04 Sustainability Statement General information n own and lead deployment of post-audit roadmaps and action plans, particularly concerning the impacts, risks and opportunities (IROs), and present them to the Governance bodies or the Group Ethics Committee; n ensure that major projects and initiatives are aligned with the Group’s objectives, policies and commitments; n identify the new capabilities needed to deploy the roadmaps; n track emerging sustainability standards and best practices. Lastly, to enhance and adjust objectives as needed, the Group regularly engages with stakeholders. The issues arising from the impacts, risks and opportunities identified in the double materiality assessment are all addressed by appropriate governance bodies. Ultimately, the Group intends to gradually transfer the leadership of its sustainability metrics to line managers, who already manage its operational and financial metrics. 4.1.2.3 Integration of sustainability-related performance in incentive mechanisms To align the interests of the Managers more closely with the Group’s sustainability performance, their short-term (annual) and long-term (multi-year) variable compensation is subject to ESG criteria. Annual variable compensation(1) 20% of this compensation depends on meeting ESG performance targets, two of which concern People (TCIR and gender balance) and one that relates to the Planet (Scope 1 and 2 CO2 emissions). The TCIR and CO2 emissions targets also apply to all Group employees eligible for variable annual compensation via the Group Bonus. Deferred variable compensation(2) 40% of this compensation, which is awarded in the form of performance shares, depends on meeting ESG performance targets. One target, accounting for 20%, concerns the Planet (the Industrial Michelin Environmental Performance or i-MEP indicator) and the other, also accounting for 20%, concerns People (the employee engagement rate). Both criteria apply to every Group employee eligible for the performance share plan. Sustainability-related incentive schemes are an integral part of the compensation policies for members of the administrative, management and supervisory bodies, as described in Chapter 3, section 3.3 of the 2023 Universal Registration Document. The terms and conditions of the Managers’ compensation are described in detail in sections 3.3.1 and 3.3.2. The criteria determining the Manager’s variable compensation are defined by the Supervisory Board. This information is based on the Managers’ compensation for the reporting year, which is set by the CGEM’s governing bodies (General Partners, Supervisory Board, Annual Shareholders Meeting) and presented in the Supervisory Board’s Corporate Governance Report in Chapter 3 of the 2023 Universal Registration Document. 4.1.2.4 Statement on due diligence For the eighth year in a row, in compliance with the requirements of French Act No. 2017-399 of March 27, 2017, Michelin has prepared a Duty of Care Plan(3) describing the impacts, risks and opportunities incurred by the Group and its value chain as regards the environment, health & safety and human rights, along with the measures taken to prevent or mitigate them, as applicable. The Plan is an effective means of consolidating and strengthening the Group’s proactive approach to deploying processes to prevent and manage risks and negative impacts in the above three areas, as well as an opportunity to deepen, year after year, its due diligence with subcontractors as part of a continuous improvement process. The Duty of Care Plan is fully aligned with the Group's purpose and values, and reflects its commitment to conducting its business responsibly with regard to all its stakeholders. The Duty of Care Plan is based on the information and initiatives already embedded in the Group’s policies, which underpin its sustainability commitment. These include the Code of Ethics, the Purchasing Principles, the Supplier Relations Code of Conduct, and the following policies: Health, the Environment, Employee Relations, Diversity & Inclusion and Human Rights. (1) The proportion of the Managers’ annual variable compensation subject to sustainability criteria is calculated by dividing the percentage of sustainability criteria by the percentage of total annual variable compensation. (2) The proportion of the Managers’ long-term variable compensation subject to sustainability criteria is calculated by dividing the percentage of sustainability criteria by the percentage of total long-term variable compensation. (3) https://www.michelin.com/en/investors/regulatory-information 177 2024 UNIVERSAL REGISTRATION DOCUMENT_MICHELIN
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