Organisation of VINCI’s corporate governance
Since 6 May 2010 and most recently on 7 February 2018, the Company’s Board of Directors has opted for a system of governance in which the roles of Chairman of the Board and Chief Executive Officer are combined, with Xavier Huillard serving in both these positions.
The Board considers that this system is still the one best suited to ensure the proper governance of the VINCI Group. This decision is based on two key observations: (i) Mr Huillard brings together all the skills, expertise and other qualities needed to capably and efficiently lead the Group’s management team, as has been demonstrated for a number of years by the Group’s performance, and (ii) the Group’s organisation lends itself particularly well to this system of governance.
The VINCI Group’s organisational structure has the distinction of being highly decentralised. This decentralised approach is a style of management that has proven its merits for business lines where decisions must be taken at local level. It is given shape through the existence of many subsidiaries (more than 2,000), all of which operate autonomously.
Decisions relating to operations (such as the signing and performance of agreements and contracts) or investments are taken by the competent bodies in each entity, in full compliance with the internal control system implemented across the Group. This system provides for the supervision and control of commitments made by these entities at different levels. The most significant commitments are subject to supervision and control by VINCI’s Executive Management or by the Board itself, where required by the latter’s internal rules. Apart from its role with respect to accounting and financial matters, the Board is called upon to examine and approve transactions involving strategic issues or exceeding a certain threshold, which are submitted to the Board by Executive Management following its own review.
The result is that the respective roles of VINCI’s Executive Management and its Board of Directors have the same focus – operational and strategic management – as both are called upon to decide on the transactions submitted to them by the operational entities. Given this reality, the combination of the roles of Chairman of the Board and Chief Executive Officer makes sense. Furthermore, the Board believes that this system of governance, which also has the advantage of unifying the Group’s top-level representation toward third parties, can still be considered as particularly efficient.
As part of the formal assessment of its work carried out at the end of 2016, the Board reviewed its choice for the system of governance and concluded that the current system is still the one best suited to the Group’s circumstances, always with the aim of achieving optimal performance. At its meeting of 7 February 2018, the Board once again discussed its governance structure and confirmed that the system in which the roles of Chairman of the Board and Chief Executive Officer are combined remains the one best suited to the Company’s circumstances.
It should be noted that the Board has opted for different systems of governance over the years (combination of the roles of Chairman of the Board and Chief Executive Officer from 2000 to 2006, separation of these roles between 2006 and 2010, and combination of these roles accompanied by the creation of the new position of Vice-Chairman and Lead Director beginning in 2010). Each time, the Board selected the system best suited to the circumstances and profiles of the Company’s executives, in order to optimise the Group’s governance structure and thereby its performance. The Group therefore remains attentive with respect to the consequences of its choices regarding the system of governance so as to ensure that it continues to work in the best interests of its shareholders.
The division of responsibilities between the Company’s governance bodies, as set forth in the Board’s internal rules, is as follows:
|Board||Chairman and Chief Executive Officer||Vice-Chairman and Senior Director|
|Responsibilities defined by law
Additional responsibilities resulting from the internal rules:
- Appointment and terms of reference of the Vice-Chairman and Senior Director
- Prior approval of strategic choices
- Prior approval of strategic investments and transactions (acquisitions or disposals) that are material for the Group’s scope of consolidation, business activities, risk profile, earnings, the balance sheet and/or the VINCI share price and specifically those relating to an exposure in an amount greater than €200 million for the Group
- Prior approval of all transactions referred to the Strategy and CSR Committee
- Prior approval of all transactions that fall outside the Company’s announced strategy
|- Organisation and supervision of the work of the
Implementation of decisions taken
- Operational management of the Group, in possession of the broadest powers to act in all circumstances in the Company’s name
|- Assistance provided to the Chairman with regard to the organisation and proper functioning of the Board and its committees
- Assistance provided to the Board with a view to the proper functioning of governance bodies and the furnishing of information to its members
- Power to call a Board meeting at any time without a specific agenda and to add any item to the agenda
- Board meeting held in the absence of the executive company officers once a year in order to evaluate their performance and assess the effectiveness of governance
- Management of conflicts of interest
Chairman and Chief Executive Officer
Xavier Huillard has served as both Chairman of the Board and Chief Executive Officer since 6 May 2010. The Board renewed his appointment to these positions at its meeting of 15 April 2014, following the Shareholders’ General Meeting. At its meeting of 7 February 2018, the Board decided to propose the renewal of Mr Huillard’s term of office as Director at the Shareholders’ General Meeting called to approve the 2017 financial statements. Should the shareholders vote in favour of the corresponding resolution, the Board plans to renew his term of office as Chairman and Chief Executive Officer.
He has the responsibilities mentioned in the table above. He regularly presents the Group’s performance,prospects and strategy to the financial community, in particular through road shows.
Mr Huillard chairs both the Executive Committee and the Management and Coordination Committee.
Mr Huillard also chairs the Risk Committee with powers to delegate this function.
Organisation of VINCI’s Executive Management and corporate management structures
Mr Huillard has appointed Pierre Coppey, Richard Francioli and Christian Labeyrie as Executive Vice-Presidents.
He has formed an Executive Committee comprising the Group’s main operational and functional executives, which had 13 members at 7 February 2018.
Apart from implementing the Group’s strategy, the Executive Committee defines and monitors the implementation of its cross-cutting policies, particularly in the areas of risk management, finance, human resources, safety, IT and insurance. It met 21 times in 2017, thus an average of about two meetings per month.
The Management and Coordination Committee is composed of the members of the Executive Committee, together with the key operational and functional executives of the Group’s main companies, and had 29 members at 7 February 2018. Its purpose is to ensure broad consultation on VINCI’s strategy and position as well as on cross-cutting policies within the VINCI Group. The Management and Coordination Committee met three times in 2017.
Vice-Chairman and Lead Director
The position of Vice-Chairman and Lead Director was created by the Board on 6 May 2010, when it decided to combine the roles of Chairman and Chief Executive Officer.
The purpose of this position, which has since been enshrined in Article 6.3 of the Afep-Medef code, is to ensure that the Board includes a member able to serve as a point of contact for all Directors distinct from the Chairman and Chief Executive Officer and who also has the personal powers necessary to guarantee the Board’s responsiveness in all circumstances.
In order to ensure optimal effectiveness, the individual holding this position must have excellent knowledge of the Group’s organisation and executives, which only strong and consistent involvement can provide. The individual appointed to this position must also demonstrate independence of judgment, which is subject to assessment by the Board.
From the outset, the Board selected Mr de Silguy to serve in this position. Since 2010, Mr de Silguy has discharged his duties and responsibilities to the complete satisfaction of all Board members, as has been made clear by the various assessments the Board has carried out since his appointment.
At their meeting of 7 February 2018, all the Directors again expressed their satisfaction with the way Mr de Silguy fulfils his role as wellas the relevance of the organisation put in place and the excellent manner in which it serves the Company’s performance objectives.
The Board has of course taken note of the Afep-Medef recommendation that a Lead Director be independent. It considers that sound governance also entails a thorough analysis of practical circumstances in order to make a choice that is pertinent and appropriate to the company in question, with a focus on performance.
The Board has noted that, in practical terms, Mr de Silguy:
- devotes a large portion of his time to keeping himself informed about the business and operations of the Group through regular meetings with the Group’s principal operational and functional executives, to ensure that the insights he shares with the members of the Board are always relevant to the Group’s business activities, which is effectively the case;
- regularly meets with Directors individually and brings them together in a meeting once a year, without the executive company officer being present, in particular to evaluate the latter’s performance, thus allowing the Directors to express themselves freely;
- chairs the Strategy and Investments Committee, which became the Strategy and CSR Committee at the end of 2017, ensuring that all Directors have access to quality information relating to the Group’s operations;
- chairs the Appointments and Corporate Governance Committee and, to this end, prepares in advance the process by which this committee seeks out and selects candidates to be appointed as Directors, while also preparing the process for the assessment of the work of the Board and the succession plan for the executive company officer.
Based on this experience, the Board expresses its complete satisfaction with the manner in which the Lead Director’s role is carried out at VINCI. It finds no obstacles that would prevent Mr de Silguy from continuing to serve effectively in the role of Lead Director, even though the Board acknowledges that he cannot be considered as an independent Director.
Services agreement between the Company and YTSeuropaconsultants
The Company has a services agreement with YTSeuropaconsultants, of which Mr de Silguy is sole shareholder, aimed at providing the Company and its subsidiaries with the benefit of his experience and skills in high-level relations, particularly on the international front. Under this agreement, Mr de Silguy takes on assignments at the request of the Group’s Executive Management involving the representation of its interests in France and abroad, while also offering advice to the Group’s operational staff in order to assist them with their sales activities as often as necessary.
The agreement with YTSeuropaconsultants has been in place since 2010 and was renewed for an additional term of four years on 7 February 2014. The Group’s governance bodies have always expressed their complete satisfaction with its performance.
In order to avoid any conflicts of interest that might weaken the role of Lead Director separately assigned to Mr de Silguy, it was established that the negotiation, termination, renewal and performance of this agreement would be placed under the supervision of the Board,
which set out its terms and provided for the following measures:
- The remuneration paid to YTSeuropaconsultants (€27,500 excluding VAT per month) is stipulated as a fixed, non-adjustable sum and is therefore independent of the scope of assignments that may be entrusted to Mr de Silguy, to ensure that the latter does not find himself in a dependent position vis-à-vis VINCI’s Executive Management.
- The services provided by Mr de Silguy under the agreement are reviewed each year by the Audit Committee on the basis of a detailed written activity report, in order to allow the Board to verify the substance of these services and the consistency of remuneration with the activity pursued by Mr de Silguy.
- It is stipulated that the agreement may be terminated by either party at each anniversary date, so as to permit the Board or Mr de Silguy to act, if applicable, in response to a situation whereby the services provided are no longer consistent with the remuneration paid.
- Once each year, the Board verifies that the continuing performance of this agreement is useful for the Group and that the remuneration paid is consistent with the services provided. Most recently at its meeting of 7 February 2018, the Board expressed the opinion that the assistance provided by Mr de Silguy continues to serve the Group’s interests and that the terms and conditions of the agreement, as reiterated above, are such that they guarantee his independence from Executive Management.
It should also be noted that Mr de Silguy reports on all his activities each year to the Remuneration Committee, the Audit Committee and the Board of Directors and that he presents his activity report to the Shareholders’ General Meeting.
At its meeting of 7 February 2018, the Board decided to renew the agreement entered into with YTSeuropaconsultants for an additional term of four years. A resolution relating to this agreement will be submitted for the approval of the next Shareholders’ General Meeting, to be held on 17 April 2018.