory training
courses and programs are helping to instill a culture of
vigilance, engagement and alertness in every employee,
both for themselves and for others. The emphasis is on
encouraging employees to embrace and demonstrate this
culture of safety in the workplace (see section 4.1.3.2).
Improvements are guided by specific indicators. To manage
risks, effective working methods, rule procedures and practices
have been defined and are verified by an internal control
process.
In recent years, a prioritized risk map has been created, based
on data from standardized risk assessments conducted for every
workstation.
Priorities in the annual or multi-year action plans are set based
on field data and the Group’s objectives and targets. The plans
are supported by programs to drive continuous improvement
both in existing equipment and processes and in the design of
new equipment and processes.
4.1.3.3
Safeguarding employee health
According to the World Health Organization, “health is a state
of complete physical, mental and social well-being and not
merely the absence of disease or infirmity. The enjoyment of the
highest attainable standard of health is one of the fundamental
rights of every human being”.
Deployment of the Group Health, Safety and Quality of Worklife
Policy is improving the performance of individual and general
prevention programs, in particular by instilling a common vision
and aligning practices among them.
Responding to Covid-19 with an effective health protocol
The Covid-19 pandemic impacted all of our host countries around the world.
As early as January 2020, a crisis unit was set up for Group facilities in China. This was gradually followed by units in other
regions and countries as the virus spread, with management centralized at corporate level.
The health protocol developed in 2020 was extended in 2021, which maintained business continuity under appropriate health
and safety conditions. Expatriates and their families were offered the possibility of repatriation to be vaccinated, while some
35,000 vaccine doses were distributed to employees where local conditions precluded effective protection.
It was left to the best judgment of local managers to apply all or some of these measures, depending on the state of the outbreak
around their facility, the type of business operations and the national recommendations in effect.
Conducted in June 2021 with the support of an outside organization to measure the impact of the pandemic on Group teams,
the How Are You survey showed that employees were highly confident in the Group's ability to manage the pandemic.
The survey asked employees how they experienced the spread of the virus and whether they were satisfied with the Group’s
response. Very significantly, 57% of Michelin and subsidiary employees responded to the questions, exceeding the expected
response rate for this type of survey. The findings were then cascaded down to all employees. The impact of the health crisis was
analyzed, with a focus on the restrictions imposed by mandated precautionary measures and working from home.
The Group’s effective response to virus-related issues was appreciated by 86% of respondents, with 91% considering
that the deployed systems and procedures were compatible with the performance of their duties.
The analysis revealed a sense of physical and moral fatigue in the answers from 44% of the respondents, as well as a feeling of
isolation when working from home for 30%, although the quality of management during the period was emphasized in 91% of
the answers. Some 52% of respondents had the impression that their workloads had increased. These figures should be verified
by a simplified survey over the next two years. It would be interesting and useful to track perceived workload and fatigue, which
could be early signs of psychosocial risks.
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4.1.3.3 a) Systematically monitoring employee health, to prevent and manage occupational illnesses
Since 2010, the Medical Advisory Committee, comprising
eight outside experts, has helped to foresee and prevent health
risks, based on the latest advances in science. Its independent
opinions assist Group management in addressing the health
risks specific to tire manufacturing. In 2021, the members of the
Medical Advisory Committee helped to assess the psychosocial
risks arising from the Covid-19 pandemic by analyzing the
findings of the How Are You survey. Their insightful expertise
informed the management of the pandemic crisis.
A majority of employees are under the care of an occupational
physician, in accordance with local legislation. Medical
check‑ups are offered to employees in the few countries, in
Africa and the Middle East, that do not require companies to
monitor employee health and lack the appropriate medical
resources.
In the regions and large European countries where the number
of Group employees and national legislation warrant a local
approach, health coordination committees are helping to align
care systems and the roll-out of the Health, Safety and Quality
of Worklife recommendations.
Initiatives to prevent and detect occupational illnesses primarily
concern the risks related to lifting, repetitive stress, physical
exertion, noise exposure and chemicals.
Occupational illnesses are reported every year to help guide
remedial action plans. The Group’s definition of occupational
illness depends on each host country’s legislation.
The majority of the recognized occupational illnesses occurring
Group-wide are associated with job-related physical activity. The
program to improve workstation ergonomics is helping in
particular to reduce the occurrence of musculoskeletal
disorders. To supplement the general protection measures,
employees systematically wear personal protective equipment at
workstations deemed at risk.
4.1.3.3 b) Safeguarding health and ability to work
To further protect employees from impairments in health or the
inability to work, the programs to attenuate occupational risks
are also supplemented with local health education
initiatives and public health campaigns.
These programs are designed to instill healthy behavior in
employees, both on and off the job. Examples include:
▶offering medical check-ups to employees in countries where
access to healthcare is difficult or expensive (e.g., China,
India, Thailand, Russia and Brazil), to provide care and
enable early diagnosis of disease;
▶introducing medical check-ups in 2018 for all expatriate
employees and their families, regardless of their home or host
country, before and during expatriation, to prevent at-risk
situations. During the Covid-19 response, these check-ups
proved especially useful for taking care of vulnerable people,
some of whom had to be repatriated as a precautionary
measure;
▶encouraging employees to engage in physical activities and
sports by installing fitness and athletic equipment and paying
a portion of the registration fees for sports activities;
▶offering
awareness-building
and
prevention
training
concerning addictive behavior, nutrition, cardiovascular
disease and other issues that may be defined in connection
with local priorities. In some countries, these programs are
organized as part of quality-of-life initiatives, such as
“Balance”, in Germany, “De Bem Com a Vida” in Brazil,
“Oxygène” in France, and “Choose Well Live Well” in the
United States. These measures, which have been in place for
a number of years now, are fully aligned with the workplace
health reforms supported by the French Ministry of Labor and
other organizations;
▶focusing special attention on the organization of work-from-
home arrangements, which are becoming increasingly
prevalent, whether requested by employees or made
mandatory in response to the pandemic.
4.1.3.3 c) Managing industrial hygiene risks to protect employee health
Industrial hygiene is an important focus of policies to protect
employee health and safety, both on the shopfloor and in
research and development facilities. These risks stem not only
from chemicals, but also from substances present in harmful
process fumes and asbestos previously used as insulation or
friction material.
Before any new product can be used, its possible risks are
managed through a dedicated assessment procedure performed
prior to issuing an authorization for use. The procedure gauges
the substance’s potential impact on human health and, if it is
deemed hazardous, defines the conditions designed for safe
use. In some cases, its use may be prohibited.
Every workstation features a product data sheet written in the
local language and approved by industrial hygiene experts.
Based on safety data sheets, these documents are managed by
a global information system, which enables real-time document
sharing among experts and ensures compliance with REACH
standards in Europe and the Global Harmonized System (GHS)
standards in the Group's other Regions. The sheets describe the
potential hazards and conditions for safe use of products used
at the workstation.
Group production facilities and tires are entirely asbestos-free
and procurement contracts explicitly prohibit the presence of
asbestos in any sourced part or machine. In addition, in recent
years, procured machines and spare parts have been inspected
to ensure that asbestos has not been reintroduced. Special
checks are performed on products sourced from countries
where asbestos use is permitted. These audits are particularly
diligent in the case of newly acquired companies.
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4.1.3.3 d) Improving production workstation ergonomics
Musculoskeletal disorders (MSDs) account for the majority of
occupational illnesses, and 25% of health-related impairments
are caused by faulty ergonomics. Since 2002, improving
ergonomics has been a major focus of Michelin’s health and
safety policies.
The prevention of MSK disorders is taken into account at the
design stage of every industrial project, so as to attenuate any
potentially negative impact on working conditions over the
medium term.
All of the production facilities and logistics hubs regularly
update their workstation maps to identify action priorities and
put in place tailored solutions.
Every year, ergonomic issues across the business base are
addressed by a dedicated capital budget, which was
increased by 50% to €14.4 million in 2021.
Projects
to
improve
ergonomics
are
implemented
by
ergonomist-led multidisciplinary teams comprised of managers,
operators, prevention specialists and physicians. Each plant is
deploying a five-year improvement plan.
In addition to protecting employee health, reducing ergonomic
hardship is also making the workstations more accessible and
appealing to a wider range of people. In turn, this is supporting
diversity, making workstations a more attractive job option, and
enhancing people’s well-being and motivation.
4.1.3.4
Assessing and preventing workplace safety and security risks SDG 8.8
In its Health and Safety Declaration, Michelin states that
“above all else, Michelin's wish is to ensure safe and healthy
conditions for everyone working in the Group”. To embed a
culture of safety and prevention in every aspect of the Group’s
business, three essential principles are being instilled across the
organization:
▶correct behavior begins with compliance with safety
guidelines;
▶through their active commitment, employees are responsible for
everyone's health and safety, both their own and that of others;
▶personal engagement drives continuous improvement.
This process emphasizes risk prevention, compliance, employee
empowerment and management involvement, so that the
Declaration is effectively demonstrated in daily work practices.
In recent years, a comprehensive, prioritized risk map has been
created, based on data from standardized risk assessments
conducted for every workstation. These data are also being
used to set priorities in the annual or multi-year action plans. In
France, they are consolidated into the comprehensive risk
assessment review (Document Unique d'Evaluation des Risques
Professionnels), which addresses all the possible risk factors.
4.1.3.4 a) Managing workplace safety
Michelin encourages every employee to embrace a culture
of accident prevention based on anticipating, analyzing,
managing and mitigating health and safety risks.
Prevention and mitigation measures are structured into three
main interconnected categories:
▶technical measures, focused on five Group Safety Programs
addressing the specific risks that the Group wants to reduce
and manage. They are supported by prioritized responses to
the most serious machinery and ergonomic risks, in liaison
with the engineering departments;
▶behavioral
measures,
combined
into
an
innovative
approach that heightens employee alertness and engages
them to demonstrate preventive practices for themselves and
their colleagues. It draws on behavioral sciences to encourage
engagement through managerial leadership and the active
participation of every employee (safety coalitions);
▶organizational measures, both to support the effective
management and mitigation of risks with a robust
management system and to develop employee skills.
A culture of safety at work is embraced by employees
across the organization, as seen in:
▶the uncompromising support of managers, from the executive
suite to the shopfloor;
▶the dissemination and sharing of best practices and feedback;
▶the corporate communication media issued by the Group;
▶the programs aimed at detecting and responding to
emerging risks.
Before conducting any on-site operations, outside
contractors must work with Michelin to prepare a
dedicated risk prevention plan addressing all the tasks to be
performed under the contract.
Two indirect metrics attest to the importance of safety for
Michelin employees in 2021:
▶more than 18,800 Progress Ideas were implemented during
the year;
▶86% of the employees who responded to the Moving Forward
Together survey felt that in their workplace “we never
compromise safety to meet other targets” (costs, deadlines,
etc.), a figure that has remained unchanged since 2019.
4.1.3.4 b) Protecting employees during the pandemic
The impact of Covid-19 on international mobility
In 2021, the international mobility of Michelin employees was
shaped and conditioned by the evolving Covid-19 situation. To
address this risk, the security and health risks in each country
were reviewed to plot out two maps, which were kept regularly
updated and distributed:
▶a four-level security risk map, which was the process already
in place;
▶a two-level health risk map showing countries with low virus
circulation in white and countries with high virus circulation
in purple.
These criteria were used by Group Security to assess any
requested travel plans.
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Employees continued to travel internationally and take up
expatriate assignments, with their trips managed in compliance
with a new protocol prepared by Group Security.
In a streamlined crisis management process, Group Security
issued weekly situation updates in liaison with the regional
security managers, assessing the epidemic’s impact on the
Group and then adjusting security rules and protocols as
needed and ruling on the appropriateness of travel.
Health and safety aspects
Regardless of the country of destination, all travelers were
strongly recommended to get fully vaccinated against Covid-19.
To counter potential security risks, the constant surveillance of
the international situation was strengthened over the year.
Expatriates
The same precautionary principles were applied to the safety of
expatriates and their families, who all had to be fully vaccinated
before departure under the supervision of the health department.
In April 2021, the spread of the epidemic and the lack of
hospital beds in India prompted the Group to repatriate its
expatriate staff to their country of origin. They returned to India
in early October, once the situation had returned to normal.
Group events
Guidelines for organizing events during the Covid-19 epidemic
were prepared in conjunction with the Corporate Engagement
and Brands Department (DCEM) and distributed to the
operating regions and units.
4.1.3.4 c) Measuring and tracking occupational accidents
In 2021, a review of the consolidated, Group-wide data for the
year enabled management, the ergonomist and the occupational
medicine team to prepare effective health and safety
improvement plans. Information, awareness-building and training
programs continued to be conducted with the designated
health and safety experts in every region and time zone.
Since 2018, the TA+ indicator has tracked the frequency, with
or without lost time, of a list of accidents that the Group has
prioritized. It supports a more granular approach to these
accidents, while helping to improve the consistency of
multi‑country data. The number of TA+ accidents is recorded by
a dedicated committee chaired by the Group Safety Manager,
which meets once a month with ergonomics experts from the
Safety Department and the Group physician after monthly
indicator data have been reported. The TA+ indicator has
steadily improved, standing at 0.67 in 2021.
During the year, there were no fatal workplace accidents in
any facilities operated by Group companies.
Consolidated TCIR(1) increased to 1.29 in 2021 from 1.19
the year before. Despite the challenging conditions, the
pandemic’s impact on accident rates was favorable in 2020, due
to extensive furloughing, but unfavorable in 2021, whose
underperformance was caused by crisis management issues
rather
than
the
deployment
of
preventive
measures.
Manufacturing operations continued to improve, with their
annual TCIR falling below 1.00 for the first time. On the other
hand, Distribution, a major contributor to Group TCIR, has not
yet delivered the expected improvements.
ANALYSIS OF 2021 CONSOLIDATED TCIR
*
Treatment represents more intensive medical care than first aid, which
involves stabilizing victims by cleaning their wounds or keeping them cool
or warm. The various types of first aid have been identified in a list.
IMPROVEMENT IN CONSOLIDATED TCIR
The Group’s objective is to achieve TCIR of below 0.75 in 2025
and below 0.5 in 2030 (including temp agency workers).
(1) Total Case Incident Rate: the number of accidents and cases of occupational illness recorded per 200,000 hours worked.
49%
Lost-time incidents
3%
Occupational illnesses
30%
Workstation
adjustments
18%
Treatment*
2017
2018
2019
2020
2021
2.14
1.93
1.43
1.19
1.29
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4.1.3.5
Well-being in the workplace: improving work-life balance
Michelin wishes to create working conditions that foster a sense
of balance and personal well-being. Initiatives are being
deployed
to
improve
the
workplace
environment
and
organization. In addition, the country organizations and plants
have been empowered to make headway on local priorities, in
accordance with the needs expressed by their employees.
The
Moving
Forward
Together(1)
survey
continues
to
demonstrate that employees would generally like to enjoy a
better balance between their personal lives and work.
4.1.3.5 a) Adjusting working hours
Extensive adjustments in response
to the Covid‑19 crisis
Although initiatives to adjust employee working hours were
pursued in 2021, their implementation was upended by the
Covid-19 pandemic.
To restrict the spread of the virus and maintain business
continuity, telecommuting solutions were extensively offered to
employees who could work from home. Thanks to the Group’s
IT resources, the quality of its IT infrastructure and the opening
of remote access to secure applications, these solutions were
deployed very quickly for all of the positions concerned.
During the crisis, many employees experienced these fresh ways
of working for the first time and were pleased with the
outcomes (see section 4.1.3.3 Safeguarding employee health/
Responding to Covid-19 with an effective health protocol).
In the manufacturing operations, where most of the workforce
had to be physically present, some plants adjusted working hours
to limit people mingling during shift changes, particularly at
entrances and exits, in the changing rooms and in the showers.
Adjusting office work schedules
Local initiatives to encourage telecommuting are still being
promoted. People working from home feel that one of the main
benefits is the significant reduction in their weekly commute,
particularly in Brazil, Romania, the United States and other
countries where traffic congestion is on the rise. Operations in
Germany, Canada, Spain, France and the Nordic countries have
introduced work-at-home options in response to the need
expressed by employees for a better work-life balance.
In France, as part of its commitment to diversity, special
attention is paid to requests from disabled employees, pre- and
post-maternity leave employees, seniors and people working
part-time after sick leave (see section 4.1.2.2 b).
Initiatives for production operator work schedules
While more challenging to implement for operators working in
a variety of shifts to keep production plants running around the
clock (3x8 hours, 4x8 hours, 5x8 hours, 2x12 hours), a number
of shopfloor work-life balance initiatives have been deployed, in
particular as part of the empowerment process. Any
adjustments to production schedules are announced as far in
advance as possible.
Offering more flexible part-time options
Michelin continues to encourage part-time working, which plays
an important role in improving quality of life and work-life
balance, while opening up job opportunities for people from
diverse backgrounds. Procedures for implementing these
arrangements vary by country, depending on local legislation,
expectations and practices. To the extent possible, they also
reflect input from employee representatives.
2.8% of employees opted to work part-time in 2021.
PART-TIME EMPLOYEES BY GENDER
Women
Men
Total
2021
2020
2021
2020
2021
2020
Production operators
5.2%
6.0%
2.3%
2.7%
2.7%
3.1%
Administrative and technical staff
and supervisors
6.7%
7.4%
1.4%
1.3%
3%
3.1%
Management staff
5.4%
6.4%
0.84%
0.8%
2%
2.2%
GROUP TOTAL
5.9%
6.7%
2%
2.2%
2.8%
3%
(1) See section 4.1.2.3 a) An assertive social dialogue process/Listening to employees via the annual engagement survey.
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4.1.3.5 b) Quality of worklife: listening to needs and measuring performance
Improvement plans to address employee needs
In a large majority of plants and offices worldwide, initiatives to
improve the quality of worklife (QWL) are underway with the
active participation of employees and, whenever possible, their
representatives.
These and other programs to enhance the quality of worklife
are being incorporated, with employee input, into each facility’s
improvement action plans by on-site Health, Safety and Quality
of Worklife Steering Committees.
Positive quality-of-worklife scores
in the engagement survey
In 2021, 77% of the 88,000 respondents to the Moving
Forward Together survey were satisfied with their quality of
worklife. This overall result reflects how employees feel about
their work-life balance and personal job fulfillment, their
workplace environment and workstation safety issues. Work-life
balance remains a priority for employees. The percentage of
employees who feel safe at work remained high, at an excellent
86%.
4.1.3.5 c) Psychosocial risks: adapting preventive measures to local cultures
Since 2020, the Covid crisis has become one of the most
important concerns in organizing the workplace, both on the
shopfloor and in offices.
The massive shift to working from home in response to the
pandemic, for example, brought to the foreground a number of
risks for certain employees that were less noticeable in the past,
such as feelings of isolation and difficulties in maintaining a
satisfactory work-life balance. In this context, the findings of the
How Are You survey took on new meaning. Their credibility
was heightened by the excellent response rate in the various
facilities around the world, but this also meant that they were
not comparable to the results of the usual Moving Forward
Together survey.
Some 86% of How Are You respondents praised the
responsiveness and quality of the company’s handling of
Covid-related issues.
In a commitment to safeguarding employees from the
psychosocial effects of stress and harassment, a variety of
programs aligned with local needs and regulations have been
deployed to provide:
▶primary prevention, through reviews, sensitivity training
and initiatives to improve the quality of management. These
measures, which help employees to protect themselves and
improve managers' ability to detect and respond to at-risk
situations, have been rolled out in most of the Group's host
countries (North America, Spain, France, Hungary, Poland,
Romania, the United Kingdom and Serbia);
▶secondary prevention, through training and organizational
improvement initiatives, particularly in at-risk segments/jobs.
Programs to prevent stress with new workplace organization
practices have been introduced in Germany, North America,
South America, China, Spain, France, Hungary, Poland,
Romania and the United Kingdom;
▶tertiary prevention, through coaching, relaxation therapy,
support groups and individual counseling. Since 2018, some
of the Group's psychosocial risk prevention programs have
been audited by the Internal Control Department, to
determine how well the corresponding resources have been
deployed. During the current period of streamlining corporate
operating procedures, employees at the facilities in
Clermont-Ferrand, particularly the head office and the
research center, were able to attend personal or group
support sessions in 2020 provided by psychologists from a
specialized
firm
working
closely
with
the
Personnel
Department and the occupational medicine team.
Almost all of the plants and offices are leading quality-of-
worklife programs that help to attenuate stress or facilitate
access to medical or psychological assistance for people seeking
support. In the Moving Forward Together survey, the
consolidated indicator measuring employee satisfaction with the
prevention of psychosocial risks stood at 76% for the entire
Michelin Group, with 90% of respondents expressing pride in
the quality of Michelin-delivered services.
The pandemic did not impact employee perception of safety in the workplace, with 86% of respondents feeling safe, virtually the
same as in 2020. The percentage of employees feeling that workplace stress was manageable was also stable for the year, at 71%.
The impact of digital technologies on employees
In 2020, the Plein Sens consulting firm conducted a study on how changes wrought by the use of digital technologies are
introduced to and experienced by employees.
In 2021, the findings were cascaded across the country organizations and practical initiatives were launched. Examples include
tasking a project team member with providing training and support during projects involving digital technology (in Poland) and
assigning local “digital partners” to support production operators in using InTouch, Digital MQP and other existing digital
applications (in Romania).
In addition, three half-day sessions were devoted to raising awareness of digital culture among members of the Michelin
European Works Council with:
▶a presentation of the training/development resources available to employees (platforms, training curricula, modules, etc.) to
support digital acculturation in the Company;
▶hands-on training for members in the use of digital communication and remote working software (Microsoft Office, Teams, etc.);
▶a presentation of the “Digital Manufacturing” transformation with examples of tools and applications in the production plants.
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4.1.4
THE ENVIRONMENT
Respect for the environment is one of Michelin’s five core values, as
expressed in 2002 in the “Michelin Performance and Responsibility
Charter” and reaffirmed in 2012 in “Michelin Performance and
Responsibility: A Better Way Forward”.
In exercising its social responsibility, Michelin has in recent years
assessed and addressed the environmental impact of its
operations across the entire life cycle of its products, from the
extraction and processing of raw materials to product use and
on to end-of-life recycling.
Life cycle assessments have shown that production phases, from
raw materials to finished product, can account for up to 30%
of a tire’s environmental impact, compared to up to 96% for
the in-use phase, depending on the type of tire and vehicle.
THE LIFE CYCLE OF A TIRE
In response, Michelin has deployed policies to attenuate the
risks arising from the environmental footprint of its products,
services and business operations (purchasing, manufacturing
and supply chain), towards mitigating climate change. Targets
for improvement have been set and performance indicators
have been introduced in all these areas.
In 2020, the Group’s commitment was expressed in the
preparation and publication of the new Michelin Environmental
Policy, which is designed to manage pollution risks and
draw down its environmental footprint to total neutrality. It
defines and prioritizes both the levers to be activated to “avoid,
reduce and renew” and the medium-term issues for action, in
line with the scale of challenges they represent throughout the
product life cycle. In this way, the new policy, which applies to
every Group unit, will effectively align the initiatives underway
in the different business segments with the Group’s
environmental goals and its 3P-based all-sustainable vision.
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In addition, the Group is actively supporting the circular
economy through the “Michelin 4R” strategy, which is designed
to address the challenges of resource conservation and end-of-
life product management by activating four levers: Reduce,
Reuse, Recycle and Renew.
The following section presents the outcomes of the
environmental policies now in place.
It does not cover the dealership networks, which do not have
any manufacturing operations and whose environmental impact
is estimated at less than 5% of the Group total.
ENVIRONMENTAL GOVERNANCE
The Environmental Governance body is chaired by the Executive
Vice President, Manufacturing, and the Executive Vice President,
Research and Development, who are both members of the
Group Executive Committee. Led by the Group Environment and
Prevention Director and coordinated by the Sustainable
Development Director, the body also comprises eight other
standing members representing the Standards and Regulations
Department, the Sustainable Development and Mobility
Department, the Materials Research Department, the Risk
Management Department, the Purchasing Department, the B2B
On-Road
section
of
the
Research
and
Development
Department, the Information Systems Security, Security, Health
& Safety and Environment Department, and the High-Tech
Materials Business Line.
The Environmental Governance body meets two to three times
a year. It validates environmental policies, objectives and
strategies, and tracks the proper execution of the action plans
deployed to meet the objectives. It ensures that environmental
risk is under control and that, if necessary, effective preventive
or remedial measures have been defined and implemented. The
body is supported by the work of three multidisciplinary
Operational Committees – the Carbon Strategy Committee, the
Circular Economy Operational Committee and the Biodiversity
Operational Committee – which are tasked with coordinating
initiatives, watching for weak signals, assessing emerging risks
and
identifying
opportunities
to
reduce
environmental
impacts(1).
4.1.4.1
Climate strategy SDG 13.1, 13.2 and 13.3
Climate change risks
Climate change poses a multitude of risks, which require concerted action by all of society, including public authorities,
businesses and consumers. The Michelin Group’s main risk factors concern the climate change impacts from the Group’s
operations (Scopes 1 and 2), from the use of its products (Scope 3)(2) and from its suppliers’ operations (Scope 3)(3), as
well as the physical impacts of climate change on the Group’s business.
These risk factors have been identified as the main risks either by the Group(4) or by the materiality analysis of non-financial risks(5).
The policies, objectives, levers for action and indicators in place to mitigate these risks have been integrated into the Transition
Plan and the Adaptation Plan described below.
The Group's climate strategy is organized around two key
outcomes. First, a transition plan includes both initiatives to
decarbonize direct and indirect activities in the value chain
(Scopes 1, 2 and 3) and a resilient strategic plan to support a
low-carbon economy. Second, an adaptation plan to prepare for
the physical impacts of climate change.
The strategy is informed by three principles:
▶achieve net‑zero emissions by 2050 by fulfilling our external
emission reduction commitments by 2030;
▶identify risks and opportunities based on climate change
scenarios;
▶transparently disclose the information expected by our
external stakeholders.
(1) See section 4.1 Michelin Sustainable Development and Mobility Report/Governance/Oversight by the Group Management Committee.
(2) See section 4.1.4.1 b) Transition plan: company strategy/Opportunities and risks/Designing ultra-energy efficient products.
(3) See section 4.1.4.1 a) Transition plan: decarbonizing our operations/Scope 3: reducing emissions from purchased raw materials and components.
(4) See section 2.1 Risk factors specific to Michelin, description and related management systems/Risk 1 – Inadequate management of environmental impacts/
Risk 4 – Physical impacts of climate change.
(5) See section 4.1 Sustainable Development and Mobility Report/Materiality matrix.
C
li
m
a
t
st
r
a
t
e
g
y
C
o
m
p
a
n
y’
s
o
v
er
al
l
st
ra
te
g
y
Transition
Plan
• Decarbonization
• Evolving strategy
Adaptation
Plan
for physical risks
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4.1.4.1 a) Transition plan: decarbonizing our operations
As part of its decarbonization plan, Michelin aims to become
carbon neutral by 2050(1) in Scopes 1, 2 and 3(2), with a priority
focus on reducing emissions from:
▶all its production plants;
▶its logistics operations;
▶its supply chain with its raw materials and components
vendors.
The Group has defined five intermediate milestones, which are
presented below.
In July 2021, Michelin joined the “Race to Zero” campaign, answering the call to action led by the Science Based Targets initiative
(SBTi), the United Nations Global Compact and We Mean Business and committing to reach net‑zero emissions by 2050. The five
milestones are aligned with this process.
(1) For a company, carbon neutrality is achieved by (i) reducing carbon emissions from its own operations and the operations of its value chain to as close to zero
as possible and (ii) over the longer term, preparing carbon capture solutions to offset any residual emissions. As such, the term “carbon neutrality” is the same
as the “net zero emissions” defined by the Intergovernmental Panel on Climate Change (IPCC).
(2) Excluding the in-use phase, see section 4.1.4.1 a) Transition plan: decarbonizing our operations/Scope 3: reducing emissions from our logistics operations/
Scope 3: reducing emissions from purchased raw materials and components/Scope 3: upstream purchased energy and end-of-life treatment of sold products.
C
li
m
a
t
st
r
a
t
e
g
y
C
o
m
p
a
n
y’
s
o
v
er
al
l
st
ra
te
g
y
Transition
Plan
• Decarbonization
• Evolving strategy
Adaptation
Plan
for physical risks
Transition to cleaner energy
Reduce energy use
Transport less, better, differently
of supplier emissions covered by
science-based targets (SBT)
MANUFACTURING
Scopes 1 & 2
2030
2030
in CO2 emissions by
2030 vs. 2020
in CO2 emissions by
2030 vs. 2018
in CO2 emissions by
2030 vs. 2018
2030
2024
END-OF-LIFE
PROCESSING
Scope 3
UPSTREAM
ENERGY
Scope 3
SUPPLY CHAIN
Scope 3
LOGISTICS
Scope 3
50% reduction
15% reduction
in CO2 emissions by
2030 vs. 2018
2030
15% reduction
15% reduction
70% reduction
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The Group’s carbon footprint
Michelin regularly updates its inventory of CO2 emissions from
its activities in accordance with the Greenhouse Gas Protocol(1),
which defines three scopes of reporting based on emissions
source. The inventory covers companies controlled and
consolidated by the Michelin Group, as defined in the financial
consolidation principles. The most recent inventory is shown in
the following table. The methodology and the data used (20% of
Scope 1 and Scope 2 data and 100% of Scope 3 data) were
reviewed by independent third parties in compliance with
standard ISAE 3000 – Assurance engagements other than audits
or reviews of historical financial information.
INVENTORY OF SCOPE 1, 2 AND 3 CO2 EMISSIONS
Scope
Inventory
(millions of
tonnes of CO2)
Year
Group sources covered
by the inventory
Comments
SCOPE 1
1.35(2)
2021 CO2 emissions from the boiler
houses at production and R&D sites
Michelin controls the assets at which energy is used, thus
generating CO2 emissions.
The change in emissions volumes in 2021 compared with
the 2010 baseline is presented below (see Scope 1 and
Scope 2 CO2 Emissions).
GRI 305-1: Direct (Scope 1) GHG emissions
GRI 305-2: Direct (Scope 2) GHG emissions
SCOPE 2
1.42(2)
2021 CO2 emissions from generating the
electricity and steam used by the
production and R&D sites
SCOPE 3
REQUIRED
17
2021 CO2 emissions from the relevant
activity categories corresponding
to the Group's value chain
(see Breakdown of Scope 3 CO2
emissions by category)
Michelin's ability to influence activities in the value chain
varies by category.
The tonnage is an estimate, with the margin of uncertainty
ranging from ±10% to ±30%, depending on the category.
As a result, it is not yet possible to present reliable data on
how these estimated emissions evolve over time.
GRI 305-3: Other indirect (Scope 3) GHG emissions.
SCOPE 3
OPTIONAL
127
2021 Indirect CO2 emissions from sold
tires in use
Thanks to its research and development expertise, Michelin
has a significant impact on vehicular CO2 emissions through
the energy efficiency of its tires(3). Inventoried tires include
all passenger car, light truck, heavy truck and bus tires
intended for on-road use, but not two-wheel tires, which
account for less than 1% of emissions. The reported figure’s
margin of uncertainty is estimated at ±30% due to the
assumptions concerning the number of vehicles fitted with
tires sold worldwide by the Group (whether their
powertrains are internal combustion or electric), the
distance traveled over the reporting year and the lifespan of
the sold tires.
(1) See Methodology/The Group's carbon footprint.
(2) See section 4.1.4.4 b) Reducing the environmental footprint of the production plants/Summary table of environmental data – Group.
(3) See section 4.1.4.1 b) Transition plan: company strategy/Opportunities and risks/Designing ultra-energy efficient products.
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CHANGE IN SCOPE 1 AND SCOPE 2 CO2 EMISSIONS(1) (MARKET-BASED)
(millions of tonnes of CO2)
(1) 2010 Scope 2 emissions were recalculated following the change in method
in 2015 (see section 4.1.4.4 b) Reducing the environmental footprint of
the production plants/Recalculation of 2010 emissions based on
differentiated emission factors for purchased steam).
Erratum: The published 2020 data contained a mistake in the
breakdown between Scope 1 and 2 emissions. The 2020
emissions amounted to 1.20 million tonnes in Scope 1 and
1.26 million tonnes in Scope 2 (instead of the published 1.01 and
1.46), for a correct total of 2.46 million tonnes for the year. The
corrected figures were reported in the 2021 CDP questionnaire.
However, 2020 data were not used in this document because the
year was not representative of a normal operating environment.
It is therefore unsuitable as a base year for measuring progress.
The baseline figures are from 2010 and 2019.
BREAKDOWN OF REQUIRED DISCLOSURE SCOPE 3 CO2 EMISSIONS BY CATEGORY
(1) Total CO2 tonnage emitted during the end-of-life treatment of sold tires
has been estimated at 3.7 million tonnes based on an aggregate recovery
and reuse rate of 76% (see section 4.1.4.2 b) Recycle). If the reuse of
secondary raw materials from the end-of-life treatment of sold tires is
taken into account, as in the ISO 14067: 2018 Greenhouse Gases –
Carbon Footprint of Products method, a total of 6.4 million tonnes of CO2
were avoided. By not using new raw materials, including petroleum
derivatives, the recovery and recycling of end-of-life tires helps to avoid
emitting CO2.
Scope 1
Scope 2
TOTAL
2010
2019
2021
1.85
1.34
1.40
2.02
1.42
1.52
3.88
2.76
2.92
52%
2.4%
4.6%
9%
2%
0.3%
1.3%
0.2%
4.9%
22%
1.3%
Purchased good and services
Capital goods
Activities related to the
to the availability of energy
(fuels, electricity)
Upstream transportation
and distribution
Waste generated by operations
Business travel
Employee commuting
Upstream leased assets
End-of-life treatment of sold
products(1)
Franchises
Downstream transportation
and distribution
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Scopes 1 and 2: reaching net zero emissions in manufacturing operations by 2050
OUR AMBITIOUS OBJECTIVES:
To help mitigate climate change:
▶Michelin has been measuring and steadily reducing its CO2 emissions since 2005;
▶the Group aims to achieve, by 2050, net-zero carbon emissions from its entire production base (Scopes 1 and 2). This is consistent
with the scenarios developed by the scientific community to keep global warming below 1.5°C(1);
▶for 2030, the Group has set an intermediate milestone corresponding to a linear pathway to improvement, which is to reduce
emissions from its production plants by 50% between 2010 and 2030, i.e., a 25% reduction from 2019 to 2030.
Note
In May 2020, the SBTi approved the following greenhouse gas emission reduction target for Scopes 1 and 2, which is consistent
with the below 2°C global warming scenario:
▶the Group has pledged to reduce its Scope 1 and 2 greenhouse gas emissions by 38% in absolute value by 2030 compared
with the 2010 baseline(2).
Since then, the more ambitious targets described above have been defined.
OUR LEVERS FOR ACTION:
The emissions reduction program is built around two major processes:
▶consuming less (energy efficiency);
▶consuming better (energy transition).
(See section 4.1.4.4 c) Reducing energy use and greenhouse gas emissions).
Because the challenge of carbon neutrality can be met only if global energy demand is kept under control, the Group has defined a
“prioritizing hierarchy of drivers,” applicable to every project impacting the energy consumption of its production plants.
THE PRIORITIZING HIERARCHY OF DRIVERS
▶Key performance indicator: tonnes of CO2 in absolute value and in gigajoules per tonne of semi-finished and finished product.
(1) In model pathways with no or limited overshoot of 1.5°C, global net anthropogenic CO2 emissions decline by about 45% from 2010 levels by 2030 (40-60%
interquartile range), reaching net zero around 2050 (2045-2055 interquartile range). IPCC Special Report: Global warming of 1.5°C.
(2) The target covers carbon emissions and absorptions from biogenic sources and biomass burned as fuel.
Use of renewable energies
AVOID
RENEW
Reduce by doing more with less. Use insulation, automation,
more energy-efficient equipment
Reuse by closing heat transfer loops.
Recycle by capturing heat for another application.
Install dual-flow ventilation and heat pump systems
REDUCE
REUSE
RECYCLE
Instill an"energy-efficient"
culture
Scrutinize the need
(design and size)
Energy efficiency levers
Emission factor levers
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CO2 EMISSIONS FROM PRODUCTION PLANTS
(millions of tonnes of CO2)
ENERGY EFFICIENCY OF PRODUCTION PLANTS(1)
Carbon pricing
In its commitment to cost-effectively reducing its CO2 emissions,
Michelin supports the introduction of an international carbon
pricing system as part of the Carbon Pricing Leadership
Coalition. Since 2016, the Group has incorporated an internal
carbon price into its method of calculating return on investment
for projects requiring major capital expenditure, such as
production capacity increases, boiler upgrades and logistics
improvements. For projects designed to increase the energy
efficiency of existing installations (curing press insulation,
lighting upgrades, etc.), which require more modest outlays, the
internal carbon price is integrated into a project consolidation
application developed in 2016 as part of the new energy
efficiency improvement program(2).
In 2021, the carbon price was raised from €50 to €100 a tonne.
Carbon quota systems
In European Union countries, direct CO2 emissions from the 15
Group facilities that operated boilers with over 20 MW capacity
in 2021 are subject to allowances issued under the EU's
Emissions Trading Scheme (ETS). In 2021, with the start of
phase 4 of the system, free allocations of allowances to the
Group’s plants fell sharply, to just 23% of requirements from
76% in 2020. Since 2017, the Group has gradually purchased
allowances on the market, which are covering returns from the
plants and smoothing the related costs.
In China, emissions trading schemes were introduced in 2013 in
seven cities and provinces. The one in Shanghai, covering an
initial three-year period until 2015, is still in effect while waiting
for a national system to be introduced. Over the 2013-2021
period, overall emissions from the two plants concerned were
covered by the allowances.
Created in 2005, the CO2 Allowance Management Committee
tracks legislation governing carbon markets and taxes in all of
the countries where Group production facilities are located.
Comprising specialists in greenhouse gases, energy buying,
energy efficiency, finance and accounting, its role is to define
CO2 allowance management principles and guidelines, ensure
their proper application and conduct the necessary forecasting
studies.
Supporting the introduction of a global carbon
pricing system
Today, there is no global carbon market or price, only
fragmented and uncoordinated local systems. Michelin is
strongly encouraging public stakeholders to support the
development of a more structured market. This is why it has
been a member of the World Bank's Carbon Pricing Leadership
Coalition since 2015. Since 2016, the Group has also been
preparing for the emergence of a global carbon market by
incorporating an internal carbon price(3).
Scope 3: reducing emissions from our logistics operations
OUR OBJECTIVE:
The corporate Supply Chain Department has set an ambitious
objective:
to
reduce
CO2
emissions
from
logistics
operations, in tonnes, by 15% between 2018 and 2030.
This objective is in line with the commitments made to the SBTi
and covers the supply of natural rubber to the production
plants, the inter-plant transportation of semi‑finished products,
customer deliveries and warehouse operations.
▶Key performance indicator: tonnes of CO2 in absolute
value.
(1) Until 2020, the energy efficiency indicator was reported per tonne of finished product. With i-MEP, as indicated in the section on methodology at the
beginning of Chapter 4, the performance ratio is expressed per tonne of total manufactured output of both finished and semi-finished products. The 2010
value of total gigajoules per tonne, which was not tracked at the time, has been recalculated and presented here for reference. The recalculation was based on
the fact that the proportion of semi-finished products in total output remained relatively constant between 2010 and 2019 and that the energy efficiency
programs targeted all forms of energy used in the production plants.
(2) See section 4.1.4.4 c) Reducing energy use and greenhouse gas emissions/Improving energy efficiency.
(3) See below: Carbon pricing.
2050
2030
2021
2019
2010
-24.8%
-28.7%
-50%
Net zero emissions
Baseline
2030
2021
2019
2010
Baseline
-17.9%
-18.3%
-37%
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CO2 EMISSIONS FROM LOGISTICS OPERATIONS
(millions of tonnes of CO2)
CO2 emissions are measured using the Smart Freight Center
application, which complies with the latest calculation standards
and recommendations issued by international organizations. It
supports the deployment of a sustainable, reliable, data-
consistent approach in every host region.
CO2 emissions from logistics operations stood at 1.321 million
tonnes in 2018(1). In 2020, they came to 1.166 million tonnes,
an 11.7% decline from 2018 that reflected the drop in
production output in the wake of the health crisis.
CO2 emissions further declined in 2021, to 1.141 million tonnes,
excluding exceptional airfreight shipments. This corresponded to a
13.4% reduction from 2018 with only slightly lower sales volume
(down 2.6%). This performance was led by the steep 30%
reduction in tonnages carried to the United States, stemming
primarily from supply chain streamlining, and by the 5.5%
decrease in the maritime container shipping of finished and semi-
finished products due to the temporary insourcing of certain
products.
Structural improvements in efficiency delivered encouraging
results, with the “tonne of CO2 released per tonne sold”
indicator declining by 11% between 2018 and 2021 as a result
of initiatives to activate the three strategic levers: transport
less, transport better and transport differently.
Worldwide, however, and including the exceptional airfreight
shipments, CO2 emissions amounted to 1.510 million tonnes for
the year, or 14.24% higher than the 2018 baseline. This
significant increase reflected the use of airfreight to overcome
supply chain disruptions caused both by the Covid crisis and
shortages of maritime shipping capacity. Using airfreight has a
significant impact on the carbon footprint, but it is a temporary
stopgap that does not reflect long-term performance.
OUR LEVERS FOR ACTION:
Transporting less, the fundamental lever
The resulting analytics help identify where inventory should be
ideally located to improve product availability, while avoiding
unnecessary transportation. They also guide the choice of
production sites, with a preference for local facilities to limit the
transfer
of
finished
products
between
producing
and
consuming regions.
The performance indicator of this lever is the ratio of tonnes
transported to tonnes sold. In 2021, this ratio improved by
9.5% year-on-year, excluding exceptional airfreight shipments,
mainly due to the elimination of certain semi-finished product
deliveries in Europe and North America. For example, the
Spanish plants locally sourced a raw material previously shipped
in from Eastern Europe, thereby avoiding the attendant CO2
emissions.
Transporting better, an operational lever
The second lever consists of optimizing current transportation
systems, based on three avenues for improvement:
Engaging with our transportation partners
Michelin firmly believes that partnerships with logistics providers
are mutually beneficial over the long term. LABS set up with
European carriers over the year to explore People, Profit and
Planet initiatives helped to nurture their close collaborative
relationship with the service providers and broaden their
perspective on the deployment of solutions to reduce their
environmental impacts. In North America, the periodic partner
review was maintained in order to identify new pathways to
improvement in CSR issues.
Optimizing our current transportation systems
In its commitment to using existing resources more efficiently,
Michelin optimizes truck and container fill rates using digital
applications that maximize each load. In Spain, trials were
pursued on the use of jumbo 32-meter EcoCombi semi-trailers for
plant-to-dealership deliveries, which confirmed the solution’s
cost-effectiveness and environmental benefits. Michelin is now
actively working on its deployment in other European countries as
well as on certain port-to-plant routes in Brazil.
Promoting and developing multimodal solutions
In Europe and the United States, Michelin has led a number of major
projects to deploy multimodal solutions, which have proven highly
effective in attenuating environmental impacts and negative
externalities. New solutions are constantly being developed and
deployed to expand the existing system. In Europe, for example, a
rail link was opened between Romania and Germany, which helped
to avoid some 500 tonnes of CO2 during more than 550 trips in
2021. In Brazil, using river barges instead of trucks to and from the
Manaus plant saved 250 tonnes of CO2 in 2021.
Also in Europe, the Group has pledged to reduce its CO2
emissions by 5% as part of the targets set for the 2019-2022
period by the FRET21 program initiated by AUTF and ADEME in
France.
Transport differently, a lever for innovation
The third lever is activated by implementing innovative
solutions, informed by two processes:
Collaborating with outside organizations
An effective way to reduce the environmental impact of logistics
operations is to share ideas and projects with other industry
stakeholders. With this in mind, Michelin continues to play a
leading role in such associations as France Supply Chain and
Clean Cargo. Regular involvement in these organizations is
driving significant progress in identifying courses of action,
while laying the foundations for collaborative work on
innovative issues supporting the sustainable mobility of goods
and decarbonized transportation. In South America, for
example, Michelin teams have worked with Saint Gobain teams
to facilitate the roll-out of innovative transportation solutions
with lower environmental impacts.
(1) Note: the above 2018 figure differs from that published in the 2020 Universal Registration Document due to adjustments in calculation assumptions for Europe.
2030
2021
2019
2018
Baseline
-1.44%
+14.24%
*
-15%
* -13.4% excluding exceptional airfreight shipments
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Innovating to deploy more environmentally friendly
technologies and practices
Michelin takes an active part in discussions about the future of
logistics, in a commitment to promoting and deploying
innovative technologies. The Group uses natural gas and electric
trucks for deliveries in Europe and the United States. In
addition, in Europe, a France Supply Chain working group
brought together more than 12 shippers and 23 carriers with
the goal of deploying 100 hydrogen-powered trucks by 2024-
2025. The group helped us to understand every aspect of this
new technology and to bring on board an entire ecosystem,
spanning range, vehicle uptime, recharging infrastructure and
maintenance servicing. In Canada, a transportation contract was
signed to ship products outbound to Europe on a cargo vessel
powered mainly by sail in 2025.
Scope 3: reducing emissions from purchased raw materials and components
The Group has taken a proactive approach to determining
which purchasing categories and suppliers represent the largest
sources of GHG emissions. These suppliers are encouraged to
initiate, step up or accelerate their commitment to reducing
their GHG emissions.
Purchased goods and services: inventory
The inventory of the Group’s Scope 3 indirect greenhouse gas
emissions was updated in 2021. Emissions from purchased
goods and services (Scope 3, category 1 in the Greenhouse Gas
Protocol, which excludes emissions related to purchased
logistics services) represent around half of all Scope 3 emissions
excluding the in-use phase (i.e., excluding category 11).
Given that raw materials account for around 90% of emissions
from purchased goods and services, programs to reduce supply-
chain related emissions focus on raw material inputs, alongside
the significant gains being made in purchased logistics services.
Purchased goods and services: the Carbon Disclosure
Project (CDP) initiative
The CDP provides a comprehensive system for disclosing
environmental information in order to assess the strategies in
place to abate climate change. In 2018, Michelin joined the
CDP’s Supply Chain Program and engaged its leading raw
materials suppliers to participate in it, encouraging them to
measure and disclose their greenhouse gas emissions and to
develop strategies to reduce them.
Conducted in 2018 and again in 2020 and 2021, the campaign
will be held annually going forward. Of the 84 raw material
suppliers asked to submit data in 2021, 92% responded.
Together, they represented 72% of the emissions from the
Group’s purchased goods and services and approximately 56%
of raw materials and natural rubber spend. In addition, 56% of
the responding suppliers scored B- or higher, indicating that
their emissions abatement systems were fairly mature. In 2021,
the CDP recognized the Michelin Group’s ability to engage its
suppliers in reducing carbon emissions with a CDP Supplier
Engagement Leader award.
PERCENTAGE OF RAW MATERIAL SUPPLIERS
RESPONDING TO THE CDP (VS. TOTAL EMISSIONS
FROM PURCHASED GOODS AND SERVICES)
Purchased goods and services: emissions
reduction targets
OUR OBJECTIVE:
In 2020, the SBTi approved the Group’s environmental targets,
including one relating to purchased goods and services, i.e.,
that suppliers representing 70% of greenhouse gas emissions
from purchased goods and services (Scope 3, category 1) will
have set science-based reduction targets by 2024.
▶Key performance indicator: percentage of CO2 emissions
from suppliers of purchased goods and services (Scope 3,
category 1) that have set science-based greenhouse gas
emission reduction targets for 2024.
2021
2020
67%
72%
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PERCENTAGE OF EMISSIONS FROM PURCHASED GOODS
AND SERVICES SOURCED FROM SUPPLIERS WITH
SCIENCE-BASED TARGETS
Logistics
Significant progress has been made in addressing CSR issues in
logistics purchases, with, for example, the requirement that
tender bids include green alternatives and the introduction of
an application (EcoTransIT) that more accurately determines the
greenhouse gas impact of our transportation purchases(1).
Energy
Purchases of electricity from renewable sources have been
increasing in recent years, and for any energy procurement
project, suppliers are now required to propose renewable
energy solutions(2).
Scope 3: upstream purchased energy and end-of-life treatment of sold products
The Scope 3 CO2 emission reduction targets approved by the
SBTi include two indirect operations in the value chain, as
defined by the GHG Protocol:
▶the extraction, production and transportation of fuels,
purchased or acquired by a company or consumed in the
generation of electricity, steam, heating or cooling used by
the company (emissions from the use of these fuels to
generate secondary energy is inventoried in Scopes 1 and 2;
▶end-of-life treatment of sold products.
OUR OBJECTIVE:
Reduce CO2 emissions, in tonnes, by 15% between 2018 and
2030.
▶Key performance indicator: tonnes of CO2 in absolute
value.
OUR LEVERS FOR ACTION:
▶gradually phasing in renewable sources for upstream
energy needs, which is being planned and managed to
meet the Group’s Scope 1 and 2 objectives(3). This is based on
the assumption that the upstream generation and delivery of
fuel from renewable sources or of purchased renewable
energy are generally less energy intensive and therefore
release less CO2 than fossil fuels/energy;
▶supporting lower carbon end-of-life product recovery
and recycling solutions and deploying circular economy
models.
OUTCOMES IN 2021:
Upstream energy
Initiatives to support the purchase of renewable energy for the
Group's sites continued apace in 2021(4). Their outcomes to date
will be disclosed later as part of the review of the SBTi
reduction targets.
End-of-life treatment of sold products(5)
The recovery and reuse of materials from end-of-life tires raises
a number of technological, organizational and financial
challenges. To overcome them, Michelin has launched two
major projects.
▶BlackCycle(6), an EU-funded research project launched in
2020 that is developing technologies to recover high-quality
secondary raw materials from scrap tires. These raw materials
could be used not only by the tire industry, but also in other
technical applications, by closing resource loops and
supporting the development of a circular economy. Initial
projections from the project show a one-kilogram reduction
in CO2 releases for every kilogram of substituted material.
▶Joint call to action by Michelin and Bridgestone in
November 2021 to enrich the recycling ecosystem for end-of-
life tires and promote the circular economy within the rubber
industry. The two global tire leaders hope to enable and
increase the use of carbon black recovered from recycled
tires. Michelin and Bridgestone are working together to lead
this transition by defining strict technical standards,
harmonizing government regulations and policies, building a
coalition of partners and promoting processes that can be
upscaled in recycling ecosystems.
In addition, Michelin is actively pursuing the implementation of
business models based on the recycling of tires and plastics(7).
(1) See section 4.1.4.1 a) Transition plan: decarbonizing our operations/Scope 3: upstream purchased energy and end-of-life treatment of sold products.
(2) See section 4.1.4.4 c) Reducing energy use and greenhouse gas emissions/Purchasing electricity from guaranteed renewable sources.
(3) See above Scopes 1 & 2: reaching net zero emissions in the manufacturing operations by 2050.
(4) See section 4.1.4.4 c) Reducing energy use and greenhouse gas emissions.
(5) State-of-the-art carbon accounting does not yet enable the emissions impact of our end-of-life treatment initiatives to be reliably measured.
(6) BlackCycle brings together seven industrial partners, five research & technological organizations (RTOs) and an innovation cluster as part of a European
consortium in five countries (EU Grant Agreement No 869625).
(7) See section 4.1.4.2 d) The Michelin 4R circular economy process/Recycle.
2021
2020
13%
70%
21%
2024
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Investing in socially responsible carbon credits
Since 2014, Michelin has invested in the Livelihoods Carbon
Fund, which supports reforestation, agroforestry and low-
carbon cookstove projects on three continents. Conducted in
collaboration with local NGOs, its projects help to reduce GHG
emissions, while improving quality of life in local communities
and offering investors a return in the form of carbon credits
with high environmental and social value. In 2017, Michelin also
invested in the new Livelihoods 2 carbon fund.
In all, the Group's total stake in the two funds currently stands
at €5.5 million.
In 2021, four projects generated 107,414 carbon credits for the
Group, corresponding to 107,414 tonnes of avoided CO2 and
representing twice as many credits as it was allocated in 2020.
The first project involved planting various species of cash crops
such as rubber trees, cardamom, coffee and cocoa, in remote
areas of Guatemala to offer local farmers more diversified
sources of income. A second NGO restored a mangrove forest
in India, which fertilized the surrounding cropland, revitalized
biodiversity in the estuary and provided additional economic
and nutritional value to local communities. The other two
projects involved the installation of several tens of thousands of
energy-efficient cookstoves in village homes in Kenya and
Burkina Faso (where the project is being carried out exclusively
with women). The stoves eliminate both toxic smoke and the
time-consuming task of collecting wood, while cutting GHG
emissions in half. The project in Burkina Faso also raised
awareness of regenerative farming practices among rural
villagers.
4.1.4.1 b) Transition plan: company strategy
Offering
the
most
efficient
mobility
solutions
without
compromising on safety is the very heart of Michelin’s past,
present and future positioning, as reflected in products that lead
the market in energy efficiency, CO2 emissions abatement and
long-lasting performance. As part of its strategic plan, the Group
is continuing to innovate to support the transition to low-carbon
mobility for people and goods, in particular by:
▶designing products that are ultra-energy efficient
throughout their life cycle, from production and use to
end-of-life recycling;
▶developing services and solutions that optimize the use
and management of vehicle fleets, while improving their
fuel/energy efficiency;
▶driving the emergence of new mobility solutions, led by
ecosystem-driven innovation and, notably, the development
of the hydrogen mobility industry.
Analyzing climate scenarios
The Group's strategic plan, which includes the abovementioned
contributions to carbon neutrality for our customers and
downstream users, was reviewed in 2021 based on the
Executive Committee’s analysis of four climate scenarios.
Co‑constructed with international transition experts, these
scenarios reflect a pathway to increases in the global mean
surface temperature ranging from 1.7°C to 4.4°C before the
end of the century, based on contrasting, yet plausible,
assumptions for 2035. The scenarios are distinct, however, with
each one featuring:
▶a qualitative narrative built around both planetary boundaries
and a range of desirable and undesirable, complex and
paradoxical factors, covering political, technological, socio-
economic and legal/regulatory issues;
▶quantitative Kaya identity indicators (global population, GDP
per capita, energy intensity and carbon footprint of
consumed
energy)
and
a
set
of
public
indicators
representative of each scenario that enable us to identify their
implications and assess their materiality over time;
▶a global map displaying the scenario or blend of scenarios
deemed most likely for each country.
A diagnosis was performed by comparing aspects of the
Group's strategic plan with each scenario's conditions and
context, with an eye to preparing the business to successfully
respond to future transitions. Analysis of the climate scenarios
resulted in (i) adjustments to the opportunities to be explored,
the innovation priorities, the implementation timeframe for the
reviewed aspects of the strategy and the projected geographic
footprint of our business operations, and (ii) a base of strategy
fundamentals, including connectivity, partnerships and a set of
trends that are favorable as concerns vehicle fleets, urban
mobility, micromobility and intermodality and unfavorable as
concerns environmental degradation. In addition, a number of
awareness-raising and ideation workshops are being conducted
with Group units around the world, enabling them to constantly
align their tactical plans with our collective understanding of
these issues.
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Opportunities and risks
Climate change opportunities and risks are presented below
and in the physical risks adaptation plan (see section 4.1.4.1 c
Adaptation plan: responding to the physical risks of climate
change).
Designing ultra-energy efficient products
Using a tire on a vehicle requires additional energy that, in an
internal combustion vehicle, entails the burning of fuel and
therefore the release of greenhouse gases.
OUR COMMITMENT:
Improve the energy efficiency of tires by 10% in 2030
compared to 2020.
▶Key performance indicator: improvement in the rolling
resistance of Passenger car, Light truck and Truck tires
compared with the 2020 baseline, weighted by sales
tonnages in the reporting year.
In 2021, Michelin improved the energy efficiency of its products
by 0.5% compared to 2020. The reduction in the rolling
resistance of the Passenger car, Light truck and Truck tires sold
by the Group in 2021 saved the equivalent of around 3.4 billion
liters of fuel over their useful lives, thereby avoiding the release
of some 8.7 million tonnes of CO2 compared with 2010 tires(1).
OUR LEVERS FOR ACTION:
Reduce the rolling resistance of Passenger car, Light truck
and Heavy truck tires.
Through its innovations, Michelin is leveraging its technology to
support a more sustainable economy and limit the use of raw
materials and energy. Reducing a tire's rolling resistance helps
to improve a vehicle's fuel efficiency, which in turn reduces both
CO2 emissions during use and ambient air pollutants, such as
NOx and SOx. Lower rolling resistance also increases the range of
electric vehicles.
Over the past 20 years or more, Michelin has improved the fuel
efficiency of its tires by more than 20%, without ever
compromising on safety or longevity. Over the next decade, it is
committed to maintaining its leadership by continuing to
improve this performance.
In 2021, Michelin launched two new tire ranges, the MICHELIN
e.Primacy and the MICHELIN Pilot Sport EV, whose life cycle
assessments (LCAs) were disclosed in an Environmental Product
Declaration (EPD). The EPD, which was certified by Veritas and is
available online at environdec.com, enables the tire industry to
transparently report comparable environmental performance
data over a product’s entire life cycle.
On average, driving on MICHELIN e.Primacy tires reduces a
vehicle’s fuel consumption by 0.2 l/100 km and its CO2 emissions
by 5 g/km, which throughout the life of the tire represents 174 kg
in avoided CO2 emissions. For drivers of electric vehicles, this record
energy efficiency translates into 7% longer range. MICHELIN Pilot
Sport EV is the first tire specifically designed for electric sports cars.
These two new lines illustrate Michelin’s commitment to serving
the growing demand in this market with eco-designed tires.
Every Michelin tire family is “made to last,” delivering real
financial and environmental value to consumers with their
durability, their totally safe, long-lasting performance down to
the final kilometer, and their contribution to reducing CO2
emissions and improving fuel efficiency.
This commitment was already demonstrated in 2016 with
products, like the MICHELIN CrossClimate+, that guarantee safe
driving in all weather conditions, in every season, throughout
their entire lives. This performance is being upheld by the latest
generations, with the MICHELIN CrossClimate 2 tire, introduced
in 2021, and the MICHELIN CrossClimate2 SUV launched in
2022.
Following on from the MICHELIN Primacy 4, brought to market
in 2018, the MICHELIN Primacy 4+ delivers excellent lifespan
performance(2) and is best-in-class in wet braking when worn(3),
thereby enabling consumers to use their tires as safely and for
as long as possible.
In Truck tires, a myriad of technological advances is delivering
not only a significant improvement in fuel efficiency and with it
a reduction in CO2 emissions, but also exceptionally efficient use
of the component materials thanks to remarkably long tread
life and the ability to run the tire down to the last millimeter of
the legal wear limit. Brought to market in January 2016, the
MICHELIN X® LINE™ ENERGY™ tires for long-haul trucks are the
first set of big rig tires to be rated A in energy efficiency, on any
axle, under EU tire-labeling rules. In addition, the MICHELIN X®
MULTI™ ENERGY™ tire for regional truckers, launched in
2017‑2018, has reaffirmed the Group's commitment to offering
innovative solutions that both improve performance and
protect the environment.
(1) Emissions avoided resulting from the improvements in rolling resistance since 2010; i.e., the difference between the CO2 emissions from the use of tires sold in
2021 and the CO2 that would have been released if the 2010 tires had been used in 2021.
(2) Longevity: External tests conducted by Dekra Test Center, at Michelin’s request, in July 2021, on the 205/55 R16 91V size fitted on a VW Golf comparing the
MICHELIN Primacy 4+ tire (31,246 km) to its competitors, the BRIDGESTONE TuranzaT005 (-15,998 km), the CONTINENTAL PremiumContact 6 (-5,655 km) and the
GOODYEAR EfficientGrip Performance 2 (+2,093 km). Longevity test run in average real usage (D50) with a 12,200 km run and extrapolated longevity at 1.6 mm.
(3) Wet braking new and worn: External tests conducted by TÜV SÜD Product Service, at Michelin's request, between 80-20 kph, in May-June 2021, on the 205/
55 R16 91V size on a VW Golf 8 (worn means buffed on a machine until the tread wear indicators appear, according to European regulation ECE R30r03f)
comparing the MICHELIN Primacy 4+ tire (new: 22.9m - worn: 31.5m) to its competitors, the BRIDGESTONE TuranzaT005 (new: 22.7m - worn: 36.4m); the
CONTINENTAL PremiumContact 6 (new:23.0m - worn: 35.3m); and the GOODYEAR EfficientGrip Performance 2 (new: 23.7m - worn: 35.6m).
2030
2021
2020
+0.5%
+10%
Baseline
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In 2021, Michelin sustained its innovation drive in this area by
renewing and expanding its MICHELIN X® LINE™ ENERGY™
and MICHELIN X® MULTI™ ENERGY™ ranges to meet the
challenges of CO2 emissions standards in Europe and North
America. The ENERGY™ lines are now being deployed in the
fast-growing markets of Brazil, China and India.
Also in 2021, a number of new products were launched to
enable more sustainable mobility in urban areas.
With the introduction of the MICHELIN X® Incity™ EV Z tire,
MICHELIN is supporting the electrification of city buses, with
improved energy efficiency(1) and load bearing capacity(2).
With the forthcoming deployment of zero-emission vehicles,
Michelin is forging partnerships with its OEM customers to
support the environmental transition in the road transportation
industry(3).
The INFINICOIL technology developed from advances in aviation
research allows trucks to carry bigger loads, which makes
freight transportation more efficient, and further lengthens tire
life. In fact, since 1980, the useful lives of Michelin’s long-haul
Truck tires have doubled, which means less process raw material
is used per kilometer traveled.
At the same time, Regenion technology, supported by the
Group’s metal 3D printing expertise, has improved grip
performance in all types of weather conditions and throughout
the life of the tire.
To drive continuous improvement in reducing the environmental
impact of its products, Michelin takes a holistic approach with
the use of life cycle assessments, support for retreading and the
increasing incorporation of sustainable materials in its tires(4).
This approach was illustrated in 2021 by the publication of
Veritas-certified environmental product declarations (EPD) for
five products, in a first for the global truck tire industry.
In addition to bringing new tires to market, Michelin has long
offered worldwide retreading solutions that deliver benefits for
the environment, the economy and society(5).
The above-mentioned new tire ranges launched in 2021 attest to
Michelin’s ongoing commitment to offering truck and bus fleets
more sustainable mobility, both by reducing CO2 emissions and by
using fewer raw materials.
Developing services and solutions that optimize
the use and management of vehicle fleets
Another pathway to reducing the Group's CO2 emissions is the
product-service economy, which involves either (i) the combined
supply of a product and a service to manage and maintain tires
in ways that optimize their energy efficiency and other
performance features; or (ii) the provision of a service alone that
streamlines certain cumbersome fleet processes to make driving
fleet vehicles more efficient, safer and greener.
Michelin’s first outsourced tire maintenance solution with per-
kilometer invoicing was introduced in the late 1940s. Today,
Michelin's services and solutions business line designs, develops
and prototypes new, data-enabled mobility solutions for the
transportation industry. These solutions are then marketed and
supported close to customers in the different Regions, either
directly by Michelin or by dedicated companies or joint ventures.
They enable fleet operators to optimize their management,
improve their safety performance and margins, and reduce their
carbon footprint. Today, MICHELIN Services & Solutions are
addressing a number of challenges faced by customers:
▶some concern tires, such as EFFITIRES™ and Michelin Tire
Care, which take the trouble out of tire maintenance. Others
focus on the vehicle, to improve their operating efficiency
and safety performance;
▶other solutions are structured around fleet management
solutions such as Michelin Connected Fleet, which help to
reduce empty kilometers, thereby optimizing fleet operations
and vehicle use while improving their energy efficiency.
Michelin Connected Fleet also offers a range of solutions to
improve driver safety, such as training courses and onboard
cameras. Overland transportation can exert significant
leverage in reducing CO2 emissions, and eliminating
inefficiency is a critical first step;
▶still other solutions are designed to assist fleets that are ready
to transition to operating with carbon-neutral vehicles.
Michelin Connected Fleet's MoveElectric solution guides
commercial fleets through the planning and transition
process and supports EV operations once they are up and
running, ensuring that the vehicles are used to the fullest.
Watèa by Michelin, a purpose-designed electric fleet mobility
solution, takes this process further by helping fleets manage
the total cost of deploying and operating EVs at a price
tailored to each customer’s needs and budget. Its all-in-one
offering includes electric vehicles, recharging solutions, a
package of services and long-term support, making the
energy transition both operationally and financially feasible.
By helping customers shift their fleets to low-carbon
operations
sooner,
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(1) Michelin calculations based on rolling resistance values.
(2) Load bearing capacity increased to a maximum of eight tonnes, or 15% more than the previous X® Incity™ XZU range.
(3) The SuperTruck programs in the United States and the European Consortium.
(4) See section 4.1.4.2 a) Increment the use of sustainable materials.
(5) See section 4.1.4.2 d) The Michelin 4R circular economy process/Reuse.
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For mining companies, Michelin offers advanced productivity
and safety solutions that help reduce the environmental impact
of their operations. MICHELIN Consulting & Services provides
custom tailored, personalized advice focused on each mine’s
long-term success. In addition, MICHELIN MEMS 4, the world’s
leading remote tire pressure and temperature monitoring
system, reduces equipment downtime and helps increase tire
life by warning of failures and avoiding premature replacement.
In this way, the solution helps reduce the consumption of
natural resources as part of a circular economy process.
Data analytics are deepening the Group’s understanding of
driver behavior and how tires and vehicles are actually used, so
that it can develop new mobility solutions that deliver superior
value-added to customers while improving their safety,
increasing their productivity and shrinking the environmental
footprint of their operations.
Developing new mobility solutions: hydrogen
Michelin has singled out the EV market as a “genuine growth
opportunity and energy transition accelerator.” In particular, it
offers an opportunity for the Group to express all its capabilities
and potential for innovation, not only with tires, but also
beyond them, and particularly in hydrogen.
Backed by this vision and its unmatched expertise in materials –
especially its 15 years of expertise in hydrogen fuel cells –
Michelin is seeking to become a world leader in hydrogen-
powered systems through Symbio, a joint venture between
Michelin and Faurecia that recently broke ground on Europe's
largest battery production plant and is already involved in two
projects to develop hydrogen-powered vans and buses.
Michelin also supports an ecosystem approach, of which a
compelling example is the creation of Hympulsion, a public-
private partnership between Michelin and the Auvergne-Rhône-
Alpes Region, ENGIE, Banque des Territoires and Crédit Agricole
that is tasked with deploying France’s Zero Emission Valley (ZEV)
project. Launched in 2017, ZEV is the first real-world
implementation of the “hydrogen valley” concept not only in
France but in all of Europe. Thanks to its shared public-private
governance, ZEV can mobilize every link in the value chain
required to foster a clean, economically viable mobility market in
the Auvergne-Rhône-Alpes region. The simultaneous deployment
across an entire region of hydrogen production, storage and
distribution infrastructure and hydrogen-powered vehicles means
that the system will be immediately operational, spurring the
emergence of a profitable, sustainable new market. ZEV’s
planned deployment of 20 hydrogen filling stations and a fleet of
1,200 hydrogen-powered vehicles by 2024 makes it the largest
renewable hydrogen mobility project in France. It is expected to
avoid the use of 4.3 million liters of diesel fuel and the release of
13,000 tonnes of CO2 per year. In addition to these outcomes,
Zero Emission Valley’s pioneering experience will provide
invaluable lessons for future projects to replicate regional
hydrogen mobility ecosystems in other parts in France and
internationally. These insights will also support the creation of
other hydrogen valleys, the initial bricks that will play a critical
role in building a nationwide network, stepping up the
development of the hydrogen value chain and reviving local
economies.
With Watèa by Michelin, the Group is demonstrating its
conviction that battery and hydrogen fuel cell technologies are
highly compatible as enablers of vehicle electrification. Watèa
by Michelin is a purpose-designed electric mobility solution for
light truck fleets that combines the supply of battery and
hydrogen fuel cell EVs with access to charging infrastructure
and digital services to ensure vehicle uptime and business
continuity. A single, all-inclusive monthly subscription fee makes
costs easy to budget.
Michelin has always considered motorsports as a business-
critical laboratory for innovation and a showcase for
technologies. The environment’s demanding requirements
stimulate research and development and enable technologies to
be tested in extreme conditions. Today, Michelin's objective is
to leverage motorsports to spur the faster roll-out of hydrogen
mobility solutions. This is why the Group and Symbio became
lead partners in MissionH24, a project that is in particular
looking to integrate hydrogen-powered technology into
endurance race vehicles competing in the 24 Hours of Le Mans
in 2025.
To further support the emergence of hydrogen mobility,
Michelin is also exploring ways to apply its innovation culture to
the technologies of certain enabling components in the
hydrogen value chain. In particular, the Group’s expertise in
materials and its ability to assemble them offer a solid
foundation
for
improving
the
performance
of
flexible
composites in stack clusters(1), including their environmental
performance.
It is also an opportunity to build a vibrant industry, capable of
creating jobs and fostering the emergence of new champions.
This means getting other stakeholders – large and small, public
and private – onboard, and working together to successfully
transform our world. Faced with a challenge as global as climate
change, we have to join forces to devise collective solutions. In
addition to innovating, Michelin is also engaging with and
bringing together other stakeholders to facilitate the energy
transition, by participating in national hydrogen industry
associations in France, Europe, Canada, the United States and
China, to nurture a clean hydrogen ecosystem and enable the
emergence of wide-scale deployment projects.
For the Michelin Group, hydrogen will play a key role in the
transition to zero-emission mobility. However, the advantages
of hydrogen go far beyond mobility, as it represents a very
interesting solution for combating CO2 emissions and air
pollution. Through its flexibility of production and use,
hydrogen produced from renewable energy sources is becoming
a keystone in the energy transition. In particular, it will help
make steel production, chemicals, district heating and of course
transportation carbon free. It is also, by far, one of the few
technologies promoting industrial and energy sovereignty for
Europe. For all these reasons, hydrogen is a strategic growth
driver for Michelin.
(1) The basic unit in a hydrogen powertrain.
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4.1.4.1 c) Adaptation plan: responding to the physical risks of climate change
The adaptation plan is being built in stages. The first, in 2019-
2020, involved a top-to-bottom updating of the Group's
environmental risk map, including climate change risk factors. In
2021, an internal audit of climate change risks identified
36 ecosystems (suppliers, production plants, logistics facilities)
within a 100‑km radius that are particularly critical for the
Group’s business. An initial pilot study to assess the vulnerability
of certain Group businesses was carried out in 2021 with the
help of external consultants. Its results will serve as a basis for
defining a vulnerability analysis methodology and applying it to
all of the Group's businesses in the coming years.
Risks related to extreme weather events have long been
managed as part of the Operational Continuity Plan, a
comprehensive process designed to manage all of the Group’s
business interruption and continuity of supply risks, whether
climate-related or not. The Group’s crisis management
capabilities reduce the potential impact of major crises(1).
Risks impacting natural rubber supplies. Rubber tree plants,
which produce the natural rubber needed to make tires, can only
grow in the planet's narrow intertropical convergence zone.
Although rubber trees are particularly resilient, they are exposed
in these regions to (i) climate change-related impacts, both
directly (extreme weather events such as cyclones and droughts)
and indirectly (new leaf diseases and pathogens), and (ii) the
growing scarcity of arable land. To address this challenge, the
Michelin Group's agronomists and scientific partners are selecting
productive, disease-resistant varieties that can thrive in emerging
climate conditions. Together with its farmer partners, the Group
supports and encourages rubber tree farming only in favorable
zones, avoiding suboptimal or marginal regions. Michelin teams
are developing and promoting highly resilient agricultural
practices, in particular to preserve soil quality and vitality by
maintaining a permanent plant cover. The Group tracks and
models changing climate and health conditions in the production
regions, directly on the plantations it supports and in partnership
with its natural rubber suppliers and the research organizations in
the International Rubber Research and Development Board
(IRRDB). Lastly, the Group is pursuing its research and
development and eco-design programs to optimize the quantity
of natural rubber used per thousand kilometers traveled. In
addition to managing physical risks, the Group continues to
pursue opportunities to produce natural rubber sustainably and
responsibly(2).
4.1.4.1 d) Engagement and transparency
CDP Climate Change
The CDP ranked Michelin among the most forward-looking
companies in the areas of transparency and combating climate
change in 2021, placing the Group in the CDP A-List in
recognition of its strategy, the reduction in its CO2 emissions
and its long-term commitment to further reducing its carbon
footprint.
Each year, the Michelin Group responds to the CDP Climate
Change, CDP Water Security and since 2021, the CDP Forest
questionnaires. The CDP is an independent, non-financial rating
organization. Michelin’s full response may be found on the CDP
platform(3) and on the Group’s website(4).
(1) See section 2.1 Risk factors specific to Michelin, description and related management systems/Risk 4 – Physical impacts of climate change.
(2) See section 4.1.1.2 c) A dedicated approach for natural rubber.
(3) https://www.cdp.net/en/responses.
(4) https://www.michelin.com/documents/reponse-au-questionnaire-cdp-climate-change-2020-en-anglais-seulement/.
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Applying the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
Since 2018, the Michelin Group has been gradually applying the
recommended guidelines issued on June 29, 2017 by the TCFD
and, in 2020, demonstrated its support for the task force as a
signatory.
Embracing TCFD principles implies changes up, down and
across the entire enterprise to shift to a market strategy and
operations consistent with a global warming scenario of less
than 2°C, while taking into account impacts associated with
warming scenarios of more than 2°C. The actions taken to date
by the Michelin Group to move forward in the four key TCFD
areas – governance, strategy, risk management and targets –
are presented in detail below.
2021
▶governance: as part of the Supervisory Board’s role of
exercising permanent oversight of the Group’s management,
its new CSR Committee began to review the climate strategy
and issue recommendations;
▶strategy and innovation: four climate scenarios comprising
narrative descriptions and quantitative socio-economic and
physical assumptions were updated, deepened and deployed
for use at two levels:
• by the business lines, regional organizations, operating
units, corporate departments and other units as part of
strategic thinking and ideation exercises,
• by the Group Executive Committee, to compare them to
Group strategy and analyze their resilience with regard to
climate change and other indirect risks arising from the
environmental transition;
▶risk management: an initial internal audit of systemic physical
risks was performed and the first pilot study of the
vulnerability of certain Group operations was completed;
▶targets: joining the “Race to Zero” campaign, answering the
call to action led by the Science Based Targets initiative (SBTi),
the United Nations Global Compact and We Mean Business
and committing to reach net zero emissions by 2050.
Detailed information concerning the application of TCFD recommendations may be found in the public answers to the CDP Climate
Change 2021 questionnaire (see https://www.cdp.net/en/responses). A summary of these disclosures is presented below(1):
Governance
Roles, responsibilities
and control
Transition plan/decarbonizing our operations and adaptation plan
The Environmental Governance Committee carefully reviews climate-related and energy transition issues
impacting the Group’s business operations and, under this remit, makes decisions on behalf of the Group
Executive Committee. It ensures that targets for decarbonizing operations are met and that climate-related
physical risks are identified and properly managed. The body comprises two Executive Committee members and
representatives from eight departments, supported by a group of in-house experts forming the Carbon Strategy
Committee(2). Via the Executive Committee, it may receive opinions concerning the Group’s climate change
strategy issued by the Corporate Stakeholders Committee(3).
Transition plan/Company strategy
The Group Executive Committee manages the transition plan in relation to the Group's strategy, based on its
analysis of the climate scenarios. Climate change-related transition issues are identified in the strategic planning
process and the resulting priorities are then defined in the business line strategic plans.
Climate strategy
As part of the Supervisory Board’s role of exercising permanent oversight of the Group’s management, its new
CSR Committee reviews the climate strategy and issues recommendations.
Strategy
Time horizons considered
when identifying, assessing
and managing risks and
opportunities
Long-term (16 to 30 years)
Build a roadmap to lower the carbon intensity of the Group’s business operations, aligned with the Paris
Agreement/1.5°C scenario and the goal of reaching net zero emissions in Scopes 1, 2 and 3 by 2050; analyze
physical risks with climate scenario modeling; and contribute to the transportation industry zero net emissions
roadmaps built and led by the Transport Decarbonization Alliance and the Paris Process for Mobility and Climate
consortia.
Medium-term (6 to 15 years)
Manage strategic risks and opportunities requiring decisions related to (i) manufacturing facilities (type of energy,
energy utilities, deployment of new technologies and/or processes); (ii) projected CO2 allowance costs;
(iii) research and development priorities (environmental footprint of future tire generations, new powertrains and
high-tech content materials); (iv) the strategic foresight analysis of trends in the mobility of people and goods;
(v) responses to forthcoming changes in standards and regulations; (vi) the analysis of qualitative/quantitative
climate scenarios by the Group Executive Committee, business lines and operating units; (vii) the analysis of
physical risks with climate scenario modeling; and (viii) the management of SBTi and other CO2 emission
reduction targets.
(1) This information has been structured according to the framework recommended for energy and transportation companies in “Climate-related financial reporting:
Operational framework for a constructive dialogue between investors and companies”, issued in July 2018 by the MEDEF French business network, the French
Insurance Federation and the French Asset Management Association.
(2) See section 4.1.4 The Environment/Environmental governance.
(3) See section 4.1.2.5 a) Dialogue with stakeholders.
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Short-term (0 to 5 years)
Operational management: (i) analyze exogenous factors, such as investors, customers, competitors, NGOs,
institutions and other stakeholders; (ii) make decisions concerning reductions in Scope 1 and 2 carbon emissions
(e.g., energy efficiency projects and renewable energy purchases) and Scope 3 emissions (e.g., supply chain
organization, engagement with suppliers and new partnerships); (iii) manage regulated carbon quotas;
(iv) prepare strategic plans and create new solutions and partnerships; (v) implement R&D projects in low carbon/
energy efficient materials, products and services; (vi) track changes in standards and regulations; (vii) deploy a
tactical strategy to address standards and regulations; (viii) manage prevention and protection measures against
extreme weather events; (ix) engage with outside sustainable mobility stakeholders, such as the Movin’On
Summit, Movin’On LABS, SUM4All and the Transport Decarbonization Alliance, to decarbonize the
transportation industry; and (x) manage internal and external communication.
Climate scenarios used
Scope 1 and 2 emissions pathways
The 2030 and 2050 reduction targets(1) were determined on the basis of the 1.5°C scenario: "In model pathways
with no or limited overshoot of 1.5°C, global net anthropogenic CO2 emissions decline by about 45% from
2010 levels by 2030 (40-60% interquartile range), reaching net zero around 2050 (2045-2055 interquartile
range)." IPCC Special Report: Global warming of 1.5°C.
Strategy and innovation
Based on best state-of-the-art practices, the Group has prepared four possible scenarios(2) for how its business
environment could evolve under the impact of climate change and the policies likely to emerge as a result(3).
Increase in global mean surface temperature:
▶four global warming pathways ranging from 1.7°C to 4.4°C by the end of the century.
Time horizons:
▶2035, with a qualitative description, a quantitative characterization based on a set of macro-indicators and a
global representation of scenarios by country;
▶2050, with elaborate, situational narratives painting a vivid picture of life in each scenario.
Contextual assumptions underlying all four scenarios:
▶the coexistence of four CO2 pathways over the coming decades in the different countries of the world;
▶a closer look at the key decade from 2024 to 2035;
▶consideration of environmental issues other than climate change (resource depletion, collapse of biodiversity,
impact of various forms of pollution).
Constant assumptions:
▶UN population forecasts;
▶human beings are essentially driven by their own interests and the interests of their loved ones and
communities;
▶a world as politically and socio-economically fragmented as today’s, in which countries choose a variety of
different strategies;
▶an irreversibly digitalized world.
Variable assumptions:
▶the landscape of environmental crises and shocks having an impact on society;
▶the economic system and economic growth;
▶the pace of energy decarbonization;
▶the development of technological inventions and strategies;
▶predominant lifestyles and consumer spending patterns;
▶the political regime and its priorities.
Main risks and
opportunities and their
potential financial impacts
Transition opportunities
▶Market: develop and promote mobility products and services that are low-carbon and/or suitable for use in adverse
weather conditions, in response to market trends driven by legislation (emissions standards, minimum tire
performance standards), technology (growing take-up of electric vehicles) or emerging new demand from
corporate customers and consumers. An initiative is underway to increase the robustness of the method for
assessing the short-term financial impact of climate change-related market opportunities. In the case of low-carbon
products and services corresponding to the definitions in Regulation (EU) No. 2020/852 implementing the EU
taxonomy on sustainable activities, the €13.6 billion revenue figure used in 2021 came from the two eligible
activities (3.6 and 8.2) and accounted for 57% of consolidated net sales(4).
(1) See section 4.1.4.1 a) Transition plan: decarbonizing our operations.
(2) An additional, extremely pessimistic alternative scenario was used to test the values attributed to the Group's plant and equipment. The results are presented in
note 2.6 to the consolidated financial statements.
(3) See 4.1.4.1 b) Transition plan: company strategy.
(4) See 4.1.4.1 d) Engagement and transparency/2021 report on the Michelin Group’s activities in respect of the European Taxonomy Regulation.
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▶Technologies: develop and bring to market hydrogen propulsion systems supporting the energy transition on
a variety of vehicles. Annual revenue over the medium term estimated at €1,500 million.
▶Sourcing: improve reliability across the natural rubber supply chain with an industry-wide commitment to
sustainable production(1). The financial impact will depend on market trends and the management of global
supply risks, which may or not be related to climate change(2). In the short term, it is estimated that initiatives
to create a sustainable natural rubber value chain are contributing USD 70 million to the value of the
MICHELIN brand.
Transition risks
▶Market: achieving net-zero emissions by 2050, thereby meeting customer and investor expectations, entails
higher costs to introduce or deploy new practices, technologies, processes and organizations. Over the
medium term, the average annual cost of reducing the Scope 1 and 2 carbon footprint is estimated at
€60 million in capital expenditure and operating expense.
▶Market: the energy transition to a low-carbon economy with low-carbon mobility for people and goods
presents both opportunities (see above) and risks. These are emerging market risks and as such are reassessed
iteratively in light of prevailing climate scenarios and their related impacts(3).
▶Legal and regulatory compliance: increasing CO2 allowance costs on regulated markets. Annual operating
expense costs over the short term estimated at between €9 million and €19 million.
Physical risks
▶Extreme weather events: deterioration of production capacity in facilities operated by the Group and its
suppliers caused by increasingly frequent and severe extreme weather events (production shutdowns, supply
chain disruptions, damage to production assets). Over the short term, the maximum net impact on annual
operating income is estimated at €150 million to €400 million.
Metrics and targets
Greenhouse gas emissions
CO2 emissions, Scopes 1, 2 and 3: see section 4.1.4.1 a) Transition plan: decarbonizing our operations/Inventory
of Scope 1, 2 and 3 CO2 emissions.
Reduction targets
Scopes 1 and 2: see section 4.1.4.1 a) Transition plan: decarbonizing our activities/Scopes 1 & 2: reaching net
zero emissions in the manufacturing operations by 2050.
Required Scope 3 (excluding the in-use phase): see section 4.1.4.1 a) Transition plan: decarbonizing our
operations/Scope 3: reducing emissions from our logistics operations/Scope 3: reducing emissions from
purchased raw materials and components/Scope 3: upstream purchased energy and end-of-life treatment of
sold products.
Optional Scope 3 (in-use phase): see section 4.1.4.1 b) Transition plan: company strategy/Opportunities and risks/
Designing ultra-energy efficient products.
Spending
Manufacturing operations: The €37 million invested in 2021 as part of the Scope 1 and 2 decarbonization plan is
disclosed below (see 2021 report on the Michelin Group’s activities in respect of the European Taxonomy
Regulation/activity 7.3).
R&D projects: In 2021, around 18% of the total R&D budget was allocated to continuously improving tire energy
efficiency and developing hydrogen mobility technologies. For 2022, this indicator will correspond to the
definitions in the EU taxonomy.
2021 report on the Michelin Group’s activities in respect of the European Taxonomy Regulation
Regulation (EU) No. 2020/852 of June 18, 2020 and its
supporting Delegated Acts, commonly known as the European
Taxonomy Regulation, establishes a framework to encourage
investment in sustainable economic activities by requiring
companies to disclose the proportion of their sales, capital
expenditure and operating expenditure that contributes
substantially to one or more of six environmental objectives:
▶climate change mitigation;
▶climate change adaptation;
▶sustainable use and protection of water and marine
resources;
▶transition to a circular economy, waste prevention and
recycling;
▶pollution prevention and control;
▶protection and restoration of biodiversity and ecosystems.
The European Commission has therefore defined a certain
number of technical screening criteria designed to build a
common language of sustainability and, consequently, support
investment flows into activities that make a substantial
contribution to meeting those six objectives.
This information must be disclosed every year in the Non-
Financial Statement, which in France is included in the
management report for the year.
Scope
For this initial taxonomy reporting exercise, only the economic
activities recognized by the European Regulation as substantially
contributing to the first two environmental objectives – climate
change mitigation and climate change adaptation – had to be
disclosed.
(1) See section 4.1.1.2 c) A dedicated approach for natural rubber.
(2) See section 2.1 Financial risks associated with climate change and the low-carbon strategy.
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As a result, the Regulation provided for a lighter reporting
procedure for 2021, the first year of application. In this case,
companies must disclose the proportion of their sales, capital
expenditure and operating expenses that are associated with
economic activities that qualify as “taxonomy-eligible,” i.e.,
classified in the EU taxonomy system.
Starting in 2023, companies will have to disclose the proportion
of their 2022 sales, capital expenditure and operating expenses
that are “taxonomy-aligned,” i.e., that meet the technical
screening criteria associated with each of the eligible activities,
in three ways: they contribute substantially to one or more of
the six environmental objectives; they do no significant harm to
the remaining objectives; they comply with the Regulation’s
minimum social safeguards.
The sales, capital expenditure and operating expenses reviewed
for the purpose of this report concern all of the Michelin
Group’s worldwide operations, corresponding to the scope of
consolidated financial reporting for the year. This complies with
Delegated Regulation (EU) 2021/2178 supporting Article 8 of
EU Taxonomy Regulation 2020/852, which requires disclosure
of the line items in the financial statements underlying the
turnover (revenue) and capital expenditure key performance
indicators (KPIs).
Reporting cycle
As with the Non-Financial Statement, the reporting cycle is
annual, with the data used for this year's report covering the
12 months from January 1 to December 31, 2021.
Joint ventures and associates
Because disclosures must be aligned with IFRS financial ratios,
companies in which the Group exercises joint control or
significant influence are excluded from the calculation of the
KPIs defined by the Delegated Act of the Taxonomy Regulation.
As a result, only fully consolidated subsidiaries of the Michelin
Group are included in the calculation of the sales, capital
expenditure and operating expense indicators. On the other
hand, the Delegated Act provides for the possibility of reporting
additional ratios that would include joint ventures and
associates.
Partnerships with joint ventures are an integral part of the
Group’s “All Sustainable” growth strategy with, around and
beyond tires. As such, their relationship with taxonomy-eligible
activities is discussed even though their activity is excluded from
the disclosed indicators. For example, Symbio, a joint venture
owned equally by Michelin and Faurecia, is dedicated to
designing, manufacturing and marketing hydrogen fuel cell
systems for all types of electric vehicles. Its business therefore
falls within the scope of activity 3.2 “Manufacture of equipment
for the production and use of hydrogen” and contributes to
the environmental objective of mitigating climate risk.
Treatment of the tire manufacturing activity –
technical screening criteria
To date, the “manufacture of rubber tyres and tubes, retreading
and rebuilding of rubber tyres” (NACE Code C2211) is not one
of the economic activities listed in the Taxonomy with regard to
the two climate change-related environmental objectives.
However, the tire industry can contribute substantially to
meeting the targets for reducing greenhouse gas emissions in
the overland transportation industry. Because tires burn fuel as
they roll (and thereby release CO2 in vehicles with conventional
powertrains), they are an important factor in a vehicle’s energy
efficiency. Known as rolling resistance, this phenomenon
accounts for up to 20% of emissions from a passenger car and
more than 30% from a truck. Rolling resistance is regulated at
the EU level through minimum performance standards and
labeling to encourage consumers to choose the most energy
efficient tires, i.e., the ones with the lowest rolling resistance.
ROLLING RESISTANCE: EUROPEAN LABELING SCALE REDUCED FROM 6 TO 5 CLASSES IN 2021
Passenger car tires
Light truck tires
Truck tires
kg/t*
Old
New
kg/t*
kg/t*
Old
New
kg/t*
kg/t*
Old
New
kg/t*
6.5
A
A
6.5
5.5
A
A
5.5
4
A
A
4
7.7
B
B
7.7
6.7
B
B
6.7
5
B
B
5
9
C
C
9
8
C
C
8
6
C
C
6
10.5
E
D
10.5
9.2
E
D
9
7
D
D
7
12
F
E
10.5
F
E
8
E
E
G
G
F
*
Upper limit of the rolling resistance class.
At the current pace of improvement in the rolling resistance of
tires sold in Europe, the reduction in the proportion of CO2
released by rolling resistance would represent 10% of the
targeted 327-million-tonne reduction in greenhouse gas
emissions from the European transportation industry by 2030,
assuming a reduction in CO2 emissions from automotive
transportation corresponding to the well-below 2 degrees
scenario (WB2D). In a more ambitious scenario for tire rolling
resistance innovation, this contribution could rise to 15%, if the
average tire in the European replacement market moves up to
performance class B, or even 20% in the best case, if the
average improves to class A. This means that by improving tire
rolling resistance, technological innovation in the tire industry
can make a substantial contribution to the climate change
mitigation objective.
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A direct link between tire rolling resistance and a vehicle’s carbon emissions
For a passenger car releasing 133 g of CO2 per kilometer, 27 g or 20% are attributable to the rolling resistance of its tires, if they
perform in line with the European market average (class D according to the new European labeling system). If it were equipped with
class C tires, the vehicle’s emissions would decline by 4 g/km, or by 7 g/km with class B tires and by 11 g/km with class A tires.
Pending recognition of this contribution by including it in the
Taxonomy’s economic activity C2211, the Michelin Group has
identified economic activity “3.6 Manufacture of other low-
carbon technologies,” which comprises the “manufacture of
technologies aimed at substantial GHG emission reductions in
other sectors of the economy. The economic activities in this
category could be associated with several NACE codes, in
particular from C22 (...) in accordance with the statistical
classification of economic activities established by Regulation
(EC) No. 1893/2006.”
Under activity 3.6, tires may be deemed to contribute
substantially to the climate change mitigation objective if they
“demonstrate substantial life-cycle GHG emission savings
compared to the best performing alternative technology/
product/solution available on the market.”
Rolling resistance was an obvious choice as a technical screening
criterion for tires, in light of:
▶its direct link to the potential for reducing the transportation
industry's emissions, as detailed above;
▶the text of the Delegated Act of the Taxonomy Regulation
dedicated to the “climate change mitigation” environmental
objective, which mentions tires and rolling resistance in the
description of the “do no significant harm” screening criteria
for urban transport-related activities 6.3 and 6.5. It stipulates
that tires equipping vehicles concerned by these activities
must comply with requirements in the two highest populated
rolling resistance classes on the market;
▶the existence of a European labeling system that sets rolling
resistance standards;
▶its selectivity, given that choosing rolling resistance as a
technical screening criterion effectively excludes so-called
specialty tires from eligibility. For these tires, rolling resistance
is not a particularly relevant performance criterion, even
though, among other customer benefits, they can help
improve fuel efficiency and therefore reduce CO2 emissions.
Compliance of eligible tires with the “low carbon intensity”
concept is based on:
▶the direct link between tire rolling resistance and the
potential for reducing emissions from the transportation
industry, as detailed above;
▶Michelin's decades-long track record of steadily reducing the
rolling resistance of its tires to improve fuel efficiency and
thereby decarbonize the transportation industry, and its
commitment to continue improving the energy efficiency of
its products (with a targeted 10% improvement over the
2021-2030 decade);
▶the exclusion from eligible activities of passenger car, light
truck and truck tires with class E rolling resistance, which is
the least efficient. The European classes have been translated
into minimum rolling resistance standards, expressed in kg/t,
so that every tire sold around the world can be compared to
a universal criterion.
Michelin has calculated an alignment criterion for the tire
business by analogy with the specifications in the Delegated Act
of the Taxonomy Regulation mentioned above, while restricting
it to the two highest rolling resistance classes on the market.
The European classes have been translated into minimum rolling
resistance standards, expressed in kg/t, so that every tire sold
around the world can be compared to a universal criterion. As a
result, only the most energy efficient tires on the market, with
rolling resistance within the upper limits defined in the table
below, will be considered as aligned.
Tire category
Rolling
resistance
class
Maximum rolling resistance
for aligned tires (kg/t)
Passenger car
tires
A and B
7.7
Light truck tires
A and B
6.7
Truck tires
A and B
5.0
This approach reflects the spirit of the alignment criterion in
activity 3.6, which requires that the technological solution reduce
carbon emissions more substantially than the best performing
alternatives on the market. In this way, selecting only tires in
higher rolling resistance classes than the market average ensures
compliance with the criterion, because the designated rolling
resistance ceilings are extremely selective. For example, a
document published by the European Tyre & Rubber
Manufacturers' Association in February 2021 noted that in 2020:
▶class A and B passenger car tires still only represent 5.3% of
the European market (2.3% in 2012-2013), with class D
accounting for a predominant 48.5%;
▶class A and B van tires still only represent 3.4% of the
European market (2.8% in 2012-2013), with class D
accounting for a predominant 53.8%;
▶class A and B truck tires still represent only 8.5% of the
European market (4.4% in 2012-2013), with demand
focused on classes C-D (74%).
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Table of eligible activities
The following table shows all of the Michelin Group’s activities identified as eligible (excluding the activities of joint ventures and
associates):
European taxonomy
Corresponding
Michlin Group
activity
Substantial
contribution to one
of the two climate
change-related
objectives
Reported KPIs
Economic
activity
Description
Michelin activity Mitigation
Adaptation
Net sales Capex
Opex
3.6 Manufacture
of other low-
carbon
technologies
Manufacture of technologies aimed
at substantial GHG
emission reductions
Passenger car and
Light truck tire
manufacturing
X
X
X
X
3.6 Manufacture
of other low-
carbon
technologies
Manufacture of technologies aimed
at substantial GHG
emission reductions
Truck tire
manufacturing
X
X
X
X
7.3 Installation,
maintenance and
repair of energy
efficiency
equipment
Individual renovation measures
consisting in installation,
maintenance or repair of energy
efficiency equipment
Production plant
decarbonization
plan
X
X
8.2 Data-driven
solutions for
GHG emissions
reductions
Development or use of ICT
solutions that are aimed at
collecting, transmitting, storing
data and at its modeling and use
where those activities are
predominantly aimed at the
provision of data and analytics
enabling GHG emission reductions
Development
of fleet
management
telematics
solutions to
improve fleet
fuel efficiency
X
X
X
X
Principles used to calculate KPIs
by eligible activity
Sales
Sales data concern:
▶sales of passenger car, light truck and truck tires,
corresponding to Taxonomy activity 3.6;
▶sales of the fleet management services and solutions,
corresponding to Taxonomy activity 8.2 (e.g., the Masternaut,
Sascar,
NexTraq
and
Watèa
businesses).
The
fleet
management business, which relies heavily on the collection,
processing and reporting of requisite data, focuses on
lowering customer fuel consumption, for example by offering
solutions to optimize routes or driving practices.
Sales data exclude sales of motorsports tires, specialty tires and
any other tires that do not meet the definition of the eligible tire
activity described above.
These sales are included in the Group's consolidated sales, as
reported in the consolidated financial statements, to calculate
the percentage of eligible sales.
Capital expenditure
The European Taxonomy defines the methods for calculating
alignment ratios. By analogy, the Group reports its eligible
capital expenditure, which may be:
▶associated with the activity’s eligible sales;
▶associated with a capital plan to expand eligible activities or
to transform eligible activities into aligned activities within
five years, or up to ten years if warranted by the features of
the activity in question;
▶individual capital outlays that are not associated with an
activity intended to be marketed by the Group.
Some of the Group’s capital expenditure is directly committed
to each activity. For other capital expenditure (in infrastructure
shared by several activities, for example, or in semi-finished
goods production units serving several activities), the Group
uses an indirect allocation method, based on the proportion of
total direct expenditure. The capital expenditure reported for a
given activity is therefore all of the capital expenditure directly
committed to it plus the indirect capital expenditure allocated to
it, less capital expenditure on corporate projects.
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Some capital expenditure may be associated with an eligible activity
that is not marketed by the Group. To avoid double counting,
these outlays are recorded separately. This category includes capital
projects to support the production plant decarbonization plan,
which corresponds to Taxonomy activity 7.3.
Operating expenses
In accordance with the European Taxonomy, the only operating
expenses disclosed in this report are direct non-capitalized costs
relating to research and development, building renovation
measures, short-term leases, maintenance and repair and any
other direct expenses related to the day-to-day servicing of the
property, plant and equipment assets. These expenses, which
constitute the denominator by which the eligible expenses will be
divided to determine the KPI, are recorded in the Group’s
information systems at the level of the consolidated financial
statements. These expenses are not recorded on a more granular
level, however, making it impossible to calculate the amount to
be included in the numerator to determine the proportion of
eligible operating expenses without performing complex
estimates, which would in any case be too approximate to be
meaningful. Eligible operating expenses were therefore calculated
proportionally to the percentage of eligible sales.
Eligible proportion of 2021 sales, capital expenditure and operating expenses:
(in € millions)
ELIGIBILITY
ECONOMIC ACTIVITY
SALES
CAPEX
OPEX
A – ELIGIBLE ACTIVITIES
3.6 Manufacture of other low-carbon technologies
13,424
1,123
(860)
7.3 Installation, maintenance and repair of energy efficiency equipment
0
37
0
8.2 Data-driven solutions for GHG emissions reductions
178
76
(11)
Total A
13,602
1,237
-871
%
57%
66%
57%
B – NON-ELIGIBLE ACTIVITIES
10,193
645
-653
%
43%
34%
43%
TOTAL (A+B)
23,795
1,882
-1,524
4.1.4.2
Enhancing the circularity of our products SDG 8.4, 9.4, 12.2, 12.4, 12.5, 13.2 and 17.17.
Risks related to other impacts of raw materials on the environment
(excluding climate change)(1)
As the only point of contact between a vehicle and the road, tires play a vital role in road safety. They are made of around
200 different materials, such as elastomers (natural and synthetic rubber), plasticizers and chemicals, which are all essential to
delivering performance.
A variety of raw material factors, such as their natural or fossil origin, their production or extraction method and their increasing
demand can generate environmental impacts, including resource depletion, pollution and/or loss of biodiversity.
Through a policy of continuous innovation, focused on
sustainable mobility, Michelin is making every effort to
attenuate the environmental impact of its products throughout
their life cycle and to help preserve resources.
This policy is grounded in eco-design practices, the use of life
cycle assessments, and the deployment of a circular economy
approach known as Michelin 4R.
In 2017, the Group presented its ambitions for sustainable
mobility through its Vision concept, which comprises both a
wheel and an airless tire, fully connected and made from
sustainable materials, whose “rechargeable” tread can be
produced on demand by 3D printing. Vision lies at the core of
Michelin’s sustainable development and mobility strategy and
offers a compelling illustration of its circular economy approach.
At the Movin'On Summit in 2019, Michelin unveiled UPTIS, a
combined airless, puncture-proof tire and wheel assembly
developed in partnership with General Motors. UPTIS eliminates
any risk of flats or blowouts, thereby improving both the safety of
motorists and the productivity of business fleet operations. This
feature also reduces the use of raw materials in production,
which in turn reduces waste. UPTIS represents a decisive
milestone in making the Vision concept a reality.
(1) See section 4.1 Sustainable Development and Mobility Report/Challenges and performance/Materiality Matrix.
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4.1.4.2 a) Increment the use of sustainable materials
OUR OBJECTIVE:
The Group’s ambitious objective is to manufacture its tires
entirely from sustainable materials by 2050, backed by a
commitment to incorporating an average of 40%
sustainable materials by 2030.
This commitment is measured by the Average Sustainable
Materials Rate (ASMR) indicator
In 2021, the percentage stood at 29%, an improvement on
2020 and in line with the roadmap to meet the 2030 target of
40%.
Due to the nature of the issues addressed, growth in this
percentage has not been nor will be linear over the indicator’s
time frame. In 2021, improvements were delivered on schedule
in the maturity of specific technologies in R&D projects and in
the traceability of certain supply chains with our suppliers. That
reflected Michelin’s active commitment to meeting its
sustainable materials objective.
Michelin defines sustainable materials as renewable bio-based
materials, such as natural rubber or butadiene produced from
biomass ethanol, or materials made from recycled sources
(recovered or reused materials).
Renewable bio-based materials(1) are made from raw
materials derived from natural resources that are naturally
replenished on a human timescale, such as biomass. This
excludes fossil fuels like oil, natural gas and coal, as well as
minerals.
Recycled(2) materials are made from raw materials or feedstocks
recovered from industrial or household waste that has been
reprocessed into products, materials or substances. Recycling
does not include energy recovery or the reprocessing into
materials that are to be used as fuels.
THE EMPREINTE PROJECT
To take its All-Sustainable approach to the next level, Michelin
launched the EMPREINTE project in late 2020.
Funded by the PIA future investment program run by ADEME as
part of the French automotive industry recovery plan, the new
project is designed to deliver effective solutions for recycling or
bio-sourcing materials and eco-designing products. These
solutions will improve the overall environmental footprint of
tires by guaranteeing in-use performance fully aligned with
expectations for new vehicles and emerging mobility needs.
By addressing the major challenges of sustainable mobility, the
EMPREINTE project is targeting two strategic markets: personal
mobility (Passenger car tires) and freight transportation (Truck
tires).
The five-year project covers four closely related research
areas, which will help drive future innovation:
▶materials: development of new sustainable materials
(recycled and biosourced, for example from recovered waste)
and their production processes;
▶tires:
design
and
development
of
“sustainable”
demonstrator tires, made from these new materials but still
delivering the same optimal performance;
▶connectivity: development of connected capabilities and
predictive maintenance solutions to optimize in-use tire
impacts;
▶manufacturing:
optimization
of
tire
manufacturing
processes to manage the industrial complexity associated
with these new materials.
4.1.4.2 b) Deploying eco-design practices
Michelin is gradually rolling out a process to systematically
assess all its new product projects based on eco-design
principles.
In 2020, Michelin joined the Pôle Eco-conception association,
France’s leading center for eco-design and life cycle
performance management, to improve its methods, make its
process more robust and continue to develop its eco-design
capabilities.
In 2021, the Environmental Governance body approved the
publication of an “Eco-design Charter” based on guidelines in
the ISO 14006:2020 and NF X30-264: February 2, 2013
standards. It presents key eco-design principles and specifies the
basic rules that all Group units are expected to apply to any
project engaged in an eco-design process (e.g., involving
research, products, services or business, digital and/or
production processes).
(1) As defined by the American Chemical Society in “12 Principles of Green Chemistry”.
(2) As defined in European Directive 2008/98/EC on waste.
26%
28%
29%
40%
100%
2050
2030
2021
2020
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4.1.4.2 c) Broadening the use of life cycle assessments
Michelin has long used life cycle assessments (LCAs) and is
continuously improving its expertise in measuring the lifetime
environmental impact of its products via such indicators as
global warming potential, resource depletion, photochemical
oxidation and water acidification and eutrophication. This
approach, which is based on ISO 14040 guidelines, provides
greater insight into these impacts that then informs the design
choices made to reduce them.
Since 2012, Michelin has been involved with eight other
international corporations in supporting the International Life
Cycle (ILC) Chair, the primary research unit of the International
Reference Centre for the Life Cycle of Products, Processes and
Services (CIRAIG). In 2017, a five-year funding agreement was
signed with the Chair, which is addressing such major issues as
the decarbonization of power generation and use, the efficient
use of resources and energy, the circularity of material flows
and planetary limits.
Since 2017, Michelin has been a member of ScoreLCA, a French
association that conducts research commissioned by its 12 active
members and partners. Like those pursued by the ILC Chair, its
research programs are helping to enhance the methodological
skills used by the Group’s LCA expertise unit.
Similarly, Michelin has worked for several years with other
tiremakers in the Tire Industry Project (TIP)(1) to draft product
category rules (PCRs) defining a set of industry-specific,
ISO 14025-compliant guidelines that manufacturers can apply to
determine the environmental impact of their products with a view
to creating Environmental Product Declarations (EPDs). The TIP
has developed a PCR that is technically comprehensive, global in
scope and capable of supporting consistent, harmonized
assessments.
In 2020, Michelin became the first tiremaker to issue a tire EPD,
as part of the market launch of the new MICHELIN e.Primacy
tire. Issuing the two EPDs for the new line-up underscored the
Group’s
commitment
to
transparently
reporting
the
environmental impacts of its products(2).
4.1.4.2 d) The Michelin 4R circular economy process
LCAs have shown that production phases, from raw materials to
finished product, can account for up to 30% of a tire's
environmental impact. This poses a variety of challenges, such as
reducing the impact of mobility on ecosystems, natural resources
and human health, limiting its effects on climate change and
securing supply. To ensure that natural resources are used more
wisely, Michelin is simultaneously rolling out four initiatives under
the Michelin 4R banner, for Reduce, Reuse, Recycle and Renew.
▶Since 2017, this process has been managed by the Circular
Economy Operational Committee, whose multidisciplinary
members are led by the Sustainable Development and
Mobility team. It defines and tracks process deployment,
identifies risks and opportunities, leads the related initiatives
and proactively plans for changes in legislation and
compliance. Its activities and outcomes are validated by the
Environmental Governance body (see section 4.1.4 The
Environment/Environmental governance).
Reduce
This aspect involves using fewer raw materials and less energy to
make tires that are lighter, longer-lasting and more energy
efficient, all while delivering the same safe driving experience and
ever-improved performance.
But Michelin does not just set objectives for new tires, it is also
committed to delivering performance over time by extensively
testing worn tires, so as to demonstrate that tires can and should
deliver very high performance until the tread wear indicators
appear. If motorists were confident that their tires would remain
safe throughout their useful lives, they would be encouraged to
use them until they reached the legal minimum tread depth – of
1.6 mm in Europe – which would avoid the unnecessary use of
400 million tires a year worldwide and help to reduce CO2
emissions by up to 35 million tonnes a year.
Michelin is therefore pleased that European institutions
accepted the principle of testing wet grip on worn tires in
revising the General Safety Regulation for vehicles(3), adopted in
November 2019. Along with the entire automotive industry,
Michelin is contributing to the working group formed as part of
the UNECE World Forum for the Harmonization of Vehicle
Regulations, which is defining a test method for future
legislation.
(1) Tire Industry Project: Launched in 2005, the Tire Industry Project is a voluntary initiative dedicated to addressing the tire industry’s sustainability challenges and
issues. It currently comprises 11 of the world’s leading tiremakers: Bridgestone Corporation, Continental AG, Cooper Tire & Rubber Company, The Goodyear Tire &
Rubber Company, Hankook Tire Company, Kumho Tire Company, Inc., Michelin Group, Pirelli Tyre SpA., Sumitomo Rubber Industries, Ltd., Toyo Tire & Rubber
Company Ltd., and Yokohama Rubber Co., Ltd. The TIP operates under the auspices of World Business Council for Sustainable Development (WBCSD).
(2) See https://www.environdec.com/library/_?Epd=18918.
(3) Regulation (EU) No. 2019/2144 of the European Parliament and of the Council of November 27, 2019 on type-approval requirements for motor vehicles and
their trailers, and systems, components and separate technical units intended for such vehicles, as regards their general safety and the protection of vehicle
occupants and vulnerable road users.
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Reuse
Raw materials can also be saved during the in-use phase by
repairing, regrooving and retreading tires. Michelin offers
retreading solutions for Truck, Aircraft and Earthmover tires.
Michelin Truck tires can be regrooved when the tread is worn,
then mold-cure retreaded using the Remix process or pre-cure
retreaded and regrooved a second time before the components
are reused in end-of-life tire recovery solutions. For example,
assuming the tire has a theoretical lifespan of 100,000 km,
regrooving can add 25,000 km without any additional material.
Retreading can then add a further 100,000 km using four times
less raw material than it takes to make a new tire. Lastly, the
final regrooving increases total tread life by another 25,000 km.
In all, with one retreading and two regroovings, a Michelin
Truck tire can last 2.5 times longer than a new Michelin tire
with only around 30% additional material.
In other words, Michelin’s retreading/regrooving solutions can
keep truckers on the road 2.5 times longer on the same tire, or
up to one million kilometers for certain long-haul tires. This
offers three benefits compared with a non-retreadable, non-
regroovable tire, whether premium or budget:
▶a financial benefit from the lower cost per kilometer;
▶environmental benefits, by considerably reducing raw
materials use;
▶social benefits, by creating more jobs. Everywhere that
retreading/regrooving is practiced, the logistics operations
and related services (collection, inspection, maintenance,
retailing, etc.) help to stimulate the local economy.
Recycle
The deployment of technically and economically viable systems
to recycle and treat end-of-life tires is a major challenge that
Michelin is determined to address, in every country, in
cooperation with all of the stakeholders concerned. Indeed, for
many years, the Group has been encouraging the introduction
of effective solutions and continues to play a leading role.
A study conducted in 2019 showed that 88% of all end-of-life
tires, regardless of brand, sold in the 45 countries under review
were collected and the majority of them were recovered and
reused(1). According to data presented in this same study, of the
total tire tonnage brought to market by Michelin in 2019 in
those countries, an estimated 76% was recovered and reused,
of which 43% as material, 29% as fuel and 4% in earthworks.
In 2021, the Group continued to participate in end-of-life tire
recycling programs through its active membership in a variety of
industry associations, including in particular:
▶the Tire Industry Project (TIP): Building on the knowledge of
recycling volumes and processes gained in previous years, the
TIP has come up with an End-of-Life Tire (ELT) Management
Toolkit (World Business Council for Sustainable Development –
WBCSD) to assist stakeholders in implementing end-of-life tire
management systems. At the same time, because it feels that
ELT management solutions are deployed locally and require the
involvement of everyone across the value chain, TIP has
organized stakeholder workshops to explore the issues and
challenges involved in managing and recycling ELTs;
▶the European Tyre and Rubber Manufacturers Association
(ETRMA), the United States Tire Manufacturers Association
(USTMA) and the Japan Automobile Tyre Manufacturers
Association (JATMA). By working with these industry
associations, Michelin is making every effort to ensure that
end-of-life tires are properly collected and processed, thereby
demonstrating its support for the concept of extended
producer responsibility.
Michelin is also exercising its influence to encourage material
recovery, which optimizes the reuse of tire components as
secondary raw materials and generally offers a smaller carbon
footprint than energy recovery.
The Group is also investing in the development of end-of-life
tire recovery and reuse technologies.
▶In 2017, Michelin acquired Lehigh Technologies, a US
company specializing in the design and production of
micronized rubber powders derived from recycled end-of-life
tires and other rubber-based industrial products.
▶In April 2020, the Group announced a partnership with
Sweden’s Enviro to develop and mass produce a highly
innovative pyrolysis technology that recovers high-quality
products like recycled carbon black, pyrolysis oil, steel and
gas, which can then be re-incorporated into the production
cycle of various industries.
▶In 2021, Michelin broke ground on its first tire recycling plant
in the world, in a joint venture with Enviro, which has
developed a patented technology to recover carbon black, oil,
steel and gas from end-of-life tires. Based in Chile’s
Antofagasta region, the plant will be able to recycle
30,000 tonnes of earthmover tires a year, or nearly 60% of
such tires scrapped every year nationwide. Production start-up
is scheduled for 2024.
Michelin is also involved in other recycling ventures, such as the
partnership formed in November 2020 with Canadian start-up
Pyrowave to speed up the industrialization of an innovative
technology to recycle polystyrene plastic waste.
The Pyrowave process breaks down polystyrene to recover its
original building blocks of styrene monomers, a key component
in synthetic rubber. Once recovered, the monomers can be used
in the manufacture of synthetic elastomers for our tires, as well
as in new polystyrene products and many other applications.
With this partnership, Michelin is helping new value chains to
emerge in the circular plastics economy.
(1) Global ELT Management – A global state of knowledge on regulation, management systems, impacts of recovery and technologies, Tire Industry Project,
December 2019: https://www.wbcsd.org/Sector-Projects/Tire-Industry-Project/End-of-Life-Tires-ELTs.
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On November 22, 2021 Michelin and Bridgestone jointly
issued a call to action to enrich the recycling ecosystem for end-
of-life tires and promote the circular economy in the rubber
industry. The two main global tire leaders hope to enable and
increase the use of carbon black recovered from recycled tires(1).
In addition, for more than ten years now, Michelin has been
ensuring that all of its tire manufacturing waste is recovered(2).
BlackCycle, a European project for recycling end-of-life
tires into new tires
Launched in 2020, the BlackCycle project brings together
13 organizations(3) in a European public-private partnership that
aims to create, develop and optimize a full value chain, from
ELT feedstock to secondary raw materials (SRMs), with no waste
of resources in any part of the chain and a specific attention for
the environmental impact. These SRMs will be used to develop
new ranges of passenger car and truck tires, which will be sold
commercially in European and global markets.
Funded by the Horizon 2020 program, the consortium is based
in five European countries (France, Spain, Germany, Greece and
Switzerland) and includes seven industrial partners, five research
& technological organizations (RTOs) and an innovation cluster.
Coordinated by Michelin, its governance system comprises a
steering committee, a cluster synergies board and a technical
support committee.
Renew
Michelin is committed to ensuring that by 2050, all the
materials used to make its tires are sustainable. To meet this
major challenge, the Group is encouraging the use of
sustainable recycled and/or biosourced materials such as natural
rubber and certain plant-based oils and resins. In the case of
biosourced materials, large-scale projects have been launched to
shift supply chains to biosourced materials or to improve the
sustainability of natural materials:
▶Project BioButterfly, in partnership with Axens and IFPEN, is
developing a bio-butadiene production process using ethanol
derived from biomass. The goal is to create innovative
synthetic rubbers that are more environmentally responsible.
The development phase got underway in 2015 and the
industrial demonstrator is now nearing completion, for
scheduled start-up in 2022.
▶BioImpulse, a collaborative public/private research project that
is helping to create a new, fully-biosourced adhesive resin
that is safer for human health. The consortium is coordinated
by Michelin subsidiary ResiCare.
Michelin is also a member of BioSpeed, a consortium of
companies committed to accelerating the market uptake of next
generation bio-based materials.
Lastly, Michelin is sustainably and responsibly developing its
natural rubber supply chain(4).
4.1.4.3
Supporting biodiversity SDG 8.4 and 15.9.
Michelin, like every company, relies on biodiversity and
ecosystem services, such as the supply of raw materials, water
provisioning and climate regulation, to conduct its business
sustainably.
Since 2018, the Group has formalized its commitment to
biodiversity by joining the act4nature initiative (act4nature
international since 2020), launched by French association
Entreprises pour l’Environnement (EpE). For the first time, more
than 60 business leaders signed a charter of ten common
commitments, along with individual commitments for each
member company.
Michelin’s individual commitments focused on five main issues:
corporate governance, dialogue with stakeholders, research and
development, raw materials and manufacturing facilities.
Also in 2018, a Group multidisciplinary Biodiversity Operational
Committee was created and tasked with tracking progress
towards the objectives, coordinating initiatives, detecting even
the most latent issues, assessing emerging risks and identifying
opportunities to reduce environmental impacts.
The 2018-2020 commitment outcomes were reviewed in the
2020 Universal Registration Document, page 228.
The 2018 commitments that could not be met in 2020 due to
pandemic-related travel restrictions have been carried forward
to 2022 in the 2030 roadmap:
▶by the end of 2022, 80% of the Group’s sourced natural
rubber volumes should be mapped with RubberWay®;
▶by the end of 2022, all the farms in which Michelin owns an
equity interest should comply with the Sustainable Natural
Rubber Policy.
(1) See section 4.1.4.1 b) Transition plan: decarbonizing our operations/Scope 3: upstream purchased energy and end-of-life treatment of sold products.
(2) See section 4.1.4.4 e) Reducing and managing waste.
(3) Michelin, Orion Engineered Carbons, Pyrum Innovations, Quantis, CSIC-Instituto de Carboquímica (ICB), CPERI/CERTH, Sisener Ingenieros SL, Aliapur, Estato
Umweltservice GmbH, HERA Holding, AXELERA, Ineris and Fundación ICAMCYL (https://blackcycle-project.eu/).
(4) See section 4.1.1.2 c) A dedicated approach for natural rubber.
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4.1.4.3 a) New act4nature international individual commitments
In 2021, Michelin renewed its commitment to easing the pressure on biodiversity from its operations, across the value chain, by setting
objectives for 2030 as part of its “All Sustainable” strategy.
Intermediate milestones for 2025 have also been defined and approved by the Environmental Governance body.
*
Pesticides, herbicides and fertilizer have been replaced with mechanical pest control and alternative solutions.
Commitments for
biodiversity in 2030
Research and
Development
Raw
Materials
Production
Facilities
Natural rubber
used by the Group
meets the
environmental criteria under
the “Sustainable
Natural
Rubber Policy”.
Suppliers
of the raw
materials identified,
excluding natural rubber,
with the most impact on
biodiversity have been
subject to an
evaluation of their
policies and practices.
100%
2030
objective
2030
objective
100%
80%
2030
objective
of the volumes
used
80%
2030
objective
b
y
2
0
2
5
,
a
t
l
e
a
s
t
3
0
p
l
a
n
t
s
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y
2
0
2
5
,
P
r
o
d
u
c
t
s
:
1
0
0
%
S
e
r
v
i
c
e
s
:
P
i
l
o
t
b
y
2
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,
D
r
i
v
e
r
s
b
y
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,
5
0
%
o
f
v
o
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e
s
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s
e
d
b
y
2
0
2
5
,
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l
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a
s
t
1
5
p
l
a
n
t
s
Our facilities apply
the commitment to
banning pesticides*
for maintaining
green spaces.
Introduction
of a biodiversity
management plan
in Group production plants
that appropriately addresses
local issues
All new product ranges and
services marketed in 2030 have
been subjected to a Life Cycle
Assessment (LCA)
including the
biodiversity criteria
of the most
mature LCA
methods.
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2021 Results
Research and development
▶By the end of 2021, life cycle analyses had been performed on:
• 50% of new Passenger car and Light truck product projects,
• 30% of new Truck product projects,
• 65% of new Specialty product projects(1).
Raw materials
Natural rubber
2030 target:
▶In 2021, Michelin began working with its partner WWF
France to review the compliance framework of its Sustainable
Natural Rubber Policy concerning the procurement of natural
rubber from industrial tree farms. Scheduled to continue
through 2022, the review will also devise a pilot risk
mitigation framework for supply regions predominantly
worked by village smallholders.
2020 targets postponed due to the pandemic:
End-2021:
▶64% of the Group’s sourced natural rubber volumes have
been mapped with RubberWay®;
▶all the farms in which Michelin owns an equity interest comply
with the Sustainable Natural Rubber Policy(2).
Other raw materials
▶in 2021, preparatory work on the pilot to be launched in
2025 began with the trials run on the Science Based Targets
Network (SBTN) method.
Manufacturing facilities
▶Twelve facilities are maintaining their grounds without using
any pesticides or herbicides, and three others have phased
out all but one product, under a maximum three-year waiver.
These facilities are all located in France, but the feasibility is
being studied for other European countries;
▶Eight sites that had identified pollution risks implemented
management plans.
Other initiatives undertaken in 2021
During the year, Michelin agreed to participate in the Natural
Capital Lab initiative founded by WWF France and the
Environmental
Accounting
Chair
at
AgroParisTech,
the
University of Paris-Dauphine, Reims Champagne-Ardenne
University and the Louis Bachelier Institute. Led by the
AgroParisTech Foundation, the Lab is dedicated to encouraging
and supporting companies in testing robust sustainability tools,
to help them align their business development with
replenishment timeframes and the planetary boundaries of
natural ecosystems.
As part of the Lab’s undertakings, Michelin began testing the
first two stages of the SBTN method in 2021, supported by its
partner WWF France and an outside consultant.
The method is being used first to identify the material impacts of
Michelin's operations on biodiversity and ecosystems across the
value chain. These impacts will then be mapped geographically
and appropriate priority actions designed for deployment in
response to local issues. The results of the trial program will be
available in the first quarter of 2022.
4.1.4.3 b) Preserving biodiversity and ecosystems in rubber tree farming
As one of the world’s leading users of natural rubber, a critical
raw material in tire manufacturing, Michelin is especially
attentive to the impacts that rubber farming and processing can
have on biodiversity and ecosystems.
The Group’s Sustainable Natural Rubber Policy, published in
2016 and updated in 2021, defines specific environmental
criteria that the Group has pledged to meet, and which are also
included
as
contractual
obligations
in
natural
rubber
procurement contracts.
The
Group
has
reaffirmed
its
commitment
to
“zero
deforestation” and includes among its criteria compliance with
such principles as:
▶preserving High Conservation Value (HCV) areas, High
Carbon Stock (HCS) areas and peatlands;
▶preserving surface water and groundwater;
▶using pesticides and chemical inputs judiciously;
▶avoiding the introduction of potentially invasive alien species;
▶encouraging the creation of environmental buffer zones
around bodies of water, and between producing regions and
HCV areas;
▶supporting biodiversity conservation by raising awareness
among local communities and stakeholders.
The Policy applies to every supplier and is supported by a
roadmap to 2025 that describes the initiatives and objectives
guiding its implementation.
Combating deforestation
Michelin estimates that it sources natural rubber from around
two million of the six million farmers total in the world, most of
whom are village smallholders working on just a few hectares.
To combat deforestation in such a complex, highly fragmented
supply chain, the Group is exercising its duty of care and
conducting a program to review the jurisdictions at risk of
deforestation in its supply countries. Based on this risk analysis,
prevention and mitigation measures will be gradually introduced
to reach a significant portion of the farmers in the jurisdictions
concerned(3).
(1) Products for earthmovers, farm machinery and aircraft, etc.
(2) 100% of the plantations were assessed in a gap analysis, and no major non-compliance was found. Collaborative action plans will be implemented for minor
areas of improvement.
(3) See section 4.1.1.2 c) A dedicated approach for natural rubber.
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Reducing pesticide use
While natural rubber production does not require the intensive
use of chemicals, their judicious use at certain stages in the
production and processing cycle may be effective.
In 2021, Michelin committed to (i) reducing pesticide use
per hectare by 50% by 2025 in the 85,000 hectares of
rubber tree farms operated by the Group and its joint
ventures; (ii) eliminating herbicides entirely on 50% of its
planted hectares by 2030; and (iii) immediately banning
all use of pesticides classified as “prohibited" and "highly
restricted” by the Forest Stewardship Council (FSC).
Michelin also intends to identify any at-risk pesticide use
practices with data inputted into the RubberWay application by
stakeholders across the supply chain and to promote best
alternative farming practices as widely as possible. The
commitment
has
been
approved
by
the
corporate
Environmental Governance body.
4.1.4.3 c) Preserving biodiversity around Group manufacturing and research facilities
Systematically identifying nearby protected areas
In 2013, the Group's production plants and research facilities
conducted an initial survey to identify nearby areas classified
as protected under supranational, national or local legislation.
In 2018, the facilities performed the update recommended
every five years, which showed a total of 196 protected areas
within a radius of five kilometers of each one. When the
updated data was analyzed with regard to the GRI 304-1(1)
indicator, it showed that 28 facilities in eight countries,
representing a total surface area of 6,600 hectares, are located
less than a kilometer from one or more protected areas.
These findings have been integrated into each facility’s
environmental risk analysis and management plans have been
revamped or deployed at the eight plants that had identified
areas at risk of pollution.
Local initiatives designed to address local issues
Ladoux, France
CENA – In July 2011, an agreement was signed with the
Auvergne Regional Nature Conservancy to ensure protection of
a 3.5-hectare area containing continental salt meadows on the
grounds of the Ladoux Technology Center. Extremely rare in
Europe, this type of habitat is home to protected maritime
species in the Auvergne region (such as the sea plantain and
black grass) and has been designated as a priority for
conservation. In 2021, the conservation area was expanded by
1.7 hectares.
NATURA’LADOUX – In addition, the Natura'Ladoux non-profit
organization, which was founded in 2016 and had 79 members
as of year-end 2021, is leading a wide range of local
preservation programs, for example, to vary mowing patterns to
protect orchids, build nest boxes and bird tables for passerines
and perform site development studies. It also organizes activities
to raise employee awareness of the site's biodiversity and
ecosystem,
including
birdsong
recognition
classes
and
observation walks.
CROPLAND – In 2020, for the first time, the cropland used as
testing grounds for agricultural tires, which had been left fallow
for several months, was rehabilitated using only farm
machinery, without any pesticides. In 2021, a steering
committee comprising Center representatives and local farmers
was set up to review and reduce the use of pesticides and
herbicides, whose frequency of application is tracked using the
dedicated IFT indicator.
RIF – A project to restore the Rif canal was undertaken in 2021
to revitalize around one hundred meters of the waterway and
limit bank erosion with a variety of vegetation engineering
techniques (combs, aquatic plant weirs, vegetated berms).
ALL SUSTAINABLE – Lastly, the Center’s All Sustainable
working group is raising employee awareness of biodiversity
issues and coordinating initiatives.
Pesticide-free groundskeeping in France
In 2020, a study conducted with groundskeeping contractors at
the Group’s production plants and research centers in France
demonstrated the feasibility of forgoing pesticides and
herbicides in maintaining site grounds. Since November 2020,
use of these products has been banned on all of the 15 French
manufacturing and research facilities tracked in the i-MEP, as
well as on the grounds of the Group’s head offices and leading
proprietary logistics hubs. Waivers for specific, judicious uses
may be requested in each country from the local Environmental
Manager, the only person authorized to grant them. Such
waivers may be granted for no more than three years, during
which time the facility must find an alternative solution
(replacement products or mechanical or manual pest control).
Three facilities were granted waivers in 2021.
The Michelin Ecological Reserve in Bahia, Brazil
Michelin created the 3,350-hectare Michelin Ecological Reserve
(REM) in Bahia Brazil in 2005 to preserve one of the world’s most
species‑rich tropical rainforests, in a region suffering from
widespread deforestation and environmental degradation. In
2021, the reserve was expanded by 550 hectares and now covers
a total 3,900 hectares.
(1) GRI 304-1: Operational sites owned, leased or managed in or adjacent to protected areas or areas of high biodiversity value outside protected areas.
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To protect the Reserve from hunters, forest rangers were hired to
conduct regular day and night patrols, which have reduced hunting
by 84% allowing wildlife abundances to increase to 117%.
Certain species critically threatened with extinction, such as the
yellow-breasted capuchin monkey (Sapajus xanthosternos) and the
red‐billed curassow (Crax blumenbachii), are once again flourishing
in the Reserve, which has become essential for their long-term
survival.
Every year, more than 100 scientists are supported by the REM
research program, which has funded 118 environmental studies
over the past 16 years, resulting in the publication of
124 scientific papers. Four new species were discovered in
2021, bringing to 20 the number of previously unknown species
found since the reserve was opened.
As part of the program launched in 2005 to restore deforested
areas, REM has planted 108,500 trees spanning 275 species,
enabling the forest to regain 300 hectares. The Reserve also
protects the 61-meter high Pandaca Grande waterfalls, which
are visited by more than 80,000 tourists a year.
The REM educational outreach program helps young people in
neighboring
communities
increase
their
awareness
of
environmental issues and encourages them to seek sustainable
solutions for their communities.
Today, REM is one of the best-protected areas of the Atlantic
Forest, which is one of the most species-rich biomes in the
world. The Reserve has also demonstrated that it is possible to
produce natural rubber while preserving biodiversity.
Clermont-Ferrand, Carmes, France
The Carmes complex, the Group's headquarters, has conducted
a full biodiversity inventory, including plants, fish, bats, birds,
mammals, reptiles, amphibians and insects. The comprehensive
study was conducted over a full year, so that all of the species
could be identified during the flowering, breeding, nesting and
other seasons.
In May 2019, for example, the local angling association came
on-site to inventory the fish species found in the Tiretaine River,
which flows through the headquarters' complex, and counted
more than 350 trout.
Full results of their survey were released in 2020 and analyzed in
2021. The review showed that the works undertaken to
improve green spaces after the Tiretaine was diverted helped to
spur rapid growth in the number of plants and animals around
the complex, with the inventory counting a total of 215 species
and subspecies of plants. This abundance of flora is directly tied
to the presence of insects (17 species), which attract a large
number of birds (24 species including wagtails, ducks,
goldfinches, swifts, titmice and redstarts) as well as four species
of bats.
The apiary created in April 2021 in the center of the Carmes
complex was sized to preserve food resources for all the
pollinating insects on the site and maintain the balance of
biodiversity.
Querétaro, Mexico
In September 2021, Michelin and the Querétaro Trust for the
Conservation of the Environment (FIQMA) reaffirmed their
commitment to preserving the natural ecosystems in the
Querétaro community by signing an agreement to support the
creation of dedicated projects and initiatives to preserve and
safeguard the flora, fauna, soil, water and air around the
production facilities.
Michelin will partner with FIQMA to identify and devise plans to
preserve local flora and fauna on the land adjacent to the plant,
which covers around 20 hectares and is considered one of
Querétaro’s finest natural attractions. Under the project, a third
of the 20 hectares will be transformed into a public park, with
educational displays indicating the unique species found in the
community, another third will be reforested with native trees
and plants, and the final third will be left as is in a natural state.
4.1.4.4
Reducing the environmental footprint of our manufacturing operations
.SDG 6.3, 6.4, 7.2, 7.3, 8.4, 9.4, 11.6, 12.2, 12.4, 12.5 and 14.1.
Risks related to manufacturing operations
The main environmental risks arising from the tire manufacturing process concern the use of energy, water and raw materials
resources, the release of pollutants into the air, water and soil, the production of waste and the release of greenhouse gas
emissions.
The Group is exposed to the risk of legal or financial consequences if its operations cause soil, water or air pollution or if it fails to
comply with the applicable local, national or international environmental regulations and standards. These risks are effectively
controlled through the Environmental Management System(1).
(1) See section 4.1.4.4 a) An Environmental Management System backed by a network of experts.
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The Group's environmental policy is aligned with the 3P Vision
(People, Profit, Planet). Since 2020, the new Environmental
Policy has affirmed, in its general policy section, both the
fundamental principles for addressing environmental issues and
the Group’s ambitious objectives. A section dedicated to the
production plants and offices defines how these principles
should be applied to enable each one to manage its operations
sustainably. This process is impelled by three main drivers:
▶improving environmental performance and reducing impacts;
▶identifying and managing environmental opportunities and
risks;
▶complying with applicable legislation and Group guidelines.
Improvements in environmental performance are being led by
four programs(1) (Energy/CO2, Volatile Organic Compounds,
Waste and Water), each with two objectives:
▶ensure that the Group's 2030 targets are met by defining a
roadmap and the technical levers to be deployed;
▶prepare for the future by defining ambitious improvement
targets for 2050, as well as effective intermediate milestones.
Each program is managed by a program leader, with the support
of a multidisciplinary team of experts who perform medium and
long-term opportunity and feasibility studies. They are all overseen
by the Environmental Governance body(2). Each program’s policies
and outcomes are described in detail in this section.
The pace of progress in the four programs is tracked
consistently across every production plant and manufacturing
unit by a shared composite indicator, the i-MEP, which replaced
the MEF in 2021 and is displayed in the Group’s balanced
scorecard. It is described in the methodology section.
At the same time, the Group has developed an Environmental
Management System to prevent the risks of soil contamination
and to protect sensitive ecosystems around its facilities.
4.1.4.4 a) An Environmental Management System backed by a network of experts
The Group’s EMS is designed to enable each plant to manage its
impact on the environment, on both a day-to-day and long-term
basis. It comprises a process to track compliance with legislation
and Michelin standards, the obligation to define and meet, every
year, improvement targets aligned with local issues and Group
commitments, and procedures to attenuate the risks of accidental
pollution. It is structured into processes, so as to ensure
compliance with ISO 14001-2015 standards. Since 2018, all of
the production plants subject to certification have been certified
to these standards.
Group guidelines dictate that every new production facility must
earn ISO 14001 certification within five years of start-up. In 2021,
93.3% of all facilities were certified(3). ISO 14001-certified facilities
accounted for 98.6% of the products produced during the year.
To ensure the effectiveness of both the system’s operating
procedures and the implemented solutions, a networked
organization is in place, comprising around 100 specialists
based in every host country, plant and Operating Department.
Its manager reports to the Environmental Governance body.
Dedicated training courses to support EMS deployment have
raised environmental awareness among all of the nearly
76,000 employees working on certified sites, along with a
varying number of subcontractors and temporary workers.
In 2021, €40.1 million, or 12.5% more than in 2019, was
committed
to
projects
to
enhance
the
environmental
performance of the production facilities.
These budget amounts are based on the definition recommended
by the French Accounting Board (CNC recommendation 2003-R02
of October 21, 2003), which covers only outlays that are
“supplementary” (i.e., excluding routine maintenance, operating
costs, waste management and similar expenses) and “exclusively
environmental” (i.e., excluding the environmental aspects of capital
expenditure projects).
Budget allocation is analyzed in the following table.
Group
Total expenditure
(in € thousands)
2021
2020
2019
Air pollution prevention
9,750
3,657
5,997
Surface water pollution prevention
2,200
1,457
953
Soil and subsurface water pollution prevention
3,147
1,965
2,543
Waste reduction and recycling
3,264
2,299
2,864
Sustainable use of water resources
2,259
1,532
2,047
Sustainable use of energy resources
16,479
6,405
12,510
Reduction of greenhouse gas emissions
2,402
3,038
6,588
Other
623
914
2,149
TOTAL
40,124
21,268
35,651
As of December 31, 2021, total consolidated provisions for environmental risk amounted to €27.3 million, of which 32% covered site
assessment and remediation issues.
(1) See Methodology.
(2) See section 4.1.4 The Environment/Environmental governance.
(3) Including the production plants, natural rubber processing facilities and Technology Centers having a material impact on the environment.
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4.1.4.4 b) Reducing the environmental footprint of the production plants
Since 2005, Michelin has measured the key impacts from its
manufacturing operations. Improvements driven by the four
environmental programs are tracked at every level, from the
shopfloor to the boardroom, through a composite performance
indicator. The MEF indicator used from 2005 to 2020 was
replaced in 2021 by the i-MEP, which measures five variables:
energy consumption and water withdrawals, CO2 emissions,
volatile organic compound (VOC) consumption and the amount
of waste generated. The i-MEP is displayed in the Group's
balanced scorecard and is one of the strategic indicators that
every plant must track to measure its operational excellence.
In 2020, each program defined its 2030 roadmaps. Based on
the identified technical levers, the new i-MEP indicator is
expected to decline by one-third over the period to 2030.
The objectives of the four programs are described in more detail
below.
The 2021 performance is analyzed in the following tables.
Improvement in the industrial - Michelin Environmental Performance (i-MEP) Indicator
Improvement in the industrial - Michelin Environmental Performance (i-MEP) Indicator
Ambitions for 2030
2030 Ambition
compared with 2019
2019
2021
2022 target
% change
2021/2019
i-MEP
-1/3
100
92.6
89.1
7.4
2019
2021
2030
92.6
2030 target = -1/3
40
50
60
70
80
90
100
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Summary table of environmental data – Group
i-MEP component
Ratios
Absolute values by
i-MEP component – Group
GRI and
SASB
indicators(1)
2021
2019
% change
2021 vs.
2019
2021
2019
Unit
% change
2021 vs.
2019
Energy consumption
(GJ/t of SF+FP)
4.4
4.40
-0.51%
41,466
40,302
x 10³ GJ
2.89%
GRI 302-1
TR‑AP‑130a.1
Michelin point sources
2.09
2.24
-6.74%
GRI 302-3
Steam purchased, net
0.50
0.36
39.90%
GRI 302-4
Electricity purchased, net
1.79
1.80
-0.80%
CO2 emissions(2)
(t/t of SF+FP)
0.29
0.32
-8.46%
2,764
2,919
x 103t
-5.33%
GRI 305-1
Direct emissions from Michelin point
sources (Scope 1)
0.14
0.15
-7.10%
1,346
1,401
x 10³ t
-3.93%
GRI 305-2
Indirect emissions, steam generation
(Scope 2)
0.03
0.02
-53.88%
257
162
x 10³ t
59.14%
GRI 305-4
Indirect emissions, electricity generation
(Scope 2)
0.12
0.15
-17.29%
1,160
1,356
x 10³ t
-14.46%
GRI 305-5
Water withdrawals
(cu.m/t of SF+FP)
3.14
3.36
-6.67%
27,498
28,227
x 103cu.m
-2.58% GRI 303-1
Organic solvent consumption (kg/
t of SF+FP)
0.72
0.83
-14.11%
6,782
7,634
t
-11.17%
GRI 305-7
Waste generated
(kg/t of SF+FP)
33.28
36.10
-7.82%
315,036 330,836
t
-4.78%
GRI 306-2
TR-AP-150a.1
i-MEP INDICATOR PERFORMANCE
92.58
100
-7.42%
Other environmental indicators
Total Michelin direct and indirect emissions
avoided (tonnes of CO2)
33,000
24,000
GRI 305-5
Sulfur dioxide emissions (kg/t of SP+FP)
0.16
0.15
5.44%
GRI 305-7
Nitrogen dioxide emissions (kg/t of SP+FP)
0.16
0.17
-5.50%
GRI 305-7
Hazardous waste generated (kg/t of SP+FP)
3.00
3.05
-1.48%
28,425
28,852
t
GRI 306-2
TR-AP-150a.1
Number and total surface area of facilities
located less than one kilometer from
a protected area
28
facilities
totaling
600 ha
GRI 304-1
In 2021, the Michelin Group did not incur any significant fines or non-monetary sanctions for non-compliance with
environmental legislation and/or regulations.
GRI 307-1
(1) GRI, Global Reporting Initiative Standards, 2016. / SASB, Sustainability Accounting Standard Board, Auto parts, 2018.
(2) “The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, revised edition”, World Business Council for Sustainable Development and
World Resources Institute.
Recalculation of 2010 emissions based on differentiated emission factors
for purchased steam
Until 2014, the same emission factor was used for every site that purchased steam, regardless of the primary energy (coal, fuel oil
or gas) or technology used by the vendor, and based on the same fuel utilization efficiency ratio of 50%(1). In 2015, the Group
decided to replace the single emission factor of 0.404 tonnes of CO2 emitted per MWh of purchased steam by three emissions
factors, one for each primary energy used, and to apply fuel utilization efficiency assumptions that were closer to the actual ratios
of the installed facilities. This means that the new baseline for the Group's 2030 target(2) corresponds to the 2010 emissions
recalculated according to the new method, i.e., 3.877 million cubic meters instead of the originally calculated 4.067 million, or
1.24 tonnes of CO2 per tonne of finished product instead of 1.28.
(1) For more information, please refer to the 2015 Registration Document, page 178.
(2) In accordance with Recommendation 13 of the SBTi Criteria and Recommendations, Version 2.0.
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4.1.4.4 c) Reducing energy use and greenhouse gas emissions
OUR AMBITIOUS OBJECTIVES
The Group’s objective is to achieve net zero carbon emissions(1)
across its entire production base by 2050.
For 2030, the Group’s objectives are to:
▶reduce emissions from Group production facilities by
50% versus 2010 in absolute terms (indicator: tonnes of
Scope 1 and 2 CO2 released);
▶eliminate the use of coal to generate own or purchased
heat (indicator: % of coal in our heat sources);
▶improve production plant energy efficiency by 37%
versus 2010 (indicator: MWh used per tonne produced).
CHANGE IN CO2 EMISSIONS*
(base 100)
*
Absolute value.
Total tonnes of CO2 released from the Group's production
plants, which had decreased by 25% over the 2010-2019
period, declined by a further 5.3% in 2021 compared to 2019
(29% versus 2010), despite the wider scope of reporting
following the inclusion of a synthetic rubber plant in Indonesia
and a tire plant in Mexico. Without this organic growth, the
2021 decline from 2019 would have been 10%. The ratio of
CO2 emissions per tonne of output stood at 0.29, versus 0.32 in
2019.
These improvements were driven by a two-pronged
strategy designed to: 1) reduce energy use and 2) shift to
a less carbon-intensive energy mix. The first objective is
being pursued through an energy efficiency process led by the
Manufacturing Department, while the second is being met by
activating both structural levers, to upgrade energy supply
infrastructure to use less carbon-intensive energies, and market
levers to purchase less carbon-intensive energies. To spur
further progress, an internal carbon price is used in analyzing
return on investment in capital projects(2).
Improving energy efficiency
CHANGE IN ENERGY CONSUMPTION*
(base 100)
*
Absolute value.
2030 Roadmap
In 2020, the technical levers to be activated over the 2020-2030
decade and their related capital expenditure programs were
identified.
Examples
include
(i)
electrifying
processes;
(ii) improving performance and control of tire curing equipment
(insulating press open/close) and motor drives; (iii) increasing the
efficiency of utilities (steam, compressed air and cooling
production); and (iv) installing new heat pumps.
Together, these projects are expected to improve energy
efficiency by 37% in 2030 compared to 2010.
2021 Achievements
By the end of 2019, energy efficiency had improved by 18%
since 2010.
After a difficult year in 2020, roiled by the severe impact of the
Covid crisis, the Group’s energy performance (MWh/tonne of
output) recovered to 2019 levels in 2021. There was even a
slight 0.4% improvement despite the inclusion of the new
Cilegon plant in Indonesia, whose upstream synthetic rubber
production uses more energy than the tiremaking process itself.
Excluding the new plant, the Group’s energy performance
would have improved by more than 2.5% compared to 2019.
In accordance with their strategic plans, the production plants
began to deploy the energy efficiency drivers in the net-zero
carbon emission roadmap, with €11 million invested in projects
with an average payback of seven to eight years and a further
€26 million invested in productivity and energy performance
projects with a two to three-year payback. In other words, in
2021, the Group directly or indirectly committed a total of
€37 million to reducing greenhouse gas emissions, a
significant increase on 2019 (€17.8 million) and 2020
(€12.35 million).
(1) Net emissions = Scopes 1 and 2 emissions less absorptions from the atmosphere.
(2) See section 4.1.4.1 a) Transition plan: decarbonizing our operations/Carbon pricing.
2010
2015
2021
100
92
75
2019
71
2015
2010
2019
2021
101
100
88
91
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To support these capital projects, the Energy competency
network was expanded with the creation of an Energy Expert
position for Europe, so that now each of the three Regions has
an Energy Expert. In addition, a Program Leader tasked with
managing and coordinating energy efficiency projects was
appointed to a two-year assignment.
2022-2026 plan
The 2022-2026 strategic plan defined in 2021 will be supported
by an even larger capital budget, with more than €60 million in
average annual outlays driving projected gains of 2.3% a year in
energy efficiency and of 3.4% in the carbon intensity of
consumed energy (tCO2/MWh)(1).
The plan is aligned with the Group Policy principle of focusing first
on energy efficiency before shifting massively to renewable
sources, according to the hierarchy of drivers(2). In particular, the
principle specifies that 42% of capital expenditure shall be
dedicated to best energy practices, 27% to process electrification
projects (which also considerably reduce fuel consumption) and
31% to boiler house transformation projects.
Driving the Group’s energy transition
2030 Roadmap
As part of its commitment to achieving net-zero carbon emissions
across its entire production base by 2050, the Group has set an
intermediate target of reducing its emissions by 50% by 2030
compared to 2010. In addition to improving energy efficiency,
the Group is exploring a wide array of sustainable solutions to use
renewable sources to generate not only electricity but also heat
by burning biomass and biogas as fuel. The latter is a more
difficult challenge, as the commercial supply of sustainably
produced biogas and biomass is not growing as fast as the supply
of electricity from guaranteed renewable sources.
At the end of 2021, 15 plants prepared their 2030 roadmap,
based on a combination of the most fit-for-purpose projects to
drive energy efficiency (consuming less) and the energy
transition (consuming better). Twenty are already underway and
thirty-five are scheduled for launch in 2022.
2021 Achievements
Increasing the use of renewable energies
In a commitment to sustainably reducing the Group's carbon footprint, strategies have been in place since 2008 to increase the use of
renewable energies. These biomass, solar power and wind power projects often have long maturity cycles.
Today, 21 Group facilities are equipped with renewable energy installations.
Facility
Technology
Tonnes of CO2 avoided in 2021*
Bassens, France
Purchase of heat generated by a waste incinerator
10,500 t (direct CO2)
Cholet, France
Biomass-fired boiler
6,800 t (direct CO2)
Bourges, France
Biomass-fired boiler
4,200 t (direct CO2)
Vannes, France
Purchase of household waste methanation heat
50 t (direct CO2)
La Combaude, France
Purchase of heat from biomass-fired facilities
1,400 t (direct CO2)
Troyes, France
Purchase of heat generated by a household waste incinerator
2,000 t (direct CO2)
Nongkae, Thailand
Photovoltaic panels
550 t (direct CO2)
Phrapadaeng, Thailand
Photovoltaic panels
650t (indirect CO2)
Laem Chabang, Thailand
Photovoltaic panels
650 t (indirect CO2)
Rayong, Thailand
Photovoltaic panels
200 t (indirect CO2)
Chennai, India
Photovoltaic panels
3,900 t (indirect CO2)
Shenyang, China
Photovoltaic panels
1,600 t (indirect CO2)
Germany, seven facilities
Photovoltaic panels
10,000 t (power sold back to the grid)
Valladolid, Spain
Photovoltaic panels
1,000 t (power sold back to the grid)
Le Puy, France
Photovoltaic panels
200 t (power sold back to the grid)
*
Based on emission factors for the substituted energies published by the International Energy Agency in “CO2 Emissions from Fuel Combustion”, 2019 edition.
In Germany, 27 MWp of photovoltaic panels were installed on
several different sites between 2006 and 2017. In Valladolid,
Spain, 31,000 square meters of solar panels with peak capacity
of 3.3 MWp were commissioned in 2010 and 2011. At the Le
Puy-en-Velay plant in France, rooftop photovoltaic panels with
an aggregate capacity of 3 MWp were installed in 2011 over
three hectares, or three quarters of the roof’s surface. The
output of all these installations, which totaled 31,000 MWh in
2021, is sold back to the national grids, helping to reduce the
host country's electricity emission factor.
Other installations are directly reducing the Group's CO2
emissions.
At the Bourges and Cholet plants in France, two biomass-fired
heating plants rated 5 and 10 MW, respectively, came on
stream in 2010.
Since 2013, the plant in Vannes, France has used steam
generated from a boiler fired by biogas derived from the
methanation of household waste. The facility was shut down
for a maintenance outage in the summer of 2021, but steam
deliveries will resume by the end of 2022.
(1) See note 2.6 to the consolidated financial statements which mentions the two primary drivers to reduce CO2 emissions.
(2) See note 4.1.4.1 a) Transition plan: decarbonizing our operations.
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In Thailand, the 0.87 MWp photovoltaic arrays installed on the
Nongkae plant's parking lot shade roofs at the end of 2018
generate around 1,200 MWh of power a year. The installation
was the Group's first solar farm whose power is directly used on-
site. In 2020, two other production facilities, in Phrapadaeng and
Laem Chabang, commissioned the 0.99 MWp photovoltaic
panels installed on their plant rooftops and the parking lot shade
roofs, which together generated around 2,600 MWh in 2021.
In Chennai, India, 4.2 MWp of rooftop photovoltaic panels
came on line in June 2020 and generated 5,100 MWh of power
in 2021, covering 11% of the plant’s needs.
Two new installations were commissioned in 2021:
▶in Shenyang, China, photovoltaic panels on the plant
rooftop and parking lot shade roofs were commissioned in
the second half. The 6 MWp installation generated
2,600 MWh of power during the year, with full-year capacity
rated at nearly 7,000 MWh;
▶in April, the plant in Troyes, France began purchasing heat
from a household waste incinerator, covering around 10% of
its needs for the year before rising to an expected 15% in
full-year 2022.
Compared with the emissions from previously used energy
sources, these on-site renewable energy installations avoided
the emission of almost 43,500 tonnes of CO2 in 2021, of which
32,500 tonnes directly reduced the Group's total CO2 emissions
(versus 21,000 in 2019).
As of end-2021, one project was underway and several were
under consideration:
▶in Cuneo, Italy, a contract was signed for the installation of a
biomass-fired 8 t/h boiler and photovoltaic panels, which will
reduce the plant’s fossil CO2 emissions by 15% in 2024 after
coming on stream in 2023;
▶in Asia, the installation of new or additional solar panels is
being reviewed at several plants in Thailand, India and China,
for a potential increase in capacity of more than 30 MWp;
▶in Golbey, France, the project to purchase steam from a
nearby paper mill continues apace;
▶in Nyiregyhaza, Hungary, the installation of an electric
boiler, powered by electricity from guaranteed renewable
sources, could reduce the plant’s emissions by 80%.
Purchasing electricity from guaranteed
renewable sources
Since 2017, all of the Group's production plants in the
European Union use electricity from renewable sources, mainly
through direct purchases of electricity with guarantees of
origin as defined by Directive (EU) 2018/2001(1) but also, to a
lesser extent, through the purchase of unbundled guarantees
of origin. In 2021, electricity was purchased from guaranteed
renewable sources in Brazil and the Republic of Serbia. In
China, in addition to the on-site installations described above,
the plants have begun purchasing I-REC-certified(2) electricity.
In 2021, this represented nearly 1,970,000 MWh, for which the
corresponding I-RECs were duly canceled in the registry. In all,
they covered nearly 30% of consumed electric power and
avoided the release of 710,000 tonnes of CO2 during the year.
Without these purchases, the Group's emissions would have
been 27% higher for the year.
In Asia, six plants use electricity generated on-site from
renewable sources under on-site power purchase agreements.
(see table below).
In all, 18.3% of the heat and power used by the Group in
2021 came from renewable sources. [SASB TR-AP-130a.1]
Eliminating coal
In China, in the final quarter of 2015, the Shanghai plant
replaced its steam generated on-site in a coal-fired boiler with
steam purchased from a gas-fired CHP power station.
Today, four of the Group’s manufacturing facilities are still
equipped
with
coal-fired
boilers,
in
Olsztyn
(Poland),
Louisville KY (United States), Bassens (France) and Pirot (Serbia),
while another, in Shenyang, China, purchases steam from a
coal-fired plant. In 2018, the Environmental Governance body(3)
approved the goal of eliminating coal as an energy source in the
production plants by 2030. Studies are underway at four of the
five plants to replace coal with another primary energy source,
such as natural gas or biomass from sustainably managed
sources. In an initial step towards going coal-free, the Olsztyn
plant is now getting 20% of its heating from a new gas-fired
boiler commissioned in mid-2020. In late 2021, the Louisville
plant signed a contract for the installation of a gas-fired boiler
scheduled to come on stream in 2024.
The Group’s first zero emission plant
Since the end of 2019, the Gravanches plant in Clermont-
Ferrand (France) has been heated by a heat pump system that
recovers waste process heat. With all its other energy needs
covered for the past three years by purchasing electricity from
guaranteed renewable sources, Gravanches has become the
Group’s first net zero carbon emissions site. As in 2020, the
170 MWh of gas needed to supply heat during pump
maintenance outages in 2021 were covered by purchases from
renewable sources with guarantees of origin.
4.1.4.4 d) Reducing harmful air emissions
Reducing VOC emissions
OUR AMBITIOUS OBJECTIVES
The Group’s strategy to lower its VOC emissions is based on
reducing the use of organic solvents in production processes.
The Group’s VOC objective for 2050 is to phase out all
VOC-generating
organic
solvents
completely.
The
intermediate milestone is to reduce VOC consumption per
tonne of finished product by 50% between 2019 and
2030. Achieving this objective means deploying the three levers
for action described below and launching innovative research
projects to overcome the main technical obstacles.
(1) https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv:OJ.L_.2018.328.01.0082.01.ENG.
(2) I-REC: Renewable Energy Certificate, https://www.irecstandard.org/what-are-recs/#/.
(3) See section 4.1.4 The Environment/Environmental governance.
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CHANGE IN VOC EMISSIONS*
*
Absolute value.
2021 Achievements
In 2021, VOC consumption per tonne of finished product declined
by 16.8% compared to 2019.
The Group’s VOC strategy is based on activating three key
levers:
▶deploying good manufacturing practices to optimize
solvent use, in particular by tracking quantities used, precisely
adjusting the solvent applicators, using just the right amount
of solvent and maintaining performance over time. The
following examples illustrate a few of these practices:
• a large number of plants have been equipped with
portable flowmeters that measure solvent use in real time.
Analyzing the data enables us to compare solvent
application by machine, by size and by product, so that
practices can be aligned,
• the Aranda plant in Spain has deployed and expanded the
best practices derived from the Green-Belt level Lean study
conducted in 2020 to lower VOC consumption (optimizing
solvent nozzle spraying, improving solvent application,
digitalizing monitoring and control, etc.). As a result, the
plant reduced the quantity of VOCs used per tonne of
finished product by 10% compared to the 2019 baseline.
The improvement was led by the sustained, disciplined,
innovative deployment of best practices, even before the
upcoming deployment of new process, material and
product solutions,
• several plants performed gap analyses of shortfalls from best
practices during the year, with the outside perspective
helping them to identify new pathways to progress,
• at the plant in Homburg, Germany, testing and deploying a
system to use just the right amount of brightening agent
reduced VOC consumption per tonne of finished product
by 16% in 2021 compared to the 2019 baseline;
▶the introduction of new process, materials and product
solutions designed to reduce or remove organic solvents at
certain interfaces. For example:
• the two-wheel tire plant in Manaus, Brazil slashed VOC
consumption by 80% in 2021 with a variety of material
and process upgrades,
• a new solution based on partially refreshing product interfaces
was tested at the Alessandria plant in Italy and the Karlsruhe
plant in Germany. These trials showed that consumption per
tonne of finished product could potentially be reduced by 20%.
The solution will be industrially upscaled at the two plants in
2022,
• several facilities, including Cuneo in Italy, Karlsruhe and Bad
Kreuznach in Germany, Shenyang in China, Nyiregyhaza in
Hungary and Roanne in France, participated in the upscaling of
a water-based brightening solution in 2021. Due to its impact
on the process and the related operating practices, the solution
requires further multidisciplinary optimization work, which will
continue in 2022,
• a large number of production facilities are continuing to
replace solvents with a thin rubber film on an interface
between two products. This is particularly the case of the
Nyiregyhaza plant in Hungary, which has already cut
consumption per tonne of finished products by 42%
compared with 2019 and expects to reduce it by a further
75% by 2025 following full-scale deployment of the
rubber interface solution;
▶research and development teams are designing lower
organic solvent use into projects, to ensure that tomorrow's
products minimize their impact on VOC emissions. In 2021,
internal project specifications were upgraded to set higher
targets for reductions in VOC use.
These three improvement drivers are embraced and documented
by the VOC program, which is pursuing the initiatives underway
since 2017 to deploy best practices, identify innovations and
explore ways of further reducing solvent use in the future.
A network of Group VOC experts meets twice a year to discuss the
deployment of best practices, the development of new process,
material and product solutions and the progress on innovative
research projects. Similar networks are in place for groups of plants
with identical processes.
Nitrogen oxide (NOx) and sulfur oxide (SOx) emissions
In general, reported data concern nitrogen oxide and sulfur oxide
emissions from the Group’s heating plants that can vary widely
from year to year, because they are calculated based on the
periodic
(often
quarterly)
measurement
of
emission
concentrations. In addition, given that purchased steam is not
included in the calculation, reported data depend on the mix
between generated and purchased steam.
In 2021, specific NOx emissions amounted to 0.16 kg per tonne
of output, versus a calculated 0.17 kg in 2019. SOx emissions
came to 0.16 kg per tonne of output, versus a calculated
0.15 kg in 2019.
In 2015 and 2016, four upgrades helped to significantly reduce
NOx and SOx emissions by: (i) replacing the use of fuel oil with
natural gas at three production facilities in Canada; (ii) closing
the former Shenyang plant in China, which used a coal-fired
boiler; (iii) replacing the on-site coal-fired steam generation
facility at the Shanghai plant with the purchase of steam from a
gas-fired CHP power station; and (iv) fitting a DeSOx/DeNOx
scrubber on the coal-fired boiler at the Bassens plant in France.
In 2020, a coal-fired boiler was replaced by a gas-fired
installation at the Olsztyn plant in Poland. The total elimination
of coal-fired boilers in all of the Group’s production facilities by
2030 will drive a further significant reduction in these
emissions(1).
(1) See section 4.1.4.4 c) Reducing energy use and greenhouse gas emissions/Eliminating coal.
2019
2021
89
100
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4.1.4.4 e) Reducing and managing waste
OUR AMBITIOUS OBJECTIVES
By 2050, the Group hopes to reduce the amount of waste
produced per tonne of total output by 50% compared to
2019 (indicator: kilogram of waste per tonne of semi-finished
and finished product). To support progress towards this
ambitious goal, an intermediate milestone of a 25%
decrease versus 2019 has been set for 2030.
Meeting these objectives will enable the Group to maintain the
steady reduction in its waste tonnages observed in recent years.
The Group's waste management policies are based on the
following principles:
▶reducing waste at the source, for example by encouraging
reuse or developing technological upgrades;
▶promoting recycling across the Group, in particular by
building synergies with acquisitions;
▶focusing waste treatment processes on recovering and
recycling materials rather than recovering energy through
burning;
▶banning landfilling, unless it can be shown that there is no
technically and environmentally viable treatment option for
the waste in question. However, this is only to be used as a
stopgap while waiting for a zero waste to landfill (0W2L)
solution.
This policy is aligned with the Group’s 4R strategy (Reduce,
Reuse, Recycle and Renew) being deployed to support the
circular economy and address the challenges of resource
depletion(1).
2021 Achievements
In 2021, the Group produced 33.3 kg of waste per tonne of
semi-finished and finished product, representing a 7.5%
improvement from the 36.0 kg generated in 2019. In absolute
terms, the Group reduced the total amount of waste by 5% in
2021 compared to 2019, to 315,000 tonnes.
While landfilled waste has held steady at less than 4% of total
waste generated since 2018, the inclusion of new facilities in
the scope of reporting in 2021 led to a 0.5-point increase for
the year. In all, 96.4% of all waste was recovered or reused as
materials or fuel in 2021. [SASB TR-AP-150a.1]
Lastly, 9% of total waste generated in 2021 was classified
as
hazardous
under
each
country's
legislation.
[SASB TR‑AP‑150a.1]
▶All these gains have been impelled by the initiatives
undertaken in every geography to (i) reuse materials or
products in-house in less demanding applications; (ii) find
new recovery and reuse channels; (iii) continue raising
employee awareness across the organization; (iv) review end-
of-waste criteria; (v) develop best practices such as repair,
regeneration and decontamination.
Although combating food waste is not an issue in its business
operations, Michelin still feels that it is a challenge for society
and seeks to raise awareness among employees, particularly
through its foodservice providers.
In the future, in addition to the positive impact of phasing out
coal by 2030, the focus will be on digitalizing waste data for
use in applications that will support more granular analysis of
waste sources, thereby helping to identify effective pathways to
progress.
CHANGE IN WASTE GENERATED*
(base 100)
*
Absolute value.
4.1.4.4 f) Reducing water withdrawals and effluent discharge
OUR AMBITIOUS OBJECTIVES
The Group is committed to eliminating all of its impact on
water availability in local communities by 2050. It is well
aware of the growing scarcity of this vital resource and is
pursuing its strategy of steadily reducing withdrawals. Its 2030
objective is to reduce these withdrawals, weighted for
each facility’s specific water stress coefficient, by 33%
compared to 2019 (indicator: stress x cu.m per tonne of
semi-finished and finished product).
To meet this 2030 target, the Group is activating levers aimed at:
▶reducing and eliminating leaks;
▶reducing steam consumption;
▶reducing evaporation;
▶optimizing recycling and/or reuse;
▶using water-saving systems;
▶measuring and controlling water use;
▶raising people’s awareness of water issues.
(1) (See 4.1.4.2 d) The Michelin 4R strategy for a circular economy).
2021
2019
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CHANGE IN WATER WITHDRAWALS*
(base 100)
*
Absolute value.
2021 Achievements
Water withdrawals declined by 2.58% in absolute value
between 2019 and 2021, even as production output rose by
2.3% over the period. Withdrawals per tonne of semi-finished
and finished product declined by 6.7%, led by the significant
contribution from the plants in the Asia-Pacific region.
A 2020-2030 water roadmap has been defined at Group level,
based on the potential gains from each lever. In 2021, an
application was developed to help the plants prepare their own
2030 water roadmaps using the levers and identified best
practices. By year-end, around half of them had drafted an initial
version. The process is still ongoing in 2022. A network of Group
Water Leaders meets quarterly to discuss the deployment of levers
and best practices, the possibilities of synergy with energy initiatives
and leaders, and the definition of plant-level roadmaps.
In 2021, multi-day workshops organized at more than 20 Group
facilities brought together key local stakeholders and experts to
discuss water issues (uses/discharges), identify pathways to
progress based on the Group-recommended levers or
otherwise, and co-build a water roadmap to act as a guiding
principle for the plants in the years ahead. This was the case for
the vast majority of facilities in the Asia-Pacific region.
The following examples illustrate how these levers are being
activated in support of the Group's strategy to reduce its water
withdrawals:
▶Phrapadaeng, Thailand: in 2021, installation of a reverse
osmosis system to treat and recycle wastewater helped to
reduce daily water withdrawals by 21% and discharges by
30%. Plans are underway to extend the system, which would
reduce daily withdrawals by 50% compared to 2019;
▶Rayong, Thailand: the plant pursued its ambitious water
conservation plan in 2021, when water use further declined
under the impact of such initiatives as reusing hot water
between equipment, optimizing cooling towers and raising
the temperature of hot water to slow the flow rate to
machinery. Between 2019 and 2021, water withdrawals per
tonne of semi-finished and finished product were reduced by
20.4% and total annual water withdrawals by almost 31%;
▶Bridgewater, Canada: a number of projects, such as reusing
curing condensates to fire the boiler and increasing the cycles
of concentration in the cooling system enabled the plant to
reduce water withdrawals by 11% and water withdrawals
per tonne of finished and semi-finished product by 6%
compared to 2019. In addition, during the year, the plant
began installing equipment to treat water discharged from
the metal reinforcement production unit and recycle it as
back-up cooling water. The project, which began in 2021,
will eventually reduce annual water withdrawals by more
than 130,000 cubic meters;
▶Greenville, United States: various initiatives, such as replacing
the condensate circuit, renovating the cooling towers,
improving refrigeration system command and control, and
deploying a disciplined leak detection and treatment
procedure enabled the plant to reduce its water withdrawals
by 18% and its withdrawals per tonne of finished and semi-
finished product by 10% compared to 2019.
Other studies are currently being reviewed to reduce water
withdrawals and will deliver their results in the years to come.
▶Cholet, France: the outside study completed in 2021
identified a wide range of reuse or recycling opportunities
and enabled the preparation of a water roadmap calling for a
61% reduction in water withdrawals per tonne of semi-
finished and finished product by 2030. In 2021, an
evaporator-concentrator came on stream for wastewater
treatment, while in 2022 a heat pump will be installed and
detailed studies will be undertaken to fine-tune the costs and
benefits of the roadmap’s many other initiatives;
▶Valladolid, Spain: the program to digitalize the plant’s water
management system is nearing completion. An outside study
is underway to explore possibilities of reusing or recycling
intermediate process effluent. Its findings will help to
broaden and deepen the initial version of the plant’s water
roadmap, which already provides for a 33% reduction in
water consumed per tonne of semi-finished and finished
product compared with 2019;
▶Alessandria, Italy: for the past two years, the plant has been
deploying an ambitious program that is redesigning its
installations to close loops and optimize water use. Between
2019 and 2021, initiatives already underway reduced annual
withdrawals by 19% and water withdrawals per tonne of
semi-finished and finished product by 28.3%. The plant’s
2030 water roadmap calls for a more than 70% reduction in
water withdrawals compared to 2019.
Water use disclosures
Since 2016, Michelin has responded to the CDP Water
Security questionnaire to disclose its water withdrawals by
source and by water stressed area (in line with GRI-303-3). The
Group received a score of B in 2021(1).
(1) https://www.michelin.com/en/documents/response-to-cdp-water-security-questionnaire-2020/.
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4.1.4.4 g) Preventing releases to soil and groundwater
The Group's Environmental Management System includes a
dedicated process to prevent the risk of chronic or accidental
spills based on three fundamentals: (i) clearly defined operating
procedures, (ii) environmental impact awareness building; and
(iii) results-oriented actions. Standard operating procedures,
which were updated in 2016 and apply to all of the Group's
property assets, demand that risks and opportunities be very
robustly managed. They were inspired by the strictest legislation
prevailing in this area, and regularly exceed local standards.
In addition to preventive measures, all of the Group's plants are
expected to follow the regularly updated site assessment and
cleanup procedures first issued in 2006, which enable them to
detect potential usage risks and to manage them with state-of-
the-art solutions. The procedures are especially applied when
any excavation work is performed at existing sites, when an
accidental spill requires analysis to manage or confirm a
potential risk or when requested by local authorities. They are
also applied in the case of an acquisition, the creation of a joint
venture or a new company, or the purchase, lease or sale of all
or part of a site or a property asset. This process requires
disciplined oversight, particularly the use of qualified service
providers generally managed through framework agreements
and the tracking of open cases by local coordinators. In
addition, since 2018, these contractor framework agreements
have included performance indicators tracked every six months,
which help to ensure superior performance.
In all, four new CSS procedures were initiated in 2021 and eight
were closed, bringing the total number of procedures
completed since 2015 to 103.
4.1.4.4 h) Abating noise pollution and odors
Although entirely innocuous, odors are nonetheless an issue for
Michelin plants, some of which are located in built-up areas.
These odors may be generated by the process used to produce
certain types of natural rubber components used in tire
manufacturing.
The standard solution, based on the thermal oxidation of
effluents, has been retrofitted at several European facilities and
at the plant in Shenyang, China. New technologies are also
being explored. In the case of noise pollution, manufacturing
operations whose noise levels are not particularly significant
consistently comply with local legislation in every host
community. When designing new facilities or extensions,
guidelines are followed to ensure that noise-generating
equipment, such as fans and other auxiliary systems, are
installed far from the property boundaries.
More generally, the on-site teams work with Group experts to
abate the odors, noise and other potential environmental
nuisances that manufacturing operations may cause local
residents.
The environmental impact of digital technology
In response to the Managing Chairman’s commitment that “tomorrow, everything will be sustainable at Michelin,” and to the
expectations of a growing number of employees and other stakeholders, a “Sustainable Digital” operational committee was
created in mid-2019. It brings together representatives from the Purchasing, Communication, Corporate & Business Services,
Sustainable Development & Mobility, Digital, Environment & Prevention, IT, Manufacturing, Research & Development and Services
& Solutions departments.
Based on the detailed inventory of Michelin’s digital carbon emissions, the committee led the following initiatives in 2021:
▶approved a training program to certify people as a “sustainable digital ambassador,” to be deployed in 2022;
▶raised employee awareness through conferences on the impact of digital technology and the transition from “green IT”
to “IT for green”;
▶formalized action plans for key sustainable digital units (Purchasing, Information Systems, Services & Solutions, R&D);
▶researched, with the support of outside partners, automated solutions for tracking energy use in our data centers and our
digital applications;
▶issued the white paper on the reuse of IT equipment with other manufacturers in the Movin’On Lab.
4.1.4.5
Valuing our environmental externalities
In 2020, Michelin initiated an exercise to place a monetary value
on its environmental impacts, starting with the ones addressed
by commitments to the planet.
Undertaken as part of the “All Sustainable” strategy, the
exercise is designed to facilitate the representation of
environmental issues, enhance transparency with stakeholders
and provide a valuation method for use in assessing the
performance of Group units or during acquisitions.
These volumes are as follows:
▶total tonnes of CO2 emissions in Scopes 1 and 2, as described
in section 4.1.4.1 a);
▶total tonnes of CO2 emissions in part of Scope 3, covering the
upstream and downstream transportation and distribution of
natural rubber, semi-finished products and finished products
(see section 4.1.4.1 a);
▶total tonnes used of organic solvents generating volatile
organic compounds (VOC) (see section 4.1.4.4 d);
▶total cubic meters of water withdrawn, both used and
discharged. (see section 4.1.4.4 d).
The initial valuation, whose methodology is described below,
was performed on the basis of volumes in 2019, which was
chosen as a baseline because it was the last year before the
health crisis.
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The production facilities covered by the valuation are the same
as in the scope of reporting for the environmental indicators, as
described in the section on methodology at the beginning of
Chapter 4.
The valuation method used is based on the OECD definition of
valuing “avoidance costs”, with input from ISO 14007:
Environmental management – Guidelines for determining
environmental costs and benefits and ISO 14008: Monetary
valuation of environmental impacts and related environmental
aspects.
It is based on determining the euro cost, per tonne or cubic meter
of reduction, of the solutions implemented or scheduled to be
implemented to reduce emissions, use or withdrawals of the
selected externalities. The value of these externalities is then
calculated by applying the unit cost to the total volume of current
emissions, use or withdrawals.
The cost calculations for the solution always include the
necessary capital expenditure. They also include operating
expenses when (i) additional consumables must be purchased
after VOC-generating organic solvents have been replaced by
aqueous solutions; and (ii) additional treatment products must
be purchased when wastewater or effluent is reused.
This valuation method is limited by the fact that it is based on
the cost of eliminating volumes that are reducible using known
solutions. There remains the unknown potential cost of
disposing of the residual volumes, whose disposal generally
costs the most or requires technologies that do not yet exist and
whose cost is unknown (and which could cost more or less
than existing technologies).
To offset this limitation, which could cause us to underestimate
the cost of negative externalities, the following conservative
approaches have been factored into the calculation method:
▶We considered that the solutions implemented or scheduled
to be implemented would reduce the amounts emitted, used
or withdrawn over 12 years, i.e., the depreciation period for
the corresponding purchased equipment, even though this is
often much shorter than historically observed life spans,
which can extend to several decades (e.g., tire curing presses
or steam-generating boilers whose longer service lives are
used to value CO2 emissions).
▶We increased the cost of certain capital expenditure outlays
(e.g., by 20% when valuing water withdrawals).
▶The
calculations
are
cross-checked
against
outside
benchmarks to confirm that the unit externality costs
determined by our generic method rank at the top of the
range calculated according to these outside methods.
In the end, the unit costs used to value the three externalities are:
▶for water, €2.4 per cubic meter, as determined by the
method;
▶for VOCs: €2,100 per tonne, based on the outside
benchmark, which was higher than the calculation from the
method;
▶for CO2, €100 per tonne for the 2021 exercise. This
represented an increase from the €58 per tonne calculated
for the first exercise, after the conservative approach
prompted a recalculation to reflect the sharp run-up in
carbon quota prices on the European market in late 2021.
The outside benchmarks used for cross-checking were as
follows:
▶CO2: we compared the calculated cost to (i) the prices applied
by leading corporations in their internal carbon fees; (ii) the
price indicated in Delft University’s Environmental Prices
Handbook
2017
(Environmental
prices
for
average
atmospheric emissions in the Netherlands – “central” carbon
dioxide price); and (iii) the price of carbon quota prices on the
European market;
▶VOCs: we compared the calculated cost to the price indicated
in Delft University’s Environmental Prices Handbook 2017
(Environmental prices for average atmospheric emissions in the
Netherlands – “central” volatile organic compounds price);
▶WATER: we compared the calculated cost to what it would
have been had we applied the three methods used by
19 companies that answered yes to the question “Does your
company use an internal price on water?” on the CDP 2020
Water Security questionnaire and were attributed an A
(18 companies) or A- (1) score.
We will reassess this approach for subsequent reporting periods
based on changes in method or scope.
On this basis, and in light of the ongoing deployment of the
scheduled reduction plans, the cost of valued externalities is
expected to decline by around 7.5% in 2023 compared to the
2019 baseline.
In 2021, the total cost of valued externalities (€508 million) was
up a very slight 0.4% on the 2019 baseline, based on the same
unit cost per tonne of CO2 (€100) and the same method of
calculating carbon emissions from upstream and downstream
transport and distribution operations (see section 4.1.4.1 a). The
2021 performance was dampened by the occasional use of air
freight to deliver natural rubber to our plants, due to maritime
shipping capacity constraints, which added €37 million to CO2
emission costs for the year. The underlying progress made in
reducing each externality puts us firmly on track to fulfill our
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COST OF TARGETED NEGATIVE EXTERNALITIES
A 2019
A 2021
P 2023*
At the
initial cost
of €58 per
tonne
of CO2
At the
updated
cost of
€100 per
tonne
of CO2
Following
adjustment in
the method
of calculating
transportation
-related CO2
emissions
At a cost
of €100
per
tonne
of CO2
Excluding
impact of
supply chain
disruptions
in 2022
At the
initial
cost of
€58 per
tonne
of CO2
At the
updated
cost of
€100 per
tonne
of CO2
Following
adjustment in
the method
of calculating
transportation
-related CO2
emissions
CO2 emissions:
Scopes 1 and 2
Thousands
of tonnes
2,919
2,919
2,919
2,764
2,764
2,665
2,665
2,665
Unit cost
€/t
58
100
100
100
100
58
100
100
Fair value
In € millions
169
292
292
276
276
155
267
267
CO2 emissions:
Scope 3
Upstream and
downstream
transportation
and
distribution**
Thousands
of tonnes
1,277
1,277
1,301
1,510
1,141
1,190
1,190
1,212
Unit cost
€/t
58
100
100
100
100
58
100
100
Fair value
In € millions
74
128
130
151
114
69
119
121
VOC
consumption
t
7,634
7,634
7,634
6,782
6,782
7,229
7,229
7,229
Unit cost
€/t
2,100
2,100
2,100
2,100
2,100
2,100
2,100
2,100
Fair value
In € millions
16
16
16
14
14
15
15
15
Water
withdrawals
Thousands
of cu.m
28,227
28,227
28,227
27,498
27,498
26,730
26,730
26,730
Unit cost
€/cu.m
2.4
2.4
2.4
2.4
2.4
2.4
2.4
2.4
Fair value
In € millions
68
68
68
66
66
64
64
64
TOTAL COST
In €
millions
327
503
506
508
471
303
465
467
Change from
2019
+0.4%
-7.4%
-7.7%
*
At 2021 scope of reporting.
** Proportion of Scope 3 upstream and downstream transport and distribution corresponding to our SBTi commitments.
(1) Including €3 million from adjustments in the method of calculating transportation-related CO2 emissions.
(2) Covers only the inbound and outbound transportation and distribution of natural rubber, semi-finished products and finished products.
(3) Corresponds to the 2023 target of approximately €300 million announced at the CMD on April 8, 2021, adjusted for the tonne of CO2 valued at €100/t and
the change in method mentioned in (1).
2023
2021
2019
restated
2019
176
37
-2
-2
-15
-16
467(3)
508
506
330(1)
Increase in
internal CO2 price:
€58/t
€100/t
CO2
Scopes
1 & 2
CO2
Scope 3(2)
excluding
disruption
to the
supply chain
in 2021
CO2
Scope 3(2)
Impact of
disruption
to the
supply chain
in 2021
Water
Volatile
organic
compounds
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4.1.5
SUMMARY TABLE OF EMPLOYEE DATA
Scope of reporting in the human resources management software:
2021
2020
2019
2018
2017
GRI Indicator
Employees on payroll at December 31*
(consolidated companies, under any form of work
contract, excluding temp agency workers)
124,767
123,642
127,187
117,393
114,069
GRI 102-7
Full-time equivalent employees at December 31*
(consolidated companies, excluding interns, apprentices,
work-study trainees and temp agency workers)
118,414
117,454
121,339
111,117
107,807
GRI 102-7
Employees by gender (employees on payroll, under
any form of work contract, excluding temp agency
workers and the dealership networks)
GRI 102-8
Men
80.2%
80.9%
81.4%
81.9%
82.5%
Women
19.7%
19.1%
18.6%
18.1%
17.5%
Employees by category (employees on payroll,
under any form of work contract, excluding temp
agency workers and the dealership networks)
GRI 102-8
Production operators
61.5%
61.3%
61.2%
61.8%
62.2%
Administrative and technical staff and supervisors
28.8%
29.1%
29.3%
29.5%
29.4%
Managers**
9.6%
9.6%
9.4%
8.7%
8.4%
Employees by age (employees on payroll, under any
form of work contract, excluding temp agency
workers and the dealership networks)
24 and under
6%
5.5%
5.6%
5.9%
5.8%
25-34
25.7%
25.8%
26.2%
26.3%
26.3%
35-44
30.8%
30.8%
30.2%
29.9%
29.4%
45-54
25.2%
24.9%
24.3%
23.4%
23.0%
55-64
11.7%
12.4%
13.1%
14.0%
15.1%
Over 65
0.5%
0.5%
0.5%
0.5%
0.4%
Employees by length of service (full-time
equivalent employees, as a %)
Less than 2 years
14.8%
12.7%
14.3%
15.5%
15.2%
3-5 years
16.3%
16.6%
15.4%
14.5%
13.8%
6-10 years
18.3%
19.3%
19.7%
17.5%
17.9%
11-15 years
14.4%
13.8%
12.5%
14.28%
13.8%
16-20 years
11.2%
12.1%
11.9%
11.6%
13.1%
More than 20 years
24.9%
25.6%
26.2%
26.8%
26.1%
Employee movements (permanent work contracts)
New hires
5,116
7,023
7,957
7,553
Resignations
6,133
3,500
4,346
3,378
2,682
Dismissals and terminations by mutual agreement
2,151
1,911
1,756
2,624
2,524
Retirement
1,888
2,341
2,357
2,484
2,077
Death
117
114
103
97
120
Attrition rate (excluding retirements and excluding
the dealership networks and recently acquired
companies)
9.5%
6.2%
6.9%
6.8%
5.9%
Contract employees (excluding temp agency
workers, as a %)
4.1%
4.0%
4.2%
4.7%
5.2%
Part-time contracts
2.8%
3.0%
3.6%
3.6%
4.4%
Training hours (employees on payroll, under any
form of work contract, excluding temp agency
workers)
Percentage of training hours per total hours worked
2.6%
2.0%
2.9%
3.1%
3.2%
Percentage of employees who received training during
the year
97%
93%
98%
97%
85%
Number of hours of training per employee per year
44
34
49
53
54
GRI 404-1
Total training hours (excluding temp agency
workers and the dealership networks)
4,318,794
3,104,429
4,585,897
5,008,971
5,107,806
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Non-Financial Statement
2021
2020
2019
2018
2017
GRI Indicator
Occupational accidents (including the dealership
networks; excluding recently acquired companies,
excluding temp agency workers)
Serious accident frequency rate (TA+)
0.67
0.7
0.7
TCIR entire Group
1.29
1.19
1.43
1.9
2.1
Diversity (employees on payroll, under any form of
work contract, excluding temp agency workers)
GRI 405-1
IMDI
67
62
Percentage of women in extended management(1)
28.9%
28.2%
27.4%
26.8%
25.7%
Percentage of local top managers in growth-
region countries
83%
79%
75%
75%
74%
GRI 405-1
GRI 202-2
Percentage of management positions held by
employees promoted or transferred from within
73%
74%
74%
76%
76%
Employee engagement rate
80%
82%
80%
80%
80%
Number of Progress Ideas
57,950
50,131
61,825
62,802
59,082
*
Scope of reporting: entire Group and its subsidiaries, including the dealership networks and recently acquired companies.
** Employees with a level of individual responsibility of A to K, according to the Hay method used by the Group.
(1) Employees with a level of individual responsibility of A to N, according to the Hay method used by the Group.
4.2
NON-FINANCIAL STATEMENT
Non-Financial Statement disclosures, as stipulated in Articles
L. 225-102-1(1) and R. 225-105 of the French Commercial Code,
may be found in the sections listed in the table of concordance
below (4.2.2).
The business and value creation model is presented in section 1.
It is illustrated by a summary diagram entitled “Our Growth
and Value Creation Model” and its components are described
throughout the section.
All of the other Statement disclosures have been included in the
Sustainable Development and Mobility Report (4.1).
4.2.1
IDENTIFICATION OF THE MAIN RISKS
As part of its social responsibility commitment, the Group has
plotted a materiality matrix. This exercise has helped to
strengthen the robustness and relevance of the main identified
issues and to enhance the Group’s overall risk management
process (see page 152, section 4.1 Sustainable Development
and Mobility Report/Introduction – Michelin Sustainable
Development and Mobility/Materiality Matrix).
The concerns identified in the new matrix represent not only
opportunities for Michelin to grow and develop its businesses,
but also issues that could involve risks. For this reason, the
materiality matrix is closely aligned with the risk map, according
to the table of concordance below, with updates to one
resulting in changes in the other. As such, the materiality matrix
serves as the frame of reference in identifying the “main risks”
that structure this Non-Financial Statement, even though these
issues are not expressed negatively as risks. For example, the
matrix speaks of “diversity” whereas the risk map is concerned
with “discrimination.” Moreover, unlike the risk map, the
materiality matrix also incorporates the perception of Michelin
stakeholders.
The method of identifying risks and the systems for managing
them are described in Chapter 2, Risk Management. The main
CSR risk families and the guidelines for managing them are
indicated in the introduction to each section of the Sustainable
Development
and
Mobility
Report,
according
to
the
methodology for plotting the materiality matrix and the
definitions of the Group's risk factors. They have also been post-
audited by the Internal Control Department. The risks
mentioned in section 4 are “operational” risks that have been
classified as level 1 (high) or level 2 (low), depending on their
criticality. Policies and due diligence procedures are presented in
extensive detail following these introductions, in particular to
express
the
Group's
sustainable
development
strategy
quantitatively, qualitatively, transparently and in a manner
comparable with reports from prior years.
(1) Information on (i) the impact that the Company's business operations and the use of its products and services may have on climate change; (ii) the Company's
social commitments to supporting sustainable development and the circular economy, reducing food waste and combating food insecurity, respecting animal
welfare and responsible, fair, sustainable food systems; (iii) the collective agreements signed in the Company and their impact on business performance and
working conditions; (iv) initiatives to prevent discrimination and promote diversity; (v) measures taken in favor of the disabled; and (vi) the impact of the
Company’s business on respect for human rights and the fight against corruption and tax evasion.
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Non-Financial Statement
The performance indicators for each of the main risks are mostly
derived from the six strategic objectives for 2030 (Chapter 1,
pages 42 and 43), which help to track the Group's responsible
performance. Means indicators have also been defined for the
main opportunities. For each of the main risks, an essential
indicator has been highlighted in the table of concordance to
the Non-Financial Statement. In the interests of transparency
and materiality, however, other indicators have been presented
alongside the deployed policies, depending on the issues
addressed.
4.2.2
TABLE OF CONCORDANCE – NON-FINANCIAL STATEMENT
Business and Value Creation Model
Our purpose: “Offering everyone a better
way forward.”
Profile / Motion for life
p. 2
Scope, organization and main resources
Profile / A global footprint
Our All Sustainable strategy for 2030
p. 3
p. 10-11
Governance
Michelin investor relations
Ethics, integrity and compliance
Risk management
p. 32-37
p. 38
p. 39
p. 40
Business and value creation model (diagram) Our business model
p. 12-13
Core businesses, operational excellence and
outcomes
Growing With tires, Around tires, Beyond tires
p. 14-25
Challenges, strategy and outlook
Message from the Managing Chairman
p. 4-5
Tire trends and issues
p. 6-9
The six transformation drivers
Performance & Ambitions
The Michelin share
Outlook
p. 26-31
p. 42-46
p. 47
p. 48
Managing the social and environmental impact of our business operations
4.1 Sustainable Development and Mobility Report
No.
Materiality matrix
issue
Main risk
identified in the
CSR map
Policies, due diligence and outcomes
Key Performance Indicators
and Objectives/Key outcomes
1
Employee health
and safety
9 – Employee and
contractor health
and safety
4.1.3 Employee health and safety
▶Achieve a total case incident rate
(TCIR) of less than 2
▶Achieve and maintain an 85%
employee engagement rate
2
Quality and safety
of products and
services
8 – Tire product
safety
4.1.1.3 Guaranteeing the quality of our products
and services
▶Improve the Partner NPS by ten
points and the End Customer NPS
by five points by 2030
3
Direct contribution
to climate change
(Scopes 1 & 2)
6 – Climate change
impact of our
Scope 1 & 2
operations
4.1.4.1a) Transition plan: decarbonizing our
operations/Scopes 1 & 2: reaching net zero
emissions in the manufacturing operations by
2050
▶Scopes 1 & 2: reaching net zero
emissions in the manufacturing
operations by 2050
4
Environmental
impact of raw
materials
4 – Non-climate
change-related
impact of our raw
materials on the
environment
4.1.4.2 Improving full circularity in our products
▶Use only sustainable materials
by 2050
▶Commitment to using 40%
sustainable materials by 2030
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5
Indirect contribution
to climate change
(Scope 3)
3 – Climate change
impact of our
suppliers (Scope 3)
4.1.4.1 a) Transition plan: decarbonizing our
operations
▪Scope 3: aiming for carbon neutrality in the
supply chain with raw materials and
components vendors
▪Scope 3: reducing emissions from our logistics
operations
▶Suppliers representing 70% of GHG
emissions from purchased goods and
services (Scope 3, category 1) are
expected to set science-based
reduction targets by 2024.
▶Reduce carbon emissions in the
supply chain by 10% compared
with 2010
1 – Climate change
impacts from the
use of our
products (Scope 3)
4.1.4.1 b) Transition plan: company strategy/
Opportunities and risks/Designing ultra-energy
efficient products
▶Improve the energy efficiency of tires
by 10% in 2030 compared to 2020
6
Respect for human
rights in the supply
chain
2 – Supplier failure
to respect human
rights
4.1.1.2 Demonstrating our CSR commitments
through responsible procurement policies
▶Percentage of suppliers assessed by
EcoVadis that are confirmed as
compliant – Objective: 70%
7
Sustainable sourcing
and responsible
supplier relations
5b – Non-
compliance with
our Supplier
Relations Code
of Conduct
8
Development of
products and services
beyond the tire
Strategic risk addressed in section I
9
Diversity and equal
opportunity
7 – Discrimination
4.1.2.2 Instilling an inclusive culture of diversity
and preventing discrimination
▶IMDI: a composite indicator tracking
diversity and inclusion
10
Business ethics
5a – Ethical
violations
4.1.1.1 Ensuring ethical business practices
Types of calls to the ethics hotline
A performance indicator to track the
Group's anti-corruption policies is
currently being introduced and will be
presented in the 2022 Universal
Registration Document
Impact of the Group’s business operations
▶on respect for human rights
4.1.2.1 Ensuring respect for human rights
4.1.1.2 Demonstrating our CSR commitments through responsible procurement policies
▶on the fight against corruption
4.1.1.1 b) Taking a firm stand against corruption
▶on the fight against tax evasion
4.1.1.1 c) Responsible tax management
Impacts on climate change
▶of the Company's business operations
4.1.4.1 Climate strategy
4.1.4.1 a) Transition plan: decarbonizing our operations/Scopes 1 & 2: reaching net zero
emissions in the manufacturing operations by 2050
4.1.4.4 c) Reducing energy use and greenhouse gas emissions
4.1.4.1 a) Transition plan: decarbonizing our operations/Scope 3: aiming for carbon
neutrality in the supply chain with raw materials and components vendors.
4.1.4.1 a) Transition plan: decarbonizing our operations/Scope 3: reducing emissions from
our logistics operations
▶of the use of the Company’s products
and services
4.1.4.1 b) Transition plan: company strategy/Opportunities and risks/Designing ultra-energy
efficient products
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Social commitments to supporting
▶sustainable development
4.1.4.3 Supporting biodiversity
4.1.2.5 Encouraging employee and corporate engagement in local communities
▶the circular economy
4.1.4.2 Improving full circularity in our products
▶initiatives to reduce food waste
Given the nature of the Michelin Group's manufacturing operations, this information does
not correspond to a major risk. However, related initiatives are being undertaken by the
Group's food service providers at the local level.
In addition, as part of its Maps & Guides business, Michelin has created the Sustainable
Gastronomy distinction, which was awarded for the first time in 2019. In 2021, the new
MICHELIN Green Star award was introduced to help users find restaurants in the various
selections that are leading the way in environmentally responsible fine dining. In this way,
the MICHELIN Guide hopes to raise awareness and encourage action in the restaurant
industry and among consumers. Lastly, by showcasing the restaurants through all its
interfaces and communication channels, the MICHELIN Guide is expressing its commitment
to bringing together gastronomic transition stakeholders and encouraging positive
emulation across the sustainable fine dining and food community.
▶initiatives to combat food insecurity
Given the nature of the Michelin Group's manufacturing operations, this information does
not correspond to a major risk.
▶responsible, fair, sustainable food choices Given the nature of the Michelin Group's manufacturing operations, this information does
not correspond to a major risk.
▶animal rights and welfare
Given the nature of the Michelin Group's manufacturing operations, this information does
not correspond to a major risk.
Information on collective bargaining agreements signed in the Company and their impact on business performance
and employee working conditions
Since these issues do not represent a major risk, they are not discussed in this report.
Initiatives to prevent discrimination and promote diversity, and measures taken in favor of the disabled
4.1.2.2 Instilling an inclusive culture of diversity and preventing discrimination
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4.2.3
TABLE OF CONCORDANCE – OTHER CSR ISSUES
Managing the social and environmental impact of our business operations
4.1 Sustainable Development and Mobility Report
No. Materiality
matrix
Other identified risks
and issues
Description
Policies, due diligence and outcomes
HUMAN RIGHTS
17
Local
community
development
4.1.2.5 Encouraging employee
and corporate engagement in
local communities
4.1.2.5 a) Dialogue with stakeholders
4.1.2.5 b) Creating local jobs and businesses
with Michelin Development
4.1.2.5 c) Participating harmoniously in local
community life through our employees
4.1.2.5 d) The Michelin Foundation:
demonstrating our corporate culture and values
4.1.2.5 e) Fostering closer relations with
environmental protection associations
4.1.2.5 f) Addressing the risk of potentially
negative impacts of our business on local
communities
19
Attracting
and retaining
talent
Lack of attractiveness
4.1.2.4 Supporting employee
growth and development
4.1.2.4 b) Employer attractiveness, promoting
from within, team succession plans
4.1.2.4 c) Employee growth and development
4.1.2.4 d)The division of roles supporting the
process
4.1.2.4 e) Enhancing skills through training
20
Developing
employee skills
Managing social cohesion,
people and human rights/
Employee skills mismatch
4.1.2.4 Supporting employee
growth and development/
Managing social cohesion, people
and human Rights – level 2 risk/
Risk factors
4.1.2.4 Supporting employee growth
and development
4.1.2.3 Promoting responsible social dialogue
22
Employee
volunteer
service
4.1.2.5.b) Participating
harmoniously in local community
life through our employees
4.1.2.5.b) Participating harmoniously in local
community life through our employees/Michelin
Volunteers guidelines
EMPLOYEE HEALTH AND SAFETY
21
Fostering
workplace
well-being
Malaise at work
4.1.3.5 Well-being in the
workplace: improving work-life
balance
4.1.3.5 Well-being in the workplace:
improving work-life balance
ENVIRONMENT AND CLIMATE CHANGE
14
Air quality
Air and water pollution
4.1.4.4 c) Reducing energy use
and greenhouse gas emissions
4.1.4.4 d) Reducing harmful air
emissions
4.1.4.4 c) Reducing energy use and greenhouse
gas emissions
4.1.4.4 d) Reducing harmful air emissions
15
Eco-design of
our products
and services
Environmental risks from raw
materials and end-of-life tires
4.1.4.2.b) Deploying eco-design
practices
4.1.4.2.b) Deploying eco-design practices
16
End-of-life
products
Environmental risks from raw
materials and end-of-life tires
4.1.4.2.d) The Michelin 4R
circular economy process
4.1.4.2.d) The Michelin 4R circular economy
process
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24
Responding to
environmental
damage
Risks related to the physical
impacts of climate change
Addressed in Chapter 2 Risk Management
25
Protecting soil
quality and
biodiversity
Damage to biodiversity
4.1.4.3 Supporting biodiversity 4.1.4.3 a) New individual act4nature
commitments
4.1.4.3 b) Preserving biodiversity and ecosystems
in rubber tree farming
4.1.4.3 c) Preserving biodiversity around Group
manufacturing and research facilities
26
Waste
management
Risks arising from the tire
manufacturing process
and end-of-life tires
4.1.4.4.e) Reducing and managing waste
4.1.4.2.d) The Michelin 4R circular economy process
27
Responsible
water
management
Air and water pollution
4.1.4.4 f) Reducing water withdrawals and effluent discharge
OTHER MATERIALITY MATRIX ISSUES
12
Data protection
4.1.1.1.d) Protecting employee privacy and personal data
13
Responsible governance
4.1 Sustainable Development and Mobility Report/Introduction – Michelin Sustainable
Development and Mobility/Governance
18
Transparency and access to information
4.1 Sustainable Development and Mobility Report/Introduction – Michelin Sustainable
Development and Mobility/Non-financial performance: Michelin, a recognized
“All Sustainable” vision
4.1.2.3 c) Transparency: information concerning redundancy plans, job retention
initiatives and retraining, placement and support programs during the year
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4.2.4
REPORT BY ONE OF THE STATUTORY AUDITORS, APPOINTED
AS AN INDEPENDENT THIRD PARTY, ON THE CONSOLIDATED
NON‑FINANCIAL STATEMENT
For the year ended December 31, 2021
This is a free translation into English of the Statutory Auditor’s report issued in French and is provided solely for the convenience of
English-speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and
professional standards applicable in France.
Compagnie Générale des Etablissements Michelin
23 Place des Carmes Déchaux
63000 Clermont-Ferrand, France
To the Shareholders,
In our capacity as Statutory Auditor of Compagnie Générale des Établissements Michelin (hereinafter the “entity”), appointed as an
independent third party and certified by Cofrac (Cofrac Inspection certification no. 3-1060, whose scope is available at www.cofrac.fr),
we hereby report to you on the consolidated non-financial statement for the year ended December 31, 2021 (hereinafter the
“Statement”), prepared in accordance with the entity's procedures (hereinafter the “Guidelines”), included in the management report
pursuant to the legal and regulatory provisions of Articles L. 225‑102-1, R. 225-105 and R. 225-105-1 of the French Commercial Code
(Code de commerce).
Conclusion
Based on the procedures performed, as described in the “Nature and scope of our work” section, and the elements that we have
collected, nothing has come to our attention that causes us to believe that the consolidated non-financial statement is not compliant
with the applicable regulatory provisions and that the Information, taken as a whole, is not presented fairly and in accordance with the
Guidelines.
Comments
Without qualifying our conclusion and in accordance with Article A. 225-3 of the French Commercial Code, we have the following
comment: the anti-corruption-related outcomes presented do not identify the key performance indicator for the policies concerned.
Preparation of the non-financial statement
The absence of a generally accepted and commonly used framework or established practices against which to evaluate and measure
the Information allows for the use of varying, but acceptable, measurement techniques that may affect comparability between entities
and over time.
Consequently, the Information needs to be read and construed in accordance with the Guidelines, the main elements of which are
available on request from the entity's head office.
Inherent limitations in preparing the Information
As indicated in the Statement, the Information may be subject to uncertainty that is inherent to the state of scientific and economic
knowledge and to the quality of the external data used. Certain information is sensitive to the methodological choices, assumptions
and/or estimates used to prepare the Information presented in the Statement.
The entity's responsibility
The Managing Chairman is responsible for:
▶selecting or establishing suitable criteria for the preparation of the Information;
▶preparing a Statement pursuant to legal and regulatory requirements, including a presentation of the business model, a description
of the principal non financial risks, a presentation of the policies implemented in light of those risks and the outcome of said
policies, including key performance indicators and, where applicable, the information required by Article 8 of Regulation (EU)
2020/852 (Green Taxonomy); and
▶implementing the internal control procedures it deems necessary for the preparation of Information that is free from material
misstatement, whether due to fraud or error.
The Statement has been prepared in accordance with the entity’s Guidelines as mentioned above.
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Responsibility of the Statutory Auditor appointed as an independent third party
On the basis of our work, our responsibility is to provide a report expressing a limited assurance conclusion on:
▶the compliance of the Statement with the provisions of Article R. 225-105 of the French Commercial Code;
▶the fairness of the information provided in accordance with Article R. 225‑105 I, 3 and II, 3 of the French Commercial Code, i.e., the
outcomes, including key performance indicators, and the measures implemented considering the main risks (hereinafter the
“Information”).
As we are engaged to form an independent conclusion on the Information as prepared by management, we are not permitted to be
involved in the preparation of the Information as doing so may compromise our independence.
It is not our responsibility to comment on:
▶the entity's compliance with other applicable legal and regulatory provisions, in particular the information required by Article 8 of
Regulation (EU) 2020/852 (Green Taxonomy), the French duty of care law and anti-corruption and tax evasion legislation;
▶the fairness of the information required by Article 8 of Regulation (EU) 2020/852 (Green Taxonomy);
▶the compliance of products and services with the applicable regulations.
Regulatory provisions and applicable professional standards
The work described below was performed in accordance with the provisions of Articles A. 225-1 et seq. of the French Commercial
Code determining the conditions in which the independent third party performs its engagement and with the professional guidelines
of the French Institute of Statutory Auditors (Compagnie nationale des commissaires aux comptes – CNCC) applicable to such
engagements, as well as with ISAE 3000 (Revised) – Assurance Engagements Other than Audits or Reviews of Historical Financial
Information.
Independence and quality control
Our independence is defined by the provisions of Article L. 822-11-3 of the French Commercial Code and the French Code of Ethics
(Code de déontologie) of statutory auditors. In addition, we have implemented a system of quality control including documented
policies and procedures regarding compliance with the applicable legal and regulatory requirements, ethical requirements and the
professional guidelines of the CNCC relating to this engagement.
Means and resources
Our work was carried out by a team of seven persons between September 2021 and February 2022 and lasted around 15 weeks.
We were assisted in our work by our specialists in sustainable development and corporate social responsibility. We conducted about
20 interviews with the people responsible for the preparation of the Statement, representing the CSR, administration and finance,
compliance, human resources, health and safety, environmental and purchasing departments.
Nature and scope of our work
We planned and performed our work considering the risk of material misstatement of the Information.
We believe that the procedures carried out, based on our professional judgment, are sufficient to provide a basis for our limited
assurance conclusion:.
▶we obtained an understanding of the activities of all the entities included in the scope of consolidation and the description of the
main risks;
▶we assessed the appropriateness of the Guidelines with respect to their relevance, completeness, reliability, objectivity and
understandability, with due consideration of industry best practices, where appropriate;
▶we verified that the Statement includes each category of social and environmental information set out in Article L. 225‑102‑1 III, as
well as information regarding compliance with human rights and anti‑corruption and tax evasion legislation;
▶we verified that the Statement presents the information set out in Article L. 225-105 II, where relevant to the main risks, and
includes an explanation of the reasons justifying the absence of the information required under Article L. 225-102-1;
▶we verified that the Statement presents the business model and a description of the main risks associated with all the consolidated
entities' activities, including where relevant and proportionate, the risks associated with their business relationships and products or
services, as well as its their policies, measures and the outcomes thereof, including key performance indicators related to the main risks;
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▶we referred to documentary sources and conducted interviews to:
• assess the process used to identify and confirm the main risks and the consistency of the outcomes and the key performance
indicators used with respect to the main risks and the policies presented, and
• corroborate the qualitative information (measures and outcomes) that we considered to be the most important, presented in the
appendix. For certain risks, associated with anti-corruption, the fight against tax evasion and responsible purchasing, our work
was performed at consolidation entity level; for other risks, work was carried out at consolidation entity level and in a selection of
entities: Homburg (Germany), Pictou (Canada), Vitoria and Valladolid (Spain), Spartanburg (United States), Bassens, Carmes,
Cholet and Troyes (France), Zalau (Romania), Pirot (Serbia), Rayong and Phra Pradaeng (Thailand), Euromaster France and
Euromaster Sweden;
▶we verified that the Statement covers the scope of consolidation, i.e., all the entities included in the scope of consolidation in
accordance with Article L. 233-16 within the limitations set out in the Statement;
▶we made inquiries about the internal control and risk management procedures the entity has put in place and assessed the data
collection process to ensure the completeness and fairness of the Information;
▶for the key performance indicators and other quantitative outcomes that we considered to be the most important, presented in the
appendix, we implemented:
• analytical procedures to verify the proper consolidation of the data collected and the consistency of any changes in those data;
• substantive tests, using sampling techniques or other methods, in order to verify the proper application of the definitions and
procedures and reconcile the data with the supporting documents. This work was carried out at a selection of contributing
entities, namely Homburg (Germany), Pictou (Canada), Vitoria and Valladolid (Spain), Spartanburg (United States), Bassens,
Carmes, Cholet and Troyes (France), Zalau (Romania), Pirot (Serbia), Rayong and Phra Pradaeng (Thailand), Euromaster France and
Euromaster Sweden, and covers between 20% and 41% of the consolidated data selected for these tests;
▶we assessed the overall consistency of the Statement based on our knowledge of all the consolidated entities.
The procedures performed in a limited assurance engagement are less extensive than those required for a reasonable assurance
engagement performed in accordance with the professional guidance of the CNCC; a higher level of assurance would have required
us to carry out more extensive procedures.
Neuilly-sur-Seine, February 17, 2022
One of the Statutory Auditors
PricewaterhouseCoopers Audit
Jean-Christophe Georghiou
Partner
Sylvain Lambert
Sustainable Development Partner
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Appendix: List of the information we considered most important
Key performance indicators and other quantitative outcomes:
▶Total Case Incident Rate and Serious Accident Frequency Rate;
▶i-MEF and its components (energy, water, volatile organic
compounds, CO2 (Scopes 1 and 2), waste);
▶CO2 emissions from logistics operations;
▶Improvement in energy efficiency compared with the 2020
baseline;
▶Percentage of renewable or recycled raw materials in our tires;
▶Percentage of facilities ISO 14001 certified;
▶Percentage of targeted customer groups delivering Net
Promoter Scores in line with the Group's objective;
▶Types of calls to the ethics hotline;
▶Percentage of suppliers assessed by EcoVadis that are
confirmed as compliant;
▶Index of management of diversity and inclusion and its
components (gender, identity, multi-nationality management,
disability, equal opportunities);
▶Percentage of training hours per total hours worked;
▶Percentage of management positions held by employees
promoted or transferred from within;
▶The Group-wide employee engagement rate as measured by
the annual “Moving Forward Together” survey and other
indicators relating to this survey;
▶Employee response rate to the “Moving Forward Together”
survey;
▶Volume of natural rubber purchases assessed by a desktop
review and volumes of purchases confirmed as compliant;
▶Percentage of employees involved in volunteer activities;
▶Percentage of employee shareholders;
▶Percentage of natural rubber volumes covered by evaluations
on the topic of “social and human rights”;
▶Percentage of assessed suppliers confirmed as compliant with
respect to the topic of “social and human rights”.
Qualitative information (actions and outcomes):
▶Safety of users of Michelin products and services (regulatory
tests, safety tests);
▶Sustainable and responsible operations (France Supply Chain,
initiatives in Canada, biodiversity initiatives, water initiatives);
▶Responsible purchasing (responsible purchasing training
course, training module on ethical rules, initiatives with the
WWF);
▶RubberWay (deployment, farmer participation);
▶Energy transition and decarbonization (Livelihoods and
Livelihoods 2, renewable energy initiatives).
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Duty of care plan
4.3
DUTY OF CARE PLAN
4.3.1
METHODOLOGY
For the fifth year in a row, Michelin has prepared a Duty of Care
Plan in compliance with French Act No. 2017-399 of
March 27, 2017. It describes all of the risks incurred by the
Group and its main subcontractors as regards the environment,
health & safety and human rights, along with the measures
taken to prevent and mitigate them. For Michelin, the plan is a
means to consolidate and strengthen its proactive approach to
deploying risk prevention and management processes in these
three areas, as well as an opportunity to deepen its due
diligence with subcontractors as part of a continuous
improvement process. The Duty of Care Plan is fully aligned
with the Group's values and its commitment to conducting its
business responsibly with regard to all its stakeholders.
Michelin's corporate governance system includes a Sustainable
Development
and
Mobility
Management
Committee,
comprising every member of the Group Executive Committee as
well as the Heads of the Legal, Purchasing, and Sustainable
Development and Mobility Departments. It coordinates three
governance bodies – Environment, Human Rights, and
Employee Health and Safety – as well as the Ethics Committee.
The plan expands on the information and initiatives already
embedded in the Group's policies, which underpin its
sustainable development commitment. These include the
Michelin Performance and Responsibility Charter, the Code of
Ethics, the Purchasing Principles, the Supplier Relations Code of
Conduct, the Health Policy, the Environment and Prevention
General Policy Note, the Employee Relations Policy and the
Diversity and Workplace Equality Policy. It presents the relevant
information disclosed by the Group in its Universal Registration
Document, including its Non-Financial Statement and other
annual reports. The Group has defined standards of compliance
that meet and often exceed prevailing standards and legislation
in its host countries. Even when local legislation is not as strict
as its own, Michelin continues to require compliance with its
highly demanding environmental, health & safety and human
rights standards. With respect to international environmental
and human rights standards, the Group has pledged to support
the UN Global Compact and upholds the UN Guiding Principles
on Business and Human Rights, the fundamental conventions of
the International Labour Organization and the OECD Guidelines
for Multinational Enterprises. These international standards also
inform the Duty of Care Plan.
The plan is tracked and updated through a dedicated process,
which was coordinated in 2021 by a Sustainable Development
and
Mobility
Department
working
group
comprising
representatives from the Internal Control, Risk Management,
Environment and Prevention, Purchasing, Legal and Employee
Relations Departments. Each one provided input to expand and
update the plan with the support of the Sustainable
Development and Mobility Department.
The Duty of Care Plan is published in the URD in the form of a
concordance table referring more broadly back to the issues
addressed in the Sustainable Development and Mobility Report
to avoid repetitions and redundancies and to facilitate
comprehension. A comprehensive, fully written, stand-
alone Duty of Care Plan may be found on the Group's
corporate website, www.michelin.com.
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Duty of care plan
4.3.2
TABLE OF CONCORDANCE
Risk family
Risks
Risk definition
and prevention(1)
Indicators
Implementation trackers
Environmental
risks
Presentation of risks related to environmental and climate change
Presentation of risk factors related to the environmental impact of products
Presentation of environmental risk factors related to production and supply chain operations
Climate change impact
of our Scope 1 & 2
operations
4.1.4.1 a) Transition plan:
decarbonizing our operations
CO2 emissions from
manufacturing operations
Deployment and outcomes
of carbon footprint targets
for 2030 and preparation of
a pathway to reaching net zero
emissions in manufacturing
operations by 2050
Deployment and outcomes of
the reduction in carbon emissions
Climate change impacts
from the use of our
products (Scope 3)
4.1.4.1 a) Transition plan:
decarbonizing our operations
Tire energy efficiency
Inventory of Scope 3 carbon
emissions
Tracking tire energy efficiency
Reducing the rolling resistance
of passenger car, light truck
and heavy truck tires
Climate change impact
of our suppliers (Scope 3)
4.1.4.1 a) Transition plan:
decarbonizing our operations
Percentage of raw
material suppliers
responding to the CDP
Percentage of emissions
from purchased goods
and services sourced
from suppliers with
“science‑based” targets
Aiming for carbon neutrality
in the supply chain with raw
materials and components
vendors
Air and water pollution
4.1.4.4 c) Reducing energy use
and greenhouse gas emissions
4.1.4.4 d) Reducing harmful
air emissions
4.1.4.4 f) Reducing water
withdrawals and effluent
discharge
Michelin Environmental
Performance (i-MEP)
Improvement in i-MEP
performance, 2019-2021, p. 217
Deployment and outcomes of
the reduction in VOC emissions
Tracking water withdrawals,
weighted for water stress
Deployment and outcomes
of the reduction in SOx and NOx
emissions
Non-climate
change‑related impact
of our raw materials
on the environment
4.1.4.2. Enhancing the
circularity of our products
4.1.4.2 b) Deploying eco‑design
practices
Sustainable materials rate
Deployment and outcomes
of the reduction in fossil fuel
and water use in 2021
Deployment and outcomes
of the use of renewable energy
sources in 2021
Deployment and outcomes
of the increase in the percentage
of recyclable materials in 2021
Deployment and outcomes of
the Michelin 4R strategy in 2021
Deployment and outcomes
of waste reduction in 2021
(1) Chapter where the information is present.
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Duty of care plan
Risk family
Risks
Risk definition
and prevention(1)
Indicators
Implementation trackers
Health and
safety risks
Presentation of risk factors related to the health and safety of employees and others in the workplace
Occupational accidents
4.1.3.4. c) Measuring and
tracking occupational accidents
Total Case Incident
Rate (TCIR)
Measures introduced to prevent
occupational accidents
Exposure to chemicals
4.1.3.3 c) Managing industrial
hygiene risks to protect
employee health
Product data sheets
in the local language
Deployment and outcomes of
the measures taken to manage
chemical risks in 2021
Production facilities are
entirely asbestos-free
Ergonomics
4.1.3.3 d) Improving production
workstation ergonomics
Capital expenditure
dedicated to ergonomic
projects
Deployment and outcomes of
the measures taken to prevent
ergonomic risks in Michelin
production plants in 2021
Change in capital expenditure
dedicated to ergonomic projects
in 2021
Malaise at work
4.1.3.3 Safeguarding
employee health
4.1.3.5 Well-being in the
workplace: improving work-life
balance
4.1.3.5 b) Quality of work-life:
listening to needs and
measuring performance
4.1.3.5 c) Psychosocial risks:
adapting preventive measures
to local cultures
The Group-wide
employee engagement
rate as measured by the
annual “Moving Forward
Together: Your Voice
for Action” survey
Employee response rate
QWL satisfaction rate(2)
Tracking the “Moving Forward
Together” survey on this issue
in 2021
Deployment and outcomes
of the measures to prevent
psychosocial risks in 2021
Epidemic: Covid-19
pandemic
4.1.3.1 Keeping people
healthy/Responding to
Covid‑19 with an effective
health protocol
Report of Covid-19 cases
at Group level by the RSSE
“How are you?” survey
Health protocol validated
by an external audit
Protocol deployment tracked
by the SE Group Steering
Committee
Safety in countries at risk
4.1.3.2 a) Managing
workplace safety
Country risk map
Deployment and outcomes of
the measures taken to prevent
workplace safety risks
(1) Chapter where the information is present.
(2) QWL: Quality of Work Life.
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Duty of care plan
Risk family
Risks
Risk definition
and prevention(1)
Indicators
Implementation trackers
Human
rights risks
Presentation of human rights risks
Discrimination
4.1.2.2 Instilling an inclusive
culture of diversity and
preventing discrimination
4.1.2.2 a) A comprehensive,
worldwide commitment
4.1.2.2 b) Targeted initiatives
in the five areas of diversity
IMDI: a composite
indicator tracking the
management of diversity
and inclusion in five areas:
▶gender equality
in the workplace
▶identity (age, religion,
sexual orientation, etc.)
▶multi-national
management
▶disability
▶equal opportunity
Deployment and outcomes
of the measures taken to drive
improvement in the five IMDI
metrics
Harassment
4.1.2.1 b) Human rights -
Organization and ambitions
Whistleblowing system
Training and e-learning
Freedom of association
4.1.2.3 Promoting
responsible social dialogue
4.1.2.3 a) An assertive social
dialogue process
4.1.2.3 c) Transparency:
information concerning
redundancy plans, job retention
initiatives and retraining,
placement and support
programs during the year
4.1.2.4 Supporting employee
growth and development
The Group-wide
employee engagement
rate as measured by the
annual “Moving Forward
Together: Your Voice
for Action” survey
Deployment and outcomes of
Michelin's Labor Relations Policy
in 2021
Deployment and outcomes
of the annual “Moving Forward
Together” survey and employee
engagement rate in 2021
Non-compliance with
personal data protection
legislation
4.1.1.1 d) Protecting employee
privacy and personal data
Percentage of each type
of ethics alerts
Deployment and outcomes
of the ethics hotline and
percentage of each type
of alert in 2021
Failure to uphold
our human rights
commitments
4.1.2.3 b) Offering fair
compensation and benefits
4.1.2.5 f) Addressing the risk
of potentially negative impacts
of our business on local
communities
Percentage of employees
paid a decent wage
Percentage of employees
with a social protection
floor
Implementation of the decent
wage policy
Feasibility study for the creation
of a social protection floor
Drafting of guidelines for
preventing risks to local
communities
Product and service safety 4.1.1.3 Guaranteeing
the quality of our products
and services
4.1.1.4 An active role in
safeguarding consumers
and the environment
Michelin Total
Performance
Michelin programs as part
of the TIP on tire wear particles
in 2021
(1) Chapter where the information is present.
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04
Duty of care plan
Risk family
Risks
Risk definition
and prevention(1)
Indicators
Implementation trackers
Supplier risks
Demonstrating our CSR commitments through responsible procurement policies
CSR risks based on nature
and purchasing category
4.1.1.2 Demonstrating our
CSR commitments through
responsible procurement
policies
4.1.1.2 a) Governance
and organization
4.1.1.2 b) Identifying categories
and countries at risk and
assessing suppliers
Number of suppliers
assessed by EcoVadis
Percentage of suppliers
assessed by EcoVadis
that are confirmed
as compliant
Compliance with the Michelin
Purchasing Principles, the
Supplier Relations Code of
Conduct and the Sustainable
Natural Rubber Policy
Spending covered by EcoVadis
assessments (based on
procurement categories
and countries at risk)
Category
management
Raw materials
procurement
4.1.1.2 b) Identifying categories
and countries at risk and
assessing suppliers
Identified risks
Levers for action deployed:
Dedicated levers for action in
certain purchasing categories
Number of suppliers
assessed by EcoVadis
Percentage of suppliers
assessed by EcoVadis
that are confirmed
as compliant
Spending covered by EcoVadis
assessments (based on
procurement categories
and countries at risk)
Deployment and outcomes of the
risk analysis for conflict minerals
and hazardous chemicals in 2021
Deployment of a specific program
on greenhouse gas emissions
(CDP report and “science-based”
targets)
Natural rubber
procurement
4.1.1.2 c) A dedicated approach
for natural rubber
Sourced volumes covered
by the RubberWay®
application
Number of RubberWay®
questionnaires
Deployment and outcomes
of the various natural rubber
partnerships in 2021
(WWF and GPSNR)
Analysis of the 2021 results
from the RubberWay® application
and implementation of on-site
action projects as needed
Other issues
Dialogue with
stakeholders
4.1.2.5 a) Stakeholder dialogue
Managing
risks related
to recent
acquisitions
Chapter 2: Managing risks – Mergers, acquisitions and alliances
Whistleblowing systems
4.1.1.2 a) Establishing a global ethical framework
Whistleblowing controls and procedures
4.1.1.3 b) Risk identification and levers for action
Mediation with suppliers
(1) Chapter where the information is present.
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Financial
performance
266
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MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
The empowerment
of people at all levels
of the company goes
hand in hand with our
simplification drive,
as it fosters agility
and innovation as close
to operations and
customers as possible.
05
Financial
performance
Covid-19: impact of the health crisis on the Group’s
operations in 2021
268
5.1
REPORT OF THE MANAGERS
270
5.1.1
Tire markets
270
5.1.2
Sales
277
5.1.3
Consolidated income statement review
282
5.1.4
Consolidated balance sheet review
289
5.1.5
Consolidated cash flow statement review
294
5.1.6
Return on capital employed (ROCE)
296
5.1.7
Trend information
297
5.1.8
Highlights
297
5.1.9
Material contracts
300
5.1.10
Information concerning payment terms
301
5.1.11
Significant change in financial
or trading position
301
5.1.12
Information disclosed in compliance with
Articles L. 225-102-1 and R. 225‑105‑1
of the French Commercial Code
302
5.1.13
Disclosure pursuant to France’s Duty of Care
Act applicable to parent companies
and subcontracting companies
302
5.1.14
Five-year summary of consolidated key
figures and ratios
303
5.2
CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR
ENDED DECEMBER 31, 2021
304
5.2.1
Consolidated statement – year ended
December 31, 2021
305
5.2.2
Statutory Auditors’ report on the
consolidated financial statements
391
5.3
FINANCIAL STATEMENTS
396
5.3.1
Review of the financial statements
of Compagnie Générale des Établissements
Michelin
396
5.3.2
Financial statements of Compagnie
Générale des Etablissements Michelin
(parent)
397
5.3.3
Statutory Auditors’ report on the financial
statements
410
5.3.4
Statutory Auditors’ special report
on related‑party agreements
413
5.3.5
Statement of changes in equity
414
5.3.6
Appropriation of 2021 net income
414
5.3.7
Five-year financial summary
415
5.4
ADDITIONAL INFORMATION
416
5.4.1
Person responsible for the Universal
Registration Document
416
5.4.2
Statutory Auditors
416
5.4.3
Statements incorporated by reference
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COVID-19: IMPACT OF THE HEALTH CRISIS ON THE GROUP’S OPERATIONS IN 2021
In 2021, the world transitioned from a state of sudden shock and a worldwide economy supported by governments and central banks
to a possible “new normal,” to which the Michelin Group successfully adapted thanks to the strength of its assets and the unflagging
commitment of its teams.
After the unprecedented slowdown in global demand that
shaped 2020, tire markets generally returned to pre-crisis levels
in 2021, with the exception of:
▶automotive Original Equipment tire markets, which were hard
hit by sluggish new vehicles production, dampened by the
worldwide shortage of semiconductors;
▶aircraft tire markets, due to the severe disruptions in air traffic
as mobility restrictions were introduced in response to new
variants.
Details of demand in each market may be found in section 5.1.1
Tire markets below.
Initiatives undertaken to attenuate the impact of the health crisis while securing
business continuity
All the Group’s host regions were affected by Covid-19 during the year. Following on from the initiatives undertaken in 2020, the
Group continued to focus on its two core priorities: protecting the health and safety of its employees and partners and doing
everything necessary to ensure business continuity.
The resulting protective measures resulted in additional costs
over the year that, while lower than in 2020, were nevertheless
significant. The total cost of purchasing and producing face
masks, providing hand sanitizer and cleaning and disinfecting
business premises came to €26 million in 2021, versus
€96 million in 2020.
In addition, plant productivity and production capacity were
curtailed by Covid-19-related absences among employees, social
distancing rules and the time spent on cleaning and
disinfecting plant premises and production equipment. In all,
implementation of health protocols in the plants resulted in the
loss of an equivalent three days of production over the year,
compared to the 2019 baseline.
The Group also took care to ensure strict compliance with
national or local work-from-home directives, guaranteeing that
every employee concerned had the resources required to
perform his or her tasks remotely. In addition, the Group
provided vaccination to all employees who wished to receive
them, meaning that more than 35,000 vaccines were
distributed in Asia, including India. Beside these Covid-related
arrangements, Michelin signed multi-year agreements with the
unions that offer employees in compatible jobs, and in
compliance
with
local
legislation,
the
opportunity
of
contractualizing, over time, their working from home either
occasionally or on a regular basis.
Impact of the health crisis on the Group’s business operations in 2021
In addition to the sales lost to the temporary restrictions on
mobility during the year, the Covid-19 crisis considerably
disrupted the Group’s business operations in 2021.
All the supply chains were thrown into disarray, primarily due to
severe constrictions in the maritime shipping. The robust
upturn in global demand, combined with a shortage of cargo
space (many shipowners had taken advantage of the 2020
decline in business to start upgrading their fleets) and the
closure of certain ports due to Covid-19, caused extensive
slowdowns across the supply chain, tightening raw material
supplies and crimping the Group’s ability to ship from its plants.
In response, some 15 crisis cells were formed and operated
around the clock to deal with supply chain issues during the
year.
This situation particularly impacted the off-the-road business,
which operates major production facilities in Sri Lanka, and sales
of surface mining tires, which are shipped primarily from the
United States.
In addition, during the first nine months of the year, the Group
occasionally used alternative more costly logistics solutions to
secure the supply of raw materials to Europe and the Americas,
thereby avoiding any cutbacks in production.
2021 was also shaped by labor shortages that impacted the
manufacturing operations of both the Group and its suppliers.
In addition to Covid-related absences, labor markets were very
tight over the year, especially in the United States. Hiring
difficulties also exacerbated the above-mentioned disruptions in
the maritime supply chains, with a shortage of truck drivers
slowing the return of empty containers to ports. While
government financial support may have temporarily delayed the
return to work, it is also possible that, in a more structural way,
these hiring difficulties arose from certain Covid-related social
changes that have created a new relationship to work.
The strong rebound in global demand in 2021 also spurred a
sharp run-up in raw material and energy costs, in addition to
the steep increase in supply chain costs. Over the full year, the
Group faced approximately €1.2 billion in additional costs,
which it successfully offset with productivity gains, assertive
price management and a higher value product mix.
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Lastly, the combination of labor shortages, supply chain
disruptions and electronic component supply outages prevented
the Group from completing all its initially planned capital
projects and investments during the year.
In the face of these severe disruptions, the Group never ceased
operating throughout the year, attesting to the soundness and
efficiency of its business continuity procedures, particularly
those concerning business interruption risks in the production
plants and supply continuity risks, as described in section 2 of
the Universal Registration Document.
As was the case in 2020, the Group did not request any form of
public support, such as government-backed loans or longer
payment deadlines, in 2021.
Impact on the Group’s strategic objectives
Spiraling costs and supply chain disruptions have not
undermined Michelin’s strategic vision nor the resources
deployed to meet its objectives. Convinced of the validity of its
strategic model, the Group has gained in strength during the
crisis and reaffirms that its “All Sustainable” vision represents
the keystone of its future performance.
As the world’s population rises and increasingly lives in large
urban communities, the need to transport people and goods is
going to grow significantly in the decades ahead. In response,
the farming, construction and mining industries will be called
upon to meet the expanding needs for food, infrastructure and
the metals required to decarbonize value chains. The two-wheel
tire businesses will continue to benefit from the surging
popularity of soft mobility and recreational activities.
Tire-related services and solutions, which were more resilient in
2020 and less exposed to supply chain disruptions than the tire
business in 2021, will continue to realize their strong growth
potential. These solutions help to optimize tire use and enhance
Michelin’s intimacy with its dealer and end-user customers,
while supporting safer, more sustainable mobility.
Although it is too soon to assess the impact of the crisis on the
emergence of new practices, certain underlying trends that
were already driving change before the pandemic seem to be
gaining new momentum. This is particularly the case for the
energy transition, one of whose major vectors is the
electrification of mobility. Michelin is firmly positioned as the
market leader in EV tires, where its technological advance
enables it to meet all the needs of this new, fast-growing
market. In addition, Michelin is stepping up the development of
solutions that support this transition to electric powertrains,
both for corporate fleets and for automakers.
Lastly, the Group is continuing to digitalize and automate its
plants. These capital expenditures, which are vitally necessary to
prepare the production facilities to meet the challenges of
tomorrow, could prove to be especially critical if the hiring
difficulties in manufacturing turn out to be structural and
long‑lasting.
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05
Report of the managers
5.1
REPORT OF THE MANAGERS
5.1.1
TIRE MARKETS
5.1.1 a)
A global market worth some $153 billion(1) in 2020
At a time of sharply slowing demand due to the Covid-19 crisis,
the global tire market totaled $153 billion in 2020, representing
an 8% decline from 2019. Light-vehicle tires accounted for
around 60% of total sales and truck tires 30%(2). By volume, the
market represented nearly 1.4 billion car and light truck tires
and a little more than 200 million truck and bus tires(2).
Around three out of four tires were sold in the Replacement
market.
In 2021, demand generally returned to 2019 levels, except in
the Aircraft tire market and in the Original Equipment
Automotive segment, which was hard hit by semiconductor
shortages in the second half of the year.
Longer term, tire demand is likely to expand by 0-2% a year in
mature markets and by 2-4% a year in the new markets. In this
environment, Michelin is targeting growing, high value-added
market segments, such as the premium segment for its Automotive
business and specialty markets.
Changes in tire standards
In recent years, mandatory tire performance ratings, displayed
on standardized labels, have been introduced in the European
Union and many other regions and countries around the world.
Similar systems with minimum tire performance standards and
regulated labeling systems are also under consideration in
China, the United States and India.
In addition, environmental legislation requiring car and truck
manufacturers to reduce CO2 emissions is helping to drive demand
for low rolling resistance tires, of which Michelin is a world-leading
manufacturer. For example, the VECTO model now required under
European Union regulations integrates the real value of tire rolling
resistance as one of the parameters for calculating truck CO2
emissions.
THE GLOBAL TIRE MARKET BY MANUFACTURER IN 2020
Source: 2020 sales in US dollars, published in Tire Business, August 2021.
(1) Tiremakers with a 2-7% market share according to the Tire Business
ranking.
(2) Tiremakers with less than a 2% market share according to the Tire
Business ranking.
THE GLOBAL TIRE MARKET BY MANUFACTURER IN 2019
Source: 2019 sales in US dollars, published in Tire Business, August 2020.
(1) Tiremakers with a 2-7% market share according to the Tire Business
ranking.
(2) Tiremakers with less than a 2% market share according to the
Tire Business ranking.
5.1.1 b)
Tire markets in 2021
In 2021, a sharp upturn in economic activity drove a robust
first‑half rebound in tire demand off of favorable prior-year
comparatives, which had been impacted by the restrictions on
freedom of movement in place during 2020. The second half
saw more contrasting trends, with (i) the Passenger car and
Light truck tire market edging back by a slight 5% as
semiconductor shortages weighed on Original Equipment
demand and Replacement sales held steady; and (ii) Truck tire
demand rising by 5% outside China but plunging 35% in China
from exceptionally high prior-year levels, which had been lifted
by buying ahead of implementation of the China 6 emissions
standard.
Prior-year comparatives were mixed, but Specialty tire markets
generally rebounded in 2021, particularly in the Agricultural,
Construction and Materials Handling Original Equipment
segments.
Methodological note: Tire market estimates reflect sell-in (sales
of manufacturers to dealers and automakers) data published by
local tiremaker associations, plus Michelin’s own estimates of
sales by tire manufacturers that do not belong to any association.
These estimates are based primarily on import-export statistics
and are expressed in the number of tires sold. They are regularly
adjusted and may be updated following their initial publication.
(1) Source: Tire Business.
(2) Michelin estimates.
25.1%
Mid-sized tiremakers(1)
13.6%
Bridgestone
7.5%
Goodyear
38.8%
Other tiremakers(2)
15.0%
Michelin
25.3%
Mid-sized tiremakers(1)
14.6%
Bridgestone
8.2%
Goodyear
36.9%
Other tiremakers(2)
15.0%
Michelin
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Report of the managers
5.1.1 c)
Passenger car and Light truck tire markets in 2021
The global Original Equipment and Replacement Passenger car and Light truck tire market rose by 9% in number of tires sold
in 2021, but ended the year 4% lower than in 2019.
THE GLOBAL PASSENGER CAR AND LIGHT TRUCK TIRE MARKET, 2021 VS. 2020
(1) Including Turkey.
(2) Including Central America.
Michelin estimates.
Original Equipment
After expanding a strong 28% in the first half due to low comparatives (caused by automotive plant shutdowns in first-half 2020),
Original Equipment tire demand was heavily impacted in the second half by the worsening global shortage of semiconductors, which
led to a 17% decline for the period. By quarter, demand fell a steep 19% in the third before recovering slightly to a 14% contraction
in the fourth, following a relative easing of chip shortages in North America and China.
In all, the global OE tire market ended 2021 down 15% on 2019.
Passenger car and Light
truck tire markets
Original Equipment
(in millions of tires)
2021
2020 2021/2020
Second-
half
2021/2020
Fourth-
quarter
2021/2020
Third-
quarter
2021/2020
First-half
2021/2020
Second-
quarter
2021/2020
First-
quarter
2021/2020
Western and Central
Europe(1)
67
71
-5%
-28%
-27%
-29%
+25%
+93%
-4%
CIS
7
7
+6%
-16%
-18%
-14%
+38%
+80%
+11%
North America(2)
62
63
0%
-22%
-17%
-26%
+32%
+132%
-4%
South America
12
11
+12%
-14%
-16%
-12%
+57%
+282%
+3%
China
115
112
+3%
-10%
-4%
-17%
+23%
-7%
+78%
Asia (excluding China)
65
64
+2%
-13%
-10%
-16%
+20%
+55%
-1%
Africa/India/Middle-East
28
25
+16%
-14%
-30%
+5%
+64%
+195%
+20%
TOTAL
356
353
+2%
-17%
-14%
-19%
+28%
+48%
+14%
(1) Including Turkey.
(2) Including Central America.
Michelin estimates.
In every region, market growth was lifted by favorable
comparatives in the first half and adversely impacted by global
semiconductor shortages in the second. Nevertheless, by
end‑2021, only the Chinese market had returned more or less
to 2019 levels, with just a 1% decline for the year. Elsewhere,
markets contracted by 17% in the rest of Asia, 21% in
North America and 27% in Western Europe.
11%
2%
27%
17%
3%
12%
14%
0%
16%
15%
6%
10%
-5%
3%
5%
2%
North
America(2)
Western & Central
Europe(1)
CIS
Asia
(exc. China)
China
South
America
Africa, India,
Middle-East
Total
Original Equipement
Replacement
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THE OE PASSENGER CAR AND LIGHT TRUCK MARKET
IN EUROPE
(in millions of tires – moving 12 months – excluding Russia)
Michelin estimates.
THE OE PASSENGER CAR AND LIGHT TRUCK MARKET
IN NORTH AMERICA
(in millions of tires – moving 12 months)
Michelin estimates.
Replacement
After surging 27% off of very favorable comparatives in the first half, global Replacement tire demand was stable year-on-year in the
second six-month period and ended the year on a par with 2019.
Passenger car and Light
truck tire markets
Replacement
(in millions of tires)
2021
2020 2021/2020
Second-
half
2021/2020
Fourth-
quarter
2021/2020
Third-
quarter
2021/2020
First-half
2021/2020
Second-
quarter
2021/2020
First-
quarter
2021/2020
Western and Central
Europe(1)
315
287
+10%
0%
+3%
-2%
+22%
+44%
+6%
CIS
61
53
+15%
+10%
+2%
+16%
+21%
+57%
-1%
North America(2)
327
288
+14%
-3%
-7%
+2%
+38%
+76%
+10%
South America
68
54
+27%
+13%
-1%
+30%
+44%
+97%
+15%
China
136
132
+3%
-7%
-4%
-9%
+15%
-2%
+38%
Asia (excluding China)
141
134
+5%
-1%
+2%
-5%
+13%
+22%
+5%
Africa/India/Middle-East
106
91
+17%
+3%
0%
+6%
+36%
+94%
+4%
TOTAL
1,154
1,039
+11%
0%
-1%
+1%
+27%
+48%
+10%
(1) Including Turkey.
(2) Including Central America.
Michelin estimates.
After rebounding a sharp 22% in the first half and declining by a
slight 2% in the third quarter, tire demand in Europe
(excluding the CIS) rose by 3% in the fourth quarter to end
the year up 10% on 2020. The fourth quarter saw strong
market growth in France (up 8%), Germany (up 6%) and
Central Europe. Demand in the United Kingdom fell 10% from
the prior-year period, which had been buoyed by the massive
buildup of dealer inventory ahead of Brexit on January 1, 2021.
The Spanish and Italian markets slipped 2% and 3%
respectively over the period. In all, the market ended the year at
close to 2019 levels in most countries, except Turkey (up 19%)
and Italy (down 10%).
In the CIS, demand surged 21% in the first half and remained
on a upward trend, delivering a 10% gain in the second.
By year-end, the market was up 15% on 2020 and a slight 2%
ahead of 2019.
2021
2019
2020
110
100
90
80
70
60
50
2021
2019
2020
110
100
90
80
70
60
50
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The following table shows the change in demand by major country, with growth varying in the non-euro geographies depending on
export sales.
Passenger car and Light truck tires – Replacement
2021 vs. 2020
WESTERN AND CENTRAL EUROPE
+10%
▶France
+15%
▶Spain
+22%
▶Italy
+9%
▶United Kingdom
+5%
▶Germany
+7%
▶Poland
+19%
▶Turkey
+2%
CIS
+15%
▶Russia
+18%
THE REPLACEMENT PASSENGER CAR AND LIGHT
TRUCK TIRE MARKET IN EUROPE
(in millions of tires – moving 12 months – excluding Russia)
Michelin estimates.
THE REPLACEMENT PASSENGER CAR AND LIGHT
TRUCK TIRE MARKET IN NORTH AMERICA
(in millions of tires – moving 12 months)
Michelin estimates.
In North and Central America, demand remained very high in
the first nine months, ending the period up 23% on 2020 and
7% on 2019, supported by favorable comparatives and dealer
inventory rebuilding. It turned down in the final three months,
losing 7% in comparison with the prior-year period, when dealer
inventories rose on speculative buying ahead of possible new US
duties on tires imported from South Korea, Thailand, Vietnam
and Taiwan. In all, the market ended the year up 14% on 2020
and 4% ahead of 2019.
Demand in South America climbed 39% over the first nine
months from favorable comparatives, particularly in the third
quarter when it had still been heavily impacted by Covid-19 in
2020. The market then flattened out over the final three months
to end the year up 27% on 2020 and a slight 2% ahead of 2019.
After rebounding 15% in the first half thanks to very favorable
first-quarter comparatives, demand in China moved back in line
with 2019 in the second six months of the year. However, it
declined 7% compared with second-half 2020, which had seen
a particularly robust 8% rebound as the country emerged from
lockdown. In all, the market expanded by 3% over the full year,
but remained a slight 2% below its 2019 level.
In Asia (excluding China and India), demand rebounded by
13% in the first half but was hard hit by Covid-19 in the third
quarter, with declines of 5% overall and of 42% in Thailand,
38% in Vietnam and 14% in Indonesia. It recovered somewhat
in the final three months, gaining 2% to end the year up 5%
on 2020, but still a steep 6% behind 2019.
Markets in Africa, India and the Middle-East rebounded
sharply off of very favorable prior-year comparatives in the first
half, with growth of 36% overall and of 64% in India. They
rose a further 6% in the third quarter before leveling out in the
fourth, leading to a 17% increase for the year, but a 3%
decline compared to 2019.
2021
2019
2020
240
250
260
270
280
290
300
310
320
330
2021
2019
2020
220
230
240
250
260
270
280
290
300
310
320
330
340
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5.1.1 d)
Truck tire markets in 2021
The number of new Truck tires sold worldwide increased by 4% in 2021. Demand rose in every region except China, where it fell
11% from prior-year levels, which had been lifted exceptionally high by buying ahead of the implementation of the China 6 emissions
standard.
THE GLOBAL TRUCK TIRE MARKET, 2021 VS. 2020
(1) Including Turkey.
(2) Including Central America.
Michelin estimates – new tire market only.
Original Equipment
The global Original Equipment Truck tire market, as measured by the number of new tires sold, contracted by 2% year-on-year in 2021,
moving back in line with 2019 levels (up 1%). These overall figures mask a marked contrast between China and the other regions.
Truck tire markets
Original Equipment
(in millions of tires)
2021
2020 2021/2020
Second-
half
2021/2020
Fourth-
quarter
2021/2020
Third-
quarter
2021/2020
First-half
2021/2020
Second-
quarter
2021/2020
First-
quarter
2021/2020
Western and Central
Europe(1)
5.8
4.7
+25%
+5%
+4%
+6%
+50%
+98%
+21%
CIS
1.1
0.9
+20%
+13%
+14%
+11%
+30%
+43%
+16%
North America(2)
6.1
4.9
+25%
+7%
+6%
+9%
+47%
+119%
+10%
South America
2.2
1.6
+35%
+20%
+8%
+33%
+56%
+120%
+19%
China
28.3
33.9
-16%
-49%
-49%
-48%
+21%
-15%
+88%
Asia (excluding China)
4.0
3.4
+16%
+16%
+11%
+21%
+16%
+51%
-5%
Africa/India/Middle-East
3.0
2.3
+28%
+14%
-12%
+56%
+45%
+79%
+30%
TOTAL
50.5
51.7
-2%
-28%
-30%
-26%
+27%
+8%
+52%
(1) Including Russia and Turkey.
(2) United States and Canada.
Michelin estimates.
In Europe (excluding the CIS) and the Americas, the robust
economic recovery and driver shortages prompted trucking
companies to massively upgrade their fleets. This drove strong
growth in demand in these regions over the year, with gains of
25% in North America and Europe and of 35% in
South America.
By year-end, markets had exceeded their 2019 levels by 2% in
Europe, but fell a considerable 10% short in North America,
where 2019 had been an exceptionally strong year.
After rebounding a vigorous 88% from favorable comparatives
in the first quarter, demand in China was dampened over the
rest of the year by the highly unfavorable comparison with
the 2020 period, which saw massive buying ahead of
implementation of the China 6 emissions standard.
As a result, the market ended the year down 16%, but
remained 11% higher than in 2019.
Markets in the rest of the world expanded during the year,
with gains of 16% in Asia excluding China and of 28% in the
Africa/India/Middle-East region, but still fell short of their 2019
levels, by 16% in Asia excluding China and by 34% in the
Africa/India/Middle-East region.
North
America(2)
Western & Central
Europe(1)
CIS
Asia
(exc. China)
China
South
America
Africa, India,
Middle-East
Total
Original Equipement
Replacement
-2%
7%
20%
19%
-7%
6%
28%
11%
21%
35%
25%
3%
-16%
16%
12%
25%
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THE OE TRUCK TIRE MARKET IN EUROPE
(in millions of new tires – moving 12 months – excluding Russia)
Michelin estimates.
THE OE TRUCK TIRE MARKET IN NORTH AMERICA
(in millions of new tires – moving 12 months)
Michelin estimates.
Replacement
After rebounding a firm 25% from favorable comparatives in the first half, demand for Replacement tires retreated by 6% in the
second six months, feeding through to a 7% increase in the market for the year, but a 3% decline compared to 2019. These overall
figures mask a marked contrast between China and the other regions.
Truck tire markets
Replacement
(in millions of tires)
2021
2020 2021/2020
Second-
half
2021/2020
Fourth-
quarter
2021/2020
Third-
quarter
2021/2020
First-half
2021/2020
Second-
quarter
2021/2020
First-
quarter
2021/2020
Western and Central
Europe(1)
17.2
15.4
+12%
0%
0%
+1%
+28%
+40%
+18%
CIS
8.6
8.3
+3%
+3%
+12%
-5%
+4%
+13%
-5%
North America(2)
31.6
26.2
+21%
+9%
+4%
+15%
+35%
+56%
+18%
South America
14.0
11.8
+19%
+7%
0%
+15%
+33%
+51%
+19%
China
43.4
46.8
-7%
-26%
-28%
-24%
+28%
+4%
+59%
Asia (excluding China)
22.8
21.6
+6%
+3%
+2%
+4%
+9%
+19%
+1%
Africa/India/Middle-East
28.5
25.6
+11%
+1%
+7%
-4%
+23%
+41%
+9%
TOTAL
166.1
155.7
+7%
-6%
-7%
-5%
+25%
+28%
+21%
(1) Including Turkey.
(2) Including Central America.
Michelin estimates.
After rebounding a solid 28% in the first half, demand in
Western and Central Europe leveled off in the second six
months, with gains of 12% in Germany and of 19% in the
Nordic countries offset by flat growth in France and Spain and a
7% decline in Central Europe.
Over the full year, the market rose by 12% on 2020 and by 9%
compared with 2019 (including an 18% improvement in Turkey).
Demand in North and Central America remained very robust,
rising 9% in the second half after rebounding by 35% in the
first six months.
Buoyed by the strong economic recovery, it ended the year up
21% on 2020 and 18% on 2019.
Markets in South America tracked North American trends,
with a 33% rebound in the first half and a sustained 7%
increase in the second. Supported by the strong economic
recovery, demand ended the year up 19% on 2020 and 10%
on 2019.
0
1
2
3
4
5
6
7
2021
2019
2020
0
1
2
3
4
5
6
7
8
2021
2019
2020
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THE REPLACEMENT TRUCK TIRE MARKET
IN EUROPE
(in millions of new tires – moving 12 months – excluding Russia)
Michelin estimates.
THE REPLACEMENT TRUCK TIRE MARKET
IN NORTH AMERICA
(in millions of new tires – moving 12 months)
Michelin estimates.
Following a 28% increase in the first half, Replacement tire
demand in China declined by 26% in the second six months,
impacted by slowing economic growth and extensive truck fleet
upgrades in 2020 ahead of implementation of the China 6
emissions standard.
Over the full year, the Replacement market ended down 7%
on 2020 and 19% compared with 2019.
In the Asia (excluding China) and Africa/India/Middle-East
regions,
demand
rose
by
6%
and
11%
respectively
year‑on‑year, but still lagged behind 2019 by 7% and 6%
respectively.
5.1.1 e)
Specialty tire markets in 2021
Mining tires: despite the pervasive disruption in global supply
chains, demand for surface mining tires rose over the year, with
a brisk acceleration in the second half.
Agricultural and Construction tires: farm machinery tire
markets climbed sharply year-on-year, with a very strong cyclical
upturn in Original Equipment sales.
An expanding construction industry helped the Construction
and Infrastructure tire markets to maintain their robust recovery,
which was more pronounced in the OE segment.
Two-wheel tires: despite a mid-year period dampened by
Covid-19 in Asian markets, two-wheel tire demand remained
strong across every geography and segment.
Aircraft tires: in a still highly unstable environment, aircraft tire
markets rebounded in line with the uptick in air traffic,
Covid‑19 vaccinations and border reopenings. Demand in the
Military and General Aviation segments continued to hold up
well over the period, but nevertheless remained significantly
below its pre‑crisis levels.
Conveyor belts: the industrial and mining conveyor belt
markets turned in a mixed performance. Demand in Australia
turned slightly upwards after suffering from the restrictions on
China-bound coal exports, while the Services and Engineering
segments
were
adversely
impacted
by
Covid-19.
In
North America, the market rebounded at year-end in both the
mining and the industrial segments.
2021
2019
2020
8
9
10
11
12
13
14
15
16
17
14
16
18
20
22
24
26
28
30
32
2021
2019
2020
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5.1.2
SALES
Sales stood at €23,795 million for the year, up 16.3% from
€20,469 million in 2020 and down a slight 1.4% on 2019. The
year-on-year change reflected the combined impact of the
following factors:
▶the strong +11.8% rebound in tire volumes on the back of a
particularly vigorous upturn in global demand in the first half,
with highly favorable comparatives reflecting the drastic
restrictions on freedom of movement in place during first-half
2020. Volumes remained higher year-on-year in the second
half, but were dampened by less favorable comparatives and
the persistently unstable business environment (health crisis,
major disruptions in global supply chains, labor shortages,
slowdown in automaker production);
▶the 6.1% positive price-mix effect. The €921 million gain
from prices reflected the disciplined, assertive pricing policy
implemented to offset (i) rising raw materials, transportation,
energy and other costs of sales and (ii) the decline in certain
currencies against the euro. The €330 million positive mix
effect reflected the sustained success of the MICHELIN
brand’s premium strategy, particularly in the 18-inch and
larger segment, and the greater percentage of Replacement
business in the sales mix as Original Equipment sales felt the
impact of semiconductor shortages in the automotive
industry;
▶the 1.9% negative currency effect, led by the decline in the
US dollar against the euro in the second half;
▶a 0.2% unfavorable decline from changes in the scope of
consolidation, mainly due to the removal of Solesis following
the sale of an equity stake to Altaris in May 2021.
Sales from non-tire activities, which were more resilient during
the Covid-19 crisis and less exposed to supply chain disruptions,
climbed 7.7% during the year.
2021 / 2020
1st Quarter 2021 / 2020
2nd Quarter 2021 / 2020
3rd Quarter 2021 / 2020
4th Quarter 2021 / 2020
16.3%
42.5%
2.3%
11.8%
7.5%
42.9%
3.9%
1.3%
6.1%
0.9%
4.5%
7.0%
11.4%
2.5%
-0.2%
-0.3%-0.3%
0.4% 0.0%
0.6%0.4%0.6%
-0.1%
0.1%
-1.9%
-6.0%
-5.7%
0.3%
8.7%
18.1%
Volumes
Total
Price-mix
Currency
Scope
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(in € millions and %)
2021
Second-half
2021
Fourth-
quarter 2021
Third-quarter
2021
First-half
2021
Second-
quarter 2021
First-quarter
2021
SALES
23,795
12,603
6,591
6,012
11,192
5,744
5,448
Change, year-on-year
+3,326
+1,491
+1,010
+481
+1,835
+1,714
+121
Volumes
+2,421
+291
+218
+72
+2,130
+1,728
+402
Price-mix
+1,251
+1,022
+635
+387
+229
+184
+45
Currency effect
-393
+155
+139
+17
-548
-227
-321
Scope of consolidation
-36
-35
-18
-17
-1
+4
-5
Non-tire sales
+83
+58
+36
+22
+25
+25
0
Change, year-on-year
+16.3%
+13.4%
+18.1%
+8.7%
+19.6%
+42.5%
+2.3%
Volumes
+11.8%
+2.6%
+3.9%
+1.3%
+22.8%
+42.9%
+7.5%
Price-mix
+6.1%
+9.2%
+11.4%
+7.0%
+2.4%
+4.5%
+0.9%
Currency effect
-1.9%
+1.4%
+2.5%
+0.3%
-5.9%
-5.7%
-6.0%
Scope of consolidation
-0.2%
-0.3%
-0.3%
-0.3%
0.0%
+0.1%
-0.1%
Non-tire sales
+0.4%
+0.5%
+0.6%
+0.4%
+0.3%
+0.6%
0.0%
5.1.2 a)
Sales by reporting segment
Segment information is presented according to the following
three operating segments:
▶automotive and related distribution;
▶road transportation and related distribution;
▶specialty businesses and related distribution.
The Specialty businesses include the Mining, Off-the-road,
Two‑wheel and Aircraft tire activities, as well as the
High‑Technology Materials activities (conveyor belts...). The
Services & Solutions businesses are included for the most part in
the “Road transportation and related distribution” segment.
Operating segment performance is measured primarily on the
basis of sales and segment operating income, calculated
according to the same measurement principles used in the
consolidated income statement.
(in € millions)
2021
Second-half
2021
Fourth-
quarter 2021
Third-quarter
2021
First-half
2021
Second-
quarter 2021
First-quarter
2021
GROUP
23,795
12,603
6,591
6,012
11,192
5,744
5,448
Automotive and related
distribution
11,998
6,436
3,395
3,041
5,562
2,868
2,694
Road transportation and
related distribution
6,233
3,336
1,730
1,606
2,897
1,509
1,388
Specialty businesses and
related distribution
5,564
2,831
1,466
1,365
2,733
1,367
1,366
% change, year-on-year
+16.3%
+13.4%
+18.1%
+8.7%
+19.6%
+42.5%
+2.3%
Automotive and related
distribution
+18.8%
+12.7%
+18.4%
+7.0%
+26.6%
+59.6%
+3.7%
Road transportation and
related distribution
+16.0%
+12.6%
+15.1%
+10.1%
+20.2%
+43.6%
+2.1%
Specialty businesses and
related distribution
+11.4%
+16.0%
+21.1%
+11.0%
+7.1%
+15.7%
-0.3%
5.1.2 b)
Automotive and related distribution – Analysis of sales
Volumes in the Automotive and related distribution reporting
segment increased by 12.3% over the year. After surging
28.0% in the first half, lifted by strongly rebounding demand
and very favorable comparatives, they leveled off in the second
six months, with just a 0.2% gain due to less favorable
comparatives and the steep slowdown in the Original
Equipment business caused by semiconductor shortages.
In this mixed environment, the Group focused on the highest
value market segments, by continuing to broaden its product
portfolio and strengthen its positions in the premium 18-inch
and larger segment.
In addition, the successful deployment of an assertive, dynamic
pricing policy demonstrated the Group’s ability to leverage its
technological leadership and brand recognition to drive higher
sales at a time of rising costs.
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In all, segment sales ended the year a slight 1.2% ahead of
2019, in markets down 4% overall over the same period.
In the Original Equipment segment, the Group maintained its
positions in a market that was severely disrupted by the decline
in automaker demand as semi-conductor shortages curtailed
output, particularly in the second half. On the other hand, the
Original Equipment business benefited from a favorable size
mix, as automakers focused on their premium models. Sales
also continued to be buoyed by the growth in the electric
vehicle segment, which was especially strong in 2021, spurred
by the auto industry support plans deployed in a large number
of countries.
In all, Original Equipment sales edged up slightly year-on-year in
2021 but remained significantly below their 2019 levels.
On the Replacement side, the Group widened its market share
in the buoyant 18-inch and larger tire segment and was able to
raise prices assertively throughout the year in every geography.
The fall launch of the MICHELIN Cross Climate 2, available in
40% more size configurations than its predecessor, confirmed
the Group’s leadership in the all-season segment.
The Group also stepped up deployment of its distribution
strategy by broadening its presence in online retailing channels,
as seen in the purchase of all outstanding shares of Allopneus in
France, and by continuing to expand its franchise network.
In Europe, new share was gained in markets shaped by
fast‑growing sell-out demand and still lower-than-normal local
dealer inventories. Consolidated sales were lifted by a positive
geographic mix stemming from the strong exposure to
Southern European countries, which had been more impacted
by the slowdown in demand in 2020. Across the region, the
Group continued to strengthen its positions in the 18-inch and
larger segment and in winter tires (particularly in Northern
Europe), while applying its assertive pricing policy. In addition,
the Group continued to expand its solid positions in the
all‑season segment with its MICHELIN Cross Climate family,
whose sales were lifted by national regulations requiring
motorists to use winter tires in mountainous regions. The
KLEBER branded Tier 2 tires maintained their robust growth
momentum and continued to enhance the size mix.
In North and Central America, with demand very high and
production capacities restrained, in particular by labor
shortages, initiatives to prioritize the most profitable segments
and manage prices helped to drive sustained growth in sales.
Restructuring the TBC dealership network acquired in 2018 has
provided the Group with particularly optimized, efficient market
access and geographic coverage.
In South America, whose highly import-driven markets
returned to 2019 levels during the year, the Group maintained
its market share and continued to enhance its mix. However,
sales were negatively impacted by import quotas in Argentina,
which prevented the Group from meeting strong local demand.
In Asia (excluding India), the Group strengthened its positions
as travel rebounded, despite lingering local disruptions from
the strict lockdowns ordered in response to Covid variants.
In a Southeast Asian market up on 2020 but still lagging behind
2019, consolidated sales were supported by price increases and
Group market share gains in the 18-inch and larger segments.
In China, where the resurgence of the pandemic in second-half
2021 caused the market to slow versus 2020 (when it did not
decline as much), the Group increased its share in the premium
tire market and maintained its share in the other segments, in a
slightly more competitive pricing environment.
The Group further strengthened its positions in 18-inch and
larger tires across the Africa/India/Middle-East region, despite
the difficulties caused by import restrictions in India, and
captured the particularly strong growth in the African and
Middle-Eastern countries.
Sales in the Michelin Experiences business, which primarily
operates in the fine dining, hospitality and travel segments,
were still adversely impacted by restrictions on international
travel and capacity limits on social events. As sales rose in 2021
compared with the previous year, the Group stepped up
deployment of its projects designed to digitalize the services
portfolio. In addition, the licensed products distribution business
continued to expand at a steady pace. Michelin Experiences
remains an unrivaled vehicle for promoting the MICHELIN brand
and its premium positioning.
In all, sales in the Automotive and related distribution reporting
segment
rose
by
18.8%
to
€11,998
million,
from
€10,103 million in 2020. As volumes grew by a robust 12.3%,
the price-mix effect was very positive over the year, led by the
price increases diligently applied in every geography, market
share gains in the 18-inch and larger segment and the
slowdown in Original Equipment Automotive business in the
second half.
5.1.2 c)
Road transportation and related distribution – Analysis of sales
Volumes in the Road transportation and related distribution
reporting segment rose by 12.9% in 2021, impelled by the
sharp upturn in economic activity and surging freight demand.
They climbed 23.9% in the first half, from very favorable
comparatives, then slowed to a 4% gain in the second six
months, reflecting a less favorable basis of comparison. In this
highly buoyant environment, the Group significantly raised its
prices to offset rising raw materials, transportation, energy and
other costs of sales and pursued its selective marketing strategy
in value-creating segments, with a sharper focus on the
MICHELIN brand.
In the Original Equipment segment, OEM output trended
upwards over the year and the Group consolidated its positions.
Environmental standards aimed at reducing carbon emissions
and OEM demand for new solutions, for example built around
battery or hydrogen fuel cell electric powertrains, are all
opportunities for the Group to forge partnerships with OEMs
and thereby demonstrate its technological leadership and
knowledge of usage practices.
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In the Replacement segment, demand for new tires was very
robust throughout the year, driven by the global economic
recovery and huge overland freight needs. In this very promising
environment, the Group focused on its value-added offerings,
led by the MICHELIN brand and retreading solutions. The
Services & Solutions business, which had been highly resilient in
2020, maintained a steady pace of expansion during the year,
particularly geographically. While the passenger transportation
market still suffered from travel restrictions, the robust growth
of online shopping – a new consumer trend that looks set to
stay – supported demand in most geographies in the last-mile
delivery segment, where the MICHELIN Agilis 3 tire, launched in
2020, was a best seller.
In the very buoyant European market, where dealer inventories
have returned to normal, the Group strengthened its positions
in MICHELIN brand segments and retreading in its leading host
countries, diligently applying price increases in response to
sharply rising costs, particularly in Central Europe. Unveiled in
November 2021, the Michelin Connected Fleet umbrella brand
now consolidates all the fleet Services & Solutions under a single
identity, enhancing the synergies among Sascar, Masternaut
and Michelin’s long-standing tire-related products and services.
The new solution will be gradually deployed around the world.
In North America, where the market was very robust and
overland freight demand rose by 50% year-on-year, the
Group’s positions were hurt by operating restrictions stemming
primarily from the serious labor shortages impacting the
manufacturing industry. The Group focused on the MICHELIN
brand and diligently offset every cost inflation factor with price
increases in every segment.
Sales of fleet services continued to expand.
The South American market significantly exceeded its 2019
levels during the year, with a slight loss of value in the mix. In
this environment, the Group strengthened its positions by
focusing on MICHELIN brand sales.
Consolidated sales, however, were dampened by import
restrictions in Argentina.
Sascar’s fleet management solutions remain on a growth trajectory,
with a sustained up-market shift in the content of the portfolio.
In Asia (excluding India), the Group continued to target
market segments that value MICHELIN solutions for their
technological content. In these more competitive markets, the
Group diligently applied a dynamic pricing policy.
The Group consolidated its positions in the Africa/India/
Middle-East region. The fast-growing Indian market is
continuing to shift to radial tires, where the Group can
capitalize on its technological advantage. The Group increased
its share in the African and Middle-Eastern markets, where the
rebound in demand has been more sluggish due to the
slowdown in capital spending in the oil and gas industry.
In all, sales in the Road transportation and related distribution
reporting segment amounted to €6,233 million, a 16.0%
year‑on-year increase that was led by sustained volume growth,
an assertive pricing policy and a more prominent positioning in
value-creating segments.
5.1.2 d)
Specialty businesses and related distribution – Analysis of sales
Surface mining tires: in an upwardly trending ore market,
impelled by growing demand for metals, in particular to support
the energy transition, Group sales were hard hit by labor
shortages, especially in the United States, and by disruptions in
downstream logistics that significantly slowed finished product
shipments particularly to Australia, South America and other
geographies. Application of the raw materials indexation clauses
included in a large percentage of mining customer contracts
fed through to price increases in the second semester, but with
a time lag that did not allow to offset all inflation factors over
the year.
Agricultural and Construction tires: the Group is capturing
the strong market momentum in both segments, particularly in
the Original Equipment market.
It is gaining market share in the Construction tire segment,
which closely tracks the infrastructure projects that have seen
particularly brisk growth after a slowdown in 2020. The
residential construction segment is also experiencing very strong
growth, particularly in the United States and Europe.
Group sales rose sharply in the Agricultural tire market, which is
very buoyant, especially in the Original Equipment segment.
However, restricted production capacity and shipping difficulties
caused by the lack of maritime cargo space prevented the
Group from meeting all the demand.
Two-wheel tires: after ending 2020 only slightly lower than in
2019, two-wheel tire sales were very strong throughout 2021.
Despite closing its Brazilian plant in Manaus for several days
early in the year due to Covid, the Group was able to meet
demand and slightly increase its market share. The price
increases offset both higher raw materials costs and the impact
of currency movements.
Aircraft tires: despite a clear rebound from 2020, aircraft tire
sales were still very hard hit in 2021 by the persistent health
crisis and locally imposed travel restrictions.
Demand in the Military and General Aviation segments
continued to hold up well over the year.
Fenner’s conveyor belt business was adversely affected by the
decline in mining output in Australia, stemming primarily from
Chinese restrictions on Australian coal imports.
In all, sales by the Specialty businesses reporting segment
increased by 11.4% year-on-year to €5,564 million, but fell
short of 2019 levels, mainly due to supply chain constrictions,
labor shortages and the Commercial Aviation business, which
may take several years to return to pre-crisis levels.
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5.1.2 e)
Changes in exchange rates for the main operating currencies
At current exchange rates, consolidated sales rose by 16.3% in 2021.
The increase includes a 1.9% (€391 million) unfavorable currency effect, stemming from a decline in the US dollar against the euro
and weakness in the Brazilian real and Turkish lira.
Average
exchange rate
2021
2020
Change
Euro/USD
1.184
1.141
+3.7%
Euro/CNY
7.636
7.873
-3.0%
Euro/AUD
1.575
1.653
-4.7%
Euro/GBP
0.860
0.889
-3.2%
Euro/BRL
6.370
5.815
+9.5%
Euro/CAD
1.483
1.529
-3.0%
Euro/RUB
87.193
81.985
+6.4%
Euro/JPY
129.829
121.814
+6.6%
Euro/MXN
23.993
24.373
-1.6%
Euro/THB
37.791
35.697
+5.9%
Euro/CLP
894.671
902.095
-0.8%
Euro/TRY
10.187
7.930
+28.5%
Euro/SEK
10.145
10.480
-3.2%
Euro/TWD
33.069
33.607
-1.6%
Euro/ZAR
17.462
18.661
-6.4%
Euro/ARS
112.099
79.562
+40.9%
Euro/COP
4,416.600
4,195.400
+5.3%
Sales break down as follows by currency:
Currency
%
Currency
%
USD
36%
TRY
0.9%
EUR
32%
THB
0.9%
CNY
6%
CLP
0.8%
AUD
3%
SEK
0.7%
GBP
3%
TWD
0.6%
BRL
3%
ZAR
0.5%
CAD
3%
ARS
0.3%
RUB
2%
COP
0.2%
JPY
1%
Other
4.5%
MXN
1%
TOTAL
100%
5.1.2 f)
Sales by region
(in € millions)
2021
2021/2020
Second-half 2021
First-half 2021
GROUP
23,795
+16.3%
12,603
11,192
Europe
9,014
+18.0%
4,766
4,248
of which France
2,066
+17.2%
1,086
980
North America (incl. Mexico)
8,389
+18.1%
4,576
3,813
Other regions
6,392
+11.6%
3,261
3,131
(in € millions)
2021
% of total
2020
% of total
GROUP
23,795
20,469
Europe
9,014
37.9%
7,640
37.3%
of which France
2,066
8.7%
1,762
8.6%
North America (incl. Mexico)
8,389
35.3%
7,102
34.7%
Other regions
6,392
26.9%
5,727
28.0%
Consolidated sales rose year-on-year in every region, with more pronounced gains in Europe and North America, which had been hit
the hardest by the fall-off in demand in 2020.
More than 60% of consolidated sales were generated outside Europe and more than 90% outside France.
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5.1.3
CONSOLIDATED INCOME STATEMENT REVIEW
(in € millions, except per share data)
2021
2020(1)
2021/2020
2021
(as a % of sales)
2020
(as a % of sales)
Sales
23,795
20,469
+16.3%
Cost of sales
(16,810)
(14,754)
+13.9%
70.6%
72.1%
Gross income
6,985
5,715
+22.2%
29.4%
27.9%
Sales and marketing expenses(1)
(1,133)
(1,070)
+5.9%
4.8%
5.2%
Research and development expenses
(682)
(646)
+5.6%
2.9%
3.2%
General and administrative expenses(1)
(2,137)
(1,994)
+7.2%
9.0%
9.7%
Segment other income and expenses
(67)
(127)
-47.2%
0.3%
0.6%
Segment operating income
2,966
1,878
+57.9%
12.5%
9.2%
Other operating income and expenses
(189)
(475)
-60.2%
0.8%
2.3%
Operating income
2,777
1,403
+97.9%
11.7%
6.9%
Cost of net debt
(192)
(242)
-20.7%
0.8%
1.2%
Other financial income and expenses
(4)
(14)
-71.4%
0.0%
0.1%
Net interest on employee benefit obligations
(41)
(56)
-26.8%
0.2%
0.3%
Share of profit/(loss) from
equity-accounted companies
(69)
(112)
-38.4%
0.3%
0.5%
Income before taxes
2,471
979
+152.4%
10.4%
4.8%
Income tax
(626)
(354)
+76.8%
2.6%
1.7%
Net income
1,845
625
+195.2%
7.8%
3.1%
▶Attributable to the shareholders of the
Company
1,844
632
+191.8%
7.7%
3.1%
▶Attributable to the non-controlling interests
1
(7)
-114.3%
EARNINGS PER SHARE (in €)
▶Basic
10.31
3.52
+192.7%
▶Diluted
10.24
3.51
+192.1%
(1) The first-half 2020 figures have been restated for comparison purposes (see note 2.8 to the consolidated financial statements).
5.1.3 a)
Analysis of segment operating income
(in € millions)
(1) Segment operating income.
1,878
2,966
-136
2020
operating
income(1)
Volumes
Scope
Raw
materials
Manufacturing
and logistics
Performance
Price-mix
SG&A
tires
Non-tire
(contribution to
change in SOI)
Other
Currency
2021
operating
income(1)
2021
at constant
exchange rate(1)
-6
1,389
1,251
-622
3,102
-574
-46
-181
13
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Segment operating income amounted to €2,966 million
or 12.5% of sales for the year ended December 31, 2021,
compared with €1,878 million and 9.2% the year before,
primarily as a result of the strong growth in volumes as the
global economy recovered.
The €1,088 million year-on-year increase reflected the
combined impact of the following factors:
▶a slight €6 million decrease from changes in the scope of
consolidation, primarily relating to the removal of Solesis and
Michelin Experiences’ printing business;
▶a €1,389 million increase from the strong growth in volumes
sold and the resulting improvement in fixed cost absorption;
▶a robust €1,251 million increase from the favorable price-mix
effect, reflecting highly assertive pricing management at a
time of steeply rising raw material prices, freight charges and
energy costs as from the second half. Over the year, the
favorable mix effect was supported by sustained growth in
sales of 18-inch and larger tires in the Passenger car segment,
the relative slowdown in automotive OE sales over the
second half and the priority focus on the MICHELIN brand in
Truck tires;
▶a €574 million decrease from the sharp rise in both the cost
of raw materials used in production over the year and their
cost of transportation, due to the shortage of maritime
shipping capacity, particularly in the first half;
▶a €622 million decrease from the rise in production and
supply chain costs, with both production and finished
product shipping costs strongly impacted by the increase in
energy, transportation and spare part costs;
▶a €181 million decrease from the year-on-year growth in
SG&A expenses (including research and development outlays)
in the Tire operations, reflecting the impact of the upturn in
business (particularly on travel expenses). Note that SG&A
expenses still ended the year lower than in 2019;
▶a €46 million unfavorable impact made of others elements,
including a €70 million decline in Covid-19 costs;
▶a €136 million decrease from the unfavorable currency effect,
stemming primarily from the decline in the US dollar in the
first half and in the Turkish lira, Russian ruble, Argentine peso
and other emerging currencies over the full year.
In all, segment operating income at constant exchange rates
totaled €3,102 million in 2021, in line with the guidance issued
on October 25, 2021 targeting more than €2,800 million in
segment operating income at constant exchange rates for the
year.
Other operating income and expenses unallocated to the
operating segments improved by €286 million year-on-year, to a
net expense of €189 million from a net expense of €475 million
in 2020. Other operating income and expenses are described in
more detail in section 3.3.3.9 below and in note 9 to the
consolidated financial statements.
5.1.3 b)
Segment operating income
Segment information is presented according to the following
three operating segments:
▶automotive and related distribution;
▶road transportation and related distribution;
▶specialty businesses and related distribution.
The Specialty businesses include the Mining, Off-the-road,
Two‑wheel and Aircraft tire activities, as well as the Conveyor
Belt and High-Technology Materials activities. The Services
& Solutions businesses are included for the most part in the
“Road transportation and related distribution” segment.
Operating segment performance is measured primarily on the
basis of sales and segment operating income, calculated
according to the same measurement principles used in the
consolidated income statement.
(in € millions)
2021
2020 Second-half 2021
First-half 2021
AUTOMOTIVE AND RELATED DISTRIBUTION
Sales
11,998
10,103
6,436
5,562
Segment operating income
1,643
839
913
730
Segment operating margin
13.7%
8.3%
14.2%
13.1%
ROAD TRANSPORTATION AND RELATED
DISTRIBUTION
Sales
6,233
5,373
3,336
2,897
Segment operating income
599
302
313
286
Segment operating margin
9.6%
5.6%
9.4%
9.9%
SPECIALTY BUSINESSES & RELATED DISTRIBUTION
Sales
5,564
4,993
2,831
2,733
Segment operating income
724
737
319
405
Segment operating margin
13.0%
14.8%
11.3%
14.8%
GROUP
Sales
23,795
20,469
12,603
11,192
Segment operating income
2,966
1,878
1,545
1,421
Segment operating margin
12.5%
9.2%
12.3%
12.7%
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Segment operating margin
(in € millions)
(1) Segment operating income.
Automotive and related distribution – Analysis of segment operating income
Automotive and related distribution
(in € millions)
2021
2020
2021/2020
2021
(% of consolidated total)
2020
(% of consolidated total)
Sales
11,998
10,103
+18.8%
50%
49%
Change in volumes
12.3%
Segment operating income
1,643
839
+95.8%
55%
45%
Segment operating margin
13.7%
8.3%
+5.4 pts
Automotive
segment
operating
income
came
to
€1,643 million or 13.7% of sales, versus €839 million and 8.3%
in 2020. The significant improvement was led by the robust
12.3% growth in volumes in a market up 9% and by a highly
assertive pricing policy applied in every geography, which
helped to offset the increase in raw material, supply chain and
energy costs. Segment operating income was also lifted by
market share gains, notably in the higher margin 18-inch and
larger tire segments, as well as by the favorable mix stemming
from the slowdown in the Automotive Original Equipment
business, which was adversely impacted by the semiconductor
shortage.
Exchange rate movements had a negative impact on the
segment’s operating income.
Road transportation and related distribution – Analysis of segment operating income
Road transportation
and related distribution (in € millions)
2021
2020
2021/2020
2021
(% of consolidated total)
2020
(% of consolidated total)
Sales
6,233
5,373
+16.0%
26%
26%
Change in volumes
12.9%
Segment operating income
599
302
+98.3%
20%
16%
Segment operating margin
9.6%
5.6%
+4.0 pts
Road transportation segment operating income amounted
to €599 million or 9.6% of sales, compared with €302 million
and 5.6% the year before.
The upturn in global demand drove a robust 12.9% rebound in
sales volumes, while the selective marketing strategy focused on
the MICHELIN brand and value-creating markets, as well as
responsive price management, helped to offset the increase in
raw materials, supply chain and energy costs.
However, the segment’s performance was dampened by
production constraints that prevented it from meeting all the
demand, particularly in North America, which lowered the
absorption of fixed costs for the year.
The Services & Solutions business stepped up both the pace of
growth and its geographic expansion, led by fleet management
solutions.
Exchange rate movements had a negative impact on the segment’s
operating income.
Automotive
Road
transportation
Specialty
business
Group
13.7%
9.6%
13.0%
12.5%
8.3%
5.6%
14.8%
9.2%
2020
2021
1,878
804
297
-13
2,966
Automotive
Road
transpor-
tation
Specialty
business
2020(1)
2021(1)
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Specialty businesses and related
distribution (in € millions)
2021
2020
2021/2020
2021
(% of consolidated total)
2020
(% of consolidated total)
Sales
5,564
4,993
+11.4%
23%
24%
Change in volumes
9.8%
Segment operating income
724
737
-1.8%
24%
39%
Segment operating margin
13.0%
14.8%
-1.7 pt
Segment operating income from the Specialty businesses
amounted to €724 million or 13.0% of sales, versus
€737 million and 14.8% the year before. With less favorable
prior-year comparatives than in the other two segments,
performance was mixed for the year, despite the 9.8% overall
increase in volumes.
Surface mining tires: Group sales were hurt by production
constraints and the shortage of maritime shipping capacity, which
prevented the plants from manufacturing and shipping all the
tires demanded by the market, thereby reducing fixed cost
absorption. Sales were lifted by the application, over the second
half, of the raw materials indexation clauses included in a large
percentage of contracts with mining operators; however given
the time lag between the increase of costs (raw material and
logistics) and the application of the clauses, the increase of selling
prices did not enable to offset all inflators over the year, in
particular logistic costs that are adjusted on a yearly basis.
Agricultural
and
Construction
tires:
Sales
rose
in
fast‑growing markets, particularly in the Original Equipment
segment. Sales were negatively impacted, however, by tight
plant capacity and logistics issues in shipping finished products,
particularly from Sri Lanka.
Two-wheel tires: Segment operating income rose sharply in
a very buoyant environment, supported in particular by a
responsive, dynamic pricing policy.
Aircraft tires: Despite a shaky recovery, business remains
severely impacted by the health crisis and the collapse in
commercial aviation demand, although it remains buoyed by
the greater resilience of the Military and General Aviation
segments.
Fenner’s conveyor belt business was adversely affected by
(i) difficulties in the Australian mining business, caused in
particular by Chinese restrictions on coal imports, and (ii) the
slowdown in the service operations due to limitations on
domestic freedom of movement in Australia.
Exchange rate movements had a negative impact on the
segment’s operating income.
5.1.3 c)
Other income statement items
Raw materials
The cost of raw materials reported in cost of sales has been
estimated at €5.0 billion in 2021 versus €3.8 billion in 2020.
It is calculated on the basis of:
▶the price and mix of the Group’s raw materials purchases;
▶production and sales volumes;
▶the valuation of raw materials, semi-finished and finished
product inventories using the weighted average cost method.
This method tends to spread fluctuations in purchase costs
over time and delay their recognition in cost of sales, due to
timing differences between the purchase of the raw materials
and the sale of the finished product;
▶exchange rate movements, which correspond to (i) the
impact of converting the cost of purchases made in local
currencies into the consolidation currency; and (ii) a residual
currency effect resulting from the difference between the
purchasing companies’ local currency and the currency used
to purchase their raw materials.
In 2021, the raw materials costs and the related transportation
costs recognized in cost of sales included a €574 million
unfavorable price impact, including the residual currency effect.
Changes in prices feed through to the income statement five to
six months later for natural rubber and around three months
later for butadiene.
On the basis of estimated 2021 production volumes, the
sensitivity of cash purchasing outlays to fluctuations in natural
rubber and oil prices is as follows:
▶a $0.10 per kg decrease in natural rubber prices would feed
through to around an $90 million reduction in full-year
purchasing costs;
▶a $1.00 per barrel decline in oil prices would feed through to
a $9 million decrease in full-year purchasing costs.
RAW MATERIALS RECOGNIZED IN 2021 COST OF SALES
(€5.0 BILLION)
28%
Natural rubber
7%
Textile
18%
Fillers
14%
Chemicals
10%
Steelcord
23%
Synthetic rubber
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NATURAL RUBBER PRICES (SICOM)
(USD/kg)
BUTADIENE PRICES
Employee benefit costs and number of employees
Employee benefit costs came to €6,445 million or 27.1% of
sales, up €449 million year-on-year. This change includes the
impact of the upturn in business and the increase of
compensation, particularly variable compensation, with respect
to 2021. The decline in benefit costs as a percentage of sales
was attributable to the more than 12% increase in sales over
the year.
Headcount in high-cost regions, particularly in corporate
functions, continued to decline in 2021 as operating procedures
were simplified across the Group.
In 2021, an expense of €6,430 million was recognized in
segment operating income, and an expense of €15 million was
recognized in other operating income and expenses.
(in € millions and number of people)
2021
2020
Change
Total employee benefit costs
6,445
5,996
+7.5%
As a % of sales
27.1%
29.3%
-2.2 pts
Employees on payroll at December 31
124,760
123,600
+0.9%
Number of full-time equivalent employees at December 31
118,400
117,500
+0.8%
Average number of full-time equivalent employees
117,600
118,800
-1.0%
Depreciation and amortization
(in € millions)
2021
2020
Change
Total depreciation and amortization
1,812
1,840
-1.5%
As a % of sales
7.6%
9.0%
Depreciation
and
amortization
charges
declined
by
€28 million to €1,812 million for the year, reflecting the
slowdown in capital expenditure in 2020 in response to the
Covid-19 crisis and the impairment losses recognized on the
Chennai plant in 2020, which lowered depreciation for the year.
In addition, not all of the capital projects scheduled for 2021
could be deployed due to the shortages of semiconductors and
materials and the pervasive disruption in global supply chains.
Of the total, €1,734 million was recognized in segment
operating income and €78 million in other operating income and
expenses (see notes 6 and 9 to the consolidated financial statements).
RSS 3
TSR 20
Jan.
2019
Jan.
2020
Jan.
2021
0
0.5
1.0
1.5
2.0
2.5
3.0
RSS 3
TSR 20
Dec.
2021
Jan.
2021
Dec.
2021
US Gulf (USD/t)
Europe (EUR/t)
Jan.
2019
Jan.
2020
0
500
1,000
1,500
2,000
2,500
3,000
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Transportation costs
(in € millions)
2021
2020
Change
Transportation costs
1,685
1,095
+53.9%
As a % of sales
7.1%
5.3%
Transportation costs came to €1,685 million or 7.1% of sales
in 2021, versus 5.3% in 2020. This exceptional spike resulted
from the increase in volumes shipped, but also from the
dramatic increase in transportation costs across the logistics
chain due to the lack of containers and containerships on many
maritime shipping routes. In response to the shortage of
shipping capacity and other disruptions in the supply chain, the
Group occasionally had to resort to more costly workarounds on
an as-needed basis.
Sales and marketing expenses
Sales and marketing expenses represented 4.8% of sales in 2021, versus 5.2% in 2020. In value and on a like-for-like basis, they
rose by €63 million on 2020 due to the upturn in business.
The year-on-year decline as a percentage of sales reflected the growth in sales led by higher volumes and price increases.
Research and development expenses
(in € millions)
2021
2020
Change
Research and development expenses
682
646
+5.6%
As a % of sales
2.9%
3.2%
Research and development expenses rose by €36 million year-on-year to €682 million. This was back in line with 2019 outlays, in a
demonstration of the Group’s commitment to maintaining its technological leadership in delivering performance and sustainability in
its products and services.
As a percentage of sales, outlays declined to 2.9% from 3.2% in 2020, reflecting the growth in sales led by higher volumes and price
increases.
General and administrative expenses
General and administrative expenses amounted to €2,137 million, a €143 million year-on-year increase that was primarily driven
from the sharp upturn in business in 2021.
They represented 9.0% of sales for the year, down 0.7 point compared with 2020.
Segment other income and expenses
Segment other operating income and expenses represented a net expense of €67 million in 2021, a €60 million year-on-year
decline that was primarily attributable to the year-on-year reduction in Covid-19-related expenditure. These outlays, which covered the
cost of purchasing and producing masks and hand sanitizer, as well as cleaning and disinfection costs, totaled €26 million in 2021,
versus €96 million in 2020.
Other operating income and expenses
Other operating income and expenses correspond to items
that are not taken into account by Management when
measuring the performance of the operating segments due to
their nature or their significant, unusual or abnormal
characteristics.
Other operating income and expenses represented a net
expense of €189 million in 2021, versus a net expense of
€475 million in 2020.
The
€286
million
year-on-year
decrease
was
primarily
attributable to:
▶the recognition in 2020 of a €164 million impairment loss on
the Chennai plant in India, which produces truck tires for the
domestic market;
▶the favorable impact of the sale of 51% of the net assets of
Solesis to the Altaris investment fund, recognized in first-half
2021 in an amount of €114 million.
Other operating income and expenses are described in more
detail in note 9 to the consolidated financial statements.
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Cost of net debt
(in € millions)
2021
2020
Change
Cost of net debt
192
242
-50
At €192 million, the cost of net debt was down €50 million
compared with 2020, primarily as a result of the following factors:
▶a €31 million decrease in net interest expense to
€206 million, reflecting the net impact of:
• a €3 million decrease due to the €104 million reduction in
average gross debt during the year,
• a €28 million decrease from the decline in the average
gross interest rate on borrowings to 2.6% in 2021 from
2.9% in 2020;
▶a €39 million decrease in losses on exchange rate derivatives,
due to the combined impact of the decline in rates in 2020
and their rise in 2021, along with the increase in the euro
against the US dollar;
▶an €11 million decrease in interest income from cash and
equivalents;
▶an aggregate €9 million net increase from movements in
other factors.
Other financial income and expenses
(in € millions)
2021
2020
Change
Other financial income and expenses
4
14
-10
Other financial income and expenses represented a net expense of €4 million in 2021, a €10 million year-on-year decline
stemming mainly from currency movements and net products of financial assets(1).
Income tax
(in € millions)
2021
2020
Change
Income/(loss) before taxes
2,471
979
+1,492
Income tax
(626)
(354)
+272
Current tax
(614)
(314)
+300
Withholding tax
(15)
(37)
-22
Deferred tax
3
(3)
-6
Income tax amounted to €626 million in 2021, a €272 million
year-on-year increase that was mostly attributable to the steep
growth in income before taxes. The €614 million in current tax
recognized for the year corresponds to the income tax payable
by the Group’s profit-making companies.
The effective tax rate for 2021 was 25.3%, versus 36.2% the
year before.
This 25.3% effective tax rate recognized in 2021 is in line with
the normal level of 2019.
(1) Note 10 to the consolidated financial statements.
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Consolidated net income and earnings per share
(in € millions)
2021
2020
Change
Net income
1,845
625
+1,220
As a % of sales
7.8%
3.1%
+ 4.7 pts
▶Attributable to the shareholders of the Company
1,844
632
+1,212
▶Attributable to the non-controlling interests
1
(7)
EARNINGS PER SHARE (IN €)
▶Basic
10.31
3.52
+6.79
▶Diluted
10.24
3.51
+6.73
Net income came to €1,845 million for the year, or 7.8% of
sales, compared with €625 million in 2020 or 3.1% of sales.
The €1,220 million increase reflected the following factors:
▶favorable factors:
• the €1,088 million increase in segment operating income,
• the €286 million decrease in net other operating expense,
• the €75 million decline in net financial expense, led by the
€50 million reduction in the cost of net debt,
• the €43 million increase in the Group’s share of profit from
equity-accounted companies, reflecting in particular the
contribution from the TBC dealership network in the
United States;
▶unfavorable factors:
• the €272 million increase in income tax expense.
5.1.4
CONSOLIDATED BALANCE SHEET REVIEW
To improve the readability of the consolidated financial statements, right-of-use assets and lease liabilities are presented separately in
the consolidated statement of financial position.
Methodological note: translation adjustments primarily stem from the translation into euros of prior-year assets and liabilities at the
closing exchange rate.
Assets
(in € millions)
December 31, 2021
December 31, 2020
Total
change
Translation
adjustments
Movement
Goodwill
2,286
2,136
+150
+122
+28
Intangible assets
1,811
1,980
-169
+101
-270
Property, plant and equipment
11,231
10,821
+410
+387
+23
Right-of-use assets
1,034
1,083
-49
+44
-93
Non-current financial assets and other
non‑current assets
1,404
865
+539
+49
+490
Investments in equity-accounted companies
1,103
941
+162
+58
+104
Deferred tax assets
751
729
+22
+11
+11
Non-current assets
19,620
18,555
+1,065
+772
+293
Inventories
5,272
3,959
+1,313
+175
+1,138
Trade receivables
3,576
3,018
+558
+99
+459
Current financial assets
713
429
+284
0
+284
Other current assets
1,038
929
+109
-12
+121
Cash and cash equivalents
4,482
4,747
-265
+13
-278
Current assets
15,081
13,082
+1,999
+276
+1,723
TOTAL ASSETS
34,701
31,637
+3,064
+1,048
+2,016
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Equity and liabilities
(in € millions)
December 31, 2021
December 31, 2020
Total
change
Translation
adjustments
Movement
Share capital
357
357
0
0
Share premiums
2,746
2,746
0
0
Reserves
11,871
9,530
+2,341
+617
+1,724
Non-controlling interests
(3)
(2)
-1
-1
0
Total equity
14,971
12,631
+2,340
+616
+1,724
Non-current financial liabilities
5,360
6,169
-809
+20
-829
Non-current lease liabilities
731
801
-70
+29
-99
Provisions for employee benefit obligations
3,362
3,700
-338
+72
-410
Provisions and other non-current liabilities
759
775
-16
+19
-35
Deferred tax liabilities
503
425
+78
+32
+46
Non-current liabilities
10,715
11,870
-1,155
+172
-1,327
Current financial liabilities
1,682
1,546
+136
+39
+97
Current lease liabilities
229
222
+7
+8
-1
Trade payables
3,174
2,291
+883
+95
+788
Trade payables under reverse factoring
agreements
613
437
+176
+28
+148
Provisions and other current liabilities
3,317
2,640
+677
+91
+586
Current liabilities
9,015
7,136
+1,879
+262
+1,617
TOTAL EQUITY AND LIABILITIES
34,701
31,637
+3,064
+1,049
+2,015
5.1.4 a)
Goodwill
Goodwill before translation adjustments was up €28 million
from December 31, 2020, reflecting the recognition of the
provisional goodwill on the acquisition of Allopneus, which closed
on December 30, 2021, and of the goodwill on the acquisition
of Lumsden Corporation (High-Technology Materials).
Goodwill was reduced by the deconsolidation of Solesis,
following the sale of a 51% stake in the company to the Altaris
investment fund in May 2021.
5.1.4 b)
Intangible assets
Intangible assets stood at €1,811 million for the year, a
€270 million decrease from December 31, 2020 (before the
positive €101 million translation adjustment). The decrease
primarily resulted from the deconsolidation of Solesis assets
following the sale of a 51% stake in the company to Altaris for
an amount of €200 million.
5.1.4 c)
Property, plant and equipment
Property, plant and equipment stood at €11,231 million at
December 31, 2021, up just €23 million before the positive
€387 million translation adjustment. The stability reflected the
difficulties in completing all the initially planned capital projects in
2021, due to disruptions in the supply chain and shortages of
components and spare parts. As a result, the Group was not fully
able to make up for the carefully managed reduction in capital
expenditure undertaken to conserve Group cash in 2020.
Additions to property, plant and equipment amounted to
€1,494 million for the year, compared with €1,041 million in 2020.
Note that the deconsolidation of Solesis resulted in a
€42 million reduction in the total for the year.
5.1.4 d)
Right-of-use assets
Beginning in 2020, right-of-use assets have been recognized
separately from property, plant and equipment. They amounted
to €1,034 million at December 31, 2021, down €93 million
year-on-year (before the positive €57 million translation
adjustment), due to the fact that new leases did not exceed
depreciation on prior-year leases.
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5.1.4 e)
Non-current financial assets and other non-current assets
Non-current financial assets and other non-current assets
stood at €1,404 million at year-end, a €490 million increase (before
the positive €49 million translation adjustment) that was attributable
mainly to the net growth in loans and deposits stemming from:
▶the preferred shares received in connection with the sale of a
51% stake in Solesis to the Altaris investment fund;
▶an investment deposited in an escrow account to fund
pension obligations in the United Kingdom. This amount is
pledged to the pension plans and is therefore not freely
available to the Group.
5.1.4 f)
Investments in equity-accounted companies
Excluding the positive €58 million translation adjustment,
investments in equity-accounted companies rose by
€104 million over the year to €1,103 million. The increase
primarily reflected changes in scope, including the addition of
Solesis following the sale of a 51% stake to Altaris in the first
half and the removal of Allopneus, which has been fully
consolidated since December 30, 2021(1).
5.1.4 g)
Deferred tax
At December 31, 2021, the Group held a net deferred tax
asset of €248 million, representing a year-on-year decline of
€36 million (before the negative €20 million translation
adjustment). The decrease was mainly due the net impact of
(i) the €87 million reduction in the taxes recognized in other
comprehensive income with regard with post-employment
benefit obligations(2), and (ii) the €48 million increase following
the sale of a 51% stake in Solesis.
5.1.4 h)
Trade working capital
(in € millions)
December 31, 2021
December 31, 2020
Change
2021
(as a % of sales)
2020
(as a % of sales)
Inventories
5,272
3,959
+1,313
22.2%
19.3%
Trade receivables
3,576
3,018
+558
15.0%
14.7%
Trade payables
(3,174)
(2,291)
-883
(13.3)%
(11.2)%
Trade payables under reverse factoring
agreements
(613)
(437)
-176
(2.6)%
(2.1)%
TRADE WORKING CAPITAL
5,061
4,249
+812
21.3%
20.8%
Trade
working
capital
requirement
increased
by
€812 million on the strong upturn in business during the year.
As a percentage of sales, it rose by 0.5 point, to 21.3% at
end‑2021, from 20.8% at end-2020.
At €5,272 million, inventories represented 22.2% of sales at
year-end, versus €3,959 million and 19.3% in 2020. Before the
positive €175 million translation adjustment, this corresponded
to a €1,138 million increase for the year.
The increase primarily stemmed from comparison with the
historically low inventories at December 31, 2020, after sluggish
second-half sales prevented the Group from fully replenishing
its inventory.
A second factor was the impact of higher raw materials prices
that have impacted year end inventories valuation.
Lastly, the amount of inventory in transit was significantly
increased by disruptions in global supply chains, particularly the
longer shipping times and worsening port congestion.
However, average inventories as a percentage of sales
decreased over the year, reflecting the structural efforts pursued
in 2021.
Trade receivables stood at €3,576 million or 15.0% of sales, a
year-on-year increase of €558 million or 0.3 point of sales that
tracked sales growth for the year. Whereas in 2020, economic
support measures helped to avoid an increase in past-due
receivables, in 2021 they held steady thanks to the Group’s
highly disciplined credit policies and the upturn in business,
which enabled customers to rebuild their cash flow(3).
Trade payables, including those covered by reverse
factoring contracts, ended the year at €3,791 million, or
15.9% of sales, up 2.6 points from December 31, 2020. The
increase reflected the strong growth in business, as well as
the general rise in raw material, transportation and energy costs.
(1) Note 17.1 to the consolidated financial statements.
(2) Note 18.1 to the consolidated financial statements.
(3) Note 20 to the consolidated financial statements.
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5.1.4 i)
Cash and cash equivalents
Cash and cash equivalents stood at €4,482 million, down
€278 million year-on-year excluding translation adjustments, as
a result of the following main factors:
▶increases from:
• the €1,357 million in free cash flow,
• €24 million in other favorable items;
▶decreases from:
• the €1,245 million reduction in debt during the year,
• the payment of €414 million in dividends and profit shares.
5.1.4 j)
Total equity
Including the positive €616 million in translation adjustments,
total equity rose by €2,340 million over the year to represent
€14,971 million at December 31, 2021.
The €1,724 million increase excluding translation adjustments
was primarily due to the following factors:
▶the €2,118 million increase in comprehensive income for the
year, including:
• €1,845 million in net income,
• the €351 million favorable impact from post-employment
benefit obligations,
• the €83 million unfavorable impact from taxes payable on
post-employment benefit obligations,
• €5 million in other favorable items;
▶the €415 million impact from dividend and other payments;
▶the €21 million favorable impact from service costs on
performance share plans.
At December 31, 2021, the share capital of Compagnie
Générale des Établissements Michelin stood at €357,060,900,
comprising 178,530,450 shares outstanding corresponding to
238,147,046 voting rights.
5.1.4 k)
Net debt
Net debt stood at €2,789 million at December 31, 2021, down
€742 million from December 31, 2020, primarily as a result of
the following factors:
▶€942 million in net cash flow, resulting from:
• €1,357 million in free cash flow,
• €415 million in distributions, of which €414 million in
dividends;
▶two factors increasing net debt by an aggregate €250 million:
• a €167 million increase from the recognition of new leases,
• a €83 million increase from translation adjustments;
▶€50 million in other factors decreasing net debt.
CHANGES IN NET DEBT
(in € millions)
2021
2020
At January 1
3,531
5,184
Free cash flow(1) before M&A
-1,460
-2,043
Investments in new ventures
+107
+40
Financing of joint ventures and associates
-4
-1
Free cash flow(1)
-1,357
-2,004
Distributions and other
+415
+368
Share buybacks
-
+99
Employee share issue – Bib’Action
-
-31
New leases
+167
+211
Changes in scope of consolidation
+17
-8
Translation adjustments
+83
-262
Other
-67
-26
AT DECEMBER 31
+2,789
+3,531
CHANGE
-742
-1,653
(1) See definition in section 3.5.3.
Gearing
Gearing declined to 18.6% at December 31, 2021 from 28% at year-end 2020, primarily due to the year-on-year reduction in net
debt plus the increase in equity chiefly led by the growth in comprehensive income for the year.
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Credit ratings
The solicited corporate credit ratings of Compagnie Générale des Établissements Michelin (CGEM), Compagnie Financière Michelin SA
and CFM Suisse SA are as follows:
CGEM
Compagnie Financière Michelin SA
CFM Suisse
Short term
Standard & Poor’s
A-2
A-2
A-2
Fitch Ratings
F2
F2
F2
Long term
Standard & Poor’s
A-
A-
A-
Fitch Ratings
A-
A-
A-
Outlook
Standard & Poor’s
Stable
Stable
Stable
Fitch Ratings
Stable
Stable
Stable
On November 10, 2021, Standard & Poor’s affirmed Michelin’s short-term A-2 and long-term A- credit ratings, as well as its stable outlook.
On March 19, 2021, Fitch Ratings affirmed Michelin’s short‑term F2 and long-term A- credit ratings, as well as its stable outlook.
Moody’s, whose rating has not been solicited since July 1, 2020, nevertheless affirmed, on April 28, 2021, CGEM’s long-term credit
rating and stable outlook:
CGEM
Compagnie Financière Michelin SA
CFM Suisse
Long term
A3
N/A
N/A
Outlook
Stable
N/A
N/A
5.1.4 l)
Provisions
Provisions and other non-current liabilities declined by
€16 million over the year, to €759 million from €775 million at
December 31, 2020. Excluding the positive €19 million in
translation adjustments, the decrease amounted to €35 million,
stemming from (i) payments out of restructuring provisions set
aside in prior years, partially offset by the new provisions written
in
2021
as
part
of
the
French
simplification
and
competitiveness plan announced on January 6, 2021; and
(ii) the reclassification of certain short-term provisions as current
liabilities.
5.1.4 m) Employee benefits
CHANGE IN THE FAIR VALUE OF THE NET DEFINED BENEFIT OBLIGATION
(in € millions)
Pension
plans
Other
plans
2021
2020
At January 1
1,626
1,863
3,489
3,828
Contributions paid to the funds
(19)
-
(19)
(142)
Benefits paid directly to the beneficiaries
(48)
(71)
(119)
(146)
Other movements
-
(3)
(3)
-
ITEMS RECOGNIZED IN OPERATING INCOME
Current service cost
34
77
111
115
Actuarial (gains) or losses recognized on other long-term benefit plans
-
(8)
(8)
1
Past service cost resulting from plan amendments
(1)
-
(1)
(2)
Effect of plan curtailments or settlements
(1)
-
(1)
9
Effect of plan curtailments recognized within reorganizations
and adaptation of activities
(72)
(96)
(168)
5
Other items
8
(1)
7
6
ITEMS RECOGNIZED OUTSIDE OPERATING INCOME
Net interest on employee benefit obligations
12
29
41
54
ITEMS RECOGNIZED IN OTHER COMPREHENSIVE INCOME
Translation adjustments
(4)
56
52
(94)
Actuarial (gains) or losses
(317)
(72)
(389)
(145)
Unrecognized assets due to the effect of the asset ceiling
38
-
38
-
AT DECEMBER 31
1,256
1,774
3,030
3,489
The net defined benefit obligation recognized at December 31, 2021 stood at €3,030 million, a year-on-year decrease of €459 million
as reported and of €511 million excluding the positive €52 million translation adjustment (stemming primarily from the increase in the
US dollar against the euro).
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The decline in the net defined benefit obligation reflected the
following main factors:
▶the total €138 million in contributions and benefits paid
in 2021 (2020: €288 million), of which:
• €19 million in contributions paid to fund management
institutions (2020: €142 million),
• €119 million in benefits paid directly to employees (2020:
€146 million);
▶a €108 million expense recognized in operating income
in 2021 (2020: €134 million) that primarily resulted from the
cost of defined benefit plans;
▶a €168 million gain recognized in operating income,
stemming from the French simplification and competitiveness
plan announced on January 6, 2021;
▶the €41 million in net interest expense on the net defined
benefit obligation, recognized outside of operating income
(2020: €54 million);
▶the €389 million in actuarial gains recorded in 2021 (2020:
actuarial losses of €145 million), which corresponded to:
• €350 million in actuarial gains on defined benefit obligations,
resulting mainly from increases in discount rates, of which
€38 million was not recognized due to the effect of the
asset ceiling,
• €39 million in actuarial gains on plan assets, due to the
fact that the actual rate of return on plan assets was higher
than the discount rate.
In addition, contributions paid by the Group to defined
contribution plans amounted to €218 million in 2021 (2020:
€217 million).
5.1.5
CONSOLIDATED CASH FLOW STATEMENT REVIEW
5.1.5 a)
Cash flow from operating activities
(in € millions)
2021
2020
Change
Segment EBITDA
4,700
3,631
+1,069
Change in net inventories
-1,106
+552
-1,658
Change in net trade receivables
-370
+92
-462
Change in net trade payables
+647
-19
+666
Restructuring cash costs
-214
-206
-8
Other changes in provisions
+13
-185
+198
Tax and interest paid
-769
-580
-189
Other
+5
+81
-76
NET CASH FROM OPERATING ACTIVITIES
2,906
3,366
-460
At €4,700 million, or 19.7% of sales, segment EBITDA was up
€1,069 million compared with 2020 (at 17.7% of sales),
reflecting the €1,088 million increase in segment operating
income over the year.
Net cash from operating activities declined by €460 million
to €2,906 million for the year, as the €1,069 million increase in
EBITDA was more than offset by:
▶a €1,454 million decrease from the rise in trade working
capital following the sharp upturn in business and the
rebuilding of inventories;
▶a €189 million decrease from the higher tax and interest paid;
▶an aggregate €122 million increase from other factors,
including a €198 million reduction in provisions.
Restructuring-related outlays were unchanged overall, with just
a slight €8 million increase for the year.
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5.1.5 b)
Capital expenditure
(in € millions)
2021
2020
2021/2020
2021
(as a % of sales)
2020
(as a % of sales)
Additions to intangible assets and PP&E
1,705
1,221
+484
7.2%
6.0%
Investment grants received and change in capital
expenditure payables
(226)
148
-374
(0.9)%
0.7%
Proceeds from sales of intangible assets and PP&E
(38)
(46)
+8
(0.2)%
(0.2)%
NET ADDITIONS TO INTANGIBLE ASSETS
AND PROPERTY, PLANT AND EQUIPMENT
1,441
1,323
+118
6.1%
6.5%
Additions to intangible assets and property, plant and
equipment amounted to €1,705 million in 2021, compared
with €1,221 million in 2020. After the scale-backs in 2020
intended to conserve cash as demand fell sharply due to
Covid‑19, the increase in 2021 reflected the Group’s
determination to continue investing to (i) improve the flexibility,
competitiveness and safety of its manufacturing facilities;
(ii) deploy technological innovations to support its expansion
strategy around and beyond tires; and (iii) address the challenges
of the energy transition.
However, total outlays for the year still fell short of the
€1,801 million committed in 2019, primarily because the
disruptions in global supply chains, shortages of materials,
components and spare parts, and tight labor market conditions
that adversely impacted supplier businesses in certain regions
combined to prevent the Group from completing all its initially
planned capital projects and investments and from making up
for the carefully managed reduction in capital expenditure
undertaken to conserve Group cash in 2020.
By Business Line, the main capital projects completed during the
year or still underway as part of competitiveness, product line
renewal and growth investment programs are as follows:
Automotive tires:
▶in Mexico;
▶in China;
▶in Thailand.
Road transportation tires:
▶in Thailand.
Specialty products:
▶mining tires;
▶off-the-road tires (Agricultural, Construction, Materials Handling);
▶two-wheel tires.
All of these capital projects were supported by the commitments
presented below.
CAPITAL EXPENDITURE
(in € billions)
Note that the Group’s financing depends on its ability to generate cash flow as well as on market opportunities. As a result, there is
generally no direct link between financing sources and capital expenditure projects.
“Investments grants received and change in capital expenditure payables” corresponds mainly to changes in capital expenditure
payables.
2016
2017
2018
2019
2020
2021
1.2
1.8
1.8
1.7
1.8
1.7
In € billions
As % of sales
8.7%
8.1%
7.6%
7.5%
6.0%
7.1%
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5.1.5 c)
Available cash flow and free cash flow
Available cash flow corresponds to cash flow from recurring operating activities, i.e., after routine capital expenditure but before
competitiveness, growth and new-venture investments.
Free cash flow, which is stated before dividend payments and financing transactions, corresponds to net cash from operating
activities less net cash used in investing activities, adjusted for net cash flows relating to cash management financial assets and
borrowing collaterals.
(in € millions)
2021
2020
Net cash from operating activities
2,906
3,366
Routine capital expenditure (maintenance, IT, dealerships, etc.)
(1,189)
(722)
AVAILABLE CASH FLOW
1,717
2,644
Competitiveness and growth investments
(381)
(355)
Investments in new ventures
(135)
(144)
Acquisitions
(107)
(39)
Other
263
(102)
FREE CASH FLOW
1,357
2,004
After subtracting €1,189 million in routine capital expenditure,
available cash flow stood at €1,717 million for the year ended
December 31, 2021.
Free cash flow was positive, at €1,357 million, after outlays of
€381 million in competitiveness and growth investments and
€135 million in investments in new ventures. The €107 million
in acquisitions primarily concerned the purchase of all the
outstanding shares in Allopneus that the Group did not already
own, as well as purchases of controlling interests that were
individually not material.
5.1.5 d)
Structural free cash flow
To track its intrinsic performance, Michelin has set targets based
on its structural free cash flow, which is defined as free cash
flow before acquisitions and adjusted for the impact of
movements in raw materials prices on trade receivables, trade
payables and inventories.
With €1,793 million in structural free cash flow in 2021, the
Group met the guidance issued on October 24, 2021 targeting
more than €1,000 million in structural free cash flow for the year.
2021
2020
FREE CASH FLOW
1,357
2,004
Acquisitions
107
39
FREE CASH FLOW EXCLUDING ACQUISITIONS & DISPOSALS
1,464
2,043
Impact of raw materials costs on working capital
329
-33
STRUCTURAL FREE CASH FLOW
1,793
2,010
5.1.6
RETURN ON CAPITAL EMPLOYED (ROCE)
The return on capital employed by the Group is measured by
dividing net operating profit after tax (NOPAT) by the average
economic assets employed during the year.
For the NOPAT calculation, amortization of acquired intangible
assets and Group's share of profit/(loss) from equity-accounted
companies are added to the segment operating income.
The theoretical tax liability was calculated at a standard rate of
25%, corresponding to the Group’s normal average effective
tax rate.
Non-euro currencies are translated at year-end rates for balance
sheet items and average rates for income statement items.
If ROCE is greater than weighted average cost of capital
(WACC) for the year, then the Group has created value during
the period.
Based on a theoretical balance between equity and debt, the
Group’s weighted average cost of capital (WACC) is estimated
at 7.5%, which is in line with external benchmarks. The rates
used are determined (i) for equity capital, based on the yield on
Michelin shares expected by the stock markets; and (ii) for debt
capital, on the market risk-free rate plus the risk premium
applied to Michelin by the markets, as adjusted for the tax
effect.
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(in € millions)
2021
2020
Segment operating income restated for ROCE calculation
2,819
1,677
Average standard income tax rate used for ROCE calculation
25%
25%
Segment operating income after tax (NOPAT)
2,114
1,258
Economic assets at December 31
21,201
19,772
Average economic assets
20,496
21,037
Consolidated ROCE
10.3%
6.0%
5.1.7
TREND INFORMATION
Outlook
In 2022, in a still highly uncertain environment due to the
unfolding health crisis, Passenger car and Light truck tire
markets are expected to expand by 0% to 4% over the year,
Truck tire markets by between 1% and 5%, and the Specialty
markets by 6% to 10%. Based on this scenario, the Group
expects to grow in line with the markets.
Considering the raw material prices and transportation costs
observed in early 2022, the Group also anticipates that these
factors will have a significantly negative impact on its 2022
results. Further enhancement of its mix and disciplined
implementation of its pricing policy are nevertheless expected to
have a positive impact on the Group’s results and offset the
increase in cost inflation factors.
Based on this scenario, and barring any new systemic impact
from Covid-19(1), Michelin’s objectives are to deliver full-year
segment operating income in excess of €3.2 billion at constant
exchange rates and structural free cash flow of more than
€1.2 billion.
This outlook has been established and prepared on a basis
comparable to historical financial information and in accordance
with the accounting methods described following this chapter.
Recent events
Redemption of convertible bonds due in 2022
The Group redeemed the outstanding convertible bonds due January 10, 2022, for a nominal amount of $592 million (€523 million at
the reporting date exchange rate). Additional information is provided in note 26.1 of the consolidated financial statements.
No other material events occurred between the reporting date and the date when the consolidated financial statements were
approved for publication by the Managing Chairman.
5.1.8
HIGHLIGHTS
5.1.8 a)
Strategy
January 6, 2021 ─ Michelin launches a simplification and
competitiveness project to support developments in its
operations in France.
To prepare for the future, Michelin has launched a three-year
project to upgrade and transition its manufacturing, corporate
and administrative operations in France. As part of this process,
the Group has reaffirmed its commitment to positioning France
in the production of premium and specialty tires while
continuing to base new high value-added businesses in the
country, particularly in the services, sustainable materials,
energy transition and recycling segments. The simplification and
competitiveness plan will be supported by an innovative social
dialogue process. The 2021 Collective Settlement Agreement
signed on June 7 by the CFDT, CFE-CGC and SUD trade unions
was approved by the local labor authorities (DREETS) on
June 14, enabling deployment of the Agreement’s voluntary
early retirement and outplacement measures.
March 19, 2021 – Michelin partners with sennder, Europe’s
leading digital freight forwarder.
Through their partnership, Michelin and sennder will deliver a
suite of fleet services to make road freight more cost effective
and less carbon intensive. sennder and Michelin’s collaboration
will initially focus on Northern Europe and Iberia, with plans to
scale it across other European markets throughout 2021.
April 2, 2021 – BMW Group reaffirms its trust in Michelin tires.
The benefits of Michelin and BMW’s long-standing, 35-year
relationship, built on the shared values of precision,
performance, responsibility and innovation, have again been
illustrated with the development of the MICHELIN Pilot Sport 4S
and the MICHELIN Pilot Sport Cup 2 Connect tires specifically
for the BMW M3 and M4.
(1) Serious supply chain disruptions or restrictions on freedom of movement that would result in a significant drop in the tire markets.
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April 8, 2021 – Michelin presents its strategy for 2030:
Michelin in Motion.
At the Group’s Capital Markets Day, Florent Menegaux presented
Michelin in Motion, the Group’s “All Sustainable” strategy
for 2030, which is based on constantly seeking the right
balance between People, Profit and Planet. He also presented
the Group’s ambitious targets for 2030 and reaffirmed the
commitment to driving strong expansion in five tire-related and
other business segments: Services & Solutions, flexible composites,
healthcare, metal 3D printing and hydrogen mobility.
April 23, 2021 – Harley-Davidson and Michelin pursue
their long-standing collaboration.
Michelin
has
custom-designed
the
MICHELIN
Scorcher
Adventure tire for the Harley-Davidson Pan America™ 1250
motorcycle. Over the past 13 years, Michelin has nurtured a
close working relationship with Harley-Davidson, based on
performance, quality and innovation, and today, its tires equip
more than 40% of the motorcycles manufactured by the
American brand.
May 17, 2021 – Camso earns recognition as a “Partner-level
supplier for 2020” in the John Deere Achieving Excellence
Program.
The Partner-level status is Deere & Company’s highest supplier
rating. The honor recognizes Camso’s dedication to providing
products and services of outstanding quality as well as its
commitment to continuous improvement.
May 21, 2021 – The Annual Meeting of Michelin shareholders
was held behind closed doors in compliance with French health
rules. The event was an opportunity for a number of people to
pay tribute to Michel Rollier, who stepped down as Chairman of
the Supervisory Board. His successor, Barbara Dalibard, was
elected at the same-day meeting of the Board.
June 1, 2021 – Movin’On’s governance body is now shared.
A number of chief executives of leading global corporations
have joined with Florent Menegaux, President of Movin’On and
Managing Chairman of the Michelin Group. The new shared
governance represents a major milestone in Movin’On’s
development, designed to set the organization’s strategic
direction and deliver actionable solutions to speed the transition
to sustainable mobility. Movin’On’s governance body now
comprises 12 CEOs.
September
24,
2021
–
Engie
supports
Michelin
in
decarbonizing its historic Cataroux plant in Clermont‑Ferrand.
Through the partnership, Michelin is seeking to reduce the
facility’s energy use while cutting its greenhouse gas emissions.
These goals fit seamlessly with the Group’s “All Sustainable”
vision, particularly the commitment to fighting global warming.
October 1, 2021 – At its fifth annual Supplier Awards,
Michelin honors nine of its best suppliers.
Michelin recognized nine of its best suppliers in the industrial
purchasing, raw materials purchasing and service procurement
categories based on five criteria: Sustainability, Innovation,
Quality, Risk Management and Support provided during the
crisis. Michelin believes that the quality and effectiveness of its
supplier relations are essential drivers of its sustainable
performance.
October 1, 2021 – Fenner™ Precision Polymers acquires
Lumsden Corporation, a leading manufacturer of metal
conveyor belting. The deal strengthens the position of Fenner™
Precision Polymers as a leading supplier of highly specialized
conveying products.
October 5, 2021 – Acting in its capacity as Non-Managing
General Partner of Compagnie Générale des Établissements
Michelin (CGEM) and with the approval of the Supervisory Board,
Société Auxiliaire de Gestion (SAGES) renewed Florent Menegaux
as Managing General Partner and Yves Chapot as General
Manager for new four-year terms, which will begin when their
current terms end at the close of the next Annual Shareholders
Meeting, on May 13, 2022, and end at the close of the Annual
Shareholders Meeting to be held in the first half of 2026.
December 30, 2021 - Michelin acquires 100% ownership of
Allopneus SAS.
With this acquisition of 100% ownership of Allopneus, the
French leader in sales and tire fitting online for private
individuals, Michelin consolidates its e-commerce presence in
France. Each year, Allopneus is selling around 3.6 million
touring tires and receives around 27 million visits on its site.
Michelin was owning so far 40% of the company.
5.1.8 b)
Innovation and new ecosystems
February 9, 2021 – CAMSO optimizes productivity for its
construction industry customers.
CAMSO has introduced the CAMSO TLH 732+ telehandler tire
that delivers 64% more service life than its predecessor, the
TLH 732. The new tire offers professionals in the construction
industry
performance,
long-lasting
durability,
puncture
resistance and improved traction.
April 2021 – Symbio, a Faurecia Michelin Hydrogen
Company, is helping to accelerate the transition to
hydrogen mobility.
Symbio is on a roll with its two development projects underway,
one with bus manufacturer Safra and the other with Stellantis,
in a further illustration of the growing importance of hydrogen
technology in making zero-emission mobility a reality. The
project to build Europe’s largest hydrogen fuel cell plant in
Saint-Fons, France, will also actively help to accelerate the
transition to hydrogen mobility. It is scheduled to come on
stream in 2023.
April 15, 2021 – Michelin and Altaris announce their
intention to join forces to speed the growth of Solesis, a
Michelin subsidiary specializing in biomaterials for the
healthcare industry.
The Partnership Agreement has three components: (i) the
acquisition of a 51% stake in Solesis by Altaris; (ii) the
deployment of a governance system; and (iii) a research and
development partnership between Michelin and Solesis. The
announcement offers another compelling illustration of the
Group’s commitment to expanding beyond tires, with a focus
on high-tech materials.
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April 15, 2021 – ProovStation partners with Michelin to
reduce the time and costs of tire inspection.
The solution developed by ProovStation, the European leader in
automated inspection, has been enhanced by Michelin’s
expertise thanks to MICHELIN QuickScan technology, which can
check tire wear automatically and instantaneously with
millimeter precision. In addition to its technology, which is
protected by more than 15 patents, Michelin is contributing its
experience in analyzing tire data using its proprietary artificial
intelligence algorithms.
April 23, 2021 – Michelin take a major step with Carbios
towards developing 100% sustainable tires.
Michelin has successfully validated the use of Carbios’enzymatic
recycling technology for PET(1) plastic waste in its tires. This
takes the Group one step closer to fulfilling its 2050 ambition of
manufacturing tires that are 100% sustainable, i.e., made
entirely of renewable, recycled or otherwise sustainable
materials, with an interim goal of 40% by 2030.
April 30, 2021 – Michelin launches two new EV tire ranges.
Following on from the February launch of the MICHELIN Pilot
Sport EV, the first tire in the Pilot Sport family purpose-
engineered for electric sports cars, Michelin has announced the
roll-out of the MICHELIN X Incity EV Z tire, the Group’s first
family of tires designed specifically for electric buses. With the
new ranges, Michelin is supporting the transition towards
cleaner, more efficient and longer-range electric mobility
solutions. The EV market represents a genuine growth
opportunity and energy transition accelerator.
May 19, 2021 – The new MICHELIN Guide – Tablet Hotels
app wins its first award.
The MICHELIN Guide and Tablet Hotels have combined their
expertise to develop a new global app that provides access to all
the selections of their inspectors and experts in more than
30 destinations in the Americas, Europe, and Asia. The
application alone contains nearly 20,000 curated addresses.
The Webby Awards, which honor excellence on the Internet,
awarded it the “Webby Honoree” distinction in the
“Apps and Software” category.
May 27, 2021 – The new MICHELIN TRAILXBIB tire
increases farm yields.
Designed in association with farmers in a number of countries,
the MICHELIN TRAILXBIB tire incorporates the innovative
MICHELIN Ultraflex technology that improves farm yields by
reducing soil compaction. In addition, the MICHELIN TRAILXBIB
range is compatible with remote inflation systems, which enable
operators to easily adjust tire pressure in real time according to
the driving surface or soil conditions.
May 28, 2021 – AddUp takes metal 3D printing to the
next level.
AddUp, the joint venture created by Michelin and Fives in 2016
and specialized in metal 3D printing, has developed a new
generation of machines with promising features for industry.
Michelin believes metal 3D printing is one of the growth drivers in
the high-tech materials field. The new-generation machines
support Michelin’s ambitions to expand its operations beyond tires.
June 1, 2021 – 2021 Movin’On: Michelin presents two
innovations to accelerate the development of sustainable
mobility.
The WISAMO project, an automated, telescopic, inflatable wing
sail system that will help to decarbonize maritime shipping, and
a high-performance racing tire containing 46% sustainable
materials offer further tangible, real-world proof of the Group’s
determination to make mobility increasingly sustainable. The
innovations also demonstrate Michelin’s commitment to basing
a portion of its growth on the development of new business
activities, while showcasing its ability to incorporate an
ever‑higher percentage of sustainable materials into its products
without compromising on their performance. Michelin expects
to use 100% sustainable materials in all its tires by 2050.
June 17, 2021 – KRISTAL.aero and Michelin launch
KRISTAL.air, a mobile app for everyone who flies light aircraft.
The new app expresses Michelin Aviation’s commitment to
fostering connected mobility, safe flying and closer customer
relationships.
It
is
also
compatible
with
the
Group’s
“All Sustainable” vision. Pilots can now optimize their flights, in
particular by enhancing the quality of their landings and
reducing their environmental impact with greater fuel efficiency
and lower CO2 emissions.
June 23, 2021 – Michelin designs the new MICHELIN X
AGVEV, the first tire specifically engineered for automatic
guided vehicles (AGVs).
Today, most AGVs operating in port facilities are electrically
powered. The EV-marked MICHELIN X AGVEV is the first port
tire that helps to cut CO2 emissions and increase an electric
vehicle’s battery life, thanks to its very low rolling resistance.
June 30, 2021 – Michelin introduces two new truck tires,
the MICHELIN X® MULTI™ ENERGY™ and the MICHELIN X®
MULTI GRIP™.
In February 2021, Michelin announced the launch of new
MICHELIN X® MULTI™ ENERGY™ tires delivering greater fuel
efficiency, lower CO2 emissions, longer mileage and a host of
other benefits. Four months later, the lineup has been expanded
with the new MICHELIN X® MULTI GRIP™ tire, designed to
ensure maximum safety and mobility in extreme winter
conditions and on wet roads. The new tire not only helps to
make overland shipping more sustainable, in particular by
reducing CO2 emissions per kilometer driven, it can also be
regrooved and retreaded to extend its service life.
June 30, 2021 – Michelin launches “WATEA by Michelin”
to support its corporate customers in transitioning to
zero-emission mobility.
Based on an all-inclusive monthly subscription and a palette of
more than 80 services, the new Michelin solution will facilitate
access to charging stations and make it easier to manage
battery-powered and, in the near future, hydrogen-powered
commercial EV fleets. This unprecedented, all-in-one solution is
a further illustration of the Group’s expertise in services, one of
its major new growth areas.
(1) Polyethylene terephthalate. PET is a currently oil-based plastic; the monomers used, ethylene glycol and terephthalic acid, come from petroleum processing.
PET is the raw material of one of the main textile fibers used in tire reinforcements.
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September 2, 2021 – Michelin introduces MICHELIN
CrossClimate 2, the new generation of MICHELIN All-Season
tires.
With its new technologies, the MICHELIN CrossClimate 2 tire is
designed to uphold its market leadership and set the standard
for all-season tires, without compromising on any performance
factors. Safer, longer-lasting and more economical, the
MICHELIN CrossClimate 2 is a further illustration of the Group’s
“All Sustainable” strategy. It also demonstrates the Group’s
commitment to investing and innovating to develop premium
tires delivering very high technological value.
October 13, 2021 – Michelin subsidiary ResiCare finds an
initial outlet “beyond tires.”
The technological advance, intended for the wood industry, is
the result of a collaboration that began in 2018 between
ResiCare and Allin, a French plywood panels manufacturer. As a
market leader in adhesive solutions, ResiCare is successfully
supporting
Michelin’s
“All
Sustainable”
vision
and
its
commitment to expanding beyond tires. The subsidiary is
dedicated to producing high-performance adhesive resins, free
of toxic molecules, from bio-based feedstocks.
November 17, 2021 – Michelin introduces MICHELIN
Connected Fleet, its new umbrella brand for fleet services.
At the Solutrans trade show, Michelin presented MICHELIN
Connected Fleet, which now brings together all the Group’s
fleet management services and solutions under the same
banner. Comprising Masternaut in Europe, NexTraq in
North America, and Sascar in Latin America, MICHELIN
Connected Fleet is currently used by 70,000 customers
worldwide, representing a fleet of 600,000 vehicles in
48 countries that collect and process data from approximately
300 million trips a year.
November 19, 2021 – Michelin acquires AirCaptif, a specialty
manufacturer of ultralight inflatable structures.
The acquisition of the innovative French startup with unique
know-how in the field of ultralight inflatable structures for
protection and insulation is fully aligned with Michelin’s
sustainable growth strategy beyond tires. It also illustrates the
Group’s commitment to expanding in high-tech materials.
November 25, 2021 – Michelin sets out the challenges of
100% sustainable tires at the Group’s global Research and
Development center in Clermont-Ferrand.
At its first Media Day, Michelin reaffirmed its target of using an
average of 40% sustainable materials in its tires by 2030 and of
raising this rate to 100% by 2050. To meet these objectives,
Michelin is leveraging all its powerful innovation expertise and
its ability to develop innovative new technologies in ecosystems,
while taking action at every stage of the tire life cycle, from
design, manufacture and logistics to use, EOL collection and
recycling.
5.1.8 c)
Motorsports
March 10, 2021 – Michelin launches its new MICHELIN
Wild Enduro Racing Line mountain bike tire.
The new line has already demonstrated its capabilities with wins
in some of the world’s most challenging races, including two
Elite World Enduro Championship titles with Sam Hill; one
U21 World Enduro Championship title with Elliot Heap; and two
Masters World Enduro Championship titles with Karim Amour.
August 18, 2021 – Michelin’s first racing tire made from
46% sustainable materials, unveiled a few weeks earlier
at Movin’On, takes its first parade laps.
Michelin’s first racing tire made from 46% biosourced and
recycled materials took its first laps around the Le Mans
24 Hours track, in a concrete illustration of the Group’s
“All Sustainable” vision. By 2050, every Michelin tire will be
made entirely of sustainable materials, with an interim target of
40% in 2030.
September 15, 2021 – Michelin and Dorna extend their
MotoGP™ partnership.
By renewing its partnership with Dorna Sports, Michelin will
remain the exclusive official tire supplier of the premier class of
motorcycle Grand Prix racing from 2024 to 2026. “At Michelin,
we see motorsports like a lab that encourages transfers of
expertise and swift application of our sustainable solutions that
benefit everyone” Florent Menegaux.
5.1.9
MATERIAL CONTRACTS
There are no material contracts other than those conducted in the ordinary course of the business.
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5.1.10
INFORMATION CONCERNING PAYMENT TERMS
Article D. 441-I-2°: invoices issued and past due at December 31, 2020
Trade receivables
0 day
1 to 30
days
31 to 60
days
61 to 90
days
More than
90 days
Total
(A) Breakdown of past due payments:
Number of invoices
-
-
Total amount of invoices (including tax)
-
-
Percentage of total sales for the period (including tax)
0.00%
0.00%
(B) Invoices excluded from (A) relating to disputed or
unrecognized payables and receivables
-
Number of invoices excluded
-
Total amount of invoices excluded
-
(C) Reference payment terms used (contractual
or statutory pursuant to Article L. 441-6 or L. 443-1
of the French Commercial Code)
30
Reference payment terms used to calculate past
due payments
Contractual terms agreed at initial recognition
of the trade receivable
30
Article D. 441-I-1°: invoices received and past due at December 31, 2020
Trade payables
0 day
1 to 30
days
31 to 60
days
61 to 90
days
More than
90 days
Total
(A) Breakdown of past due payments:
Number of invoices
95
99
37
51
282
Total amount of invoices (including tax)
231 526
93 259
32 044
64 347
421 176
Percentage of total purchases for the period (including tax)
0,04 %
0,02 %
0,01 %
0,01 %
0,08 %
(B) Invoices excluded from (A) relating to disputed
or unrecognized payables and receivables
Number of invoices excluded
-
Total amount of invoices excluded (including tax)
-
5.1.11
SIGNIFICANT CHANGE IN FINANCIAL OR TRADING POSITION
The items presented below reflect the impact of the conflict
between Russia and Ukraine that began on February 24, 2022,
i.e., ten days after the Group published its 2021 results and its
2022 guidance. The Report of the Managers, included in this
Universal Registration Document, has not been amended since
its publication.
Since the start of the conflict, the Group’s primary concern has
been to guarantee the safety of its employees. Michelin has
12 employees in Ukraine, based in Kyiv and Western Ukraine,
who work there to develop sales. In the current circumstances,
the Group is providing them with the best possible logistical
support and, given the difficulties involved in transferring funds,
is implementing the necessary arrangements to pay them salary
advances.
Group exposure to Russia
After setting up an initial establishment in Russia in the early
20th century, Michelin has been present in the country since
1997 and was the first foreign tire manufacturer to open a
production plant there in 2004. Michelin employs around
1,000 people in the country, including 750 at the Davydovo
plant, located about a hundred kilometers from Moscow. This
site has a production capacity of 1.5 to 2 million tires per year,
mainly for passenger cars, i.e. 1% of the Group’s global
capacity in this segment. Most of this production is dedicated to
the Russian market.
Michelin’s sales in Russia represent around 2% of the Group’s
total sales.
Michelin does not produce or sell any tires for military use in
Russia.
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Impact of the conflict on the Group’s operations
In a press release published on March 15, 2022, the Group
announced the suspension of its manufacturing operations in
Russia, as well as of its exports to Russia, due to severe
operating restrictions stemming from supply difficulties, the
disruption of financial flows and monetary instability.
Like other tire manufacturers, Michelin sources certain raw
materials from Russia for its European plants. In a press release
on March 3, 2022, the Group announced the closure of certain
plants in Europe for a few days during the month of March,
given procurement issues and supply chain disruptions resulting
from the conflict, and in order to optimize its operations. This
operational adjustment allowed priority to be given to the
Group’s high-value added segments. On the date this document
was published, operations had resumed at all the facilities
concerned.
Activating alternative sourcing solutions has however limited the
operational impact, attesting to the effectiveness of the
Group's business continuity procedures with regard to
manufacturing business interruption risks and supply chain risks,
as described in Chapter 2 of this Universal Registration
Document.
Beyond Michelin’s exposure to Russia and Ukraine, the potential
impact of the conflict on the global economy remains very
uncertain to date.
Impact on the Group’s financial position
At the end of December 2021, the Group's balance sheet exposure linked to its three subsidiaries in Russia and Ukraine amounted to
around €200 million, including intangible assets for around €40 million.
5.1.12
INFORMATION DISCLOSED IN COMPLIANCE WITH ARTICLES L. 225-102-1
AND R. 225‑105‑1 OF THE FRENCH COMMERCIAL CODE
The 2021 employee, societal and environmental information disclosed in compliance with Article 225-102-1 of the French Commercial
Code, as well as the Statutory Auditors' report, may be found in the section 4, "Non-financial performance".
5.1.13
DISCLOSURE PURSUANT TO FRANCE’S DUTY OF CARE ACT APPLICABLE
TO PARENT COMPANIES AND SUBCONTRACTING COMPANIES
The 2021 Duty of Care plan, which outlines the risks and preventive measures that the Group and its main subcontractors face in
relation to the environment, public health and safety and human rights, pursuant to the French Duty of Care Act (No 2017-399) of
March 27, 2017, is presented in section 4 "Non-financial performance".
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5.1.14
FIVE-YEAR SUMMARY OF CONSOLIDATED KEY FIGURES AND RATIOS
(in € millions)
2021
2020
2019
2018*
2017
Sales
23,795
20,469
24,135
22,028
21,960
% change
+16.3%
-15.2%
+9.6%
+0.3%
+5.0%
Total employee benefit costs
6,445
5,996
6,365
6,038
5,871
as a % of sales
27.1%
29.3%
26.4%
27.4%
26.7%
Number of full-time equivalent employees at period-end
118,400
117,500
121,300
111,100
107,800
Research and development expenses
682
646
687
648
641
as a % of sales
2.9%
3.2%
2.8%
2.9%
2.9%
Segment EBITDA(1)
4,700
3,631
4,763
4,119
4,087
Segments operating income
2,966
1,878
3,009
2,775
2,742
Segment operating margin
12.5%
9.2%
12.5%
12.6%
12.5%
Operating income
2,777
1,403
2,691
2,550
2,631
Operating margin
11.7%
6.9%
11.1%
11.6%
12.0%
Cost of net debt
192
242
330
200
176
Other financial income and expenses
(4)
(14)
(5)
16
0
Income before taxes
2,471
979
2,236
2,230
2,354
Income tax
626
354
506
570
661
Effective tax rate
25.3%
36.2%
22.6%
25.6%
28.1%
Net income
1,845
625
1,730
1,660
1,693
as a % of sales
7.8%
3.1%
7.2%
7.5%
7.7%
Dividends
410
357
666
637
585
Net cash from operating activities
2,906
3,366
3,321
2,831
2,741
as a % of sales
12.2%
16.4%
13.8%
12.9%
12.5%
Gross purchases of intangible assets and PP&E
1,705
1,221
1,801
1,669
1,771
as a % of sales
7.2%
6.0%
7.5%
7.6%
8.1%
Net debt(2)
2,789
3,531
5,184
4,056
716
Total equity
14,971
12,631
13,229
12,181
11,261
Gearing
19%
28%
39%
33%
6%
Net debt(2)/segment EBITDA(1)
0.59
0.97
1.09
0.98
0.18
Segment operating income/net interest expense(3)
13.7
7.9
10.1
13.3
15.9
Free cash flow(4)
1,357
2,004
1,142
-1,985
662
ROE(5)
12.3%
4.9%
13.1%
13.6%
15.0%
Operating ROCE(6)
10.3%
6.0%
10.0%
-
-
PER-SHARE DATA (in €)
Net assets per share(7)
83.9
70.8
74.1
67.8
62.7
Basic earnings per share
10.31
3.52
9.69
9.30
9.39
Diluted earnings per share
10.24
3.51
9.66
9.25
9.34
Price-earnings ratio(8)
14.0
29.8
11.3
9.3
12.7
Dividend for the year(9)
4.50
2.30
2.00
3.70
3.55
Payout ratio(10)
42.0%
47.0%
19.5%
36.4%
36.0%
Yield(11)
3.1%
2.2%
1.8%
4.3%
3.0%
*
In the above table, the 2018 figures are stated as published in the 2019 Universal Registration Document. See note 2.5 to the consolidated financial
statements for that year for details of restatements compared with the figures published in the 2018 Registration Document.
(1) As defined in note 3.7.2 to the consolidated financial statements.
(2) Net debt: financial liabilities less cash and cash equivalents (excluding cash flows from cash management financial assets and borrowing collaterals) plus/less
derivative assets, as defined in note 26 to the consolidated financial statements.
(3) Net interest expense: interest financing expenses - interest income from cash and equivalents.
(4) Free cash flow: as calculated in section 5.1.5 c).
(5) ROE: net income attributable to shareholders divided by shareholders’ equity excluding non-controlling interests.
(6) Operating ROCE: based on the method in use since 2021 as explained in 5.1.6. Full-year 2019 and 2020 ROCE has been remeasured using this method.
(7) Net assets per share: net assets/number of shares outstanding at the end of the period.
(8) Price-earnings ratio: share price at the end of the period/basic earnings per share.
(9) Subject to approval by the Annual Shareholders Meeting of May 13, 2022.
(10) Payout ratio: Dividend/net income excluding non-recurring items (adjusted with respect to the nominal tax rate).
(11) Yield: dividend per share/share price at December 31.
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5.2
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2021
DETAILED SUMMARY OF THE NOTES
TO THE FINANCIAL STATEMENTS
NOTE 1
General Information
309
NOTE 2
Basis of preparation
309
NOTE 3
Accounting policies
315
NOTE 4
Changes in the scope of consolidation
326
NOTE 5
Segment reporting
328
NOTE 6
Expenses by nature
329
NOTE 7
Employee benefit costs
329
NOTE 8
Segment other income and expenses
330
NOTE 9
Other operating income and expenses
330
NOTE 10 Cost of net debt and other financial
income and expenses
331
NOTE 11 Income tax
332
NOTE 12 Earnings per share
333
NOTE 13 Goodwill and intangible assets
334
NOTE 14 Property, plant and equipment
and right‑of-use assets
336
NOTE 15 Non-current financial assets
and other non-current assets
338
NOTE 16 Derivative instruments
339
NOTE 17 Investments in equity-accounted
companies
341
NOTE 18 Taxes
344
NOTE 19 Inventories
346
NOTE 20 Trade receivables
346
NOTE 21 Current financial assets
347
NOTE 22 Other current assets
347
NOTE 23 Cash and cash equivalents
348
NOTE 24 Share capital and share premiums
348
NOTE 25 Reserves
349
NOTE 26 Financial liabilities
350
NOTE 27 Provisions for employee benefit obligations
353
NOTE 28 Share-based payments
367
NOTE 29 Provisions and other non-current liabilities
368
NOTE 30 Provisions and other current liabilities
369
NOTE 31 Notes to the statement of cash flows
370
NOTE 32 Commitments and contingencies
370
NOTE 33 Financial risk management
372
NOTE 34 Related-party transactions
378
NOTE 35 Events after the reporting date
379
NOTE 36 List of consolidated companies
379
NOTE 37 Statutory Auditors’ Fees
390
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5.2.1
CONSOLIDATED STATEMENT – YEAR ENDED DECEMBER 31, 2021
CONSOLIDATED INCOME STATEMENT
(in € millions, except per share data)
Note
2021
2020(1)
Sales
5
23,795
20,469
Cost of sales
(16,810)
(14,754)
Gross income
6,985
5,715
Sales and marketing expenses
(1,133)
(1,070)
Research and development expenses
(682)
(646)
General and administrative expenses
(2,137)
(1,994)
Segment other income and expenses
8
(67)
(127)
Segment operating income
5
2,966
1,878
Other operating income and expenses
9
(189)
(475)
Operating income
2,777
1,403
Cost of net debt
10
(192)
(242)
Other financial income and expenses
10
(4)
(14)
Net interest on employee benefit obligations
27.1
(41)
(56)
Share of profit/(loss) from equity-accounted companies
17
(69)
(112)
Income before taxes
2,471
979
Income tax
11
(626)
(354)
NET INCOME
1,845
625
▶Attributable to the shareholders of the Company
1,844
632
▶Attributable to the non-controlling interests
1
(7)
EARNINGS PER SHARE (in €)
12
▶Basic
10.31
3.52
▶Diluted
10.24
3.51
(1) The 2020 figures have been adjusted for comparison purposes (see note 2.8 to the consolidated financial statements).
Notes 1 to 37 are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(in € millions)
Note
2021
2020
Net income
1,845
625
Post-employment benefits
27.1
351
145
Tax effect – Post-employment benefits
18
(83)
(33)
Equity instruments at fair value through OCI – changes in fair value
15.1
31
28
Tax effect – equity instruments at fair value through OCI
18
(7)
(7)
Other comprehensive income that will not be reclassified
to the income statement
292
133
Cash flow hedges – changes in fair value
(10)
16
Currency translation differences
616
(976)
Other
(9)
(2)
Other comprehensive income/(loss) that may be reclassified
to the income statement
597
(962)
Other comprehensive income/(loss)
889
(829)
TOTAL COMPREHENSIVE INCOME/(LOSS)
2,734
(204)
▶Attributable to the shareholders of the Company
2,734
(198)
▶Attributable to the non-controlling interests
-
(6)
Notes 1 to 37 are an integral part of the consolidated financial statements.
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(in € millions)
Note
December 31, 2021
December 31, 2020
Goodwill
13
2,286
2,136
Intangible assets
13
1,811
1,980
Property, plant and equipment (PP&E)
14.1
11,231
10,821
Right-of-use assets
14.2
1,034
1,083
Non-current financial assets and other non-current assets
15
1,404
865
Investments in equity-accounted companies
17
1,103
941
Deferred tax assets
18
751
729
Non-current assets
19,620
18,555
Inventories
19
5,272
3,959
Trade receivables
20
3,576
3,018
Current financial assets
21
713
429
Other current assets
22
1,038
929
Cash and cash equivalents
23
4,482
4,747
Current assets
15,081
13,082
TOTAL ASSETS
34,701
31,637
Share capital
24
357
357
Share premiums
24
2,746
2,746
Reserves
25
11,871
9,530
Non-controlling interests
(3)
(2)
Total equity
14,971
12,631
Non-current financial liabilities
26
5,360
6,169
Non-current lease liabilities
26
731
801
Provisions for employee benefit obligations
27.1
3,362
3,700
Provisions and other non-current liabilities
29
759
775
Deferred tax liabilities
18
503
425
Non-current liabilities
10,715
11,870
Current financial liabilities
26
1,682
1,546
Current lease liabilities
26
229
222
Trade payables
3,174
2,291
Trade payables under reverse factoring agreements
3.26
613
437
Provisions and other current liabilities
30
3,317
2,640
Current liabilities
9,015
7,136
TOTAL EQUITY AND LIABILITIES
34,701
31,637
Notes 1 to 37 are an integral part of the consolidated financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(in € millions)
Share capital
(note 24)
Share premium
(note 24)
Reserves
(note 25)
Non-controlling
interests
Total equity
At January 1, 2020
357
2,789
10,080
3
13,229
Net income/(loss)
-
-
632
(7)
625
Other comprehensive income/(loss)
-
-
(830)
1
(829)
Total comprehensive income/(loss)
-
-
(198)
(6)
(204)
Issuance of shares
1
54
-
-
55
Share buybacks
-
-
(99)
-
(99)
Cancellation of shares
(2)
(97)
99
-
-
Sales of treasury shares
-
-
-
-
-
Dividends and other appropriations
-
-
(368)
-
(368)
Share-based payments – current service cost
-
-
14
-
14
Other
1
-
2
1
4
At December 31, 2020
357
2,746
9,530
(2)
12,631
Net income/(loss)
-
-
1,844
1
1,845
Other comprehensive income/(loss)
-
-
890
(1)
889
Total comprehensive income/(loss)
-
-
2,734
-
2,734
Issuance of shares
-
-
-
-
-
Share buybacks
-
-
(1)
-
(1)
Cancellation of shares
-
-
-
-
-
Sales of treasury shares
-
-
1
-
1
Dividends and other appropriations
-
-
(414)
(1)
(415)
Share-based payments – current service cost
-
-
21
-
21
Other
-
-
-
-
-
AT DECEMBER 31, 2021
357
2,746
11,871
(3)
14,971
Notes 1 to 37 are an integral part of the consolidated financial statements.
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CONSOLIDATED STATEMENT OF CASH FLOWS
(in € millions)
Note
2021
2020
Net income
1,845
625
Adjustments
▶Cost of net debt
10
192
242
▶Other financial income and expenses
10
4
14
▶Net interest on employee benefit obligations
27.1
41
56
▶Income tax
11
626
354
▶Amortization, depreciation and impairment of intangible assets and PP&E
6
1,734
1,753
▶Other operating income and expenses
9
189
475
▶Share of profit from equity-accounted companies
17
69
112
Segment EBITDA
3.7.2
4,700
3,631
Other operating income and expenses (cash) and change in provisions
31
(201)
(385)
Interest and other financial income and expenses received and paid, net
31
(207)
(265)
Income tax paid
18.2
(562)
(315)
Change in working capital, net of impairment
31
(824)
700
Net cash from operating activities
2,906
3,366
Purchases of intangible assets and PP&E
31
(1,479)
(1,369)
Proceeds from sales of intangible assets and PP&E
38
46
Equity investments in consolidated companies, net of cash acquired
(82)
(75)
Disposals of equity investments in consolidated companies, net of cash sold
(3)
5
Purchases of equity instruments at fair value
(25)
(15)
Disposals of equity instruments at fair value
3
45
Cash flows relating to other financial assets
31
(203)
(25)
Net cash from/(used in) investing activities
(1,751)
(1,388)
Proceeds from issuance of shares
24
-
55
Dividends paid to the shareholders of the Company
24
(410)
(357)
Cash flows relating to financial liabilities
31
(1,043)
1,784
Share buybacks
24
-
(99)
Other
20
(39)
Net cash from/(used in) financing activities
(1,433)
1,344
Effect of changes in exchange rates
13
(41)
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
(265)
3,281
Cash and cash equivalents at January 1
4,747
1,466
Cash and cash equivalents at December 31
23
4,482
4,747
Notes 1 to 37 are an integral part of the consolidated financial statements.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 GENERAL INFORMATION
Compagnie Générale des Établissements Michelin (CGEM or the
“Company”) and its subsidiaries (together “the Group”)
design, manufacture and market tires throughout the world.
The Group also provides its customers with tire- and vehicle-
related services and solutions, mobility experiences and
expertise in high-tech materials.
The Company is a partnership limited by shares (société en
commandite par actions) incorporated in Clermont-Ferrand (France).
The Company is listed on Euronext Paris (Eurolist Compartment A).
After a review by the Supervisory Board, these consolidated
financial statements were authorized for issue by the Managing
Chairman on February 11, 2022.
Except as otherwise stated, all amounts are presented in millions
of euros (in € millions).
NOTE 2 BASIS OF PREPARATION
2.1 Statement of compliance
The consolidated financial statements:
▶have been prepared in accordance with the International
Financial Reporting Standards (IFRS) adopted by the European
Union as of the reporting date and with a mandatory
application to the period then ended;
▶also comply with the International Financial Reporting Standards
(IFRS) published by the International Accounting Standards
Board (IASB); and
▶have been prepared using the historical cost convention, with
the exception of unconsolidated equity investments and
financial assets and liabilities (including derivatives), which are
measured at fair value through profit and loss or other
comprehensive income.
2.2 Accounting policies
The accounting policies applied in the preparation of the Group’s consolidated financial statements are set out in note 3 “Accounting
policies”. Aside from the exceptions described in sections 2.3 and 2.8 below, these policies have been consistently applied to all the
years presented.
2.3 New standards, amendments to existing standards and interpretations effective
from January 1, 2021 in the European Union
The following amendments to IFRSs applied from January 1, 2021 have no material impact on the consolidated financial statements:
IFRIC clarification on IAS 19
The IFRIC has clarified the interpretation of IAS 19 in the case of
plans that require beneficiaries to be on the company’s payroll
at the time of retirement and for which the number of
qualifying years of service is capped.
Previously, benefit was attributed over the entire period of
service, from the time when the employee first joined the
company up to the date of retirement, based on a projected
benefit obligation on the retirement date. From now on, it will
be attributed over the last years of service taken into account to
determine the qualifying period.
The impact on the Group of first-time application of this
interpretation is not material.
Amendments to IAS 39 – IFRS 4 – IFRS 7 – IFRS 9 – IFRS 16 – Interest Rate Benchmark Reform (Phase 2)
The Phase 2 amendments address issues that might affect
financial reporting as a result of interest rate benchmark,
including the effects of changes to contractual cash flows or
hedging relationships arising from the replacement of an
interest rate benchmark with an alternative benchmark rate
(replacement issues).
No hedging relationships have been identified by the Group
that are affected by the replacement of an interest rate
benchmark. The impact of applying new interest rates to leases,
loans, borrowings and derivative instruments is not material.
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Amendment to IFRS 16 – Covid-19 Related Rent Concessions Beyond June 30, 2021
This new amendment, adopted by the European Union on
August 30, 2021, extends the provisions of the original
amendment concerning Covid-19-related rent concessions by
one year to June 30, 2022. The concession may consist of rent
relief or a reduction in the rent originally due. Lessees may
choose to account for the rent concession as variable lease
payments recognized directly in the income statement of the
period(s) in which the event or condition that triggers the
reduced payment occurs, rather than treating it as a lease
modification with the resulting obligation to remeasure the
lease liability based on the revised consideration using a revised
discount rate.
This amendment had no material impact on the Group’s
consolidated financial statements.
IFRIC decision on the cost of implementing SaaS arrangements
The IFRS IC has clarified how configuration and customization
costs should be accounted for in a Software as a Service (SaaS)
arrangement in which the entity only has a right to receive
access to the software and does not control said software. The
interpretation specifies that if the software concerned is not a
resource controlled by the entity, then the configuration and
customization activities do not themselves create a resource
controlled by the entity. Consequently, they do not lead to the
recognition of an intangible asset and should be accounted for
as an expense.
The decision also specifies that the fee should be recognized
over the term of the right-of-access contract when (i) the
software configuration and customization work is performed
by the software hosting service provider or by a third-party
provider acting as a subcontractor of the hosting service
provider, and (ii) this work constitutes a separate service (by
analogy with IFRS 15) from the software access service. In all
other cases, the fee should be recognized immediately as an
expense when the configuration and customization work is
performed.
The Group has reviewed substantially all of its SaaS contracts; in
most cases, these contracts have not involved any configuration
or customization work. Consequently, the IFRS IC’s decision
does not have a material impact on the Group’s consolidated
financial statements.
2.4 New standards, amendments to existing standards and interpretations effective from
January 1, 2022 in the European Union that have not been early-adopted by the Group
The following amendments to IFRSs which were not applicable at December 31, 2021 are not expected to have a material impact on
the Group at their application date.
Amendment to IAS 16 – Property, Plant and Equipment – Proceeds Before Intended Use
This amendment prohibits a company from deducting from the cost of property, plant and equipment amounts received from selling
items produced while the asset is being prepared for its intended use (for example, during the testing phase). Instead, the proceeds
from selling such items must be recognized in profit or loss.
Amendment to IAS 37 – Provisions, Contingent Liabilities and Contingent Assets – Onerous Contracts,
Cost of Fulfilling a Contract
The amendment specifies the costs to be taken into account when assessing whether a contract will be loss-making.
Amendment to IFRS 3 – Update of the Conceptual Framework
This amendment updates a reference in IFRS 3 to the latest Conceptual Framework without changing the accounting requirements for
business combinations.
Annual Improvements to IFRSs – 2018-2020 Cycle
Minor amendments have been made to IFRS 9, IAS 41, IFRS 16 and IFRS 1.
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2.5 Standards, amendments to existing standards and interpretations issued by the International
Accounting Standards Board (IASB) but not yet adopted by the European Union
As of the date when the Group’s consolidated financial statements were approved for publication, the Group had not adopted the
following new standards or amendments to existing standards that had been published but were not effective as of January 1, 2021:
Amendment to IAS 1 – Presentation of Financial Statements – Classification of Liabilities
as Current or Non-current
This amendment clarifies the principles applied to classify liabilities as current or non-current.
Amendment to IAS 1 – Disclosure of Accounting Policies
This amendment requires entities to disclose their material accounting policy information rather than their significant accounting
policies. Accounting policy information is material if users of an entity’s financial statements would need it to understand other
material information in the financial statements.
The amendment is effective for annual periods beginning on or after January 1, 2023.
Amendment to IAS 8 – Definition of Accounting Estimates
This amendment is designed to help entities distinguish between
changes in accounting policies and changes in accounting
estimates by introducing a new definition of accounting
estimates. Accounting estimates are monetary amounts in
financial
statements
that
are
subject
to
measurement
uncertainty. The amendment is effective for annual periods
beginning on or after January 1, 2023.
Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
These amendments narrow the scope of the initial recognition
exemption by excluding transactions for which companies
recognize both an asset and a liability, such as leases and
decommissioning obligations. In future, companies will be
required to recognize deferred tax on these transactions.
The amendments will be effective for annual periods beginning
on or after January 1, 2023 and will apply to qualifying
transactions occurring as from the beginning of the earliest
comparative period presented.
The impact on the consolidated financial statements of applying
this amendment is currently being assessed.
IFRS 17 – Insurance Contracts – Recognition, Measurement and Presentation
The new standard, including the amendments issued in June 2020,
will be effective for accounting periods beginning on or after
January 1, 2023. It was adopted by the European Union on
November 19, 2021 and will not have a material impact on the
Group’s consolidated financial statements.
There are no other new standards, updates or interpretations
published but not yet effective whose impact could be material
for the Group.
2.6 Climate risk
The consequences of the Group’s 2030 energy transition goals
announced in April 2021 have been taken into account for the
preparation of the annual financial statements.
The Group has decided to stop using coal as an energy source
by 2030. This decision has not had a material impact on the
values attributed to the underlying plant and equipment. The
number of sites still using coal is limited and the assets concerned
are largely depreciated. The cost of replacing these assets is
estimated at around €70 million. An electrification program
concerning the presses used to vulcanize tires has been launched
to optimize the Group’s energy use. The sums to be invested in
the program over the next five years are estimated at €80 million.
Beyond that, the speed of press electrification will depend on the
first phase’s impact on energy performance. This capital expenditure
has been taken into account in the cash flow forecasts used for
assets impairment tests.
The long-term consequences of climate risk on future cash
flows are difficult to predict. They could include, for example,
the interruption of operations at plants exposed to natural
disaster risks or price increases designed to pass on green taxes
decided by governments to encourage the energy transition.
They are taken into account in the analyses resulting from the
Group’s risk mapping. For CGUs or groups of CGUs to which
goodwill is allocated, a simulated impairment test has been
performed based on an extremely pessimistic scenario. The
simulation consisted of determining projected future cash flows
over a period of just twenty years and setting the projected
growth rate to zero beyond the fifth year. On this basis, an
impairment loss of approximately €180 million would be
recognized.
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The Group is subject to the European Union’s rules on the
management of CO2 emission allowances. The Group purchases
allowances on the market based on its forecast needs for the
next two to three years. The accounting treatment of emission
allowances is described in note 3.15.1 and the balance sheet
amounts at December 31, 2021 are disclosed in note 13.2.4.
The interest rate on the Group’s €2,500 million syndicated line
of credit (see note 33.2.1) depends on its performance in
relation to its environmental objectives (CO2 emissions and
industrial environmental performance indicator).
2.7 Critical accounting estimates and judgments
The preparation of the consolidated financial statements in
accordance with IFRS requires that management use assumptions
and estimates to calculate the value of assets and liabilities at the
date of the consolidated statement of financial position and the
amount of income and expenses for the reporting period. Actual
results could differ from those estimates.
The main sources of uncertainty relating to key assumptions and
judgments concern impairment of non-financial assets, employee
benefit obligations, income taxes, goodwill, intangible assets
acquired in business combinations and the assets’ estimated
useful lives, the definition of the enforceable period of a lease
and the effect on revenue recognition of deferred customer
discounts.
2.7.1 Impairment of non-financial assets
The cash generating units’ (CGU) future cash flows used to
calculate value in use (note 3.17 “Impairment of non-financial
assets”) are derived mainly from forecasts set out in the Group’s
five-year business plan. The forecasts are prepared by the
Business Departments and Business Lines based on the strategic
objectives validated by the Group Executive Committee. The
process requires using critical estimates and judgments,
especially to determine market trends, raw material costs and
pricing policies. Consequently, actual cash flows may differ from
the estimates used to calculate the CGUs’ value in use (see in
particular the comments in note 2.6 concerning the recognition
of climate risk).
Quantitative information is provided in note 13.1 “Goodwill”.
2.7.2 Employee benefit obligations
The Group uses defined contribution plans which generally
require, on top of the portion financed by the Group, a
contribution from each salaried employee, defined as a
percentage of their compensation.
Some subsidiaries also recognize liabilities for pension plans,
jubilees and other post-employment benefits linked to rights
acquired by the employees through plans specific to these
subsidiaries or resulting from certain legal obligations.
The valuation of these benefits is carried out annually with the
assistance of independent actuaries. The actuarial method used
is the projected unit credit method.
In accordance with this method, statistical information and
various assumptions are used in calculating the expenses,
liabilities and assets related to the benefit plans. Assumptions
mainly include the discount rate, the inflation rate, the
long‑term salary increase rate and the expected rate of growth
in future medical costs. Statistical information is mainly related
to demographic assumptions such as mortality, employee
turnover, disability and retirement age.
Assumptions and statistical information are determined based
on internal guidelines, in consultation with the actuaries.
Discount rates are determined with the assistance of
independent actuaries based on the same maturities as the
liabilities.
The rate of salary increases is determined by each country based
on a long-term salary policy and takes into consideration all of
the relevant factors including market practices, as well as career
development, promotion and seniority, among other inputs.
The inflation rates, calculated over standard durations, are
determined using several methods:
▶by using actuarial models based on target rates published by
central banks, forecasts from Consensus Economics and
inflation swap curves;
▶by taking the spread between inflation-linked bonds and
conventional securities. The rates are then adjusted with a
spread which represents the liquidity and risk premium
embedded in the inflation-linked bonds;
▶based on historical averages.
The other assumptions (retirement age, employee turnover,
health care cost trend, mortality and disability) reflect the
demographic and economic situation of the countries and
subsidiaries in which the plans are in force.
The actual data (such as inflation, mortality and real return on
assets) may differ from the long-term actuarial assumptions
used. The resulting difference is recognized as a gain or loss in
other comprehensive income.
Quantitative information is provided in note 27 “Employee
benefit obligations”.
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2.7.3 Income tax
Judgments and estimates are required to determine the amount
of the deferred tax assets resulting from tax loss carryforwards
or deductible temporary differences.
The expected reversal of tax losses is based on the forecast of
future results validated by the local management and reviewed
by the Group Tax and Accounting Departments. Analyses are
also performed in order to ensure the consistency of the
forecasts with the Group’s strategic plans validated by
management. Analyses to support the deferred tax positions are
performed periodically, at a date as close as possible to the
reporting date.
The period over which tax loss carryforwards are reversed is
based on a reasonable time horizon, taking into account the
specific circumstances of each Group company, such as:
▶the origin of the historical tax losses (generally exceptional and
non-recurring: restructuring, significant increases in production
capacity, etc.);
▶forecast future results;
▶tax planning strategies;
▶opportunities for internal reorganizations that will eliminate
sources of losses;
▶the time limit for recovering historical losses; and
▶the maximum utilization rate of tax loss carryforwards in a
given year.
Quantitative information is provided in notes 11 “Income tax”
and 18 “Taxes”.
The companies that make up the Group operate in different,
and sometimes uncertain, legal and regulatory environments,
including tax environments. They may be involved, in the
normal course of business, in various types of litigation, disputes
or other proceedings.
Each of the known disputes or ongoing proceedings in which
the Group or one of the Group companies is involved was
examined at the reporting date, where appropriate with the
assistance of external consultants, and provisions have, if
necessary, been booked to cover the estimated risks. The main
ongoing tax audits are described in note 11 “Income taxes”.
2.7.4 Goodwill, intangible assets acquired in business combinations and their estimated
remaining useful life
As part of its acquisitions, the Group identifies, measures and
recognizes
intangible
assets
(trademarks
and
customer
relationships, for example) and determines their residual useful
lives. The difference between the fair value of assets acquired
and liabilities assumed, on the one hand, and the consideration
transferred, on the other, represents goodwill, which is
allocated to the CGUs or to the groups of CGUs benefiting from
the synergies expected from the business combination. In order
to perform the purchase price allocation, the Group takes into
account the various strategic and operational objectives
underlying the acquisition and relies on the expertise of
valuation firms.
The value of assets and liabilities recognized on business
combinations may be impacted in the future if judgments,
estimates and key assumptions made at the time of the
acquisition, such as revenue growth rate, operating margin or
discount rates, should differ from reality.
2.7.5 Enforceable period of a lease
When the Group enters into a lease, it determines the
enforceable period by taking into account all the economic facts
and circumstances, as well as the options to extend and
terminate the lease. This information is used to determine the
most economically relevant end date for the lease.
For certain categories of leased assets (mainly vehicles), the Group
considers that there is no reasonably certain extension option.
Consequently, the duration is selected to coincide with the
initial term of the lease. For real estate leases, the Group defines
the reasonable end date of the lease, based on the enforceable
period, in line with the asset’s expected period of use.
Accordingly, for leases with a residual term of more than ten
years, the first enforceable exit option is chosen unless specific
information and economic circumstances lead the Group to
define a longer period.
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2.8 Restatement of comparative financial information
The costs of the Euromaster distribution network’s support functions have been reclassified from “Sales and marketing expenses” to
“General and administrative expenses” in the consolidated income statement, in order to better reflect the specific nature of the
distribution business.
For comparison purposes, an amount of €127 million has been reclassified from “Sales and marketing expenses” to “General and
administrative expenses” in the consolidated income statement for 2020.
The effects of the restatement are presented in the table below:
(in € millions)
2020 as reported
Reclassifications
2020 restated
Sales
20,469
-
20,469
Cost of sales
(14,754)
-
(14,754)
Gross income
5,715
-
5,715
Sales and marketing expenses
(1,197)
127
(1,070)
Research and development expenses
(646)
-
(646)
General and administrative expenses
(1,867)
(127)
(1,994)
Segment other income and expenses
(127)
-
(127)
Segment operating income
1,878
-
1,878
Other operating income and expenses
(475)
-
(475)
Operating income
1,403
-
1,403
Cost of net debt
(242)
-
(242)
Other financial income and expenses
(14)
-
(14)
Net interest on employee benefit obligations
(56)
-
(56)
Share of profit/(loss) from equity-accounted companies
(112)
(112)
Income before taxes
979
-
979
Income tax
(354)
-
(354)
NET INCOME
625
-
625
▶Attributable to the shareholders of the Company
632
-
632
▶Attributable to the non-controlling interests
(7)
-
(7)
EARNINGS PER SHARE (in €)
▶Basic
3.52
-
3.52
▶Diluted
3.51
-
3.51
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NOTE 3 ACCOUNTING POLICIES
3.1 Consolidation
The Group’s consolidated financial statements include all
subsidiaries, joint ventures and associates of Compagnie
Générale des Établissements Michelin.
The Group treats transactions with non-controlling interests, as
long as they do not result in a change of control over the entities
in question (no loss nor gain of control), as equity transactions
having no impact on comprehensive income. Expenses relating to
these transactions are directly accounted for in equity. At the
date the Group gains control of an entity, the carrying amount of
previously held non-controlling interests, if any, is adjusted to fair
value and the difference is recognized in the income statement.
All other related items previously recognized in other
comprehensive income are reclassified to the income statement.
When the Group loses control over an entity but keeps some
non-controlling interests in the entity, the transaction is analyzed
as an exchange, i.e., the disposal of a controlling interest and the
acquisition of a non-controlling interest.
Shareholdings in companies which are not subsidiaries, joint
ventures or associates are not consolidated. They are accounted
for as non-derivative financial assets (note 3.18 “Non-derivative
financial assets”).
3.1.1 Subsidiaries
The Group controls an entity when it has:
▶power over the investee;
▶exposure, or rights, to variable returns from its involvement
with the investee; and
▶the ability to use its power over the investee to affect the
amount of the investor’s returns.
The financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
Intercompany transactions and balances, as well as unrealized
gains on transactions between Group companies are eliminated.
Unrealized losses are also eliminated unless an impairment loss
on the transferred asset arises on the transaction.
Group accounting policies are applied consistently by all
subsidiaries.
3.1.2 Joint ventures and associates
Joint ventures are joint arrangements (arrangements over which
the Group has joint control with one or more other parties) in
which the Group has rights to the net assets. Joint control is
defined as the contractually agreed sharing of control over an
arrangement, which exists only when decisions about the
relevant activities require the unanimous consent of the parties
sharing control.
Associates are all entities over which the Group has significant
influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but is
not control or joint control of those policies. Generally,
associates are entities in which the Group has a shareholding
representing between 20% and 50% of the voting rights.
Investments in joint ventures and associates are accounted for
using the equity method and are initially recognized at cost. The
Group’s investments in joint ventures and associates include
goodwill identified at the acquisition date and are presented net
of any accumulated impairment losses.
From the acquisition date to the date that significant influence
ceases, the Group’s share of its joint ventures’ and associates’
profits and losses, is recognized in the income statement and its
share of movements in other comprehensive income is
recognized in other comprehensive income. The cumulative
post-acquisition movements are adjusted against the carrying
amount of the investment.
When the Group’s share of losses in a joint venture or associate
equals or exceeds its interest in the investee, the Group
recognizes its share of the investee’s negative net worth and,
where appropriate, the carrying amount of any loans to the
joint venture or associate is reduced by the amount of that
negative net worth.
Unrealized gains on transactions between the Group and its
joint ventures and associates are eliminated to the extent of the
Group’s interest in the investee. Unrealized losses are also
eliminated unless an impairment loss on the transferred asset
arises on the transaction.
The profit resulting from downstream transactions carried out
with a joint venture or an associate is deducted from the
Group’s proportionate share in profit of equity-accounted
company.
3.2 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s Management.
The Managing Chairman regularly examines segment operating income to assess segment performance. He has therefore been
identified as the chief operating decision maker of the Group.
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3.3 Foreign currency
3.3.1 Presentation and functional currency
The financial statements of the Group entities are measured
using their functional currency, which is the currency of the
primary economic environment in which they operate and
corresponds for most of them to their local currency.
The consolidated financial statements are presented in euros
(presentation currency), which is the Company’s functional
currency.
3.3.2 Transactions
Foreign currency transactions are translated into the functional
currency using the exchange rate prevailing at the transaction
date. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the revaluation
at closing exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in the income
statement.
Exchange differences on unconsolidated equity investments
are included in other comprehensive income until the
investment is sold.
3.3.3 Translation
The financial statements of the Group entities whose functional
currency is different from the Group’s presentation currency are
translated into euros as follows: assets and liabilities are
translated at the closing rate at the date of the consolidated
statement of financial position, income and expenses are
translated at the average rate for the period (as it is considered
a reasonable approximation to actual rates at the transaction
date), and all resulting exchange differences are recognized in
other comprehensive income.
Cash flows are also translated at the average rate for the period.
When an entity is disposed of, the translation differences
accumulated in other comprehensive income are recycled to the
income statement as part of the gain or loss on disposal.
On the acquisition of an entity, goodwill and fair value
adjustments recognized are treated as assets and liabilities of
the acquired entity and translated at the spot rate on the
transaction date.
3.3.4 Exchange rates of major currencies
Against the euro (EUR):
Closing rates
Average rates
2021
2020
2021
2020
US dollar (USD)
1.132
1.228
1.184
1.141
Canadian dollar (CAD)
1.449
1.571
1.483
1.529
Mexican peso (MXN)
23.309
24.413
23.993
24.373
Brazilian real (BRL)
6.454
6.400
6.370
5.815
Pound sterling (GBP)
0.840
0.907
0.860
0.889
Chinese yuan (CNY)
7.206
8.020
7.636
7.873
Indian rupee (INR)
84.394
90.038
87.477
84.530
Thai baht (THB)
37.754
36.867
37.791
35.697
3.4 Derivative instruments
Derivative instruments are used to manage financial exposures.
All derivatives are initially recognized at fair value on the date a
derivative contract is entered into and are subsequently measured
at their fair value. The method of recognizing the resulting gain
or loss depends on whether the derivative is designated as a
hedging instrument, and if so, the nature of the item being
hedged (see hedging policy below).
All changes in fair value of derivatives not qualifying as hedges
are recorded as financial income or expense in the period in
which they arise.
The fair values of listed instruments are based on their market values.
For unlisted instruments, fair values are determined using
mathematical models, such as option pricing models, or
methods based on discounted future cash flows. These models
take into account market data.
Embedded derivatives are recognized separately if they are not
closely related to the host contract.
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3.5 Hedging
Some derivative instruments are eligible for hedge accounting
and are therefore designated as either:
▶hedges of the fair value of recognized assets or liabilities or a
firm commitment (fair value hedges);
▶hedges of highly probable forecast transactions (cash flow
hedges).
At the inception of the transaction, the Group documents the
relationship between the hedging instrument and the hedged
item, as well as its risk management objectives and strategies.
The Group also documents its assessment, both at inception
and on an ongoing basis, of whether the derivatives that are
used in hedging transactions are highly effective in offsetting
changes in fair values of hedged items.
Changes in the fair value of derivatives are accounted for
differently depending on the type of hedge.
3.5.1 Fair value hedges
Changes in fair value of derivatives are recorded in financial income and expenses, together with any changes in the fair value of the
hedged assets or liabilities that are attributable to the hedged risk.
3.5.2 Cash flow hedges
The effective portion of changes in the fair value of derivatives is
recognized in other reserves. The ineffective portion of the gain
or loss is recognized immediately in the income statement, in
operating income (commodity price hedges) or financial income
and expenses (interest rate hedges).
When options are used to hedge future transactions, only the
changes in the options’ intrinsic value are designated as
hedging instruments. Changes in the intrinsic value and the
time value in relation to the hedged item (“aligned time value”)
are recorded in other reserves.
For forward contracts used to hedge future transactions, the
Group designates all the changes in fair value (including the
forward points) as hedging instruments. These changes in fair
value are recorded in other reserves.
Amounts accumulated in other reserves are recognized in the
income statement over the period during which the hedged
item affects the profit and loss, as follows:
▶when the hedged item is a non-financial asset (for example, a
consolidated investment or an inventory), deferred gains or
losses, as well as deferred gains or losses on the time value of
the option or contract forward points are included in the
initial cost of the asset;
▶the gains or losses resulting from the interest rate hedge are
recognized in financial income at the same time as the
interest on the loans that are hedged.
When a hedging instrument is sold or expires, or when a
hedging instrument no longer meets the criteria required to
qualify for hedge accounting, the amount accumulated in other
reserves at that date is immediately recognized in profit or loss.
3.5.3 Derivatives not qualifying for hedge accounting
Certain other derivative instruments, while offering effective
economic hedging in terms of the Group’s financial policy, do
not meet the criteria for hedge accounting or have not been
treated as hedging instruments (refer to the policy relating to
derivative instruments, above). Changes in the market value of
these derivatives must therefore be recognized in financial
income and expenses. For example, foreign exchange derivatives
used to hedge the currency exposure of financial assets and
liabilities recognized in the consolidated statement of financial
position are not designated as hedging instruments.
3.6 Fair value of financial instruments
Fair value measurements are disclosed by level in the following
fair value measurement hierarchy:
▶Level 1: Quoted prices in active markets. The fair value of
financial instruments traded in active markets is based on
quoted market prices at the date of the consolidated
statement of financial position. A market is regarded as active
if quoted prices are readily and regularly available from an
exchange, dealer, broker, industry group, pricing service, or
regulatory agency, and those prices represent actual and
regularly occurring market transactions on an arm’s length
basis. The quoted market price used for financial assets held by
the Group is the current bid price. These instruments,
essentially cash and cash equivalents, as well as quoted
unconsolidated equity investments, are included in level 1.
▶Level 2: Inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly (i.e.,
as prices) or indirectly (i.e., derived from prices). The fair value
of financial instruments that are not traded in an active market
(for example, over-the-counter derivatives) is determined by
using valuation techniques. These valuation techniques
maximize the use of observable market data where it is
available and rely as little as possible on entity-specific
estimates. If all significant inputs required to fair value these
instruments are observable, these instruments, essentially cash
management financial assets and derivative instruments, are
included in level 2.
▶Level 3: Inputs for assets or liabilities that are not based on
observable market data (i.e., unobservable inputs). If one or more
of the significant inputs is not based on observable market
data, the instrument, essentially non-quoted unconsolidated
equity investments, is included in level 3.
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Specific valuation techniques used to value, generally internally,
financial instruments include:
▶quoted market prices or dealer quotes for similar instruments
(level 1);
▶the fair value of interest rate swaps calculated internally as
the present value of the estimated future cash flows based on
observable yield curves (level 2);
▶the fair value of forward foreign exchange contracts
determined internally using forward exchange rates at the
date of the consolidated statement of financial position, with
the resulting value discounted back to present value (level 2).
Other techniques, such as discounted cash flow analysis, are
used internally to determine fair value for the remaining
financial instruments (level 3).
When observable yield curves include negative interest rates,
those are used without adjustment to determine the fair value
of derivatives.
The Group assesses the counterparty risk included in the fair
value of its over-the-counter derivatives for which there is no
exchange of collateral. The Group includes the effect of its
exposure to the credit risk of the counterparty or the
counterparty’s exposure to the credit risk of the Group. The
valuation
for
long-term
derivatives
with
no
exchange
of collateral is based on discounted cash flows using a rate
including the counterparty credit risk.
3.7 Definition of certain indicators presented in the consolidated financial statements
3.7.1 Net debt
Net debt is made up of current and non-current financial
liabilities (including lease liabilities), as they appear on the
consolidated statement of financial position, less:
▶cash and cash equivalents as they appear on the consolidated
statement of financial position;
▶derivative instruments included in “Current financial assets”
and “Non-current financial assets” on the consolidated
statement of financial position;
▶cash management financial assets included in “Current
financial assets” on the consolidated statement of financial
position (these assets are highly liquid, little affected
by interest rate risk and foreign currency risk); and
▶borrowing collateral included in “Current financial assets”
and “Non-current financial assets” on the consolidated
statement of financial position.
3.7.2 Segment EBITDA
The Group defines Segment EBITDA as segment operating income less depreciation of property, plant and equipment, right-of-use
assets and amortization of intangible assets allocated to segments.
3.8 Revenue recognition
The sale of tires, in the original equipment or replacement
market, constitutes the major part of Group income. In the
replacement market, tires are sold to distributors (wholesalers,
specialist dealers, etc.) who are customers of the Group. These
distributors have the full and complete possibility to use the tires
for their own benefit, or to market them, and in this case, to fix
the resale price. Furthermore, they carry the inventory risk.
The terms of sale offered by Group companies, in line with
normal market practice, vary according to the customer
category and the country in which the sales are made. They
provide however, that the payment for the goods sold will be
made in a period appreciably less than one year and there is
therefore no reason to adjust the amount of consideration
received from customers to take into account the effects of a
financing component.
Each delivery of tires, either in the original equipment market
with car manufacturers or in the replacement market, represents
a distinct and separate performance obligation to be fulfilled at a
point in time and which corresponds to the loading of goods or
their delivery, in accordance with the underlying contract.
The warranties offered to the buyers cover design or
manufacturing defects, which may appear as irregular or
excessive tire wear under normal conditions of use. These
warranties, which do not provide the customer with any
supplementary guarantee, apart from the fact that the tire is
exempt from defects, continue to be accounted for in
accordance with IAS 37 “Provisions, Contingent Liabilities, and
Contingent Assets”.
The Group agrees, under certain conditions, to give trade
concessions or to reimburse unsatisfied customers. Occasionally
and under special circumstances, it also grants the right to
return products already sold. This right gives rise to the
recognition of a liability and a reduction in income, as well as an
asset representing the Group’s right to recover the goods that
customers will return. In addition, the amount that the Group
effectively receives for the tires delivered, as well as the revenue
from sales recognized in the income statement, can vary as a
result of deferred rebates stipulated in contractual agreements
and/or at the start of marketing campaigns, which will be paid
to the customers at the end of the reference period and
depending on the achievement of qualitative or quantitative
objectives set for that period. Their value is determined using
the expected value method. The Group relies on the analysis of
historical data and its accumulated experience to estimate the
probable amount of rebates and discounts to be given to
customers. Income from ordinary activities is therefore
recognized taking into account the uncertainty surrounding the
different components of variable consideration and to the
extent that it is highly probable that the outcome of this
uncertainty will not give rise to a significant reduction in the
amount of sales already recognized, once the uncertainty is
resolved. The difference between the amounts invoiced to the
customers and the level of income recorded from ordinary
activities results in the recognition of a liability in respect of the
future reimbursement under “Other current liabilities” in the
consolidated statement of financial position.
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The other sales categories essentially comprise the management
of tires for commercial fleets and the supply of telematics
services, where the main objective is greater fuel economy and
fleet efficiency. The services supplied under these contracts
consist of a single performance obligation satisfied over time for
which the sales revenue is recognized according to the stage of
completion, measured on the basis of the work performed and
the costs incurred.
The Group may enter into multi-year agreements with
customers, which include a commitment regarding its capacity
to supply the products, in exchange for a specific amount of
consideration. This is to be paid in advance of fulfillment of the
obligations to supply the products, which will be spread over
the duration of the contract. As such, this commitment is
considered to be linked to the supply of the products and will
be recognized as revenue as and when the supply obligations
are fulfilled. When the payment is received, a contract liability is
recognized and split between the line items “Provisions and
other non-current liabilities” and “Provisions and other current
liabilities” in the consolidated statement of financial position,
depending on the date the performance obligations are fulfilled.
3.9 Cost of sales
Cost of sales for the Group’s manufacturing activities comprises
the costs of manufacturing products and the cost of goods
purchased for resale.
It includes the purchase cost of raw materials, production costs
directly related to the manufactured products and all production
overheads, based on the normal capacity of manufacturing
facilities.
Production overheads include depreciation of property, plant
and equipment, amortization of intangible assets relating to
production and write-downs of inventories.
Cost of sales also includes a relevant portion of general
overheads to the extent that they are directly attributable to
bringing the manufactured products to their present location
and condition.
For non-manufacturing activities, especially customer services,
cost of sales includes all the costs incurred to produce,
administer or execute a service delivered in the distribution
network. Cost of sales for these activities mainly comprises
employee benefits expense, depreciation of facilities and
equipment, energy costs and the cost of acquiring and
processing the data needed to produce the service.
3.10 Research and development expenses
Research costs cannot be capitalized. Development costs are capitalized as intangible assets when the conditions relating to the
commercial and technical feasibility of the project, the ability to allocate the costs reliably and the probability of generating future
economic benefits are fulfilled.
Development costs are reviewed annually in order to determine whether the criteria for recognition as intangible assets are met.
3.11 Segment operating income
Segment operating income measures the performance of the operating segments and is one of the Group’s management indicators.
3.12 Other operating income and expenses
“Other operating income and expenses” records items that are
not taken into account by management when measuring the
performance of the operating segments due to their nature or
their significant, unusual or abnormal characteristics. They
include, in particular, the costs related to the reorganization and
adaptation of activities and those related to major litigation
(and the adjustments in the corresponding provisions), as well
as impairment of goodwill and acquisition-related costs. Given
the recent major acquisitions made by the Group, the
amortization
of
trademarks
and
customer
relationships
recognized as part of a business combination is also recognized
in other operating income and expenses. They also include gains
and losses on disposals and changes in impairment of property,
plant and equipment and intangible assets, acquisition price
adjustments, as well as gains and losses related to changes in
post-employment benefits. They are detailed in note 9
“Other operating income and expenses”.
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3.13 Income tax
Current and deferred taxes, plus any withholding tax on
royalties and on distributions of retained earnings within the
Group, are recorded in the consolidated income statement
except if they relate to items recognized either in other
comprehensive income or directly in equity, in which case they
are also recognized, respectively, in other comprehensive
income or directly in equity.
Current tax is based on the results of Group companies and is
calculated according to local rules, including any adjustments to
tax payable in respect of previous years.
Deferred tax is recognized, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amount in the consolidated financial
statements, using enacted or substantially enacted tax rates that
are expected to prevail when the temporary differences reverse.
A deferred tax asset or liability is recognized on initial
recognition of transactions arising from business combinations
and impacting the accounting or taxable profit or loss.
Deferred tax assets are recognized to the extent that it is probable
that future taxable profit will be available against which the tax loss
carryforwards and the temporary differences can be offset.
Deferred tax is calculated on temporary differences arising from
investments in subsidiaries, joint ventures, and associates:
deferred tax assets are recognized if the reversal is under the
entity’s control and is also probable. Deferred tax liabilities are
recognized unless their reversal is controlled and not probable.
Tax positions are analyzed periodically and if any positions are
considered unlikely to be accepted by the tax authorities a
provision is booked for the most probable amount in order to
cover the risk. Assets/liabilities resulting from uncertain tax
treatments are included in current or deferred tax assets or
liabilities in the consolidated statement of financial position.
3.14 Business combinations and goodwill
When the Group obtains control of an entity, the business
combination is valued and accounted for by applying the
acquisition method. Goodwill is calculated at the acquisition
date as the difference between:
▶the fair value of the consideration transferred including, if
any, the fair value of any contingent consideration; and
▶the fair value at the acquisition date of the identifiable
acquired assets, the liabilities and contingent liabilities
assumed.
The valuation period for a business combination does not
exceed 12 months after the acquisition date.
Goodwill is allocated to cash-generating units (CGUs) or groups of
CGUs that are expected to benefit from the synergies of the
combination and that reflect the level at which the Group
manages goodwill. Goodwill is tested for impairment annually.
3.15 Intangible assets
Intangible assets are recognized at cost. The cost of an
intangible asset acquired as part of a business combination is its
fair value at the acquisition date.
Intangible assets with indefinite useful lives are not amortized
but are tested for impairment at least once a year.
Those with finite useful lives are amortized on a straight-line
basis over their estimated useful life:
▶software:
3-7 years
▶brands and trademarks:
5-20 years
▶customer relationships:
5-20 years
3.15.1 CO2 emission allowances
The Group participates in the European Union’s Emissions
Trading System. The emission allowances received or purchased
are recognized as an intangible asset at their price on the
transaction date. For emission allowances that are received
rather than purchased, a government grant is recognized in
liabilities for the same amount. The cost and liability
corresponding
to
actual
emissions
and
the
income
corresponding to the use of the government grant are
accounted for using the price on the grant date.
3.16 Property, plant and equipment (PP&E)
Property, plant and equipment are measured at cost less
accumulated depreciation and, when necessary, impairment.
The gross carrying amount includes the cost of acquisition or
production cost and other costs directly attributable to the
acquisition or the construction of the asset (including borrowing
costs). Investment grants are initially accounted for as deferred
income and are subsequently recognized as income over the
useful life of the related asset.
Repair and maintenance costs are expensed as incurred. Other
subsequent expenditures are included in the asset’s carrying
amount or recognized as a separate asset if the recognition
criteria are met.
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Property, plant and equipment are depreciated on a straight-line
basis, except land, which is not depreciated. Depreciation of
property, plant and equipment reflects the pattern in which the
asset’s future economic benefits are expected to be consumed.
Depreciation is allocated to cost of sales, sales and marketing
expenses, research and development expenses or general and
administrative expenses.
The following depreciation periods, based on the expected useful
lives of the respective assets, are applied throughout the Group:
▶buildings and general land and building
installations:
25 years
▶petrochemical equipment:
25 years
▶industrial and commercial equipment:
2-12 years
▶computer and telecommunication equipment:
5 years
▶vehicles:
5 years
▶other:
5-12 years
The useful lives of the assets and their respective residual values
are reviewed annually.
When assets are sold or otherwise disposed of, the difference
between the net proceeds and the net carrying amounts of the
assets is recognized in “Other operating income and expenses”.
3.16.1 Leases
A contract is or contains a lease if it conveys to the lessee in
return for a payment or series of payments the right to use an
asset for an agreed period of time. The Group assesses whether
a contract is or contains a lease on the inception of the lease,
which is the earlier of the date of the lease agreement and the
date of commitment by the parties to the principal provisions of
the lease.
Substantially all of the Group’s leases are leases where the
Group is the lessee. Leased assets are mainly real estate assets
(points of sale for the Group’s integrated distribution network,
sales and administrative offices), passenger cars and forklifts.
Lease liabilities
Lease liabilities correspond to the present value of future lease
payments, excluding variable lease payments that do not
depend on an index or a rate.
For contracts that include a lease component and non-lease
components (such as services), only the lease component is taken
into account in calculating the present value.
The interest rate implicit in the lease is used as the discount rate
if it can be readily determined. If the implicit rate cannot be
readily determined, each Group entity uses its incremental
borrowing rate reflecting its specific credit risk, the currency of
the lease and the weighted average maturity of the outstanding
lease liability.
Over the life of the contract, the interest expense increases the
lease liability while the lease payments reduce it.
The carrying amount of the lease liability and the corresponding
right-of-use asset is adjusted to reflect any change in the lease
term, any change in the assessment of an option to purchase the
underlying asset, any change in the amount that the lessee
expects to have to pay to the lessor under the residual value
guarantee or any change in future lease payments resulting from
a change in an index or a rate used to determine those payments.
Right-of-use assets
Right-of-use assets corresponding to leased property, plant and
equipment are initially measured at cost, corresponding to the
sum of the present value of the outstanding lease payments at
the commencement date. Any lease payments made at or
before the commencement date, any initial direct costs and an
estimate of costs to be incurred by the Group in dismantling or
restoring the underlying asset, are included in the value of the
right-of-use asset, less any lease incentives.
The right-of-use asset is depreciated over the shorter of the
lease term and the useful life of the leased asset if the transfer
of ownership of the leased asset is uncertain or is not provided
for in the contract.
Enforceable period
The enforceable period of a lease is determined by taking into
account all the economic facts and circumstances (such as
contractual terms and conditions for the optional periods
compared
with
market
rates,
significant
leasehold
improvements, costs relating to the termination of the lease,
such as negotiation costs, relocation costs, costs associated with
returning the underlying asset in a contractually specified
condition or to a contractually specified location), and
contractual options to extend or terminate the lease.
Consequently, for leases that are automatically renewable and
the 3/6/9-year commercial leases that are common in France,
the enforceable period can be longer than the period to the
contractual end date. This information is used to determine the
most economically relevant end date for the lease. For certain
categories of leased assets (mainly vehicles), the Group
considers that there is no reasonably certain extension option.
Consequently, the duration is selected to coincide with the
initial term of the lease. For real estate leases, the Group defines
the reasonable end date of the lease, based on the enforceable
period, in line with the asset’s expected period of use.
Accordingly, for leases with a residual term of more than ten
years, the first enforceable exit option is chosen unless specific
information and economic circumstances lead the Group to define
a longer period.
Exceptions
Leases with a term not exceeding 12 months or concerning
low‑value assets (mainly computers, printers and tools) are not
recognized in the consolidated statement of financial position.
The payments related to these leases are expensed on a
straight-line basis over the duration of the contracts. Variable
lease payments are expensed in the period in which the
triggering event or situation occurs.
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3.17 Impairment of non-financial assets
When there is any indication that the recoverable amount of an
asset (goodwill, intangible assets or property, plant and
equipment) may be lower than its carrying amount, the
recoverable amount of the asset is measured and if needed, an
impairment is recognized. Whether there is an indication of
impairment or not, an annual impairment test is performed for
goodwill, intangible assets with an indefinite useful life and
intangible assets not ready for use, by comparing their carrying
amount with their recoverable amount.
At individual asset level, indications of impairment generally
relate to a fall in market value, technical obsolescence or an
anticipated change of use. The recoverable amount is usually
based on the market value.
At Group level, non-financial assets (including rights-of-use
assets, note 3.16.1) are combined for impairment testing
purposes in the smallest identifiable group of assets that
generates cash flows that are largely independent of cash flows
from other assets or groups of assets (cash-generating
units – CGUs).
For the tire business, CGUs are based on industrial asset groups,
generally production plants, working together to manufacture and
provide product offerings that meet the needs of customers with
similar expectations in homogeneous markets or market segments.
CGUs related to non-tire businesses (Services and Solutions,
Experiences,
High-Technology
Materials
and
Distribution)
generally cover the scope of each of these activities.
CGUs to which goodwill has been allocated are tested annually
for impairment or more frequently if events or changes in
circumstances indicate a potential impairment loss. For the
purpose of impairment testing, goodwill is allocated to a CGU
or group of CGUs on the same basis as that used by the
Group’s management to monitor the performance of the
businesses and assess synergies deriving from business
combinations.
CGUs to which no goodwill is allocated are tested for
impairment only if there is an indication that they may be
impaired. In assessing whether there is any indication that
a CGU may be impaired, the Group has defined three indicators
for the tire business CGUs. They measure respectively the
trends (i) in the market served by the CGU, (ii) in financial
performance through the cost of sales margin and (iii) in the use
of the installed production capacity. For the non-tire business
CGUs, as well as for the distribution CGUs, the indicator used to
measure trends in financial performance serves as the triggering
indicator for an impairment test.
Recoverable amount is the higher of value in use and fair value
less costs of disposal.
For most CGUs, recoverable amount is based on value in use,
which is equal to estimated future cash flows calculated using the
weighted average cost of capital (WACC) as a discount rate.
Future cash flows are mainly based on the CGUs’ five-year cash
flow forecasts plus a terminal value, measured by discounting
projected cash flows using the WACC. The discount rate is based
on the cost of equity capital derived from the market-expected
return on the Company’s shares, the cost of debt and a risk
premium reflecting the risks associated with the countries where
the assets are located. The gearing and the beta are based on
data from comparable segments and take into account the
specificities of certain activities.
The recoverable amount of the distribution CGUs is measured at
fair value less costs of disposal. Since most of these assets are land
and buildings, external appraisals or other real estate valuation
techniques are applied to measure their fair value.
Any impairment loss is recognized first against goodwill, and
any remaining amount is allocated among the other
non‑current assets, proportionally to their net carrying amounts
at the closing date.
When the circumstances which previously caused non-financial
assets to be impaired no longer apply, the impairment losses are
reversed accordingly. However, goodwill impairment can never
be reversed.
Changes in impairment losses, including any reversals, are
recognized in “Other operating income and expenses”.
3.18 Non-derivative financial assets
3.18.1 Asset categories
The Group classifies and measures its debt instruments in the
following categories depending on their alignment with
“solely payment of principal and interest” (SPPI) criteria and
with its business model:
▶amortized cost: financial assets held to maturity in order to
collect repayments from principal and interest;
▶fair value through profit or loss: financial assets that do not
meet the criteria to be classified as amortized costs
(SPPI and HTC).
The Group measures all its unconsolidated equity investments at
their fair value. The Group chooses to use the irrevocable
option to record fair value adjustments in other comprehensive
income and the realized gains or losses on disposal are not
recycled in the income statement. The impairment losses
recognized on equity investments are not shown separately
from the other changes in fair value.
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3.18.2 Initial recognition and derecognition
Purchases and sales of non-derivative financial assets are recognized
on the trade-date, i.e., the date on which the Group commits to
purchase or sell the asset. Non-derivative financial assets are
initially recognized at fair value plus transaction costs for all
financial assets not carried at fair value through profit or loss.
Non-derivative financial assets are derecognized when the rights
to receive cash flows from the assets have expired or have been
transferred and the Group has transferred substantially all the
risks and rewards of ownership.
3.18.3 Measurement
Loans and receivables are measured at amortized cost using the
effective interest rate method.
Financial assets at fair value are valued by direct reference to a
price quoted in an active market or on the basis of market
assumptions (note 3.6 “Fair value of financial instruments”).
Gains and losses, realized or unrealized, arising from changes in
the fair value of financial assets at fair value through profit or
loss are recognized immediately in other operating income and
expenses.
Gains and losses, realized or unrealized, arising from changes
in the fair value of financial assets at fair value through
comprehensive income are recorded in other comprehensive
income and never impact the income statement.
3.18.4 Impairment
At each reporting date, the Group looks for any objective
indication of impairment of financial assets recorded at
amortized cost.
The model for calculating the expected credit loss is determined
on the basis of the counterparty rating and the associated
default probability. The impairment loss is calculated over a
period of 12 months given the non-deterioration of the credit
risk of the counterparties. It is recognized in the income
statement.
When the credit risk of a financial asset at amortized cost
increases significantly, the expected credit loss is calculated over
the life of the asset.
If there is no longer a reasonable expectation to recover the
value of a financial asset at amortized cost, the asset is
derecognized from the consolidated statement of financial
position and impacts the income statement.
3.19 Inventories
Inventories are carried at the lower of cost and net realizable
value.
The cost of raw materials, supplies and purchased finished
goods includes the purchase price and other costs directly
attributable to the acquisition. The cost of work in progress and
manufactured finished goods comprises direct labor costs, other
direct costs and production overheads based on the normal
capacity of production facilities. Borrowing costs are expensed
as incurred. The measurement of inventories and cost of sales
using the standard cost method put in place by the Group,
taking variances into account, is close to what would be
obtained using the actual cost method.
Net realizable value is the estimated selling price less the
estimated costs of completion and sale.
An impairment loss is recognized when net realizable value is
lower than cost and is reversed when it becomes apparent that
the circumstances which previously caused inventories to be
written down below cost no longer exist. Indications of
impairment include physical damage, obsolescence, slow‑moving
items, and market changes.
3.20 Trade receivables
Trade receivables are initially recognized at the amount
unconditionally due by the customer. The Group manages its
trade receivables in order to collect the contractual cash flows
and measures its receivables at amortized cost, according to the
effective interest rate method, after deduction of any
impairment losses.
When payment terms are less than one year, the initial fair value
and the subsequent amortized cost are equal to the nominal
amount to the extent that the receivable does not include a
significant financial component.
The Group applies the simplified approach provided under
IFRS 9, which consists in calculating the expected credit loss
over the life of the trade receivable. This model makes it
possible to determine a credit loss expected at maturity for all
trade receivables, as soon as they are recognized.
Expected credit losses are based on customer payment patterns
that have been observed over 36 months, and trade credit
losses historically recorded during this period.
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An impairment loss is also recognized whenever there are
objective indications that the Group will not be able to recover
all amounts due under the terms of the original transaction.
Bankruptcies, the use of legal procedures to protect against
creditors, cases of known insolvency or disappearance of the
debtor, late payments of more than six months, economic or
political risks in the country of residence of the debtor, as well
as the deterioration of the latter’s solvency are all indicators that
suggest that a trade receivable must be impaired. The amount
of the impairment loss is the difference between the carrying
amount of the asset and the present value of the estimated
future cash inflows at the initial effective interest rate. Before
recognizing an impairment loss, the quality of the guarantees
potentially obtained must be assessed, as well as the capacity to
implement them. The impairment loss is recognized in
“Sales and marketing expenses”.
When the receivable is irrecoverable, it is canceled by offsetting
it against the previously recognized impairment loss. Any
subsequent
cash
inflows
corresponding
to
previously
derecognized receivables are recorded by reducing “Sales and
marketing expenses” in the income statement.
3.21 Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand
deposits and other short-term highly liquid investments with
initial maturities not exceeding three months. Term deposits
maturing in more than three months, but with early withdrawal
terms of less than three months with guaranteed capital and
negligible withdrawal costs are also classified as cash and cash
equivalents.
3.22 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
ordinary shares are shown in equity as a deduction, net of tax,
from the proceeds.
Treasury shares are presented separately in reserves. The amount
of the consideration paid, which includes directly attributable
costs, net of any tax effects, is recognized as a deduction from
equity. When treasury shares are sold, the amount received is
recognized as an increase in equity and the resulting surplus or
deficit on the transaction is presented within retained earnings.
3.23 Non-derivative financial liabilities
Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for
at least 12 months after the consolidated statement of financial
position date.
Non-derivative financial liabilities are recognized initially at fair
value, net of transaction costs, and subsequently at amortized
cost. Any difference between the issue proceeds (net of
transaction costs) and the redemption value is recognized in the
income statement over the period of the borrowing using the
effective interest method.
The fair value of the liability portion of a convertible bond is
determined using a market interest rate for an equivalent
non‑convertible bond. This amount is recorded as a liability at
amortized cost. The remainder of the proceeds (after deducting
the debt component), representing the value of the conversion
option, is recognized:
▶in equity if the exercise of the option results in the delivery of
a fixed amount of shares - the initial value of the option is not
subsequently remeasured; or
▶as a financial liability at fair value through profit or loss in
cases where the conversion option does not meet the criteria
for recognition in equity.
To the extent that borrowings are hedged by qualifying fair
value hedges, the carrying amount of the hedged item is
adjusted for the change in fair value attributable to the risk
being hedged.
3.24 Employee benefit obligations
Wages, salaries, social security contributions, payments to defined
contribution plans, annual leave and sick leave payments,
bonuses and non-monetary benefits are recognized in the year
in which the associated services are rendered by the employees.
Where employee benefits, such as certain pension plans, other
post-employment benefits and other long-term benefits, are
provided by the Group, a liability or an asset and the related
costs are recognized.
3.24.1 Pension and other post-employment benefits
Post-employment benefits are benefits payable after employment
ceases. The Group provides retirement benefits for most of its
employees, either directly or by contributing to independently
administered funds. The benefits provided by the Group vary
according to the legal, tax and economic situation in each
country and are usually based on one or more factors such as
employees’ compensation, age and years of service. The
obligations relate both to current retirees and to the entitlements
of future retirees.
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The Group provides post-employment benefits under defined
contribution plans and defined benefit plans.
In the case of defined contribution plans, the Group pays fixed
contributions to fund managers or insurance companies. Once
the contributions have been paid, the Group has no legal or
constructive obligation to make further contributions if the fund
does not hold sufficient assets to pay the benefits expected by
the beneficiaries.
The regular contributions are recognized as an expense for the
year in which they are due and, as such, are included in cost of
sales, sales and marketing expenses, research and development
expenses or general and administrative expenses.
Group
management
policies
regarding
post-employment
benefits have led to the transformation of defined benefit plans
into defined contribution benefit plans since the early 2000s.
Nevertheless, a significant portion of the post-employment
benefit plans provided by the Group are still defined benefit
plans. They are either externally funded plans (mainly pension
plans), for which the plan assets are held separately in
independently administered funds, or unfunded plans such as
healthcare plans and end-of-service benefit plans.
Post-employment benefit obligations, and the related current
service cost, are measured using the projected unit credit method.
A defined benefit plan is a plan that defines an amount of
benefits that the Group is committed to pay to current and
former employees.
All defined benefit plans are subject to actuarial valuations
carried out annually for the largest plans and on a regular basis
for other plans. These actuarial valuations are carried out with
the help of independent actuaries. Actuarial assumptions,
primarily discount rates, projected salary increase rates, inflation
rates and expected growth in healthcare costs are incorporated
into the actuarial valuations and reviewed annually.
The liabilities or assets recognized in the consolidated statement
of financial position in respect of defined benefit plans
correspond to the present value of the defined benefit
obligation at the reporting date, less the fair value of plan
assets. They take into account any unrecognized assets not
available in the form of refunds or a reduction in future
contributions.
The present value of the defined benefit obligation corresponds
to the estimated future cash outflows, calculated using a
discount rate established by reference to a market rate based on
interest rates of high-quality corporate bonds that have
maturities
approximating
the
duration
of
the
related
post‑employment benefit obligation.
A net asset is recognized only to the extent that it represents a
future economic benefit that is actually available to the Group
in the form of refunds from the plan or reductions in future
contributions.
When a defined benefit plan is subject to a minimum funding
requirement (MFR), the Group determines whether paying these
contributions may give rise to a surplus in that defined benefit
plan. To the extent that the surplus in the plan exceeds the
available economic benefits, the Group immediately recognizes
a decrease in the defined benefit asset or an increase in the
defined benefit liability.
Actuarial gains and losses arising from experience adjustments
and changes in actuarial assumptions are recognized in other
comprehensive income in the period in which they arise.
Past service costs may arise when new defined benefit plans are
set up, when changes to benefits payable under an existing
defined benefit plan are introduced or when curtailments occur.
They are recognized immediately in the income statement.
The Group’s net benefit plan cost recognized in the income
statement includes the current service cost for the period,
curtailment and settlement gains and losses, past service cost,
as well as actuarial gains and losses arising under other
long‑term benefit plans. Net interest on the net defined benefit
liability (asset) is recognized outside operating income.
3.24.2 Share-based payments
Employee stock option plans
Benefits related to stock options, which may be granted to
some Group employees, are measured at the grant date using
the binomial option pricing model.
The grant date is the date when the Managing Chairman
decides on the list of plan beneficiaries and the number of
options granted to them.
The binomial model is based on the spot price for Company
shares, the exercise price, the historical volatility of the shares
(over a period equal to the expected lifetime of the option), a
risk-free interest rate (zero coupon government bonds with a
maturity equal to the expected lifetime of the option), and a
dividend stream based on market expectations.
Benefits are spread over the period during which the services
are rendered. They are recognized in “Segment other income
and expenses”.
Share grants and performance share plans
The Group may adopt plans to grant free shares of the
Company to certain employees or to its Managers.
The grant date is the date when the Managing Chairman
decides on the list of plan beneficiaries and the number of
performance shares granted to them.
The fair value of the performance shares granted corresponds to
the Company’s share price on the grant date less:
▶the present value of dividends that will not be received by the
grantees during the vesting period;
▶the value of the stock market performance condition on the
grant date, which depends on the probability of the condition
being fulfilled.
The number of shares that will ultimately be issued at the end
of the vesting period depends on the extent to which the
Group’s performance and service conditions are met.
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The total benefit cost is based on the fair value of the performance
shares and the estimated number of shares that will ultimately
be issued. This cost is recognized over the vesting period and is
recognized in “Segment other income and expenses”.
Employee share ownership plan
The Group may offer most of its employees the opportunity to
participate in a share ownership plan allowing them to purchase
Company shares.
These shares, which are subject to certain restrictions relating to
their sale or transfer, may be purchased by the employees at a
subscription price based on the Michelin share price, less a
discount. The benefit granted to the employees equals the
difference between the fair value of the shares acquired (after
deducting the five-year lock-up cost) and the price paid by the
employees, multiplied by the number of shares acquired.
The benefit granted to the employees is immediately expensed by
the Group, as no vesting period applies, and is recognized under
“Employee benefit costs – share-based payments”, within
“Segment other income and expenses”.
3.25 Provisions
Provisions are recognized when a legal or constructive obligation has been incurred that will probably lead to an outflow of resources
that can be reasonably estimated.
Provisions for reorganizations and adaptation of activities are recognized when the Group has a detailed formal plan that has been
announced.
Provisions are recorded at the net present value of the estimated cash outflows.
3.26 Trade payables
Trade payables are recognized initially at fair value and are
subsequently measured at amortized cost using the effective
interest method.
The Group has put in place paying agent agreements with
several financial institutions. Under these agreements, the
financial institution acts as a paying agent with respect to
invoices due to suppliers who have entered into a bilateral
agreement with the financial institution in order to be in
position to factor their trade receivables from the Group.
The agreements’ classification in trade payables is supported by a
multi-criteria analysis. In particular:
▶the factoring transaction is completely independent from the
commercial relationship;
▶the supplier has full discretion to decide - on a case-by-case
basis - whether to factor its receivables;
▶the date of payment to the supplier or the bank, whichever is
the case, corresponds to the payment date shown on the
invoice;
▶the Group is not affected by the factoring cost because the
discount is borne by the supplier and is paid directly to the
bank.
Trade payables concerned by the program are presented
separately in the consolidated statement of financial position
under “Trade payables covered by reverse factoring contracts”.
In the consolidated statement of cash flows, these transactions
are included in operating or investing activities (note 31 “Notes
to the statement of cash flows”).
NOTE 4 CHANGES IN THE SCOPE OF CONSOLIDATION
4.1 Operations in 2021
4.1.1 Solesis, Inc.
On May 28, 2021, Michelin and Altaris announced the signing
of a partnership agreement whereby Altaris would become a
shareholder of Solesis, a Michelin subsidiary specializing in
biomaterials for the healthcare industry. The partnership
agreement has three components:
▶acquisition of a 51% stake in Solesis by Altaris;
▶setup of a governance system that will enable the two Solesis
shareholders to support the business’ development and
expansion;
▶a research and development partnership between Michelin
and Solesis to continue co-developing biopolymers focused
on the intersection of polymer science and biology.
As a result of this agreement, the Solesis subsidiaries that were
previously fully consolidated by Michelin have been accounted
for by the equity method with effect from May 28, 2021.
The consideration received for the sale of 51% of Solesis’ net
assets, based on an enterprise value of $475 million, is
presented as follows in the transaction date consolidated
statement of financial position:
▶49% retained interest recognized under “Investments in
equity-accounted companies” for an amount of €146 million.
The fair value measurement of the assets acquired and
liabilities assumed by the joint venture is currently in progress
and will be completed within 12 months of the date of
signature of the partnership agreement-; and
▶preferred non-voting shares, considered in substance as a
financial asset measured at fair value through profit or loss,
presented under “Non-current financial assets and other
non‑current assets” for €229 million.
The €114 million gain realized on the disposal is presented under
“Other operating income and expenses” for 2021 (note 9).
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The transaction has had no effect on the Group’s cash position
as the cash contributed by Altaris has been retained in the
accounts of the Solesis joint venture to fund its growth. For this
reason, the transaction qualifies as a tax-exempt reorganization
for taxes payable and under US tax rules. However, it led to the
remeasurement of Solesis’ carrying amount in the Group’s
financial statements, creating a taxable temporary difference.
The corresponding deferred tax liability recognized by the
Group at December 31, 2021 amounted to €78 million.
The effects of the transaction on the transaction-date consolidated statement of financial position are as follows:
(in € millions)
At the transaction date
Investments in equity-accounted companies
146
Other non-current financial assets and other non-current assets
229
Net assets sold
(261)
DISPOSAL GAIN
114
Details of the net assets sold are presented in the table below:
(in € millions)
Net assets sold
Goodwill
(53)
Intangible assets
(200)
Property, plant and equipment
(42)
Non-current assets
(295)
Inventories
(11)
Trade receivables
(14)
Cash and cash equivalents
(1)
Current assets
(26)
TOTAL ASSETS
(321)
Net assets
(261)
Non-current financial liabilities
-
Non-current lease liabilities
(3)
Deferred tax liabilities
(48)
Non-current liabilities
(51)
Trade payables
(3)
Provisions and other current liabilities
(6)
Current liabilities
(9)
TOTAL EQUITY AND LIABILITIES
(321)
Additional information about the financial position of Solesis is provided in note 17.3.
4.1.2 Allopneus
On July 30, 2021, the Group signed an agreement to acquire an additional 60% of Allopneus in order to acquire exclusive control of
the company. Allopneus is an online distributor of tires, rims and accessories to both retail and trade customers.
After obtaining antitrust clearance, the transaction was completed on December 30, 2021.
The net cash outflow generated by the acquisition of 60% of Allopneus shares in 2021 was as follows:
(in € millions)
At acquisition date
Fair value of consideration transferred
(47)
Net cash acquired
3
NET CASH OUTFLOW FROM THE ACQUISITION
(44)
Identification and measurement at their acquisition-date fair value of the identifiable assets acquired and liabilities assumed will begin
in the first half of 2022 and will be completed within 12 months from the acquisition date, i.e., no later than December 30, 2022.
The price paid for the acquired 60% interest valued the company’s previously held 40% interest at €31 million. Remeasurement of the
40% interest on this basis led to the recognition of a €13 million capital gain, recorded in the line ”Share of profit/(loss) from
equity‑accounted entities”.
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The provisional purchase price allocation resulted in the recognition of goodwill in the amount of €65 million at December 31, 2021,
as shown in the following table:
(in € millions)
At the acquisition date
Investment in an associate at market value (40%)
31
Fair value of consideration transferred (60%)
47
Less: consolidated net assets (100%)
(13)
PROVISIONAL GOODWILL
65
NOTE 5 SEGMENT REPORTING
Segment information is presented according to the following
three operating segments:
▶automotive and related distribution;
▶road transportation and related distribution;
▶specialty businesses and related distribution.
The Specialty businesses include the Mining, Off-the-road,
Two‑wheel and Aircraft tire activities, as well as the Conveyor
Belt and High-Technology Materials activities. The Services &
Solutions businesses are included for the most part in the
“Road transportation and related distribution” segment.
Operating segment performance is measured primarily on the
basis of sales and segment operating income, calculated
according to the same measurement principles used in the
consolidated income statement.
Segment assets consist of goodwill, intangible assets, property,
plant and equipment, right-of-use assets, trade receivables and
finished product inventories. Corporate intangible assets and
property, plant and equipment are allocated to each segment in
proportion to the amount of their directly attributed assets. The
amounts provided to the Group’s management in respect of
operating segment assets are measured in a manner consistent
with the consolidated financial statements. Capital expenditure
consists of additions of property, plant and equipment and
intangible assets.
No operating liabilities are allocated to the segments in the
internal report provided to the Group’s management.
Segment information is as follows:
(in € millions)
2021
2020
Automotive
and related
distribution
Road
transportation
and related
distribution
Specialty
businesses
and related
distribution
Total
Automotive
and related
distribution
Road
transportation
and related
distribution
Specialty
businesses
and related
distribution
Total
PROFIT AND LOSS
INFORMATION
Sales
11,998
6,233
5,564
23,795
10,103
5,373
4,993
20,469
Segment operating
income
1,643
599
724
2,966
839
302
737
1,878
As a percentage of sales
13.7%
9.6%
13.0%
12.5%
8.3%
5.6%
14.8%
9.2%
SEGMENT ASSETS
Goodwill, PP&E,
intangible assets
and right-of-use assets
7,625
3,636
5,101
16,362
7,294
3,680
5,046
16,020
Finished product
inventories
1,408
948
837
3,193
1,042
752
688
2,482
Trade receivables
1,605
1,130
841
3,576
1,359
984
675
3,018
Segment assets
10,638
5,714
6,779
23,131
9,695
5,416
6,409
21,520
Other information
Capital expenditure
889
429
387
1,705
628
339
254
1,221
The Group derives 95.6% of its revenue (2020: 95.3%) from
tire sales and sales related to the supply of tires to the original
equipment or replacement market, plus sales of Fenner
conveyor belts. These sales totaled €22,744 million in 2021
(2020: €19,497 million). Sales are recognized at the exact point
in time when control of the goods is transferred to the
customer.
Revenue deriving from commercial fleet tire management
contracts and from contracts for the supply of telematics
services, each of which being a performance obligation satisfied
over time, was recognized in an amount of €621 million in 2021
(2020: €560 million), representing 2.6% of total sales (2020: 2.7%).
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Segment reporting assets are reconciled to total Group assets as follows:
(in € millions)
December 31, 2021
December 31, 2020
Total segment assets
23,131
21,520
Non-current financial assets and other non-current assets
1,404
865
Investments in equity-accounted companies
1,103
941
Deferred tax assets
751
729
Other net inventories (raw materials and supplies, work in progress)
2,079
1,477
Current financial assets
713
429
Other current assets
1,038
929
Cash and cash equivalents
4,482
4,747
TOTAL GROUP ASSETS
34,701
31,637
Information by region breaks down as follows:
(in € millions)
2021
2020
Europe
North
America
Other
Total
Europe
North
America
Other
Total
Sales
9,014
8,389
6,392
23,795
7,640
7,102
5,727
20,469
Goodwill, PP&E, intangible assets
and right-of-use assets
6,723
5,042
4,597
16,362
6,572
4,997
4,451
16,020
Capital expenditure
875
464
366
1,705
561
284
376
1,221
Europe includes the Western and Eastern European countries.
North America includes Mexico. Asian, South American,
Middle‑Eastern, Oceanic and African countries are included
in Other.
The Group sales information is based on the location of the
customer.
Sales generated in France amounted to €2,066 million in 2021
(2020: €1,762 million). Goodwill, intangible assets and
PP&E located in France amounted to €2,545 million in 2021
(2020: €2,418 million).
Approximately 80% of North American sales were generated in
the United States in 2020 and 2021.
No single external customer accounted for 10% or more of the
Group’s sales in 2021 and 2020.
NOTE 6 EXPENSES BY NATURE
The following segment operating costs are allocated by function to the appropriate expense headings in the income statement:
(in € millions)
2021
2020
Raw materials and consumables used and changes in finished product inventories
(8,212)
(6,923)
Employee benefit costs
(6,430)
(5,970)
Transportation of goods
(1,685)
(1,095)
Depreciation and amortization(1)
(1,734)
(1,753)
Other expenses
(2,768)
(2,850)
EXPENSES BY NATURE
(20,829)
(18,591)
(1) Excluding amortization of trademarks and customer relationships acquired through business combinations.
NOTE 7 EMPLOYEE BENEFIT COSTS
Employee benefit costs are allocated by function to the appropriate expense headings in the income statement:
(in € millions)
2021
2020
Wages and salaries
(5,140)
(4,743)
Payroll taxes
(957)
(893)
Defined benefit plan costs (note 27.1)
(109)
(129)
Defined contribution plan costs (note 27.2)
(218)
(217)
Share-based payments – current service cost (note 25)
(21)
(14)
EMPLOYEE BENEFIT COSTS(1)
(6,445)
(5,996)
(1) Of which €6,430 million is recognized in “Segment operating income” (note 6) and €15 million in “Other operating income and expenses” (note 9).
The average number of employees on payroll in 2021 was 124,037 (2020: 124,533).
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NOTE 8 SEGMENT OTHER INCOME AND EXPENSES
Segment other income and expenses are recognized in the income statement as follows:
(in € millions)
2021
2020
Employee share ownership plan cost
-
(14)
Share-based payments – current service cost (note 28.2)
(21)
(17)
Covid-19 health and safety costs
(26)
(96)
Other operating income/(expenses)
(20)
-
SEGMENT OTHER INCOME AND EXPENSES
(67)
(127)
NOTE 9 OTHER OPERATING INCOME AND EXPENSES
Other operating income and expenses are detailed in the table below:
(in € millions)
2021
2020
Amortization of acquired trademarks and customer relationships (note 9.1)
(78)
(87)
Reorganization and adaptation of activities (note 9.2)
(86)
(59)
Impairment of non-current assets (note 9.3)
(116)
(285)
Employee benefit obligations (note 9.4)
(15)
(26)
Other (note 9.5)
106
(18)
OTHER OPERATING INCOME AND EXPENSES
(189)
(475)
9.1 Amortization of acquired trademarks and customer relationships
Amortization of intangible assets recognized in the course of a business combination amounts to €78 million in 2021 (2020: €87 million):
▶€25 million related to amortization of brands or trademarks (2020: €26 million);
▶€53 million to amortization of customer relationships (2020: €61 million).
9.2 Reorganizations and adaptation of activities
9.2.1 Year ended December 31, 2021
As part of the initiatives to improve the competitiveness of its
manufacturing and office-based activities, on January 6, 2021
the Group announced the launch of a reinforced simplification
and competitiveness plan to significantly improve the agility and
overall performance of its operations in France. Pursuant to the
framework agreement, a mutually agreed severance package
(Collective Settlement Agreement or “RCC”) will be negotiated
in three phases between 2021 and 2023 to implement voluntary
early retirement and voluntary outplacement measures.
The first phase signed in June led to the recognition of an
€89 million provision for the implementation of support
measures (note 29), and reversal of the €86 million provision for
pension and other defined benefit obligations recognized in prior
periods for the employees concerned (notes 27.1.1 and 27.1.2).
A provision of €100 million has been recognized for the
implementation of support measures in the second phase
(note 29) and an €82 million provision for pension and other
defined benefit obligations has been reversed (notes 27.1.1
and 27.1.2).
The net expense covered by provisions booked in 2021 for the
first two phases of the RCC agreement amounts to €21 million.
The balance is explained by various provisions set aside to
further improve the Group’s industrial and service competitiveness
in a number of countries, including Germany and Italy.
9.2.2 Year ended December 31, 2020
Reorganization expense of €59 million recorded during the year included the cost of reorganization plans that were individually not
material and adjustments to existing provisions.
9.3 Impairment of non-current assets
9.3.1 Year ended December 31, 2021
This amount includes impairment losses:
▶on property, plant and equipment and right-of-use assets for €75 million (of which €63 million on plant and equipment); and
▶on intangible assets for €41 million.
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9.3.2 Year ended December 31, 2020
The Group has a plant in India that primarily manufactures
premium truck tires, sold for the most part in the domestic
market. In light of this market’s growing structural difficulties,
the Group had revised its growth projections for the premium
segment. Various initiatives to improve the plant’s margins
failed to deliver the hoped-for results and the carrying amount
of this industrial asset was therefore written down in full,
representing an impairment loss of €164 million.
In addition, impairment losses were recorded on the intangible
assets of the Tablet online hotel reservation agency for
€37 million and the intangible assets of Nextraq for €19 million.
9.4 Employee benefit obligations
No material events occurred in 2021 or 2020.
9.5 Other
9.5.1 Year ended December 31, 2021
The gain resulting from the sale of part of Solesis (note 4.1.1) is recognized under “Other” for €114 million.
9.5.2 Year ended December 31, 2020
No material events occurred in 2020.
NOTE 10 COST OF NET DEBT AND OTHER FINANCIAL INCOME AND EXPENSES
Cost of net debt and other financial income and expenses are broken down in the table below:
(in € millions)
2021
2020
Interest expense
(176)
(199)
Interest expense on lease liabilities
(30)
(38)
Interest income
(11)
-
Interest rate derivatives
32
(7)
Fees on credit lines
(9)
(5)
Capitalized borrowing costs
2
7
COST OF NET DEBT
(192)
(242)
Net income from financial assets (other than cash and cash equivalents
and cash management financial assets)
7
18
Currency remeasurement (including currency derivatives)
(13)
(19)
Other
2
(13)
OTHER FINANCIAL INCOME AND EXPENSES
(4)
(14)
10.1 Derivatives not accounted for using hedge accounting
As described in the financial risk management policy, the
Group’s financing activities are mostly centralized (note 33.1.2
“Liquidity risk”) and the interest rate risk is managed through
the use of “plain vanilla” derivative instruments (note 33.1.4
“Interest rate risk”). As a consequence:
▶most borrowings are denominated in euros (note 26
“Financial liabilities”);
▶some of these borrowings are subsequently swapped into
foreign currencies to finance the foreign subsidiaries; and
▶derivatives are purchased to manage the interest rate risk in
these currencies (note 16 “Derivative instruments”).
This process is described in the summary table in note 33.2.3
“Interest rate risk”.
Although these transactions provide effective economic hedges,
they do not qualify for hedge accounting under IFRS and
therefore they cannot be recognized as cash flow hedges as
described in note 3.5 “Hedging”. Fluctuations in the derivatives’
fair values are therefore accounted for in the income
statement. The increase in fair value during the year amounted
to €32 million (2020: decrease of €7 million) and is included in
“Cost of net debt” under “Interest rate derivatives”.
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10.2 Ineffective hedges
The effectiveness of the hedge is determined at the beginning
of the hedging relationship and through periodic prospective
effectiveness assessments to ensure that an economic
relationship exists between the hedged item and the hedging
instrument. A hedging relationship may become ineffective if
the timing of the planned transaction changes from the original
estimate. This ineffectiveness is not material.
NOTE 11 INCOME TAX
11.1 Income tax expense
(in € millions)
2021
2020
Current tax expense (note 18.2)
(629)
(351)
Deferred tax benefit/(expense) (note 18.1)
3
(3)
INCOME TAX
(626)
(354)
Current tax includes €15 million of withholding tax on royalties and on retained earnings distributed between Group companies
(2020: €37 million).
The Group’s tax proof is presented in the table below:
(in € millions)
2021
2020
Income before taxes
2,471
979
Tax calculated using domestic tax rates applicable to income in the respective countries
(537)
(229)
Tax effect of:
▶untaxed transactions
(1)
(24)
▶deferred tax assets not recognized during the period
(26)
(115)
▶net change in unrecognized deferred tax assets
46
41
▶changes in tax rates
3
14
▶taxes with no tax base (tax credits, withholding tax, etc.)
(33)
(34)
▶other items
(78)
(7)
INCOME TAX
(626)
(354)
The Group has operations in various countries that have
different tax laws and rates. The weighted average domestic tax
rate of Group companies may therefore vary from year to year
depending on the relative size of taxable incomes.
The difference between the Group’s effective and theoretical
tax rates is mainly due to the deferred tax recognized on the
Solesis transaction for €78 million, which is included in
“Other items”. Other differences concern unrecognized
deferred tax assets, withholding taxes, tax credits and other
taxes not assessed on income.
The utilization of deferred tax assets is periodically reviewed at
the tax entity level and may lead to the recognition of previously
unrecognized deferred tax assets.
11.2 Tax audits in Germany
Following a tax audit covering the years 2005 to 2009, a
German subsidiary was notified in 2018 of a €382 million
reassessment of its corporate income tax base determined by
estimating its taxable income for the audited period by reference
to the Group’s average profit margin. The reassessment includes
an amount of €298 million corresponding to the effects on the
subsidiary of the Group’s transfer pricing policy, which was
challenged by the tax administration.
On July 17, 2018, a procedure was initiated with the tax
authorities to suspend payment of the tax deficiency and late
interest ; as a result of this application, the payments made
were not material. In addition, an appeal was lodged with a
higher authority challenging the methodology used by the tax
authorities and based on the Group’s average profit margin.
On December 16, 2019, the Group filed a Mutual Agreement
Procedure (MAP) under the EU Arbitration Convention and the
respective Double Tax Treaties, for the total reassessment
amounting to €382 million.
In November 2020, the reassessment for the period 2005-2009
was revised downwards to €96 million from €382 million
previously.
In 2021, while maintening its appeal concerning the 2005‑2009
reassessments, the Group decided to settle the tax claimed on
the revised €96 million reassessment in order to avoid the
accrual of further late interest.
In addition, a second tax audit covering the years 2010 to 2014
began in 2016.
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In 2021, an agreement was reached with the German tax
authorities on the main proposed reassessments. The Group has
accepted a €31 million reassessment of the tax base for the
period 2005 to 2009 and a €58 million reassessment of the tax
base for the period 2010 to 2014. The reassessments are
covered by a provision at December 31, 2021.
However, the German subsidiary continues to challenge certain
reassessments proposed by the local tax authorities that do not
relate to transfer pricing policy. The tax base reassessments in
these cases amount to €45 million in tax base and are covered
by a provision at December 31, 2021.
NOTE 12 EARNINGS PER SHARE
Basic earnings per share are calculated by dividing income
attributable to the shareholders of the Company by the
weighted average number of shares outstanding during the
year, excluding shares bought back by the Group and held as
treasury shares.
Diluted earnings per share are calculated by adjusting the
weighted average number of shares outstanding to assume
conversion of all dilutive potential shares. At December 31, 2021,
the Company had only one type of dilutive potential shares:
performance shares (note 28.2 “Performance share plans”). The
last stock option plan expired on June 30, 2021, and no stock
options were outstanding at the end of 2021.
No share transactions affecting the weighted average number
of shares used to calculate basic earnings per share and diluted
earnings per share occurred after the end of the 2021 reporting
period.
2021
2020
Net income (in € millions), excluding non-controlling interests
1,844
632
▶Less, estimated General Partners’ profit shares
(5)
(4)
Net income attributable to the shareholders of the Company
used to calculate basic earnings per share
1,839
628
Weighted average number of shares outstanding (thousands of shares)
used to calculate basic earnings per share
178,362
178,310
▶Plus, adjustment for stock option plans
-
12
▶Plus, adjustment for performance shares
1,218
848
Weighted average number of shares used to calculate diluted earnings per share
179,580
179,170
EARNINGS PER SHARE (in €)
▶Basic
10.31
3.52
▶Diluted
10.24
3.51
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NOTE 13 GOODWILL AND INTANGIBLE ASSETS
Changes in goodwill and intangible assets are as follows:
(in € millions)
Goodwill
Intangible assets
Total
Gross carrying amounts at January 1, 2020
2,448
4,097
6,545
Translation adjustments
(242)
(201)
(443)
Additions (including new emission allowances: €19 million)
-
200
200
Disposals
-
(55)
(55)
Change in scope of consolidation
19
-
19
Transfers and other
-
(23)
(23)
Gross carrying amounts at December 31, 2020
2,225
4,018
6,243
Translation adjustments
126
153
279
Additions (including new emission allowances: €30 million)
-
240
240
Disposals
-
(58)
(58)
Change in scope of consolidation
42
(236)
(194)
Transfers and other
-
8
8
Gross carrying amounts at December 31, 2021
2,393
4,125
6,518
Amortization and impairment at January 1, 2020
(60)
(1,817)
(1,877)
Translation adjustments
5
77
82
Amortization
-
(265)
(265)
Net impairment
(33)
(47)
(80)
Disposals
-
35
35
Change in scope of consolidation
-
-
-
Transfers and other
(1)
(21)
(22)
Amortization and impairment at December 31, 2020
(89)
(2,038)
(2,127)
Translation adjustments
(5)
(51)
(56)
Amortization
-
(268)
(268)
Net impairment
(14)
(27)
(41)
Disposals
-
36
36
Change in scope of consolidation
-
36
36
Transfers and other
1
(2)
(1)
Amortization and impairment at December 31, 2021
(107)
(2,314)
(2,421)
NET CARRYING AMOUNTS AT DECEMBER 31, 2021
2,286
1,811
4,097
Net carrying amounts at December 31, 2020
2,136
1,980
4,116
13.1 Goodwill
At December 31, 2021, goodwill allocated to the CGUs or groups of CGUs is as follows:
(in € millions)
December 31, 2021
December 31, 2020
Passenger car tires – global brands CGU group
367
358
Passenger car tires – regional brands CGU
162
150
Light truck and Truck tires CGU group
587
573
Mining CGU group
260
241
Two-wheel tires CGU
18
18
Off-the-road tires CGU
690
637
High-Tech Materials CGU group
137
159
Allopneus (note 4.1.2)
65
-
GOODWILL
2,286
2,136
To take into account the uncertainty surrounding the pandemic’s overall impact on global economic activity (duration and severity of
the global recession), the Group considered a scenario that modeled the projected change in global gross domestic product (GDP). The
resulting future cash flow estimates were used to calculate the value in use of the different CGUs and groups of CGUs.
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Goodwill has been tested for impairment using the following
two main assumptions:
▶the terminal value takes into account an annual growth rate
that depends on the type of business and the countries
where the assets are located;
▶the CGUs’ future cash flows are discounted using the after-tax
weighted average cost of capital (WACC) applied to after-tax
cash flows. They are determined by geographical region taking
into account the features of the business. The slight increase
in interest rates being compensated by the volatility in market
premiums over the period, the weighted average costs of
capital (WACC) used for the tests at December 31, 2021
were stable compared with December 31, 2020.
After-tax discount rates and perpetual growth rates used in 2021 for terminal value calculations are presented in the table below:
(%)
WACC
Perpetual growth rate
Passenger car tires – global brands CGU group
7.8
1.5
Passenger car tires – regional brands CGU
7.6
1.4
Light truck and Truck tires CGU group
8.0
1.1
Mining CGU group
9.6
1.5
Two-wheel tires CGU
7.9
1.4
Off-the-road tires CGU
7.6
1.8
High-Tech Materials CGU group
8.6
2.5
A 50-basis point increase in WACC combined with a 100-basis
point decrease in the perpetual growth rate applied to the
groups of CGUs would not lead to the recognition of any
impairment.
Projected future cash flows used for impairment testing of fixed
assets include best estimates of investments to be made to fulfill
the Group’s 2030 energy transition ambitions (see note 2.6
Climate risk).
To take into account the effect of applying IFRS 16, right-of-use
assets have been included in the assets to be tested, the
corresponding lease liabilities have been deducted from the
value of the CGUs concerned and values in use include the lease
payments determined previously, before IFRS 16 was applied.
This pragmatic approach does not preclude other approaches to
this subject that may be implemented in the future.
13.2 Intangible assets
In 2021, additions to intangible assets, amounted to €240 million (2020: €200 million), breaking down as follows:
▶software: €192 million;
▶CO2 emission allowances: €30 million;
▶other: €18 million.
13.2.1 Software
The net carrying amount of software at December 31, 2021 was €671 million (2020: €645 million). Software is initially recognized at
cost, including the cost of acquisition or production and other costs directly attributable to the acquisition or production of the
software.
13.2.2 Brands and trademarks
At December 31, 2021, the net carrying amount of brands and
trademarks in the consolidated statement of financial position
was €324 million (2020: €363 million), of which €7 million
related to brands and trademarks with indefinite useful lives.
These amounts correspond mainly to the value of brands and
trademarks recognized as part of business combinations.
13.2.3 Customer relationships
At December 31, 2021, the net carrying amount of customer
relationships in the consolidated statement of financial position
was €680 million (2020: €826 million). These amounts
correspond primarily to the value of customer lists recognized in
connection with business combinations (mainly Fenner and
Camso). The sharp decrease for the year is mainly due to the
Solesis transaction (note 4.1.1).
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13.2.4 CO2 emission allowances
Emission allowances at December 31, 2021 totaled 2.3 million
tons (2020: 2.7 million tons) and were carried in the
consolidated statement of financial position for an amount of
€59 million (2020: €44 million). The liability corresponding to
actual emissions in 2021 amounts to 0.7 million tons
(2020: 0.7 million tons) representing a value of €22 million
(2020: €13 million). It will be offset by the delivery of the
acquired allowances.
13.2.5 Development costs
In 2020 and 2021, no development costs were capitalized since
the criteria for recognition as intangible assets were not met. To
be recognized as an asset, the development costs incurred for a
new product or a significant product renewal project must
fulfill six criteria. One of these criteria requires the entity to
demonstrate the existence of a market for the output of the
intangible asset. The existence of a market is demonstrated only
when the Group has obtained OEM approval and when the
margin generated by the purchase volumes proposed by the
manufacturers is in line with Group objectives. In practice, the
corresponding development costs are incurred at a stage of the
project which is prior to OEM approval.
NOTE 14 PROPERTY, PLANT AND EQUIPMENT AND RIGHT-OF-USE ASSETS
14.1 Property, plant and equipment
Changes in property, plant and equipment are as follows:
(in € millions)
Land and
buildings
Plant and
industrial
equipment
Other
equipment
Total
Gross carrying amounts at January 1, 2020
7,007
21,097
1,543
29,647
Translation adjustments
(360)
(1,181)
(84)
(1,625)
Acquisitions
135
817
89
1,041
Disposals
(106)
(501)
(70)
(677)
Change in scope of consolidation
(2)
31
2
31
Transfers and other
32
(26)
(14)
(8)
Gross carrying amounts at December 31, 2020
6,706
20,237
1,466
28,409
Translation adjustments
211
737
41
989
Acquisitions
263
1,148
83
1,494
Disposals
(70)
(678)
(48)
(796)
Change in scope of consolidation
(29)
(12)
-
(41)
Transfers and other
(14)
7
(5)
(12)
Gross carrying amounts at December 31, 2021
7,067
21,439
1,537
30,043
Depreciation and impairment at January 1, 2020
(3,122)
(13,426)
(1,057)
(17,605)
Translation adjustments
150
728
57
935
Depreciation
(191)
(1,074)
(81)
(1,346)
Net impairment
(75)
(106)
(12)
(193)
Disposals
90
477
61
628
Change in scope of consolidation
6
(8)
(1)
(3)
Transfers and other
(2)
1
(3)
(4)
Depreciation and impairment at December 31, 2020
(3,144)
(13,408)
(1,036)
(17,588)
Translation adjustments
(95)
(476)
(31)
(602)
Depreciation
(190)
(1,040)
(79)
(1,309)
Net impairment
(8)
(63)
(3)
(74)
Disposals
50
658
44
752
Change in scope of consolidation
2
4
-
6
Transfers and other
(22)
27
(2)
3
Depreciation and impairment at December 31, 2021
(3,407)
(14,298)
(1,107)
(18,812)
NET CARRYING AMOUNTS AT DECEMBER 31, 2021
3,660
7,141
430
11,231
Net carrying amounts at December 31, 2020
3,562
6,829
430
10,821
PP&E in progress amount to €1,611 million (2020: €1,328 million).
Accumulated impairment losses included in total “Depreciation and impairment” at December 31, 2021 amount to €465 million
(2020: €449 million).
Borrowing costs capitalized in 2021 in PP&E amounted to €2 million (2020: €7 million).
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14.2 Right-of-use assets
Right-of-use assets can be analyzed as follows:
(in € millions)
Right-of-use
assets Land
and buildings
Right-of-use assets
Plant and industrial
equipment
Right-of-use
assets Other
equipment
Total
Gross carrying amounts at January 1, 2020
1,097
100
235
1,432
Translation adjustments
(54)
(7)
(12)
(73)
New leases
132
42
36
210
Disposals
(28)
(12)
(14)
(54)
Change in scope of consolidation
2
-
-
2
Transfers and other
28
(4)
29
53
Gross carrying amounts at December 31, 2020
1,177
119
274
1,570
Translation adjustments
50
5
10
65
New leases
116
20
31
167
Disposals
(32)
(11)
(17)
(60)
Change in scope of consolidation
(4)
1
-
(3)
Transfers and other
(21)
(2)
(3)
(26)
Gross carrying amounts at December 31, 2021
1,286
132
295
1,713
Depreciation and impairment at January 1, 2020
(208)
(26)
(71)
(305)
Translation adjustments
11
2
3
16
Depreciation
(146)
(36)
(47)
(229)
Net impairment
(11)
-
-
(11)
Disposals
28
12
14
54
Change in scope of consolidation
-
-
-
-
Transfers and other
(18)
8
(2)
(12)
Depreciation and impairment at December 31, 2020
(344)
(40)
(103)
(487)
Translation adjustments
(15)
(2)
(3)
(20)
Depreciation
(151)
(39)
(45)
(235)
Net impairment
(1)
-
-
(1)
Disposals
32
11
17
60
Change in scope of consolidation
-
-
-
-
Transfers and other
(5)
9
-
4
Depreciation and impairment at December 31, 2021
(484)
(61)
(134)
(679)
NET CARRYING AMOUNTS AT DECEMBER 31, 2021
802
71
161
1,034
Net carrying amounts at December 31, 2020
833
79
171
1,083
Some leases are recorded directly as an expense in the income
statement on a straight-line basis over the life of the lease.
This is the case for:
▶short-term leases, representing an expense of €28 million in 2021
(2020: €33 million);
▶leases of low-value assets, representing an expense of
€42 million for the year (2020: €40 million);
▶variable lease payments not taken into account to determine
the lease liability, representing an expense of €16 million
(2020: €16 million).
Undiscounted future lease payments are analyzed by maturity in
note 33.2.1 “Liquidity risk”.
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NOTE 15 NON-CURRENT FINANCIAL ASSETS AND OTHER NON-CURRENT ASSETS
The carrying amount of the non-current financial assets and other non-current assets is analyzed in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Equity investments (note 15.1)
279
229
Loans and deposits (note 15.2)
387
294
Solesis preferred shares
247
-
Derivative instruments (note 16.1)
125
101
Pension plan surpluses (note 27.1)
332
211
Other
34
30
NON-CURRENT FINANCIAL ASSETS AND OTHER NON-CURRENT ASSETS
1,404
865
15.1 Equity investments
Unconsolidated equity investments consist primarily of a portfolio of shares in unlisted companies (note 33.4. “Classification of
financial assets”).
Movements in the portfolio during the year are presented in the table below:
(in € millions)
2021
2020
At January 1
229
237
Translation adjustments
6
(5)
Acquisitions
25
14
Disposals
(2)
(45)
Change in scope of consolidation
(10)
-
Fair value changes
31
28
AT DECEMBER 31
279
229
15.2 Loans and deposits
The carrying amount of loans and deposits is analyzed in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Gross loans and deposits
434
335
Impairment
(47)
(41)
TOTAL
387
294
Loans and deposits mainly comprise loans to companies
accounted for by the equity method and various loans to
customers and employees.
The €93 million net increase in loans and deposits reflects:
▶the €184 million (£158 million) deposited in an escrow
account to fund pension obligations in the United Kingdom
(note 27.1.1). This amount is pledged to the pension plans
and is therefore not freely available to the Group;
▶partly offset by a partial early repayment of $100 million
(€88 million) received on the loan to TBC. This loan was made
at the inception of the joint venture for an initial amount of
$200 million. Michelin’s partner in the joint venture made an
equivalent loan.
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NOTE 16 DERIVATIVE INSTRUMENTS
As mentioned in note 3.5 “Hedging”, some derivatives, while complying with the Group’s financial risk management policies, do not
qualify or have not been designated as hedging instruments for hedge accounting purposes.
16.1 Derivatives recognized as assets
(in € millions)
December 31, 2021
December 31, 2020
Derivatives qualifying as fair value hedges
-
-
Derivatives qualifying as cash flow hedges
▶Currency derivatives
83
45
▶Interest-rate derivatives
-
-
▶Other derivatives
-
-
Derivatives not qualifying for hedge accounting
▶Currency derivatives
16
38
▶Interest-rate derivatives
2
-
▶Other derivatives(1)
24
18
Non-current derivative instruments (note 15)
125
101
Derivatives qualifying as fair value hedges
-
-
Derivatives qualifying as cash flow hedges
▶Currency derivatives
49
2
▶Interest-rate derivatives
-
-
▶Other derivatives
-
-
Derivatives not qualifying for hedge accounting
▶Currency derivatives
21
49
▶Interest-rate derivatives
-
-
▶Other derivatives(1)
27
1
Current derivative instruments (note 21)
97
52
TOTAL ASSETS
222
153
(1) Corresponds primarily to the financial instruments acquired as hedges of the options embedded in convertible bonds (note 26.1).
The Group grants cash collateral to cover counterparties’ credit risk on derivatives with a positive fair value. Collateral received at
December 31, 2021 amounted to €74 million (2020: €22 million).
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16.2 Derivatives recognized in liabilities
(in € millions)
December 31, 2021
December 31, 2020
Derivatives qualifying as fair value hedges
-
-
Derivatives qualifying as cash flow hedges
▶Currency derivatives
-
21
▶Interest-rate derivatives
-
-
▶Other derivatives
-
-
Derivatives not qualifying for hedge accounting
▶Currency derivatives
56
23
▶Interest-rate derivatives
3
5
▶Other derivatives(1)
24
18
Non-current derivative instruments (note 26)
83
67
Derivatives qualifying as fair value hedges
-
-
Derivatives qualifying as cash flow hedges
▶Currency derivatives
26
1
▶Interest-rate derivatives
-
-
▶Other derivatives
-
-
Derivatives not qualifying for hedge accounting
▶Currency derivatives
49
49
▶Interest-rate derivatives
-
-
▶Other derivatives(1)
27
-
Current derivative instruments (note 26)
102
50
TOTAL LIABILITIES
185
117
(1) Corresponds to the options embedded in convertible bonds (note 26.1).
The Group holds cash collateral covering its credit risk on derivatives with a negative fair value. Collateral received at December 31, 2021
amounted to €100 million (2020: €49 million).
16.3 Contractual amounts of derivatives
The contractual amounts of derivative instruments are presented in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Current
Non-
current
Total
Current
Non-
current
Total
Currency derivatives
5,253
1,459
6,712
3,799
1,306
5,105
Interest rate derivatives
-
189
189
81
81
162
Other
1,054
1,060
2,114
-
1,954
1,954
Derivatives not qualifying for hedge accounting
6,307
2,708
9,015
3,880
3,341
7,221
Interest rate derivatives
-
-
-
-
-
-
Derivatives qualifying as fair value hedges
-
-
-
-
-
-
Currency derivatives
576
435
1,011
57
981
1,038
Interest rate derivatives
-
-
-
-
-
-
Other
11
2
13
4
1
5
Derivatives qualifying as cash flow hedges
587
437
1,024
61
982
1,043
TOTAL
6,894
3,145
10,039
3,941
4,323
8,264
The “Other” derivatives not qualifying for hedge accounting include options related to convertible bonds in USD (note 16.1, 16.2 and 26).
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16.4 Hedge accounting
Summarized financial data for hedging instruments are set out in the table below:
(in € millions)
Notional
amount of
the hedging
instrument
Carrying amount
of the hedging
instrument in
assets/(liabilities)
Cash flow
hedge
reserve
Amount
recognized in
profit or loss
Line item affected
in profit or loss
DERIVATIVES QUALIFYING
AS CASH FLOW HEDGES
Forward foreign exchange contracts on
bonds denominated in foreign currencies
941
107
11
96
Cost of net
debt/Other financial
income and expense
Commodity price risk –
forward purchase contracts
13
-
(1)
1
Operating income
Interest rate swaps
-
-
(16)
(2)
Cost of net debt
Interest component of cross currency swaps
41
(1)
-
-
Cost of net debt
Forward foreign exchange contracts
on forecast sales
18
-
1
(2)
Operating income
Hedges of currency risk on raw
materials purchases
11
-
-
2
Operating income
Current and non-current
hedging instruments
1,024
106
(5)
95
Gains and losses on cash flow hedges are included in equity,
under “Other reserves” (note 25 “Reserves”). These reserves are
used to recognize the effective portion of derivatives that qualify
for hedge accounting (note 3.5.2 “Cash flow hedges”). The
gains and losses accumulated in the reserve are subsequently
reclassified as part of the initial cost of a non‑financial asset or
transferred to the income statement. Cash flow hedge reserves
correspond mainly to advance hedging of interest rate risks on
the August 2018 bond issues for €16 million and hedges of
currency risk on dollar‑denominated convertible bonds for
€11 million (note 26.1 “Bonds and commercial paper”). The
gains and losses are transferred to the income statement when
the interest on the hedged bonds affects profit or loss.
NOTE 17 INVESTMENTS IN EQUITY-ACCOUNTED COMPANIES
Associates and joint ventures are listed in note 36 “List of consolidated companies” to the consolidated financial statements.
17.1 Investments in equity-accounted companies
Changes in investments in equity-accounted companies are as follows:
(in € millions)
Investments
in associates
Investments in
joint ventures
Total investments in
equity-accounted
companies
At January 1, 2020
166
921
1,087
Share of profit/(loss) from equity-accounted companies
(12)
(61)
(73)
Impairment
(38)
-
(38)
Dividends
(2)
(4)
(6)
Changes in scope of consolidation/capital increases
2
28
30
Translation adjustments
(1)
(57)
(58)
Other
(5)
4
(1)
At December 31, 2020
110
831
941
Share of profit/(loss) from equity-accounted companies
12
(29)
(17)
Impairment
(8)
(58)
(66)
Dividends
(3)
(5)
(8)
Changes in scope of consolidation/capital increases
(16)
214
198
Translation adjustments
2
56
58
Other
-
(3)
(3)
AT DECEMBER 31, 2021
97
1,006
1,103
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The main equity-accounted companies are TBC (note 17.2) and
Solesis (note 17.3). All of the other companies represent
non‑material investments.
In the consolidated income statement, the line “Share of
profit/(loss) from equity-accounted companies” also includes
the remeasurement at fair value of investments previously
accounted for by the equity method that are now fully
consolidated.
The effect of changes in the scope of consolidation is mainly
due to the first-time application of the equity method to Solesis
in the first half (note 4.1.1) and the full consolidation of
Allopneus from December 30, 2021 (note 4.1.2).
During the year, the Group recognized an impairment loss of
€57 million on investments in companies active in the cultivation
and production of natural rubber in Asia. Negotiations are
underway with the various stakeholders to resolve the liquidity
problems faced by these companies. If the negotiations are
unsuccessful, these companies may be unable to meet their
debt repayment obligations to external lenders in the first
quarter of 2022 ($175 million at December 31, 2021). The
Group has no commitment to assume all or part of these debts
in the event of default, nor has it signed any cross-default
clauses.
17.2 Joint venture with Sumitomo Corporation of Americas (TBC)
Summarized financial data for the TBC joint venture are set out in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Current assets
1,636
1,396
▶of which cash and cash equivalents
48
251
Non-current assets
1,695
1,677
▶of which goodwill
133
127
TOTAL ASSETS
3,331
3,073
Current liabilities
1,139
902
▶of which current financial liabilities
144
135
Non-current liabilities
1,086
1,193
▶of which non-current financial liabilities
930
1,068
Equity
1,106
978
TOTAL LIABILITIES AND EQUITY
3,331
3,073
(in € millions)
2021
2020 (1)
Sales
4,482
3,932
EBITDA
321
251
Interest income
(1)
2
Interest expense
(52)
(67)
Depreciation and amortization
(203)
(223)
Income tax
(22)
3
NET INCOME/(LOSS)
43
(34)
(1) In 2020, TBC's reporting deadline was aligned with the Group's standard reporting deadline. As a consequence, the “Share of profit/(loss) from equity-
accounted companies” caption in the consolidated income statement for 2020 included 13 months of the Group's share in TBC's net income; the amount of
the thirteenth month was not significant. For comparability purposes, the TBC figures for 2020 have been adjusted in the above chart to reflect a 12-months
activity for both periods presented.
The equity-accounted share of TBC included in the Group's consolidated income statement (including elimination of downstream
transactions) is a profit of €13 million (2020: loss of €13 million).
(in € millions)
December 31, 2021
December 31, 2020
Net assets (including goodwill)
1,106
978
Share of net assets (including goodwill)
553
489
Elimination of profit from downstream transactions (net of tax)
(31)
(19)
CARRYING AMOUNT OF NET INTEREST IN THE JOINT VENTURE
522
470
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17.3 Joint venture with Altaris (Solesis)
Summarized financial data in respect of Solesis are set out in the table below:
(in € millions)
December 31, 2021
Current assets
286
▶of which cash and cash equivalents
253
Non-current assets
400
▶of which provisional goodwill
351
TOTAL ASSETS
686
Current liabilities
99
▶of which current financial liabilities
-
Non-current liabilities
254
▶of which non-current financial liabilities
4
▶of which preferred shares
250
Equity
333
TOTAL LIABILITIES AND EQUITY
686
(in € millions)
2021
(7 months)
Sales
47
EBITDA
16
Interest expense
(3)
Depreciation and amortization
(6)
Income tax
-
NET INCOME
7
The equity-accounted share of Solesis included in the Group's consolidated income statement is a profit of € 3 million.
(in € millions)
December 31, 2021
Net assets (including goodwill)
329
CARRYING AMOUNT OF NET INTEREST IN THE JOINT VENTURE
161
17.4 Financial information about equity-accounted companies
The financial statements of equity-accounted companies other than TBC and Solesis, which are not material taken individually, include
the following amounts (information presented on a 100% basis):
(in € millions)
2021
2020
Assets
2,970
2,277
Liabilities
2,061
1,488
Sales
3,142
3,045
Net income/(loss)
(3)
(150)
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17.5 Transactions with equity-accounted companies (related parties)
Transactions and balances between the Group and its associates and joint ventures are presented in the table below:
(in € millions)
2021
2020
INCOME STATEMENT
Income for the sale of goods or supply of services
477
254
Expenses for the purchase of products or supply of services
(285)
(184)
STATEMENT OF FINANCIAL POSITION
Financial liabilities
(5)
(6)
Trade payables
(25)
(7)
Financial assets
470
284
Accounts receivable
183
139
NOTE 18 TAXES
18.1 Deferred taxes
Deferred taxes in the consolidated statement of financial position are as follows:
(in € millions)
December 31, 2021
December 31, 2020
Deferred tax assets
751
729
Deferred tax liabilities
(503)
(425)
NET DEFERRED TAX ASSET
248
304
Deferred tax assets and liabilities at the end of the period, before netting, are as follows:
(in € millions)
December 31, 2021
December 31, 2020
Employee benefit obligations
510
604
Inventories
110
102
Financial instruments
(32)
55
Provisions
17
44
Unused tax losses
154
132
Unused tax credits
-
1
Goodwill and intangible assets
(235)
(274)
Property, plant and equipment
(472)
(543)
Other
196
183
NET DEFERRED TAX ASSET
248
304
Deferred tax assets have been recognized for tax loss
carryforwards to the extent that it is probable that future
taxable profit will be available against which the unused tax
losses can be utilized, taking into account the restrictions
applicable in local tax jurisdictions. The probability that unused
tax losses will be utilized is assessed according to the entity and
its taxable profit projections. These projections are prepared
using assumptions that are consistent with the short- and
medium-term budgets prepared by Group entities. The
Covid‑19 crisis did not have any material impact on the
projections supporting the recognition of deferred tax assets.
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The change in the net deferred tax asset over the period is as follows:
(in € millions)
2021
2020
At January 1
304
359
Translation adjustments
(20)
1
Deferred tax benefit/(expense) (note 11)
3
(3)
Tax recognized in other comprehensive income
(87)
(40)
Changes in the scope of consolidation
49
(11)
Other
(1)
(2)
AT DECEMBER 31
248
304
In 2021 and 2020, the reductions in the net deferred tax asset were due mainly to the change in taxes recorded in other
comprehensive income in respect of post-employment benefit obligations.
The effect of changes in the scope of consolidation in 2021 mainly concerned the sale of part of Solesis for €48 million. (note 4.1.1).
The deferred income tax recognized in other comprehensive income is as follows:
(in € millions)
December 31, 2021
December 31, 2020
Post-employment benefits
229
312
Unconsolidated equity investments and other financial instruments
(30)
(26)
TOTAL DEFERRED TAX RECOGNIZED IN OTHER COMPREHENSIVE INCOME
199
286
In 2021, the change in deferred tax recognized in other comprehensive income primarily reflects decreased pension benefit obligations.
Unrecognized deferred tax assets break down as follows:
(in € millions)
December 31, 2021
December 31, 2020
Deductible temporary differences
89
139
Tax losses:
▶of which expiring in less than one year
7
8
▶of which expiring in one to five years
25
43
▶of which expiring in more than five years
17
26
▶of which evergreen
471
301
Total tax losses
520
378
Tax credits
10
5
TOTAL UNRECOGNIZED DEFERRED TAX ASSETS
619
522
Unrecognized deferred tax assets in the amount of €619 million mainly concern the tax losses of certain companies in the United
Kingdom and India that are not certain of generating sufficient taxable profit in the coming years and that are subject to certain
restrictions concerning the use of the losses:
▶in the United Kingdom, tax losses can be carried forward indefinitely but only 50% of the loss can be set off against taxable profit in
excess of £5 million;
▶in India, operating tax loss carryforwards expire after eight years but there is no limit on the remaining balance.
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18.2 Current taxes
Current taxes in the consolidated statement of financial position are as follows:
(in € millions)
2021
2020
Taxes receivable (note 22)
324
317
Taxes payable (note 30)
(186)
(145)
Net total at January 1
138
172
Current tax expense (note 11)
(629)
(351)
Income tax paid
562
315
Changes in the scope of consolidation
1
-
Translation adjustments and other
(6)
2
Total changes
(72)
(34)
Taxes receivable (note 22)
304
324
Taxes payable (note 30)
(238)
(186)
NET TOTAL AT DECEMBER 31
66
138
NOTE 19 INVENTORIES
Inventories include the following:
(in € millions)
December 31, 2021
December 31, 2020
Raw materials and supplies
1,481
1,066
Work in progress
644
438
Finished products
3,267
2,541
Total gross inventory
5,392
4,045
Impairment of raw materials and supplies
(44)
(26)
Impairment of work in progress
(2)
(1)
Impairment of finished products
(74)
(59)
Impairment
(120)
(86)
NET INVENTORY
5,272
3,959
Changes in impairment losses on inventory are as follows:
(in € millions)
2021
2020
At January 1
(86)
(100)
Translation adjustments and other
(25)
7
Change in scope of consolidation
1
(1)
Impairment of inventories recognized as an expense in the period
(30)
(36)
Impairment reversals
20
44
AT DECEMBER 31
(120)
(86)
NOTE 20 TRADE RECEIVABLES
The carrying amount of trade receivables is analyzed in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Gross trade receivables
3,678
3,126
Impairment
(102)
(108)
TRADE RECEIVABLES
3,576
3,018
All trade receivables are due within 12 months.
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Consolidated financial statements for the year ended December 31, 2021
The following table presents an aging analysis of trade receivables at December 31, 2021:
(in € millions)
Gross
Impairment
Net
Trade receivables not yet due
3,352
(14)
3,338
Overdue
▶by less than three months
185
(2)
183
▶between three and six months
23
(2)
21
▶by more than six months
118
(84)
34
Overdue trade receivables
326
(88)
238
TRADE RECEIVABLES
3,678
(102)
3,576
Movements in impairment are analyzed in the table below:
(in € millions)
2021
2020
At January 1
(108)
(97)
Translation adjustments and other
(1)
5
Change in scope of consolidation
-
1
Impairment of trade receivables recognized as an expense in the period
(32)
(51)
Impairment reversals
39
34
AT DECEMBER 31
(102)
(108)
Impairment provisions of €17 million were reversed during the period following the write-off of the underlying receivables
(2020: €18 million).
NOTE 21 CURRENT FINANCIAL ASSETS
The carrying amount of current financial assets is analyzed in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Loans and deposits
181
92
Cash management financial assets (note 26)
435
285
Derivative instruments (note 16.1)
97
52
CURRENT FINANCIAL ASSETS
713
429
Although cash management financial assets are highly liquid
and have very limited exposure to interest rate risk, they do not
strictly fulfill the criteria for classification as cash and cash
equivalents (note 3.21 “Cash and cash equivalents”). Cash
management financial assets are measured at amortized cost
(note 3.18 “Non-derivative financial assets”).
Loans and deposits include collateral exchanged with financial
institutions of €74 million (2020: €22 million) that is not freely
available.
NOTE 22 OTHER CURRENT ASSETS
The carrying amount of other current assets is analyzed in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Prepayments to suppliers
141
99
Income tax receivable
304
324
Other taxes receivable
317
240
Other
280
271
Impairment
(4)
(5)
OTHER CURRENT ASSETS
1,038
929
Other taxes receivable mainly concern VAT.
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Consolidated financial statements for the year ended December 31, 2021
NOTE 23 CASH AND CASH EQUIVALENTS
The carrying amount of cash and cash equivalents is analyzed in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Money-market funds
3,372
3,516
Bank deposits subject to up to a three-month notice period
784
962
Cash at bank and in hand
326
269
CASH AND CASH EQUIVALENTS
4,482
4,747
The average effective interest rate on cash and cash equivalents was -0.29% in 2021 (2020: -0.10%). Cash and cash equivalents are
mainly held in euros (2021: 93%, 2020: 93%).
Cash and cash equivalents include restricted cash of €103 million whose use is governed by prudential insurance regulations in Ireland
(2020: €81 million).
NOTE 24 SHARE CAPITAL AND SHARE PREMIUMS
Changes in share capital and share premiums are analyzed in the table below:
(in € millions)
Share capital
Share premiums
Total
At January 1, 2020
357
2,789
3,146
Issuance of shares upon exercise of stock options and performance share rights
1
54
55
Cancellation of shares
(2)
(97)
(99)
Other
1
-
1
At December 31, 2020
357
2,746
3,103
Issuance of shares upon employee share plan and performance share rights
-
-
-
Cancellation of shares
-
-
-
Other
-
-
-
AT DECEMBER 31, 2021
357
2,746
3,103
Changes in outstanding shares are analyzed in the table below:
(number of shares)
Shares issued
Treasury shares
Shares
outstanding
At January 1, 2020
178,627,555
-
178,627,555
Issuance of shares upon exercise of stock options and performance share rights
810,071
-
810,071
Share buybacks
-
(1,097,540)
(1,097,540)
Sales of treasury shares
-
-
-
Cancellation of shares
(1,097,540)
1,097,540
-
Other
-
-
-
At December 31, 2020
178,340,086
-
178,340,086
Issuance of shares upon exercise of stock options and performance share rights
190,364
-
190,364
Share buybacks
-
(8,032)
(8,032)
Sales of treasury shares
-
8,032
8,032
Cancellation of shares
-
-
-
Other
-
-
-
AT DECEMBER 31, 2021
178,530,450
-
178,530,450
The shares have a par value of €2 (unchanged from 2020). All
outstanding shares are fully paid and registered. Shares held for
more than four years have a double voting right.
The 2020 dividend paid to shareholders in 2021 was €2.30 per
share (2019 dividend paid in 2020: €2.00 per share). The
dividend was paid in full in cash for a net amount of
€410 million (2020: €357 million).
The Managing Chairman will propose that shareholders approve
the payment of a 2021 dividend in 2022 of €4.50 per share.
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NOTE 25 RESERVES
(in € millions)
Translation
reserve
Treasury
shares
Other
reserves
Retained
earnings
Total
At January 1, 2020
(287)
-
78
10,289
10,080
Dividends and other appropriations
-
-
-
(368)
(368)
Share-based payments – current service cost (notes 7 and 8)
-
-
-
14
14
Share buybacks
-
(99)
-
-
(99)
Sale/cancellation of shares
-
99
-
-
99
Other
-
-
-
2
2
Transactions with the shareholders of the Company
-
-
-
(352)
(352)
Net income attributable to the shareholders of the Company
-
-
-
632
632
Post-employment benefits
-
-
-
145
145
Tax effect – Post-employment benefits
-
-
-
(33)
(33)
Equity instruments at fair value through OCI – changes in fair value
-
-
28
-
28
Tax effect – equity instruments at fair value through OCI
-
-
(7)
-
(7)
Other
-
-
(3)
3
-
Other comprehensive income that will not be reclassified
to the income statement
-
-
18
115
133
Cash flow hedges – changes in fair value
-
-
16
-
16
Currency translation differences
(977)
-
-
-
(977)
Other
(1)
-
2
(3)
(2)
Other comprehensive income/(loss) that may be reclassified
to the income statement
(978)
-
18
(3)
(963)
Total comprehensive income/(loss)
(978)
-
36
744
(198)
At December 31, 2020
(1,265)
-
114
10,681
9,530
Dividends and other appropriations
-
-
-
(414)
(414)
Share-based payments – current service cost (notes 7 and 8)
-
-
-
21
21
Share buybacks
-
(1)
-
-
(1)
Sale/cancellation of shares
-
1
-
-
1
Other
-
-
-
-
-
Transactions with the shareholders of the Company
-
-
-
(393)
(393)
Net income attributable to the shareholders of the Company
-
-
-
1,844
1,844
Post-employment benefits
-
-
-
351
351
Tax effect – Post-employment benefits
-
-
-
(83)
(83)
Equity instruments at fair value through OCI – changes in fair value
-
-
31
-
31
Tax effect – equity instruments at fair value through OCI
-
-
(7)
-
(7)
Other
-
-
(1)
1
-
Other comprehensive income that will not be reclassified
to the income statement
-
-
23
269
292
Cash flow hedges – changes in fair value
-
-
(10)
-
(10)
Currency translation differences
617
-
-
-
617
Other
(7)
-
2
(4)
(9)
Other comprehensive income/(loss) that may
be reclassified to the income statement
610
-
(8)
(4)
598
Total comprehensive income/(loss)
610
-
15
2,109
2,734
AT DECEMBER 31, 2021
(655)
-
129
12,397
11,871
During 2021, the Group bought back 8,032 shares for
€1 million and then sold them immediately.
In January 2020, an agreement was signed with an investment
services provider under which the Company undertook to buy
back up to €100 million worth of Michelin shares before
November 19, 2020. A total of 1,097,540 shares were finally
bought back under the program at an average price per share
of €89.83, representing a total investment of €99 million. All of
the shares bought back under the agreement were canceled
before the end of 2020.
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Consolidated financial statements for the year ended December 31, 2021
NOTE 26 FINANCIAL LIABILITIES
The carrying amount of financial liabilities is presented in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Bonds
5,090
5,867
Loans from financial institutions and other
187
235
Derivative instruments
83
67
Non-current financial liabilities
5,360
6,169
Non-current lease liabilities
731
801
Bonds
823
77
Commercial paper
258
940
Loans from financial institutions and other
499
479
Derivative instruments
102
50
Current financial liabilities
1,682
1,546
Current lease liabilities
229
222
FINANCIAL LIABILITIES
8,002
8,738
Group net debt is analyzed in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Financial liabilities
8,002
8,738
Derivatives recognized as assets (note 16.1)
(222)
(153)
Borrowing collaterals (note 32.3.2)
(74)
(22)
Cash management financial assets (note 21)
(435)
(285)
Cash and cash equivalents (note 23)
(4,482)
(4,747)
NET DEBT
2,789
3,531
The fair value of non-current financial liabilities, calculated in accordance with note 3.6 “Fair value of financial instruments”,
is presented in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Bonds
5,485
6,649
Loans from financial institutions and other
187
235
Lease liabilities
731
801
Derivative instruments
83
67
FAIR VALUE OF NON-CURRENT FINANCIAL LIABILITIES
6,486
7,752
Changes in financial liabilities and derivatives are detailed by flow in the table below:
(in € millions)
At January 1, 2021
Cash flows
from financial
liabilities
Non-cash movements
At December 31, 2021
Conversions
Other
Bonds, loans from financial institutions
and other
6,102
(730)
20
(115)
5,277
Lease liabilities
801
-
29
(99)
731
Derivative instruments
67
1
-
15
83
Non-current financial liabilities
6,970
(729)
49
(199)
6,091
Bonds, loans from financial institutions
and other
1,496
(90)
39
135
1,580
Lease liabilities
222
(244)
8
243
229
Derivative instruments
50
57
-
(5)
102
Current financial liabilities
1,768
(277)
47
373
1,911
TOTAL FINANCIAL LIABILITIES
8,738
(1,006)
96
174
8,002
Derivatives recognized as assets
(153)
(37)
-
(32)
(222)
Net impact on the consolidated
statement of cash flows
(1,043)
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26.1 Bonds and commercial paper
The table below provides detailed information about the bonds and commercial paper issued by the Group:
(in € millions)
December 31, 2021
December 31, 2020
Current
Non-current
Current
Non-current
Bonds repayable by Compagnie Générale des Établissements Michelin
-
314
▶nominal amount of €302 million
▶issued in September 2015 and September 2016 and due in September 2045
▶nominal interest rate of 3.25%
▶effective interest rate of 3.02%
-
314
Bonds repayable by Compagnie Générale des Établissements Michelin
▶nominal amount of €500 million
▶issued in October 2020 and due in November 2040
▶nominal interest rate of 0.625%
▶effective interest rate of 0.68%
-
496
-
495
Bonds repayable by Compagnie Générale des Établissements Michelin
-
744
▶nominal amount of €750 million
▶issued in August 2018 and due in September 2038
▶nominal interest rate of 2.50%
▶effective interest rate of 2.56%
-
743
Bonds repayable by Compagnie Générale des Établissements Michelin
▶nominal amount of €500 million
▶issued in October 2020 and due in November 2032
▶nominal interest rate of 0.25%
▶effective interest rate of 0.32%
-
496
-
496
Bonds repayable by Compagnie Générale des Établissements Michelin
-
993
▶nominal amount of €1,000 million
▶issued in August 2018 and due in September 2030
▶nominal interest rate of 1.75%
▶effective interest rate of 1.84% (2.00% after hedging)
-
992
Bonds repayable by Compagnie Générale des Établissements Michelin
▶nominal amount of €500 million
▶issued in October 2020 and due in November 2028
▶nominal interest rate of 0.00%
▶effective interest rate of 0.06%
-
498
-
498
Bonds repayable by Compagnie Générale des Établissements Michelin
-
298
▶nominal amount of €300 million
▶issued in May 2015 and due in May 2027
▶nominal interest rate of 1.75%
▶effective interest rate of 1.86% (1.80% after hedging)
-
298
Bonds repayable by Compagnie Générale des Établissements Michelin
-
745
▶nominal amount of €750 million
▶issued in August 2018 and due in September 2025
▶nominal interest rate of 0.875%
▶effective interest rate of 1.04% (1.17% after hedging)
-
744
Debt component of convertible bonds repayable by Compagnie Générale
des Établissements Michelin
-
506
▶nominal amount of $600 million
▶issued in January 2018 and due in November 2023
▶nominal interest rate of 0%
▶effective interest rate of 2.50% (0.16% after hedging)
▶conversion price at December 31, 2021 of €169.89
-
455
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Consolidated financial statements for the year ended December 31, 2021
(in € millions)
December 31, 2021
December 31, 2020
Current
Non-current
Current
Non-current
Private placement loan notes issued by Fenner Group Holdings Limited
▶nominal amount of $160 million
▶issued in 2011 and due in 2021 ($95 million) and 2023 ($65 million)
▶nominal and effective interest rate of 5.144% (2021) and 5.420% (2023)
▶repaid in 2021 (note 26.1.2)
-
-
77
53
Bonds repayable by Compagnie Générale des Établissements Michelin
300
-
▶nominal amount of €300 million
▶issued in May 2015 and due in May 2022
▶nominal interest rate of 1.125%
▶effective interest rate of 1.17%
-
300
Debt component of convertible bonds repayable by Compagnie Générale
des Établissements Michelin
▶nominal amount of $600 million
▶issued in January 2017 ($500 million) and April 2017 ($100 million)
and due in January 2022 (note 26.1.1 and note 35)
▶nominal interest rate of 0%
▶effective interest rate of 1.98% (-0.38% after hedging)
▶conversion price at December 31, 2021 of €133.34
▶repaid at maturity on January 10, 2022 (note 26.1.1)
523
-
-
479
Commercial paper repayable by Compagnie Générale des Établissements Michelin
258
-
-
▶in USD, euro-equivalent nominal amount: €22 million (2020: €42 million)
▶effective interest rate of 0.30% at December 31, 2021
▶in €, nominal amount: €236 million (2020: €898 million)
▶effective interest rate of -0.57% at December 31, 2021
940
-
TOTAL
1,081
5,090
1,017
5,867
At December 31, 2021, the weighted average nominal interest rate for bonds and commercial paper is 1.40% (1.08% after hedging).
26.1.1 2022 convertible bonds
Some holders of the convertible bonds due in January 2022
chose to exercise their conversion right in the second half of 2021,
i.e., before the scheduled maturity date of January 10, 2022.
These conversions resulted in:
▶early repayment of bonds with a nominal value of $8 million
in 2021;
▶repayment of the $592 million worth of outstanding bonds at
maturity on January 10, 2022.
The converted bonds were settled in cash and not in shares of
the Company. The risk of additional cash outflows in the event
of conversion was hedged using options and had no impact on
the Group’s cash position and income statement in 2021.
26.1.2 Fenner private placement loan notes
During the second half of 2021, the Group repaid all of the private placement loan notes issued by its subsidiary Fenner. The €80
million ($95 million) tranche due in 2021 was repaid at maturity, and the tranche due in 2023 was repaid early, for an amount of €55
million ($65 million).
26.2 Loans from financial institutions and other
Loans from financial institutions and other consist mainly of drawdowns on the Group’s credit lines.
At December 31, 2021, loans from financial institutions totaled €686 million (2020: €713 million). Most of the loans were denominated
in euros and USD and most were at variable interest rates.
The contractual re-pricing of the interest rates of these loans is generally less than six months.
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NOTE 27 PROVISIONS FOR EMPLOYEE BENEFIT OBLIGATIONS
In accordance with the laws and regulations applicable in each
country, as well as in application of its social responsibility
policy, the Group takes part mainly in pension, healthcare,
death and disability and end-of-service benefit plans, for which
the amount of benefits paid varies based on a number of
factors including the employee’s years of service, salary,
accumulated
funds
with
an
independent
manager
or
contributions paid to insurers.
Such plans can be either defined benefit plans or defined
contribution plans. In the case of defined benefit plans, Group
commitments are measured using the projected credit unit
method. These commitments are calculated with the help of
independent actuaries. In the case of defined contribution plans,
liabilities correspond to the contributions due.
Since 2003 the Group has been closing its defined benefit plans
to new entrants and, in some cases, to future accruals, in order
to reduce the risk on the Group’s consolidated statement of
financial position. New defined contribution plans have
correspondingly been put in place or existing ones improved.
Since 2005 the Group has a governance body, the Global
Employee Benefit Board, that monitors benefits. Its role is to
define Group policies on employee benefits and ensure that
local benefit programs comply with them (approval of
amendments, introduction of new benefits, etc.). At the same
time, it monitors asset returns and benchmarks, as well as the
de-risking policies put in place by local boards or committees,
and proposes an audit plan. The Committee is assisted by two
teams, the Global Benefits Policy Team composed of members
from the accounting, finance and human resources departments
and the Global Benefits Investment Team composed of the
chairs of the investment committees or Chief Investment
Officers of the main funded pension plans and Group experts. In
countries
with
substantial
benefit
obligations,
a
similar
organization exists.
27.1 Defined benefit plans
The Group’s defined benefit plans are retirement plans and
retiree healthcare plans, the vast majority of which are now
closed to new entrants, and in some cases to future accruals, as
well as some minor plans such as long-service awards or
end‑of‑service benefits.
In Europe, the discount rates are determined with the assistance
of the Group’s actuary, based on the yield of investment-grade
corporate bonds. The rates are applied for the duration of the
corresponding liabilities. The discount rate in the United States
is based on the local actuary’s AA Only Bond yield curve rates.
The discount rate in Canada is based on the Canadian Institute
of Actuaries’ Canadian Corporate AA Bond yield curve rates. For
countries that have several plans (but only one material plan),
the discount rate calculated for the main plan is used for all
plans. For countries with several plans of comparable size but
quite different durations, several rates are used.
The inflation assumptions are set using different methods. For
the Eurozone, the Group’s actuarial model is used with
reference to different sources of information, such as the target
inflation rates set by central banks, the forecasts from
Consensus Economics and inflation swap curves. In the
United Kingdom, the market-implied inflation rate is also
considered (corresponding to the differential between gilts and
index-linked gilts, less a spread). In the United States and
Canada, the cost‑of-living increases for some pensions are set
using historical averages, central bank targets and implied
inflation (corresponding to the differential between indexed and
non‑indexed bonds).
The salary increase assumptions can be either spreads above
inflation (either RPI or CPI) or absolute values. These assumptions
take into account expected long-term yearly average salary
increases as well as the effects of promotions. In some cases,
assumptions by category of personnel can be used.
The post-employment mortality tables used for the pension plans
that are funded through insured contracts are the insurers’ tables.
For the other main post-employment plans, the following tables
are used: (i) United States: Pri-2012 Blue Collar table using Scale
MP-2020 (Michelin custom Table for retirees); (ii) Canada: 105%
of CPM 2014 Private – MI-2017; (iii) United Kingdom: Generational
S3PA CMI 2020 with a 1.5% floor and a weighting of 113% for
men and 99% for women, and (iv) Germany: Heubeck RT 2019 G.
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Consolidated financial statements for the year ended December 31, 2021
December 31, 2021
December 31, 2020
United
States
Canada
United
Kingdom
Germany
United
States
Canada
United
Kingdom
Germany
Life expectancy for males
at 65 at the end of the
reporting period
18.4
21.7
21.1
20.2
18.4
21.6
21.0
20.2
Life expectancy for males
at 65 (15 years after the end
of the reporting period)
19.3
22.8
21.7
22.3
19.3
22.8
21.6
22.3
Life expectancy for females
at 65 at the end of the
reporting period
20.3
24.2
23.9
23.7
20.3
24.1
23.8
23.7
Life expectancy for females
at 65 (15 years after the end
of the reporting period)
21.3
25.2
25.0
25.4
21.3
25.2
24.9
25.4
The financial position of the main defined benefit plans is summarized below:
(in € millions)
Pension plans
Other plans
December 31, 2021
December 31, 2020
Present value of fully or partly
funded obligations
7,578
-
7,578
7,795
Fair value of plan assets
(7,516)
-
(7,516)
(7,373)
Funded status deficit/(surplus)
62
-
62
422
Present value of unfunded obligations
1,097
1,774
2,871
3,014
Unrecognized assets due to the effect of the asset ceiling
97
-
97
53
NET DEFINED BENEFIT OBLIGATION
1,256
1,774
3,030
3,489
Amounts recognized in the statement of financial position:
▶As assets under non-current financial assets and other
non‑current assets (note 15)
(332)
(211)
▶As liabilities under employee benefit obligations
3,362
3,700
NET LIABILITY
1,256
1,774
3,030
3,489
At December 31, 2021, the projected defined benefit obligation
comprised €3,389 million for active members (current employees),
€1,299 million for members who have deferred their vested
benefits and €5,762 million for retired members (2020: respectively
€3,905 million, €1,358 million and €5,546 million).
At December 31, 2021, the projected defined benefit obligation
comprised €8,356 million for vested benefits and €2,094 million
for unvested benefits (2020: respectively €8,653 million and
€2,156 million).
Actuarial gains and losses on post-employment defined benefit plans
are recognized in other comprehensive income when they occur.
The Group does not recognize as an asset any surplus in excess
of the present value of any economic benefits available in the
form of refunds from the plan or reductions in future
contributions to the plan. If a defined benefit plan is subject to a
minimum funding requirement (MFR), the Group immediately
recognizes a liability for any surplus resulting from the
contributions paid under the MFR which would not be fully
recoverable through economic benefits available to the Group.
Any reduction in assets or increase in liabilities resulting from
the effect of the asset ceiling is recognized in other
comprehensive income.
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Consolidated financial statements for the year ended December 31, 2021
The movements in net defined benefit obligations recognized in the consolidated statement of financial position are shown below:
(in € millions)
Pension plans
Other plans
2021
2020
At January 1
1,626
1,863
3,489
3,828
Contributions paid to the fund managers
(19)
-
(19)
(142)
Benefits paid directly to the beneficiaries
(48)
(71)
(119)
(146)
Other movements
-
(3)
(3)
-
ITEMS RECOGNIZED IN OPERATING INCOME
Current service cost
34
77
111
115
Actuarial (gains) or losses recognized on other long-term
benefit plans
-
(8)
(8)
1
Past service cost resulting from plan amendments
(1)
-
(1)
(2)
Effect of plan curtailments or settlements
(1)
-
(1)
9
Effect of plan curtailments recognized within reorganizations
and adaptation of activities
(72)
(96)
(168)
5
Other items
8
(1)
7
6
ITEMS RECOGNIZED OUTSIDE OPERATING INCOME
Net interest on employee benefit obligations
12
29
41
54
ITEMS RECOGNIZED IN OTHER COMPREHENSIVE INCOME
Translation adjustments
(4)
56
52
(94)
Actuarial (gains) or losses
(317)
(72)
(389)
(145)
Unrecognized assets due to the effect of the asset ceiling
38
-
38
-
AT DECEMBER 31
1,256
1,774
3,030
3,489
The amount of actuarial gains or losses presented in the statement of comprehensive income and recognized in equity is detailed in
the table below:
(in € millions)
Pension plans
Other plans
2021
2020
At January 1
1,585
613
2,198
2,343
Actuarial (gains) or losses recognized during the year
due to changes in demographic assumptions:
▶Due to change in assumptions
(11)
(14)
(25)
(82)
▶Due to experience adjustments
(30)
(48)
(78)
18
Actuarial (gains) or losses recognized during the year
due to changes in financial assumptions:
▶Due to change in assumptions
(230)
(29)
(259)
633
▶Due to experience adjustments
(46)
19
(27)
(714)
Unrecognized assets due to the effect of the asset ceiling
38
-
38
-
Change in scope of consolidation
-
-
-
-
AT DECEMBER 31
1,306
541
1,847
2,198
Of which actuarial (gains) or losses
1,209
541
1,750
2,145
Of which asset ceiling effect
97
-
97
53
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Consolidated financial statements for the year ended December 31, 2021
In 2021, the net amount recognized in the consolidated income statement was income of €19 million (2020: expense of €188 million),
broken down as follows:
(in € millions)
Pension plans
Other plans
2021
2020
Current service cost
34
77
111
115
Net interest on net defined benefit obligation (asset)
12
29
41
54
Actuarial (gains) or losses recognized during the year
on other long-term defined benefit plans
-
(8)
(8)
1
Past service cost recognized during the year:
▶Due to the introduction of or amendments to defined
benefit plans
(1)
-
(1)
(2)
▶Due to curtailments of defined benefit plans
-
-
-
-
Effect of defined benefit plan settlements
(1)
-
(1)
9
Other items
8
(1)
7
6
Portion of defined benefit expenses recognized under provisions
for reorganizations and adaptation of activities
(72)
(96)
(168)
5
TOTAL RECOGNIZED IN THE INCOME STATEMENT
(20)
1
(19)
188
Annual costs are determined with the assistance of independent
actuaries at the beginning of each financial year based on the
following factors:
▶cost corresponding to acquisition of an additional year of
rights (“Current service cost”);
▶income/expense corresponding to the discounting adjustment
made to reflect the impact of the passage of time (“Net
interest”);
▶income/expense from annual recognition of actuarial gains or
losses on other long-term defined benefit plans (“Actuarial
(gains) or losses recognized during the year”);
▶gain/loss resulting from plan amendments or the introduction
of benefit plans (“Past service cost recognized during the
year”);
▶gain/loss resulting from curtailments of any benefit plans
(“Past service cost recognized during the year”);
▶gain/loss resulting from the settlement of any benefit plans.
27.1.1 Pension plans
The Group offers its employees in some countries different
pension plans that vary according to local laws and regulations
and the collective bargaining agreements applicable in each
subsidiary.
Under defined benefit plans, the future level of benefits is
defined by the plan regulations. The valuation of such defined
benefit plans is carried out with the assistance of independent
actuaries using actuarial techniques. Defined benefit pension
plans may be funded through payments to external funds or to
insurers. In the case of unfunded plans, such as the German
pension plans, a provision is recognized in the consolidated
statement of financial position.
The Group’s main pension plans are as follows:
United States
The defined benefit plan in the United States is the Michelin
Retirement Plan (MRP). The provisions applicable to the main
population are described below.
The plan was closed to new entrants as of January 1, 2004.
Accruals were frozen under the plan as of December 31, 2016.
These participants have been enrolled in a defined benefit
contribution plan.
The plan sets the normal retirement age at 65. However,
employees who have reached age 55 and have completed at
least ten years of service are eligible for early retirement benefits
under the applicable provisions.
In the event of early retirement, the amount of the pension is
reduced but a supplemental benefit may be granted to
employees who have reached the age of 55 and completed
30 years of service, to bridge the gap between early retirement
and social security eligibility.
The plan provides for a guaranteed monthly annuity based on a
set formula (with a lower accrual rate on the amount
corresponding to the social security wage base) that takes into
consideration the years of plan membership and average
pensionable earnings. Only employees who have voluntarily
joined the defined contribution plan (in 2004 or 2007) may
receive a lump sum payment.
The plan includes provisions for death-in-service benefits as well
as a spouse reversionary pension and orphan’s pension upon
the death of the retiree. The plan also provides for disability
benefits.
The plan includes a cost-of-living adjustment clause applicable
to the pensions of employees hired before January 1, 1991.
The plan is fully funded by employer contributions.
Canada
There is one major defined benefit plan in Canada, the Pension
Plan for the Employees of Michelin North America (Canada) Inc.
and Participating Employers (MR Plan). Other minor defined
benefit plans, which are closed to new entrants, are valued but
not detailed further.
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The MR Plan was closed to new entrants as from January 1, 2005.
Since this date, new entrants have been enrolled in a defined
contribution plan. Accruals for most of the participants were
frozen under the plan as of December 31, 2015. All employees
are enrolled in a defined benefit contribution plan.
The plan sets the normal retirement age at 65. However,
employees who have reached the age 55 or completed 30 years
of service are eligible for early retirement benefits under the
applicable provisions.
In the event of early retirement, the amount of the pension is
reduced but a supplemental benefit is granted to employees
who have completed 30 years of service, to partially bridge the
gap between early retirement and social security eligibility.
The plan provides for a guaranteed monthly annuity at
retirement based on a set formula that takes into consideration
the years of plan membership and total pensionable earnings.
The plan includes provisions for death-in-service benefits as well
as a spouse reversionary pension or a beneficiary pension upon
the death of the retiree. The plan also provides for disability
benefits.
The plan includes an indexation clause applicable to the
benefits, based on the increase in the Consumer Price Index less
a deduction.
The plan is currently fully funded by employer contributions.
United Kingdom
The defined benefit retirement plan in the UK is the Michelin
Pension and Life Assurance Plan.
This plan was closed to new entrants as from March 31, 2005. It
was closed to all future accruals as of January 1, 2009 and has
been replaced by a defined contribution plan.
Accruals up to December 31, 2008 are frozen but pensions are
still linked to the average final salary at retirement.
The plan sets the normal retirement age at 65. However,
employees who have reached the age of 55 are eligible for early
retirement under the applicable provisions, with the Group’s
consent. In the case of early retirement, the accrued benefit is
reduced by an actuarial reduction factor.
The amount of the annual pension is based on the employee’s
pensionable earnings. Most employees opt to receive the maximum
amount allowed by tax legislation in the form of a lump sum.
The plan also provides death-in-service benefits, a spouse
reversionary pension and disability benefits.
The amount of the pension benefit is indexed to a capped
inflation rate for members who did not choose the pension
increase exchange option.
The plan is fully funded by employer contributions.
Germany
The main defined benefit retirement plan in Germany is the
“Versorgungsordnung 1979” (VO 1979).
The plan was closed to new entrants as from January 1, 2000.
Since this date, new entrants have been enrolled in defined
contribution plans.
The plans set the normal retirement age at 65.
They provide for a lifetime monthly annuity which is based on
the employee’s pensionable earnings.
A flat rate applies to the amount of earnings exceeding the
social security ceiling and an additional rate, calculated based
on years of service, is applied to the total pensionable earnings.
The plan includes provisions for death-in-service benefits, a
spouse reversionary pension, an orphan’s pension and disability
benefits.
There is a legal obligation to adjust the pension annuity every
three years for inflation up to the average increase in the
employees’ salaries.
France
There is one major pension defined benefit plan in France,
“Régime de retraite supplémentaire MFPM”.
In order to be eligible, employees must have completed ten
years of service and still be on the payroll at the retirement date.
This plan was set up in 1996 in order to provide additional
retirement income to all employees in the event that their
pension under the mandatory government-sponsored plans
represents less than a certain replacement rate (top hat plan). The
additional benefit is calculated based on years of service and
pensionable earnings. The plan provides for the payment of a
pension to the surviving spouse and a disability pension.
The historical threshold has been gradually lowered since
January 1, 2013 to zero in 2046. In return, employees participate
in a mandatory defined contribution plan (PERO, ex‑Article 83 plan)
and can also participate in a voluntary defined contribution plan
(PERCOL, ex-PERCO).
In accordance with government order 201-697 dated July 3, 2019,
this plan was closed to new members on July 3, 2019 and the
vesting period was frozen at December 31, 2019.
Following an agreement with two co-insurers, the Group has
transferred as of January 1, 2021, the obligation related to the
plan's retirees. This partial liquidation of the plan reduced the
obligation and plan assets for an amount of €212 million.
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Consolidated financial statements for the year ended December 31, 2021
The following table analyzes changes in the financial position of the Group’s defined benefit pension plans:
(in € millions)
2021
2020
North
America
Europe
Other
Total
North
America
Europe
Other
Total
Present value of the obligations
at the beginning of the year
3,967
4,932
47
8,946
4,205
4,950
62
9,217
Translation adjustments
325
238
-
563
(356)
(177)
(16)
(549)
Change in scope of consolidation
-
-
-
-
-
-
-
-
Current service cost
1
32
1
34
3
36
1
40
Interest cost on the defined benefit obligation
99
56
2
157
125
70
3
198
Administrative costs
3
5
-
8
2
4
-
6
Plan reorganization costs generated
during the year:
▶past service cost due to the introduction
of or amendments to defined benefit plans
-
(1)
-
(1)
-
-
-
-
▶past service cost due to curtailments
of defined benefit plans
-
(72)
-
(72)
-
1
-
1
▶(gains) or losses on settlement
of defined benefit plans
-
(1)
-
(1)
-
9
-
9
Benefits paid during the year
(269)
(199)
(3)
(471)
(262)
(230)
(3)
(495)
Other items*
-
(211)
1
(210)
-
21
1
22
Actuarial (gains) or losses
generated during the year
(169)
(105)
(4)
(278)
250
248
(1)
497
Present value of the obligations
at the end of the year
3,957
4,674
44
8,675
3,967
4,932
47
8,946
Fair value of plan assets
at the beginning of the year
3,773
3,561
39
7,373
3,898
3,394
49
7,341
Translation adjustments
317
254
1
572
(334)
(185)
(14)
(533)
Change in scope of consolidation
-
-
-
-
-
-
-
-
Interest income on plan assets
93
50
2
145
116
58
2
176
Contributions paid to the funds
-
19
-
19
-
142
-
142
Benefits paid by the plans during the year
(268)
(153)
(2)
(423)
(262)
(196)
(2)
(460)
Other items*
-
(210)
1
(209)
-
21
1
22
Actual return on plan assets
excluding interest income
7
38
(6)
39
355
327
3
685
Fair value of plan assets
at the end of the year
3,922
3,559
35
7,516
3,773
3,561
39
7,373
Deficit/(surplus) at the end of the year
35
1,115
9
1,159
194
1,371
8
1,573
Deferred items at the beginning of the year
(50)
-
(3)
(53)
(55)
-
-
(55)
Translation adjustments
(5)
-
-
(5)
3
-
1
4
Unrecognized assets due to the effect
of the asset ceiling
(42)
-
3
(39)
2
-
(4)
(2)
Deferred items at the end of the year
(97)
-
-
(97)
(50)
-
(3)
(53)
NET LIABILITY/(ASSET) RECOGNIZED
IN THE STATEMENT OF FINANCIAL
POSITION AT THE END OF THE YEAR
132
1,115
9
1,256
244
1,371
11
1,626
*
This amount includes €212 million related to the partial settlement of the “Régime de retraite supplémentaire MFPM” in France following the transfer of the
benefit obligation for retired employees and the corresponding plan assets to an external fund as of January 1, 2021.
In France, the voluntary early retirement and voluntary
outplacement measures provided for in the Collective Settlement
Agreement (RCC phase 1 and phase 2, note 9.2) had the effect
of reducing the Group’s pension obligations by €72 million.
A provision for reorganizations and adaptation of activities was
recorded at December 31, 2021 (note 29).
For Canadian pension plans, the Group does not have any rights
to a refund of the plan surplus. The available economic benefits
are measured as the present value of the future service cost.
These pension plans are subject to a minimum funding
requirement. The surplus recognized as an asset is the sum of:
▶any prepaid amount that would reduce the future minimum
funding requirement; and
▶the estimated future service cost in each period less the
estimated minimum funding requirement contributions that
would be required for future service.
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Any amount exceeding this limit is immediately recognized within other comprehensive income.
In 2021, a negative amount of €44 million was recognized on application of the asset ceiling.
In 2021, the projected defined benefit pension obligation decreased by €271 million due to:
(in € millions)
2021
2020
Translation adjustments
(563)
549
Actuarial gains or (losses) from changes in actuarial assumptions and the difference
between assumptions and actual experience
278
(497)
Difference between the costs (service cost and interest cost) and the benefits paid during the year
272
251
Changes in plan rules
74
(10)
Changes in the scope of consolidation
-
-
Other items*
210
(22)
*
This amount includes €212 million related to the partial settlement of the “Régime de retraite supplémentaire MFPM” in France following the transfer of the
benefit obligation for retired employees and the corresponding plan assets to an external fund as of January 1, 2021.
The fair value of plan assets amounted to €7,516 million at December 31, 2021, representing an increase of €143 million compared to
December 31, 2020 due to:
(in € millions)
2021
2020
Translation adjustments
572
(533)
Difference between the contributions paid to the funds and the benefits paid by the funds
(404)
(318)
Actual return on plan assets
184
861
Changes in the scope of consolidation
-
-
Other items*
(209)
22
*
This amount includes €212 million related to the partial settlement of the “Régime de retraite supplémentaire MFPM” in France following the transfer of the
benefit obligation for retired employees and the corresponding plan assets to an external fund as of January 1, 2021.
The present value of the defined benefit obligation, the fair value of the plan assets, the surplus or deficit in the plan and the experience
adjustments are as follows for 2021 and the previous four periods:
(in € millions)
2021
2020
2019
2018
2017
Defined benefit obligation
(8,675)
(8,946)
(9,217)
(8,304)
(8,443)
Plan assets
7,516
7,373
7,341
6,294
6,367
SURPLUS/(DEFICIT)
(1,159)
(1,573)
(1,876)
(2,010)
(2,076)
Experience adjustments to:
▶plan liabilities
37
(7)
(5)
15
32
▶plan assets
39
685
727
(284)
415
The experience adjustments expressed as a percentage of the present value of the obligation and the fair value of plan assets are
presented in the table below:
Experience adjustments to:
2021
2020
2019
2018
2017
▶the plan liabilities as a percentage of the
present value of the obligation (DBO)
-0.43%
0.08%
0.05%
-0.18%
-0.38%
▶the plan assets as a percentage of the fair
value of the assets
0.52%
9.29%
9.90%
-4.51%
6.52%
The main actuarial weighted average assumptions used to measure pension plan obligations are as follows:
December 31, 2021
December 31, 2020
North
America
Europe
Other
North
America
Europe
Other
Discount rate
2.83%
1.39%
8.80%
2.47%
1.08%
6.85%
Inflation rate
2.00%
2.75%
3.25%
2.00%
2.39%
3.25%
Rate of salary increases
2.40%
3.08%
3.65%
2.41%
2.77%
3.69%
Weighted average duration of the defined
benefit obligation
11.2
15.7
13.4
12.0
15.6
13.9
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Consolidated financial statements for the year ended December 31, 2021
The discount rates, salary increase rates and inflation rates are
the main financial assumptions used in the measurement of the
defined benefit obligation (DBO) and changes in these rates
may have a significant effect on the amounts reported.
For each plan, all the actuaries calculate the sensitivities of the
DBO and current service cost to changes in the main
assumptions. In the case of a change in one of these
assumptions, DBO and current service cost sensitivities are
expressed as weighted average changes in these items.
Regarding the sensitivity of the fair market value of plan assets
due to interest rate movements, it is considered that the entire
yield curve moves up or down by 0.5 point and that only the
values of the bonds are impacted, with the values of all other
assets remaining unchanged. The level of sensitivity indicated
corresponds to the change in the total value of the portfolio
due to the change in interest rates.
A 0.5-point change in these rates compared with those used
for 2021, all else being equal, would have the following effect:
0.5-point increase
0.5-point decrease
Discount rate on the defined benefit obligation (DBO)
-6.54%
7.32%
Discount rate on the aggregate of current service cost and interest cost on the obligation
12.71%
-14.80%
Inflation rate on the defined benefit obligation (DBO)
3.26%
-3.13%
Inflation rate on the aggregate of current service cost and interest cost on the obligation
3.43%
-3.24%
Salary increase rate on the defined benefit obligation (DBO)
0.75%
-0.68%
Salary increase rate on the aggregate of current service cost and interest cost on the obligation
1.43%
-1.27%
Interest rates on the fair market value of plan assets
-5.50%
5.99%
Net income and expenses recognized in the income statement as well as the actual return on plan assets are as follows:
(in € millions)
2021
2020
North
America
Europe
Other
Total
North
America
Europe
Other
Total
Current service cost
1
32
1
34
3
36
1
40
Interest cost on the defined benefit obligation
99
56
2
157
125
70
3
198
Interest income on plan assets
(93)
(50)
(2)
(145)
(114)
(59)
(3)
(176)
Actuarial (gains) or losses recognized during the
year on other long-term defined benefit plans
-
-
-
-
-
-
-
-
Past service cost recognized during the year:
▶Due to the introduction of or amendments
to defined benefit plans
-
(1)
-
(1)
-
-
-
-
▶Due to curtailments of defined benefit plans
-
-
-
-
-
-
-
Effect of defined benefit plan settlements
-
(1)
-
(1)
-
9
-
9
Other items
3
5
-
8
2
4
-
6
Portion of defined benefit expenses recognized
under provisions for reorganizations
and adaptation of activities
-
(72)
-
(72)
-
1
-
1
TOTAL DEFINED PENSION BENEFIT COST
10
(31)
1
(20)
16
61
1
78
Actual return on plan assets
100
88
(4)
184
471
385
5
861
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Consolidated financial statements for the year ended December 31, 2021
The asset allocation of fully and partly funded pension plans is as follows:
December 31, 2021
December 31, 2020
Canada
United
States
United
Kingdom
Other
Total
Canada
United
States
United
Kingdom
Other
Total
LISTED SECURITIES
Local equities
1.7%
5.4%
0.0%
0.0%
2.2%
1.9%
8.5%
0.0%
0.0%
3.3%
Foreign and global equities
3.8%
4.8%
0.8%
0.0%
2.7%
7.2%
7.5%
1.2%
0.0%
4.3%
Alternative investments
1.8%
8.7%
0.0%
0.0%
3.4%
0.0%
9.2%
0.8%
0.0%
3.6%
Real estate
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Index-linked bonds
0.0%
0.0%
20.2%
14.0%
9.5%
0.1%
0.0%
20.6%
7.2%
9.3%
Fixed income government
and agencies
34.1%
23.0%
12.4%
0.0%
19.3%
26.3%
16.6%
13.2%
0.0%
15.7%
Corporate bonds
19.0%
37.1%
19.0%
0.0%
25.0%
15.6%
31.1%
19.1%
0.0%
21.7%
Other fixed income securities,
multi-asset credit and
emerging market bonds
27.8%
8.4%
25.2%
0.0%
18.8%
39.8%
16.6%
23.9%
0.0%
22.4%
Cash and cash equivalents
2.3%
1.0%
3.5%
2.0%
2.4%
3.9%
1.3%
6.5%
2.0%
4.0%
Total listed securities
90.6%
88.3%
81.0%
16.0%
83.3%
94.8%
90.9%
85.3%
9.2%
84.4%
UNLISTED SECURITIES
Funds managed by insurance
companies
0.0%
0.0%
0.0%
84.0%
2.4%
0.0%
0.0%
0.0%
90.8%
5.2%
Private placements(1)
6.9%
2.1%
14.3%
0.0%
8.3%
3.2%
0.8%
10.5%
0.0%
5.3%
Real estate
2.4%
9.5%
4.6%
0.0%
5.9%
2.1%
8.3%
4.3%
0.0%
5.1%
Total unlisted securities
9.4%
11.7%
19.0%
84.0%
16.7%
5.2%
9.1%
14.7%
90.8%
15.6%
TOTAL
100.0%
100.0%
100.0% 100.0% 100.0%
100.0%
100.0%
100.0% 100.0% 100.0%
Duration in years of the
bond portfolio, excluding
cash and cash equivalents
and funds managed by
insurance companies
13.7
13.3
19.8
11.2
16.4
14.8
14.5
22.6
13.3
18.4
(1) Private placements and private debt
In the above allocation, assets reported under “Listed securities“
are assets that have a regularly quoted market value at which
they can be sold and those reported under “Unlisted securities“
are assets managed by insurance companies and less liquid
assets that could be sold on short notice or in difficult markets,
at a discount.
An internal group of experts, composed of the chairs or Chief
Investment Officers of the main investment committees and
Group specialists, has issued investment guidelines for the local
investment committees presenting investment best practices. In
particular, the guidelines state that direct investments should
not be made in Michelin securities or properties used by the
Group. Fund managers are not subject to such restrictions. The
Group has not invested material amounts in its own securities.
Michelin does not occupy or use any of the real estate assets
included in the various portfolios. The Group is not in
possession of comprehensive information on the underlying
assets held in insurance funds or alternative investments.
Alternative investments are composed of hedge funds and
multi-asset products such as diversified growth funds in the
United Kingdom. These kinds of investments are expected to
deliver absolute returns with lower volatility than equities.
Other fixed income securities include emerging market bonds,
mutual funds, liability hedging portfolios for which the
managers invest in government and corporate bonds or in
derivatives, as well as, in the United Kingdom, in multi-asset
funds allowing the managers to switch between the main credit
products depending on market conditions. This kind of
investment is expected to have a return similar to that of
corporate bonds, but with lower volatility due to its diversified
profile (including asset backed securities, loans and high-yield
bonds as well as cash, government and corporate bonds).
The real estate portfolio in the United Kingdom consists of an
investment in an LPI (Limited Price Inflation) Income Property
Fund composed of long-term leases that provides a secure,
inflation-hedged return.
In most countries, assets are managed by local independent
boards, in accordance with local pension laws. The boards are
required by their bylaws as well as by law to act in the best
interest of the fund and all relevant stakeholders, i.e., current
and future beneficiaries as well as employers.
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Consolidated financial statements for the year ended December 31, 2021
Asset allocation analyses are performed periodically, generally
every three to five years, by an independent fiduciary body
(Investment Board, Board of Trustees) based on recommendations
made by independent advisors (actuaries, consultants, banks or
investment management firms). The asset allocation takes into
account the structure of employee-related liabilities and their
terms. In the event of a sharp increase in the funding ratio, an
asset allocation analysis should be performed to ensure the
target allocation is still appropriate.
The largest pension plans have implemented a dynamic asset
allocation policy, whereby the target asset allocations are based
on the plan’s funded status. An improvement in funded status
results in the de-risking of the portfolios, allowing more funds
to be allocated to liability hedging assets (LHA) and less to
return seeking assets (RSA). In the event of a decrease in the
funding ratio, the target allocation remains unchanged, as the
re-risking of the portfolios is not permitted. These pension plans
have also implemented an interest rate hedging policy and, in
the United Kingdom, an inflation hedging policy. The hedging
ratio increases as the funding level improves.
The RSA are diversified with the objective of targeting efficient
portfolios where the level of volatility is minimized for the
targeted return. These portfolios combine domestic and global
equities with real estate and alternative assets such as hedge
funds and private placements. Special attention is given to less
liquid asset classes that may complicate the de-risking process
by creating concentrated positions or requiring transactions at
discounted prices.
The LHA are used to hedge the duration risk as well as, in some
cases, the credit spread and inflation risks. The LHA portfolios
are primarily composed of government and corporate bonds. The
larger plans also use completion managers to implement
custom solutions in order to hedge key rates in accordance with
the policy set by each pension fund.
Foreign exchange risks may be hedged when the exposure to a
foreign currency is considered to be non-negligible. For
instance, the UK fund is exposed to many currencies and has a
policy of hedging 75% of its exposure. In Canada, 50% of the
US dollar exposure is hedged. In other cases, investment
managers are given discretion to hedge currency exposure as
they deem necessary.
Group contributions to pension plans and benefit payments made by these plans in 2021 and to be made over the following ten years
are as follows:
(in € millions)
North
America
Europe
Other
Total
CONTRIBUTIONS PAID AND BENEFITS PAID DIRECTLY BY THE GROUP
2021
2
65
1
68
ESTIMATES OF CONTRIBUTIONS TO BE PAID
AND BENEFITS TO BE PAID DIRECTLY BY THE GROUP
2022
2
71
-
73
2023
2
75
-
77
2024
2
78
-
80
2025
2
88
-
90
2026
2
86
-
88
2027-2031
10
450
-
460
The Group makes contributions to fully and partly funded plans
in order to meet its future benefit payment obligations to the
beneficiaries.
The
level
of
contributions
is
periodically
determined by the Group based on factors such as current
funding levels, legal and tax considerations and local practice, in
consultation, as the case may be, with local boards and
actuaries.
In the United States, the following year’s contribution is
determined annually in accordance with Internal Revenue
Service (IRS) rules, in particular as regards temporary funding
relief provided for under the Bipartisan Budget Act of 2015
(BBA15).
In Canada, the contributions are determined on a triennial basis
and the funding plan is spread over 15 years as required under
local regulations.
In the United Kingdom, the contributions are determined based
on triennial actuarial valuations as required by the Pension Act.
In the event of a deficit, the employer must implement a
recovery plan in agreement with the Trustee. For Michelin
Pensions Trust Ltd, the 2021 agreement allows contributions to
be deposited in an escrow account if the plan is overfunded, on
a basis defined with the Trustee (note 15.2).
In the case of unfunded plans, the payments are made on the
due dates, either directly to the beneficiaries or indirectly via the
relevant fund managers.
Future payments for unfunded plans are estimated based on
data included in the calculation of the projected defined benefit
obligation according to expected leaving dates each year. The
same method is used for calculating the amount of the
constitutive capital invested in partially funded plans with
insurance companies.
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27.1.2 Other defined benefit plans
In many countries, Group employees receive other post-employment
benefits and long-term benefits throughout their term of
employment. Other post-employment benefits mainly include
health insurance and end-of-service benefits. Other defined
benefit plans are mainly found in the United States, Canada and
France. Other long-term benefits include mainly long-service
awards provided under local company-specific agreements.
Such defined benefit plans chiefly concern the Group’s European
companies.
As in the case of the above-described defined benefit pension
plans, other defined benefit plans are valued with the assistance
of independent actuaries using actuarial techniques. The
obligations under these plans are not covered by assets and are
recognized in full as liabilities.
The main plans provided within the Group are detailed below:
United States
The Group offers retiree medical benefits that provide
healthcare coverage for Pre-Medicare and Medicare eligible
retirees and their dependents.
Eligible retirees are mainly those who were active prior to
January 1, 2004 and will have at least reached age 55 with
10 years of service at the date of retirement.
For Medicare-eligible retirees, the healthcare coverage is
provided in addition to Medicare.
Medical and prescription drug expenses are covered by the plan.
The retirees contribute to the cost of the Pre-Medicare
post‑retirement medical plan.
In 2016, the plan was amended to move non-union Medicare-
eligible retirees from a company-sponsored retirement offering
to private Medicare exchanges. For this population, the plan
provides the following benefit improvements:
▶Retiree Reimbursement Account (RRA): this account is funded
in a fixed annual amount per retiree and eligible dependents
through a Retiree Health Exchange program to either
reimburse Medicare, Medicare supplement and/or prescription
drug premiums;
▶Catastrophic Retiree Reimbursement Account (CRRA): if the
retiree or dependent reaches the eligibility threshold for
catastrophic drug coverage, he or she can receive reimbursement
for the 5% of the out-of-pocket cost not covered by
Medicare Part D.
The Group pays a premium for the administrative services. This
plan is not pre-funded.
Canada
The Group provides healthcare coverage to certain retirees and
their dependents. Medical and prescription drug expenses are
covered by the plan.
This plan was closed to new entrants as from January 1, 2005.
The Group pays a premium for the administrative services. This
plan is not pre-funded.
France
The main plan is a mandatory rubber division end-of-service
benefit plan.
The plan provides for the payment of a lump sum to employees
who are present at their retirement date. The normal retirement
age is set at 65. The amount of the lump sum corresponds to a
number of months of salary based on years of service at the time
of retirement.
This plan is not pre-funded.
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Consolidated financial statements for the year ended December 31, 2021
Changes in the financial position of other defined benefit plans are as follows:
(in € millions)
December 31, 2021
December 31, 2020
North
America
Europe
Other
Total
North
America
Europe
Other
Total
Present value of the obligations
at the beginning of the year
689
1,089
85
1,863
759
1,047
91
1,897
Translation adjustments
55
(3)
4
56
(63)
4
(15)
(74)
Change in scope of consolidation
-
(3)
-
(3)
-
-
-
-
Current service cost
13
55
9
77
9
57
9
75
Interest cost on the defined benefit obligation
16
10
3
29
22
9
1
32
Administrative costs
-
-
-
-
-
-
-
-
Plan reorganization costs generated
during the year:
▶Past service cost due to the introduction
of or amendments to defined benefit plans
-
-
-
-
-
(2)
-
(2)
▶Past service cost due to curtailments
of defined benefit plans
-
(96)
-
(96)
-
4
-
4
▶(Gains) or losses on settlement
of defined benefit plans
-
-
-
-
-
-
-
-
Benefits paid during the year
(45)
(21)
(5)
(71)
(50)
(57)
(4)
(111)
Other items
-
-
(1)
(1)
-
(1)
2
1
Actuarial (gains) or losses generated
during the year
(61)
(17)
(2)
(80)
12
28
1
41
Present value of the obligations
at the end of the year
667
1,014
93
1,774
689
1,089
85
1,863
Fair value of plan assets
at the beginning of the year
-
-
-
-
-
-
-
-
Translation adjustments
-
-
-
-
-
-
-
-
Change in scope of consolidation
-
-
-
-
-
-
-
-
Interest income on plan assets
-
-
-
-
-
-
-
-
Contributions paid to the funds
-
-
-
-
-
-
-
-
Benefits paid by the plans during the year
-
-
-
-
-
-
-
-
Other items
-
-
-
-
-
-
-
-
Actual return on plan assets excluding
interest income
-
-
-
-
-
-
-
-
Fair value of plan assets at the end
of the year
-
-
-
-
-
-
-
-
Deficit/(surplus) at the end of the year
667
1,014
93
1,774
689
1,089
85
1,863
NET LIABILITY/(ASSET) RECOGNIZED
IN THE STATEMENT OF FINANCIAL
POSITION AT THE END OF THE YEAR
667
1,014
93
1,774
689
1,089
85
1,863
In France, the voluntary early retirement and voluntary outplacement measures provided for in the Collective Settlement Agreement
(note 9.2) had the effect of reducing the Group’s other post-employment benefit obligations by €96 million. A provision for
reorganizations and adaptation of activities was recorded at December 31, 2021 (note 29).
In 2021, the present value of other defined benefit plans decreased by €89 million, due to:
2021
2020
Effect of changes in exchange rates for the US dollar, pound sterling and Canadian dollar
against the euro
(56)
74
Actuarial gains or (losses) from changes in actuarial assumptions and difference
between assumptions and actual experience
80
(41)
Difference between the costs (service cost and interest cost) and the benefits paid during the year
(35)
4
Changes in plan rules
96
(2)
Changes in the scope of consolidation
3
-
Other items
1
(1)
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Consolidated financial statements for the year ended December 31, 2021
The present value of the other defined benefit obligation and experience adjustments are as follows for 2021 and the previous four
periods:
(in € millions)
2021
2020
2019
2018
2017
Defined benefit obligation
(1,774)
(1,863)
(1,897)
(1,760)
(1,820)
Experience adjustments to plan liabilities
29
19
48
14
46
Experience adjustments to plan liabilities
(as a % of the present value of the obligation – DBO)
-1.63%
-1.02%
-2.53%
-0.80%
-2.53%
The main actuarial weighted average assumptions used to measure obligations for other defined benefit plans are as follows:
December 31, 2021
December 31, 2020
North
America
Europe
Other
North
America
Europe
Other
Discount rate
2.69%
1.01%
4.34%
2.43%
0.69%
2.60%
Weighted average duration of the defined
benefit obligation
10.2
15.4
13.6
11.5
14.2
12.5
Assumptions concerning healthcare cost trends are as follows:
December 31, 2021
December 31, 2020
United States
Canada
United States
Canada
Expected growth in healthcare costs in the first year
8.25%
4.47%
7.00%
4.04%
Minimum long-term rate of annual growth in healthcare costs
4.50%
4.05%
4.93%
4.05%
Year in which the minimum growth rate will be achieved
2030
2040
2026
2040
The discount rate is one of the main assumptions used in the
measurement of the defined benefit obligation and changes in
this rate may have a significant effect on the amounts reported.
For each plan, all the actuaries calculate the sensitivities of the
DBO and current service cost to changes in the main
assumptions. The sensitivities of the DBO and cost (meaning in
this case the aggregate of the current service cost and interest
cost on the obligation) correspond to the weighted average
change in the DBO and the cost, respectively, when one of
these assumptions changes.
A 0.5-point change in these rates compared with those used for 2021, all else being equal, would have the following effect:
0.5-point increase 0.5-point decrease
Discount rate on the defined benefit obligation (DBO)
-6.58%
7.37%
Discount rate on the aggregate of the current service cost and interest cost on the obligation
-0.44%
0.65%
Healthcare cost trend rate on the healthcare defined benefit obligation
1.49%
-1.36%
Healthcare cost trend rate on the aggregate of the current service cost and interest cost
on the healthcare plan obligation
1.16%
-1.33%
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Consolidated financial statements for the year ended December 31, 2021
Net income and expenses recognized in the income statement are as follows:
(in € millions)
2021
2020
North
America
Europe
Other
Total
North
America
Europe
Other
Total
Current service cost
13
55
9
77
9
57
9
75
Interest cost on the defined benefit obligation
16
10
3
29
22
9
1
32
Interest income on plan assets
-
-
-
-
-
-
-
-
Actuarial (gains) or losses recognized during the year
on other long-term defined benefit plans
-
(8)
-
(8)
-
(1)
2
1
Past service cost recognized during the year:
▶Due to the introduction of or amendments
to defined benefit plans
-
-
-
-
-
(2)
-
(2)
▶Due to curtailments of defined benefit plans
-
-
-
-
-
-
-
-
Effect of defined benefit plan settlements
-
-
-
-
-
-
-
-
Other items
-
-
(1)
(1)
-
-
-
-
Portion of defined benefit expenses recognized
under provisions for reorganizations
and adaptation of activities
-
(96)
-
(96)
-
4
-
4
TOTAL OTHER DEFINED
BENEFIT EXPENSES
29
(39)
11
1
31
67
12
110
Benefit payments made under other defined benefit plans in 2021 and to be made over the following ten years are as follows:
(in € millions)
North
America
Europe
Other
Total
BENEFIT PAYMENTS MADE
2021
45
21
5
71
ESTIMATES OF BENEFIT PAYMENTS TO BE MADE
2022
45
24
6
75
2023
45
19
2
66
2024
44
23
2
69
2025
44
28
3
75
2026
44
35
4
83
2027-2031
201
245
27
473
For unfunded plans, such payments are made on the due dates, either directly to the beneficiaries or indirectly to the relevant
administrators.
27.2 Defined contribution plans
In some Group companies, employees are covered by defined
contribution plans. Such plans mainly provide benefits in
addition to those of mandatory post-employment plans.
In 2021, the contributions paid to defined contribution plans
and expensed amounted to €218 million (2020: €217 million).
These plans are mainly found in the United States, Canada, the
United Kingdom and France.
United States
The defined contribution plans in the United States include the
Michelin Retirement Account Plan (MRAP) and various 401(k)
plans. The MRAP plan is fully funded by employer contributions.
The contribution levels are based on age and years of service.
The 401(k) plans are voluntary and are funded by employee
contributions with employer matching contributions. In both the
MRAP and 401(k) plans, asset allocation decisions are made by
the employees. The asset allocation choices are determined and
monitored by the North American Investment Committee under
the authority of the US Pension Board.
Canada
The defined contribution plans in Canada include the Defined
Contribution Plan for the Employees of Michelin North America
(Canada) Inc. as well as a registered retirement savings plan
(RRSP). The defined contribution plan is funded by core
employer contributions and optional employee contributions
with employer matching. The core contribution levels, modified
at January 1, 2016, are based on years of service and age. The
RRSP plan is voluntary and is funded by employee contributions
with employer matching contributions. In both the DC and RRSP
plans, asset allocation decisions are made by the employees.
The asset allocation choices are determined and monitored by
the North American Investment Committee under the authority
of the US Pension Board.
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United Kingdom
The main defined contribution pension plan in the United
Kingdom is the Michelin Pension and Life Assurance plan DC
section (for Michelin and ATS employees). It has been
implemented as of December 1, 2004 for new entrants and as
of January 1, 2009 for all employees who did not opt out.
For Michelin employees, there are employee and employer
contributions to this plan. The contributions are based on a
percentage of the eligible pay and age of the employee.
Employees may also make optional contributions to the plan
and the Group will match some of these optional contributions.
For ATS employees, there are employee and employer
contributions. The level of contribution is chosen by the
employee and matched by the employer. Contributions are a
flat-rate amount whatever the age of the employee.
All contributions to the plan are held in a Pension Account in a
Trust. The employees choose how to invest these contributions
among the different options made available for the plan. The
asset allocation choices are determined and monitored by the
Board of Trustees.
France
There are two defined contribution pension schemes in France:
PERO (ex Article 83) and PERCOL (ex PERCO).
PERO is a mandatory retirement savings plan. It was established
as of January 1, 2012 to replace the “Régime de retraite
supplémentaire MFPM” defined benefit plan. Contributions are
paid by the employee and the employer based on the capped
gross annual salary.
PERCOL is a voluntary retirement savings plan established on
June 1, 2007 and revised on January 1, 2012. The company
pays a capped contribution.
NOTE 28 SHARE-BASED PAYMENTS
28.1 Employee stock option plans
Changes in the number of options granted under stock option plans and their weighted average exercise price are as follows:
2021
2020
Weighted average
exercise price
(in € per option)
Number
of options
Weighted average
exercise price
(in € per option)
Number
of options
At January 1
51.16
22,588
56.23
37,185
Granted
-
-
-
-
Forfeited
51.16
(13,200)
51.16
(27)
Exercised
51.16
(9,388)
64.09
(14,570)
AT DECEMBER 31
0.00
-
51.16
22,588
The last stock options were granted in June 2012 and expired in June 2021.
28.2 Share grants and performance share plans
Changes in the number of share grants and performance share rights are as follows:
2021
2020
Number of share grants or
performance share rights outstanding
Number of share grants or
performance share rights outstanding
At January 1
1,273,400
870,805
Granted
319,622
589,020
Forfeited
(108,428)
(104,907)
Shares delivered
(180,976)
(81,518)
AT DECEMBER 31
1,303,618
1,273,400
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Excellence Plan
In November 2021, 319,622 rights to performance shares were
granted to Group employees and the Managers. The rights are
subject to a four-year vesting period ending in November 2025
without any lock-up period. The shares will vest at the end of
this period if the performance objectives have been met (stock
market performance, environmental performance of manufacturing
operations, employee engagement rate, sales growth and
ROCE). The fair value of each performance share right is
estimated at €109.61. This fair value is based on the share price
at the grant date, less the present value of expected dividends
that will not be received by grantees during the vesting period.
The estimated value of the stock market performance condition
is deducted from the grant-date fair value of the performance
share rights based on the probability of this condition being
met. The total cost of the Excellence plan set up in 2021 is
estimated at €26 million.
The share grants and performance share plans have the following characteristics:
Grant date
Vesting
date
Lock-up
period
Fair value
at grant date
December 31, 2021
December 31, 2020
Number of share
grants or
performance share
rights outstanding
Number of share
grants or
performance share
rights outstanding
France
Other
countries
France
Other
countries
France
Other
countries
2017
2021
2021
None
None
66.84
66.84
-
182,751
2018
2022
2022
None
None
47.91
47.91
38,821
127,480
2019
2023
2023
None
None
62.01
62.01
369,803
374,369
2020
2024
2024
None
None
75.62
75.62
495,928
506,236
2020
2022
N/A
None
N/A
101.54
N/A
79,988
82,564
2021
2025
2025
None
None
109.61
109.61
319,078
-
NUMBER OF SHARE GRANTS OR PERFORMANCE SHARE RIGHTS OUTSTANDING
1,303,618
1,273,400
The expense recognized in 2021 for performance share plans amounts to €21 million (2020: €17 million). It is included in “Segment
other income and expenses”.
NOTE 29 PROVISIONS AND OTHER NON-CURRENT LIABILITIES
Provisions and other non-current liabilities amount to €759 million (2020: €775 million) and include provisions for reorganizations and
adaptation of activities, provisions for claims and litigation, warranties and other contingencies, and contract liabilities as described in
note 3.8 “Revenue recognition“.
29.1 Changes in provisions (current and non-current)
Changes in provisions during the period are presented below:
(in € millions)
Reorganizations and
adaptation of activities
Litigation, warranties
and other provisions
Total
At January 1, 2021
258
345
603
Additional provisions
257
136
393
Provisions utilized during the period
(209)
(77)
(286)
Unused provisions reversed during the year
(8)
(12)
(20)
Translation adjustments
3
10
13
Other effects
1
(4)
(3)
AT DECEMBER 31, 2021
302
398
700
Of which short-term portion (note 30)
193
83
276
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29.2 Reorganizations and adaptation of activities
At December 31, the remaining provisions for reorganizations and adaptation of activities relate to following countries:
(in € millions)
December 31, 2021
December 31, 2020
France(1)
198
88
Germany(2)
57
116
United Kingdom
27
32
Other countries
20
22
TOTAL
302
258
(1) The total includes the provision set aside in 2021 in connection with the simplification and competitiveness plan (note 9.2), as well as the balance of provisions
for previously announced reorganization plans, in particular the closure of the La Roche-sur-Yon site.
(2) It corresponds mainly to provisions for costs related to the closure of the Bamberg plant set aside in 2019 and the industrial and services competitiveness plan
measures (note 9.2).
29.3 Provisions for claims and litigation, warranties and other provisions
Provisions at December 31 concern the following risks:
(in € millions)
December 31, 2021
December 31, 2020
Provisions for claims and litigation
102
90
Provisions for product warranties (note 3.8)
69
62
Provisions for product liability claims
74
40
Other provisions for contingencies
153
153
TOTAL
398
345
Provisions for claims and litigation mainly concern litigation with URSSAF dating back several years for €50 million (2020: €50 million).
NOTE 30 PROVISIONS AND OTHER CURRENT LIABILITIES
The carrying amount of other current liabilities is presented in the table below:
(in € millions)
December 31, 2021
December 31, 2020
Customers - Deferred rebates
992
796
Employee benefit obligations
871
556
Payroll tax liabilities
349
304
Provisions for reorganizations and adaptation of activities
193
168
Income tax payable
238
186
Other taxes
245
223
Other
429
407
PROVISIONS AND OTHER CURRENT LIABILITIES
3,317
2,640
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NOTE 31 NOTES TO THE STATEMENT OF CASH FLOWS
Cash flows are presented in detail in the table below:
(in € millions)
2021
2020
Investment grants recognized in profit or loss
(12)
(12)
Change in employee benefit obligations
(42)
(180)
Change in litigation and other provisions
29
(5)
Restructuring costs
(214)
(206)
Other
38
18
Other operating income and expenses (cash) and change in provisions
(201)
(385)
Interest and other financial expenses paid
(227)
(305)
Interest and other financial income received
7
28
Dividends received
13
12
Interest and other financial income and expenses received and paid, net
(207)
(265)
Change in inventories
(1,106)
552
Change in trade receivables and advances
(370)
92
Change in trade payables and advances
527
(34)
Change in trade payables under reverse factoring agreements
120
15
Change in other receivables and payables
5
75
Change in working capital, net of impairment
(824)
700
Purchases of intangible assets (note 13)
(211)
(180)
Purchases of PP&E (note 14)
(1,494)
(1,041)
Government grants received
9
6
Change in capital expenditure payables
217
(154)
Purchases of intangible assets and PP&E
(1,479)
(1,369)
Increase in other non-current financial assets
(48)
(45)
Decrease in other non-current financial assets
79
26
Net cash flows from cash management financial assets
(150)
(105)
Net cash flows from borrowing collaterals
(51)
79
Net cash flows from other current financial assets
(33)
20
Cash flows relating to other financial assets
(203)
(25)
Increase in non-current financial liabilities
44
2,439
Decrease in non-current financial liabilities
(774)
(1,076)
Repayment of lease liabilities
(244)
(244)
Net cash flows from current financial liabilities
(90)
731
Derivatives
21
(66)
Cash flows relating to financial liabilities
(1,043)
1,784
Details of non-cash transactions:
▶New leases (note 14)
167
211
▶New emission allowances granted
13
12
NOTE 32 COMMITMENTS AND CONTINGENCIES
32.1 Commitments
32.1.1 Capital expenditure commitments
Capital expenditure on the main projects which were contracted but not delivered before December 31, 2021 amounts to
€331 million (of which €46 million is likely to be delivered in 2023).
32.1.2 Other commitments
The Group has many purchase commitments for goods and services. These commitments are in line with the level of activity expected
in the first half of 2022. They are entered into on arm’s length terms in the normal course of business.
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32.2 Contingencies
32.2.1 Brazil
During 2021, one of the Group’s Brazilian subsidiaries received
a notice of reassessment from the tax authorities following an
audit of its 2017 accounts. The reassessment concerns the
deductibility of goodwill amortization recorded during the year.
The subsidiary strongly contests the reassessment and lodged an
appeal before the Administrative Court on April 27, 2021.
Following the unfavorable ruling of the Administrative Court, the
Group is planning to lodge an appeal with the Brazilian
Administrative Tax Appeal Board. It considers that amortizing the
goodwill was justified, in terms of both its form and substance,
and believes that the court is likely to find in its favor.
Consequently, no provision has been recorded for this matter.
32.2.2 Michelin Pension Trust Ltd UK
Following adoption of the Pensions Act 2004 in the United
Kingdom, a multi-annual plan of contributions to the UK
pension fund (the “Recovery Plan”) was established between
the Group’s UK companies and their pension funds. In order to
limit the amount of contributions, the Group issued guarantees
to the pension funds to cover the contributions to be made by
its subsidiaries. Michelin Pensions Trust Ltd has also received an
additional guarantee covering the possible insolvency of the
participating entities. The risk is considered unlikely and the
guarantee is capped at £100 million.
The last Recovery Plan calculations were performed on
March 31, 2020 and the next ones will be performed on
March 31, 2023. The actuarial assumptions used to measure the
Recovery Plan liability are generally more conservative than the
ones used to measure defined benefit obligations under IAS 19.
The amount of the Group’s guarantee is equal to the difference,
if positive, between the present value of future contributions
and the amount of the provision booked in the accounts. At
December 31, 2021, the present value of future contributions in
excess of the provision booked in the consolidated financial
statements was €7 million, including €0 million for the
guarantee given to the trustees of the Michelin Pension Trust
Ltd UK and €7 million for the guarantee given to Fenner
Pension Scheme Trustee Limited.
For the Michelin Pension Trust Ltd, contributions are payable to
the plan if the plan is underfunded. If the plan is overfunded,
the contributions are deposited in an escrow account up to a
certain level of overfunding, after which a contributions holiday
is granted. When the amount in escrow exceeds a certain level,
the local entity may apply for a refund (note 15).
For Fenner UK Pension Scheme Trustee Limited, a contributions
holiday is granted once a certain funding level is met.
32.2.3 Other contingencies
In the normal course of business, the Group companies may be
involved in administrative proceedings, litigation and claims.
Although provisions have been recognized when the risks are
established and an outflow of financial resources is probable,
there exist uncertainties concerning some of these administrative
proceedings, litigation and claims.
In the opinion of Group management, there are no other
governmental, judicial or arbitration proceedings likely to have a
material impact on the Group’s financial position or cash
position.
32.3 Assets pledged as collateral
32.3.1 Property, plant and equipment
Property, plant and equipment pledged as collateral for debt amounted to €33 million (2020: €33 million).
32.3.2 Financial assets
The €184 million held in an escrow account linked to the pension plan in the United Kingdom is pledged to the plan and is therefore
not freely available (note 15.2).
Loans and deposits amounting to €74 million (2020: €22 million) are pledged as collateral for debt (note 16 “Derivative instruments”).
32.3.3 Trade receivables
The Group runs two separate programs whereby certain
European and North American subsidiaries have transferred
ownership interests in portfolios of eligible trade receivables.
The maximum financing that can be raised from these programs
amounts to €477 million (2020: €463 million). Since the Group
has retained substantially all the risks and rewards of ownership,
the ownership interests in the trade receivable portfolios sold
by the European and North American subsidiaries have not been
derecognized and the financing received from the financial
institutions, amounting to €15 million at December 31, 2021
(2020: €15 million), has been accounted for as secured debt
(note 26.2 “Loans from financial institutions and other“).
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NOTE 33 FINANCIAL RISK MANAGEMENT
33.1 Financial risk management policy
33.1.1 Organization of financial risk management
The Corporate Financing Department controls, measures and
supervises financial risks for each company and region, as well
as at Group level. The Corporate Financing Department reports
directly to the Group Finance Department.
One of the Corporate Financing Department’s ongoing missions
is the formulation of financial risk management policies,
monitored on the basis of a full array of internal standards,
procedures and authoritative literature. Regional finance
managers oversee the implementation of the Group’s financial
risk management policies by the regional treasury centers.
Compliance with financial risk policies is assessed through
internal audit reviews to evaluate risk control efficiency and
identify areas of improvement.
All strategic decisions regarding Group financial risk hedging
policy are made by the Group Finance Department. As a general
rule, the Group strictly limits the use of derivatives to the sole
purpose of hedging clearly identified exposures.
A Financial Risks Committee is responsible for establishing and
validating financial risk management policies, identifying and
measuring these risks and validating and monitoring hedging
programs. The Financial Risks Committee, which is chaired by a
Manager, meets on a monthly basis and includes members of
the Group Finance Department and the Corporate Financing
Department.
33.1.2 Liquidity risk
33.1.2.1 Risk factors
Liquidity is defined as the ability to repay borrowings when they
fall due and to find new stable sources of financing so that
there is always sufficient money to cover expenses. In the course
of its business, the Group is exposed to the risk of having
insufficient liquid resources to finance its operations and make
the investments needed to drive its growth. It must therefore
manage its cash reserves and confirmed lines of credit on a
continuous basis.
33.1.2.2 Risk management response
The Corporate Financing Department is responsible for ensuring
that the Group has access to adequate financing and liquidity
at the lowest cost. The Group raises financing through
long‑term debt issues (bonds) on the capital markets, as well as
through bank facilities (loans and credit lines), commercial paper
programs and receivables securitization programs. The Group
has also negotiated confirmed back-up credit lines and
maintains cash reserves that are calibrated in order to ensure
the refinancing of short-term debt. Long-term financing and
confirmed back-up credit lines are essentially concentrated at the
level of the Group financial holding companies.
Except in the case of particular restrictions due to the specific
features of local financial markets, the Group companies are
financed in accordance with the following model:
▶cash pooling with the Group for the management of
day‑to‑day liquidity requirements;
▶intercompany credit lines and loans to meet medium- and
long-term requirements.
For subsidiaries that do not participate in the cash pool,
short‑term financing is the responsibility of the local treasurer.
The management of liquidity risk is supported by a system that
forecasts short-, medium- and long-term financing requirements
based on business forecasts and the strategic plans of the
operating entities.
As a matter of prudent financial policy, the Group guards against
the inclusion in its financial contracts of hard covenants or material
adverse change clauses that could affect its ability to draw
down credit lines or the facilities’ term. At December 31, 2021,
none of the Group’s loan agreements included any clauses of
this type. Concerning default and acceleration clauses included
in the Group’s loan agreements, the probability of trigger
events occurring is low and the possible impact on the Group’s
financial position would not be material.
33.1.3 Currency risk
33.1.3.1 Risk factors
Currency risk is defined as the impact on financial indicators of
fluctuations in the exchange rates of foreign currencies used in
the normal course of business. The Group is exposed to
currency risks on its foreign currency transactions (transaction
risk) and also on the translation of its net investment in foreign
subsidiaries (translation risk).
Foreign currency transaction risk arises from the monetary
assets and liabilities of the company and its subsidiaries (mainly
cash and cash equivalents, receivables, payables and borrowings)
that are denominated in foreign currencies. It corresponds to
the risk of a change in the exchange rate between the date
when these monetary assets and liabilities are recorded in the
accounts and the date when they are recovered or settled.
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Foreign currency translation risk arises from the Group’s net
investment in foreign subsidiaries. It corresponds to the risk of a
change in the exchange rate used to translate the net
investment in the foreign subsidiary into euros during the
consolidation process.
During certain operations, the Group may face foreign
exchange exposures not recognized in the accounts but which
can have a significant impact on the cash flow of the Group.
These are future transactions such as the payment of internal
Group dividends and internal Group capital increases, or
company acquisitions. In this case, the Group may put in place
hedging of its economcic foreign exchange risk.
33.1.3.2 Risk management response
Foreign currency transaction risk
Foreign currency transaction risk is monitored locally by the
Company and its subsidiaries and at Group level by the
Corporate Financing Department.
Each Group company continually calculates its accounting
exposure in relation to its functional currency and hedges it
systematically. Temporary exemptions can, however, be
approved by the Group Finance Department when it is not
possible to hedge a currency on the market or when an
exemption is justified due to exceptional market conditions.
Foreign currency payables and receivables of the same type and
with equivalent maturities are netted off and only the net
exposure is hedged. This is normally carried out through
Compagnie Financière Michelin Suisse SA, or, alternatively,
through a bank. Compagnie Financière Michelin Suisse SA in
turn assesses its own resulting net exposure and hedges it with
its banking partners. The main hedging instruments used are
forward currency contracts. The structural exposure is hedged
using long-term instruments (with a life of up to five years) and
the
operational
exposure
is
hedged
using
short-term
instruments (generally expiring within three months). Currency
risk monitoring and hedging is based on Group internal
standards and procedures. A system to closely monitor foreign
currency transaction risk is implemented throughout the Group
under the responsibility of the Corporate Financing Department.
Gains and losses on foreign currency transactions are tracked
on a monthly basis in a detailed management report.
Currency translation risk
The Group does not use hedging instruments to actively
manage this risk.
Investments in foreign subsidiaries are booked in the functional
currency of the parent company and are not included in the
latter’s foreign exchange position.
Foreign currency economic risk
The risk is hedged as soon as the transaction is highly probable
and is above certain thresholds determined by the Group risk
management
policy,
approved
by
the
Financial
Risks
Committee. The instruments used are mainly currency options.
33.1.4 Interest rate risk
33.1.4.1 Risk factors
The Group’s income statement may be affected by interest rate
risk. An unfavorable change in interest rates may adversely
affect future finance costs and cash flows. The Group is in a net
debt position and is exposed to the risk of an increase in
interest rates on the portion of its debt that is at variable rates.
It may also be exposed to an opportunity risk in the case of a
fall in interest rates, if too great a proportion of debt is at fixed
rates, as well as on financial investments, depending on their
interest terms.
33.1.4.2 Risk management response
The objective of interest rate management is to minimize
financing costs whilst protecting future cash flows against
unfavorable movements in interest rates. For this purpose, the
Group uses various derivative instruments available in the
market, but restricts itself to the use of “plain vanilla“
instruments (interest rate swaps, mainly).
Interest rate exposure is analyzed and monitored by the
Financial
Risks
Committee
using
monthly
performance
indicators and management reports.
The interest rate position is centralized by currency by the Corporate
Financing Department, which is the only department permitted to
undertake hedging operations. Interest rate hedging is concentrated
on the main currencies. The Financial Risks Committee sets hedging
limits by currency, taking into consideration the Group’s gearing as
hedging needs change in line with this ratio.
33.1.5 Equity risk
33.1.5.1 Risk factors
The Group holds non-controlling interests in companies whose
share price fluctuates, among other things, in line with changes
in the global stock markets, the multiples applied by the markets
to the industries in which these companies operate and their
specific economic and financial metrics.
Equity investments are made for strategic rather than trading
purposes. Equities are held under a medium- or long-term strategy,
and not for short-term trading portfolio management.
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33.1.5.2 Risk management response
The Group Investments Committee, which comprises representatives
from the Finance, Legal Affairs, Mergers & Acquisitions and
Strategy Departments, is responsible for ensuring that investment
management and monitoring rules are properly applied for its
non-controlling interests. To this end, it reviews investments at
annual intervals to assess the risk level and actual results
compared to defined targets.
33.1.6 Counterparty risk
33.1.6.1 Risk factors
Counterparty risk is the risk of a debtor refusing or being unable
to fulfill all or part of its obligations. The Group is exposed to
counterparty risk on its contracts and financial instruments.
Counterparty risk may lead to an impairment loss or a loss of
liquidity. The Group is exposed to the risk of impairment losses
arising from the investment of available cash in money market
instruments and other marketable securities, as well as on
finance receivables, derivative instruments and third-party
guarantees. It is exposed to the risk of a loss of liquidity on its
undrawn confirmed lines of credit.
33.1.6.2 Risk management response
The Group chooses its banks extremely carefully, particularly
when it comes to the management of its cash investments. As it
would be inappropriate to add financial risk to the other risks
that are associated with its operations, the Group gives priority
to the security and the liquidity of its cash investments. Cash
investments consist of (i) financial instruments that are subject
to no risk or an insignificant risk of changes in value purchased
from a sufficiently diversified group of leading banks, and
(ii) unrestricted units in diversified money market funds or
short‑term bond funds.
The Group is also exposed to counterparty risk on derivative
instruments used for hedging purposes that have a positive fair
value. These hedging instruments and the level of concentration by
bank are tracked weekly by Group Treasury and monitored
monthly by the Financial Risks Committee.
In order to mitigate counterparty risk on its derivatives
instruments, the Group exchanges collateral with its main
banks.
33.1.7 Credit risk
33.1.7.1 Risk factors
Credit risks may arise when the Group grants credit to its
customers. If a customer becomes insolvent or files for
bankruptcy, it may default on the receivables held by the Group
and this may have a negative impact on the Group’s earnings
and cash flows.
33.1.7.2 Risk management response
The Credit Department, which is part of the Group Financial
Department, sets the maximum payment terms and customer
credit limits to be applied by the operating companies. It
manages and controls credit activity, risk and results, and is also
responsible for managing and collecting trade receivables. The
main policies and procedures are defined at Group level and are
monitored and controlled at both regional and Group level.
33.2 Financial risk data
33.2.1 Liquidity risk
At December 31, 2021, the debt repayment schedule (principal and interest) and the maturities of undrawn confirmed credit lines are
as follows:
(in € millions)
2022
2023
2024
2025
2026
2027
2028 and beyond
Bonds
893
575
68
810
59
354
4,015
Commercial paper
257
-
-
-
-
-
-
Loans from financial institutions and other
509
100
23
40
12
7
6
Lease liabilities
253
212
171
129
98
55
148
Derivative instruments
5
(57)
6
4
2
3
-
DEBT REPAYMENT SCHEDULE
1,917
830
268
983
171
419
4,169
LONG-TERM UNDRAWN
CONFIRMED CREDIT LINES
-
-
2,500
-
-
-
-
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This table analyzes principal and interest payments on debt by
payment date, as projected using available market data at the
reporting date (interest is calculated in each currency on the
basis of market rates, and converted into euros at period-end
rates). The amounts shown are not discounted.
In 2020, the Group increased its syndicated credit line to
€2,500 million and rolled it over for a further period of three
years, with two one-year extension options. At the end of 2021,
the Group exercised its first extension option, extending the
maturity from 2023 to 2024.
The Group considers that at December 31, 2021 its sources of
financing were sufficient to meet the needs of the business:
▶cash and cash equivalents for €4,482 million;
▶cash management financial assets for €435 million;
▶a €2,500 million NEU CP commercial paper program, of
which €236 million had been utilized at December 31, 2021;
▶a $700 million (€619 million) US CP commercial paper
program, of which $25 million (€22 million) had been utilized
at December 31, 2021;
▶two €477 million factoring programs activated when there
are sufficient trade receivables of high enough quality, drawn
down by €15 million as of December 31, 2021;
▶€2,500 million in confirmed, undrawn lines of credit.
33.2.2 Currency risk
Foreign currency transaction risk
Net currency hedging positions are presented in the table below:
(in € millions)
December 31, 2021
December 31, 2020
EUR
CNY
USD
MXN
Other
EUR
CNY
USD
MXN
Other
Hedges
552
(208)
490
(571)
(1,222)
817
(321)
386
(513)
(545)
The other currencies mainly include currency hedges in GBP
and THB.
A 1% unfavorable change in exchange rates for the above
currencies would not have a material adverse effect on the
consolidated income statement. This relatively low sensitivity to
foreign currency transaction risk is consistent with the objective
described in section 33.1.3 “Currency risk“.
Because of the low volume of cash flow hedges (note 16
“Derivative instruments“), the sensitivity of equity to currency
risk is not material.
Currency translation risk
A breakdown of equity by currency is provided in the following table:
(in € millions)
December 31, 2021
December 31, 2020
EUR
5,117
4,308
USD
5,085
4,038
GBP
1,509
1,587
CNY
923
652
BRL
850
843
THB
684
530
CAD
398
284
MXN
119
30
Other
286
359
TOTAL
14,971
12,631
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33.2.3 Interest rate risk
Net debt at December 31, 2021 breaks down as follows by type of hedge and by currency:
(in € millions)
Net debt
before hedging
Currency
hedging
Net debt after currency
hedging but before
interest rate hedging
Interest rate
hedging
Net debt
after hedging
Fixed Variable
Total
Fixed Variable
Total
Fixed Variable
Fixed
Variable
Total
THB
47
10
57
475
47
485
532
77
(77)
124
408
532
GBP
52
(4)
48
473
52
469
521
99
(99)
151
370
521
USD
1,267
310
1,577
(1,075)
206
296
502
589
(589)
795
(293)
502
MXN
2
(2)
-
496
2
494
496
165
(165)
167
329
496
CNY
37
(51)
(14)
319
37
268
305
164
(164)
201
104
305
EUR
4,994
(3,902)
1,092
(1,156)
6,055
(6,119)
(64)
(77)
77
5,978
(6,042)
(64)
Other currencies
117
(51)
66
468
117
417
534
217
(217)
334
200
534
Total before
derivatives
6,516
(3,690)
2,826
-
6,516
(3,690)
2,826
1,234
(1,234)
7,750
(4,924)
2,826
Fair value of
derivatives included
in net debt
(37)
(37)
(37)
NET DEBT
(NOTE 26)
2,789
2,789
2,789
The main reference rates to which the Group is exposed are Euribor and Libor.
Financial instruments that are backed by a benchmark rate subject to the reform have no significant impact on the Group's
consolidated financial statements.
A 1-point parallel shift in the yield curves applied to the net debt components would have the following impact at December 31, 2021:
(in € millions)
Annualized cash
impact recognized in
the income statement
Fair value impact
Recognized
in the income
statement(1)
Recognized in other
comprehensive
income(2)
Not
recognized(3)
Total
1-point downward shift
(49)
(22)
1
(513)
(534)
1-point increase
49
21
(1)
513
533
(1) The Group’s interest rate management policy aims at hedging perfectly identified future cash flows. However, some derivative instruments do not qualify for
hedge accounting under IFRS and are measured at fair value through profit or loss.
(2) For derivatives qualifying for hedge accounting (cash flow hedges).
(3) Some fair value impacts are not accounted for because the underlying net debt component is not measured at fair value but at amortized cost.
33.2.4 Equity risk
Equity risk is the risk of a 10% unfavorable change in the price of equities held by the Group.
(in € millions)
December 31, 2021
December 31, 2020
Carrying amount (note 15.1)
279
229
IMPACT ON EQUITY OF A 10% UNFAVORABLE CHANGE
IN THE PRICE OF EQUITIES HELD BY THE GROUP
(22)
(19)
33.2.5 Counterparty risk
At December 31, 2021, 68% of cash and cash equivalents (including cash management financial assets) was invested in money
market or short-term bond funds to allow for a maximum diversification of counterparty risk. The balance is invested directly with
international banks that meet the counterparty risk management criteria defined by the Group.
Furthermore, most derivatives are contracted with the same banks.
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33.2.6 Credit risk
At December 31, 2021, net receivable balances from the ten
largest customers amounted to €496 million (2020: €398 million).
Five of these customers are located in Europe and five in North
America. At the same date, 69 customers (2020: 55) had been
granted credit limits in excess of €10 million. Out of these,
29 are located in Europe, 26 in North America, two in Central
America, seven in Asia and five in the Africa/India/Middle-East
region. No material collateral has been received to limit the
related credit risk. In 2021, credit losses represented 0.07% of
sales (2020: 0.09%).
33.2.7 Commodities derivatives
In 2021, the Group did not have any significant hedges of commodities purchases (note 16.3 “Derivative contractual amounts“).
33.3 Capital risk management
The Group’s objectives when managing its capital are to protect
its ability to continue as a going concern and to ensure its
development, so that it can provide returns for shareholders and
benefits for other stakeholders.
The main indicator used for capital management purposes is
gearing. Gearing corresponds to the ratio of net debt to equity.
(in € millions)
December 31, 2021
December 31, 2020
Net debt (note 26)
2,789
3,531
Total equity
14,971
12,631
GEARING
0.19
0.28
33.4 Classification of financial assets
Group financial assets break down as follows between the categories “at fair value through profit or loss (FVTPL)“, “at fair value
through other comprehensive income (FVOCI)“ and “at amortized cost“ at December 31, 2021:
(in € millions)
FVTPL
FVOCI
Amortized cost
Total 2021
Trade receivables
-
-
3,576
3,576
Current financial assets
121
50
542
713
Cash and cash equivalents
3,698
-
784
4,482
Non-current financial assets
567
279
558
1,404
TOTAL FINANCIAL ASSETS
4,386
329
5,460
10,175
Non-current financial assets at fair value through profit or loss consist mainly of the Solesis preferred shares (note 4.1.1) and the
escrow account related to UK pension plans (note 27.1.1)
Investments in non-consolidated companies are measured at fair value through other comprehensive income (note 15).
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33.5 Fair value measurement hierarchy
The following tables present Group assets and liabilities measured at fair value at December 31, 2021 and 2020 by level in the fair
value measurement hierarchy:
(in € millions)
Level 1
Level 2
Level 3
Total 2021
Cash and cash equivalents
3,698
-
-
3,698
Current financial assets
74
97
-
171
Non-current financial assets
218
372
256
846
TOTAL ASSETS
3,990
469
256
4,715
Derivative instruments (note 16.2)
-
185
-
185
TOTAL LIABILITIES
-
185
-
185
(in € millions)
Level 1
Level 2
Level 3
Total 2020
Cash and cash equivalents
3,786
-
-
3,786
Current financial assets
22
52
-
74
Non-current financial assets
35
101
200
336
TOTAL ASSETS
3,843
153
200
4,196
Derivative instruments (note 16.2)
-
117
-
117
TOTAL LIABILITIES
-
117
-
117
There has been no significant transfer during these two years between level 1 and level 2.
The following table presents the changes in level 3 instruments for the year ended December 31, 2021:
(in € millions)
At January 1, 2021
193
Acquisitions
20
Disposals
(2)
Gains or losses for the year recognized in other comprehensive income
31
Other
6
AT DECEMBER 31, 2021
248
NOTE 34 RELATED-PARTY TRANSACTIONS
Management and Supervisory Bodies
Florent Menegaux, Managing Chairman and Managing General
Partner of Compagnie Générale des Établissements Michelin,
received a statutory distribution in 2021 based on 2020 net
income of €0.8 million (2020 based on 2019 net income:
€1.0 million). He was also awarded compensation of €1.2 million
(payroll taxes included) as General Manager of Manufacture
Française des Pneumatiques Michelin (2020: €1.1 million). The
benefits that vested during the period in respect of a
post‑employment defined benefit plan amounted to €0.4 million
(2020: €0.4 million). In addition, an expense of €0.3 million
(2020: €0 million) was recognized in the Company’s 2021
accounts, corresponding to performance shares granted to
Florent Menegaux in respect of years after 2019.
A €0.2 million statutory distribution based on net income was
paid in 2021 to Jean-Dominique Senard, Managing Chairman
and General Partner of Compagnie Générale des Établissements
Michelin until May 2019, corresponding to the balance of his
2018 compensation.
Yves Chapot received compensation of €1.7 million (payroll
taxes included) in 2021 as General Manager of Compagnie
Générale des Établissements Michelin (2020: €1.2 million). The
benefits that vested during the period in respect of a
post‑employment defined benefit plan amounted to €0.4 million
(2020: €0.4 million). A provision of €1.3 million (payroll taxes
included) has been recognized based on the present value of
the vested rights in a long-term incentive bonus program and a
variable compensation program. In addition, an expense of
€0.2 million (2020: €0 million) was recognized in the
Company’s 2021 accounts, corresponding to performance
shares granted to Yves Chapot in respect of years after 2019.
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At December 31, 2021, the Group Executive Committee had nine members (2020: eight members). Employee benefits costs
for members of the Group Executive Committee break down as follows:
(in € millions)
2021
2020
Short-term and termination benefits
9.9
7.3
Post-employment benefits
1.6
1.9
Other long-term benefits
-
-
Share-based payments
2.3
1.7
COMPENSATION GRANTED TO MEMBERS OF THE GROUP EXECUTIVE COMMITTEE
13.8
10.9
The compensation paid in 2021 to the Supervisory Board members for 2020 was €0.7 million (2020 for 2019: €0.7 million).
NOTE 35 EVENTS AFTER THE REPORTING DATE
Redemption of convertible bonds due in January 2022
The Group redeemed the outstanding convertible bonds at maturity on January 10, 2022, for a nominal amount of $592 million.
No other material events occurred between the reporting date and the date when the consolidated financial statements were
authorized for issue by the Managing Chairman.
NOTE 36 LIST OF CONSOLIDATED COMPANIES
Countries are presented based on the Michelin geographical regions and are listed within each region according to the alphabetical
order of the French names.
Companies
Consolidation method
Registered office
Type
% interest
EUROPE
GERMANY
Michelin Reifenwerke AG & Co.
Kommanditgesellschaft auf Aktien
Full consolidation method
Karlsruhe Manufacturing & commercial
100.00
Euromaster GmbH
Full consolidation method
Mannheim
Commercial
100.00
Euromaster Reifenservice Deutschland GmbH
Full consolidation method
Mannheim
Commercial
100.00
Euromaster Immobilien GmbH
Full consolidation method
Mannheim
Commercial
100.00
Advantico GmbH
Full consolidation method
Mannheim
Commercial
60.00
Michelin Deutschland GmbH
Full consolidation method
Karlsruhe
Financial
100.00
PTG Reifendruckregelsysteme GmbH
Full consolidation method
Neuss
Commercial
100.00
Michelin Finanz Gesellschaft für Beteiligungen
AG & Co. OHG
Full consolidation method
Karlsruhe
Financial
100.00
Ihle Tires GmbH
Full consolidation method
Muggensturm
Commercial
100.00
Tirecorp GmbH
Full consolidation method
Muggensturm
Commercial
100.00
Ihle International GmbH
Full consolidation method
Muggensturm
Commercial
100.00
ProServ Produktionsservice
und Personaldienste GmbH
Equity method
Karlsruhe
Miscellaneous
49.00
Dichtelemente Hallite GmbH
Full consolidation method
Hamburg Manufacturing & commercial
100.00
Camso Deutschland GmbH
Full consolidation method
Duisbourg
Commercial
100.00
Masternaut GmbH
Full consolidation method
Munich
Commercial
100.00
TyresNParts GmbH
Full consolidation method
Frankfurt
Commercial
100.00
Cleantech Innovation Park GmbH
Equity method
Hallstadt
Miscellaneous
45.00
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Companies
Consolidation method
Registered office
Type
% interest
AUSTRIA
Michelin Reifenverkaufsgesellschaft m.b.H.
Full consolidation method
Vienna
Miscellaneous
100.00
Euromaster Reifenservice GmbH
Full consolidation method
Vienna
Commercial
100.00
Camso Austria GmbH
Full consolidation method
Korneubourg
Commercial
100.00
BELGIUM
Michelin Belux S.A.
Full consolidation method
Zellik
Commercial
100.00
Camsotech European R&D Centre NV
Full consolidation method
Ghent
Financial
100.00
Eurowheel BVBA
Full consolidation method
Herenthout
Manufacturing
100.00
ITC International Tire NV
Full consolidation method
Wommelgem
Commercial
85.00
Industrial International Tire Company NV
Full consolidation method
Wommelgem
Commercial
85.00
BULGARIA
Michelin Bulgaria EOOD
Full consolidation method
Sofia
Miscellaneous
100.00
CROATIA
Michelin Hrvatska d.o.o.
Full consolidation method
Zagreb
Commercial
100.00
DENMARK
Euromaster Danmark A/S
Full consolidation method
Skanderborg
Commercial
100.00
Michelin Gummi Compagni A/S
Full consolidation method
Frederiksberg
Miscellaneous
100.00
Euromaster Ejendomme A/S
Full consolidation method
Skanderborg
Commercial
100.00
Viborg Direct A/S
Full consolidation method
Skanderborg
Commercial
100.00
Ihle Skandinavien ApS
Full consolidation method
Copenhagen
Commercial
100.00
SPAIN
Michelin España Portugal, S.A.
Full consolidation method
Tres Cantos Manufacturing & commercial
99.81
Euromaster Automoción y Servicios, S.A.
Full consolidation method
Madrid
Commercial
100.00
Nex Tyres, S.L.
Full consolidation method
Lleida
Commercial
50.00
Lehigh Spain, S.L.
Full consolidation method
Barcelona
Miscellaneous
100.00
Servicios y Asistencia OK24, S.L.
Full consolidation method
Madrid
Commercial
60.80
Fundación Michelin España Portugal
Full consolidation method
Valladolid
Miscellaneous
99.81
Rodi Metro, S.L.
Equity method
Lleida
Miscellaneous
20.00
Fenner Dunlop, S.L.
Full consolidation method
Esparreguera Manufacturing & commercial
100.00
Camso Spain, S.L.
Full consolidation method
Saragossa
Commercial
100.00
Masternaut Iberica, S.L.
Full consolidation method
Madrid
Commercial
100.00
ESTONIA
Michelin Rehvide OÜ
Full consolidation method
Tallinn
Miscellaneous
100.00
Technobalt Eesti OÜ
Full consolidation method
Peetri Manufacturing & commercial
100.00
FINLAND
Oy Suomen Michelin Ab
Full consolidation method
Espoo
Miscellaneous
100.00
Suomen Euromaster Oy
Full consolidation method
Pori
Commercial
100.00
FRANCE
Compagnie Générale des Établissements
Michelin
Full consolidation method
Clermont-Ferrand
Parent
-
Compagnie Financière Michelin
Full consolidation method
Clermont-Ferrand
Financial
100.00
Manufacture Française des Pneumatiques
Michelin
Full consolidation method
Clermont-Ferrand Manufacturing & commercial
100.00
Pneu Laurent
Full consolidation method
Avallon Manufacturing & commercial
100.00
Simorep et Cie – Société du Caoutchouc
Synthétique Michelin
Full consolidation method
Bassens
Manufacturing
100.00
Euromaster France
Full consolidation method
Montbonnot-
Saint‑Martin
Commercial
100.00
Michelin Aircraft Tyre
Full consolidation method
Clermont-Ferrand
Commercial
100.00
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Companies
Consolidation method
Registered office
Type
% interest
Transityre France
Full consolidation method
Clermont-Ferrand
Commercial
100.00
Alliance Réseaux
Full consolidation method
Saint-Jean-de-
Maurienne
Commercial
100.00
Michelin Travel Partner
Full consolidation method
Boulogne-
Billancourt
Commercial
100.00
Spika
Full consolidation method
Clermont-Ferrand
Financial
100.00
Michelin Air Services
Full consolidation method
Clermont-Ferrand
Miscellaneous
100.00
Tyredating
Full consolidation method
Lyon
Commercial
100.00
Ihle France
Full consolidation method
Schiltigheim
Commercial
100.00
Euromaster Services et Management
Full consolidation method
Clermont-Ferrand
Commercial
100.00
GIE Michelin Placements
Full consolidation method
Clermont-Ferrand
Financial
100.00
Simp
Full consolidation method
Clermont-Ferrand
Financial
51.00
Société d’Investissements et de Mécanique
Full consolidation method
Montagny
Miscellaneous
100.00
Michelin Ventures SAS
Full consolidation method
Clermont-Ferrand
Financial
100.00
Oxymore
Full consolidation method
Montbonnot-
Saint‑Martin
Commercial
95.00
Teleflow SAS
Full consolidation method
Mably
Miscellaneous
100.00
Michelin Middle-East
Full consolidation method
Clermont-Ferrand
Financial
100.00
Michelin Europe (EEIG)
Full consolidation method
Clermont-Ferrand
Miscellaneous
99.95
AddUp
Equity method
Cébazat
Manufacturing
53.67
MMM !
Full consolidation method
Paris
Miscellaneous
100.00
1 Pièce Cuisine SAS
Full consolidation method
Paris
Miscellaneous
100.00
Allopneus
Full consolidation method
Aix-en-Provence
Commercial
100.00
Call For You
Full consolidation method
Aix-en-Provence
Commercial
100.00
Log For You
Full consolidation method
Aix-en-Provence
Commercial
100.00
Rautor
Full consolidation method
Aix-en-Provence
Commercial
100.00
Roadzila
Full consolidation method
Aix-en-Provence
Commercial
100.00
Watea SAS
Full consolidation method
Clermont-Ferrand
Commercial
100.00
Société Internationale de Plantations d’Hévéas
Equity method
Courbevoie
Miscellaneous
44.41
Symbio
Equity method
Fontaine
Miscellaneous
50.00
Taquipneu
Equity method
Montauban
Miscellaneous
22.92
Hympulsion
Equity method
Lyon Manufacturing & commercial
22.78
Fenner Dunlop SARL
Full consolidation method
Élancourt Manufacturing & commercial
100.00
Camso France SAS
Full consolidation method
Le Malesherbois
Commercial
100.00
Masternaut SAS
Full consolidation method
Puteaux (Paris)
Commercial
100.00
Masternaut International SAS
Full consolidation method
Louviers
Financial
100.00
Runa
Equity method
Lyon
Miscellaneous
48.99
Resicare
Full consolidation method
Clermont-Ferrand
Manufacturing
100.00
Aircaptif SAS
Full consolidation method
Trappes
Miscellaneous
100.00
Wanikou Technologie SAS
Full consolidation method
Trappes
Miscellaneous
100.00
Michelin Editions SAS
Equity method
Paris
Miscellaneous
40.00
GREECE
Elastika Michelin Single Member S.A.
Full consolidation method
Halandri
Commercial
100.00
HUNGARY
Michelin Hungaria Tyre Manufacture Ltd.
Full consolidation method
Nyíregyháza Manufacturing & commercial
100.00
Ihle Magyarország Kft.
Full consolidation method
Komárom
Commercial
100.00
Camso Manufacturing Hungary Kft.
Full consolidation method
Budapest
Financial
100.00
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Companies
Consolidation method
Registered office
Type
% interest
IRELAND
Miripro Insurance Company DAC
Full consolidation method
Dublin
Miscellaneous
100.00
Async Technologies Limited
Equity method
Ennis
Miscellaneous
25.00
ITALY
Società per Azioni Michelin Italiana
Full consolidation method
Turin Manufacturing & commercial
100.00
Fondazione Michelin Sviluppo
Full consolidation method
Turin
Miscellaneous
100.00
Euromaster Italia S.r.l.
Full consolidation method
Milan
Commercial
100.00
MAV S.p.A.
Full consolidation method
Bosentino Manufacturing & commercial
100.00
Hallite Italia S.r.l.
Full consolidation method
Collesalvetti Manufacturing & commercial
100.00
Fenner Dunlop Italia S.r.l.
Full consolidation method
Milan Manufacturing & commercial
100.00
Camso Manufacturing Italy S.r.l.
Full consolidation method
Milan
Manufacturing
100.00
Camso Italy S.p.A.
Full consolidation method
Ozzero
Commercial
100.00
Webraska Italia S.r.l.
Full consolidation method
Milan
Miscellaneous
100.00
LATVIA
TB Industry SIA
Full consolidation method
Riga Manufacturing & commercial
100.00
LITHUANIA
UAB Michelin Padangos
Full consolidation method
Vilnius
Miscellaneous
100.00
Technobalta UAB
Full consolidation method
Vilnius Manufacturing & commercial
100.00
LUXEMBOURG
Michelin Finance (Luxembourg) S.à.r.l.
Full consolidation method
Luxembourg
Financial
100.00
Camso International S.à.r.l.
Full consolidation method
Luxembourg
Financial
100.00
Camso Holding S.à.r.l.
Full consolidation method
Luxembourg
Financial
100.00
Artic Investments S.A.
Full consolidation method
Luxembourg
Financial
100.00
NORWAY
Norsk Michelin Gummi AS
Full consolidation method
Oslo
Miscellaneous
100.00
Fenner Mandals AS
Full consolidation method
Mandal Manufacturing & commercial
100.00
THE NETHERLANDS
Euromaster Bandenservice B.V.
Full consolidation method
Deventer
Commercial
100.00
Michelin Nederland N.V.
Full consolidation method
Drunen
Commercial
100.00
Transityre B.V.
Full consolidation method
Breda
Commercial
100.00
Michelin Distribution B.V.
Full consolidation method
Breda
Commercial
100.00
Actor B.V.
Full consolidation method
Deventer
Commercial
100.00
Euromaster Vastgoed B.V.
Full consolidation method
Deventer
Commercial
100.00
MC Projects B.V.
Equity method
Maastricht
Miscellaneous
50.00
Dunlop Service B.V.
Full consolidation method
Klazienaveen Manufacturing & commercial
100.00
Fenner Dunlop B.V.
Full consolidation method
Drachten Manufacturing & commercial
100.00
De Bruin & Berends B.V.
Full consolidation method
Drachten
Financial
100.00
Dunlop Assets B.V.
Full consolidation method
Klazienaveen
Financial
100.00
Dunlop Enerka Netherlands B.V.
Full consolidation method
Drachten
Financial
100.00
Dunlop Enerka Netherlands Holding B.V.
Full consolidation method
Klazienaveen
Financial
100.00
Dunlop Manufacturing Holdings B.V.
Full consolidation method
Drachten
Financial
100.00
Dunlop Service International B.V.
Full consolidation method
Drachten
Financial
100.00
Dunlop Conveyor Belting International B.V.
Full consolidation method
Drachten
Financial
100.00
Dunlop Sales & Marketing B.V.
Full consolidation method
Klazienaveen
Financial
100.00
Fenner Dunlop Steelcord B.V.
Full consolidation method
Drachten
Financial
100.00
Camso Nederland B.V.
Full consolidation method
Nieuwegein
Commercial
100.00
Masternaut B.V.
Full consolidation method
Breda
Commercial
100.00
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Companies
Consolidation method
Registered office
Type
% interest
POLAND
Michelin Polska sp. z o.o.
Full consolidation method
Olsztyn Manufacturing & commercial
100.00
Euromaster Polska sp. z.o.o.
Full consolidation method
Olsztyn
Commercial
100.00
Michelin Development Foundation
(Fundacja Rozwoju Michelin)
Full consolidation method
Olsztyn
Miscellaneous
100.00
Dunlop Conveyor Belting Polska sp. z.o.o.
Full consolidation method
Mikołów Manufacturing & commercial
100.00
Camso Polska S.A.
Full consolidation method
Warsaw
Commercial
100.00
PORTUGAL
Michelin-Companhia Luso-Pneu, Limitada
Full consolidation method
Lisbon
Miscellaneous
100.00
Euromaster Portugal - Sociedade Unipessoal,
LDA
Full consolidation method
Lisbon
Commercial
100.00
CZECH REPUBLIC
Euromaster Česká republika s.r.o.
(Euromaster Ceska republika s.r.o.)
Full consolidation method
Prague
Commercial
100.00
Michelin Česká republika s.r.o.
(Michelin Ceska republika s.r.o.)
Full consolidation method
Prague
Miscellaneous
100.00
Cemat trading spol sro
Full consolidation method
Bohumín
Commercial
100.00
Ihle Czech, s.r.o.
Full consolidation method
Plzen
Commercial
100.00
ROMANIA
Michelin Romania S.A.
Full consolidation method
Voluntari Manufacturing & commercial
99.86
Euromaster Tyre & Services Romania S.A.
Full consolidation method
Voluntari
Commercial
100.00
Ihle Anvelope SRL
Full consolidation method
Pitesti
Commercial
100.00
UNITED KINGDOM
Michelin Tyre Public Limited Company
Full consolidation method
Stoke-on-Trent Manufacturing & commercial
100.00
ATS Euromaster Limited
Full consolidation method
Birmingham
Commercial
100.00
Associated Tyre Specialists (Investment)
Limited
Full consolidation method
Birmingham
Commercial
100.00
ATS Property and Real Estate Limited
Full consolidation method
Birmingham
Commercial
100.00
Blackcircles.com Limited
Full consolidation method
Edinburgh
Commercial
100.00
Michelin Finance (U.K.) Limited
Full consolidation method
London
Financial
100.00
Michelin Lifestyle Limited
Full consolidation method
Stoke-on-Trent
Commercial
100.00
Michelin Development Limited
Full consolidation method
Stoke-on-Trent
Miscellaneous
100.00
TFM Holdings Limited
Full consolidation method
Eastleigh
Commercial
100.00
Michelin Travel Partner UK Limited
Full consolidation method
Stoke-on-Trent
Commercial
100.00
Fenner Group Holdings Limited
Full consolidation method
Stoke-on-Trent
Financial
100.00
Fenner International Limited
Full consolidation method
Stoke-on-Trent
Financial
100.00
J.H. Fenner & Co. Limited
Full consolidation method
Stoke-on-Trent Manufacturing & commercial
100.00
Hallite Seals International Limited
Full consolidation method
Stoke-on-Trent Manufacturing & commercial
100.00
James Dawson & Son Limited
Full consolidation method
Stoke-on-Trent Manufacturing & commercial
100.00
Dunlop Conveyor Belting Investments Limited
Full consolidation method
Stoke-on-Trent
Financial
100.00
Fenner N.A. Limited
Full consolidation method
Stoke-on-Trent
Financial
100.00
Hall & Hall Limited
Full consolidation method
Stoke-on-Trent
Financial
100.00
J.H. Fenner & Co. (Advanced
Engineering Products) Limited
Full consolidation method
Stoke-on-Trent
Financial
100.00
J.H. Fenner & Co. (India) Limited
Full consolidation method
Stoke-on-Trent
Financial
100.00
James Dawson (China) Limited
Full consolidation method
Stoke-on-Trent
Financial
100.00
Fenner Pension Scheme Trustee Limited
Full consolidation method
Stoke-on-Trent
Miscellaneous
100.00
Fenner International Australia Limited
Full consolidation method
Stoke-on-Trent
Financial
100.00
Fenner Advanced Sealing Investments Limited
Full consolidation method
Hull
Financial
100.00
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Companies
Consolidation method
Registered office
Type
% interest
Fenner Advanced Sealing Technologies
Limited
Full consolidation method
Hull
Financial
100.00
Fenner Drives Limited
Full consolidation method
Hull
Financial
100.00
Fenner Dunlop Limited
Full consolidation method
Hull
Financial
100.00
Hallite Limited
Full consolidation method
Hull
Financial
100.00
Hallite Polytek Limited
Full consolidation method
Hull
Financial
100.00
Indico (Europe) Limited
Full consolidation method
Hull
Financial
100.00
J.H. Fenner & Co. (Special Belting) Limited
Full consolidation method
Hull
Financial
100.00
Norwegian Seals UK Limited
Full consolidation method
Hull
Financial
100.00
Turner Belting Limited
Full consolidation method
Hull
Financial
100.00
Vulcanisers International Limited
Full consolidation method
Hull
Financial
100.00
Camso UK Limited
Full consolidation method
Cowbridge
Commercial
100.00
Masternaut Group Holdings Limited
Full consolidation method
Marlow
Financial
100.00
Masternaut Limited
Full consolidation method
Aberford
Commercial
100.00
Masternaut Bidco Limited
Full consolidation method
London
Financial
100.00
Masternaut Holdings Limited
Full consolidation method
Marlow
Commercial
100.00
Masternaut ITS Limited
Full consolidation method
Aberford
Commercial
100.00
Masternaut Risk Solutions Limited
Full consolidation method
Marlow
Commercial
100.00
Old World Limited
Full consolidation method
London
Miscellaneous
100.00
Telefleet Limited
Full consolidation method
London
Miscellaneous
100.00
Easy Sailing Limited
Full consolidation method
Aberford
Miscellaneous
100.00
SERBIA
Tigar Tyres d.o.o.
Full consolidation method
Pirot Manufacturing & commercial
100.00
SLOVAKIA
Michelin Slovensko, s.r.o.
Full consolidation method
Bratislava
Miscellaneous
100.00
Ihle Slovakia s.r.o.
Full consolidation method
Bratislava
Commercial
100.00
Ihle Slovakia Logistic a Servis s.r.o.
Full consolidation method
Bratislava
Commercial
100.00
SLOVENIA
Michelin Slovenija, pnevmatike, d.o.o.
Full consolidation method
Ljubljana
Miscellaneous
100.00
Ihle pnevmatike, d.o.o.
Full consolidation method
Maribor
Commercial
100.00
SWEDEN
Euromaster AB
Full consolidation method
Varberg
Commercial
100.00
Michelin Nordic AB
Full consolidation method
Stockholm
Commercial
100.00
Masternaut AB
Full consolidation method
Stockholm
Commercial
100.00
Scandinavian Enviro Systems AB
Equity method
Gothenburg Manufacturing & commercial
20.00
SWITZERLAND
Euromaster (Suisse) S.A.
Full consolidation method
Givisiez
Commercial
100.00
Nitor S.A.
Full consolidation method
Granges-Paccot
Financial
100.00
Michelin Suisse S.A.
Full consolidation method
Givisiez
Commercial
100.00
Compagnie Financière Michelin Suisse S.A.
Full consolidation method
Granges-Paccot
Financial
100.00
Michelin Recherche et Technique S.A.
Full consolidation method
Granges-Paccot
Miscellaneous
100.00
Michelin Global Mobility S.A.
Full consolidation method
Granges-Paccot
Miscellaneous
100.00
Michelin Mexico Properties Sàrl
Full consolidation method
Granges-Paccot
Financial
100.00
Michelin Finanz Gesellschaft
für Beteiligungen S.A.
Full consolidation method
Granges-Paccot
Financial
100.00
Michelin Invest S.A.
Full consolidation method
Granges-Paccot
Financial
100.00
Ihle Service & Logistik Schweiz AG
Full consolidation method
Bülach
Commercial
100.00
Swissco Project S.A.
Equity method
Neuchâtel
Miscellaneous
20.00
Camso Schweiz AG
Full consolidation method
Schaffhouse
Commercial
100.00
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Companies
Consolidation method
Registered office
Type
% interest
TURKEY
Michelin Lastikleri Ticaret A.S.
Full consolidation method
Istanbul
Commercial
100.00
Euromaster Lastik Ve Servis Limited Sirketi
Full consolidation method
Istanbul
Commercial
100.00
Camso Lastik Ticaret Limited Sirketi
Full consolidation method
Istanbul
Commercial
100.00
AFRICA/INDIA/MIDDLE-EAST
SOUTH AFRICA
Michelin Tyre Company South Africa
Proprietary Limited
Full consolidation method
Boksburg
Commercial
100.00
Fenner (South Africa) (Pty) Limited
Full consolidation method
Isando
Financial
100.00
Fenner Conveyor Belting (South Africa)
(Pty) Limited
Full consolidation method
Isando Manufacturing & commercial
71.00
Michelin Connected Fleet South Africa
(Pty) Limited
Full consolidation method
Boksburg
Miscellaneous
100.00
ALGERIA
Société d’Applications Techniques Industrielles
Full consolidation method
Algiers
Commercial
100.00
SAUDI ARABIA
E.A. Juffali & Brothers for Tyres
Equity method
Jeddah
Commercial
50.00
CAMEROON
Société Moderne du Pneumatique Camerounais
Full consolidation method
Douala
Commercial
100.00
IVORY COAST
Société Internationale de Plantations d’Hévéas
Equity method
Abidjan
Miscellaneous
18.00
UNITED ARAB EMIRATES
Michelin AIM FZCO
Full consolidation method
Dubai
Miscellaneous
100.00
Dunlop Service Middle-East, LLC
Full consolidation method
Dubai Manufacturing & commercial
49.00
GHANA
Dunlop Conveyor Belting Ghana Limited
Full consolidation method
Accra Manufacturing & commercial
100.00
INDIA
Michelin India Private Limited
Full consolidation method
Chennai
Manufacturing
100.00
Michelin India Technology Center Private Limited
Full consolidation method
Gurgaon
Miscellaneous
100.00
Fenner Conveyor Belting Private Limited
Full consolidation method
Madurai Manufacturing & commercial
100.00
Hallite Sealing Solutions India Private Limited
Full consolidation method
Bangalore Manufacturing & commercial
100.00
Camso India LLP
Full consolidation method
Gurgaon
Commercial
100.00
KENYA
Tyre Distribution Africa Limited
Equity method
Nairobi
Miscellaneous
49.00
MOROCCO
Fenner Dunlop Maroc SARL
Full consolidation method
Casablanca Manufacturing & commercial
100.00
Michelin Maroc SARL
Full consolidation method
Casablanca
Commercial
100.00
NIGERIA
Michelin Tyre Services Company Ltd.
Full consolidation method
Lagos
Commercial
95.48
SRI LANKA
Camso Loadstar (Private) Limited
Full consolidation method
Ja-Ela
Manufacturing
100.00
Camso Trading (Private) Limited
Full consolidation method
Ja-Ela
Commercial
100.00
Camso Global Business Services (Private) Limited
Full consolidation method
Colombo
Financial
100.00
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Consolidated financial statements for the year ended December 31, 2021
Companies
Consolidation method
Registered office
Type
% interest
NORTH AMERICA
CANADA
Michelin North America (Canada) Inc.
Full consolidation method
Laval Manufacturing & commercial
100.00
Michelin Retread Technologies (Canada) Inc.
Full consolidation method
New Glasgow
Commercial
100.00
Michelin Development (Canada) Inc.
Full consolidation method
New Glasgow
Miscellaneous
100.00
Oliver Rubber Canada Limited
Full consolidation method Granton, Nova Scotia
Commercial
100.00
Fenner Dunlop (Bracebridge), Inc.
Full consolidation method
Bracebridge Manufacturing & commercial
100.00
Hallite Seals (Canada) Ltd
Full consolidation method
Mississauga Manufacturing & commercial
100.00
Camso Inc.
Full consolidation method
Magog
Financial
100.00
Camso Distribution Canada Inc.
Full consolidation method
Mississauga
Commercial
100.00
Klinge Tire Management Consultants CA Ltd
Full consolidation method
Toronto
Miscellaneous
100.00
UNITED STATES
Michelin North America, Inc.
Full consolidation method
New York Manufacturing & commercial
100.00
Michelin Retread Technologies, Inc.
Full consolidation method
Wilmington
Commercial
100.00
CR Funding Corporation
Full consolidation method
Wilmington
Financial
100.00
Michelin Corporation
Full consolidation method
New York
Financial
100.00
Oliver Rubber Company, LLC
Full consolidation method
Wilmington
Manufacturing
100.00
NexTraq, LLC
Full consolidation method
Wilmington
Commercial
100.00
Tire Centers West, LLC
Full consolidation method
Wilmington
Commercial
100.00
Pelham 2 Corp.
Full consolidation method
Wilmington
Financial
100.00
Lehigh Technologies, Inc.
Full consolidation method
Wilmington
Commercial
100.00
TBC Corporation
Equity method Palm Beach Gardens
Commercial
50.00
T & W Tire, LLC
Equity method
Oklahoma City
Commercial
25.00
Snider Tire, Inc.
Equity method
Greensboro
Commercial
25.00
Fenner, Inc.
Full consolidation method
Harrisburg Manufacturing & commercial
100.00
Fenner America, Inc.
Full consolidation method
Wilmington
Financial
100.00
Fenner Advanced Sealing Technologies, LLC
Full consolidation method
Wilmington
Financial
100.00
Fenner U.S., Inc.
Full consolidation method
Wilmington
Financial
100.00
American Industrial Plastics, LLC
Full consolidation method
Plantation Manufacturing & commercial
100.00
CDI Energy Products, LLC
Full consolidation method
Dallas Manufacturing & commercial
100.00
Hallite Seals Americas, LLC
Full consolidation method
Plymouth Manufacturing & commercial
100.00
Solesis, Inc.
Full consolidation method
Harrisburg
Financial
100.00
Fenner Dunlop (Toledo), LLC
Full consolidation method
Columbus Manufacturing & commercial
100.00
Solesis Holdings, LLC
Equity method
Charlotte
Miscellaneous
49.00
Mandals US, LLC
Full consolidation method
Dallas Manufacturing & commercial
100.00
Camso Holding USA, LLC
Full consolidation method
Wilmington
Financial
100.00
Camso Manufacturing USA, Ltd.
Full consolidation method
Wilmington
Manufacturing
100.00
Camso USA Inc.
Full consolidation method
Tallahassee
Commercial
100.00
Industrial Tire/DFW, LLC
Full consolidation method
Irving
Commercial
67.00
Blacksmith OTR, LLC
Equity method
Rome
Miscellaneous
50.00
Airflash, Inc.
Full consolidation method
Saratoga
Miscellaneous
100.00
Achilles Tires USA, Inc.
Full consolidation method
Los Angeles
Commercial
99.64
The Wine Advocate, Inc.
Full consolidation method
Parkton
Miscellaneous
100.00
Tablet, LLC
Full consolidation method
Wilmington
Miscellaneous
100.00
Klinge Tire Management Consultants, Inc.
Full consolidation method
Carson City
Miscellaneous
100.00
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Companies
Consolidation method
Registered office
Type
% interest
MEXICO
Michelin Sascar Mexico S.A. de C.V.
Full consolidation method
Querétaro
Commercial
100.00
Industrias Michelin, S.A. de C.V.
Full consolidation method
Querétaro Manufacturing & commercial
100.00
Michelin Mexico Services, S.A. de C.V.
Full consolidation method
Querétaro
Miscellaneous
100.00
Camso Distribución México, S.A. de C.V.
Full consolidation method
Tultitlan
Commercial
100.00
PANAMA
Michelin Panama Corp.
Full consolidation method
Panama
Miscellaneous
100.00
SOUTH AMERICA
ARGENTINA
Michelin Argentina Sociedad Anónima,
Industrial, Comercial y Financiera
Full consolidation method
Buenos Aires
Commercial
100.00
Rodaco Argentina S.A.U.
Full consolidation method
Buenos Aires
Commercial
100.00
BRAZIL
Sociedade Michelin de Participações,
Indústria e Comércio Ltda
Full consolidation method
Rio de Janeiro Manufacturing & commercial
100.00
Sociedade Tyreplus Brasil Ltda.
Full consolidation method
Rio de Janeiro
Commercial
100.00
Plantações Michelin da Bahia Ltda.
Full consolidation method
Rio de Janeiro
Miscellaneous
100.00
Plantações E. Michelin Ltda.
Full consolidation method
Rio de Janeiro
Miscellaneous
100.00
Sascar Tecnologia e Segurança
Automotiva S.A.
Full consolidation method
Barueri
Miscellaneous
100.00
Seva Engenharia Eletrônica S.A.
Full consolidation method
Contagem
Miscellaneous
100.00
CVB Produtos Industriais Ltda.
Full consolidation method
São Paulo
Manufacturing
100.00
Camso Holding Brasil Ltda.
Full consolidation method
São Paulo
Financial
100.00
Camso Indústria de Produtos
de Borracha Ltda.
Full consolidation method
Alvorada
Commercial
100.00
CHILE
Michelin Chile Ltda.
Full consolidation method
Santiago
Commercial
100.00
Conveyor Services S.A.
Full consolidation method
Antofagasta Manufacturing & commercial
100.00
Fenner International Chile Limitada
Full consolidation method
Las Condes
Financial
100.00
Michelin Specialty Materials Recovery SpA
Full consolidation method
Santiago Manufacturing & commercial
100.00
COLOMBIA
Industria Colombiana de Llantas S.A.
Full consolidation method
Bogotá
Commercial
99.96
ECUADOR
Michelin del Ecuador S.A.
Full consolidation method
Quito
Commercial
100.00
PERU
Michelin del Perú S.A.
Full consolidation method
Lima
Commercial
100.00
VENEZUELA
Michelin Venezuela, S.A.
Equity method
Valencia
Commercial
100.00
SOUTHEAST ASIA/AUSTRALIA
AUSTRALIA
Michelin Australia Pty Ltd
Full consolidation method
Melbourne
Commercial
100.00
Klinge Holdings Pty Ltd
Full consolidation method
Brisbane
Miscellaneous
100.00
Hallite Seals Australia Pty Limited
Full consolidation method
Wetherill Park Manufacturing & commercial
100.00
Transeals Pty Limited
Full consolidation method
Welshpool
Financial
100.00
Fenner Dunlop Australia Pty Limited
Full consolidation method
West Footscray Manufacturing & commercial
100.00
Fenner (Pacific) Pty Limited
Full consolidation method
West Footscray
Financial
100.00
Fenner Australia Financing Pty Limited
Full consolidation method
West Footscray
Financial
100.00
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Companies
Consolidation method
Registered office
Type
% interest
Australian Conveyor Engineering Pty Limited
Full consolidation method
West Footscray Manufacturing & commercial
100.00
Agile Maintenance Services Pty Limited
Full consolidation method
West Footscray
Financial
100.00
Fenner Investments Australia Limited
Partnership
Full consolidation method
West Footscray
Financial
100.00
BBV Partnership
Full consolidation method
West Footscray Manufacturing & commercial
100.00
Belle Banne Conveyor Services Pty Limited
Full consolidation method
West Footscray Manufacturing & commercial
100.00
Bearcat Tyres Pty Ltd
Full consolidation method
Girraween
Commercial
100.00
INDONESIA
PT Michelin Indonesia
Full consolidation method
Jakarta
Commercial
100.00
PT Synthetic Rubber Indonesia
Full consolidation method
Jakarta
Manufacturing
55.00
PT Royal Lestari Utama
Equity method
Jakarta
Miscellaneous
49.07
PT Lestari Asri Jaya
Equity method
Jakarta
Miscellaneous
29.80
PT Multi Kusuma Cemerlang
Equity method
Jakarta
Miscellaneous
29.33
PT Wanamukti Wisasa
Equity method
Jakarta
Miscellaneous
23.22
PT Multistrada Arah Sarana Tbk
Full consolidation method
Bekasi Manufacturing & commercial
99.64
PT Kawasan Industri Multistrada
Full consolidation method
Bekasi
Miscellaneous
99.60
PT Penta Artha Impressi
Equity method
Jakarta
Commercial
19.93
MALAYSIA
Michelin Malaysia Sdn. Bhd.
Full consolidation method
Petaling Jaya
Commercial
100.00
Michelin Services (S.E.A.) Sdn. Bhd.
Full consolidation method
Petaling Jaya
Miscellaneous
100.00
NEW ZEALAND
Tyreline Distributors Limited
Equity method
Hamilton
Commercial
25.00
Beau Ideal Limited
Equity method
Te Awamutu
Commercial
25.01
Camso New Zealand Limited
Full consolidation method
Auckland
Commercial
100.00
SINGAPORE
Michelin Asia (Singapore) Co. Pte. Ltd.
Full consolidation method
Singapore
Commercial
100.00
Michelin Asia-Pacific Pte. Ltd.
Full consolidation method
Singapore
Miscellaneous
100.00
Michelin Asia-Pacific Import (SG) Pte. Ltd.
Full consolidation method
Singapore
Miscellaneous
100.00
Michelin Asia-Pacific Export (SG) Pte. Ltd.
Full consolidation method
Singapore
Miscellaneous
100.00
Michelin Asia-Pacific Import-Export (SG) Pte. Ltd.
Full consolidation method
Singapore
Miscellaneous
100.00
Société des Matières Premières Tropicales Pte. Ltd.
Full consolidation method
Singapore
Miscellaneous
100.00
Wine Advocate Pte. Ltd.
Full consolidation method
Singapore
Miscellaneous
100.00
Fenner Singapore Pte. Ltd.
Full consolidation method
Singapore
Financial
100.00
CDI Energy Products Pte. Ltd.
Full consolidation method
Singapore Manufacturing & commercial
100.00
THAILAND
Michelin Siam Company Limited
Full consolidation method
Bangkok Manufacturing & commercial
100.00
Michelin Experience (E2A) Co., Ltd.
Full consolidation method
Bangkok
Commercial
49.00
Michelin Roh Co., Ltd.
Full consolidation method
Bangkok
Miscellaneous
100.00
NTeq Polymer Co., Ltd.
Equity method
Surat Thani
Miscellaneous
45.00
VIETNAM
Michelin Vietnam Company Limited
Full consolidation method
Ho Chi Minh City
Commercial
100.00
Camso Vietnam Co., Ltd
Full consolidation method
Tan Uyen
Manufacturing
100.00
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Companies
Consolidation method
Registered office
Type
% interest
CHINA
CHINA
Michelin Shenyang Tire Co., Ltd.
Full consolidation method
Shenyang
Manufacturing
100.00
Shanghai Michelin Tire Co., Ltd.
Full consolidation method
Shanghai
Manufacturing
100.00
Michelin Asia (Hong Kong) Limited
Full consolidation method
Hong Kong
Commercial
100.00
Michelin (China) Investment Co., Ltd.
Full consolidation method
Shanghai
Commercial
100.00
Shanghai Suisheng Information
Technology Co., Ltd.
Full consolidation method
Shanghai
Commercial
100.00
Michelin Tire Research and Development
Center (Shanghai) Co., Ltd.
Full consolidation method
Shanghai
Miscellaneous
100.00
Tyre Plus (Shanghai) Auto Accessories
Trading Co., Ltd.
Full consolidation method
Shanghai
Commercial
100.00
Michelin (Shanghai) Aircraft Tires
Trading Co., Ltd.
Full consolidation method
Shanghai
Commercial
100.00
DT Asia Holding Co., Limited
Equity method
Hong Kong
Commercial
40.00
Dawson Polymer Products (Shanghai)
Company Limited
Full consolidation method
Shanghai Manufacturing & commercial
100.00
Hallite Shanghai Company Limited
Full consolidation method
Shanghai Manufacturing & commercial
100.00
Dunlop Conveyor Belting (Shanghai)
Company Limited
Full consolidation method
Shanghai Manufacturing & commercial
100.00
Shanghai Fenner Conveyor Belting
Company Limited
Full consolidation method
Shanghai Manufacturing & commercial
85.00
Fenner Management (Shanghai)
Company Limited
Full consolidation method
Shanghai Manufacturing & commercial
100.00
Camso Rubber Products (Qingdao) Co., Ltd.
Full consolidation method
Qingdao
Manufacturing
100.00
Camso Enterprise Management (China)
Co., Ltd.
Full consolidation method
Shanghai
Commercial
100.00
Wine Advocate (HK) Ltd.
Full consolidation method
Hong Kong
Miscellaneous
100.00
TAIWAN
Michelin Tire Taiwan Co., Ltd.
Full consolidation method
Taipei
Commercial
100.00
EASTERN EUROPE
RUSSIA
Michelin Russian Tyre Manufacturing
Company LLC
Full consolidation method
Davydovo Manufacturing & commercial
100.00
Camso CIS LLC
Full consolidation method
Moscow
Commercial
100.00
UKRAINE
Michelin Ukraine LLC
Full consolidation method
Kiev
Commercial
100.00
JAPAN/KOREA
JAPAN
Nihon Michelin Tire Co., Ltd.
Full consolidation method
Tokyo
Commercial
100.00
Camso Japan Co., Ltd.
Full consolidation method
Yokohama
Commercial
100.00
SOUTH KOREA
Michelin Korea Co., Ltd.
Full consolidation method
Seoul
Commercial
100.00
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Consolidated financial statements for the year ended December 31, 2021
NOTE 37 STATUTORY AUDITORS’ FEES
(in € thousands)
Deloitte
PricewaterhouseCoopers
Statutory Auditor
(Deloitte & Associés)
Network
Statutory Auditor
(PricewaterhouseCoopers
Audit)
Network
Amount
%
Amount
%
Amount
%
Amount
%
STATUTORY AUDIT AND HALF-YEAR
REVIEW OF THE INDIVIDUAL AND
CONSOLIDATED FINANCIAL STATEMENTS
▶Issuer
462
34%
-
-
463
31%
-
-
▶Fully consolidated subsidiaries
890
66%
3,796
100%
1,049
69%
3,382
100%
Sub-total
1,352
100%
3,796
100%
1,512
100%
3,382
100%
NON-AUDIT SERVICES
▶Issuer(1)
-
-
-
-
142
80%
-
-
▶Fully consolidated subsidiaries(2)
71
100%
1,371
100%
36
20%
840
100%
Sub-total
71
100%
1,371
100%
178
100%
840
100%
TOTAL
1,423
5,167
1,689
4,222
(1) These services consist mainly of an independent third-party body engagement by PricewaterhouseCoopers Audit.
(2) These services correspond for the most part to procedures performed in connection with acquisitions or planned acquisitions, diagnostic reviews, tax
compliance reviews and certifications issued at the request of the audited companies.
390
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Consolidated financial statements for the year ended December 31, 2021
5.2.2
STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED
FINANCIAL STATEMENTS
(For the year ended December 31, 2021)
This is a translation into English of the statutory auditors’ report on the financial statements of the Compagnie Générale des
Etablissements Michelin issued in French and it is provided solely for the convenience of English-speaking users.
This statutory auditors’ report includes information required by French law, such as information about the appointment of the
statutory auditors or verification of the management report and other documents provided to shareholders.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards
applicable in France.
Compagnie Générale des Établissements Michelin
23 place des Carmes-Déchaux
63000 Clermont-Ferrand, France
To the Shareholders,
Opinion
In compliance with the engagement entrusted to us by your Annual Shareholders Meeting, we have audited the accompanying
consolidated financial statements of Compagnie Générale des Établissements Michelin for the year ended December 31, 2021.
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position
of the Group as at December 31, 2021 and of the results of its operations for the year then ended in accordance with International
Financial Reporting Standards as adopted by the European Union.
The audit opinion expressed above is consistent with our report to the Audit Committee.
Basis for Opinion
Audit Framework
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Statutory Auditors' Responsibilities for the Audit of the
Consolidated Financial Statements section of our report.
Independence
We conducted our audit engagement in compliance with independence requirements of the French Commercial Code (code de
commerce) and the French Code of Ethics (code de déontologie) for statutory auditors, for the period from January 1st, 2021 to the
date of our report, and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU)
No 537/2014.
Justification of Assessments – Key Audit Matters
Due to the global crisis related to the Covid-19 pandemic, the financial statements of this period have been prepared and audited
under specific conditions. Indeed, this crisis and the exceptional measures taken in the context of the state of sanitary emergency have
had numerous consequences for companies, particularly on their operations and their financing, and have led to greater uncertainties
on their future prospects. Those measures, such as travel restrictions and remote working, have also had an impact on the companies'
internal organization and the performance of the audits.
It is in this complex and evolving context that, in accordance with the requirements of Articles L. 823-9 and R. 823-7 of the French
Commercial Code (code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating
to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the consolidated
financial statements of the current period, as well as how we addressed those risks.
These matters were addressed in the context of our audit of the consolidated financial statements as a whole, approved in the
conditions mentioned above, and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the
consolidated financial statements.
Valuation of goodwill and intangible assets
Risk identified
As of December 31, 2021, the net value of goodwill and intangible assets (in particular trademarks and customer relationships)
amounted respectively to € 2,286 million and to € 1,811 million, for total assets on the statement of financial position of
€ 34,701 million.
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Consolidated financial statements for the year ended December 31, 2021
For the purpose of impairment testing in accordance with IAS 36, these assets are allocated to cashgenerating units (CGUs) or – in the
case of goodwill– to groups of CGUs. Notes‑ 2.7.1 and 3.17 to the consolidated financial statements describe the methods used by
the Group to ensure that the net carrying amount of non-current non-financial assets allocated to CGUs does not exceed their
recoverable amount.
For the majority of the assets, the recoverable amount is assessed on the basis of the value in use determined from discounted future
cash flows, using the forecasts set out in the Group’s five-year business plan. For the Distribution CGUs, the recoverable amount is
measured based on the fair value of land and buildings, which represent most of their assets, less costs of disposal.
We considered the valuation of goodwill and intangible assets to be a key audit matter, in particular for the CGU carrying risk of
impairment, due to their materiality in the consolidated statement of financial position and because the determination of their
recoverable amount requires judgment, notably for the cash flow projections.
How our audit addressed this risk
With the assistance of our valuation experts, we performed the following procedures with respect to impairment tests:
▶examined the compliance of the method applied by the Group with the provisions of IAS 36 “Impairment of Assets”;
▶performed a critical assessment of the analyses conducted by the Group to identify the assets carrying a risk of impairment;
▶reconciled the value of the assets subject to the impairment tests with the consolidated financial statements to ensure that the
CGUs cover all of the Group’s assets;
▶verified that the future cash flow used are consistent with the forecasts validated by Management;
▶assessed the reasonableness of the forecasts with respect to revenue, EBITDA and investments in renewals, which are the main
assumptions underlying the cash flow amounts, with the finance managers of the relevant businesses, in particular with respect to
past performance and by performing sensitivity analyses on the various inputs;
▶corroborate, for the sensitive CGUs, the externalized EBITDA multiple on the basis of cash flow projections with those derived from
comparable market data;
▶assessed the reasonableness of the discount rates and long-term growth rates used to perform the impairment tests, based on
comparable market data;
▶verified the appropriateness of the disclosures provided in notes 2.7.1, 3.17, 9.3 and 13 to the consolidated financial statements.
Measurement of the employee benefit obligations under defined benefit plans
Risk identified
The Group has set up several post-employment defined benefit plans, mainly pension and health insurance plans and end-of service
benefits. A significant portion is comprised of defined benefit plans for which the Group undertakes to pay the agreed benefits to current
or retired employees, mainly in North America and in certain European countries (mainly the United Kingdom, Germany and France).
The actuarial value of the Group’s cumulative employee benefit obligations amounted to € 10,449 million at December 31, 2021.
Given that some of these liabilities are covered by dedicated assets (plan assets) with a fair value (after the application of the asset
ceiling) of € 7,419 million, mainly in North America and the United Kingdom, the net obligation recognized in the consolidated
statement of financial position at December 31, 2021 amounted to € 3,030 million.
In order to measure the Group’s obligations under the defined benefit plans and the expense to be recognized during the period,
Management must exercise significant judgment to determine, for each of the relevant countries and plans, the appropriate
assumptions to be used, the main ones being the discount and inflation rates and demographic assumptions such as the long-term
rate of change in salaries and mortality tables. These elements are described in note 3.24.1.
Changes in any of the key assumptions underlying the measurements can have a material impact on the measurement of the
recognized net liability and on the Group’s total comprehensive income. Management calls upon external actuaries to assist in
determining these assumptions.
We considered the measurement of the employee benefit obligations under defined benefit plans to be a key audit matter given their
amounts, the related judgment to determine the main actuarial or demographic assumptions.
How our audit addressed this risk
We made inquiries about the process implemented by Management to measure the Group’s obligations under post-employment
defined benefit plans for the main plans in North America, the United Kingdom, Germany and France.
With the assistance of our experts, our procedures first consisted in assessing the reasonableness of the main assumptions used, in
particular the discount and inflation rates, with regard to market conditions and the consistency of the assumptions relating to
changes in salaries and demographic data (mortality tables, inflation rates for medical costs.) with the details of the plans.
Our other procedures consisted in:
▶examining the impact of the main amendments made to certain plans and verifying their correct recognition;
▶regarding plan assets, making inquiries about the process implemented by Management to document the existence and
measurement of these assets and, using sampling techniques, verifying their existence and the consistency of their measurement
with the confirmations from third parties;
▶using sampling techniques, confirming that individual data and the actuarial and demographic assumptions used by Management
have been correctly transcribed by the external actuaries in their calculation of the Group’s benefit obligations;
▶verifying the appropriateness of the disclosures provided in notes 9.4 and 27 to the consolidated financial statements.
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Consolidated financial statements for the year ended December 31, 2021
Risk assessment relating to tax litigation in Germany
Risk identified
The Group carries out its business activities in different and sometimes uncertain legal, tax and regulatory environments. In the
ordinary course of business, the tax and social security authorities in the countries in which the Group operates have questions relating
to its activities. Such audits can result in tax adjustments or disputes with the relevant local authorities.
The estimated risk relating to each dispute is reviewed regularly by the management team of the relevant subsidiary and at Group
level, with the assistance of external counsel for the most material or complex disputes.
As described in note 11.2 to the consolidated financial statements, the Group is specifically involved in a dispute with the local
authorities in Germany, following several tax audits covering the years 2005 to 2009 and 2010 to 2014, which resulted in significant
tax adjustments. The tax adjustment related to the period 2005-2009, which primarily concerns transfer pricing, has been reduced
from € 382 million to € 96 million on a tax base in 2020.
During the 2021 financial year, an agreement was reached with the German tax authorities on the main components of the tax
adjustment. The Group has accepted a tax base adjustment of € 31 million for the period 2005 to 2009 and € 58 million for the
period 2010 to 2014. The net residual risk estimated by the Group is provisioned as of December 31, 2021.
We considered the risk assessment relating to tax litigation in Germany to be a key audit matter given the potential amounts at stake,
the complexity of the related tax regulations and the significant level of judgment required to determine the accounting positions
relating to this dispute.
How our audit addressed this risk
With the assistance of our experts, we performed the following procedures:
▶conducted interviews with the management team of the relevant German entity and with Group Management to assess the status
of the proceedings and to quantify the potential impact on the consolidated financial statements of the adjustments notified or in
the process of being notified by the tax authorities and of the disputes underway with the tax authorities;
▶consulted the decisions of the local legal and tax authorities as well as the relevant entity’s correspondence with those authorities
and with their external counsel;
▶verified that the accounting treatment of this risk complies with the provisions of IAS 12 and IFRIC 23 “Uncertainty Over Income Tax
Treatments”.
We also assessed the appropriateness of the disclosures provided in note 11.2 to the consolidated financial statements on contingent
liabilities.
Specific Verifications
We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and
regulations of the information pertaining to the Group presented in the Managing Chairman’s management report.
We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.
We attest that the consolidated non-financial statement required by Article L. 225-102-1 of the French Commercial Code (code de
commerce) is included in the information pertaining to the Group presented in the management report, it being specified that, in
accordance with the provisions of Article L. 823-10 of the code, we have verified neither the fair presentation nor the consistency with
the consolidated financial statements of the information contained therein. This information should be reported on by an independent
third party.
Other Legal and Regulatory Verifications or Information
Format of presentation of the consolidated financial statements intended to be included in the annual
financial report
We have also verified, in accordance with the professional standard applicable in France relating to the procedures performed by the
statutory auditor relating to the annual and consolidated financial statements presented in the European single electronic format, that
the presentation of the consolidated financial statements intended to be included in the annual financial report mentioned in Article
L. 451-1-2, I of the French Monetary and Financial Code (code monétaire et financier), prepared under the responsibility of the
Managing Chairman, complies with the single electronic format defined in the European Delegated Regulation No 2019/815 of
17 December 2018. As it relates to consolidated financial statements, our work includes verifying that the tagging of these
consolidated financial statements complies with the format defined in the above delegated regulation.
Based on the work we have performed, we conclude that the presentation of the consolidated financial statements intended to be
included in the annual financial report complies, in all material respects, with the European single electronic format.
We have no responsibility to verify that the consolidated financial statements that will ultimately be included by your company in the
annual financial report filed with the AMF are in agreement with those on which we have performed our work.
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Consolidated financial statements for the year ended December 31, 2021
Appointment of the Statutory Auditors
We were appointed Statutory Auditors of Compagnie Générale des Établissements Michelin by the Annual Shareholders Meetings of
May 14, 2004 for PricewaterhouseCoopers Audit and May 7, 2010 for Deloitte & Associés.
At December 31, 2021, PricewaterhouseCoopers Audit and Deloitte & Associés were in the eighteenth and twelfth consecutive year of
their engagement, respectively.
Responsibilities of Management and Those Charged with Governance for the Consolidated
Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with
International Financial Reporting Standards as adopted by the European Union, and for such internal control as management
determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a
going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is
expected to liquidate the Company or to cease operations.
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risks
management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures.
The consolidated financial statements were approved by the Managing Chairman.
Statutory Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Objectives and audit approach
Our role is to issue a report on the consolidated financial statements. Our objective is to obtain reasonable assurance about whether
the consolidated financial statements as a whole are free from material misstatement. Reasonable assurance is a high level of
assurance but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
As specified in Article L. 823-10-1 of the French Commercial Code (code de commerce), our statutory audit does not include assurance
on the viability of the Company or the quality of management of the affairs of the Company.
As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor exercises
professional judgment throughout the audit and furthermore:
▶Identifies and assesses the risks of material misstatement of the consolidated financial statements, whether due to fraud or error,
designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and
appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
▶Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control.
▶Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management in the consolidated financial statements.
▶Assesses the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report.
However, future events or conditions may cause the Company to cease to continue as a going concern. If the statutory auditor
concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in
the consolidated financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed
therein.
▶Evaluates the overall presentation of the consolidated financial statements and assesses whether these statements represent the
underlying transactions and events in a manner that achieves fair presentation.
▶Obtains sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. The statutory auditor is responsible for the direction,
supervision and performance of the audit of the consolidated financial statements and for the opinion expressed on these
consolidated financial statements.
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Consolidated financial statements for the year ended December 31, 2021
Report to the Audit Committee
We submit a report to the Audit Committee which includes in particular a description of the scope of the audit and the audit program
implemented, as well as the results of our audit. We also report, if any, significant deficiencies in internal control regarding the
accounting and financial reporting procedures that we have identified.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgment, were of most
significance in the audit of the consolidated financial statements of the current period and which are therefore the key audit matters,
that we are required to describe in this report.
We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) N° 537/2014, confirming our
independence within the meaning of the rules applicable in France such as they are set in particular by Articles L. 822-10 to L. 822-14
of the French Commercial Code and in the French Code of Ethics (code de déontologie) for statutory auditors. Where appropriate, we
discuss with the Audit Committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.
Neuilly-sur-Seine and Paris-La Défense, February 18, 2022
The Statutory Auditors
French original signed by
PricewaterhouseCoopers Audit
Deloitte & Associés
Jean-Christophe Georghiou
Frédéric Gourd
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Financial statements
5.3
FINANCIAL STATEMENTS
5.3.1
REVIEW OF THE FINANCIAL STATEMENTS OF COMPAGNIE GÉNÉRALE
DES ÉTABLISSEMENTS MICHELIN
Compagnie Générale des Établissements Michelin (CGEM) is the
Group’s parent company, which directly or indirectly owns all
of its subsidiaries and affiliates. Its two main subsidiaries are:
▶Manufacture Française des Pneumatiques Michelin (MFPM), a
wholly-owned subsidiary that coordinates all of the
manufacturing, sales and research operations based in
France;
▶Compagnie Financière Michelin (CFM), a wholly-owned
subsidiary that owns most of the Group's manufacturing,
sales and research companies outside of France and
coordinates their operations.
Services provided by CGEM and CFM to the operating
companies are governed by contractual agreements.
A portion of these services are delivered by MFPM, which bills
the operating companies on a cost-plus basis.
Intra-group transactions involve sizable volumes in such areas as
intangible assets, a wide array of services, equipment and
facilities, raw materials and semi-finished and finished products.
The corresponding fees or prices are set using methods that
vary by type of transaction. However, all of the methods are
based on the arm’s length principle as defined in the OECD’s
Transfer Pricing Guidelines for Multinational Enterprises and Tax
Administrations.
5.3.1.1
Income statement
CGEM reported net income of €584 million in 2021, versus €1,011 million in 2020.
5.3.1.1.1
Net operating income
Net operating income amounted to €374 million in 2021, compared with €278 million in 2020. Royalty revenue came close to being
restored to the pre-Covid-19 level, rising by €162 million over the year. Operating expenses increased by €60 million to €611 million,
versus €551 million in 2020.
5.3.1.1.2
Net financial income
Net financial income amounted to €330 million in 2021, compared with €729 million the previous year, reflecting a decrease in
dividend income.
5.3.1.2
Balance sheet
Equity amounted to €8,116 million at December 31, 2021, versus €7,946 million a year earlier. The net increase corresponded mainly
to recognition of the Company's net income for the year less payment of the 2020 dividend and profit shares for €414 million.
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Financial statements
5.3.2
FINANCIAL STATEMENTS OF COMPAGNIE GÉNÉRALE DES ETABLISSEMENTS
MICHELIN (PARENT)
Balance sheet
Assets
(in € thousands)
Note
December 31, 2021
December 31,
2020
Cost
Depreciation,
amortization &
provisions
Net
Net
Intangible assets
5
427,758
(218,552)
209,206
220,795
Investments
6
13,696,538
(162,062)
13,534,476
13,905,101
Non-current assets
14,124,296
(380,614)
13,743,682
14,125,896
Receivables
7
885,566
-
885,566
839,175
Marketable securities
7
149,944
-
149,944
-
Derivative instruments
8.1
195,383
(87,249)
108,134
52,990
Cash
3,622,869
-
3,622,869
3,891,516
Prepaid expenses
4,953
-
4,953
7,601
Current assets
4,858,715
(87,249)
4,771,466
4,791,282
Deferred charges and bond call premiums
44,674
(6,843)
37,831
47,180
Conversion losses
1,713
-
1,713
1,725
TOTAL ASSETS
19,029,398
(474,706)
18,554,692
18,966,083
Equity and liabilities
(in € thousands)
Note
December 31,
2021
December 31,
2020
Share capital
9
357,061
356,680
Paid-in capital in excess of par
9
2,746,083
2,745,842
Revaluation reserve
10
624,772
624,772
Other reserves
10
1,283,218
1,283,580
Retained earnings
10
2,459,216
1,862,506
Net income
10
584,192
1,010,644
Untaxed reserves
10
61,598
61,598
Equity
8,116,140
7,945,622
Convertible bonds
8.1
1,053,600
977,816
Ordinary bonds and other borrowings
8.2
5,197,372
5,879,110
Other financial liabilities
11
3,736,923
3,731,168
Accrued taxes and payroll costs
11
31,366
9,532
Other liabilities
11
411,110
388,835
Derivative instruments
8.1
4,254
30,096
Liabilities
10,434,625
11,016,557
Conversion gains
3,927
3,904
TOTAL EQUITY AND LIABILITIES
18,554,692
18,966,083
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Financial statements
Income statement
(in € thousands)
Note
2021
2020
Royalties
13
959,769
797,951
Other revenue
1,064
626
Exchange gains
23,532
30,843
Revenue
984,365
829,420
External charges
14
(532,750)
(463,564)
Taxes other than on income
(3,625)
(8,268)
Payroll costs
(3,190)
(2,280)
Depreciation and amortization
5
(46,493)
(45,232)
Other expenses
(649)
(770)
Exchange losses
(23,841)
(30,827)
Operating expenses
(610,548)
(550,941)
NET OPERATING INCOME
373,817
278,479
Dividends from subsidiaries and affiliates
20
232,323
761,032
Interest income
72,152
59,677
Provision reversals
6
41,325
-
Exchange gains
366
503
Financial income
346,166
821,212
Amortization and provision expense
(26,962)
(25,906)
Interest expense
(89,455)
(65,663)
Exchange losses
(248)
(158)
Financial expense
(116,665)
(91,727)
NET FINANCIAL INCOME
229,501
729,485
INCOME BEFORE NON-RECURRING ITEMS AND TAX
603,318
1,007,964
Non-recurring income
13,203
3,087
Non-recurring expenses
(13,518)
(10,180)
NET NON-RECURRING INCOME/(EXPENSE)
(315)
(7,093)
Income tax
15
(18,811)
9,773
NET INCOME
584,192
1,010,644
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Financial statements
NOTES TO THE FINANCIAL STATEMENTS
DETAILED SUMMARY OF THE NOTES
TO THE FINANCIAL STATEMENTS
NOTE 1
General information
400
NOTE 2
Significant events of the year
400
NOTE 3
Basis of preparation
400
NOTE 4
Summary of significant accounting policies
400
NOTE 5
Intangible assets
402
NOTE 6
Investments
402
NOTE 7
Maturities of loans and receivables
402
NOTE 8
Bonds
403
NOTE 9
Share capital and paid-in capital
in excess of par
404
NOTE 10 Other equity
404
NOTE 11 Maturities of payables and long-
and short- erm debt
404
NOTE 12 Related parties
405
NOTE 13 Revenue
405
NOTE 14 External charges
405
NOTE 15 Income tax
405
NOTE 16 Share-based payments
406
NOTE 17 Market risks and derivative financial
instruments
407
NOTE 18 Management compensation
407
NOTE 19 Fees paid to the Statutory Auditors
407
NOTE 20 List of subsidiaries and affiliates
408
NOTE 21 Financial commitments
409
NOTE 22 Events after the reporting date
409
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Financial statements
NOTE 1 GENERAL INFORMATION
The financial year of Compagnie Générale des Établissements
Michelin (the Company) covers the 12 months from January 1
to December 31.
The following notes and tables form an integral part of the
financial statements.
The financial statements were approved for publication by the
Managing Chairman on February 11, 2022 after being reviewed
by the Supervisory Board.
Unless otherwise specified, all amounts are presented in
thousands of euros.
NOTE 2 SIGNIFICANT EVENTS OF THE YEAR
2.1 In 2021, the Company’s royalty revenue came close to
being restored to the pre-Covid-19 level (see note 13).
2.2 Until March 31, the subsidiary Compagnie Financière
Michelin SA (CFM) provided cash management services for
the Group and also acted as a holding company. Following
a legal reorganization, cash management services were
transferred to another Group company that is indirectly
owned by the Company. To facilitate the transaction, no
dividend was paid by CFM to the Company in 2021.
2.3 Effective April 30, CFM’s headquarters were transferred
to Clermont-Ferrand in France from Granges-Paccot in
Switzerland, where they were previously domiciled.
2.4 A dividend of €198 million was paid in the fall by Fenner
Group Holdings Limited, representing its first dividend
since it became a member of the Michelin Group in 2018.
2.5 A dividend of €34 million was paid in December by
Camso International S.à.r.l., also representing its first
dividend since it became a member of the Michelin Group
in 2018.
2.6 A portfolio of brands and patents was purchased from
an indirectly-owned Group company for €33 million.
NOTE 3 BASIS OF PREPARATION
The
financial
statements
of
Compagnie
Générale
des
Établissements Michelin have been prepared and presented in
accordance
with
French
generally
accepted
accounting
principles,
including
regulation
ANC
2016-07
dated
November 4, 2016 and the guidance and recommendations
issued since that date by the French Accounting Standards
Board (ANC). These principles have been applied consistently in
all periods presented unless otherwise specified.
NOTE 4 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
4.1 Intangible assets
“Brands, patents and other rights” are stated at historical cost.
Brands have an indefinite life and are not amortized. Patents
and other rights are amortized on a straight-line basis over
seven years. If there is any indication that the value of brands,
patents or other rights may be impaired, a provision for
impairment is recorded. Expenses incurred for the creation and
protection of brands are recognized as expenses for the year.
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4.2 Investments
4.2.1 Shares in subsidiaries and affiliates
Shares in subsidiaries and affiliates are stated at historical cost,
except for investments held at the time of the 1976/1978 legal
revaluation, which are stated at valuation.
At each annual closing, the fair value of shares in subsidiaries
and affiliates is estimated based on the investee’s net assets
(stated at valuation if applicable), profitability and outlook, and
its fair value for the investor company. In the event of a lasting
decline in fair value to below the carrying amount, an
impairment loss is recognized.
Investment acquisition costs are recorded as an expense on the
transaction date.
4.2.2 Loans and advances to subsidiaries and affiliates
Loans and advances to subsidiaries and affiliates are stated at nominal value and a provision for impairment is recognized to cover any
risk of non-recovery.
4.3 Receivables
Accounts receivable are stated at nominal value and a provision for impairment is recognized to cover any risk of non-recovery.
4.4 Paid-in capital in excess of par
This item corresponds to premiums on shares issued for cash or on conversion of bonds, after deducting issuance costs net of tax.
When shares are cancelled, the difference between their purchase cost and par value is recorded as a deduction from paid-in capital in
excess of par.
4.5 Untaxed reserves
Substantially all untaxed reserves correspond to reinvested capital gains qualifying for rollover relief under the former Article 40 of the
French General Tax Code (Code général des impôts).
4.6 Conversion of foreign currencies
Revenues and expenses in foreign currencies are converted at
the transaction date exchange rate.
Foreign currency receivables and payables are converted at the
year-end exchange rate.
In accordance with regulation ANC 2015-05 dated July 2, 2015,
separate accounting treatments are applied to commercial
transactions in foreign currencies and financial transactions in
foreign currencies:
▶exchange gains and losses on commercial transactions are
included in operating income and expenses;
▶exchange gains and losses on financial transactions are
included in financial income and expenses.
4.7 Derivative instruments
4.7.1 Currency derivatives at fair value through profit or loss
Forward foreign exchange contracts that are outstanding at the balance sheet date are marked to market in the balance sheet.
4.7.2 Currency derivatives qualifying for hedge accounting
Losses and gains arising from remeasurement at fair value of currency derivatives qualified as hedges are recorded in the balance sheet
under conversion losses or conversion gains, to offset the gain or loss on the hedged item.
4.7.3 Options on treasury stock qualifying for hedge accounting
The Company has purchased cash-settled call options to hedge its economic exposure to the potential exercise of the conversion rights
embedded in non-dilutive cash-settled convertible bonds.
Pursuant to regulation ANC 2015-05, Article 628-12, the premium on the purchased options was initially recorded in the balance
sheet and is being amortized through financial expense over the hedging period (five years).
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4.8 Income tax
Income tax in the income statement includes current taxes due by the tax group and tax credits.
4.9 Other financial liabilities
Other financial liabilities are stated at their nominal value.
Debt issuance costs are recorded in deferred charges.
NOTE 5 INTANGIBLE ASSETS
(in € thousands)
December 31, 2020
Additions/
increases
Disposals/
decreases
December 31, 2021
Brands, patents and other rights
395,135
32,623
-
427,758
Total cost
395,135
32,623
-
427,758
Brands, patents and other rights
(174,340)
(44,212)
-
(218,552)
Amortization
(174,340)
(44,212)
-
(218,552)
TOTAL
220,795
(11,589)
-
209,206
The increase in the gross value of brands, patents and other rights is explained in note 2.6.
NOTE 6 INVESTMENTS
(in € thousands)
December 31, 2020
Additions/
increases
Disposals/
decreases
at December 31,
2021
Shares in subsidiaries and affiliates (note 20)
9,133,279
17,538
(11,915)
9,138,902
Loans and advances to subsidiaries and affiliates
(note 7)
4,829,441
142,242
(4,634,390)
337,293
Other loans (note 7)
142,662
5,260,069
(1,189,496)
4,213,235
Other equity interests
3,106
4,280
(278)
7,108
Total cost
14,108,488
5,424,129
(5,836,079)
13,696,538
Shares in subsidiaries and affiliates (note 20)
(202,062)
-
40,000
(162,062)
Other loans (note 7)
(1,325)
-
1,325
-
Impairment
(203,387)
-
41,325
(162,062)
TOTAL
13,905,101
5,424,129
(5,794,754)
13,534,476
Most of the loans and advances to subsidiaries and affiliates at
December 31, 2020 were reclassified as other loans at
December 31, 2021 following the legal reorganization
mentioned in note 2.2.
Provisions for impairment of shares in subsidiaries and affiliates
in the amount of €40 million were reversed in 2021.
NOTE 7 MATURITIES OF LOANS AND RECEIVABLES
(in € thousands)
Due within one
year
Due in more than
one year
Cost
Impairment
Net
NON-CURRENT ASSETS (NOTE 6)
Loans and advances to subsidiaries and
affiliates
337,293
-
337,293
-
337,293
Other loans
3,597,472
615,763
4,213,235
-
4,213,235
CURRENT ASSETS
Receivables
885,566
-
885,566
-
885,566
TOTAL AT DECEMBER 31, 2021
4,820,331
615,763
5,436,094
-
5,436,094
Marketable securities
The €149,944 thousand in marketable securities consist of units in a specialized professional fund. They represent short-term, highly
liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.
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NOTE 8 BONDS
8.1 Convertible bonds
(in € thousands)
December 31, 2021
December 31, 2020
CONVERTIBLE BONDS (NOTE 11)
2017-2022 convertible bond issue
523,353
489,336
2018-2023 convertible bond issue
530,247
488,480
TOTAL
1,053,600
977,816
The two convertible bond issues each represented a nominal amount of USD 600 million. They do not pay interest.
(in € thousands)
Cost
Amortization
Net
DERIVATIVE INSTRUMENTS (ASSETS)
Conversion risk hedges (options) – 2017-2022 bonds
52,925
(52,925)
-
Conversion risk hedges (options) – 2018-2023 bonds
42,905
(34,324)
8,581
Forward foreign exchange contracts – 2018-2023 bonds
75,295
-
75,295
Forward foreign exchange contracts – 2017-2022 bonds
24,258
-
24,258
TOTAL AT DECEMBER 31, 2021
195,383
(87,249)
108,134
(in € thousands)
DERIVATIVE INSTRUMENTS (LIABILITIES)
Forward foreign exchange contracts – Other
4,254
TOTAL AT DECEMBER 31, 2021
4,254
8.2 Ordinary bonds and other borrowings
(in € thousands)
Annual interest
December 31, 2021
December 31, 2020
ORDINARY BONDS AND OTHER BORROWINGS (NOTE 11)
2018-2025 bond issue
0.875%
750,000
750,000
2018-2030 bond issue
1.750%
1,000,000
1,000,000
2018-2038 bond issue
2.500%
750,000
750,000
2015-2022 bond issue
1.125%
300,000
300,000
2015-2027 bond issue
1.750%
300,000
300,000
2015/16-2045 bond issue
3.250%
316,826
317,451
2020-2028 bond issue
0.000%
500,000
500,000
2020-2032 bond issue
0.250%
500,000
500,000
2020-2040 bond issue
0.625%
500,000
500,000
Accrued interest on ordinary bonds and other borrowings
22,452
22,452
Negotiable European Commercial Paper (NEU CP)
236,000
898,500
US Commercial Paper (US CP)
22,094
40,707
TOTAL
5,197,372
5,879,110
The Negotiable European Commercial Paper program totals €2.5 billion, and the US Commercial Paper program amounts to
USD 700 million.
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NOTE 9 SHARE CAPITAL AND PAID-IN CAPITAL IN EXCESS OF PAR
Share capital and paid-in capital in excess of par break down as follows:
(in € thousands)
Share capital
Share
premiums
Total
At January 1, 2021: 178,340,086 shares
356,680
2,745,842
3,102,522
Issuance of 565 shares (note 16) in exchange for vested performance share
rights
1
-
1
Deductions from paid-in capital in excess of par
0
(220)
(220)
Issuance of 9,388 shares (note 16) on exercise of stock options
19
461
480
Issuance of 180,411 shares (note 16) in exchange for vested performance
share rights
361
-
361
AT DECEMBER 31, 2021: 178,530,450 SHARES
357,061
2,746,083
3,103,144
The shares have a par value of €2.
All outstanding shares are registered and fully paid.
NOTE 10 OTHER EQUITY
(in € thousands)
Revaluation
reserve
Other
reserves
Retained
earnings
Net income
Untaxed
reserves
Total
At January 1, 2021
624,772
1,283,580
1,862,506
1,010,644
61,598
4,843,100
Appropriation of 2020 net income
-
-
596,710
(1,010,644)
-
(413,934)
Deduction for performance share issuance
-
(362)
-
-
-
(362)
2021 net income
-
-
-
584,192
-
584,192
AT DECEMBER 31, 2021
624,772
1,283,218
2,459,216
584,192
61,598
5,012,996
The revaluation reserve concerns:
▶Land
32
▶Shares in subsidiaries and affiliates
624,740
Other reserves break down as follows:
▶Legal reserve, including €26,943 thousand
corresponding to long-term capital gains
37,158
▶Special long-term capital gains reserve
881,256
▶Other reserves
364,804
At the 2021 Annual Shareholders Meeting, shareholders approved the payment of a dividend of €2.30 per share, representing a total
payout of €410 million after deducting the €4 million share of profits attributed to the General Partners in accordance with the Bylaws.
NOTE 11 MATURITIES OF PAYABLES AND LONG- AND SHORT-TERM DEBT
(in € thousands)
Total
Due within
one year
Due in one to five
years
Due in more than
five years
Convertible bonds (note 8.1)
1,053,600
523,353
530,247
-
Ordinary bonds and other borrowings (note 8.2)
5,197,372
580,545
750,000
3,866,827
Other financial liabilities
3,736,923
3,736,923
-
-
Accrued taxes and payroll costs
31,366
31,366
-
-
Other liabilities
411,110
411,110
-
-
TOTAL AT DECEMBER 31, 2021
10,430,371
5,283,297
1,280,247
3,866,827
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NOTE 12 RELATED PARTIES
12.1 Related-party assets and liabilities
(in € thousands)
Note
Related
parties
Third parties
Total in the
balance sheet
(net book value)
Shares in subsidiaries and affiliates
6
8,976,840
-
8,976,840
Loans and advances to subsidiaries and affiliates
6
337,293
-
337,293
Other loans
6
4,213,235
-
4,213,235
Other equity interests
6
7,108
-
7,108
Receivables
7
621,292
264,274
885,566
Other financial liabilities
11
3,736,923
-
3,736,923
Other liabilities
11
407,743
3,367
411,110
12.2 Related-party transactions
All related-party transactions are on arm’s length terms.
NOTE 13 REVENUE
Revenue consists entirely of royalties received from related companies, as follows:
(in € thousands)
2021
2020
Companies in France
54,709
45,610
Companies outside France
905,060
752,341
TOTAL
959,769
797,951
NOTE 14 EXTERNAL CHARGES
(in € thousands)
2021
2020
Outsourcing expenses
(156,677)
(139,300)
Research and development expenses
(306,634)
(278,325)
Miscellaneous
(69,439)
(45,939)
TOTAL
(532,750)
(463,564)
NOTE 15 INCOME TAX
Compagnie Générale des Établissements Michelin is the parent
company of a tax group that also comprises 14 French
subsidiaries that are at least 95%-owned directly or indirectly.
Under the terms of the group relief agreement, each subsidiary
in the tax group continues to record the income tax expense
that it would have paid if it had been taxed on a stand-alone
basis and any group relief is recorded at the level of Compagnie
Générale des Établissements Michelin.
Income tax recognized in the Company’s financial statements
comprises the following:
(in € thousands)
2021
2020
Current tax due by the Company on a stand-alone basis
(37,285)
(28,395)
Group relief
14,382
30,071
Other
4,092
8,097
TOTAL
(18,811)
9,773
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NOTE 16 SHARE-BASED PAYMENTS
Employee stock option plans
Changes in the number of options granted under stock option plans and their weighted average exercise price are as follows:
2021
2020
Weighted average
exercise price
(in € per option)
Number of options
Weighted average
exercise price
(in € per option)
Number of options
At January 1
51.16
22,588
56.23
37,185
Granted
-
-
-
-
Forfeited
51.16
(13,200)
51.16
(27)
Exercised
51.16
(9,388)
64.09
(14,570)
AT DECEMBER 31
0.00
-
51.16
22,588
The last stock options were granted in June 2012 and expired in June 2021.
Share grants and performance share plans
Changes in the number of share grants and performance share rights are as follows:
2021
2020
Number of share grants or
performance share rights
outstanding
Number of share grants or
performance share rights
outstanding
At January 1
1,273,400
870,805
Granted
319,622
589,020(1)
Forfeited
(108,428)
(104,907)
Shares delivered
(180,976)
(81,518)
AT DECEMBER 31
1,303,618
1,273,400
(1) 60 additional rights were granted in 2021 under the France 2020 plan.
Excellence Plan
In November 2021, 319,622 rights to performance shares were
granted to Group employees and the Managers. The rights are
subject to a four-year vesting period ending in November 2025
without any lock-up period. The shares will vest at the end of
this period if the performance objectives have been met (stock
market
performance,
environmental
performance
of
manufacturing operations, employee engagement rate, sales
growth and ROCE).
The share grants and performance share plans have the following characteristics:
Grant date
Vesting date
Lock-up period
December 31, 2021
December 31, 2020
Number of share
grants or
performance share
rights outstanding
Number of share
grants or
performance share
rights outstanding
France
Other
countries
France
Other
countries
2017
2021
2021
None
None
-
182,751
2018
2022
2022
None
None
38,821
127,480
2019
2023
2023
None
None
369,803
374,369
2020
2024
2024
None
None
495,928
506,236
2020
2022
N/A
None
N/A
79,988
82,504(1)
2021
2025
2025
None
None
319,078
-
NUMBER OF SHARE GRANTS OR PERFORMANCE SHARE RIGHTS
OUTSTANDING
1,303,618
1,273,400
(1) 60 additional rights were granted in 2021 under the France 2020 plan.
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NOTE 17 MARKET RISKS AND DERIVATIVE FINANCIAL INSTRUMENTS
17.1 Interest rate risk
The Company does not hold any interest rate instruments.
17.2 Currency risk
At December 31, 2021, the Company had receivables
corresponding to royalties with a net book value of
€324 million. These receivables have been converted into euros
at the year-end exchange rate. The policy is to hedge currency
risk through forward foreign currency contracts. The forwards
are measured at fair value through profit or loss.
The Company holds convertible bonds denominated in US
dollars (note 8.1). The related currency risk is fully hedged by
means of forward purchases of foreign currency with the same
maturity as the bonds. Currency derivatives qualify for hedge
accounting.
17.3 Equity risk
The Company holds shares in subsidiaries and affiliates and other equity interests that are measured at value in use.
The Company is exposed to the risk of a change in value of its own shares, in connection with its non-dilutive cash-settled convertible
bond issues. This risk has been fully hedged through the purchase of options (note 8.1).
NOTE 18 MANAGEMENT COMPENSATION
As per its Bylaws, the Company is administered by one or
several Managers.
Managers who are General Partners are entitled to a share of
the income distributed among all the General Partners in
accordance with the provisions of the Bylaws.
The General Manager is paid fixed and variable compensation
and may also receive a long-term incentive (LTI) bonus.
The statutory share of 2020 profit allocated in 2021 to Florent
Menegaux, Managing General Partner since May 18, 2018 and
Managing Chairman since May 17, 2019, amounted to
€761 thousand (2020 for 2019: €1,008 thousand).
A €162 thousand statutory distribution based on net income
was paid in 2021 to Jean-Dominique Senard, Managing
Chairman and General Partner of the Company until May 2019,
corresponding to the balance of his 2018 compensation.
The total compensation (fixed compensation and 2020 variable
compensation payable in 2021) paid by the Company to Yves
Chapot, General Manager, amounted to €1,655 thousand
(including
payroll
taxes)
in
2021
(2020
for
2019:
€1,216 thousand). In addition, a €1,321 thousand accrual
(including payroll taxes) was recorded at December 31, 2021 to
cover his 2021 bonus payable in 2022 and his conditional
entitlement to a long-term incentive bonus payable in 2022
after the Annual Shareholders Meetings. Benefits in kind
amounted to €10 thousand.
NOTE 19 FEES PAID TO THE STATUTORY AUDITORS
(in € thousands)
Deloitte & Associés
PricewaterhouseCoopers Audit
Audit services
462
463
Non-audit services(1)
-
142
(1) These services consist mainly of an independent third-party body engagement by PricewaterhouseCoopers Audit.
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NOTE 20 LIST OF SUBSIDIARIES AND AFFILIATES
(in € thousands unless
otherwise specified)
Share
capital(1)(2)
Other
equity excl.
income(1)(2)
% interest
Book value of shares
Outstanding
loans and
advances
Last
published
revenue(1)(2)
Last
published
profit/
(loss)(1)(2)
Dividends
received during
the year
Cost
Net
A. SUBSIDIARIES (OVER 50%-OWNED)
Camso Inc.
Magog (Canada)
351,000
(USD)
33,162
(USD)
100.0%
307,703
307,703
-
42,131
(USD)
10,557
(USD)
-
Camso International
S.à.r.l.
Luxembourg (Luxembourg)
33,700
(USD)
88,778
(USD)
100.0%
223,620
223,620
-
4,603
(USD)
1,295
(USD)
33,764
Camso Vietnam Co., Ltd
Tan Uyen (Vietnam)
29,000
(USD)
(7,877)
(USD)
100.0%
29,840
29,840
-
39,066
(USD)
5,285
(USD)
-
Compagnie Financière
Michelin
Clermont-Ferrand (France)
2,502,355
(CHF)
9,488,948
(CHF)
100.0%
4,325,679
4,325,679
-
-
493,803
(CHF)
-
Fenner Group Holdings
Limited
Stoke-on-Trent
(United Kingdom)
48,751
(GBP)
157,991
(GBP)
100.0%
1,365,554
1,365,554
-
-
17,778
(GBP)
198,429
Masternaut Bidco
Limited
London (United Kingdom)
85,236
26,129
100.0%
85,975
85,975
-
-
22
-
Rodaco Argentina S.A.U.
Buenos Aires (Argentina)
170,873
(ARS)
68,522
(ARS)
100.0%
4,104
4,104
-
571,395
(ARS)
49,221
(ARS)
-
Spika
Clermont-Ferrand (France)
477,000
(9,328)
100.0%
655,915
493,944
304,264
-
(49,036)
-
Michelin Ventures SAS
Clermont-Ferrand (France)
45,025
(541)
100.0%
45,025
45,025
33,029
-
1,588
-
Manufacture Française
des Pneumatiques
Michelin
Clermont-Ferrand (France)
504,000 1,250,096
100.0%
1,614,309
1,614,309
- 4,522,654
(185,865)
-
PT Multistrada Arah
Sarana Tbk
Bekasi (Indonesia)
137,343
(USD)
58,022
(USD)(3)
99.64%
481,051
481,051
-
289,608
(USD)(3)
(31,897)
(USD)(3)
-
B. OTHER SUBSIDIARIES AND AFFILIATES
1. Subsidiaries not listed under A
▶Foreign companies
-
-
128
37
-
-
-
-
2. Affiliates not listed under A
▶French companies
-
-
7,107
7,107
-
-
-
130
TOTAL SHARES IN SUBSIDIARIES AND
AFFILIATES AND OTHER EQUITY INTERESTS
9,146,010 8,983,948
337,293
232,323
(1) In thousands of local currency units.
(2) Most recent fiscal year.
(3) Last published consolidated financial statements.
Guarantees given by the Company to subsidiaries and affiliates: please refer to note 21.3.
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NOTE 21 FINANCIAL COMMITMENTS
21.1 Lines of credit
(in € thousands)
2021
2020
Lines of credit granted by the Company to related companies
-
1,212,000
Drawdowns
-
(496,000)
AVAILABLE AT DECEMBER 31
-
716,000
All credit lines and related drawdowns were transferred to Compagnie Financière Michelin, a subsidiary of the Company, in 2021.
21.2 Forward currency exchange contracts
At December 31, 2021, the value in euros of the forward foreign exchange contracts was as follows:
▶currency to be received
€1,252 million;
▶currency to be delivered
€1,137 million.
21.3 Commitments given: Guarantees
▶The Company has issued a guarantee to Fenner Pension
Scheme Trustee Limited covering the future pension
contributions to be paid by its subsidiary Fenner Group
Holdings Limited. The contingent liability amounted to
€7 million at December 31, 2021.
▶In its role as holding company, the Company may give a
commitment to support certain controlled subsidiaries should
the need arise.
▶The Company is committed to paying €12 million to Siparex
Associés over the period to 2025, corresponding to the
payment in installments of the nominal amount of Siparex
bonds redeemable for shares.
21.4 Commitments received:
▶In October 2020, the Company obtained a €2,500 million syndicated three-year credit line with two one-year extension options. No
drawdowns were made on the facility during the year. At the end of 2021, the Company exercised its first extension option,
extending the maturity from 2023 to 2024.
NOTE 22 EVENTS AFTER THE REPORTING DATE
On January 10, 2022, the Company redeemed its 2017-2022 convertible bonds.
No other material events occurred between the reporting date and the publication date of the financial statements.
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5.3.3
STATUTORY AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS
(For the year ended December 31, 2021)
This is a translation into English of the statutory auditors’ report on the financial statements of the Company issued in French and it is
provided solely for the convenience of English-speaking users.
This statutory auditors’ report includes information required by European regulation and French law, such as information about the
appointment of the statutory auditors or verification of the management report and other documents provided to shareholders.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards
applicable in France.
Compagnie Générale des Etablissements Michelin
23 place des Carmes-Déchaux
63000 Clermont-Ferrand, France
To the Shareholders,
Opinion
In compliance with the engagement entrusted to us by your Annual Shareholders Meeting, we have audited the accompanying
financial statements of Compagnie Générale des Etablissements Michelin for the year ended December 31, 2021.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company
at December 31, 2021 and of the results of its operations for the year then ended in accordance with French accounting principles.
The audit opinion expressed above is consistent with our report to the Audit Committee.
Basis for Opinion
Audit Framework
We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the “Statutory Auditors' Responsibilities for the Audit of the
Financial Statements” section of our report.
Independence
We conducted our audit engagement in compliance with the independence rules provided for in the French Code de Commerce and
in the French Code of Ethics (code de déontologie) for statutory auditors, for the period from January 1st 2020 to the date of our
report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014.
Justification of Assessments – Key Audit Matters
Due to the global crisis related to the Covid-19 pandemic, the financial statements of this period have been prepared and audited
under specific conditions. Indeed, this crisis and the exceptional measures taken in the context of the state of sanitary emergency have
had numerous consequences for companies, particularly on their operations and their financing, and have led to greater uncertainties
on their future prospects. Those measures, such as travel restrictions and remote working, have also had an impact on the companies'
internal organization and the performance of the audits.
It is in this complex and evolving context that, in accordance with the requirements of Articles L. 823-9 and R. 823-7 of the French
Commercial Code relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material
misstatement that, in our professional judgment, were of most significance in our audit of the financial statements of the current
period, as well as how we addressed those risks.
These matters were addressed in the context of our audit of the financial statements as a whole, approved in the conditions mentioned
above, and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the financial statements.
Valuation of shares in subsidiaries and affiliates
Risk identified
At December 31, 2021, the carrying amount of shares in subsidiaries and affiliates was €8,977 million, representing 48% of total
assets on the balance sheet. The securities are recognized at historical cost, increased by the impact of value adjustments made in
accordance with the law where applicable.
At the end of each reporting year, the Company estimates the value in use of shares in subsidiaries and affiliates. This value in use is
based either on the net assets (adjusted if necessary) or on the profitability and outlook of the investee as well as its usefulness for the
investor company. In the event of a lasting decline in value in use to below the carrying amount, an impairment loss is recognized.
To estimate the value in use of the securities, Management exercises judgment when choosing the items to be taken into
consideration, depending on the relevant subsidiary or affiliate.
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Accordingly, we deemed the measurement of the value in use of shares in subsidiaries and affiliates to be a key audit matter due to
the materiality of these assets in the balance sheet, the degree of judgment required by Management and the uncertainties inherent in
determining the cash flow assumptions particularly as regards the probability of achieving the forecasts used by Management in the
context of the Covid-19 health crisis.
Note 4.2.1 to the annual financial statements describes the methods used to measure shares in subsidiaries and affiliates.
How our audit addressed this risk
Concerning shares with a material value or which carry a specific risk of impairment, our audit work consisted in:
▶for valuations based on historical data: verifying that the net asset figures used are consistent with the relevant entities’ annual
financial statements and that any adjustments made were based on probative documentation;
▶for valuations based on forecast data: obtaining the cash flow from operations projections prepared by Management for the
relevant entities’ operations and assessing the consistency of the assumptions with business trends (mainly net sales, margin rates
and general expenses).
Our work also consisted in assessing, with the help of our financial valuation experts, the reasonableness of the perpetual growth rates
and discount rates used by Management.
Specific Verifications
We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and
regulations.
Information given in the management report and in the other documents provided to the shareholders
with respect to the Company’s financial position and the annual financial statements
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in
the management report prepared by the Managing Chairman and in the other documents with respect to the financial position and
the financial statements provided to the shareholders.
We attest the fair presentation and the consistency with the financial statements of the information relating to payment deadlines
mentioned in Article D.441-6 of the French Commercial Code (code de commerce).
Report on corporate governance
We attest that the Supervisory Board’s report on corporate governance sets out the information required by Article L. 225-37-4,
L.22‑10-10 and L. 22-10-9 of the French Commercial Code.
Concerning the information given in accordance with the requirements of Article L. 22-10-9 of the French Commercial Code (code de
commerce) relating to remunerations and benefits received by or awarded to the directors and any other commitments made in their
favour, we have verified its consistency with the financial statements, or with the underlying information used to prepare these
financial statements and, where applicable, with the information obtained by your Company from controlled enterprises included in
the scope of consolidation. Based on these procedures, we attest the accuracy and fair presentation of this information.
With respect to the information relating to items that your company considered likely to have an impact in the event of a takeover bid
or exchange offer, provided pursuant to Article L. 22-10-11 of the French Commercial Code (code de commerce), we have agreed this
information to the source documents communicated to us. Based on these procedures, we have no observations to make on this information.
Other Information
In accordance with French law, we have verified that the required information concerning the identity of the shareholders and holders
of the voting rights has been properly disclosed in the management report.
Other Legal and Regulatory Verifications or Information
Format of the presentation of the financial statements intended to be included in the annual financial report
We have also verified, in accordance with the professional standard applicable in France relating to the procedures performed by the
statutory auditor relating to the annual and consolidated financial statements presented in the European single electronic format, that
the presentation of the financial statements intended to be included in the annual financial report mentioned in Article L. 451-1-2, I of
the French Monetary and Financial Code (code monétaire et financier), prepared under the responsibility of the Managing Chairman,
complies with the single electronic format defined in the European Delegated Regulation No 2019/815 of 17 December 2018.
Based on the work we have performed, we conclude that the presentation of the financial statements intended to be included in the
annual financial report complies, in all material respects, with the European single electronic format.
We have no responsibility to verify that the financial statements that will ultimately be included by your company in the annual
financial report filed with the AMF are in agreement with those on which we have performed our work.
Appointment of the Statutory Auditors
We were appointed Statutory Auditors of Compagnie Générale des Etablissements Michelin by the Annual Shareholders Meeting of
May 14, 2004 for PricewaterhouseCoopers Audit and May 7, 2010 for Deloitte & Associés.
At December 31, 2021, PricewaterhouseCoopers Audit and Deloitte & Associés were in the eighteenth and twelfth consecutive year of
their engagement, respectively.
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Financial statements
Responsibilities of Management and Those Charged with Governance for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with French accounting
principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the Company’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to
liquidate the Company or to cease operations.
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risks
management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures.
The financial statements were approved by the Managing Chairman.
Statutory Auditors’ Responsibilities for the Audit of the Financial Statements
Objectives and audit approach
Our role is to issue a report on the financial statements. Our objective is to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance but is not a guarantee
that an audit conducted in accordance with professional standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
As specified in Article L. 823-10-1 of the French Commercial Code, our statutory audit does not include assurance on the viability of
the Company or the quality of management of the affairs of the Company.
As part of an audit conducted in accordance with professional standards applicable in France, the statutory auditor exercises
professional judgment throughout the audit and furthermore:
▶Identifies and assesses the risks of material misstatement of the financial statements, whether due to fraud or error, designs and
performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to
provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one
resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
▶Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control.
▶Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management in the financial statements.
▶Assesses the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report.
However, future events or conditions may cause the Company to cease to continue as a going concern. If the statutory auditor
concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in
the financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein.
▶Evaluates the overall presentation of the financial statements and assesses whether these statements represent the underlying
transactions and events in a manner that achieves fair presentation
Report to the Audit Committee
We submit a report to the Audit Committee which includes in particular a description of the scope of the audit and the audit program
implemented, as well as the results of our audit. We also report, if any, significant deficiencies in internal control regarding the
accounting and financial reporting procedures that we have identified.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgment, were of most
significance in the audit of the financial statements of the current period and which are therefore the key audit matters that we are
required to describe in this report.
We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) N° 537/2014, confirming our
independence within the meaning of the rules applicable in France such as they are set in particular by Articles L. 822-10 to L. 822-14
of the French Commercial Code and in the French Code of Ethics (code de déontologie) for statutory auditors. Where appropriate, we
discuss with the Audit Committee the risks that may reasonably be thought to bear on our independence, and the related safeguards.
Neuilly-sur-Seine and Paris-La Défense, February 18, 2022
The Statutory Auditors
PricewaterhouseCoopers Audit
Deloitte & Associés
Jean-Christophe Georghiou
Frédéric Gourd
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5.3.4
STATUTORY AUDITORS’ SPECIAL REPORT ON RELATED-PARTY AGREEMENTS
Annual Shareholders Meeting for the approval of the financial statements for the year ended December 31, 2021
This is a free translation into English of the Statutory Auditors’ special report on related-party agreements issued in French and is
provided solely for the convenience of English-speaking readers. This report should be read in conjunction with, and construed in
accordance with, French law and professional auditing standards applicable in France.
Compagnie Générale des Établissements Michelin
23 place des Carmes-Déchaux
63000 Clermont-Ferrand, France
To the Shareholders,
In our capacity as Statutory Auditors of Compagnie Générale des Établissements Michelin, we hereby report to you on related-party
agreements.
It is our responsibility to report to shareholders, based on the information provided to us, on the main terms and conditions of
agreements that have been disclosed to us or that we may have identified as part of our engagement, as well as the reasons given as
to why they are beneficial for the Company, without commenting on their relevance or substance or identifying any undisclosed
agreements. Under the provisions of Article R. 226-2 of the French Commercial Code (Code de commerce), it is the responsibility of
the shareholders to determine whether the agreements are appropriate and should be approved.
Where applicable, it is also our responsibility to provide shareholders with the information required by Article R. 226-2 of the French
Commercial Code in relation to the implementation during the year of agreements already approved by the Annual Shareholders
Meeting.
We performed the procedures that we deemed necessary in accordance with professional standards applicable in France to such
engagements.
Agreements to be submitted for the approval of the Annual Shareholders Meeting
We were not informed of any agreement authorized and entered into during the year to be submitted for the approval of the Annual
General Meeting pursuant to the provisions of Article L. 226-10 of the French Commercial Code.
Agreements already approved by the Annual Shareholders Meeting
We were not informed of any agreement that had already been approved by the Annual Shareholders Meeting which remained in
force during the year.
Neuilly-sur-Seine and Paris-La Défense, February 18, 2022
The Statutory Auditors
PricewaterhouseCoopers Audit
Deloitte & Associés
Jean-Christophe Georghiou
Frédéric Gourd
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5.3.5
STATEMENT OF CHANGES IN EQUITY
(in € thousands and € per share)
2021
2020
NET INCOME
Accounting profit
Total: Net income/(loss)
584,192
1,010,644
Per share: Net income/(loss)
3.27
5.67
RECOMMENDED TOTAL DIVIDEND PAYOUT
803,387(1)
410,182
Recommended dividend per share
4.50(1)
2.30
(1) Subject to approval by shareholders at the Annual Meeting on May 13, 2022.
STATEMENT OF CHANGES IN EQUITY
(in € thousands)
2021
2020
A) 1. Equity at prior year-end before dividends
7,945,622
7,346,285
2. Dividend approved by the Annual Shareholders Meeting
(413,935)
(367,635)
B) Equity at January 1, 2021 after dividends
7,531,687
6,978,650
C) Movements for the year:
1. Change in capital
381
(575)
2. Increase in paid-in capital in excess of par
241
(43,368)
3. Change in reserves and retained earnings(2)
(361)
271
4. Net income
584,192
1,010,644
D) Equity at December 31, 2021 before dividends
8,116,140
7,945,622
E) TOTAL CHANGES IN EQUITY DURING THE YEAR
584,453
966,972
F) of which changes due to changes in Group structure
0
0
G) TOTAL CHANGES IN EQUITY DURING THE YEAR EXCLUDING CHANGES IN GROUP
STRUCTURE
584,453
966,972
Notes:
C3 Dividends on treasury shares credited to retained earnings
-
434
(1) Subject to approval by shareholders at the Annual Meeting on May 13, 2022.
(2) Excluding appropriation of 2020 net income.
5.3.6
APPROPRIATION OF 2021 NET INCOME
(in € thousands)
AMOUNT TO BE APPROPRIATED
Retained earnings brought forward from prior year
2,459,216
Net income
584,192
RECOMMENDED APPROPRIATIONS
Dividend
803,387(1)
Statutory share of income attributed to the General Partners
5,299
Retained earnings
2,234,722
AVAILABLE AT DECEMBER 31
3,043,408
3,043,408
(1) Subject to approval by shareholders at the Annual Meeting on May 13, 2022.
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5.3.7
FIVE-YEAR FINANCIAL SUMMARY
(in € thousands and in € per share, unless
otherwise specified)
2017
2018
2019
2020
2021
I.
CAPITAL AT DECEMBER 31
a)
Share capital
359,042
359,695
357,255
356,680
357,061
b) Number of common shares
outstanding
179,520,987
179,847,632
178,627,555
178,340,086
178,530,450
II. RESULTS OF OPERATIONS
a)
Net revenue
681,188
895,113
1,034,805
797,951
959,769
b) Earnings before tax, depreciation,
amortization and provisions (EBTDA)
1,058,933
1,028,453
817,567
1,072,009
635,133
c)
Income tax
(16,054)
47,930
30,603
(9,773)
18,811
d) Net income
1,029,300
813,150
672,105
1,010,644
584,192
III. PER-SHARE DATA
a)
Earnings per share after tax, before
depreciation, amortization and
provision expenses (EBDA)
5.99
5.45
4.41
6.07
3:45
b) Basic earnings per share
5.73
4.52
3.76
5.67
3:27
c)
Dividend per share
3.55
3.70
2.00
2.30
4.50(1)
IV. EMPLOYEE DATA
a)
Average number of employees
-
-
-
1
2
b) Total payroll
28
877
1,123
2,280
3,190
c)
Total benefits
95
369
(76)
645
838
(1) Subject to approval by shareholders at the Annual Meeting on May 13, 2022.
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Additional information
5.4
ADDITIONAL INFORMATION
5.4.1
PERSON RESPONSIBLE FOR THE UNIVERSAL REGISTRATION DOCUMENT
Person responsible for the Universal Registration
Document and the Annual Financial Report
Florent Menegaux, Managing Chairman
Statement by the person responsible for the Universal
Registration Document and the Annual Financial Report
I hereby declare that the information contained in the Universal
Registration Document is in accordance with the facts and no
information has been omitted that would be likely to affect its
import.
I further declare that, to the best of my knowledge, the financial
statements have been prepared in accordance with applicable
accounting standards and give a true and fair view of the assets,
liabilities, financial position and profit of the Company and the
undertakings included in the consolidation, and that the
information included in this Universal Registration Document
within the Report of the Managers and listed in the table of
concordance in section 8.4 of this Universal Registration
Document gives a true and fair view of the business, profit and
financial position of the Company and the undertakings
included in the consolidation, as well as a description of the
main risks and uncertainties they face.
Clermont-Ferrand, April 8, 2022
Florent Menegaux,
Managing Chairman
5.4.2
STATUTORY AUDITORS
5.4.2.1
Statutory Auditors
Under French law, the accounts of listed companies are required
to be audited by two independent Statutory Auditors. The
purpose of this requirement is to provide assurance that the
financial statements have been properly prepared and comply
with the true and fair view principle.
The Statutory Auditors are appointed by the Annual Shareholders
Meeting for a six-year term, based on a recommendation made
by the Supervisory Board following a selection process overseen
by the Audit Committee. They may be re-appointed for
successive terms. They test the fairness of financial statements
and carry out all of the statutory audit work required by law.
Michelin does not ask them to perform any other engagements
that might impair their independence.
The Statutory Auditors of Compagnie Générale des Établissements
Michelin, Michelin’s holding Company are:
PricewaterhouseCoopers Audit
Registered member of the Compagnie régionale des Commissaires
aux Comptes de Versailles
63, rue de Villiers
92208 Neuilly-sur-Seine
Represented by Jean-Christophe Georghiou, Partner
Substitute Statutory Auditor, Jean-Baptiste Deschryver, Partner,
PricewaterhouseCoopers Audit
Deloitte & Associés
Registered member of the Compagnie régionale des Commissaires
aux Comptes de Versailles
6, place de la Pyramide
92908 Paris-La Défense
Represented by Frédéric Gourd, Partner
Substitute Statutory Auditor, BEAS
6, place de la Pyramide
92908 Paris-La Défense
There are no legal or financial ties of any sort between the two
firms or the lead partners.
The Statutory Auditors’ term of office will expire at the end of
the Annual Shareholders Meeting to be held in 2022 to approve
the 2021 financial statements.
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Additional information
5.4.2.2
Fees paid to the Statutory Auditors of Compagnie Générale des Établissements
Michelin (CGEM)
The following table sets out the details of the fees charged by the Statutory Auditors in respect of 2021:
(in € thousands)
Deloitte
PricewaterhouseCoopers
Statutory Auditor
(Deloitte & Associés)
Network
Statutory Auditor
(PricewaterhouseCoopers
Audit)
Network
Amount
%
Amount
%
Amount
%
Amount
%
STATUTORY AUDIT AND HALF-YEAR
REVIEW OF THE INDIVIDUAL AND
CONSOLIDATED FINANCIAL STATEMENTS
▶Issuer
462
34%
-
-
463
31%
-
-
▶Fully consolidated subsidiaries
890
66%
3,796
100%
1,049
69%
3,382
100%
Sub-total
1,352
100%
3,796
100%
1,512
100%
3,382
100%
NON-AUDIT
SERVICES
▶Issuer(1)
-
-
-
-
142
80%
-
-
▶Fully consolidated subsidiaries(2)
71
100%
1,371
100%
36
20%
840
100%
Sub-total
71
100%
1,371
100%
178
100%
840
100%
TOTAL
1,423
5,167
1,689
4,222
(1) Corresponding mainly to an independent third-party body engagement performed by PricewaterhouseCoopers Audit.
(2) Corresponding chiefly to procedures performed in connection with acquisitions or planned acquisitions, diagnostic reviews, tax compliance reviews and
certifications issued at the request of the audited companies.
5.4.3
STATEMENTS INCORPORATED BY REFERENCE
In accordance with Article 19 of Regulation (EU) No. 2017/1129 of the European Parliament and of the Council of June 17, 2017, this
Universal Registration Document incorporates by reference the following information to which readers are invited to refer:
▶the management report, the consolidated financial statements and the parent company financial statements for the year ended
December 31, 2020, as well as the relevant Statutory Auditors’ reports, presented in the Universal Registration Document filed with
the AMF on April 9, 2021 under number D. 21-0285;
▶the management report, the consolidated financial statements and the parent company financial statements for the year ended
December 31, 2019, as well as the relevant Statutory Auditors’ reports, presented in the Universal Registration Document filed with
the AMF on April 17, 2020 under number D. 20-0306;
▶the management report, the consolidated financial statements and the parent company financial statements for the year ended
December 31, 2018, as well as the relevant Statutory Auditors’ reports, presented in the Registration Document filed with the AMF
on March 19, 2019 under number D. 19-0170.
The information included in said Registration Document and Universal Registration Documents, other than the items cited above, are
superseded or updated by the information included in the 2021 Universal Registration Document. The 2018 Registration Document
and the 2019 and 2020 Universal Registration Documents are available for consultation at the Company’s registered office or on its
website www.michelin.com.
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0
Investor
relations
418
6
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
More than
205,000 shareholders
support our
ambitions. They
hold their shares
in registered
form, which fosters
effective, high-quality
shareholder dialogue.
62,000 of our
employees are
Michelin shareholders.
06
Investor
relations
6.1
INFORMATION ABOUT
THE COMPANY
420
6.2
SHARE INFORMATION
421
6.2.1
The Michelin share
421
6.2.2
Share data
422
6.2.3
Per-share data
422
6.2.4
Capital and ownership structure
422
6.3
INVESTOR RELATIONS
423
6.4
DOCUMENTS ON DISPLAY
423
6.5
ADDITIONAL SHARE INFORMATION 424
6.5.1
Changes in share capital
424
6.5.2
Potential shares
425
6.5.3
Stock options
426
6.5.4
Share grants and performance shares
428
6.5.5
Employee share ownership
436
6.5.6
Information concerning a share buyback
program currently in effect
436
6.5.7
Description of the share buyback program
submitted for shareholder approval
at the Annual Shareholders Meeting
of May 13, 2022
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06
Information about the Company
6.1
INFORMATION ABOUT THE COMPANY(1)
Legal and commercial name of the Company
▶Compagnie Générale des Établissements Michelin.
Place of registration and registration number
▶The Company is registered in the Clermont-Ferrand Trade
and Companies Register under number 855 200 887.
▶LEI code: 549300SOSI58J6VIW05.
Date of incorporation and term
▶The Company was incorporated on July 15, 1863. Its term
will end on December 31, 2050, unless it is wound up before
that date or its term is extended.
Registered office
▶The Company's registered office is located at 23, place des
Carmes-Déchaux – Clermont-Ferrand (Puy-de-Dôme), France.
▶Phone: +33 (0)4 73 32 20 00.
▶Corporate website: www.michelin.com
Legal form and governing law
▶The Company is a société en commandite par actions
(partnership limited by shares) governed by Articles L. 226-1 to
L. 226-14 of the French Commercial Code (Code de commerce).
Main business
▶Managing subsidiaries and other interests held in any and all
countries.
Summary organization chart
(at December 31, 2021)
The Group’s parent company is Compagnie Générale des
Établissements Michelin (CGEM), which directly or indirectly
owns all of its subsidiaries and associates. Its two main
subsidiaries are:
▶Manufacture Française des Pneumatiques Michelin (MFPM), a
wholly-owned subsidiary that coordinates all of the Group's
manufacturing, sales and research operations in France;
▶Compagnie
Financière
Michelin
France
(CFM),
a
wholly‑owned
subsidiary
(the
holding
company
for
companies carrying out these activities outside France).
Services provided by CGEM and CFM to the operating
companies are governed by contractual agreements.
A portion of these services are delivered by MFPM, which bills
the operating companies on a cost-plus basis.
Intra-group transactions involve sizeable volumes in such areas
as intangible assets, a wide array of services, equipment, raw
materials and semi-finished and finished products. The
corresponding fees or prices are set using methods that vary by
type of transaction. However, all of the methods are based on
the arm’s length principle as defined in the OECD’s Transfer
Pricing Guidelines for Multinational Enterprises and Tax
Administrations.
(1) See also section 3 for information on the Company’s Bylaws.
Compagnie Générale
des Établissements Michelin (CGEM)
France
Compagnie Financière
Michelin (CFM) France
Manufacture Française
des Pneumatiques Michelin
(MFPM) France
Manufacturing,
sales and research companies
outside France
Manufacturing,
sales and research companies
in France
100%
100%
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Share information
6.2
SHARE INFORMATION
6.2.1
THE MICHELIN SHARE
Traded on the Euronext Paris stock exchange
▶Compartment A;
▶Eligible for the SRD deferred settlement system;
▶ISIN: FR 0000121261;
▶Par value: €2;
▶Traded in units of: 1.
Indices
The Michelin share is included in two leading stock market
indices:
▶CAC 40: 1.47% of the index at December 31, 2021;
▶Euronext 100: 0.67% of the index at December 31, 2021.
Michelin is also included in the main Socially Responsible
Investing (SRI) indices:
▶Ethibel Excellence Europe and Global, Euronext VigeoEiris
France 20, Europe 120, Eurozone 120, World 120 and
FTSE4Good.
MICHELIN SHARE PERFORMANCE
Michelin
CAC 40
Euro Stoxx 600
Millions
of shares
Monthly trading volume
Dec.
2021
Jan.
2019
June
2019
Dec.
2019
June
2020
Dec.
2020
June
2021
0
20
40
60
80
100
120
140
160
180
0
10
20
30
40
50
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Share information
6.2.2
SHARE DATA
Share price (in €)
2021
2020
2019
2018
2017
2016
Session high
146.00
112.80
119.50
130.85
128.40
106.80
Session low
103.30
68.00
83.74
82.68
98.93
77.40
High/Low ratio
1.41
1.66
1.43
1.58
1.30
1.38
Closing price, end of period
144.15
104.95
109.10
86.70
119.55
105.70
Average closing price over the period
129.75
95.49
104.36
109.40
115.65
91.97
Change in the Michelin share price over the period
37.35%
-3.80%
25.84%
-27.48%
13.10%
20.25%
Change in the CAC 40 index over the period
28.85%
-7.14%
26.37%
-10.95%
9.26%
4.86%
Change in the Stoxx 600 index over the period
22.25%
-4.04%
-
-
-
-
Market capitalization
(at end of the period, in € billions)
25.74
18.72
19.49
15.59
21.45
19.03
Average daily trading volume over the period
435,955
548,883
577,545
649,347
503,534
554,262
Average number of shares outstanding
178,378,193
178,497,159
179,669,608
179,384,513
182,212,806
182,122,667
Volume of shares traded over the period
112,476,357
141,062,953
147,273,882
165,583,378
128,401,095
142,445,218
According to statistical data collected by Euronext Paris.
6.2.3
PER-SHARE DATA
(in € per share, except ratios)
2021
2020
2019
2018
2017
Net asset value per share
83.9
70.8
74.1
67.8
62.7
Basic earnings per share
10.31
3.52
9.69
9.30
9.39
Diluted earnings per share(1)
10.24
3.51
9.66
9.25
9.34
PER
14.0
29.8
11.3
9.3
12.7
Dividend per share(2)
4.50
2.30
2.00
3.70
3.55
Payout ratio (excl. non-recurring items)
42.0%
47.0%
19.5%
36.4%
36.0%
Yield(3)
3.1%
2.2%
1.8%
4.3%
3.0%
(1) Earnings per share adjusted for the impact on net income and on average shares outstanding of the exercise of outstanding dilutive instruments.
(2) Subject to approval by the Annual Shareholders Meeting of May 13, 2022.
(3) Dividend/share price at December 31.
6.2.4
CAPITAL AND OWNERSHIP STRUCTURE
At December 31, 2021, Michelin’s share capital amounted to €357,060,900.
At December 31, 2021
At December 31, 2020
At December 31, 2019
Number of
shareholders
Shares
outstanding
Voting rights
outstanding
Number of
shareholders
Shares
outstanding
Voting rights
outstanding
Number of
shareholders
Shares
outstanding
Voting rights
outstanding
French institutional
investors
23.6%
27.3%
3,938
27.1%
29.3%
3,735
27.4%
29.1%
Non-resident
institutional investors
4,123
65.5%
59.2%
61.8%
57.1%
61.3%
57.1%
Individual
shareholders
139,099
9.2%
11.5%
136,935
9.1%
11.4%
141,628
9.5%
11.8%
Employee share
ownership plan
62,118
1.7%
2.0%
69,378
2.0%
2.3%
58,079
1.8%
2.0%
TOTAL
205,340
178,530,450(1)
SHARES
238,147,046
VOTING
RIGHTS
210,251
178,340,086
SHARES
243,584,598
VOTING
RIGHTS
203,442
178,627,555
SHARES
240,861,826
VOTING
RIGHTS
(1) All fully paid up.
Shares held in the same name for at least four years carry double voting rights.
As of December 31, 2021, theoretical voting rights outstanding were equal to exercisable voting rights outstanding, and to the
company’s knowledge, no material portion of its issued capital has been pledged.
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Documents on display
6.3
INVESTOR RELATIONS
Every shareholder has access to clear, comprehensive, transparent
information, tailored to his or her individual needs.
In particular, extensive information about our business operations,
strategy and financial performance may be found in a wide variety
of regulatory filings, such as press releases, the Universal
Registration Document, the Interim Financial Report and the
Company Bylaws. All of these publications are readily available in
French and English at www.michelin.com in the Finance section
and on request from the Investor Relations Department.
During the year, more than 1,400 institutional investors and
financial analysts were contacted. In spring 2021, the Michelin in
Motion 2030 strategy was presented to the financial community at
a virtual Capital Markets Day organized from the headquarters
offices in Clermont-Ferrand, France.
At the same time, Michelin reached out to individual
shareholders
at
shareholder
meetings,
convened
its
Shareholders' Committee and participated for the first time in
the Investir Day event organized by financial newspaper Les
Echos and Investir magazine. At the meeting, which was held
both in person and remotely, Michelin reiterated its Ambitions
for 2030 and was able to answer many questions from
individual shareholders.
Each year, all shareholders and proxy solicitors are notified of
the date of the Annual Shareholders Meeting and of the voting
procedures.
In accordance with the Company Bylaws, shares held in the
same name for at least four years carry double voting rights.
6.4
DOCUMENTS ON DISPLAY
Historical financial information, Universal Registration Documents
(Registration Documents), Notices and Minutes of Shareholders
Meetings, the Company Bylaws, and all of the regulatory filings
within
the
meaning
of
Article
221-1
of
the
AMF
General Regulations (particularly press releases, quarterly reports
and the Interim and Annual Reports), may be viewed in French or
English at www.michelin.com or at the Company's registered
office. They are also available on the French website of record,
www.info‑financiere.fr, and if necessary at the company's head
office.
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Additional share information
6.5
ADDITIONAL SHARE INFORMATION
6.5.1
CHANGES IN SHARE CAPITAL
Year
Transaction
Change in capital
Number of shares
Capital
(in €)
Share premium
(in €)
At December 31, 2016
180,066,121
360,132,242
2017
Exercise of stock options
308,979
617,958
16,376,110
Vesting of performance shares
39,084
78,168
0
Cancellation of shares
(893,197)
(1,786,394)
(98,790,498)
At December 31, 2017
179,520,987
359,041,974
2018
Employee share issue
578,639
1,157,278
46,470,498
Exercise of stock options
201,946
403,892
10,245,710
Vesting of performance shares
194,291
388,582
0
Cancellation of shares
(648,231)
(1,296,462)
(73,928,476)
At December 31, 2018
179,847,632
359,695,264
2019
Exercise of stock options
64,178
128,356
3,594,008
Vesting of performance shares
61,566
123,132
0
Cancellation of shares
(1,345,821)
(2,691,642)
(137,856,194)
At December 31, 2019
178,627,555
357,255,110
2020
Vesting of performance shares
81,518
163,036
0
Exercise of stock options
14,570
29,140
904,670
Employee share issue
713,983
1,427,966
52,416,948
Cancellation of shares
(1,097,540)
(2,195,080)
(96,689,419)
At December 31, 2020
178,340,086
356,680,172
2021
Vesting of performance shares
180,976
361,952
0
Exercise of stock options
9,388
18,776
461,514
AT DECEMBER 31, 2021
178,530,450
357,060,900
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Additional share information
6.5.2
POTENTIAL SHARES
6.5.2 a)
Outstanding securities convertible, exchangeable, redeemable or otherwise exercisable
for shares
Options to purchase new shares of common stock
Please refer to the detailed information in section 6.5.3.
Performance shares
Please refer to the detailed information in section 6.5.4.
6.5.2 b)
Estimated maximum number of potential new shares at December 31, 2021
Issued capital
(in €)
ISSUED CAPITAL AT DECEMBER 31, 2021
357,060,900
Stock options outstanding as of December 31, 2021
The last plan launched in 2012 expired in 2021 and no exercisable stock options remain.
Performance shares outstanding at December 31, 2021
Grant date
Vesting period ends
Performance shares
outstanding
Capital
(in €)
November 22, 2018 (Excellence Management)
November 22, 2022
38,821
November 15, 2019 (Excellence)
November 15, 2023
369,803
November 13, 2020 (Excellence, Managers)
November 13, 2024
495,928
November 16, 2020
November 16, 2022
79,988
November 17, 2021 (Excellence, Managers)
November 17, 2025
319,078
TOTAL PERFORMANCE SHARES OUTSTANDING
1,303,618
2,607,236
MAXIMUM POTENTIAL SHARES AS OF DECEMBER 31, 2022
(REPRESENTING A 0.73% INCREASE IN ISSUED CAPITAL)
359,668,136
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6.5.3
STOCK OPTIONS
6.5.3 a)
Stock option plans in effect at December 31, 2021 (Table 8 of the AFEP/MEDEF Corporate
Governance Code)
The corporate officers did not receive any stock options in respect of their positions under one of the plans adopted by the Company
which, at December 31, 2021, had all expired.
Plan 14
Date of the shareholder authorization
05/15/2009
Date granted by the Managers
06/25/2012
Total number of new or existing shares that may be purchased upon exercise of the options
143,276
Of which options granted to:
▶Florent Menegaux(1) (Managing General Partner)
-
▶Yves Chapot(1) (General Manager)
-
▶Michel Rollier(2) (Chairman of the Supervisory Board)
-
Vesting date
06/25/2016
Expiration date
06/24/2021
Exercise price
€51.16
Number of options exercised as of December 31, 2021
117,524
Number of options cancelled or expired
25,752
NUMBER OF OPTIONS OUTSTANDING AT DECEMBER 31, 2021
0
(1) Granted in his capacity as Manager.
(2) Granted in his capacity as Chairman of the Supervisory Board.
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6.5.3 b)
Stock options granted and exercised during the year
Stock options granted by CGEM(1) to the ten grantees other
than Managers who received the greatest number of
options and options exercised by the ten grantees other
than Managers who exercised the greatest number of
options
Number of options
granted/exercised
Exercise price
(in €)
End of exercise
period
Date granted
by the
Managers
Options granted
0
-
-
-
Options exercised (new shares issued)
6,250
51.16
06/24/2021
06/25/2012
(1) No options have been granted by any qualifying company apart from CGEM.
6.5.3 c)
Special report of the Managing Chairman
No stock options were granted during the year.
The ten employees other than the Managers who exercised the greatest number of options exercised 6,250 options at a unit price of
€51.16 for options granted on June 25, 2012.
No Manager holds non-exercisable stock options.
Clermont-Ferrand, February 11, 2022
Florent Menegaux
Managing Chairman
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6.5.4
SHARE GRANTS AND PERFORMANCE SHARES
6.5.4 a)
Performance share plans in effect at December 31, 2021 (Table 9 of the AFEP/MEDEF
Corporate Governance Code)
PLANS IN EFFECT
Plan 9
(Excellence Management)
Plan 10
(Excellence)
Plan 11
(Excellence)
Date of the shareholder
authorization
May 13, 2016
May 17, 2019
June 23, 2020
Date granted by the Managers
November 22, 2018
November 15, 2019
November 13, 2020
Number of rights granted
129,270
377,292
486,216
O/w to:
▶Florent Menegaux(1)
(Managing Chairman)
-
-
-
▶Yves Chapot(1)
(General Manager)
-
-
-
Vesting date
(in years)
November 22, 2022
(4 years)
November 15, 2023
(4 years)
November 13, 2024
(4 years)
End of lock-up period (in years)
N/A
N/A
N/A
Performance conditions(2)
(period over which criteria are
applied: 3 years)
▶Michelin share price that
outperforms the CAC 40 by at
least 15 points, comparing the
average closing price between
the second half of 2017 and
the second half of 2020
▶Corporate social responsibility
objective:
• average MEF(3) of 51 or less
over the 2018-2020 period
• average employee engagement
rate of at least 80% over the
2018-2020 period
▶Average annual growth in
consolidated operating income
of €150 million over the
2018‑2020 period
▶Michelin share price that
outperforms the CAC 40 by at
least 15 points, comparing the
average closing price between
the second half of 2018 and
the second half of 2021
▶Corporate social responsibility
objective:
• average change in MEF(3) of
less than -1.5 points over the
2019-2021 period
• average change in employee
engagement rate of more
than 1.5 points over the
2019-2021 period
▶Average segment operating
margin of at least 12% over
the 2019-2021 period(4)
▶Michelin share price outperforms
the Euro Stoxx 600 index by at
least 15 points, comparing the
average closing price in 2019
and in 2022
▶Corporate social responsibility
objective:
• average change in MEF(3) of
less than -1.5 points over the
2020-2022 period
• average change in employee
engagement rate of more
than 1.5 points over the
2020‑2022 period
▶Average annual growth in
revenue (excluding tires and
distribution) of more than
8% over the 2019-2021
and 2021‑2022 periods(5)
▶Return on capital employed
(ROCE) of at least 11% in 2022
Number of vested shares
at December 31, 2021
0
325
409
Number of canceled or voided
share rights
90,449
7,164
9,899
NUMBER OF SHARE GRANTS
OR PERFORMANCE SHARES
OUTSTANDING AT
DECEMBER 31, 2021
38,821
369,803
475,908
(1) Granted in his capacity as Manager.
(2) On a like-for-like consolidated basis, excluding changes in exchange rates for the financial criteria.
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Plan 12
(Managers)
Plan 13
Plan 14
(Excellence)
Plan 15
(Managers)
June 23, 2020
June 23, 2020
June 23, 2020
June 23, 2020
November 13, 2020
November 16, 2020
November 17, 2021
November 17, 2021
20,020
82,784
305,627
13,995
12,012
0
-
8,397
8,008
0 (Yves Chapot waived
his four share rights)
-
5,598
November 13, 2024
(4 years)
November 16, 2022
(2 years)
November 17, 2025
(4 years)
November 17, 2025
(4 years)
N/A
N/A
N/A
N/A
▶Michelin share price outperforms
the Euro Stoxx 600 index by at
least 15 points, comparing the
average closing price in 2019 and
in 2022
▶Corporate social responsibility
objective:
• average change in MEF(3) of less
than -1.5 points over the
2020-2022 period
• average change in employee
engagement rate of more than
1.5 points over the 2020-2022
period
▶Average annual growth in
revenue (excluding tires and
distribution) of more than 8%
over the 2019-2020,
2020-2021 and
2021‑2022 periods
▶Return on capital employed
(ROCE) of at least 11% in 2022
N/A
▶Michelin share price outperforms
the Euro Stoxx 600 index by at
least 5 points, comparing the
average closing price in 2020
and in 2023
▶Corporate social responsibility
objective:
• i-MEP below 88 points in
2023
• average change in employee
engagement rate of more
than 1 point over the
2021‑2023 period
▶Average annual growth in
revenue (excluding tires and
distribution) of more than 8%
over the 2020-2021,
2021-2022 and
2022‑2023 periods
▶Return on capital employed
(ROCE) of at least 11% in 2023
▶Michelin share price
outperforms the Euro Stoxx 600
index by at least 5 points,
comparing the average closing
price in 2020 and in 2023
▶Corporate social responsibility
objective:
• i-MEP below 88 points
in 2023
• average change in employee
engagement rate of more
than 1 point over the
2021‑2023 period
▶Average annual growth in
revenue (excluding tires and
distribution) of more than 8%
over the 2020-2021,
2021-2022 and
2022‑2023 periods
▶Return on capital employed
(ROCE) of at least 11% in 2023
0
36
0
0
0
2,760
544
0
20,020
79,988
305,083
13,995
(3) Michelin Environmental Footprint (MEF) indicator: energy use, water withdrawals, CO2 emissions, volatile organic compound emissions, amount of waste
produced and amount of waste landfilled.
(4) Replaces the condition of reporting average consolidated operating income of more than €200 million a year over the 2019-2021 period, which is no longer
feasible given the 2020 business environment.
(5) Given the impact of Covid-19 on the business environment, the 2020 result has been factored out of this indicator so that it remains attainable.
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6.5.4 b)
Performance shares granted during the year
Rights to 319,622 performance shares were granted during the year.
Number of shares
granted
Date granted by the
Managers
Performance shares granted by CGEM to the ten grantees other than Managers who
received the greatest number of shares
1,333
November 17, 2021
6.5.4 c)
Special report of the Managing Chairman
November 17, 2021 Plan (Excellence)
The Annual Shareholders Meeting of June 23, 2020 authorized
the grant of shares without consideration to employees of the
Company (including the Managers and the Chairman of the
Supervisory Board) and of related companies within the
meaning of Articles L. 225-197-1 et seq. of the French
Commercial Code, with the number of shares that may be
granted limited to 0.9% of issued capital.
This authorization was used in 2021 to grant 319,622 rights to
one new share of common stock to 1,613 grantees.
Performance shares will vest based on the fulfillment of
performance criteria set out under the Michelin Performance
and Responsibility Ambitions for 2020.
As specified in the report presenting the related resolution of
the June 23, 2020 Shareholders Meeting(1), adopted as
announced on page 425 of the 2020 Universal Registration
Document, all grantees must fulfill three performance
conditions.
as follows:
▶Michelin's share performance compared with the Stoxx
Europe 600 index: the difference between average closing
prices of the Michelin share for 2020 and for 2023 must
exceed the difference between the closing Stoxx Europe 600
indexes for these same years by at least 5 points;
▶Corporate social responsibility objective: employee engagement
and
the
environmental
performance
of
manufacturing
operations. This criterion is based on two indicators: the
environmental footprint of Michelin’s manufacturing operations
and the level of employee engagement:
• since 2005, Michelin has measured and reported the main
impacts of its manufacturing operations using the MEF
indicator. This indicator now needs to be updated to reflect
the extensive progress made and the emergence of new
environmental challenges since its launch. The new i-MEP
indicator will track the environmental impact of the
Group's manufacturing operations until 2030. The i-MEP
will make these easier to understand by focusing on five
priority areas: energy use, CO2 emissions, organic solvent
use, water withdrawals and stress, and waste production.
The i-MEP must be below 88 points in 2023,
• since 2013, the annual “Moving Forward Together: Your Voice
for Action” survey has measured the employee engagement
rate. The change in the average engagement rate over
three years (2021-2023 period) must exceed 1 point;
▶operating performance: growth in revenue (excluding tires
and distribution) and return on capital employed (ROCE). This
criterion is based on two indicators: revenue growth excluding
tires
and
distribution,
and
total
consolidated
ROCE
(i.e., including acquisitions and companies accounted for by
the equity method):
• the growth in the new business revenue indicator (like-for-like
growth excluding tires and distribution) measures the
Group’s ability to grow its new businesses (as opposed to
its historical core business). The average growth in new
business revenue from 2020 to 2021, from 2021 to 2022
and from 2022 to 2023 must be at least 8%,
• total consolidated ROCE (including acquisitions, related
goodwill and equity-accounted companies) measures the
robustness of the Group’s performance. It must be at least
11% in 2023.
For all criteria, fulfillment is calculated as follows:
▶If the minimum performance condition is not met, no shares
will vest;
▶if the minimum performance condition is met or exceeded,
shares will vest on a gradual and proportional basis up to a
certain ceiling.
Provided that the grantee is still employed by the Group at the
end of the vesting period (or qualifies for an exemption from
this requirement under French law or in exceptional cases at the
discretion of the Managers), if the achievement rate for all of
the above criteria is 100% then 100% of the performance
shares will vest, with the first criterion accounting for 30%, the
second criterion for 40% (20% per indicator) and the third
criterion for 30% (15% per indicator).
(1) Please refer to pages 395 to 398 of the 2019 Universal Registration Document.
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Fulfillment of performance conditions under performance share plans in effect in 2021
FULFILLMENT OF PERFORMANCE CONDITIONS UNDER THE NOVEMBER 14, 2017 PERFORMANCE SHARE PLAN
Criteria
Weighting
Results
Achievement
rate
2019 vs. 2016
Share price
performance
Michelin share price outperforms the
CAC 40 by at least 15 points for the
2016-2019 period (average closing price
for the second half of the two years)
35%
-17.5 points
0%
2017
2018
2019
Average
Corporate social
responsibility
performance
Michelin Environmental Footprint –
MEF (indicator: energy use, water
withdrawals, CO2 emissions, volatile
organic compound emissions, amount
of waste produced and amount of
waste landfilled) average over three
years (2017-2019 period) must be
less than 60
15%
53
49
49
50
15%
Average employee engagement
rate: must be at least 80% a year on
a like-for-like consolidated basis over
the 2017-2019 period
15%
80%
80%
81%
80%
15%
Growth in
operating income
Like-for-like growth in consolidated
operating income from recurring
activities(1), of €150 million a year
over the 2017-2019 period
35%
145
265
111
174
35%
TOTAL
65%
(1) Indicator replacing operating income before non-recurring income and expenses.
Given that one of the performance conditions was not met, no more than 65% of the performance shares vested.
Note that the vesting period ended in November 2021 (with no lock-up period) for all grantees.
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FULFILLMENT OF PERFORMANCE CONDITIONS UNDER THE NOVEMBER 22, 2018 PERFORMANCE SHARE PLAN
Criteria
Weighting
Results
Achievement
rate
2020 vs. 2017
Share price
performance
Michelin share price outperforms the
CAC 40 by at least 15 points for the
2017-2020 period (average closing price
for the second half of the two years)
35%
-15.7 points
0%
2018
2019
2020
Average
Corporate social
responsibility
performance
Michelin Environmental Footprint –
MEF (indicator: energy use, water
withdrawals, CO2 emissions, volatile
organic compound emissions, amount
of waste produced and amount of
waste landfilled) average over three
years (2018-2020 period) must be
less than 51
15%
49
49
49
49
15%
Average employee engagement
rate: must be at least 80% a year on
a like-for-like consolidated basis over
the 2018-2020 period
15%
80%
81%
83%
81%
15%
Growth in
operating income
Like-for-like growth in consolidated
operating income from recurring
activities(1), of €150 million a year
over the 2018-2020 period
35%
265
111
(1,002)
(209)
0%
TOTAL
30%
(1) Indicator replacing operating income before non-recurring income and expenses.
Given that only one of the performance conditions was met, no more than 30% of the performance shares will vest.
Note that the vesting period will end in November 2022 (with no lock-up period) for all grantees.
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FULFILLMENT OF PERFORMANCE CONDITIONS UNDER THE NOVEMBER 15, 2019 PERFORMANCE SHARE PLAN
In view of the challenging business environment in 2020, the Managing Chairman decided to replace the growth in segment
operating income condition by the segment operating margin. The change is intended to attenuate the impact of the 2020
performance on the overall achievement rate of the conditions over the three-year period from 2019 to 2021. This change does not
concern the Managers, for whom none of the performance criteria have been adjusted.
Criteria
Weighting
Results
Achievement
rate
2021 vs. 2018
Share price
performance
Michelin share price outperforms
the CAC 40 by at least 15 points
for the 2018-2021 period (average
closing price for the second half of
the two years)
35%
+9.0 points
21%
2019
2020
2021
Average
Corporate social
responsibility
performance
Average change in the Michelin
Environmental Footprint – MEF
(energy use, water withdrawals,
CO2 emissions, volatile organic
compound emissions, amount
of waste produced and amount
of waste landfilled) over three
years (2019-2021 period) must
be less than -1.5 points
15%
-0.5 points
+0.1 points
-2.5 points
-1.0 point
10%
Change in average employee
engagement rate must exceed
1.5 points a year on a like-for-
like consolidated basis over the
2019-2021 period
15% +1.0 points
+2.0 points
-2.0 points
0.3 points
3%
Operating margin
Segment operating margin,
at current scope of consolidation,
constant accounting methods
and current exchange rates,
of an average 12% a year over
the 2019-2021 period
35%
12.5%
9.2%
12.5%
11.4%
25%
TOTAL
59%
Given that the performance conditions were partially met, no more than 59% of the performance shares will vest.
Note that the vesting period will end in November 2023 (with no lock-up period) for all grantees.
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Additional share information
INTERIM FULFILLMENT OF PERFORMANCE CONDITIONS UNDER THE NOVEMBER 13, 2020 PERFORMANCE SHARE PLAN
FOR EMPLOYEES
Criteria(1)
Weighting
Interim results
2021 vs. 2019
Share price
performance
Michelin share price outperforms the Stoxx Europe 600
index by at least 15 points, comparing the average
closing price in 2019 and in 2022
30%
+4.2 points
2020
2021
2022
Corporate social
responsibility
performance
Average change in the Michelin Environmental
Footprint – MEF (energy use, water withdrawals, CO2
emissions, volatile organic compound emissions,
amount of waste produced and amount of waste
landfilled) over three years (2020-2022 period)
must be less than -1.5 points
15%
+0.1 points
-2.5 points
-
Change in average employee engagement rate must
exceed 1.5 points a year on a like-for-like
consolidated basis over
the 2020-2022 period
15%
+2.0 points
-2.0 points
-
Operating
performance
Average annual growth in revenue, excluding tires
and distribution, must be at least 8% over the 2019-
2021 and 2021-2022 periods(2).
13%(1)
factored out
+1.7%
-
Total consolidated ROCE (including acquisitions, related
goodwill and equity-accounted companies) must be
at least 11% in 2022.
20%
6.0%
10.3%
-
(1) The figures indicated are the results to be achieved to obtain 100% of the criteria.
(2) Given the impact of Covid-19 on the business environment, the 2020 result has been factored out of this indicator so that it remains attainable. As a result,
the indicator’s achievement rate has been capped at 13%, instead of 20%, to reflect its assessment over two-thirds of the period.
INTERIM FULFILLMENT OF PERFORMANCE CONDITIONS UNDER THE NOVEMBER 13, 2020 PERFORMANCE
SHARE PLAN FOR THE MANAGERS
Criteria(1)
Weighting
Interim results
2021 vs. 2019
Share price
performance
Michelin share price outperforms the Stoxx Europe 600
index by at least 15 points, comparing the average
closing price in 2019 and in 2022
(average daily price for the two years)
30%
+4.2 points
2020
2021
2022
Corporate social
responsibility
performance
Average change in the Michelin Environmental
Footprint – MEF (energy use, water withdrawals, CO2
emissions, volatile organic compound emissions,
amount of waste produced and amount of waste
landfilled) over three years (2020-2022 period) must be
less than -1.5 points
15%
+0.1 points
-2.5 points
-
Change in average employee engagement rate must
exceed 1.5 points a year on a like-for-like
consolidated basis over the 2020-2022 period
15%
+2.0 points
-2.0 points
-
Operating
performance
Average annual growth in revenue, excluding tires
and distribution, must be at least 8% over the
2019‑2020, 2020-2021 and 2021-2022 periods
20%
-10.2%
+7.7%
-
Total consolidated ROCE (including acquisitions, related
goodwill and equity-accounted companies) must be
at least 11% in 2022.
20%
6.0%
10.3%
(1) The figures indicated are the results to be achieved to obtain 100% of the criteria.
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Additional share information
INTERIM FULFILLMENT OF PERFORMANCE CONDITIONS UNDER THE NOVEMBER 17, 2021 PERFORMANCE SHARE PLAN
FOR EMPLOYEES AND THE MANAGERS
Criteria(1)
Weighting
Interim results
2021 vs. 2020
Share price
performance
Michelin share price outperforms the Stoxx Europe 600
index by at least 5 points, comparing the average
closing price in 2020 and in 2023
(average daily price for the two years)
30%
+11.3 points
2021
2022
2023
Corporate social
responsibility
performance
Industrial-Michelin Environmental Performance -
i-MEP(2) must be below 88 points in 2023
20%
92.6 points
-
-
Change in average employee engagement rate must
exceed 1 point a year on a like-for-like consolidated
basis over the 2021-2023 period
20%
-2.0 points
-
-
Operating
performance
Average annual growth in revenue, excluding tires
and distribution, must be at least 8% over the 2020-
2021, 2021-2022 and 2022-2023 periods
15%
+7.7%
-
-
Total consolidated ROCE (including acquisitions, related
goodwill and equity-accounted companies) must be at
least 11% in 2023.
15%
10.3%
-
-
(1) The figures indicated are the results to be achieved to obtain 100% of the criteria
(2) Annual scope based on reported figures, including acquisitions from the fourth year of consolidation in the Group’s financial statements.
Performance shares vested and delivered
Note that during 2021:
▶the two Managers received 13,995 performance share rights
(one received 8,397 and the other received 5,598);
▶the two Managers received 8,993 fully vested performance
shares (one received 5,314 and the other received 3,679);
▶the 10 employees other than Managers who were granted the
greatest number of share rights:
• received 29,935 performance share rights,
• received 29,356 fully vested performance shares.
Clermont-Ferrand, February 11, 2022
Florent Menegaux
Managing Chairman
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Additional share information
6.5.5
EMPLOYEE SHARE OWNERSHIP
Michelin regularly offers employees opportunities to purchase shares of Company stock on preferential terms through recurring
employee share ownership plans. Following completion of the seven employee savings plans set up since 2002, a total of
62,118 Group employees in almost 50 countries around the world are now shareholders. At December 31, 2021, they owned 1.7%
of the Company’s issued capital.
6.5.6
INFORMATION CONCERNING A SHARE BUYBACK PROGRAM CURRENTLY
IN EFFECT
The following information includes the disclosures reported in the Managing Chairman’s Report in compliance with Article L. 225-211
of the French Commercial Code.
6.5.6 a)
Authorizations granted to the Managers
At the Annual Shareholders Meeting of June 23, 2020,
shareholders granted the Managers an 18-month authorization
to buy or sell shares of Company stock, as part of a new share
buyback program. The Company was authorized to buy back up
to 10% of the total shares outstanding, at a maximum
purchase price of €180 per share, with the requirement that it
not hold more than 10% of its own share capital at any time.
The authorization was used in 2020 (please refer to section
6.5.6 b) of the 2020 Universal Registration Document).
In addition, at the May 21, 2021 Annual Shareholders Meeting,
shareholders granted the Managers a new authorization, valid
for 18 months or until replaced, to buy or sell shares of
Company stock, under the same terms and conditions as the
previous authorization, at a maximum purchase price of €180.
From its entry into force this authorization has replaced the
previous authorization.
At the Annual Shareholders Meeting on May 13, 2022,
shareholders will be asked to authorize the Managers to buy or
sell shares of Company stock as part of a new buyback
program, the terms and conditions of which are described
below in section 6.5.7 “Description of the share buyback
program submitted for shareholder approval at the Annual
Shareholders Meeting of May 13, 2022”.
6.5.6 b)
Transactions in the Company's shares in 2021
Under the share buyback program authorized by shareholders at the May 23, 2020 Annual Shareholders Meeting, the Company has
entered into a share buyback agreement with a service provider and has carried out a buyback of 8,032 shares. These shares were
allocated to Group employees as part of the Bib'Action 2020 program.
The Company no longer held any shares in treasury at December 31, 2021, as was the case at January 1, 2021.
6.5.6 c)
Purpose of shares held in treasury at December 31, 2021
The Company held no shares in treasury at December 31, 2021.
6.5.6 d)
Market value of treasury shares at December 31, 2021
No shares were held at December 31, 2021.
Treasury shares bought back and sold
during the year
Buybacks
Sales/transfer
Number of shares
-
-
Average transaction price per share (in €)
0
0
Average exercise price
N/A
N/A
Total cost of transactions (in €)
0
0
Derivative instruments were not used to buy back shares. The Company did not have any open buy or open sell positions in its own
stock at December 31, 2021.
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Additional share information
6.5.7
DESCRIPTION OF THE SHARE BUYBACK PROGRAM SUBMITTED
FOR SHAREHOLDER APPROVAL AT THE ANNUAL SHAREHOLDERS
MEETING OF MAY 13, 2022
The following description has been prepared in accordance with Articles 241-1 et seq. of the General Regulations of the French
securities regulator (AMF) and with European Commission regulations.
Date of the Annual Shareholders Meeting at which the share buyback program
is submitted for approval
May 13, 2022.
Purposes of the new share buyback program
The objectives of the share buyback program are as follows:
▶to purchase shares for sale or allocation to employees of
Group companies in accordance with the conditions set
down by law, including (i) on exercise of stock options,
(ii) under performance share plans and (iii) by way of transfer
and/or employer matching contributions, directly or indirectly,
in connection with employee rights issues;
▶to maintain a liquid market for the Company’s shares
through a liquidity contract with an independent investment
services provider, using the market practices authorized by
the AMF on July 2, 2018;
▶to purchase shares for allocation on exercise of rights
attached to securities redeemable, convertible, exchangeable
or otherwise exercisable for shares of the Company;
▶to purchase shares to be held and subsequently sold,
exchanged or otherwise transferred in connection with
external growth transactions. The maximum number of
shares purchased for the purpose of being held and
subsequently sold or exchanged in connection with a merger,
de-merger or asset contribution shall not exceed 5%
(five percent) of the Company’s share capital;
▶to implement any other market practices that may be
authorized in the future;
▶to acquire shares for cancellation under a shareholder-
approved capital reduction.
Maximum percentage of issued capital, maximum number and characteristics of the shares
the Company proposes to buy back and maximum purchase price
The Company would be authorized to buy back up to 10% of
the total shares outstanding, i.e., 17,853,045 shares at the date
of this report. Based on the maximum purchase price of
€220.00 per share, this would correspond to a maximum
theoretical amount of €3,927,669,900 (as adjusted if necessary
for the effect of any stock split).
In accordance with the law, when shares are bought back for
the second purpose listed above, the number of shares used to
calculate the 10% limit is the number bought back less the
number sold during the course of the program.
Pursuant to Article L. 22-10-62 et seq. and L.225-210 et seq. of
the French Commercial Code, the total value of shares held in
treasury may not exceed the amount of available reserves (other
than the legal reserve) recorded in the Company’s balance sheet
at December 31, 2021.
Duration of the share buyback program
Subject to shareholder approval, the shares may be bought back at any time during the 18 months from the May 13, 2022
Annual Shareholders Meeting, i.e., until the close of trading on November 13, 2023.
Effective as from the Annual Shareholders Meeting of May 13, 2022, this authorization would replace the similar authorization
granted by shareholders at the Annual Shareholders Meeting of May 21, 2021.
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0
Annual
Shareholders
Meeting of
May 13, 2022
438
7
MICHELIN 2021 UNIVERSAL REGISTRATION DOCUMENT
The world’s number one
brand of premium tires,
Michelin is committed
to meeting its customers’
expectations with ever
greater precision.
Dialogue and observation
are central to our
approach.
07
Annual Shareholders
Meeting of May 13, 2022
7.1
REPORT OF THE MANAGING
CHAIRMAN AND PROPOSED
RESOLUTIONS
440
7.1.1
Ordinary resolutions (1st to 18th resolutions)
440
7.1.2
Extraordinary resolutions
(19th to 30th resolutions)
446
Summary of financial authorizations
submitted for shareholder approval
457
7.2
REPORT OF THE SUPERVISORY
BOARD: RECOMMENDATIONS
CONCERNING THE VOTES ON
THE PROPOSED RESOLUTIONS
458
7.2.1
Re-election of Supervisory Board members
(13th to 15th resolutions)
458
7.2.2
Appointment of the Statutory Auditors
(17th and 18th resolutions)
460
7.2.3
Approval of the compensation of the
corporate officers, increase in the total
compensation awarded to the Supervisory
Board (6th to 12th and 16th resolutions)
461
7.2.4
Approval of the financial statements,
related-party agreements, financial
authorizations and stock split
(1st to 5th and 19th to 29th resolutions)
462
7.3
STATUTORY AUDITORS’ REPORTS
463
7.3.1
Statutory Auditors’ report on the issue
of shares and/or various securities, with
or without pre-emptive subscription rights
463
7.3.2
Statutory Auditors’ report on the rights issue
reserved for members of a Group employee
shareholder plan
465
7.3.3
Statutory Auditors’ report on the capital
reduction
466
7.3.4
Other Statutory Auditors' reports
467
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Report of the Managing Chairman and proposed resolutions
7.1
REPORT OF THE MANAGING CHAIRMAN
AND PROPOSED RESOLUTIONS
Ongoing dialogue between shareholders and issuers, both
before and after Annual Shareholders Meetings, is essential to
enable shareholders to effectively exercise their role, and for
companies to enhance their communications.
One of the ways that companies can ensure the effectiveness of
such dialogue is by making efforts to clearly explain the
content, rationale and import of the resolutions submitted for
shareholder approval.
The resolutions set in blue type below are the resolutions
proposed by the Company that will be included in the Notice of
Meeting published in the Bulletin des annonces légales
obligatoires. Each shareholder will also be sent a copy of the
Notice of Meeting within the period prescribed by law.
7.1.1
ORDINARY RESOLUTIONS (1ST TO 18TH RESOLUTIONS)
1st and 2nd resolutions
Approval of the Company's financial statements for the year ended December 31, 2021
Appropriation of net income for the year ended December 31, 2021 and approval
of the recommended dividend
The 1st and 2nd resolutions concern the approval of the
Company’s 2021 financial statements and appropriation of net
income for the year.
Shareholders are invited to approve the transactions reflected in
the Company's income statement and balance sheet, as
presented, and to appropriate net income for the year which
amounts to €584,192,137.32.
After deducting €5,299,452.00 attributable to the General Partners
in accordance with the Bylaws, the balance of €578,892,685.32
plus €2,459,215,554.28 in retained earnings brought forward
from prior years represents a total of €3,038,108,239.60 available
for distribution to shareholders.
We are recommending paying a dividend of €4.50 per share in
respect of 2021.
In order to qualify for the dividend payment, beneficiaries must
be shareholders of record at midnight (CEST) on May 18, 2022
(the record date).
The ex-dividend date will be May 17, 2022.
The dividend will be paid as from May 19, 2022.
If the ninth resolution (Approval of the components of the
compensation paid or awarded to Florent Menegaux for the year
ended December 31, 2021) is not approved by this Shareholders
Meeting, the amount attributable to the General Partners
referred to above will be added to the amount available for
distribution, as provided for in Article 12.1 of the Bylaws, and will
be appropriated to retained earnings, which will be increased to
€2,240,020,666.60.
If the Company holds any of its own shares on the dividend payment
date, the distributable profit corresponding to the unpaid dividend
on these shares will also be appropriated to retained earnings.
First resolution
(Approval of the Company's financial statements
for the year ended December 31, 2021)
Having considered the reports of the Chief Executive Officer,
the Statutory Auditors and the Supervisory Board, the Ordinary
Shareholders Meeting approves the Company's financial
statements for the year ended December 31, 2021 which show
net income for the period of €584,192,137.32.
The Ordinary Shareholders Meeting also approves the transactions
reflected in these financial statements and referred to in these
reports, including those relating to the various provision accounts.
Second resolution
(Appropriation of net income for the year ended
December 31, 2021 and approval of the recommended
dividend)
On the recommendation of the Managing Chairman (as
approved by the Supervisory Board), the Ordinary Shareholders
Meeting notes that the total amount available for distribution is
as follows:
▶net income for the year:
€584,192,137.32;
▶share of profits attributed
to the General Partners in
accordance with the Bylaws:
€5,299,452.00;
▶balance:
€578,892,685.32;
▶plus retained earnings brought
forward from prior years:
€2,459,215,554.28;
▶total amount available for distribution:
€3,038,108,239.60.
And resolves:
▶to pay an aggregate dividend of:
€803,387,025.00;
▶representing
€4.50 per share;
▶to appropriate the balance of
€2,234,721,214.60
to retained earnings.
The dividend will be paid as from May 19, 2022.
If the ninth resolution (Approval of the components of the
compensation paid or awarded to Florent Menegaux for the
year ended December 31, 2021) is not approved by this
Shareholders Meeting, the amount attributable to the General
Partners referred to above shall be added to the amount
available for distribution, as provided for in Article 12.1 of the
Bylaws, and shall be appropriated to retained earnings, which
will be increased to €2,240,020,666.60.
If the Company holds any of its own shares on the dividend
payment date, the distributable profit corresponding to the unpaid
dividend on said shares shall be appropriated to retained earnings.
440
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For individual shareholders domiciled in France for tax purposes,
the tax treatment of the dividend will be as follows:
▶in application of Article 200-A of the French General Tax
Code (Code général des impôts), dividends paid to individual
shareholders domiciled in France for tax purposes are subject
to a 30% (thirty percent) flat tax (12.8% [twelve point eight
percent] in respect of income tax and 17.2% [seventeen
point two percent] for social security contributions). This flat
tax does not discharge the individual from other tax liabilities;
▶the 12.8% flat tax will be applied automatically unless the
taxpayer makes an irrevocable election to pay income tax at
the graduated rate on all dividend income. The election must
be made each year, when the taxpayer's personal income tax
return is filed;
▶the two-step method of paying tax on dividends is maintained.
In accordance with Article 119 bis of the French General Tax
Code, dividends paid to shareholders not domiciled in France
for tax purposes are subject to withholding tax at the rate
applicable to the country in which the shareholder is domiciled.
As required under Article 243 bis of the French General Tax
Code, shareholders note that dividends paid for the past three
years were as follows:
Year
Total dividend
payout (in €)
Dividend per
share* (in €)
2018
665,436,238.40
3.70
2019
357,255,110.00
2.00
2020
410,182,197.80
2.30
*
The full amount of the dividend was eligible for the 40% tax allowance
provided for in Article 158-3-2° of the French General Tax Code.
3rd resolution
Approval of the consolidated financial statements for the year ended December 31, 2021
The purpose of the 3rd resolution is to approve the consolidated
financial statements for the year ended December 31, 2021,
which show net income for the period of €1,845,067 thousand.
The 2021 Universal Registration Document, which can be
downloaded from Michelin's website (www.michelin.com),
contains an analysis of the consolidated financial statements
and year-on-year changes.
Third resolution
(Approval of the consolidated financial statements
for the year ended December 31, 2021)
Having considered the reports of the Managing Chairman, the
Statutory Auditors and the Supervisory Board, the Ordinary
Shareholders Meeting approves the consolidated financial
statements for the year ended December 31, 2021, which show
net income for the period of €1,845,067 thousand.
4th resolution
Related-party agreements
As no related-party agreements were entered into during 2021,
shareholders are invited to place on record that there are no
such agreements to approve.
In addition, no related-party agreements entered into in
previous years remained in force during 2021.
Fourth resolution
(Related-party agreements)
Having considered the Statutory Auditors' special report on related-
party agreements governed by Article L. 226-10 of the French
Commercial Code (Code de commerce), the Ordinary Shareholders
Meeting approves said report and places on record that no such
agreements requiring shareholder approval were entered into or
were in force in 2021.
5th resolution
Authorization for the Managers to put in place a share buyback program, except during a public offer
period, based on a maximum purchase price per share of €220.
In the 5th resolution, shareholders are invited to renew the
authorization granted to the Company to buy back its own
shares over a period of 18 months. The maximum purchase
price per share under this authorization would be €220.00 and
the maximum number of shares purchased would not exceed
10% of the total shares outstanding at the time of the
transaction(s).
The maximum purchase price per share has been raised in this
authorization compared to the authorization given by the
Shareholders Meeting of May 21, 2021, to take into account
the growth in Michelin’s share price in late 2021.
During 2021, the Company used the previous authorization to
buy back 8,032 shares. For details of the buybacks, see section
6.5.6.2 of the 2021 Universal Registration Document.
The proposed authorization could not be used during a public
offer period.
Fifth resolution
(Authorization for the Managers or either of them to
put in place a share buyback program, except during
a public offer period, based on a maximum purchase
price per share of €220.00)
Having considered the reports of the Managing Chairman and the
Supervisory Board, as well as the description of the share buyback
program drawn up in accordance with the requirements of the
General Regulations of the AMF, the Ordinary Shareholders Meeting
authorizes the Managers or either of them, in accordance with
Articles L.22-10-62 et seq. and L.225-210 et seq. of the French
Commercial Code, to put in place a program for the Company to
buy back its own shares at a maximum purchase price per share of
€220.00 (two hundred and twenty euros).
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In the event of any corporate actions, such as a bonus share
issue paid up by capitalizing reserves or a stock split or reverse
stock split, the above maximum purchase price will be adjusted
accordingly.
The number of shares that may be bought back under this
authorization may not represent more than 10% (ten percent)
of the total shares outstanding at the time of each transaction.
The total number of shares that may be purchased for the
purpose of maintaining a liquid market, as set out below, will
be calculated after deducting the number of shares sold over
the duration of the share buyback program. In addition, the
Company may not hold more than 10% (ten percent) of its own
share capital at any time.
Based on the share capital at December 31, 2021, the maximum
amount
invested
in
the
program
would
not
exceed
€3,927,669,900.00
(three billion, nine hundred and twenty-seven million, six hundred
and sixty-nine thousand and nine hundred euros), corresponding to
10% (ten percent) of the Company's share capital or 17,853,045
(seventeen million, eight hundred and fifty-three thousand, and
forty five) shares purchased at the maximum price of €220.00 (two
hundred and twenty euros) per share, as adjusted if necessary for
the effect of any stock split.
The objectives of the share buyback program are as follows:
▶to purchase shares for sale or allocation to employees of
Group companies in accordance with the conditions set
down by law, including (i) on exercise of stock options,
(ii) under performance share plans and (iii) by way of transfer
and/or employer matching contributions, directly or indirectly,
in connection with employee rights issues;
▶to maintain a liquid market for the Company's shares
through a liquidity contract with an independent investment
services provider, using the market practices authorized by
the AMF on July 2, 2018;
▶to purchase shares for allocation on exercise of rights
attached to securities redeemable, convertible, exchangeable
or otherwise exercisable for shares of the Company;
▶to purchase shares to be held and subsequently sold,
exchanged or otherwise transferred in connection with
external growth transactions. The maximum number of
shares purchased for the purpose of being held and
subsequently sold or exchanged in connection with a merger,
de-merger or asset contribution shall not exceed 5% (five
percent) of the Company's share capital;
▶to implement any other market practices that may be
authorized in the future;
▶to acquire shares for cancellation under a shareholder-
approved capital reduction.
The purchase, sale or transfer of shares may be effected at any
time, except during a public offer period, and by any method,
on the basis and within the limits prescribed by the laws and
regulations in force on the transaction date(s), via regulated
markets, multilateral trading facilities, systematic internalizers or
over-the-counter, including through (i) block purchases or sales,
(ii) public offers of purchase or exchange, (iii) the use of options
or other forward financial instruments traded via regulated
markets, multilateral trading facilities, systematic internalizers or
over-the-counter, or (iv) the allocation of shares on conversion,
redemption, exchange or exercise of securities carrying rights to
the Company's shares or by any other means, either directly or
via an investment services provider. The entire buyback program
may be implemented through a block trade.
The Managers, or either of them, shall have full powers – which
may be delegated – to (i) place buy and sell orders, (ii) enter
into any and all agreements, (iii) make any and all filings,
(iv) carry out all other formalities, (v) allocate or reallocate the
purchased shares to any of the various purposes of the program
and (vi) generally, do everything necessary to carry out the
share buyback program.
This authorization shall be valid for a period of 18 months from
the date of this Meeting.
6th and 7th resolutions
Compensation Policy for the Managers and the Supervisory Board members
Since 2014, the compensation awarded to the Managers and
the Chair of the Supervisory Board has been submitted to the
shareholders at the Annual Meeting and, since 2020, according
to the method and on the basis specified in the PACTE Act that
came into force that year.
The General Partners and the Supervisory Board, based on the
recommendation of its Compensation and Appointments
Committee, will ask the Annual Shareholders Meeting of May
13, 2022 to approve the 2022 Compensation Policy applicable
to (i) the Managers and (ii) the Supervisory Board.
The 2022 Compensation Policy is described in the Corporate
Governance Report presented in section 3.3 of the 2021
Universal Registration Document.
The Compensation Policy applicable to the Managers and the
Supervisory Board is determined and revised in accordance with
the relevant laws and regulations.
Sixth resolution
(Approval of the Compensation Policy applicable
to the Managers)
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-76 II of
the French Commercial Code, approves the Compensation
Policy applicable to the Managers, as presented in the
Corporate Governance Report set out in sections 3.3.1 and
3.3.2 of the Company’s 2021 Universal Registration Document.
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Report of the Managing Chairman and proposed resolutions
Seventh resolution
(Approval of the Compensation Policy applicable
to members of the Supervisory Board)
Having noted the agreement of the General Partners and considered
the report of the Supervisory Board, the Annual Shareholders
Meeting, in application of Article L. 22-10-76 II of the French
Commercial Code, approves the Compensation Policy applicable to
the members of the Supervisory Board, as presented in the
Corporate Governance Report set out in sections 3.3.1 and 3.3.3 of
the Company’s 2021 Universal Registration Document.
8th to 12th resolutions
Information about the compensation packages of the corporate officers and about the individual
compensation paid or awarded to the Managers, the Chairman and the Chair of the Supervisory Board
in 2021
In accordance with the applicable laws and regulations, at the
Annual Shareholders Meeting, the General Partners and the
Supervisory Board will submit to the Ordinary Shareholders
Meeting the required disclosures concerning the compensation
paid or awarded in 2021 to the Managers and the Supervisory
Board.
In 2022, the General Partners and the Supervisory Board are
submitting to the Annual Shareholders Meeting for approval:
▶information about the components of the compensation paid
or awarded to the corporate officers for 2021 (8th resolution);
▶components of the individual compensation paid or awarded
to the Managers, the Chairman and the Chair of the
Supervisory Board in 2021, in respect of their service during
the year, i.e., to:
• Florent Menegaux, General Partner and Managing
Chairman (9th resolution),
• Yves Chapot, General Manager (10th resolution),
• Barbara Dalibard, Chair of the Supervisory Board since
May 2021 (11th resolution),
• Michel Rollier, Chairman of the Supervisory Board until
May 2021 (12th resolution).
These compensation components have been determined in
accordance with the principles described in the Compensation
Policy presented in 2021 for that year in the Corporate
Governance Report set out in section 3.4 of the 2020 Universal
Registration Document.
Eighth resolution
(Approval of the disclosures concerning the
compensation packages of the corporate officers)
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-77 I of
the French Commercial Code, approves the disclosures
mentioned in Article L. 22-10-9 I of the Code, as presented in the
Corporate Governance Report set out in sections 3.4.1 to 3.4.6
of the Company’s 2021 Universal Registration Document.
Ninth resolution
(Approval of the components of the compensation
paid or awarded to Florent Menegaux for the year
ended December 31, 2021)
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-77 II of
the French Commercial Code, approves the fixed, variable and
exceptional compensation making up the total compensation
and
fringe
benefits
paid
during
the
year
ended
December 31, 2021 or awarded in respect of that year to
Florent Menegaux, General Partner and Managing Chairman, as
presented in the Corporate Governance Report set out in
section 3.5.3 of the Company’s 2021 Universal Registration
Document.
Tenth resolution
(Approval of the components of the compensation
paid or awarded to Yves Chapot for the year ended
December 31, 2021)
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-77 II of
the French Commercial Code, approves the fixed, variable and
exceptional compensation making up the total compensation
and
fringe
benefits
paid
during
the
year
ended
December 31, 2021 or awarded in respect of that year to Yves
Chapot, General Manager, as set out in section 3.5.4 of the
Company’s 2021 Universal Registration Document.
Eleventh resolution
(Approval of the components of the compensation paid
or awarded to Barbara Dalibard for the year ended
December 31, 2021)
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-77 II of
the French Commercial Code, approves the fixed, variable and
exceptional compensation making up the total compensation
and
fringe
benefits
paid
during
the
year
ended
December 31, 2021 or awarded in respect of that year to
Barbara Dalibard, Chair of the Supervisory Board from
May 21, 2021, as set out in section 3.5.1 of the Company’s
2021 Universal Registration Document.
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ANNUAL SHAREHOLDERS MEETING OF MAY 13, 2022
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Report of the Managing Chairman and proposed resolutions
Twelfth resolution
(Approval of the components of the compensation paid
or awarded to Michel Rollier for the year ended
December 31, 2021)
Having noted the agreement of the General Partners and
considered the report of the Supervisory Board, the Annual
Shareholders Meeting, in application of Article L. 22-10-77 II of
the French Commercial Code, approves the fixed, variable and
exceptional compensation making up the total compensation
and
fringe
benefits
paid
during
the
year
ended
December 31, 2021 or awarded in respect of that year to
Michel Rollier, Chairman of the Supervisory Board until
May 21, 2021, as set out in section 3.5.2 of the Company’s
2021 Universal Registration Document.
13th to 15th resolutions
Terms of office of Supervisory Board members
The 13th to 15th resolutions concern the re-election of Supervisory Board members.
Michelin’s Supervisory Board plays a vital role for the Group
The current members of Michelin's Supervisory Board are
Barbara Dalibard, Anne-Sophie de La Bigne, Aruna Jayanthi,
Monique Leroux, Delphine Roussy, Jean-Pierre Duprieu, Patrick
de La Chevardière, Jean-Christophe Laourde, Thierry Le Hénaff,
Wolf‑Henning Scheider and Jean-Michel Severino.
The members elected by the Annual Shareholders Meeting all
have very solid business experience acquired through working
with leading corporations, as well as a good knowledge of the
Michelin Group. They actively participate in and contribute to
the work of both the Board and its Committees, as illustrated by
the 100% overall attendance rate for meetings held in 2021.
The Supervisory Board members perform their duties with total
freedom of judgment.
A summary of the work carried out by the Supervisory Board in
2021 is included in section 3.2 of the Corporate Governance
Report presented in the 2021 Universal Registration Document.
Michelin’s General Partners do not take part in the election or re-election of Supervisory
Board members
Compagnie Générale des Établissements Michelin is a
partnership limited by shares (société en commandite par
actions) and as such its Supervisory Board is entirely made up of
non-executive members (89% of whom are independent) who
represent the shareholders.
With a view to clearly separating management and supervisory
powers, none of the General Partners may play a role in the
nomination process, whether the Managing General Partner or the
Non-Managing General Partner, SAGES (which is responsible for
ensuring the Company's continuity of leadership).
The General Partners may not be involved in decisions to
recommend candidates for election to the Supervisory Board at
Shareholders Meetings.
Likewise, in accordance with the law and the Company's
Bylaws, the General Partners may not take part in any votes cast
at Shareholders Meetings concerning the election or re-election
of Supervisory Board members and their shares are not
included in the quorum for the related resolutions.
The Supervisory Board is recommending that shareholders re-elect three Supervisory Board members
The Supervisory Board unanimously decided to recommend
(with the interested parties abstaining) and to ask the Managing
Chairman to propose to the Shareholders Meeting the re-
election of Thierry Le Hénaff, Monique Leroux and Jean-Michel
Severino (13th, 14th and 15th resolutions respectively).
The candidate review and selection process, the criteria applied
by the Compensation and Appointments Committee and a
presentation of the candidates are set out in the report of the
Supervisory Board on the proposed resolutions (see the Notice
of Meeting for the May 13, 2022 Annual Shareholders Meeting
and section 7.2.1 of the 2021 Universal Registration Document).
Thirteenth resolution
(Re-election of Thierry Le Hénaff as a member
of the Supervisory Board)
Having considered the reports of the Managing Chairman and
the Supervisory Board, the Ordinary Shareholders Meeting re-
elects Thierry Le Hénaff as a member of the Supervisory Board
for a four-year term expiring at the close of the Annual
Shareholders Meeting to be called to approve the financial
statements for the year ending December 31, 2025.
Fourteenth resolution
(Re-election of Monique Leroux as a member
of the Supervisory Board)
Having considered the reports of the Managing Chairman and
the Supervisory Board, the Ordinary Shareholders Meeting re-
elects Monique Leroux as a member of the Supervisory Board
for a four-year term expiring at the close of the Annual
Shareholders Meeting to be called to approve the financial
statements for the year ending December 31, 2025.
444
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Report of the Managing Chairman and proposed resolutions
Fifteenth resolution
(Re-election of Jean-Michel Severino as a member
of the Supervisory Board)
Having considered the reports of the Managing Chairman and
the Supervisory Board, the Ordinary Shareholders Meeting re-
elects Jean‑Michel Severino as a member of the Supervisory
Board for a four-year term expiring at the close of the Annual
Shareholders Meeting to be called to approve the financial
statements for the year ending December 31, 2025.
16th resolution
Supervisory Board compensation
The Managing Chairman is presenting to the Annual
Shareholders Meeting a resolution proposed by the Supervisory
Board to increase the total compensation paid to the
Supervisory Board to €950,000.00 per year.
In order to take into account, in particular, the increase in the
number of members of the Supervisory Board (with the election
of two additional members) and the creation of a new
committee (Corporate Social Responsibility Committee – CSR
Committee), the Compensation and Appointments Committee
recommended that the Supervisory Board ask the Shareholders
Meeting to approve an increase in the total compensation paid
to the members of the Supervisory Board(1).
Sixteenth resolution
(Supervisory Board compensation)
Having considered the reports of the Chief Executive Officer and
the Supervisory Board, the Ordinary Shareholders Meeting sets
at €950,000.00 (nine hundred and fifty thousand euros), the
total annual compensation awarded to the Supervisory Board,
effective from the financial year beginning on January 1, 2022.
17th to 18th resolutions
Terms of office of the Statutory Auditors
The purpose of the seventeenth and eighteenth resolutions is to
re-appoint the Company's Statutory Auditors.
The Audit Committee, in consultation with the Group,
considered whether the current Statutory Auditors should be re-
appointed when their appointments expire at the Shareholders
Meeting called to approve the 2021 financial statements.
In line with the recommendation made by the Audit Committee
and in consideration of the quality of the Statutory Auditors’
work, the Supervisory Board decided to recommend that the
Annual Shareholders Meeting of May 13, 2022:
▶renew
the
appointment
as
Statutory
Auditor
of
PricewaterhouseCoopers
Audit,
represented
by
Jean-
Christophe Georghiou, for a period of six years;
▶renew the appointment as Statutory Auditor of Deloitte &
Associés, represented by Frédéric Gourd, for a period of six
years;
▶not renew the appointment of their substitutes, as companies
are no longer required to appoint a substitute if the
Statutory Auditor is not an individual or a one-person firm.
Just as for the election or re-election of members of the
Supervisory Board, the General Partners do not take part in the
process to appoint or re-appoint the Statutory Auditors.
The appointment review process is described in the report of
the Supervisory Board on the proposed resolutions (see the
Notice of Meeting for the May 13, 2022 Annual Shareholders
Meeting and section 7.2.2 of the 2021 Registration Document).
Seventeenth resolution
(Appointment of a Statutory Auditor)
Having considered the report of the Supervisory Board and
noted that the appointments of PricewaterhouseCoopers Audit
as Statutory Auditor and Jean-Baptiste Deschryver as Substitute
Auditor are due to expire, the Ordinary Shareholders Meeting
resolves:
▶to renew the appointment of PricewaterhouseCoopers Audit,
63, rue de Villiers, 92208 Neuilly-sur-Seine, as Statutory
Auditor for a period of six years expiring at the close of the
Annual Shareholders Meeting called to approve the financial
statements for the year ending December 31, 2027;
▶not to renew the appointment as Substitute Auditor of Jean-
Baptiste Deschryver, 63 rue de Villiers, 92208 Neuilly-sur-
Seine, as the appointment of a substitute auditor is no longer
required if the Statutory Auditor is not an individual or a
one-person firm.
(1) Additional information in support of the proposed increase is set out in the report of the Supervisory Board on the proposed resolutions (see the Notice of
Meeting for the May 13, 2022 Annual Shareholders Meeting and section 7.2.3 of the 2021 Registration Document).
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ANNUAL SHAREHOLDERS MEETING OF MAY 13, 2022
07
Report of the Managing Chairman and proposed resolutions
Eighteenth resolution
(Appointment of a Statutory Auditor)
Having considered the report of the Supervisory Board and
noted that the appointments of Deloitte & Associés as Statutory
Auditor and of B.E.A.S as Substitute Auditor are due to expire,
the Ordinary Shareholders Meeting resolves:
▶to renew the appointment of Deloitte & Associés, 6 place de la
Pyramide, 92908 Paris‑La‑Défense as Statutory Auditor, for a
period of six years, expiring at the end of the Annual
Shareholders Meeting called to approve the financial
statements for the year ending December 31, 2027;
▶not to renew the appointment as Substitute Auditor of
B.E.A.S., 6, place de la Pyramide, 92908 Paris-La Défense, as
the appointment of a substitute auditor is no longer required if
the Statutory Auditor is not an individual or a one-person firm.
7.1.2
EXTRAORDINARY RESOLUTIONS (19TH TO 30TH RESOLUTIONS)
The 19th to 28th resolutions concern authorizations for the
Managers to make certain decisions to issue shares and
securities carrying rights to shares. The purpose of these
financial authorizations is to give the Company the necessary
flexibility to choose the type and timing of the issues, based on
the Company’s needs, the conditions prevailing in the French or
international markets and the opportunities arising in those
markets.
The resolutions fall into two main categories: issues with
pre‑emptive subscription rights and issues without pre-emptive
subscription rights.
In the case of a share issue, shareholders automatically have a
pre-emptive subscription right, exercisable pro rata to their
interest in the Company’s capital during a period of at least five
trading days from the opening of the subscription period. These
pre-emptive subscription rights are detachable and negotiable.
For some of the financial resolutions, the Managers are seeking
an authorization to cancel these pre-emptive subscription rights
to enable them to decide to issue certain types of securities,
notably when speed is of the essence to place the securities on
the best possible terms.
The authorizations sought by the Managers are in line with standard
practice in France.
These authorizations would be given for a fixed period and
would be subject to monetary ceilings, beyond which any
further share issues would have to be authorized by a new
extraordinary shareholder resolution. The main ceilings are as
follows:
▶a blanket ceiling of €125 million (excluding premiums), i.e.,
less than 35% of the Company's share capital at December
31, 2021, that is common to all issues of shares and/or
securities carrying rights to shares; and
▶a sub-ceiling of €35 million (excluding premiums), i.e., less
than
10%
of
the
Company's
share
capital
at
December 31, 2021, that is common to all issues of shares
and/or securities carrying rights to shares without pre-emptive
subscription rights.
In addition to these limits, the 19th to 25th resolutions could not
be used in the event of a public offer made by a third party for
the Company's shares.
The financial authorizations given in resolutions 16 to 21 of the
Shareholders’ Meeting of June 23, 2020 have not been used.
The 29th resolution concerns a stock split (described in detail in
the presentation of this resolution) and the 30th resolution is an
authorization to carry out formalities.
19th resolution
Authorization for the Managers, or either of them, to issue shares and/or equity securities carrying
rights to other equity securities and/or other securities carrying rights to shares, with pre-emptive
subscription rights for existing shareholders
In the 19th resolution, shareholders are invited to authorize the
Managers to increase the Company's capital by issuing ordinary
shares and/or other equity securities carrying rights to other
equity securities, or other securities carrying rights to shares,
with pre-emptive subscription rights for existing shareholders.
Note that the authorization could not be used while a public
offer for the Company’s shares was in progress.
The aggregate par value of shares issued under this authorization
would not exceed €125,000,000.00 (one hundred and twenty-
five million euros), representing close to 35% of the Company's
current share capital, and the aggregate nominal value of debt
securities issued with immediate or deferred rights to shares
would be capped at €2,500,000,000.00 (two billion five hundred
million euros).
This new resolution renews the authorization given at the
Annual Shareholders Meeting of June 23, 2020 (16th resolution),
which has not been used.
The blanket ceiling on the issuance of shares, other equity
securities or other securities carrying rights to shares, with or
without pre-emptive subscription rights, is set in the
27th resolution.
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Report of the Managing Chairman and proposed resolutions
Nineteenth resolution
(Authorization for the Managers, or either of them, to
issue shares and/or equity securities carrying rights to
other equity securities and/or other securities carrying
rights to shares, with pre-emptive subscription rights
for existing shareholders)
Having considered the Managing Chairman's report, the
Statutory Auditors' special report and the report of the
Supervisory Board, and having noted the approval of both of
the General Partners, the Extraordinary Shareholders Meeting
resolves, in accordance with Articles L. 225-129 et seq. of the
French Commercial Code – notably Article L. 225-129-2 and
Articles L. 22-10-49 and L. 228-91 et seq.:
▶to authorize the Managers, or either of them, to decide,
except while a public offer for the Company’s shares is in
progress, to carry out one or several issues of shares of the
Company and/or equity securities carrying rights to other
equity securities and/or other securities carrying rights to
shares with pre-emptive subscription rights. The issues may
be carried out in France or abroad, be denominated in euros,
foreign currency or any monetary unit determined by
reference to a basket of currencies, and be paid up in cash or
by capitalizing certain liquid and callable debts, or, in whole
or in part, by capitalizing reserves, net income or additional
paid-in capital;
▶that:
• the aggregate par value of the shares issued under this
authorization, either immediately or on conversion,
exchange, redemption or exercise of securities carrying
rights to shares, shall not exceed €125,000,000.00 (one
hundred and twenty-five million euros), representing
around 35% (thirty-five percent) of the Company's current
share capital. This ceiling shall not include the par value of
any additional shares to be issued in accordance with the
applicable laws, regulations, or contractual provisions in
order to protect the rights of existing holders of securities
carrying rights to shares or of other rights to the
Company's shares;
• the securities carrying rights to shares to be issued under this
authorization may notably consist of equity securities and/or
debt securities or equity- or debt-linked securities or securities
allowing the issue of intermediate debt securities. They may
take the form of dated or undated, subordinated or
unsubordinated notes. However, this authorization may not
be used to issue preference shares or securities with
immediate or deferred rights to preference shares;
• the aggregate nominal amount of debt securities carrying
rights to shares issued under this authorization shall not
exceed €2,500,000.000.00 (two billion five hundred
million euros) or the equivalent at the issue date in a
foreign currency or a monetary unit determined by
reference to a basket of currencies;
• shareholders shall have a pre-emptive right to subscribe the
securities and/or debt securities issued under this
authorization, pro rata to their existing shareholdings. The
Managers or either of them may also give shareholders a
pre-emptive right to subscribe any shares and/or securities
not taken up by other shareholders. In this case, if the issue
is oversubscribed, this secondary pre-emptive right will
also be exercisable pro rata to the existing shareholdings of
the shareholders concerned;
• if the entire issue is not taken up by shareholders exercising
their pre-emptive rights, the Managers or either of them may
take one or more of the following courses of action, in the
order of their choice: (i) limit the amount of the issue to the
subscriptions received, provided that at least three-quarters of
the issue is taken up, (ii) freely allocate all or some of the
unsubscribed securities among the investors of its choice, or
(iii) offer them for subscription by the public in the French
market and/or a foreign market and/or the international
market;
• that for any issues of stock warrants, the Managers, or
either of them, shall have the authority to determine the
number and characteristics of the warrants and to decide, at
their discretion and on the terms and conditions that they
shall determine, that the warrants may be redeemable or
callable, or that they shall be allocated without consideration
to shareholders pro rata to their interests in the Company’s
capital;
• the Managers or either of them shall have full powers –
which may be delegated in accordance with the applicable
laws and regulations – to use this authorization, including
to (i) set the characteristics, amount(s), timing, price(s) and
other terms and conditions of the issue(s), which may be
carried out on one or more occasions in France and/or
abroad and/or in the international market, (ii) suspend any
issue(s) where appropriate, (iii) determine the issue date(s),
subscription period(s) and cum-rights date(s), as well as the
method and timeframe for paying up the shares, (iv) apply
for the listing of the new shares on the markets of their
choice, (v) place on record the amount of the capital
increase(s) resulting from the share issues, (vi) carry out –
directly or through a representative – all operations and
formalities related to the capital increase(s) and, at their
discretion, enter into any and all agreements for the
purpose of completing the issue(s), and (vii) charge the
costs of the capital increase(s) against the related
premiums and deduct from the premiums the amounts
necessary to increase the legal reserve to 10% (ten
percent) of the new capital after each issue.
This authorization shall be valid for a period of 26 months from
the date of this Meeting. It supersedes any authorization
previously granted for the same purpose.
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ANNUAL SHAREHOLDERS MEETING OF MAY 13, 2022
07
Report of the Managing Chairman and proposed resolutions
20th resolution
Authorization for the Managers, or either of them, to issue shares and/or equity securities carrying
rights to other equity securities and/or other securities carrying rights to shares through a public
offer not governed by Article L.411-2, paragraph 1, of the French Monetary and Financial Code,
without pre-emptive subscription rights for existing shareholders
The 20th resolution concerns the issuance of ordinary shares
and/or equity securities carrying rights to other equity securities
and/or other securities carrying rights to shares without
pre‑emptive subscription rights for existing shareholders. Note
that the authorization could also not be used while a public
offer for the Company’s shares was in progress.
In all cases, the issue price of the shares would be at least equal
to the weighted average price quoted for the Company’s shares
over the last three trading sessions preceding the opening of
the offer period, less a discount of no more than 10% (ten
percent).
The aggregate par value of shares issued under this authorization
would not exceed €35,000,000.00 (thirty-five million euros),
representing less than 10% of the current share capital, and the
aggregate nominal value of securities carrying immediate or
deferred rights to shares would be capped at €2,500,000,000.00
(two billion five hundred million euros).
This resolution renews the authorization given at the Annual
Shareholders Meeting of June 23, 2020 (17th resolution), which
has not been used.
The blanket ceiling on issues of shares and equity securities or
other securities carrying rights to shares, with or without
pre‑emptive subscription rights, is set in the 27th resolution.
Twentieth resolution
(Authorization for the Managers, or either of them, to
issue shares and/or equity securities carrying rights to
other equity securities and/or other securities carrying
rights to shares through a public offer not governed by
Article L. 411-2, paragraph 1, of the French Monetary and
Financial Code, without pre-emptive subscription rights
for existing shareholders)
Having considered the Managing Chairman's report, the
Statutory Auditors' special report and the report of the
Supervisory Board, and having noted the approval of both of
the General Partners, the Extraordinary Shareholders Meeting
resolves, in accordance with Articles L. 225-129 et seq. of the
French Commercial Code – notably Articles L. 225-135,
L. 225‑136, and Articles L. 22-10-49, L. 22‑10-51, L. 22-10-52
and L. 228-91 et seq.:
▶to authorize the Managers, or either of them, to decide,
except while a public offer for the Company’s shares is in
progress, to carry out one or several issues of shares of the
Company and/or equity securities carrying rights to other
equity securities and/or other securities carrying rights to
shares without pre-emptive subscription rights, through a
public offer not governed by Article L. 411-2, paragraph 1, of
the French Monetary and Financial Code. The issues may be
carried out in France or abroad, be denominated in euros,
foreign currency or any monetary unit determined by
reference to a basket of currencies, and be paid up in cash or
by capitalizing certain liquid and callable debts, or, in whole
or in part, by capitalizing reserves, net income or additional
paid-in capital;
▶that:
• the aggregate par value of the shares issued under this
authorization either immediately or on conversion,
exchange, redemption or exercise of securities carrying
rights to shares shall not exceed €35,000,000.00
(thirty‑five million euros), representing less than 10% of
the Company's current share capital. This ceiling shall not
include the par value of any additional shares to be issued
in accordance with the applicable laws, regulations, or
contractual provisions in order to protect the rights of
existing holders of securities carrying rights to shares or of
other rights to the Company's shares;
• the securities carrying rights to securities to be issued
under this authorization may notably consist of equity
securities and/or debt securities or equity- or debt-linked
securities or securities allowing the issue of intermediate
debt securities. They may take the form of dated or
undated, subordinated or unsubordinated notes. However,
this authorization may not be used to issue preference
shares or securities with immediate or deferred rights to
preference shares;
• the aggregate nominal amount of debt securities carrying
rights to shares issued under this authorization shall not
exceed €2,500,000,000.00 (two billion five hundred
million euros) or the equivalent in a foreign currency or a
monetary unit determined by reference to a basket of
currencies;
• shareholders shall not have a pre-emptive right to
subscribe the securities issued under this authorization;
• if the issue of shares, other equity securities or other
securities is not taken up in full, the Managers or either of
them may take one or more of the following courses of
action, in the order of their choice: (i) limit the amount of
the issue to the subscriptions received, provided that at
least three-quarters of the issue is taken up, (ii) freely
allocate all or some of the unsubscribed securities among
the investors of its choice, or (iii) offer all or some of the
unsubscribed securities for subscription by the public;
• that (i) the issue price of the shares shall be at least equal
to the minimum price specified in Articles L. 22-10-52 and
R. 22-10-32 of the French Commercial Code, as applicable
on the issue date (currently, the weighted average of the
prices quoted over the three trading days preceding the
opening of the offer period, less a discount of no more
than 10% (ten percent)), and (ii) the issue price of
securities carrying rights to shares shall be set in such a
way that the amount received by the Company at the issue
date plus the amount to be received on conversion,
exchange, redemption or exercise of said securities shall
be, for each share issued, at least equal to the minimum
price defined in point (i) above;
• the Managers or either of them shall have full powers –
which may be delegated in accordance with the applicable
laws and regulations – to use this authorization, including
to (i) set the characteristics, amount(s), timing, price(s)
(within the above limits) and other terms and conditions of
the issue(s), which may be carried out on one or more
occasions in France and/or abroad and/or in the
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international market, (ii) suspend any issue(s) where
appropriate, (iii) determine the issue date(s), subscription
period(s) and cum-rights date(s), as well as the method and
timeframe for paying up the shares, (iv) apply for the
listing of the new shares on the markets of their choice,
(v) place on record the amount of the capital increase(s)
resulting from the share issues, (vi) carry out – directly or
through a representative – all operations and formalities
related to the capital increase(s) and, at their discretion,
enter into any and all agreements for the purpose of
completing the issue(s), and (vii) charge the costs of the
capital increase(s) against the related premiums and deduct
from the premiums the amounts necessary to increase the
legal reserve to 10% (ten percent) of the new capital after
each issue.
This authorization shall be valid for a period of 26 months from
the date of this Meeting. It supersedes any authorization
previously granted for the same purpose.
21st resolution
Authorization for the Managers, or either of them, to issue shares and/or equity securities carrying
rights to other equity securities and/or other securities carrying rights to shares through an offer
governed by Article L. 411-2, paragraph 1, of the French Monetary and Financial Code, without pre-
emptive subscription rights for existing shareholders
Following adoption of the 20th resolution, the purpose of the
21st resolution is to submit to a separate vote by shareholders a
proposed authorization for the Managers or either of them to
issue shares and/or securities carrying rights to shares through
offers governed by paragraph 1 of Article L. 411-2 of the French
Monetary and Financial Code (Code monétaire et financier).
This authorization could not be used during a public offer
period.
This authorization would give the Company the necessary
flexibility to rapidly raise funds from qualified investors.
The securities would be placed exclusively with the categories of
investors specified in paragraph 1 of Article L.411-2 of the
French Monetary and Financial Code, i.e., (i) qualified investors
or restricted groups of investors, provided that they are
investing on their own behalf.
This resolution renews the authorization given at the Annual
Shareholders Meeting of June 23, 2020 (18th resolution), which
has not been used.
Twenty-first resolution
(Authorization for the Managers or either of them to
issue shares and/or equity securities carrying rights to
other equity securities and/or other securities carrying
rights to shares through an offer governed by Article
L. 411-2, paragraph 1, of the French Monetary and
Financial Code, without pre-emptive subscription
rights for existing shareholders)
Having considered the Managing Chairman's report, the
Statutory Auditors' special report and the report of the
Supervisory Board, and having noted the approval of both of
the General Partners, the Extraordinary Shareholders Meeting
resolves, in accordance with Articles L. 225-129 et seq. of the
French Commercial Code – notably Articles L. 225-135,
L. 225‑136 and, L. 22-10-49, L. 22-10-52 and L. 228-91 et seq.
– and paragraph 1 of Article L. 411-2 of the French Monetary
and Financial Code:
▶to authorize the Managers, or either of them, to decide,
except while a public offer for the Company’s shares is in
progress, to carry out one or several issues of shares of the
Company and/or equity securities carrying rights to other
equity securities and/or other securities carrying rights to
shares without pre-emptive subscription rights, through an
offer governed by Article L. 411-2, paragraph 1, of the
French Monetary and Financial Code. The issues may be
carried out in France or abroad, be denominated in euros,
foreign currency or any monetary unit determined by
reference to a basket of currencies, and be paid up in cash or
by capitalizing certain liquid and callable debts, or, in whole
or in part, by capitalizing reserves, net income or additional
paid-in capital;
▶that:
• the aggregate par value of the shares issued under this
authorization either immediately or on conversion,
exchange, redemption or exercise of securities carrying
rights to shares shall not exceed €35,000,000.00
(thirty‑five million euros), representing less than 10% of
the Company's current share capital. This ceiling shall not
include the par value of any additional shares to be issued
in accordance with the applicable laws, regulations, or
contractual provisions in order to protect the rights of
existing holders of securities carrying rights to shares or of
other rights to the Company’s shares,
• the securities carrying rights to securities to be issued
under this authorization may notably consist of equity
securities and/or debt securities or equity- or debt-linked
securities or securities allowing the issue of intermediate
debt securities. They may take the form of dated or
undated, subordinated or unsubordinated notes. However,
this authorization may not be used to issue preference
shares or securities with immediate or deferred rights to
preference shares,
• the aggregate nominal amount of debt securities issued
under
this
authorization
shall
not
exceed
€2,500,000,000.00 (two billion five hundred million euros)
or the equivalent at the issue date in a foreign currency or
a monetary unit determined by reference to a basket of
currencies,
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• issues of shares and securities carried out pursuant to this
authorization shall be included in the ceilings for such issues
set in the twentieth resolution of this Meeting,
• shareholders shall not have a pre-emptive right to subscribe
the securities issued under this authorization,
• if the issue of shares, other equity securities or other
securities is not taken up in full, the Managers or either of
them may take one or more of the following courses of
action, in the order of their choice: (i) limit the amount of
the issue to the subscriptions received, provided that at
least three-quarters of the issue is taken up, (ii) freely
allocate all or some of the unsubscribed securities among
the investors of its choice, or (iii) offer all or some of the
unsubscribed securities for subscription by the public,
• (i) the issue price of the shares shall be at least equal to the
minimum price specified in Articles L.22-10-52 and
R.22‑10-32 of the French Commercial Code, as applicable
on the issue date (currently, the weighted average of the
prices quoted over the three trading days preceding the
opening of the offer period, less a discount of no more
than 10% (ten percent)), and (ii) the issue price of
securities carrying rights to shares shall be set in such a
way that the amount received by the Company at the issue
date plus the amount to be received on conversion,
exchange, redemption or exercise of said securities shall
be, for each share issued, at least equal to the minimum
price defined in point (i) above;
• the Managers or either of them shall have full powers –
which may be delegated in accordance with the applicable
laws and regulations – to use this authorization, including
to (i) set the characteristics, amount(s), timing, price(s)
(within the above limits) and other terms and conditions of
the issue(s), which may be carried out on one or more
occasions in France and/or abroad and/or in the
international market, (ii) suspend any issue(s) where
appropriate, (iii) determine the issue date(s), subscription
period(s) and cum-rights date(s), as well as the method and
timeframe for paying up the shares, (iv) apply for the
listing of the new shares on the markets of their choice,
(v) place on record the amount of the capital increase(s)
resulting from the share issues, (vi) carry out – directly or
through a representative – all operations and formalities
related to the capital increase(s) and, at their discretion,
enter into any and all agreements for the purpose of
completing the issue(s), and (vii) charge the costs of the
capital increase(s) against the related premiums and deduct
from the premiums the amounts necessary to increase the
legal reserve to 10% (ten percent) of the new capital after
each issue.
This authorization shall be valid for a period of 26 months from
the date of this Meeting. It supersedes any authorization
previously granted for the same purpose.
22nd resolution
Authorization for the Managers or either of them, for issues of shares and/or securities carrying rights
to shares representing up to 10% of the capital in any 12-month period without pre-emptive
subscription rights pursuant to the twentieth and twenty-first resolutions, to set the issue price by the
method decided by the Shareholders Meeting
The purpose of the 22nd resolution is to authorize the Managers
not to apply the minimum pricing rules specified in the
applicable regulations, for issues of shares or securities carrying
rights to ordinary shares, representing up to 10% of the capital
in any 12-month period, of the Company without pre-emptive
subscriptions rights carried out pursuant to the 20th and
21st resolutions.
The purpose of this authorization is to enable the Company to
raise funds under the best possible conditions in a context of
highly volatile financial markets.
Under this authorization, the issue price of the shares would be
at least equal to either of the following two amounts, at the
option of the Managers: (i) the volume-weighted average share
price for the last trading session preceding the pricing date; or
(ii) the volume-weighted average share price for the trading
session when the issue price is set; in both cases less a discount
of no more than 10%.
The aggregate amount by which the capital could be increased
(excluding premiums) under this authorization would be capped
at the equivalent of 10% of the capital and the securities
issued pursuant to this resolution would be included in the
ceilings provided for in the two proposed resolutions referred to
above, and also in the blanket ceiling set in the 27th resolution.
This resolution could not be used while a public offer for the
Company’s shares was in progress.
Twenty-second resolution
Authorization for the Managers or either of them, for
issues of shares and/or securities carrying rights to shares
representing up to 10% of the capital in any 12-month
period without pre-emptive subscription rights pursuant
to the twentieth and twenty-first resolutions, to set the
issue price by the method decided by the Shareholders
Meeting
Having considered the Managing Chairman's report, the
Statutory Auditors' special report and the report of the
Supervisory Board, and having noted the approval of both of
the General Partners, the Extraordinary Shareholders Meeting
resolves, in accordance with Articles L. 225-136, paragraph 1-2
and L. 22-10-52 of the French Commercial Code:
▶to authorize the Managers, or either of them, except while a
public offer for the Company’s shares is in progress, for share
issues without pre-emptive subscription rights carried out
pursuant to the twentieth and twenty-first resolutions of this
Shareholders Meeting, to set the issue price according to the
following conditions:
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• that the amount is at least equal to (i) the volume-weighted
average share price on the Euronext Paris regulated market
for the last trading session preceding the pricing date; or
(ii) the volume-weighted average share price on the
Euronext Paris regulated market for the trading session
when the issue price is set; in both cases less a discount of
no more than 10%,
• that the issue price of securities carrying rights to shares
and the number of shares to be issued on conversion,
exchange, redemption or exercise of each security carrying
rights to shares shall be set in such a way that the amount
received by the Company at the issue date of the securities
plus the amount to be received for each share issued on
conversion, exchange, redemption or exercise of said
securities shall be at least equal to the minimum price
defined above;
▶that, in accordance with the law, the aggregate amount of
share issues (excluding premiums) that may be carried out
immediately or in the future pursuant to this authorization
shall not exceed 10% (ten percent) of the share capital per
12-month period (with aggregate issuance in relation to this
limit determined as of the date on which the issue price of
the shares and/or securities carrying rights to shares is set),
and said aggregate amount shall be included in the ceilings
set in the twentieth and twenty-first resolutions of this
Meeting. These ceilings shall not include the par value of any
additional shares to be issued in accordance with the
applicable laws, regulations and contractual provisions in
order to protect the rights of existing holders of securities
carrying rights to shares or of other rights to the Company’s
shares;
▶that the securities with rights to shares issued under this
authorization may consist of debt securities or debt-linked
securities, or securities allowing the issue of intermediate
debt securities. The aggregate nominal amount of debt
securities issued immediately or in the future under this
authorization shall not exceed €2,500,000,000.00 (two
billion five hundred million euros) or the equivalent in any
other currency and shall be included in the ceilings on debt
issues set in the twentieth and twenty-first resolutions of this
Meeting;
▶that, if this authorization is used by the Managers or either of
them, they shall issue an additional report, certified by the
Statutory Auditors, describing the final terms of the
transaction and providing information to assess the actual
impact on the shareholder's situation;
▶that this authorization is given for a period of 26 months, as
from the date of this Meeting.
23rd resolution
Authorization for the Managers or either of them to increase the number of securities to be issued in
the event that an issue, with or without pre-emptive subscription rights, is oversubscribed
The purpose of the 23rd resolution is to authorize the Managers
or either of them to increase the number of securities to be
issued in the event that an issue carried out under the 19th, 20th,
21st or 22nd resolutions is oversubscribed. It could not be used
during a public offer period.
The additional securities would not exceed 15% of the original
issue and would be offered at the same price as for the original
issue. They would be included in the ceilings set in the
resolution concerned.
This resolution renews the authorization given at the Annual
Shareholders Meeting of June 23, 2020 (19th resolution), which
has not been used.
Twenty-third resolution
(Authorization for the Managers or either of them to
increase the number of securities to be issued in the
event that an issue, with or without pre-emptive
subscription rights, is oversubscribed)
Having considered the Managing Chairman's report, the
Statutory Auditors' special report and the report of the
Supervisory Board, and having noted the approval of both of
the General Partners, the Extraordinary Shareholders Meeting
resolves, in accordance with Article L. 225-135-1 of the French
Commercial Code:
▶to authorize the Managers or either of them to increase the
number of shares and/or securities carrying rights to shares
issued with or without pre-emptive subscription rights under
the nineteenth, twentieth, twenty-first and twenty-second
resolutions of this Shareholders Meeting. Any such additional
shares and/or other securities (i) shall be issued within
30 (thirty) days of the end of the subscription period for the
original issue, (ii) shall not represent more than 15% (fifteen
percent) of the original issue, (iii) shall be offered at the same
price as for the original issue, and (iv) shall be included in the
respective ceilings set in the nineteenth, twentieth, twenty-
first and twenty-second resolutions.
This authorization shall be valid for a period of 26 months from
the date of this Meeting. It supersedes any authorization
previously granted for the same purpose.
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24th resolution
Authorization for the Managers or either of them to increase the Company's capital by capitalizing
reserves, income or additional paid-in capital
The purpose of the 24th resolution is to authorize the Managers
or either of them, to increase the Company's capital by up to
€80,000,000.00 (eighty million euros) by capitalizing reserves or
additional paid-in capital. Note that the authorization could not
be used while a public offer for the Company’s shares was in
progress.
This authorization renews the authorization given at the Annual
Shareholders Meeting of June 23, 2020 (20th resolution), which
has not been used.
Twenty-fourth resolution
(Authorization for the Managers or either of them to
increase the Company's capital by capitalizing reserves,
income or additional paid-in capital)
Having considered the reports of the Managing Chairman and
the Supervisory Board, and having noted the approval of both of
the General Partners, the Ordinary Shareholders Meeting resolves,
in accordance with Articles L. 225-129, L. 225-130 and
L. 22‑10‑50 of the French Commercial Code:
▶to authorize the Managers or either of them to increase the
Company's capital, on one or more occasions except during a
public offer period, by a maximum of €80,000,000.00
(eighty million euros) by issuing bonus shares and/or raising
the par value of existing shares, to be paid up by capitalizing
reserves, income or additional paid-in capital. This amount
shall not include the par value of any additional shares to be
issued in accordance with the applicable laws, regulations
and contractual provisions in order to protect the rights of
existing holders of securities carrying rights to shares or of
other rights to the Company's shares. This amount shall not
include the par value of any additional shares to be issued in
accordance with the applicable laws, regulations and
contractual provisions in order to protect the rights of existing
holders of securities carrying rights to shares or of other
rights to the Company’s shares;
▶that if new shares are issued, the Managers or either of them
shall be authorized to decide that rights to fractions of shares
shall be non-transferable and non-tradable and that the
corresponding shares shall be sold in accordance with
Articles L. 225-130 and L.22‑10‑50 of the French Commercial
Code. In such a case, the sale proceeds shall be allocated
among the rights holders within 30 days of the date when
the whole number of shares allotted to them is recorded in
their securities account;
▶that the Managers or either of them shall have full powers –
which may be delegated in accordance with the applicable
laws and regulations – to use this authorization, including to
(i) determine the timing and terms and conditions of the
capital increase(s), (ii) determine the subscription period(s)
and cum-rights date(s) as well as the method and timeframe
for paying up shares, (iii) apply for the listing of the new
shares on any market chosen by them, (iv) place on record
the amount of the capital increase(s) resulting from the issue
of shares, (v) carry out – directly or through a representative –
all operations and formalities related to the capital increase(s)
and, at their discretion, charge the costs of the capital
increase(s) against the related premiums and deduct from the
premiums the amounts necessary to increase the legal
reserve to 10% (ten percent) of the new capital after each
capital increase.
This authorization shall be valid for a period of 26 months from
the date of this Meeting. It supersedes any authorization
previously granted for the same purpose.
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25th resolution
Authorization for the Managers or either of them to increase the Company's capital by issuing ordinary
shares, without pre-emptive subscription rights for existing shareholders, in connection with a stock-
for-stock offer or in payment of contributed assets
The 25th resolution concerns issues of shares, without pre-emptive
subscription rights for existing shareholders, in connection with a
stock-for-stock offer or in payment of contributed assets.
Shares issued in payment of contributed assets would be limited
to the equivalent of 10% of the Company's capital and would
be included in the ceiling specified in the 20th resolution.
This resolution renews the authorization given at the Annual
Shareholders Meeting of June 23, 2020 (21st resolution), which
has not been used.
Twenty-fifth resolution
(Authorization for the Managers or either of them to
increase the Company's capital by issuing ordinary
shares, without pre-emptive subscription rights for
existing shareholders, in connection with a stock-for-
stock offer or in payment of contributed assets)
Having considered the reports of the Managing Chairman and
the Supervisory Board and having noted the approval of both of
the General Partners, the Extraordinary Shareholders Meeting
resolves:
▶to authorize the Managers or either of them to issue ordinary
shares, except while a public offer for the Company’s shares
is in progress:
• in connection with a stock-for-stock offer carried out in
accordance with Article L. 22-10-54 of the French
Commercial Code; or
• as payment for shares or securities carrying rights to shares
of another company contributed to the Company in
transactions not governed by Article L. 22-10-54 of the
French Commercial Code, in which case the number of
shares issued shall be based on the report of the Expert
Appraiser of Capital Contributions (Commissaire aux
apports) and shall not exceed 10% (ten percent) of the
Company’s capital.
The aggregate par value of shares issued under this
authorization shall be included in the ceiling specified in the
twentieth resolution of this Meeting;
▶that the Managers or either of them shall have full powers –
which may be delegated in accordance with the applicable
laws and regulations – to use this authorization, including to
(i) determine the timing and terms and conditions of the
capital increase(s), (ii) determine the subscription period(s)
and cum-rights date(s) as well as the method and timeframe
for paying up shares, (iii) approve the value attributed to the
acquired stock, (iv) apply for the listing of the new shares on
any market chosen by them, (v) place on record the amount
of the capital increase(s) resulting from the issue of shares,
(vi) carry out – directly or through a representative – all
operations and formalities related to the capital increase(s)
and, at their discretion, charge the costs of the capital
increase(s) against the related premiums and deduct from the
premiums the amounts necessary to increase the legal
reserve to 10% of the new capital after each capital increase.
This authorization shall be valid for a period of 26 months from
the date of this Meeting. It supersedes any authorization
previously granted for the same purpose.
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26th resolution
Authorization for the Managers or either of them to carry out a rights issue for members of a Group
employee shareholder plan and/or restricted share issues, without pre-emptive subscription rights for
existing shareholders
The 26th resolution concerns rights issues for employees who are
members of a Group employee shareholder plan. The issues
would be limited to an aggregate par value of €7,100,000.00
(seven million one hundred thousand euros), representing
around 2% of the Company's current share capital.
This authorization would replace, with the same ceiling, the
authorization granted for the same purpose at the Annual
Shareholders Meeting of June 23, 2020 (22nd resolution), which
was used to launch an employee shareholder plan in 2020.
Twenty-sixth resolution
(Authorization for the Managers or either of them
to carry out a rights issue for members of a Group
employee shareholder plan and/or restricted share
issues, without pre-emptive subscription rights
for existing shareholders)
Having considered the report of the Managing Chairman, the
Statutory Auditors' special report and the report of the
Supervisory Board, and having noted the approval of both of
the General Partners, the Extraordinary Shareholders Meeting
resolves:
▶to authorize the Managers or either of them, pursuant to
Articles L. 3332-18 et seq. of the French Labor Code (Code du
travail) and Articles L. 225-129-6 and L. 225-138-1 of the French
Commercial Code, to carry out one or more rights issues for
members of an employee shareholder plan of the Company or
of French or foreign related companies within the meaning of
Article L. 225-180 of the French Commercial Code and Article
L. 3344-1 of the French Labor Code;
▶that:
• existing shareholders shall waive their pre-emptive right to
subscribe any shares to be issued under this authorization,
• the aggregate par value of shares issued under this
authorization shall not exceed €7,100,000.00 (seven
million one hundred thousand euros), representing less
than 2% (two percent) of the Company's current share
capital. This ceiling shall not include the par value of any
additional shares to be issued in accordance with the
applicable laws, regulations or contractual provisions in
order to protect the rights of existing holders of securities
carrying rights to shares or of other rights to the
Company's shares,
• the issue price of the shares offered under this
authorization shall be set by the Managers or either of
them in accordance with Article L. 3332-19 of the French
Labor Code and shall not reflect a discount of more than
30% (thirty percent) on the average of the opening prices
quoted for the Company's shares on Euronext Paris over
the 20 trading days preceding the date on which the
opening date of the subscription period is decided. The
Managers or either of them may reduce or cancel this
discount if appropriate, in order to take into account, inter
alia, locally applicable tax, labor law or accounting
restrictions,
• employees may be given free shares in place of the
discount, in accordance with Article L. 3332-21 of the
French Labor Code,
• the Managers or either of them may also decide that
employer matching payments will be made in the form of
free shares or securities with rights to shares instead of
cash, subject to the limits set out in Article L. 3332-21 of
the French Labor Code,
• the Managers or either of them shall have full powers –
which may be delegated in accordance with the applicable
laws and regulations – to use this authorization, including to
(i) set the characteristics, amount, and terms and conditions
of the issue(s), (ii) determine whether the shares will be
purchased directly by employees or through a corporate
mutual fund, (iii) set the issue date(s), subscription period(s)
and cum-rights date(s) as well as the method and timeframe
for paying up the shares, (iv) apply for the listing of the new
shares on any markets chosen by them, (v) set any length-
of-service conditions to be met by beneficiaries, (vi) place on
record the amount of the capital increase(s) resulting from
the rights issues, (vii) carry out – directly or through a
representative – all operations and formalities related to the
capital increase(s) and, at their discretion, charge the costs of
the capital increase(s) against the related premiums and
deduct from the premiums the amounts necessary to
increase the legal reserve to 10% (ten percent) of the new
capital after each issue.
In accordance with the applicable legal and regulatory
provisions, the authorization provided for in this resolution shall
also cover sales of shares to members of a Group employee
shareholder plan.
This authorization shall be valid for a period of 26 months from
the date of this Meeting. It supersedes any authorization
previously granted for the same purpose.
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27th resolution
Blanket ceilings on issues of shares, securities carrying rights to shares or debt securities
The purpose of the 27th resolution is to set a blanket ceiling of
€125,000,000.00 (one hundred and twenty five million euros) –
or the equivalent of close to 35% of the Company's current
capital – on share issues carried out pursuant to the 19th, 20th,
21st, 22nd, 23rd and 25th resolutions.
It also sets at €2,500,000,000.00 (two billion five hundred
million euros) the blanket ceiling on issues of debt securities
carrying immediate or deferred rights to shares carried out
pursuant to the 19th, 20th, 21st, 22nd and 23rd resolutions.
This resolution renews the ceilings set by the Annual
Shareholders Meeting of June 23, 2020 (23rd resolution, which
has not been used).
Twenty-seventh resolution
(Blanket ceilings on issues of shares, securities carrying
rights to shares and debt securities)
Having considered the reports of the Managing Chairman and
the Supervisory Board and having noted the approval of both of
the General Partners, the Extraordinary Shareholders Meeting
resolves:
▶that:
• the aggregate par value of shares issued under the nineteenth,
twentieth, twenty-first, twenty-second, twenty-third and
twenty-fifth resolutions, either immediately or on conversion,
exchange, redemption or exercise of securities carrying rights to
shares, shall not exceed €125,000,000.00 (one hundred and
twenty-five million euros), representing less than 35% of the
Company's capital as of the date of this Meeting. This ceiling
shall not include the par value of any additional shares to be
issued in accordance with the applicable laws, regulations or
contractual provisions in order to protect the rights of existing
holders of securities carrying rights to shares or of other rights
to the Company's shares,
• the aggregate nominal amount of debt securities carrying
immediate or deferred rights to shares, issued under the
nineteenth, twentieth, twenty-first, twenty-second and
twenty-third resolutions of this Shareholders Meeting shall
not exceed €2,500,000,000.00 (two billion five hundred
million euros) or the equivalent in foreign currency or a
monetary unit determined by reference to a basket of
currencies.
This authorization shall be valid for a period of 26 months from
the date of this Meeting. It supersedes any authorization
previously granted for the same purpose.
28th resolution
Authorization for the Managers to reduce the Company's capital by canceling shares
In the 28th resolution, shareholders are invited to authorize the
Managers, or either of them, for a period of 24 months, to
reduce the Company's capital by canceling treasury shares
purchased under shareholder-approved buyback programs.
This authorization replaces the authorization given for the same
purpose at the Annual Shareholders Meeting of May 21, 2021
(14th resolution), which was not used in 2021.
Twenty-eighth resolution
(Authorization for the Managers or either of them
to reduce the Company's capital by canceling shares)
Having considered the report of the Managing Chairman, the
Statutory Auditors' special report and the report of the
Supervisory Board, and having noted the approval of the General
Partners, the Extraordinary Shareholders Meeting resolves:
▶to authorize the Managers or either one of them to:
• cancel, at their sole discretion, on one or more occasions, all
or some of the shares purchased under shareholder-approved
buyback programs, provided that the number of shares
canceled does not exceed 10% (ten percent) of the
Company’s capital,
• charge the difference between the cost of the canceled
shares and their par value against any available premium or
reserve account;
▶to grant the Managers, or either of them, full powers – which
may be delegated in accordance with the law – to (i) carry
out the capital reduction(s) following the cancellation(s) of
shares authorized under this resolution, (ii) make the
corresponding accounting entries, (iii) amend the Bylaws to
reflect the new capital and (iv) generally, carry out all
necessary formalities.
This authorization shall be valid for a period of 24 months from
the date of this Meeting. It supersedes any authorization
previously granted for the same purpose.
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29th resolution
Four-for-one stock split
The 29th extraordinary resolution presented at this Shareholders
Meeting concerns a proposed four-for-one stock split, which
would reduce the par value of the share from €2.00 (two euros)
to €0.50 (fifty cents) and lead to a four-fold increase in the
number of shares.
The purpose of this proposed stock split is to:
▶help to further diversify the shareholder base and contribute to
increasing the amounts invested by employees in Michelin
shares;
▶create a more liquid market for the Company's shares.
The reduction in par value would be effective on a date to be
set by the Managers within 12 months of this Shareholders
Meeting and would have no impact on the double voting rights
attached to shares in application of the Company's Bylaws.
Twenty-ninth resolution
(Four-for-one stock split)
Having considered the reports of the Managing Chairman and
the Supervisory Board and having noted the approval of both of
the General Partners, the Extraordinary Shareholders Meeting
resolves:
▶to carry out a four-for-one stock split;
▶that the par value of each share shall be reduced from € 2.00
(two euros) to €0.50 (fifty cents), and consequently:
• that the number of outstanding shares will be multiplied by
four, without affecting the amount of the Company’s
share capital;
• that each share with a par value of €2.00 (two euros)
making up the share capital on the date of the stock split
shall be replaced ipso jure by four shares with a par value
of €0.50 (fifty cents), without this exchange resulting in
any novation in the existing relations between the
Company on the one hand, and its shareholders and any
holders of rights or securities carrying rights to the
Company's capital on the other hand;
▶that the stock split and the corresponding allocation of new
shares to shareholders shall have no effect on the rights
attached to the shares as provided for in the Company's
Bylaws, and that the new shares shall confer the same rights
on their holders as the old shares for which they will be
substituted, in particular for shares that have been registered
in the name of the same holder for at least two years, which
shall continue to confer double voting rights on their holders;
▶that the Managers or either of them shall have full powers –
which may be delegated in accordance with the law – to:
• set the effective date of the stock split, which shall take
place within 12 (twelve) months of the date of this
Shareholders Meeting,
• determine the exact number of new shares with a par
value of €0.50 (fifty cents) to be issued based on the
number of shares with a par value of €2.00 (two euros)
outstanding at date of the stock split and deliver the new
shares in exchange for the old shares,
• make any and all adjustments required by the stock split, in
particular adjustment of the number of share rights
allocated to certain employees and corporate officers prior
to the stock split,
• amend Article 6 – Share Capital of the Bylaws, and
• carry out, directly or through an agent, all operations and
formalities that may be useful or necessary for the
implementation of this decision.
30th resolution
Powers to carry out formalities
The purpose of the 30th resolution is to give powers to carry out
the formalities related to the Annual Shareholders Meeting.
Thirtieth resolution
(Powers to carry out formalities)
The shareholders give full powers to the bearer of an original,
copy or extract of the minutes of this Ordinary and
Extraordinary Shareholders Meeting to carry out all legal and
administrative formalities and to make all filings and publish all
notices required by the applicable laws.
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SUMMARY OF FINANCIAL AUTHORIZATIONS SUBMITTED
FOR SHAREHOLDER APPROVAL
Corporate action
Applicable ceilings
(nominal amount)
Duration
(expiration date)
Issuance of shares and/or securities carrying rights to shares,
with pre‑emptive subscription rights
(19th resolution)
shares: €125 million (close to 35% of issued capital)
debt securities: €2.5 billion
26 months
(July 2024)
Issuance of shares and/or securities carrying rights to shares, through
a public offer, without pre-emptive subscription rights
(20th resolution)
shares: €35 million (less than 10% of issued capital)
debt securities: €2.5 billion
26 months
(July 2024)
Issuance of shares and/or securities carrying rights to shares through
an offer governed by paragraph 1 of Article L. 411-2 of the French
Monetary and Financial Code (Code monétaire et financier), without
pre-emptive subscription rights
(21st resolution)
shares: €35 million (less than 10% of issued
capital)(1)
debt securities: €2.5 billion(1)
26 months
(July 2024)
Determination of the issue price of shares to be issued without
pre‑emptive subscription rights under the 20th and 21st resolutions
(22nd resolution)
shares: €35 million (less than 10% of issued
capital)(1)
debt securities: €2.5 billion(1)
26 months
(July 2024)
Authorization to increase the number of shares issued in the event
that an issue (with or without pre-emptive subscription rights) is
oversubscribed
(23rd resolution)
15% of the original issue(2)
26 months
(July 2024)
Issuance of new shares paid up by capitalizing reserves, income
or additional paid-in capital
(24th resolution)
€80 million
26 months
(July 2024)
Issuance of shares for a stock-for-stock offer or in payment
for contributed assets
(25th resolution)
€35 million (less than 10% of issued capital)(1)
26 months
(July 2024)
Employee rights issue
(26th resolution)
€7.1 million (less than 2% of issued capital)
26 months
(July 2024)
Blanket ceilings on all the authorizations to issue shares and debt
securities carrying rights to shares (except for share issues carried
out under the 24th and 26th resolutions)
(27th resolution)
shares: €125 million (close to 35% of issued capital)
debt securities: €2.5 billion
26 months
(July 2024)
Capital reduction by canceling shares
(28th resolution)
10% of the issued capital
24 months
(May 2024)
Share buyback program
(5th resolution)
17.9 million shares at a maximum price of €220
per share
18 months
(November
2023)
(1) Included in the ceiling set in the 20th resolution (issuance through a public offer without pre-emptive subscription rights).
(2) 19th and 22nd resolutions.
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7.2
REPORT OF THE SUPERVISORY BOARD: RECOMMENDATIONS
CONCERNING THE VOTES ON THE PROPOSED RESOLUTIONS
7.2.1
RE-ELECTION OF SUPERVISORY BOARD MEMBERS (13TH TO 15TH RESOLUTIONS)
Compagnie Générale des Établissements Michelin is a société en
commandite par actions (partnership limited by shares) and as
such its Supervisory Board is entirely made up of non-executive
members (89% of whom are independent) who represent the
shareholders.
With a view to clearly separating management and supervisory
powers, no General Partner may play a role in the nomination
process – neither Florent Menegaux, Managing Chairman, nor
SAGES,
the
Non-Managing
General
Partner,
which
is
responsible
for
ensuring
the
Company's
continuity
of
leadership.
Neither of the two General Partners is involved in decisions to
recommend candidates for election to the Supervisory Board at
Shareholders Meetings.
In addition, French law and the Company’s Bylaws prohibit the
General Partners from taking part in the vote at Shareholders
Meetings to elect members of the Supervisory Board and their
shares are not included in the quorum for the related
resolutions.
Thierry Le Hénaff, Monique Leroux and Jean‑Michel Severino
have informed the other Supervisory Board members that they
wish to stand for re-election, which is the purpose of the 13th,
14th and 15th resolutions.
Thierry Le Hénaff
Arkema – 420, rue d'Estienne-d'Orves, 92700 Colombes –
France
Thierry Le Hénaff, a French national, is currently Chairman and
Chief Executive Officer of Arkema(1).
After starting his career with Peat Marwick Consultants, in 1992
he joined Bostik, Total’s Adhesives Division, where he held a
number of operational positions in France and worldwide. In
July 2001, he was appointed Chairman and Chief Executive
Officer of Bostik Findley, the new entity resulting from the
merger of Total’s and Elf Atochem’s Adhesives divisions. On
January 1, 2003, he joined Atofina’s Executive Committee, with
responsibility for three divisions (Agrochemicals, Fertilizers and
Thiochemicals) as well as three corporate departments. Then, in
2004, he joined the Total group’s Executive Committee.
He was named Chairman and Chief Executive Officer of Arkema
on March 6, 2006.
He has sat on the Board of Directors of the École Polytechnique
Foundation since 2016.
Thierry Le Hénaff holds engineering degrees from École
Polytechnique and École Nationale des Ponts et Chaussées, and
a Master’s degree in Industrial Management from Stanford
University in the United States.
He holds the titles of Chevalier de l’Ordre national du mérite
and Chevalier de l’Ordre national de la Légion d’honneur.
He owns 400 Michelin shares.
He has served as an independent member of the Supervisory Board
since 2018, was a member of the Audit Committee between
2018 and May 2021, and has been the Senior Independent
Member of the Supervisory Board and member of the
Compensation and Appointments Committee since May 2021.
Thierry Le Hénaff was considered by the Supervisory Board to be
an independent member at the time of its last review, in
2021(2).
The Board examined Thierry Le Hénaff's candidature for
re‑election (for the first time) for a four-year term, taking into
account:
▶the appropriateness of his re-election;
▶his managerial experience within a major international group;
▶his proven ability to support the transformation of an
industrial group, while making it a global leader in its main
activities;
▶his contribution to the complementary skills and experience
represented on the Board;
▶his involvement in the work of the Audit Committee and,
since May 2021, both in leading the executive sessions of the
Board as the Senior Independent Member and in the work of
the Compensation and Appointments Committee;
▶his availability and attendance rate at meetings of the Board
and its Committees; Thierry Le Hénaff’s overall attendance
rate at meetings of the Supervisory Board and the
Committees of which he was a member during the last three
years (the period used by the Board to assess the attendance
rate of incumbent Board members) was 96.30%(3);
▶the fact that he is an independent member of the Board and
has no conflicts of interest.
On
the
recommendation
of
the
Compensation
and
Appointments Committee, the Supervisory Board decided to
recommend that Thierry Le Hénaff be re-elected for a further
four-year term. Mr. Le Hénaff did not take part in the Board’s
discussion or vote.
Monique Leroux
Fiera Capital – 1501 McGill College – Montreal (Quebec) – H3A
3M8 – Canada.
Monique Leroux, a Canadian national, is a company director.
She is a Companion of the Canadian Business Hall of Fame and
Investment Industry Hall of Fame. She sits on the Boards of
Directors of Bell (BCE)(1), Couche-Tard (ATD)(1) and S&P Global
(SPGI, term expiring in 2022)(1).
(1) Listed company.
(2) A detailed discussion of Supervisory Board members’ independence is provided in section 3.2.6 of the 2021 Universal Registration Document.
(3) Thierry Le Hénaff missed only one meeting, in 2019.
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Monique Leroux is a member of the Order of Canada, an
Officer of the Ordre national du Québec, a Chevalier de la
Légion d’honneur (France) and a recipient of a Woodrow Wilson
Award (United States). She has been inducted as a Fellow of
the Canadian Order of Certified Public Accountants and Fellow
of the Canadian Institute of Corporate Directors, and has been
awarded honorary doctorates from ten Canadian universities in
recognition of her contribution to the business sector and also
to the community.
Monique Leroux chaired Canada’s Industrial Strategy Board in
2020 as part of a special mandate on economic recovery and she
also chaired the Board of Directors of Investissement Québec from
2016 to 2020.
Monique Leroux owns 1,000 Michelin shares.
She has served as an independent member of the Supervisory
Board since October 2015 and member of the Audit Committee
since 2017. Since 2020, she has been Chair of the Corporate
Social Responsibility Committee (CSR Committee).
Monique Leroux was considered by the Supervisory Board to be an
independent member at the time of its last review, in 2021(1).
The Board examined Monique Leroux’s candidature for
re‑election (for the second time) for a four-year term, taking
into account:
▶the appropriateness of her re-election;
▶her commitment to the work of the Board and the Audit
Committee and, since December 2020, her leadership of the
CSR Committee as its Chair;
▶her excellent understanding of the challenges facing the
Group;
▶her experience in the areas of accounting, finance and
internal control;
▶her attendance, availability and involvement in Board and
Committee meetings; Monique Leroux’s attendance rate in
2021 at meetings of the Supervisory Board and the
Committees of which she was a member during the last three
years (the period used by the Board to assess the attendance
rate of incumbent Board members) was 100%;
▶the fact that she is an independent member of the Board and
has no conflicts of interest;
▶the expertise and experience she brings to the Board; the
Committee felt that Monique Leroux will continue to give the
Group the benefit of her broad experience, gained in particular
during her time as a partner of EY (Canada) and as Chair of the
Board and Chief Executive Officer (from 2008 to 2016) of
Desjardins Group, one of Canada’s leading financial institutions,
which she helped to build into one of the world’s most robust
financial institutions after a period of dynamic growth under her
stewardship.
On
the
recommendation
of
the
Compensation
and
Appointments Committee, the Supervisory Board decided to
recommend that Monique Leroux be re-elected for a further
four-year term. Monique Leroux did not take part in the Board’s
discussion or vote.
Jean-Michel Severino
Investisseurs et Partenaires ‑ 9, rue Notre-Dame-des-Victoires ‑
75002 Paris - France.
Jean-Michel Severino, a French national, is a former student of
École Nationale d’Administration. He graduated from ESCP
Business School and Institut d’Études Politiques in Paris and has
a master’s degree in economics and a bachelor’s in law.
Awarded the civil service rank of Inspecteur Général des
Finances, he served as Development Director at the French
Ministry of Cooperation and Development, Vice-President East
Asia at the World Bank and Chief Executive Officer at the
French Development Agency.
Since 2011, he has been Managing Partner then Chairman of
the Supervisory Board of Investisseurs et Partenaires (I&P), a
fund management team specialized in impact finance that is
dedicated to financing and supporting African SMEs.
He is Senior Independent Director and Chairman of the
Governance Committee of the Board of Directors of Danone(2)
(until the end of the Annual Shareholders Meeting of
April 26, 2022), a director and member of the Audit Committee
of Orange(2) and Chairman of the Board of Directors of Ecobank
International (EBI SA).
He is also a Senior Fellow at the Foundation for Studies and
Research on International Development (FERDI) and a member
of the French Academy of Technologies.
Jean-Michel Severino owns 400 Michelin shares.
He joined the Supervisory Board in November 2020, following
the resignation of Cyrille Poughon, and his appointment for the
remainder of his predecessor’s term (one year) was ratified by
the Shareholders Meeting of May 21, 2021 by a majority of
99.92% of the votes cast (12th resolution).
He is also a member of the Supervisory Board’s Corporate Social
Responsibility Committee (CSR Committee) created in 2020.
Jean-Michel Severino was considered by the Supervisory Board
to be an independent member at the time of its last review, in
2021(1).
Following his recent appointment to the Supervisory Board, his
candidature for re-election for a four-year term was examined
by the Board, taking into account:
▶the appropriateness of his re-election, after serving on the
Board for the remaining ten months of his predecessor’s term;
▶his expertise, especially in the areas of social environment,
human resources and governance;
▶his good knowledge of the world of manufacturing;
▶his international experience;
▶his availability, attendance rate and involvement in the work
of the Supervisory Board, with an attendance rate at Board
meetings of 100%;
▶the fact that he is an independent member of the Board and
has no conflicts of interest.
On
the
recommendation
of
the
Compensation
and
Appointments Committee, the Supervisory Board decided to
recommend that Jean-Michel Severino be re-elected for a
further four-year term. He did not take part in the Board's
discussion or vote.
(1) A detailed discussion of Supervisory Board members’ independence is provided in section 3.2.6 of the 2021 Universal Registration Document.
(2) Listed company.
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Expiration Dates of Supervisory Board members’ terms of office
After the Annual Shareholders Meeting, assuming the shareholders elect the members standing for election and re-election, the
expiration dates of the Supervisory Board members' terms of office will be effectively staggered, as follows:
2022 AGM
2023 AGM
2024 AGM
2025 AGM
Barbara Dalibard
•
Jean-Pierre Duprieu
•
Aruna Jayanthi
•
Patrick de La Chevardière
•
Anne-Sophie de La Bigne
•
Jean-Christophe Laourde
• (1)
Thierry Le Hénaff
•
Monique Leroux
•
Delphine Roussy
• (1)
Wolf-Henning Scheider
•
Jean-Michel Severino
•
NUMBER OF TIMES RE-ELECTED BY THE AGM
3
2
3
1
(1) Appointed pursuant to the Bylaws and not elected by the shareholders.
7.2.2
APPOINTMENT OF THE STATUTORY AUDITORS (17TH AND 18TH RESOLUTIONS)
During several of its meetings in 2020 and based on Finance
Department analyses and presentations, the Audit Committee
examined the issue of whether to re-appoint the Statutory
Auditors when their appointment expired at the end of the
Annual Shareholders Meeting called to approve the 2021
financial statements or to appoint new firms.
The Audit Committee noted that (i) neither firm had to be
replaced under the auditor rotation rules and (ii) the signing
partners rotated in 2018 and 2020.
An assessment of the situation was carried out, focusing in
particular on the quality of the auditors’ work, cooperation
between the two firms, their understanding of the Group's
strategic changes and transformations, the support provided
during the process of upgrading the Group’s internal controls
and information systems, and the coverage of the Michelin
Group’s host countries by the members of the two firms’
networks and the coordination of their work. After considering
several scenarios, taking into account the regulatory framework
and
the
Group's
organization,
the
Audit
Committee
recommended
that
the
Statutory
Auditors
should
be
re‑appointed, taking into account the following main factors:
▶their renewed audit approach that takes into account the
current changes within the Group, including its numerous
acquisitions;
▶the rotation and reallocation of audit cycles between the two
firms, at the central level and at the level of the different
countries/entities;
▶the new fee budgets, as revised to reflect the simplification of
the Michelin Group's processes and legal structures and the
deployment of digital solutions.
On the basis of these factors and on the recommendation of
the Audit Committee, the Supervisory Board has decided to
recommend to the Shareholders Meeting to re-appoint
PricewaterhouseCoopers Audit and Deloitte & Associés as
Statutory Auditors for a further period of 6 years.
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7.2.3
APPROVAL OF THE COMPENSATION OF THE CORPORATE OFFICERS, INCREASE
IN THE TOTAL COMPENSATION AWARDED TO THE SUPERVISORY BOARD
(6TH TO 12TH AND 16TH RESOLUTIONS)
The policy and the components of the corporate officer
compensation packages were presented to the corresponding
Annual
Shareholders
Meetings
by
the
Chair
of
the
Compensation and Appointments Committee.
In 2022, the General Partners and the Supervisory Board are
submitting to the Ordinary Shareholders Meeting for approval:
▶the 2022 Compensation Policy applicable to (i) the Managers
(6th resolution) and (ii) the Supervisory Board (7th resolution)(1);
▶the information about the compensation of the Managers
and the Chair(man) of the Supervisory Board (8th resolution)
and the individual compensation paid or awarded to them
(9th to 12th resolutions) for 2021(2).
At this year's Meeting, we intend to ask shareholders to
approve an increase in the total fees awarded to the Supervisory
Board, to take into account:
▶the increase in the number of Board members in 2020
(11 members, up from 9);
▶the creation of a new committee in 2020, the Corporate
Social Responsibility Committee (CSR Committee), and the
involvement of its members in the very intensive activities of
this committee, which meets as regularly as the other Board
committees;
▶the increasing number of areas in which the activities of the
various Committees overlap, requiring them to work together
on an expanding range of subjects such as the analysis of
CSR risks and the review of the Group's Diversity and
Inclusion policy;
▶the growing demands placed on Supervisory Board members
in terms of professionalization, engagement and availability,
particularly in the case of members of the Committees of the
Board(3);
▶the need to retain and continue to attract Supervisory Board
members with the recognized experience and first-rate skills
required to represent shareholders in a group that has a
broad international footprint and a growth strategy that is
taking it into new business sectors.
The total compensation payable to members of the Supervisory
Board in 2023 would be raised from €770,000 to €950,000 as
from the 2022 financial year (16th resolution). In accordance
with the Supervisory Board's internal rules, the fee allocated to
each member depends to a large extent on their attendance
rate at Board and Committee meetings.
The rules for allocating this compensation among the members
of the Supervisory Board would not be changed in 2022 and
would remain identical to those defined in the 2021
compensation policy(4).
We concur with the proposal of the Compensation and
Appointments Committee and recommend that shareholders
adopt the corresponding proposed resolutions.
(1) Detailed policy described in the Supervisory Board’s Corporate Governance Report, see section 3.3 of the 2021 Universal Registration Document.
(2) Detailed disclosures in the Supervisory Board’s Corporate Governance Report, see sections 3.4 to 3.6 of the 2021 Universal Registration Document.
(3) A summary of the work carried out by the Supervisory Board, the Board Committees and the Senior Independent Member in 2021 is included in section 3.2 of
the 2021 Universal Registration Document.
(4) Detailed policy described in the Supervisory Board’s Corporate Governance Report, see section 3.3.3 of the 2021 Universal Registration Document.
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7.2.4
APPROVAL OF THE FINANCIAL STATEMENTS, RELATED-PARTY AGREEMENTS,
FINANCIAL AUTHORIZATIONS AND STOCK SPLIT
(1ST TO 5TH AND 19TH TO 29TH RESOLUTIONS)
Concerning the other ordinary resolutions, the accounting and
financial information communicated to shareholders and the
Managing Chairman's report present the Group's operations
and results for 2021 (for the purposes of the 1st, 2nd and
3rd ordinary resolutions).
We have no comments on the Statutory Auditors' reports on
the financial statements.
As no new related-party agreements requiring shareholder
approval were entered into in 2021, you are asked to place on
record that there are no such agreements to approve
(4th resolution).
Before asking shareholders to approve the financial statements
of the Company, the consolidated financial statements and the
proposed appropriation of net income, we would like to
highlight the fact that the Group is exceptionally well managed
and that it was this that enabled it to withstand an
unprecedented crisis without sacrificing its long-term objectives.
These good performances lead us to reaffirm our confidence in
the Managers.
They also lead us to support the Managing Chairman's
recommendation to set the dividend at €4.50 per share
(2nd resolution).
The Company wishes to renew its share buyback program on
similar terms as for the previous program (5th resolution).
An authorization to cancel shares bought back under the
program is also being sought to replace the authorization
granted at the 2021 Meeting (28th extraordinary resolution).
We are also proposing a number of extraordinary resolutions
(19th to 25th and 27th resolutions) which renew – on the same or
very similar terms – the financial authorizations granted at the
June 23, 2020 Annual Shareholders Meeting, which are needed
by the Group to support implementation of its strategy.
In addition, shareholders will be asked to renew the previous
authorization to carry out rights issues for members of a Group
employee shareholder plan (26th resolution).
Lastly, a stock split is proposed, in order to increase employee
ownership of Michelin shares and, more generally, to broaden
the Company’s shareholder base, (29th resolution).
We recommend that shareholders adopt the proposals
submitted by the Managing Chairman for their approval by
voting in favor of the corresponding ordinary and extraordinary
resolutions.
February 11, 2022
The Supervisory Board
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Statutory Auditors’ reports
7.3
STATUTORY AUDITORS’ REPORTS
7.3.1
STATUTORY AUDITORS’ REPORT ON THE ISSUE OF SHARES AND/OR VARIOUS
SECURITIES, WITH OR WITHOUT PRE-EMPTIVE SUBSCRIPTION RIGHTS
Combined Shareholders Meeting of May 13, 2022 (19th, 20th, 21st, 22nd and 23rd resolutions)
This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of
English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and
professional auditing standards applicable in France.
To the Shareholders’ meeting,
In our capacity as Statutory Auditors of Compagnie Générale des Etablissements Michelin, and pursuant to Articles L. 228-92 and
L. 225-135 et seq. and Article L. 22-10-52 of the French Commercial Code (Code de commerce), we hereby report to you on the
proposed delegations of authority to the Managers, or either of them, to carry out various issues of shares and/or securities, which are
submitted to you for approval.
On the basis of his report, the Managing Chairman invites the shareholders:
▶to delegate to the Managers, or either of them, for a period of 26 months, from the date of this Annual Shareholders Meeting, the
authority to carry out, except during a public offer period, the following transactions and to set the final terms and conditions
thereof, and, where appropriate, to cancel shareholders’ preemptive subscription rights:
• the issue, with pre-emptive subscription rights (19th resolution), of shares and/or equity securities carrying rights to other equity
securities and/or other securities carrying rights to shares,
• the issue, without pre-emptive subscription rights (20th resolution), of shares and/or equity securities carrying rights to other
equity securities and/or other securities carrying rights to shares through a public offer not governed by Article L.411-2,
paragraph 1, of the French Monetary and Financial Code,
• the issue, without pre-emptive subscription rights (21st resolution), of shares and/or equity securities carrying rights to other equity
securities and/or other securities carrying rights to shares through an offer governed by Article L.411-2, paragraph 1, of the
French Monetary and Financial Code,
▶to authorize the Managers, under the 22nd resolution, and as part of the implementation of the delegations referred to in the
20th and 21st resolutions, to set the issue price within the annual legal limit of 10% of the capital
The aggregate nominal amount of the shares that may be issued under the 19th, 20th, 21st, 22nd, 23rd and 25th resolutions, immediately
or in the future may not, under the 27th resolution, exceed €125,000,000, it being specified that the nominal amount of the shares
that may be issued, either immediately or in the future on conversion, may not exceed:
▶€125,000,000 under the 19th resolution,
▶€35,000,000 under either the 20th or 21st resolution or under all the 20th and 21st resolutions combined.
Under the 27th resolution, the aggregate nominal amount of debt securities that may be issued under the 19th, 20th, 21st, 22nd and
23rd resolutions may not exceed €2,500,000,000, this amount also constituting the individual ceiling for each of the 19th, 20th and
21st resolutions.
These ceilings take into account the additional securities to be issued under the delegations of authority sought in the 19th, 20th,
21st and 22nd resolutions, in accordance with Article L. 225-135-1 of the French Commercial Code, in the event that the shareholders
adopt the 23rd resolution.
It is the responsibility of the Managing Chairman to prepare a report in accordance with Articles R. 225-113 et seq. of the French
Commercial Code. Our responsibility is to express an opinion on the fairness of the information taken from the financial statements,
on the proposed cancellation of the shareholders’ pre-emptive subscription rights, and on certain other information relating to these
transactions, which is presented in this report.
We performed the procedures that we considered necessary in accordance with the professional standards applicable in France to such
engagements. These procedures consisted in verifying the information provided in the Managing Chairman’s report relating to these
transactions and the methods used to set the issue price of the shares to be issued.
Subject to a subsequent examination of the terms and conditions of the issues, we have no matters to report as regards the
information provided in the Managing Chairman’s report on the methods used to set the issue price of the equity securities to be
issued under the 20th, 21st and 22nd resolutions.
In addition, as this report does not stipulate the methods used to set the issue price of the shares to be issued under the
19th resolution, we do not express an opinion on the basis used to calculate the issue price.
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Since the final terms and conditions of the issues have not been set, we do not express an opinion in this respect, or, consequently, on
the proposed cancellation of the shareholders’ preemptive subscription rights under the 20th and 21st resolutions.
In accordance with Article R. 225-116 of the French Commercial Code, we will prepare an additional report if and when the
Managers, or either of them, use the delegations of authority to issue equity securities carrying rights to other equity securities,
securities carrying rights to equity securities to be issued or shares without preemptive subscription rights.
Neuilly-sur-Seine and Paris La Défense, March 25, 2022
The Statutory Auditors
PricewaterhouseCoopers Audit
Jean-Christophe Georghiou
Deloitte & Associés
Frédéric Gourd
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7.3.2
STATUTORY AUDITORS’ REPORT ON THE RIGHTS ISSUE RESERVED
FOR MEMBERS OF A GROUP EMPLOYEE SHAREHOLDER PLAN
Combined Shareholders Meeting of May 13, 2022 (26th resolution)
This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of
English speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and
professional auditing standards applicable in France.
To the Shareholders’ meeting,
Compagnie Générale des Etablissements Michelin
23 place des Carmes-Déchaux
63000 Clermont-Ferrand
In our capacity as Statutory Auditors of Compagnie Générale des Etablissements Michelin, and pursuant to Articles L. 225-135 et seq.
of the French Commercial Code (Code de commerce), we hereby report to you on the proposed delegation of authority to the
Managers, or either of them, to increase the capital by issuing, without preemptive‑ subscription rights, ordinary shares reserved for
members of an employee shareholder plan of the Company or of French and foreign companies related to the Company within the
meaning of Article L. 225-180 of the French Commercial Code and Article L. 33441 of the French Labor Code ‑(Code du travail), for a
maximum amount of €7,100,000, which is submitted to you for approval.
This rights issue is submitted to the shareholders for approval pursuant to the provisions of Article L. 225129‑6 of the French
Commercial Code and Articles L. 3332-18 ‑et seq. of the French Labor Code.
On the basis of his report, the Managing Chairman invites the shareholders to delegate to the Managers, or either of them, for a
period of 26 months from the date of this meeting, the authority to increase the capital and cancel shareholders’ pre-emptive
subscription rights to the shares to be issued. Where applicable, the Managing Chairman will be responsible for setting the final terms
and conditions of this transaction.
It is the responsibility of the Managing Chairman to prepare a report in accordance with Articles R. 225-113 and R. 225-114 of the
French Commercial Code. It is our responsibility to express an opinion on the fairness of the financial information taken from the
financial statements, on the proposed cancellation of the shareholders’ pre-emptive subscription rights, and on certain other
information relating to the issue, which is presented in this report.
We performed the procedures that we considered necessary in accordance with the professional standards applicable in France to such
engagements. These procedures consisted in verifying the information provided in the Managing Chairman’s report relating to this
transaction and the methods used to set the issue price of the shares to be issued.
Subject to a subsequent examination of the terms and conditions of the proposed rights issue, we have no matters to report as
regards the information provided in the Managing Chairman’s report on the methods used to set the issue price of the ordinary shares
to be issued.
Since the final terms and conditions of the rights issue have not been set, we do not express an opinion in this respect or,
consequently, on the proposed cancellation of shareholders’ pre-emptive subscription rights.
In accordance with Article R. 225-116 of the French Commercial Code, we will prepare an additional report if and when the Managers
or either of them use this delegation of authority.
Neuilly-sur-Seine and Paris La Défense, March 25, 2022
The Statutory Auditors
PricewaterhouseCoopers Audit
Jean-Christophe Georghiou
Deloitte & Associés
Frédéric Gourd
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7.3.3
STATUTORY AUDITORS’ REPORT ON THE CAPITAL REDUCTION
Combined Shareholders’ meeting of May 13, 2022 - 28th resolution
This is a free translation into English of the statutory auditors’ report issued in the French language and is provided solely for the
convenience of English-speaking readers. This report should be read in conjunction with, and construed in accordance with, French
law and professional auditing standards applicable in France.
To the Shareholders’ meeting,
Compagnie Générale des Etablissements Michelin
23 place des Carmes-Déchaux
63000 Clermont-Ferrand
In our capacity as Statutory Auditors of your Company and pursuant to Article L. 22-10-62 of the French Commercial Code (Code de
commerce) concerning capital reductions carried out by canceling bought-back shares, we hereby present our report on our
assessment of the reasons for and terms of the proposed capital reduction(s).
Your Managing Chairman has proposed that you delegate to the Managing Partners, or to one of them, for a period of 24 months
from the date of this meeting, the authority to cancel the bought-back shares of your company up to 10% of the share capital, by
period of 24 months, as authorized under the aforementioned article.
We performed the procedures that we considered necessary in accordance with the professional guidelines of the French National
Institute of Statutory Auditors (Compagnie Nationale des Commissaires aux Comptes), for this type of engagement. Those procedures
consisted of examining the fairness of the reasons for and whether the terms of the proposed capital reduction(s), which do not
undermine shareholders’ equality, were compliant.
We have nothing to report concerning the reasons for and the terms of the proposed capital reduction(s).
Neuilly-sur-Seine and Paris La Défense, March 25, 2022
The Statutory Auditors
PricewaterhouseCoopers Audit
Jean-Christophe Georghiou
Deloitte & Associés
Frédéric Gourd
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7.3.4
OTHER STATUTORY AUDITORS' REPORTS
The Statutory Auditors’ reports to the Annual Shareholders Meeting of May 21, 2021 that are not presented below can be found
in the following sections of this Universal Registration Document:
▶Report on the Company's financial statements: in section 5.3.3;
▶Special report on related-party agreements and commitments: in section 5.3.4;
▶Report on the consolidated financial statements: in section 5.2.2;
▶Report by one of the Statutory Auditors, appointed as an independent third party, on the consolidated environmental, labor and
social information presented in the management report: in section 4.2.3.
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In 2030, we expect to
derive 20% to 30% of
our sales from non-tire
businesses. One example
is this high-tech inflatable
wing sail designed
to reduce the energy
consumption of cargo
ships.
08
Tables of
concordance
8.1
TABLE OF CONCORDANCE
FOR THE UNIVERSAL
REGISTRATION DOCUMENT
470
8.2
TABLE OF CONCORDANCE FOR
THE ANNUAL FINANCIAL REPORT
472
8.3
TABLE OF CONCORDANCE WITH
THE AMF TABLES ON CORPORATE
OFFICER COMPENSATION
472
8.4
TABLE OF CONCORDANCE
FOR THE MANAGEMENT REPORT
473
8.5
TABLE OF CONCORDANCE GRI
(GLOBAL REPORTING INITIATIVE)
476
8.6
TABLE OF CONCORDANCE
FOR THE SASB (SUSTAINABILITY
ACCOUNTING STANDARD BOARD)
483
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8.1
TABLE OF CONCORDANCE FOR THE UNIVERSAL
REGISTRATION DOCUMENT
In order to make the Universal Registration Document easier to navigate, the following table cross-references the key information
required under Annex 1 of European Regulation No. 2019/980 supplementing European Regulation No. 2017/1129.
Section headings provided under Annex 1 of Commission Delegated Regulation (EU) No. 2019/980
Pages
1. Persons responsible for the Universal Registration Document
5.4.1
2. Statutory Auditors
5.4.2
3. Risk factors
2
4. Information about the issuer
6.1
5.1. Principal activities
1
5.2. Principal markets
5.1.1; 5.1.2
5.3. Important events
5.1.8
5.4. Strategy and objectives
1
5.5. Extent of dependence on patents, licenses, industrial, commercial or financial contracts
or new manufacturing processes
N/A
5.6. Basis for any statements by the issuer regarding its competitive position
5.1.1
5.7. Investments
5.1.5 b); 5.1.5 c)
6.1. Brief description of the Group
6.1
6.2. List of significant subsidiaries
5.2 (note 36)
5.3 (note 20)
7.1. Financial condition
5.1
7.2. Operating results
5.1.3
8.1. Information concerning capital resources
5.1.4; 5.1.6; 5.2; 6.5.1
8.2. Sources and amounts of cash flows
5.1.4; 5.1.5; 5.2
8.3. Information on borrowing requirements and funding structure
5.1.4; 5.2 (note 26)
8.4. Restrictions on the use of capital resources that have materially affected,
or could materially affect the Company
N/A
8.5. Anticipated sources of funds needed to fulfill Management's firm commitments
and planned property, plant and equipment
N/A
9. Regulatory environment
5.1.1 a)
10. Trend information
5.1.7; 5.1.11
11. Profit forecasts or estimates
5.1.7
12.1. Information on the members of the administrative, management and supervisory board
3.1; 3.2
12.2. Conflicts of interest
3.1.5; 3.2.6
13.1. Remuneration and benefits in kind
3.3; 3.5
13.2. Total amounts set aside or accrued to provide pension, retirement or similar benefits
3.3; 3.5
14.1. Date of expiration of current terms of office
3.1
14.2. Service contracts to which members of the administrative, management and supervisory board are bound
3.1.5
14.3. Information on the Committees
3.2.9; 3.2.10
14.4. Statement of compliance with the applicable corporate governance regime
N/A
14.5. Potential material impacts on corporate governance
3.1
15.1. Number of employees
4.1.2.4; 5.1.3 c)
15.2. Corporate officer shareholdings and stock options
4.1.2.3 b); 6.5.3
15.3. Arrangements for involving the employees in the capital
4.1.2.3 b); 6.5.3
16.1. Shareholders holding more than 5% of the share capital or voting rights
3.11
16.2. Statement as to whether shareholders have different voting rights
3.10.6; 3.11; 6.2.4; 6.3
16.3. Control over the issuer
3.11
16.4. Arrangement, known to the issuer, the implementation of which may at a subsequent date result
in a change in control
3.13
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02
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05
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Section headings provided under Annex 1 of Commission Delegated Regulation (EU) No. 2019/980
Pages
17. Related party transactions
5.2 (note 34)
18.1. Historical financial information
5.1.14; 5.2; 5.3
18.2. Interim and other financial information
N/A
18.3. Auditing of historical financial information
5.2.2; 5.3.3
18.4. Pro forma financial information
5.2; 5.3
18.5. Dividend policy
6.2.3
18.6. Legal and arbitration proceedings
5.2 (note 32.2.3)
18.7. Significant change in the issuer's financial position
5.1.11
19.1. Share capital
6.5
19.1.1. Issued capital and authorized capital
6.5
19.1.2. Shares not representing capital
N/A
19.1.3. Shares held by the issuer or its subsidiaries
6.5.6; 6.5.7
19.1.4. Convertible securities, exchangeable securities or securities with warrants
6.5.3
19.1.5. Acquisition rights and/or obligations attached to authorized but unissued capital, or any undertaking
to increase the capital
6.5
19.1.6. Options on the capital relating to members of the Group
6.5.3
19.1.7. A history of share capital
6.5.1
19.2. Articles of incorporation and bylaws
3.10; 6.1
19.2.1. Register and corporate purpose
3.10
19.2.2. Rights, preferences and restrictions attached to shares
3.10
19.2.3. Previsions that could delay, defer or prevent a change in control
N/A
20. Material contracts
5.1.9
21. Documents available
6.4
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8.2
TABLE OF CONCORDANCE FOR THE ANNUAL FINANCIAL REPORT
In order to make the Annual Financial Report easier to navigate, the following table cross-references the key information required by Article
L. 451-1-2 of the French Monetary and Financial Code (Code monétaire et financier) and Article 222-3 of the AMF General Regulations.
Section headings provided under Article L. 451-1-2 of the French Monetary and Financial Code
and Article 222-3 of the AMF General Regulations
Pages
1. 2020 annual financial statements
5.3
2. 2020 consolidated financial statements
5.2
3. 2020 Report of the Managers
8.4
4. Statement by the person responsible for the 2020 Annual Financial Report
5.4.1
5. Statutory Auditors’ report on the 2020 Annual Financial Statements
5.3.3
6. Statutory Auditors’ Report on the 2020 consolidated financial statements
5.2.2
7. Fees paid to the Statutory Auditors
5.2 (note 37)
8.3
TABLE OF CONCORDANCE WITH THE AMF TABLES
ON CORPORATE OFFICER COMPENSATION
The following cross-reference table has been drawn up in order to put information on compensation into perspective with regard to
the breakdown of such information in the 11 tables recommended by the AMF in its guide for the preparation of Universal
Registration Documents (see also the AFEP-MEDEF Code).
Remuneration tables in the AMF recommendations
3.6.1
Table 1 Summary of compensation, options and shares granted to each executive officer
3.6.1.1
Table 2 Summary of compensation paid to each executive officer
3.6.1.2; 3
Table 3 Directors' fees and other compensation received by the non-executive officers
3.6.1.4
Table 4 Stock options granted during the year to executive officers by the issuer and any other Group company
3.6.1.5
Table 5 Stock options exercised during the year by the executive officers
3.6.1.6
Table 6 Performance shares granted to the executive officers
3.6.1.7
Table 7 Performance shares that became available to each corporate officer
3.6.1.8
Table 8 History of stock option grants
3.6.1.9; 6.5.3 a)
Table 9 Stock options granted to and exercised by the ten employees other than executive officers
who received the greatest number of options
3.6.1.10; 6.5.4 a)
Table 10 Past awards of free shares
3.6.1.11; 3.6.2
Table 11 Commitments related to the termination of the duties of an executive officer
3.6.1.12
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02
03
04
05
06
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8.4
TABLE OF CONCORDANCE FOR THE MANAGEMENT REPORT
To make the Management Report easier to navigate, the following table cross-references the key information required by Articles
L. 225-100 et seq., L. 22-10-35 and L. 22-10-36, L. 232-1 and R. 225-102 et seq. of the French Commercial Code, as well as the
specific section of the Management Report dedicated to corporate governance, pursuant to sub-paragraph 6 of Article L. 225-37 et
seq. and Article L. 22-10-8 et seq. of the French Commercial Code.
Section headings of the 2021 Management Report
Reference text
Section/Page(s)
Position and activity of the Group in 2021
Position of the Company over the year and objective and comprehensive analysis
of the changes in business, results and financial position of the Company
and the Group, in particular its debt situation, in relation to the volume
and complexity of its business
L. 225-100-1, I-1°, L. 232-1, II,
L. 233-6 and L. 233-26
of the French Commercial Code
5.1
Key financial performance indicators
L. 225-100-1, I-2
of the French Commercial Code
1; 5.1
Key non-financial performance indicators relating to the Company’s
and the Group’s specific operations
L. 225-100-1, I-2
of the French Commercial Code
1; 5.1.12
Material events arising since the beginning of the business period 2021
L. 232-1, II and L. 233-26
of the French Commercial Code
5.1.7
Foreseeable change in the situation of the Company and the Group
and future prospects
L. 232-1, II and L. 233-26
of the French Commercial Code
5.1.7
Names of the major shareholders and holders of voting rights at Shareholders
Meetings, and changes during the year
L. 233-13
of the French Commercial Code
3.11; 6.2.4; 6.5
Existing branches
L. 232-1, II
of the French Commercial Code
5.2 (note 36); 6.1
Significant shareholdings in companies with their registered office in France
Article L. 233-6 paragraph 1
of the French Commercial Code
5.2 (note 36)
Disposals of cross-shareholdings
Articles L. 233-29, L. 233-30
and R. 233-19
of the French Commercial Code
N/A
Research and development activity
Articles L. 232-1, II
and L. 233-26
of the French Commercial Code
5.1.3 c)
Table of the Company’s financial results over each of the last five years
Article R. 225-102
of the French Commercial Code
5.1.14
Information on payment deadlines for suppliers and clients
Article D. 441-4
of the French Commercial Code
5.1.10
Amount of inter-company loans granted and the Statutory Auditor’s statement
Articles L. 511-6
and R. 511-2-1-3 of the French
Monetary and Financial Code
(Code monétaire et financier)
N/A
Internal control and risk management
Description of the main risks and contingencies to which the Company is exposed
L. 225-100-1, I-3 and 4
of the French Commercial Code
2.1
Information on financial risks linked to climate change and measures
taken to reduce them by implementing a low-carbon strategy throughout
all components of the business
L. 22-10-35, 1
of the French Commercial Code
2.1 (Risque 1); 5.2
(note 2.6)
Main internal control and risk management procedures put in place by the Company
and by the Group, in particular those relating to the preparation and processing
of accounting and financial information
L. 22-10-35, 2
of the French Commercial Code
2.3
Information on the objectives and policy regarding the hedging of each major
category of transactions and the exposure to price, credit, liquidity and cash risks,
including the use of financial instruments
Article L. 225-100-1., 4
of the French Commercial Code
5.2
(notes 3.5, 16, 20,
23, 33)
Anti-bribery and corruption system
French Act no. 2016-1691
of 9 December 2016 (“Sapin II”)
4.1.1.1 b)
Duty of care plan and report on its effective implementation
Article L. 225-102-4
of the French Commercial Code
5.1.13
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Section headings of the 2021 Management Report
Reference text
Section/Page(s)
Corporate governance
Information on remuneration
Remuneration policy for corporate officers
Article L. 22-10-8, I., paragraph 2
of the French Commercial Code
3.3.1
Remuneration and benefits in kind paid during the financial year or granted
in respect of the financial year to each corporate officer
Article L. 22-10-9, I., 1
of the French Commercial Code
3.4
Relative proportion of fixed and variable remuneration
Article L. 22-10-9, I., 2
of the French Commercial Code
3.4.4.1; 3.4.4.2
Possibility to request repayment of variable remuneration
Article L. 22-10-9, I., 3
of the French Commercial Code
N/A
Commitments of any kind entered into by the Company for the benefit of
its corporate officers concerning the remuneration, compensation and benefits
that would be due or potentially due at the time of or following their appointment,
loss of office or change in position
Article L. 22-10-9, I., 4
of the French Commercial Code
3.6.1.12
Remuneration paid or allocated by a company included in the scope of consolidation
within the meaning of Article L. 233-16 of the French Commercial Code
Article L. 22-10-9, I., 5
of the French Commercial Code
3.4
Ratios between the level of remuneration of each executive corporate officer
and the average and median remuneration of company employees
Article L. 22-10-9, I., 6
of the French Commercial Code
3.4.6
Annual changes in remuneration, Company performance, average remuneration
of Company employees and the above ratios over the last five years
Article L. 22-10-9, I., 7
of the French Commercial Code
3.4.6
How total remuneration complies with the adopted remuneration policy,
including how it contributes to the long-term performance of the Company
and how the performance criteria have been applied
Article L. 22-10-9, I., 8
of the French Commercial Code
3.3.1
Procedure for taking into account the vote of the last ordinary Shareholders Meeting
provided for in paragraph I of Article L. 22-10-34 of the French Commercial Code
Article L. 22-10-9, I., 9
of the French Commercial Code
3.3.1
Non-compliance with the procedure for implementing the remuneration policy and
any deviation from the procedure
Article L. 22-10-9, I., 10
of the French Commercial Code
N/A
Application of the provisions of paragraph 2 of Article L. 225-45 of the French
Commercial Code (suspension of payment of directors’ remuneration in the event
of lack of gender diversity on the Board)
Article L. 22-10-9, I., 11
of the French Commercial Code
N/A
Stock options granted to and held by corporate officers
Article L. 225-185
of the French Commercial Code
N/A
Free shares granted to and held by executive corporate officers
Articles L. 225-197-1
and L. 22-10-59
of the French Commercial Code
3.4.3.3; 3.4.5.3; 6.5.4
Information of governance
List of positions held and duties performed by each corporate officer in all companies
during the reporting period
Article L. 225-37-4, 1
of the French Commercial Code
3.1.2; 3.1.3
Agreements entered into between a corporate officer or a significant shareholder
and a subsidiary
Article L. 225-37-4, 2
of the French Commercial Code
N/A
Summary table showing delegations granted by the Shareholders Meeting
to increase the share capital currently in force
Article L. 225-37-4, 3
of the French Commercial Code
3.12
General management procedures
Article L. 225-37-4, 4
of the French Commercial Code
3.1
Composition, preparation and organization of the work of the Board
Article L. 22-10-10, 1
of the French Commercial Code
3.2
Description of the diversity policy, objectives and results, including Supervisory Board
gender balance
Article L. 22-10-10, 2
of the French Commercial Code
3.1.3.3
Limitations placed by the Board on the powers of the Managing General Partner
Article L. 22-10-10, 3
of the French Commercial Code
3.1.3.2; 3.2.8
Reference to the AFEP/MEDEF Code and application of the “comply or explain”
principle
Article L. 22-10-10, 4
of the French Commercial Code
3.2.8
Specific conditions for shareholder participation in the Shareholders Meeting
Article L. 22-10-10, 5
of the French Commercial Code
3.10.6
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Section headings of the 2021 Management Report
Reference text
Section/Page(s)
Procedure for evaluating current agreements – Implementation
Article L. 22-10-10, 6
of the French Commercial Code
3.9
Items likely to have an impact in the event of a takeover bid or exchange offer
Shareholders’ agreements relating to the Company's capital
Article L. 22-10-11
of the French Commercial Code
3.13
Shareholdings and capital
Structure, changes in the Company’s capital and threshold crossings
Article L. 233-13
of the French Commercial Code
3.11 ; 6.5.1
Purchase and sale of treasury stock
Article L. 225-211
of the French Commercial Code
6.5.6
Employee share ownership at the period end (proportion of share capital
represented)
Article L. 225-102, paragraph 1
of the French Commercial Code
6.5.5
Any adjustments made to securities giving rights to share capital in the event
of share buybacks or financial transactions
Articles R. 228-90 and R. 228-91
of the French Commercial Code
6.5
Information on transactions by executive corporate officers and related persons
in the Company’s shares
Article L. 621-18-2
of the French Monetary
and Financial Code
3.8; 6.5.4
Dividends paid during the last three financial years
Article 243 bis
of the French General Tax Code
(Code général des impôts)
5.1.14; 6.2.3; 7.1.1
Non-financial information statement (NFPS)
See the concordance table for the Non-Financial
Information Statement 4.2.2
Additional information
Additional tax information
Articles 223 quater and
223 quinquies of the French
General Tax Code
N/A
Injunctions or penalties for anti-competitive practices
Article L. 464-2
of the French Commercial Code
N/A
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Table of concordance GRI (Global Reporting Initiative)
8.5
TABLE OF CONCORDANCE GRI (GLOBAL REPORTING INITIATIVE)
This report has been prepared in accordance with the GRI Standards: Core option(1). The following table cross-references sections in
the report that are aligned with GRI indicators, according to the standards updated on December 31, 2021.
Disclosure
Description
Section
Cross-reference (or reason for omission)
GRI 102: GENERAL DISCLOSURES
1. Organizational profile
102-01
Name of the organization
6.1
Information about the company
102-02
Activities, brands, products,
and services
1
Our Business Model
102-03
Location of headquarters
6.1
Information about the company
102-04
Location of operations
1
A global footprint
102-05
Ownership and legal form
1
The Michelin partnership limited by shares
102-06
Markets served
1
With tires, Around tires, Beyond tires
102-07
Scale of the organization
4.1.2.4
1
3.11
6.2.1
1
Supporting employee growth and development/Workforce overview
A global footprint
Ownership structure and voting rights
The Michelin share
Financial performance
102-08
Information on employees
and other workers
4.1.2
4.1.3
4.1.5
Human rights
Employee health and safety
Summary table of employee data
102-09
Supply chain
4.1.1.2
Demonstrating our CSR commitments through responsible
procurement policies
102-10
Significant changes to the
organization and its supply chain
5.1.11
Significant change in the issuer's financial or trading position
4.1.2.3 c)
Transparency: information concerning redundancy plans, job retention
initiatives and retraining, placement and support programs in 2021
102-11
Precautionary principle
or approach
2
4.3
Risk management
Duty of care plan
102-12
External initiatives
4
Methodology
4.1.1.1
Ensuring ethical business practices
4.1.1.2
Demonstrating our CSR commitments through responsible
procurement policies
4.1.2.1 a)
Human rights//Employee relations standards and responsibilities
4.1.2.2 b)
Programs and tools to attenuate the risk of discrimination
4.1.2.2 d)
Promoting employment for people with disabilities and retaining
employees who become disabled
4.1.3
Employee health and safety/Health, safety and quality of worklife
policies
4.1.4.3
Supporting biodiversity
4.3.1
Duty of care plan/Methodology
(1) There are two options for preparing a report in accordance with the GRI Standards: Core and Comprehensive. The Core option indicates that a report
contains the minimum information needed to understand the nature of the organization, its material topics and related impacts, and how these are managed
(see https://www.globalreporting.org, and the GRI standards 101-3 and 102-54).
476
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Table of concordance GRI (Global Reporting Initiative)
01
02
03
04
05
06
07
08
Disclosure
Description
Section
Cross-reference (or reason for omission)
102-13
Membership of associations
4.1.1.2 c)
A dedicated approach for natural rubber/The Global Platform
for Sustainable Natural Rubber (GPSNR)
4.1.2.1
Ensuring respect for human rights
4.1.2.3
Promoting responsible social dialogue
4.1.4.2 d)
The Michelin 4R circular economy process
4.1.4.4 a)
New act4nature international individual commitments
Main transparency registers in which Michelin is registered (in French only):
https://www.hatvp.fr/fiche-organisation/?organisation=855200507##
https://www.michelin.com/developpement-mobilite-durables/performance-transparence/
lobbying-affaires-publiques/
4.1.2.5 e)
Fostering relations with environnemental protection associations
2. Strategy
102-14
Statement from senior
decision‑maker
1
Message from the Managing Chairman
102-15
Key impacts, risks,
and opportunities
2
4.1
4.1
Risk management
Identification of the main risks
Introduction/The Materiality Matrix
3. Ethics and integrity
102-16
Values, principles, standards,
and norms of behavior
1
4.1.1.1
4.1.2.1
4.1.2.2
“All Sustainable” Strategy
Ensuring ethical business practices
Ensuring respect for human rights
Instilling an inclusive culture of diversities and preventing discrimination
102-17
Mechanisms for advice
and concerns about ethics
4.1.1.1
4.1.1.1 a)
4.1.1.2 b)
Ensuring ethical business practices
Establishing a global ethical framework/Whistleblowing controls
and procedures
Risk identification and levers for action/Mediation with suppliers
4. Governance
102-18
Governance structure
3.1
Administrative, management and supervisory bodies
102-19
Delegating authority
3.12
Financial authorizations
102-20
Executive-level responsibility
for economic, environmental,
and social topics
4.1.2.3 b)
Offering fair compensation and benefits / Integrating CSR performance
criteria into executive compensation
102-21
Consulting stakeholders
on economic, environmental,
and social topics
4.1.2.5 a)
Stakeholder dialogue
102-22
Composition of the highest
governance body and its
committees
3.1
Administrative, management and supervisory bodies
102-23
Chair of the highest
governance body
3.1
Administrative, management and supervisory bodies
102-26
Role of highest governance
body in setting purpose, values,
and strategy
3.1.1 b)
Role and responsibilities
102-29
Identifying and managing
economic, environmental,
and social impacts
2
Risk management
4.1
Identification of the main risks
4.1
Introduction/The Materiality Matrix
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Table of concordance GRI (Global Reporting Initiative)
Disclosure
Description
Section
Cross-reference (or reason for omission)
102-35
Remuneration policies
3.3
Management and Supervisory Board compensation policies for 2021
102-36
Process for determining
remuneration
3.3
Management and Supervisory Board compensation policies for 2021
102-37
Stakeholders' involvement
in remuneration
3.3.1
General principles
3.5
Individual compensation paid or awarded to the Managers
and the Chairman of the Supervisory Board for 2021
5. Stakeholder engagement
102-40
List of stakeholder groups
4.1.2.5 a)
Stakeholder dialogue
102-41
Collective bargaining agreements 4.1.2.3 a)
An assertive social dialogue process
102-42
Identifying and selecting
stakeholders
4.1.2.5 a)
Stakeholder dialogue
102-43
Approach to stakeholder
engagement
4.1.2.5 a)
Stakeholder dialogue
102-44
Key topics and concerns raised
4.1.2.5 a)
Stakeholder dialogue
4.1
Introduction/The Materiality Matrix
6. Reporting practice
102-45
Entities included in the
consolidated financial statements
5.2
Consolidated financial statements year ended December 31, 2021
102-46
Defining report content
and topic boundaries
4
Methodology/Definition of content and scope of reporting
102-47
List of material topics
4.1
Introduction/Challenges and performance/The Materiality Matrix
102-48
Restatements of information
4
Methodology
102-49
Changes in reporting
4
Methodology/Indicators
102-50
Reporting period
4
Methodology/Reporting cycle and period
102-51
Date of most recent report
4
Methodology/Indicators
102-52
Reporting cycle
4
Methodology/Reporting cycle and period
102-53
Contact point for questions
regarding the report
back cover
102-54
Claims of reporting in accordance
with the GRI Standards
4
Methodology/Definition of content and scope of reporting
102-55
GRI content index
8.5
Global Reporting Initiative cross-reference table
102-56
External assurance
4.2.4
Report by one of the Statutory Auditors, appointed as an independent
third party, on the consolidated environmental, labor and social
information presented in the management report
GRI 200: ECONOMIC
GRI 201 – Economic performance
GRI 201-1
Direct economic value generated
and distributed
1
Financial performance
1
The Michelin share
4.1.2.3 b)
Offering fair compensation and benefits
5.2
Note 11 : Income tax
GRI 201-2
Financial implications and other
risks and opportunities due
to climate change
2.1
5.2
Risk factors specific to Michelin, description and related management
systems
Note 2.6 : Climate Risk
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01
02
03
04
05
06
07
08
Disclosure
Description
Section
Cross-reference (or reason for omission)
GRI 202 – Market presence
GRI 202-2
Proportion of senior management
hired from the local community
4.1.2.2 b)
Ensuring fairness and equal opportunity regardless of social,
cultural and ethnic difference
GRI 203 – Indirect economic impacts
GRI 203-1
Infrastructure investments
and services supported
4.1.2.5 d)
The Michelin Foundation: demonstrating our corporate culture
and value
4.1.2.5 c)
Participating harmoniously in local community life through
our employees
4.1.2.5. g)
Making a public committment to supporting sustainable mobility
GRI 204 – Procurement practices
GRI 204-1
Proportion of spending on local
suppliers
4.1.1.2
Demonstrating our CSR commitments through responsible
procurement policies/Diversifying the supplier base
Reason for omission of the figure: not applicable – Group procurement is managed globally. While operating globally and purchasing from
major international suppliers who meet its exacting standards and embrace the principles of sustainable development, Michelin, in line
with its Purchasing Principles, also strives to source locally, as well as from sheltered work centers and social enterprises. These local purchases
are not tracked by a Group-wide KPI.
GRI 205 – Anti-corruption
GRI 205-1
Communication and training
about anti-corruption policies
and procedures
4.1.1.1 a)
Establishing a global ethical framework
4.1.1.1 b)
Taking a firm stand against corruption
Reason for omission of certain data: lack of information/confidentiality issues – All of the Group's host regions have been reviewed and
assessed for corruption risks. The findings are not available at the site or facility level. For confidentiality reasons, Michelin does not publicly
disclose the material risks of corruption identified during the assessments.
GRI 205-2
Communication and training
about anti-corruption policies
and procedures
4.1.1.2 a)
Establishing a global ethical framework
4.1.1.2 b)
Taking a firm stand against corruption
GRI 205-3
Confirmed incidents of
corruption and actions taken
Reason for omission: confidentiality issues
GRI 206 – Anti-competitive behavior
GRI 206-1
Legal actions for anti-competitive
behavior, anti‑trust,
and monopoly practices
Reason for omission: confidentiality issues – the requested information is highly sensitive
and its disclosure could be detrimental to trade secrets
GRI 300: ENVIRONMENTAL
GRI 301 – Materials
GRI 301-2
Recycled input materials used
4.1.4.2 a)
Increment the use of sustainable materials
GRI 302 – Energy
GRI 302-1
Energy consumption
within the organization
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
GRI 302-3
Energy intensity
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
GRI 302-4
Reduction of energy consumption 4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
GRI 303 – Water
GRI 303-1
Interactions with water
as a shared resource
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
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Table of concordance GRI (Global Reporting Initiative)
Disclosure
Description
Section
Cross-reference (or reason for omission)
GRI 304 – Biodiversity
GRI 304-1
Operational sites owned, leased,
managed in, or adjacent to,
protected areas and areas of
high biodiversity value outside
protected areas
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
4.1.4.3
Supporting biodiversity
GRI 305 – Emissions
GRI 305-1
Direct (Scope 1) GHG emissions
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
4.1.4.4 c)
Reducing energy use and greenhouse gas emissions
GRI 305-2
Energy indirect (Scope 2)
GHG emissions
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
4.1.4.4 c)
Reducing energy use and greenhouse gas emissions
GRI 305-3
Other indirect (Scope 3)
GHG emissions
4.1.4.1 a)
Transition plan: decarbonizing our operations
Inventory of Scope 1, 2 and 3 CO2 emissions
Scope 3: reducing emissions from our logistics operations
Scope 3: reducing emissions from purchased raw materials
and components
Scope 3: upstream purchased energy and end-of-life treatment
of sold products
GRI 305-4
GHG emissions intensity
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
4.1.4.4 c)
Reducing energy use and greenhouse gas emissions
GRI 305-5
Reduction of GHG emissions
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
4.1.4.4 c)
Reducing energy use and greenhouse gas emissions
GRI 305-7
Nitrogen oxides (NOx),
sulfur oxides (SOx), and other
significant air emissions
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
4.1.4.4 d)
Reducing harmful air emissions
GRI 306 – Effluents and waste
GRI 306-2
Waste by type and disposal
method
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
4.1.4.4 e)
Reducing and managing waste
GRI 307 – Environmental compliance
GRI 307-1
Non-compliance
with environmental laws
and regulations
4.1.4.4 b)
Reducing the environmental footprint of the production plants/
Summary table of environmental data – Group
GRI 308 – Supplier environmental assessment
GRI 308-2
Negative environmental impacts
in the supply chain and actions
taken
4.1.1.2
Demonstrating our CSR commitments through responsible
procurement policies
GRI 400: SOCIAL
GRI 401 – Employment
GRI 401-1
New employee hires
and employee turnover
4.1.2.4
Supporting employee growth and development
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01
02
03
04
05
06
07
08
Disclosure
Description
Section
Cross-reference (or reason for omission)
GRI 402 – Labor/Management relations
GRI 402-1
Minimum notice periods
regarding operational changes
4.1.2.2 a)
Managing diversity seamlessly around the world
GRI 403 – Occupational health and safety
GRI 403-1
Occupational health and safety
management system
4.1.3
Employee health and safety/Health, safety and quality
of worklife policies
GRI 403-2
Hazard identification, risk
assessment, and incident
investigation
4.1.3.4
Assessing and preventing workplace safety and security risks
4.1.3.4 c)
Measuring and tracking occupational accidents
4.1.5
Summary table of employee data
GRI 404 – Training and education
GRI 404-1
Average hours of training
per year per employee
4.1.2.4 c)
Enhancing skills through training
4.1.5
Summary table of employee data
GRI 404-3
Percentage of employees
receiving regular performance
and career development reviews
4.1.2.4 c)
Employee growth and development
4.1.2.4 d)
A new division of roles to support the process
GRI 405 – Diversity and equal opportunity
GRI 405-1
Diversity of governance bodies
and employees
4.1.2.2 b)
Making all positions accessible to women and ensuring gender
wage parity
GRI 405-2
Ratio of basic salary and
remuneration of women to men
4.1.2.2 b)
Making all positions accessible to women and ensuring gender
wage parity/Ensuring wage equality worldwide
GRI 406 – Non-discrimination
GRI 406-1
Incidents of discrimination
and corrective actions taken
4.1.2.2
Programs and tools to attenuate the risk of discrimination
4.1.1.1 a)
Establishing a global ethical framework
The system for consolidating the various ethics hotlines is now being
revamped. Based on a single outside service provider, the new system
will be able to manage and track all types of alerts in real time, while
guaranteeing data confidentiality and respecting people's privacy
GRI 407 – Freedom of association and collective bargaining
GRI 407-1
Operations and suppliers
in which the right to freedom
of association and collective
bargaining may be at risk
4.1.2.3 a)
An assertive social dialogue process
4.1.1.2 b)
Demonstrating our CSR commitments through responsible
procurement policies/Risk identification and levers for action/Supplier
assessments
GRI 408 – Child labor
GRI 408-1
Operations and suppliers
at significant risk for incidents
of child labor
4.1.2.1 b)
Risks and prevention measures/Decent work-related risks now being
assessed in the contracting chain
GRI 409 – Forced or compulsory labor
GRI 409-1
Operations and suppliers
at significant risk for incidents
of forced or compulsory labor
4.1.2.1 b)
Risks and prevention measures/Decent work-related risks now being
assessed in the contracting chain
4.1.1.2 b)
Demonstrating our CSR commitments through responsible
procurement policies/Risk identification and levers for action/Effective
levers for action/Addressing CSR issues in appropriate purchasing
processes
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Table of concordance GRI (Global Reporting Initiative)
Disclosure
Description
Section
Cross-reference (or reason for omission)
GRI 410 – Security practices
GRI 410-1
Security personnel trained
in human rights policies
or procedures
4.1.2.1 b)
Organization and ambitions
GRI 411 – Rights of indigenous peoples
GRI 411-1
Incidents of violations involving
rights of indigenous peoples
4.1.2.1 b)
Organization and ambitions
GRI 412 – Human rights assessment
GRI 412-1
Operations that have been
subject to human rights reviews
or impact assessments
4.1.2.1 a)
Employee relations standards and responsibilities
4.1.2.1 b)
Risks and prevention measures
GRI 413 – Local communities
GRI 413-1
Operations with local community
engagement, impact
assessments, and
development programs
4.1.2.5
Encouraging employee and corporate engagement in local
communities
4.1.2.5 a)
Stakeholder dialogue
GRI 414-1
New suppliers that were
screened using social criteria
4.1.1.2
Demonstrating our CSR commitments through responsible
procurement policies
GRI 414-2
Negative social impacts
in the supply chain
and actions taken
4.1.1.2 b)
Risk identification and levers for action/Supplier assessments
GRI 415 – Public policy
GRI 415-1
Political contributions
Code of ethics
“The Michelin vocation is not to support a political candidate in order
to hopefully obtain further advantages for the Company. The Michelin
Group maintains a neutrality principle. However, in countries/
jurisdictions where it is legal and commonly accepted, the Michelin
Group can provide support to a candidate, who works for sustainable
mobility. These donations and political contributions will be published,
as required by law.”
GRI 416 – Customer health and safety
GRI 416-1
Assessment of the health
and safety impacts of product
and service categories
4.1.1.3
Guaranteeing the quality of our products and services
GRI 417 – Marketing and labeling
GRI 417-2
Incidents of non-compliance
concerning product and service
information and labeling
4.1.1.3
Guaranteeing the quality of our products and services
GRI 418 – Customer privacy
GRI 418-1
Substantiated complaints
concerning breaches of customer
privacy and losses of customer
data
4.1.1.2
Ensuring ethical business practices
4.1.1.2 d)
Protecting employee privacy and personal data
GRI 419 – Socioeconomic compliance
GRI 419-1
Non-compliance with laws
and regulations in the social
and economic area
4.1.1.2
Ensuring ethical business practices
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Table of concordance for the SASB (Sustainability Accounting Standard Board)
01
02
03
04
05
06
07
08
8.6
TABLE OF CONCORDANCE FOR THE SASB
(SUSTAINABILITY ACCOUNTING STANDARD BOARD)
The following table cross-references sections in the report that are aligned with Sustainability Accounting Standard Board -
Transportation Standard Index - Autoparts, according to the standards updated on December 31, 2021.
Topic
Accounting metric
Section
Energy management
TR-AP-130a.1
Total energy consumed
4.1.4.4 b) Reducing the environmental footprint of the production
plants/Summary table of environmental data – Group
Percentage renewable
4.1.4.4 c) Reducing energy consumption and greenhouse gas
emissions/Implementing the Group's energy transition
Waste management
TR-AP-150a.1
Total amount of waste
from manufacturing
4.1.4.4 b) Reducing the environmental footprint of the production
plants/Summary table of environmental data – Group
Percentage hazardous
4.1.4.4 e) Reducing and managing waste
Percentage recycled
4.1.4.4 e) Reducing and managing waste
Product safety
TR-AP-250a.1
Number of recalls issued, total units
recalled
4.1.1.3 Guaranteeing the quality of our products and services/
Michelin Quality
Design for fuel efficiency
TR-AP-410a.1
Revenue from products designed to
increase fuel efficiency and/or reduce
emissions
4.1.4.1 d) Engagement and transparency / 2021 report on the
Michelin Group’s activities in respect of the European Taxonomy
Regulation
Materials sourcing
TR-AP-440a.1
Description of the management of risks
associated with the use of critical materials
4.1.1.2 b) Identifying categories and countries at risk and assessing
suppliers/Critical materials
Materials efficiency
TR-AP-440b.1
Percentage of products sold
that are recyclable
This information was not available at the date of publication
of the report.
Materials efficiency
TR-AP-440b.2
Percentage of input materials from
recycled or remanufactured content
4.1.4.2 a) Increment the use of sustainable materials
Competitive behavior
TR-AP-520a.1
Total amount of monetary losses as a
result of legal proceedings associated
with anticompetitive behavior regulations
During the period, the Group did not incur monetary losses
as a result of legal proceedings pursuant to regulations
on anti‑competitive behavior(1).
Activity metric
Code
Section
Number of parts produced
TR-AP-000.A
4.1.1.3 Guaranteeing the quality of our products and services/Michelin Quality
Weight of parts produced
TR-AP-000.B
3,289,207 tons (scope: i-MEP)
Area of manufacturing plants
TR-AP-000.C
3,649 hectares(1)
(1) This information was added after the review by the independent third-party and was therefore not subject to its review procedures.
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Design and production:
Editorial advice and copywriting: Michelin, Information et Conseil. Photo credits: Theo Gosselin; Getty; ContentCenter; iStock;
Gerald Geronimi; Allen McEachern; Bruno Mazodier; Vanina de Turckheim/studio Raymond Velin; Wlad Simitch;
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Any printed copy of this document is not managed.
COMPAGNIE GÉNÉRALE
DES ÉTABLISSEMENTS MICHELIN
+ 33 (0) 4 73 32 20 00
23, Place des Carmes-Déchaux – 63000 Clermont-Ferrand – France
www.michelin.com
INVESTOR RELATIONS
GUILLAUME JULLIENNE,
PIERRE HASSAÏRI,
FLAVIEN HUET
+ 33 (0) 4 63 21 56 90
27, cours de l’Île Seguin – 92100 Boulogne-Billancourt – France
23, Place des Carmes-Déchaux – 63000 Clermont-Ferrand – France
investor-relations@michelin.com
INDIVIDUAL SHAREHOLDER RELATIONS
GUILLAUME JULLIENNE,
CLÉMENCE RODRIGUEZ,
ISABELLE MAIZAUD-AUCOUTURIER
+ 33 (0) 4 73 32 23 05
23, Place des Carmes-Déchaux – 63000 Clermont-Ferrand – France
Toll-free calls in France: 0 800 000 222
actionnaires-individuels@michelin.com
SUSTAINABLE DEVELOPMENT AND MOBILITY
NICOLAS BEAUMONT
+ 33 (0) 4 73 32 20 00
23, place des Carmes-Déchaux – 63000 Clermont-Ferrand – France
COMMUNICATION
AND BRANDS DEPARTMENT
MEDIA RELATIONS: PAUL-ALEXIS BOUQUET
+ 33 (0) 1 45 66 22 22
27, cours de l’Île Seguin – 92100 Boulogne-Billancourt – France