3 _119 2023 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN 3 CORPORATE GOVERNANCE REPORT Management and Supervisory Board compensation policies for 2024 Long-term variable compensation: performance share rights In order to align the Managers' medium/long-term objectives with the objectives assigned to performance share plans for eligible Group employees, this compensation has taken the form of Michelin performance share rights since 2020. The conditions, criteria and objectives applicable to the 2024 performance share grants have been established within the framework of the authorization to issue shares to the Managers and employees of Michelin group companies approved by Annual Shareholders Meeting of May 12, 2023(1). Within the framework of this authorization, the Supervisory Board, on the recommendation of the Compensation and Appointments Committee, has decided to apply the 2023 indicators in 2024, with adjusted targets and rebalanced weightings(2). The main specific characteristics of the performance share rights that may be awarded to the Managers in 2024 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 shares awarded to the Managers during the period of validity of the proposed extraordinary resolution of the Annual Shareholders Meeting of May 12, 2023 will be capped at 0.1% 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 2024 would be limited to an amount equivalent to 140% of his 2024 fixed compensation and for the General Manager, the rights granted in 2024 would be limited to an amount equivalent to 120% of his 2024 fixed compensation; these levels correspond to the median rates for their counterparts in CAC 40 companies(3); ● 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 the 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; ● 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 before the end of the vesting period, he would retain a number of performance share rights initially awarded to him prorated to the time served in office during the vesting period, and the reference three-year period would continue to run, during and beyond the end of his term(4). The performance criteria are as follows: Criterion Objective Indicator Weighting Share price performance Stock performance Michelin share price must outperform the Stoxx Europe 600 index by between 0 points (threshold) and 5 points (ceiling) between 2023 and 2026 (based on average daily closing prices for the two baseline years) 20% Corporate social responsibility performance Planet Industrial-Michelin Environmental Performance (i‑MEP(1)) indicator to range between 83 points (threshold) and 77 points (ceiling) in 2026 20% People Change in average employee engagement rate to range between 83.0 points (threshold) and 85.0 points (ceiling) on a like-for-like consolidated basis over a three‑year period 20% Operating performance Profit Average annual growth in revenue from non-tire and distribution activities(2) to range between 3% (threshold) and 8% (ceiling) between 2024/2023, 2025/2024 and 2026/ 2025 20% Profit Total consolidated return on capital employed (ROCE)(3) to range between 10% (threshold) and 12% (ceiling) in 2026 20% (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. (3) Including acquisitions and related goodwill, and associates & joint ventures. (1) 14th resolution adopted by a majority of 87.04% of the votes cast. Details of this authorization are provided on pages 455 to 457 of the 2022 Universal Registration Document. (2) The weighting of the share price performance indicator has been set at 20% (vs. 30% in 2023), and the weighting of the two operating performance criteria has been set at 20% (vs. 15% each in 2023). (3) Based on the Compensation and Appointments Committee’s 2022 analysis of the convergent results of several studies carried out by leading compensation consultants. (4) In the event of disability or death, the total number of rights would be awarded and the reference period would not apply.
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