Share price 07/20/2017 17:36
€77.950 -0.55 %

Governance

Organisation of VINCI’s corporate governance

On 6 May 2010, the Company’s Board of Directors opted for a system of governance in which the roles of Chairman of the Board and Chief Executive Officer are combined, appointing Xavier Huillard to both positions at this time.

Over the years, the Board has opted for different systems of governance (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 Senior 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 decision taken by the Board always bears in mind that the VINCI Group is highly decentralised. Its management model is based on the delegation of responsibility to the local level. The Group is made up of a very large number of operating entities (around 3,000) organised into business lines that operate autonomously (motorway, airport and other concessions; construction and installation in the fields of energy, roads, buildings and civil engineering; property development). Decisions relating to operations (signature and execution 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 only 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 respective roles of VINCI’s Executive Management and its Board of Directors therefore 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 due to Xavier Huillard’s experience.

As part of the formal assessment of its work mentioned in paragraph 3.5 on page 150, 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.

The division of responsibilities between the Company’s governance bodies, as set forth in the Board’s internal rules, is as follows:

BoardChairman and Chief Executive OfficerVice-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 Investments Committee
- Prior approval of all transactions that fall outside the Company’s announced strategy
Organisation and supervision of the work of the Board
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, held immediately following the Shareholders’ General Meeting that renewed his term of office as Director for a period of four years.

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

On 20 June 2016, the Chairman and Chief Executive Officer decided to modify the organisation of VINCI’s Executive Management. Following this move designed to better address current growth-related challenges, the Executive Management now includes Pierre Coppey, Executive Vice-President and Chairman of VINCI Autoroutes; Richard Francioli, Executive Vice-President in charge of Contracting; and Christian Labeyrie, Executive Vice-President and Chief Financial Officer. Mr Coppey’s term of office as Chief Operating Officer, a position to which he was appointed by the Board on 15 April 2014, ended on 20 June 2016.

The Executive Committee comprises the Group’s main operational and functional executives and had 13 members at 7 February 2017. Apart from implementing the Group’s strategy, the Executive Committee defines and monitors the implementation of its policies in the areas of risk management, finance, human resources, safety, IT and insurance. It met 20 times in 2016, 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 31 members at 7 February 2017. 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 four times in 2016.

Vice-Chairman and Senior Director

On 6 May 2010, when the Board decided to combine the roles of Chairman and Chief Executive Officer, to be filled by Mr Huillard, it concurrently created the position of Senior Director, which was an innovative idea at the time. 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, a quality on which the Board must reach an informed opinion.

From the outset, the Board selected Mr de Silguy to serve in this position. Mr de Silguy was a Director of the Company. He had been appointed as the non-executive Chairman of the Company’s Board of Directors on 1 June 2006 and served in that position until 6 May 2010. During his term of office, Mr de Silguy had made the changes necessary to bring the Company’s governance structure in line with the highest standards. In recognition of these achievements, the Board decided to appoint him as Vice-Chairman and Senior Director. It renewed this appointment on 15 April 2014. During the formal assessment process mentioned in paragraph 3.5, page 150, all the Directors expressed their satisfaction with the way Mr de Silguy fulfils his role as well as the relevance of the organisation put in place and the excellent manner in which it serves the Company’s performance objectives.

The Board has taken note of the Afep-Medef recommendation that a Senior Director should be independent. However, it is convinced of the importance of conducting a thorough analysis of practical circumstances in order to make a choice appropriate to all the organisations concerned.

In this case, the Board notes that the decision not to consider Mr de Silguy as an independent Director relates to the fact that he served as its non-executive Chairman between 2006 and 2010 and that the Company has entered into a services agreement with Mr de Silguy, subsequently renewed on several occasions, each time with the approval of the Shareholders’ General Meeting, so as to benefit from his experience and skills in the area of international relations. In order to ensure that this agreement does not give rise to any conflict of interest or weaken the role of Senior Director separately assigned to him, the remuneration paid to Mr de Silguy has been stipulated as a fixed, non-adjustable sum and is therefore independent of the scope of assignments that may be entrusted to him. The Audit Committee reviews the performance of the services agreement every year, on the basis of a detailed written activity report. The agreement may be terminated by either party at each anniversary date. Acting on the advice of the Audit Committee, which conducts an annual review of Mr de Silguy’s activity report, the Board determined at its meeting of 7 February 2017 that the continuing performance of this agreement is useful for the Group and that the remuneration paid is consistent with the services provided. The Board considers that the assistance provided by Mr de Silguy continues to serve the Group’s interests and that the terms and conditions of this agreement are such that they guarantee his independence from Executive Management, which lacks the authority either to terminate or extend the agreement, or even to modify the remuneration stipulated under the agreement, as any of these decisions may only be made by the Board.

Lastly, Mr de Silguy has served as a Director for more than 12 years (16 at the date of this Annual Report). The Board believes, however, that this seniority is not an obstacle but rather an asset in the context of his position as Senior Director.

In practice, 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;
- regularly meets with Directors individually and brings them together in a meeting once a year, without the executive company officers being present, so as to evaluate the performance of the latter;
- chairs the Strategy and Investments Committee;
- chairs the Appointments and Corporate Governance Committee. He prepares in advance the process by which this committee seeks out and selects candidates to be appointed as Directors as well as the process for the assessment of the work of the Board

In addition, under the aforementioned services agreement, Mr de Silguy assists VINCI’s Executive Management or the senior management of its business lines, at their request, in top-level representation vis-.-vis governmental authorities and the Group’s major customers or business partners both within and outside France. This agreement was entered into with Mr de Silguy on 5 February 2014 for a term of four years. A resolution relating to this services agreement was approved by the Shareholders’ General Meeting of 15 April 2014 (Twelfth resolution).

Mr de Silguy reports on all his activities to the Remuneration Committee, the Audit Committee and the Board of Directors. Each year, he presents his activity report to the Shareholders’ General Meeting.