The present general meeting proposes a non-binding advisory vote on compensation of the managing general partner, Jean-Dominique Senard. Shareholders should note that given its status as a partnership limited by shares (Société en commandite par actions, SCA), Michelin is not required to submit to shareholders a binding resolutions on ex-post pay 2017 and ex-ante pay 2018 (remuneration policy).
Group performance over the year was satisfactory; the overall level of remuneration is acceptable for a CEO of Company belonging to the CAC40 index. Last year the Company integrated environmental and social factors into is long term incentive program in addition to a new relative TSR criterion.
However, our 2017 policy has generally been to recommend that shareholders oppose any non-binging retrospective votes in cases where the company has failed to disclose individual achievement rates for the criteria of the annual bonus, given that almost all large cap companies in France already disclose this information. We note that Michelin does not, citing reasons of confidentiality. After having been in contact with the Company regarding this practice, the Company has promised that it will going forward disclose this information, as such in light of its otherwise good excellent remuneration practices, we support the remuneration of Jean-Dominique Senard (Resolution 6).
We note that Jean-Dominique Senard benefits from a non-compete and supplementary retirement benefits that do not figure in the Statutory Auditors’ Report on Regulated Agreements and Commitments with Related Parties (resolution 4) because the Company believes given its status as an SCA it is exempted from certain articles of the French Code of Commerce, a claim which we contest. As such, we recommend that shareholders oppose this resolution.
Compagnie Generale des Etablissements Michelin is active in the tire and mobility-related service markets. Co. manufactures, distributes and sells tires for all kinds of vehicles, publishes maps and guides and operates a number of services. Co.'s operates in three segments: Passenger car/Light truck tires and related distribution; Truck tires and related distribution and Specialty businesses segment including tires for specialty vehicles and maps and guides. Co. distributes its products through two tire distribution networks: Euromaster (Europe) and TCI (U.S.A.) and its brands include Michelin, BFGoodrich, Kleber, Uniroyal, Warrior, Kormoran, Riken, Taurus and Tigar.
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In the run-up to publications, we have revised down our 2019 production scenario (-3.5% est. vs -1.6%), our estimates (~4% on average) and our target prices (~5% on average). In the face of persistently unfavourable momentum, we are sticking with our cautious stance on suppliers (Valeo downgraded to Reduce vs Neutral) and our preference for the tyre segment and Michelin, in particular. - >The assumption of a rebound in production in H2 2019 has been cast into doubt - ...
Item 3: Approve the Remuneration ReportThe remuneration structure is satisfactory, though accelerated vesting is possible. Potential and actual total variable remuneration exceed guidelines, but not very much. They are moderate in comparison with UK market practice. Overall, the quantum during the year was not excessive. We recommend shareholders vote in favor.
Item 3: Approve the Remuneration Report The structure is weighted more heavily towards short-term performance. One of the performance metrics for the LTI is the payment of sustainable dividends, which is not considered appropriate as executives can potentially influence the payout level. The LTI also includes relative TSR as a performance metric. Nevertheless, the quantum is not excessive and even maximum potential amounts are moderate. On balance, we recommend shareholders vote in favor. Item 4: Approve the Remuneration PolicyThe main concern with the Company's remuneration policy is that pa...
Item 2: Approve the Remuneration ReportThe remuneration structure is unsatisfactory. The main concern at the Company is that the potential maximum incentive pay including the bonus, matching shares on the deferred portion of the bonus and the LTI amounts to 1000% of base salary, which is considered grossly excessive. Actual incentive pay during the year was1.6 times the ECGS limit. Furthermore, variable remuneration is overly reliant on a single performance metric, benchmark profit before tax. A second performance criteria will be used in the coming year. We note that the Company has adjusted ...
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