2017 MANAGEMENT REPORT a Global Player in the Cable Industry Linking People, Ideas and the Future
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Nexans - 2017 MANAGEMENT REPORT - Page 1/140 2017 MANAGEMENT REPORT A global player in the cable industry linking people, ideas and the future 26,000 EMPLOYEES Cables make up a hidden network powering everything around us. Millions of homes, cities, businesses are powered every day by Nexans’ high-quality sustainable cabling solutions. Both economic development and quality of life are dependent on access to energy and information, building and infrastructure 6.4 safety, and the movement of goods and people. BILLION EUROS IN SALES(1) As a global player in the cable industry, Nexans is behind the scenes delivering the innovative services and resilient products that carry thousands of watts of MANUFACTURING energy and terabytes of data per second around the world. We help our SITES IN customers meet the challenges they face in the fields of energy infrastructure, 34 COUNTRIES energy resources, transport, buildings, telecom and data, providing them with solutions and services for the most complex cable applications in the most demanding environments. WORLDWIDE SALES PRESENCE With over 120 years of experience we drive a safer, smarter and more efficient future. On the leading edge of the cable industry, Nexans brings energy to life. Nexans is listed on the regulated market of Euronext Paris. (1) At current copper prices. As a member of the United Nations Global Compact, Nexans is committed to supporting and implementing ten universally-accepted principles in the areas of human rights, labor, the environment and anti-corruption. 5 Nexans - 2017 MANAGEMENT REPORT - Page 2/140 Table of contents 1. Presentation of the Group and its activities ..................................................................................................4 1.1. Mission, Businesses and Markets ................................................................................................................5 1.2. Strategy .........................................................................................................................................................8 1.3. Key figures ................................................................................................................................................. 10 1.4. Operations during 2017 ............................................................................................................................. 13 1.4.1. Consolidated results of the Nexans Group ................................................................................. 13 1.4.2. Other items in the 2017 consolidated financial statements ........................................................ 15 1.4.3. The Company ............................................................................................................................. 18 1.5. Progress made and difficulties encountered in 2017................................................................................. 20 1.6. Innovation and technology (R&D) .............................................................................................................. 21 1.7. Significant events after the reporting period .............................................................................................. 22 1.8. Trends and outlook .................................................................................................................................... 22 2. Corporate governance ............................................................................................................................... 23 2.1. Governance structure ................................................................................................................................ 24 2.2. Management bodies .................................................................................................................................. 25 Chief Executive Officer .............................................................................................................................. 25 Management Board ................................................................................................................................... 26 Management Council ................................................................................................................................. 27 2.3. Administrative body.................................................................................................................................... 28 2.3.1. Composition of the Board of Directors ........................................................................................ 28 2.3.2. Operation and work of the Board of Directors ............................................................................ 41 2.3.3. Additional information ...................................................................................................................... 48 2.3.4 Corporate governance code ............................................................................................................. 49 2.4. Transactions in the Company’s securities by corporate officers and senior managers ............................ 50 2.5. Compensation and benefits ....................................................................................................................... 51 2.5.1. Directors’ compensation ............................................................................................................. 51 2.5.2. Compensation policy for executive directors for 2018 ................................................................ 53 2.5.3. Compensation payable for 2017 to Georges Chodron de Courcel, Chairman of the Board of Directors 58 2.5.4 Compensation payable for 2017 to Arnaud Poupart-Lafarge, Chief Executive Officer .............. 59 2.5.5 Stock options and performance shares ...................................................................................... 64 3. Main risk factors and risk management within the Group.......................................................................... 67 3.1 Risk factors ................................................................................................................................................ 68 3.1.1. Legal risks ................................................................................................................................... 68 3.1.2. Business-related risks ................................................................................................................. 70 3.1.3. Financial risks ............................................................................................................................. 78 3.1.4. Insurance .................................................................................................................................... 80 3.2. Internal control and risk management procedures implemented at Nexans ............................................. 82 3.2.1. Definitions, scope, objectives and limitations ............................................................................. 82 3.2.2. Risk management policies and procedures ................................................................................ 84 3.2.3. Main risk management initiatives in 2017 ................................................................................... 85 3.2.4. Preparation and processing of financial and accounting information ......................................... 86 3.2.5. Oversight of internal control ........................................................................................................ 87 Nexans - 2017 MANAGEMENT REPORT - Page 3/140 4. Corporate social responsibility ................................................................................................................... 88 4.1. Environmental approach ............................................................................................................................ 91 4.1.1. Limiting the environmental impact of business activity ............................................................... 91 4.1.2. Limiting the environmental impact of our products ..................................................................... 97 4.1.3. Data compilation methodology for environmental indicators .................................................... 100 4.2. Social approach ....................................................................................................................................... 101 4.2.5. Taking action with and for our employees ................................................................................ 102 4.2.6. Management, development and accountability at every level .................................................. 103 4.2.7. An active workplace health and safety policy ........................................................................... 108 4.2.4. Labor relations and social dialogue: a key component in change ............................................ 111 4.2.5. Diversity and equal treatment ........................................................................................................ 112 4.2.6. Employee commitment and engagement ................................................................................. 112 4.2.7. Data compilation methodology for social indicators ................................................................. 115 4.3. Societal approach ...................................................................................................................................