ECONOMICAL CONTEXT LINKED TO COVID-19, SHORTAGE OF ELECTRONICS COMPONENTS AND MILITARY CONFLICT IN UKRAINE

In 2022, worldwide automotive production grew by 6.7% vs. 2021, from 77.2 million LVs in 2021 to 82.4 million LVs in 2022. It remains significantly  below the 89 millions LVs recorded in 2019, before the Covid crisis. The first-half of the year was down 1.1% year-on-year, mostly impacted by Q1 (down 3.5% vs. Q1 2021) that recorded the outbreak of the war in Ukraine in February, while the second half was up 14.8%, mostly reflecting the very low base of comparison of Q3 2021.

It was penalized by Stop and Gos from OEMs consequent to supply chain disruptions due to the war in Ukraine, by the continued shortage of semiconductors and the Covid developments  in China :

• ■China was strongly penalized by the Covid-related restrictions implemented in April and May (Q2 2022 automotive production in China was down 4.7% year-on-year) and then by the increase in Covid cases late 2022, after the decision to end the zero Covid policy (Q4 2022 automotive production in China was down 5.5% year-on-year);
• ■Europe was strongly impacted by Stop & Gos related to supply chain disruptions due to the war in Ukraine and the continuous shortage of semiconductors with H1 2022 automotive  production in Europe down 11.3% year-on-year vs. H1 2021, of which -17.5% in Q1 2022;
• ■shortage of semiconductors for the automotive industry continued throughout the year and could gradually ease in 2023, while it is unlikely to resolve entirely before 2024;
• ■lastly, from a macroeconomic standpoint, 2022 has been characterized by additional challenges: high inflation has broadened out across countries, energy supply risks have pushed prices up and interest rates have risen to curb inflation.

As regards to the Group’s very limited activity in Russia (sales represented 0.4% of total consolidated sales in 2022 vs. 1.4% in 2021), due to the war in Ukraine, OEMs’ decisions regarding their operations in Russia and the uncertain and complex environment, Faurecia has decided to disengage from Russia and has depreciated related assets in 2022. The detailed accounting impacts are described in note 6. The group is not present in Ukraine.

• ■ Faurecia has announced a partnership with BMW group to integrate the Faurecia Aptoide Automotive App Store in future vehicles. The App Store enable an innovative and seamlessly connected app offering in the new models of the world’s leading premium car and motorcycle manufacturer. 
• ■On January 31, 2022, Faurecia announced the closing of the HELLA transaction, in line with the indicative timetable. Faurecia now owns a controlling stake exceeding 80% of the shares of HELLA and will consolidate HELLA in its financial accounts as from February 1, 2022. As a result of the transaction, the Hueck and Roepke Family pool received 13,571,385 newly issued shares of Faurecia, thus becoming Faurecia’s main shareholder with c. 9% of its share capital. The Family pool agreed to be subject to a first lock-up of its Faurecia shares during 18 months as from the closing date and a subsequent lock-up of 12 additional months for the portion of its Faurecia shares exceeding 5% of the Faurecia share capital. 

• ■Faurecia, selected to partner on the hydrogen fuel cell research project, “Bavarian fleet”, with MAN. 
• Faurecia announced that the Company will equip a Bavarian fleet (Bayern flotte) of heavy-duty trucks provided by MAN with complete hydrogen storage systems, as part of a state-supported fuel cell research project. 
• For this project, backed with about €7 million funding from Bavarian Ministry of Economic Affairs, Regional Development and Energy, Faurecia, part of group FORVIA, will develop and seek certification for a new size of tank perfectly adapted to meet the requirements of heavy-duty vehicles and other applications with intensive use cases. 

• ■The California Energy Commission (CEC) has selected Symbio, Michelin, Faurecia along with GTI and other industry partners, to develop and demonstrate a hydrogen-fueled, regional-haul Class 8 truck, as major contributors to a state-supported hydrogen mobility project. 
• The “Symbio H2 Central Valley Express” project, will develop and demonstrate a hydrogen fuel cell truck that matches the performance of a 15-liter diesel truck providing a zero-emission solution for demanding regional-haul trucking operations. This hydrogen truck project strives to support California’s goal to achieve economy wide carbon neutrality by 2045.
• ■Faurecia has announced a worldwide long-term partnership with Mercedes-Benz group AG to integrate its apps platform, developed in partnership with Aptoide, into the MBUX multimedia system of one of the global suppliers of premium and luxury cars and vans. 
• From 2023, the Company will provide a customized app portfolio refreshed multiple times per year to enhance user experience. The Faurecia Aptoide apps platform provides maximum security, privacy and control of content. 

• ■Faurecia, and Veolia have signed a Cooperation and Research Agreement to jointly develop innovative compounds for automotive interior modules, aiming to achieve an average of 30% of recycled content by 2025. Through this partnership, the two companies will accelerate the deployment of breakthrough sustainable interiors solutions implemented in instrument panels, door panels and center consoles in Europe. Veolia will start the production of these secondary raw materials at its existing recycling sites in France starting from 2023. 
• In 2011, Faurecia was the first automotive supplier to introduce a complete range of bio-composite cockpit solutions with NAFILean®. More than a decade later and in around 13 million vehicles, these products' CO2 footprint is 28% lower than that of conventional all-plastic counterparts.
• ■ Faurecia has signed power purchase agreements (PPA) with ENGIE and EDP to equip over 150 sites in 22 countries with solar panels. 
• This partnership is a major milestone in Faurecia’s roadmap to become CO2 neutral for its industrial operations (scopes 1 and 2) by 2025. 

• ■Faurecia in collaboration with the company Air Flow has been awarded a contract to supply high-capacity hydrogen storage containers for refilling stations in the Zero Emission Valley (ZEV), a project involving HYmpulsion. 
• The ZEV project aims to deploy, before the end of 2024, 1,200 fuel cell vehicles and 20 hydrogen stations, including several equipped with electrolyzers to produce hydrogen from renewable electricity without emitting CO2. 
• ■FORVIA, has announced that its joint CO2 neutrality roadmap was validated by the Science Based Target initiative (SBTi) on June 6, 2022. Together, Faurecia and HELLA will reach net zero emissions by 2045 – an objective corresponding to the most ambitious standard of SBTi. Only twenty companies worldwide have had their net zero commitments approved so far.

• ■HELLA has agreed the sale of its 33.33% stake in HBPO to its co-shareholder, Plastic Omnium for €290 million.
• ■Faurecia has signed a €315 million loan with the European Investment Bank (EIB). The €315 million transaction is a bullet loan with a maturity of seven years. 
• This loan allows Faurecia to enhance its liquidity profile by extending its debt maturity at an attractive financing cost.

• ■Faurecia has been integrated into the Euronext CAC 40 ESG® index that comprises the 40 companies within the CAC® Large 60 index that demonstrate the best Environmental, Social and Governance (ESG) practices. 
• ■FORVIA exhibited at this year’s IAA Transportation in Hanover, for the first time with its two brands Faurecia and HELLA. Located in Hall 12 Booth B27 & 31, FORVIA will showcase the combined expertise of both companies in the fields of lighting and electronics as well as clean and sustainable mobility.
• ■Faurecia, has announced a $210 million loan with Latin America banks. This transaction is part of the program to finance HELLA acquisition. The $210 million transaction is structured into two tranches in USD and MXN, with a 2028 maturity. Margin above reference rates is close to 3.35% on average which represents an attractive financing cost in the current environment.

• ■The zero emissions mobility activities of Faurecia, are selected as being of common European interest. Faurecia and Symbio are among the 10 projects supported by the French government in IPCEI (Important Project of Common European Interest). €2.1 billion are provided to support those 10 projects to accelerate the hydrogen industry in France.
• ■Faurecia, has been awarded by HYVIA, a joint venture between Renault Group and Plug. Faurecia will supply next generation hydrogen storage systems for the mass production of its Renault Master H2-TECH, made in France. The hydrogen storage systems will be produced in Faurecia’s plant located in Allenjoie, France, which has a capacity of over 100k tanks per year.
• ■Faurecia, signed a power purchase agreement (PPA) of Europe’s largest investors in renewable energy, Octopus Energy Generation and Mirova, a management company dedicated to sustainable investment and an affiliate of Natixis Investment Managers. The installed capacity of the project reaches 85.8 megawatts (MW). The wind turbines are located in Alingsas, Sweden. This agreement will support FORVIA’s plan to reach net-zero CO2 emissions by 2045.

• ■FORVIA announced the creation of MATERI’ACT, a new brand to massively develop and manufacture cutting-edge sustainable materials. FORVIA is the first in the automotive industry whose "net zero emissions" objective is validated by the Science Based Target initiatives, and thus reinforces its technological advantage in the field to offer mobility experiences that matter to people.
• ■Faurecia and HELLA, operating together as FORVIA hosted their first joint Capital Markets Day, during which the Group presented Power25, its new medium-term plan to drive profitable growth, enhance cash generation and accelerate Group deleveraging.
  The ambitions of FORVIA’s Power25 plan are focused on three key strategic priorities:
  • ■Drive sales growth through innovation and sustainability,
  • ■Enhance profitability and lower breakeven,
  • ■Generate strong cash conversion and actively manage portfolio to accelerate Group deleveraging.
• They are translated into the following 2025 financial objectives (based on an assumption of worldwide automotive production of 88 million units in 2025 and after the estimated effect of the €1bn disposal program by end-2023):
  • ■2025 sales of c. €30 billion,
  • ■2025 operating margin > 7% of sales,
  • ■2025 net cash flow at 4% of sales,
  • ■Net-debt-to-adjusted-EBITDA < 1.5x at December 31, 2025.
• ■FORVIA, has received the prestigious CES 2023 Innovation Award in the category "Vehicle Tech & Advanced Mobility" as "Honoree" for its digital, chip-based "Solid State Lighting | High Definition" (SSL | HD) headlamp system.
• ■Faurecia has successfully priced €700 million in aggregate principal amount of SL Notes at 7.25%. The SL Notes are to be issued under Faurecia's Sustainability-Linked Financing Framework established in October 2021.

• ■FORVIA showcased its newest solutions in electrification and energy management, automated and safe driving, and personalized experiences in the digital and sustainable cockpit. Through these technologies, FORVIA illustrated its commitment to becoming carbon-neutral across all operations and products by 2045.
• ■Faurecia, Michelin and Stellantis announced exclusive negotiations for Stellantis to acquire a substantial stake in Symbio, a leader in zero-emission hydrogen mobility, to become a significant player along with existing shareholders Faurecia and Michelin.

• ■Faurecia has successfully priced the New Notes, sustainability-linked 7.25% senior notes due 2026 (the “New Notes”) following a private placement arranged by BNP Paribas. Faurecia priced the New Notes at 101.75% of par, or a yield of 6.65%. 

• ■Faurecia has issued on February 1st, 2023 €250 million of New Notes, sustainability-linked 7.25% senior notes due 2026. The proceeds of the issuance of the New Notes will be used to fully reimburse the Bridge-to-Bond and the Bridge-to-Equity in connection with the HELLA acquisition and for general corporate purposes.
• ■Faurecia has entered in February 2023 into exclusive negotiations with Cummins for the potential sale of a part of  its Commercial Vehicle exhaust aftertreatment business. The potential transaction would be subject to customary conditions precedents, including regulatory approvals and completion of applicable employee representative consultations.
• ■Faurecia has announced mid February 2023 to have signed with the Motherson Group an agreement by which Motherson commits to acquire Faurecia SAS Cockpit Modules division (assembly and logistics services), reported as part of its Interiors Segment, for an enterprise value of €540 million. The transaction will be subject to customary conditions precedents, including regulatory approvals.

All press releases related to these events are available on the site www.faurecia.com

Based on the following assumptions:

• ■Worldwide automotive production of 82 million vehicles in 2023, broadly flat vs. actual production in 2022 and more
  conservative than S&P’s latest forecast of 85 million
• ■Main currency rates of USD/€ @ 1.10 and CNY/€ @ 7.50

FORVIA’s full-year 2023 guidance is as follows:

• ■Sales between €25.2bn and €26.2bn including an estimated impact on sales of €(1.3)bn from disposals announced
  to date (mainly SAS deconsolidation as from January 1, 2023, to comply with IFRS 5 and business to be sold to Cummins as
  from July 1, 2023)
• ■Operating margin between 5% and 6% of sales
• ■Net cash flow exceeding 1.5% of sales
• ■Net debt/Adj. EBITDA ratio between 2x and 2.4x at December 31, 2023, including the effect of the disposal program of €1bn by end-2023

This guidance assumes no major lockdown impacting production or retail sales in any major automotive region during the year.

The Faurecia group incurs certain development costs in connection with producing and delivering modules for specific customer orders which are considered as set up costs for the serial parts production and capitalized. In accordance with IAS 38, these development costs are recorded as an intangible asset where the Company concerned can demonstrate:

• ■its intention to complete the project as well as the availability of adequate technical and financial resources to do so;
• ■how the customer contract will generate probable future economic benefits and the Company’s ability to measure these reliably;
• ■its ability to reliably measure the expenditure attributable to the contracts concerned (costs to completion).

These capitalized costs are amortized to match the quantities of parts delivered to the customer, over a period not exceeding five years except under exceptional circumstances.

Research costs, and development costs that do not meet the above criteria, are expensed as incurred.

Other intangible assets include development and purchase costs relating to software used within the Group –which are amortized on a straight-line basis over a period of between one and three years– as well as patents and licenses, and the intangible assets acquired in business combinations (customer relationship…); these assets are amortized on the corresponding contracts duration.

Intangible assets break down as follows:

The book value of development costs allocated to a customer contract as well as the associated specific tooling is compared to the present value of the expected net future cash flows to be derived from the contract based on the best possible estimate of future sales. The volumes taken into account in Faurecia’s Business Plans are the best estimates by the Group’s Marketing department based on automakers’ forecasts when available.

This is a translation into English of the statutory auditors’ report on the consolidated financial statements of the Company issued in French and it is provided solely for the convenience of English-speaking users.

This statutory auditors’ report includes information required by European regulations and French law, such as information about the appointment of the statutory auditors or verification of the information concerning the Group presented in the management report and other documents provided to shareholders.

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.

To the shareholders,

In compliance with the engagement entrusted to us by your annual general meeting, we have audited the accompanying consolidated financial statements of Faurecia for the year ended December 31st, 2022.

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31st, 2022 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

The audit opinion expressed above is consistent with our report to the Audit Committee.

Faurecia S.E. company is a holding company which directly and indirectly provides financial, accounting, IT, executive management and administrative services to companies in the Group.

The sales 2022 are going up to €96.6 million, compared to €42.5 million in 2021.

Faurecia invoices trademark royalties, calculated as a proportion of the subsidiaries’ sales. These royalties, extended since 2015 to all companies wholly owned by the Group, totaled €64.2 million in 2022, versus €52.3 million in 2021.

The operating profit for the year 2022 is a profit of €18.5 million to be compared to a loss of €24.5 million in 2021.

The net financial income totaled €314.0 million, compared to a net financial income of €218.2 million in 2021.

The variance is mainly due to the increase in dividends received from €208.2 million in 2021 to €277.3 million in 2022. Interest income, net of interest expense, represents €44.1 million, compared to €6.8 million in 2021.

In 2022, the net non-recurring loss is at €2.4 million versus a loss of €2.5 million in 2021.

Tax income amounted to €14.3 million, compared with €21.4 million for fiscal year 2021. This corresponds to the tax income recognized from the positive earnings of French subsidiaries that are part of the consolidated tax group.

Net income for the fiscal year showed a profit of €344.3 million (5). This compares with a profit €212.6 million in 2021.

This is a translation into English of the statutory auditors’ report on the financial statements of the Company issued in French and it is provided solely for the convenience of Englishspeaking users.

This statutory auditors’ report includes information required by European regulations and French law, such as information about the appointment of the statutory auditors or verification of the management report and other documents provided to the shareholders.

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.

To the shareholders,

In compliance with the engagement entrusted to us by your annual general meeting, we have audited the accompanying financial statements of Faurecia SE for the year ended December 31st, 2022.

In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December 31st, 2022 and of the results of its operations for the year then ended in accordance with French accounting principles.

The audit opinion expressed above is consistent with our report to the Audit Committee.

This section describes the parties involved in FORVIA Group's Enterprise Risk Management program (ERM) and the main risk factors to which the Group believes it is exposed as of the date of this Universal Registration Document. However, other risks that the Group is not aware of at the date of this Universal Registration Document, or which are not considered to date as likely to have a significant unfavorable impact for the Group, its Business Groups, its financial position, its results or its outlook, may exist or occur. It is one vision of Faurecia and HELLA Global Risk Leadership team.

This section presents the risk factors of the Group within its scope as of the date of this Universal Registration Document, it being understood that certain information presented below and identified as such relates to the 2022 fiscal year.

The Group operates its activities in an environment that is constantly changing. It is therefore exposed to risk factors that could result in events whose probability of occurrence and/or severity could adversely affect the achievement of its objectives in the short, medium or long term.

The Group works every year on a risk tolerance mapping through a global approach that is broken down into several stages:

• the definition of the Group’s context and associated objectives; this forward-looking strategy phase is carried out at the beginning of the year as part of the strategic plan. Thanks to a bottom-up approach, for each product line, the deliverable is formalized with a SWOT analysis and a risk tolerance mapping. This includes three key elements:
  • ■the uncertainties related to the global environment and the automotive sector,
  • ■the threats, known or unknown, that could affect the Group’s objectives,
  • ■the opportunities associated with the threats identified in order to achieve the Group’s objectives,
• A version is then consolidated by business groups with the entries of its product lines to form a Strategic risk mapping that represents the net impact in function of the time horizon; a final version is then consolidated for the Group;
• the risk assessment of which the Group is aware, with three phases:
  • ■risk identification which is approached via various methods, including surveys and interviews with the main stakeholders at Group and business level,
  • ■risk analysis by the causes and consequences to better qualify the risk parameters using a qualitative method,
  • ■risk assessment using the prioritization method described below,
• the risk processing is done using 4 different levers so called 4T (terminate or avoid, treat or reduce, transfer or share or/and then tolerance the residual risk) and this thanks to risk control tools that apply for:
  • ■the probability of occurrence with control measures, to anticipate the occurrence of any known and possible event,
  • ■the impact (or severity) with appropriate mitigation plans, to limit the effects of any adverse event as far as possible.

The Group’s risk mapping changes each year according to the external and internal context. It is submitted to the Risk Committee for approval.

There are two other specific risk mappings in accordance with the new regulations:

• ■the corruption risk mapping in application of the provisions of the Sapin II law;
• ■the extra-financial performance risk mapping in the context of the Non-Financial Performance Declaration.

Since 2022, more granular risk analyzes have been carried out at the level of functions, Business Groups or regions, and these feed into the Group’s vision. They also give more autonomy to the operational teams thanks to the deployment of tools and help to raise their awareness of risk management and culture. The result is formalized in the form of risk tolerance maps. They are specific to the scope in question and are accompanied by risk mitigation measures and plans.

The link between risk management and internal control is described in Section 2.2.2.2. “Internal control” in this section.

The assessment of the main risks takes into account the control measures implemented to reduce the risk (the risk is net or residual) and is based on a simplified risk tolerance mapping with a three-level scale:

• ■impact or severity (low/medium/high) which is characterized by financial, operational, reputational, human and/or legal criteria;
• ■the probability of occurrence (low/medium/high) which is characterized by a frequency.

In 2022, the Group created the ABC Risk class method to better control risk (see paragraph 2.2.4 RISK department).

The simplified mapping of the main risk factors is shown below. The different risk factors included in this matrix are detailed in this section. The risk mapping is an internal tool to manage these risk factors. It is validated by the Audit Committee and by the Board of Directors.

In addition to the simplified mapping of the main risks above, the following table provides a summary of the risk factors and the associated measures of control. The categories below are not set out in order of importance. However, within each category, the risk factors are set out in decreasing order of importance as determined by the Group at the date of this Universal Registration Document on the basis of an assessment of their probability and potential impact, taking into account mitigating measures (net risk). The assessment made by the Group of this ranking in terms of importance may however be modified at any time, in particular, in response to new events outside or within the Group. Moreover, even a risk that is currently considered to be of lesser importance could have a significant impact on the Group should it occur at a future date.

Other risks of which the Group is currently unaware, or which it does not consider significant at the date of this Universal Registration Document, could also affect its business.

The Audit Committee, which is tasked with overseeing the effectiveness of the risk management program and the internal control system (which are not limited to accounting and financial risks), informs the Board of Directors of the main actions taken by the Group in this domain. Risk contributors provide information to the Audit Committee which conducts a formal annual review of the global risk management program and the internal control system.

The following diagrams provide a summary of the organization and processes of risk  management & control within the Group.

The Group’s Executive Committee examines the major operational risks inherent to the Group’s business during the monthly meetings of the Operations Committee, and at least once per year it reviews the risk mapping prepared by the Group’s Risk Committee.

The Executive Management of each business (Business Group) is responsible for identifying and managing the operational risks inherent to its business, which are examined by the respective Operations Committee and Risk Committee. The operational and support functions direct and lead the actions, including risk management, necessary to achieve the Group’s objectives.

The Group's asset protection policy is based on the implementation and ongoing adaptation of a policy of (i) preventing industrial risks and (ii) transferring the main insurable risks to the insurance market.

In addition, given the trend in claims and the unfavorable trend in the insurance market - in particular the increase in deductibles - Faurecia is de facto its own insurer to a certain extent. The Group has set up a captive reinsurance company based in Luxembourg in order to further structure this self-insurance. The Group obtained approval from the Luxembourg Insurance Commission in May 2021 and Forvia-Ré is now active in the Group's liability, property and casualty and business interruption insurance programs.

The Group has taken out a fire, property damage and business interruption insurance policy with a co-insurance group of major insurers led by FM Global.

Buildings and equipment are insured as replacement values. The guarantees are organized around a Master policy which directly covers the risks located in the area of freedom to provide services and local policies for subsidiaries located outside this area.

The premium rates applicable to exposed capital (direct damage and annual gross margin) depend directly on the Highly Protected Risk (HPR) classification assigned to the site, after audit by the insurer.

The Group was recently affected by several major incidents:

• ■June 2019: destruction following a fire at the plant belonging to the FCM supplier Modulo in Poland;
• ■November 2019: a fire in a workshop used for the manufacturing of flooring and trim and door panels in the Abrera plant in Spain following an outbreak of a fire on a painting production line.

These claims and general developments in the insurance market have led to a significant tightening of the program’s terms and conditions:

• ■a sharp increase in deductibles, particularly for major sites that are poorly protected or exposed to high natural risks;
• ■increase in the premium;
• ■increase in the deductible for failures, and reduction in the level of coverage provided for indirect failures (tier-2 and above suppliers, customer suppliers).

Following recent incidents, prevention actions have been stepped up by :

• ■monitoring by the Risk Committee of the fire protection action plans of the most vulnerable main sites;
• ■the launch of an analysis and a monitoring of the fire and natural risks of our main suppliers, in particular through the precise location of their production plants;
• ■the launch of a technical and an economic evaluation of the costs of securing sites exposed to a high risk of flooding, earthquakes, wind or snowfall.

The renewal of the Property & Casualty policy in July 2022 was affected by an indexation of values in countries affected by inflation. Actions to improve the reliability of reported values are underway to mitigate this effect.

Lastly, the increase in climatic hazards could increase claims related to natural events or trigger other events (heat waves, water scarcity, etc.) likely to affect the Group’s operations. A comprehensive analysis of the industrial park portfolio was carried out by an external partner in 2022, with the aim of anticipating the likely impacts of climate change on the most vulnerable industrial parks. Based on this risk analysis, an adaptation plan will be rolled out to the sites concerned from 2023.

Damage insurance is supplemented by builder’s risk insurance and insurance covering the transportation of goods or equipment and political risk.

A consolidation project of the various regional transport policies is currently ongoing. A call for tenders was launched to renew the Transport policy and was won by AXA XL, which became the Group’s insurer on January 1, 2022. Prevention actions are underway to control claims in countries affected by recurrent claims.

The information below constitutes the chapter relating to the corporate governance report as provided for by the last paragraph of Article L. 225-37 of the French Commercial Code.

Some of the information forming an integral part of the corporate governance report, as required by Articles L. 22-10-8 and L. 22-10-10 of the French Commercial Code, is included in other chapters of this Universal Registration Document. The cross-references included in this section indicate the chapter of this Universal Registration Document in which the relevant information can be found.

This chapter has been prepared on the basis of the work carried out by the Group’s Legal department and Human Resources department. 

The Company refers to the AFEP-MEDEF Corporate Governance Code for listed companies, available on the MEDEF website (www.medef.fr).

The diagram below summarizes the composition of the Board of Directors and the Committees (permanent) at the date of this Universal Registration Document:

The table below presents the key figures of the Board of Directors at the date of this Universal Registration Document.

In addition to General Management, the information about which is given in Section 3.1.2.4 “Governance structure and shareholder dialog”, the Group has an Executive Committee and is also supported by Group Leadership Committee (top 300). The diversity policy within the governing bodies is described in Chapter 4 “Extra-financial performance”, Section 4.4.2 “Diversity & Inclusion” of this Universal Registration Document.

As mentioned in Section 4.4.2 of this Universal Registration Document, Faurecia has set itself the goal of boosting the recruitment and internal promotion of women in order to increase the presence of women among engineers and executives and in the Group top management with targets at 24% in 2025 and at 30% in 2030 of women in the Group Leadership Committee (top 300). As at December 31, 2022, the TOP 300 leaders comprised 23% women (compared to 21% in 2021) evidencing a strong feminization dynamic in the top management. The feminization of the Group Leadership Committee (top 300), in particular by the 2030 horizon, allows to build the necessary “reservoir”, in order to accelerate the gender balance in the Executive Committee (given that the majority of the Executive Committee’s members comes from the Group Leadership Committee (top 300).

In this context, Faurecia has notably implemented ambitious actions and initiatives described in Section 4.4.2 of this Universal Registration Document, in particular, in terms of hiring, training and promotion of female talents. In 2023, the Group will continue its efforts in terms of the promotion of female talent, notably by implementing a new program referred to as “RISE” in favor of about 40 identified female talents (who may occupy top leaders positions, including Executive Committee member). This nine-month program includes collective coaching sessions, co-development exercises and networking events. It is overseen by four members of the Executive Committee, including the Chief Executive Officer. By developing female talent at the highest level, the Group wishes to develop a more inclusive management, allowing female potential to be developed in turn by these role models.

In addition, it is to be noted that recent performance share plans for the Group Leadership Committee (top 300) include an internal condition relating to gender balance, therefore supporting actions in favor of the feminization of top management.

Finally, the Board of Directors carries out, on an annual basis, a review of the succession plan of the Executive Committee (with a special attention to the percentage of women in the succession plan) and a specific review of the Group diversity policy.

The Faurecia group’s Executive Management is provided, under the responsibility of the Chief Executive Officer, by an Executive Committee which meets at least once a month to review the Group’s results and deliberate on general Group issues, or as often as the interests of the Company require.

The composition of the Executive Committee as of January 2, 2023 was as follows:

The table below presents key figures on the composition of the Executive Committee as of January 2, 2023:

The Board of Directors, further to a proposal from the Compensation Committee, sets the compensation for executive and non-executive corporate officers in accordance with the applicable legal provisions and the compensation policy.

The compensation policy setting the structure as well as the principles and criteria defined in order to determine the compensation and all benefits granted to the Chairman of the Board of Directors for the fiscal year ended December 31, 2022, which was 99.60% approved at the Company’s General Meeting held on June 1, 2022 pursuant to the 11th resolution, is set out in the Company’s 2021 Universal Registration Document, in Section 3.3.4.1 “Compensation policy for corporate officers”, and more specifically in Section 3.3.4.1.2. “Compensation policy for the Chairman of the Board of Directors”.

It should be noted that, in a summarized form, as in previous years, the 2022 compensation policy for the Chairman of the Board of Directors provided for fixed compensation, benefits in kind and social protection schemes.

The Chairman of the Board of Directors’ compensation, for the 2021 and 2022 fiscal years, as described below, complies with the compensation policy approved by the shareholders. It reflects the willingness of the Company to put in place a compensation system that is simple, stable, and compliant with market practices as presented to the shareholders. 

On February 18, 2022, the Board of Directors resolved to maintain the fixed annual compensation paid to the Chairman of the Board of Directors at €300,000. This has remained unchanged since 2017.

The fixed annual compensation of the Chairman of the Board of Directors, net of benefits in kind related to the provision of an assistant for his/her activities other than those relating to the chairmanship of Faurecia, amounted to €265,200 (excluding benefits in kind and social protection described thereafter). It was paid in full in 2022.

In addition to the provision of a personal assistant for activities other than those related to the chairmanship of Faurecia for an amount valued at €34,800, which is included in the above-mentioned €300,000 ceiling, the Chairman of the Board of Directors was provided with a company car. This benefit is valued at €6,624.

The total amount of benefits in kind is valued at €41,424.

It is finally specified that the Company paid €4,692 in consideration of the supplementary health/life/disability pension scheme.

With the exception of the components described above, the Chairman of the Board of Directors did not receive any other compensation (including compensation for his duties as Board member), including by a company comprised in the scope of consolidation of the Company within the meaning of Article L. 233-16 of the French Commercial Code.

The tables below present the compensation and benefits paid during the 2021 and 2022 fiscal years or granted for these fiscal years to the Chairman of the Board of Directors.

It is stipulated that, since the Chairman of the Board of Directors receives only fixed compensation as well as benefits in kind and has social protection schemes, to the exclusion of any other compensation, tables No. 4 to No. 7 provided for by the AFEP-MEDEF Code and AMF recommendation No. 2021-02 are not applicable. The same applies to table No. 10 provided for by the AFEP-MEDEF Code.

The compensation policy setting the structure as well as the principles and criteria established to determine the compensation and benefits of any kind granted to the Chief Executive Officer for the fiscal year ended on December 31, 2022, which was 85.19% approved by the Company’s General Meeting of June 1, 2022 in the 12th resolution, appears in the Company’s 2021 Universal Registration Document in Section 3.3.4.1 “Compensation policy for corporate officers”, and more specifically in Section 3.3.4.1.3. “Compensation policy for the Chief Executive Officer”.

The compensation policy for the Chief Executive Officer for 2022 therefore provided for the following:

• ■a fixed annual compensation;
• ■a variable annual compensation, subject to performance conditions and representing up to a maximum of 180% of the fixed annual compensation;
• ■a long term compensation in the form of free share allocations subject to presence and performance conditions;
• ■termination payment;
• ■an indemnity in return for a non-compete commitment;
• ■a notice period and a non-poaching/non-solicitation commitment;
• ■additional defined contributions and benefits pension schemes;
• ■benefits in kind and social protection;
• ■compensation for his duties in the Shareholder Committee of HELLA.

The Chief Executive Officer’s compensation for the 2021 and 2022 fiscal years, as described below, is compliant with the compensation policy as approved by the shareholders. It reflects the Company’s will to elaborate a compensation system which is legible, competitive and that predominantly includes clear and precise performance criteria relating to the implementation of the strategy, the fulfillment of which is beneficial to all stakeholders. 

The 2022 fiscal year was marked by the transformation of the Group through the financial consolidation of HELLA. Although the economic context remained tense in 2022 in the automotive sector, and more particularly for equipment manufacturers, and the situation was aggravated by the geopolitical context, notably in Europe, the Company was able to demonstrate its resilience, strengthen its presence in its various regional markets, and support the development of promising technological segments. The actions taken to protect operating income, preserve cash and make fixed costs more flexible protected the Group's results during this period. The Group has also implemented its deleveraging strategy in accordance with the plan submitted to shareholders, which has resulted in the renegotiation of its debt and the sale of assets. The Group has initiated various synergy programs, including cost optimization synergies following the consolidation of HELLA. It has also pursued its ambitious carbon neutrality plan, which has produced effects in all the Group's sectors and geographies.

These achievements are reflected in the remuneration of the Chief Executive Officer in 2022, a significant part of which is based on the Group's performance, in particular for the short-term and long-term variable aspects.

On February 18, 2022, the Board of Directors, on the recommendation of the Compensation Committee, decided, subject to the adoption of the 2022 compensation policy by the Company’s General Meeting, to increase the fixed annual compensation as from January 1, 2022 for the Chief Executive Officer from €1,000,000 to €1,100,000, to take into account the new dimension of the Group following the acquisition of HELLA in January 2022 and the subsequent significant change in the responsibilities of the Chief Executive Officer. The proposed increase of 10%, which was approved by the general meeting dated June 1st, 2022, was based on a comparative study based on a group of comparable European industrial companies.

As a result, the fixed annual compensation of the Chief Executive Officer amounted to €1,100,000 for the 2022 fiscal year. This amount was paid in full in 2022.

On the recommendation of the Compensation Committee, the Board of Directors set the procedures for determining the variable compensation of the Chief Executive Officer for 2022, in accordance with the 2022 compensation policy.

The table below summarizes the results of the analysis carried out by the Board of Directors on February 17, 2023, on the recommendation of the Compensation Committee, and assesses the levels of achievement of the quantifiable and qualitative criteria targets set in respect of the variable annual compensation for the fiscal year ended December 31, 2022:

Detailed explanations regarding the assessment of quantifiable and qualitative criteria:

• ■Quantifiable criteria:
  • ■The criterion relating to the net debt to EBITDA ratio was defined by the Board of Directors with reference to the deleveraging trajectory following the acquisition of HELLA, and the targets were set in the Group's budget. Achievement was measured at June 30, 2022 and December 31, 2022, and the Board of Directors noted that the objectives had been reached to the maximum extent possible. 
  • ■The criterion relating to synergies from the integration of HELLA was defined by the Board of Directors with reference to the HELLA integration plan and the expected financial synergies at the level of the consolidated Group, and the objectives were set in the Group budget. Achievement was measured as of December 31, 2022, and the Board of Directors noted that the objectives had been reached to the maximum extent possible, both in terms of impact over 2022 and in terms of run rate impact.
  • ■The environmental criterion linked to carbon neutrality has been defined by the Board of Directors with reference to the trajectory for achieving the Group's commitments (excluding HELLA) for 2025 and in line with the intermediate stage of 2023, as specified in the "sustainability-linked financing framework". Achievement was measured as of December 31, 2022 and the Board of Directors noted that the Group had reached its maximum target, with 35.9 tons of CO2 issued per million euros of revenue generated at Faurecia level.
• ■Qualitative criteria: given the objectives set and the results obtained, the qualitative criterion has been achieved to the maximum. The elements taken into account are detailed below.
  • ■The amount of new orders in euros was achieved at the level of the Faurecia budget and overachieved when considering Forvia level ; operating margins associated with these orders were higher than the Faurecia and Forvia budgets set by the Board of Directors.

After examining the rate of achievement of the objectives of the criteria for the variable annual compensation for the 2022 fiscal year, the Board of Directors of February 17, 2023 noted that the total amount of the variable annual compensation for 2022 amounts to €1,980,000, compared to €300,000 for the 2021 fiscal year (and €270,000 for the 2020 fiscal year). Taking into account the amount of variable annual compensation for fiscal year 2022 resulting from outperformance relative to the quantifiable criteria, the relative proportion of fixed and variable annual compensation for fiscal year 2022 is as follows: 36% for fixed annual compensation and 64%for variable annual compensation.

In accordance with the provisions of Article L. 22-10-34 of the French Commercial Code, the variable compensation for the fiscal year ended December 31, 2022 shall be paid only after the shareholders, in a meeting to be held on May 30, 2023, have approved the components of compensation paid during the course of the 2022 fiscal year or awarded in respect of this fiscal year to Patrick Koller, Chief Executive Officer.

It is also acknowledged that the payment of Patrick Koller’s variable annual compensation for the 2021 fiscal year, which amounted to €300,000 was, in accordance with the law, subject to a favorable vote at the General Meeting of June 1, 2022 on the components of compensation paid or awarded in respect of the 2021 fiscal year (9th resolution). Since the vote in favor of this resolution was 92.41%, the payment of Patrick Koller’s variable annual compensation for the 2021 fiscal year was made after this General Meeting.

In view of the capital increase carried out by the Company in 2022, the Board of Directors had the option to neutralize the impact of the transaction by adjusting the rights to receive shares in favor of the beneficiaries of Share Plans subject to performance conditions. This option was introduced by the regulations of Plan No. 11 of October 9, 2019, No. 12 of October 22, 2020, ESPI of July 23, 2021 and No. 13 of October 25, 2021 and transposed the applicable rules provided for in Articles R. 225-137 et seq. of the French Commercial Code, taking into account the ratio between the share price before and after the detachment of preferential subscription rights.

At its meeting of July 22, 2022, the Board of Directors decided that the number of performance shares to be delivered to beneficiaries of free share allocation plans whose vesting period is ongoing will be multiplied by 1.0788, the new number of shares obtained being rounded up to the next higher integer.

Plan No. 10 granted in 2018 - no delivery of performance shares in 2022

The non-achievement of the performance conditions of the internal and external quantitative targets, described in Chapter 5 “Capital stock and shareholding structure”, Section 5.2.2 “Potential capital” of the 2021 Universal Registration Document, are restated in the summary table below. As a result, no performance shares will be delivered under Plan No. 10.

Plan No. 11 awarded in 2019 -  Total performance of 11.5 % (assessed as at December 31, 2021)

The Board of Directors, at a meeting held on October 9, 2019, on a recommendation from the Compensation Committee, resolved to grant a maximum of 1,147,260 performance shares, including 56,220 to Patrick Koller. In addition to a condition of presence, this grant is subject to (i) an external condition of net earnings per share assessed between the 2018 fiscal year and the 2021 fiscal year, by comparison with a reference group of global automotive suppliers, weighting 30%, (ii) an internal condition related to the Group net income (after tax) at December 31, 2021, weighting 60% and (iii) a CSR internal condition related to gender diversity within the “Managers and Professionals” category (Group executives), weighting 10%.

At its meeting of February 18, 2022, the Board of Directors noted, on the recommendation of the Compensation Committee (i) the non-achievement of the quantified objectives of the internal condition related to the Group’s net income (after tax) as assessed at December 31, 2021 (weighting of 60%) and (ii) the achievement of 115% of the internal CSR condition linked to gender balance within the “Managers and Professionals” category at December 31, 2021.

At its meeting of April 21, 2022, the Board of Directors noted, on the recommendation of the Compensation Committee, the non-achievement of the external condition linked to the net earnings per share of Plan No. 11. 

The total performance is therefore 11.5%.

As a consequence and given the decision made by the Board of Directors on July 22, 2022 to proceed to an adjustment of the number of unvested rights related to the Performance Share Plans (following the capital increase carried out by the Group), the number of shares that will therefore be delivered to the Chief Executive Officer in October 2023 will be 5,365 shares.

Plan No. 12 awarded in 2020 - Assessment of performance at December 31, 2022 in 2023

The Board of Directors, at a meeting held on October 22, 2020, on a recommendation from the Compensation Committee, resolved to grant a maximum of 1,384,630 performance shares, including 61,140 to Patrick Koller.

In view of the decision of the Board of Directors on July 22, 2022 to adjust the rights to performance shares subject to performance conditions not yet vested (following the capital increase carried out by the Group), the maximum number of performance shares now granted to Patrick Koller has been adjusted to 65,958 under Plan No. 12.

In addition to a condition of presence, this grant is subject to (i) an external condition of net earnings per share assessed between the 2019 fiscal year and the 2022 fiscal year, by comparison with a reference group of global automotive suppliers, weighting 30%, (ii) an internal condition related to the Group net income (after tax) as of December 31, 2022, weighting 60% and (iii) a CSR internal condition related to gender diversity within the “Managers and Professionals” category (Group executives), weighting 10%.

The impact of the integration of HELLA into Faurecia's accounts as from 2022, as well as exceptional events such as the war in Ukraine and the level of vehicle production, have been restated from the internal target criterion for net income after tax under Plan No. 12 by decision of the Board of Directors on July 22, 2022, while maintaining the same trajectory curve.

The completion of the internal conditions and the external condition of Plan No. 12 will be assessed by the Board of Directors at its meeting reviewing the sales revenue of the first quarter of 2023.

Plan No. 13 awarded in 2021 - Assessment of performance at December 31, 2023 in 2024

The Board of Directors, at a meeting held on October 25, 2021, on a recommendation from the Compensation Committee, resolved to grant a maximum of 1,389,000 performance shares, including 96,150 to Patrick Koller.

In view of the decision of the Board of Directors on July 22, 2022 to adjust the rights to performance shares subject to performance conditions not yet vested (further to the capital increase carried out by the Company), the maximum number of performance shares now granted to Patrick Koller has been adjusted to 103,727 under Plan No. 13.

Executive Super Performance Initiative (ESPI) Plan awarded in 2021 - 1st tranche assessment in 2022

The Board of Directors, at a meeting held on July 23, 2021, on a recommendation from the Compensation Committee, resolved to grant a maximum of 673,549 performance shares, including 71,941 to Patrick Koller.

Patrick Koller's grant is subject to the following two conditions:

• ■50% of the rights subject to a condition of Annual Relative TSR, with a level of achievement noted each year, over a period of five years, giving rise to a maximum annual partial vesting of 20% of the tranche of the year in question. The total amount of the definitive grant under the Annual Relative TSR will be equal to the sum of the five years of partial vesting of the Annual Relative TSR.
• ■50% of the rights subject to a condition of Average Relative TSR 5 Years, not giving rise to any partial vesting, the level of realization being calculated at the end of the five-year reference period and taking into account all the Relative Annual TSR of the period.

In view of the decision of the Board of Directors on July 22, 2022 to adjust the rights to performance shares subject to performance conditions not yet vested (following the capital increase carried out by the Group), the maximum number of performance shares now granted to Patrick Koller has been adjusted to 77,610 as part of the ESPI plan.

In addition, at its meeting of July 22, 2022, the Board of Directors, on the recommendation of the Compensation Committee, noted the non-fulfillment of the first tranche of the annual relative Total Shareholder Return (TSR) condition (i). Consequently, the maximum number of shares remaining for the Chief Executive Officer is 69,848.

The conditions for the definitive acquisition of these shares described above, as well as the consequence of the neutralization of the capital increase, are set out in Chapter 5 "Capital stock and shareholding structure", section 5.2.2 "Potential capital stock" of this Universal Registration Document.

The table below summarizes, for the three Plans No. 10 to 12, described above, the maximum number of shares to be allocated to the Chief Executive Officer, the rate of achievement of the performance conditions, the rate of vesting and the number of shares delivered (or to be delivered) to the Chief Executive Officer: 

At a meeting held on July 28, 2022, the Board of Directors, on a recommendation from the Compensation Committee, resolved, on the basis of the 20th resolution of the General Meeting of June 1, 2022, to grant a maximum of 2,388,290 performance shares, of which 169,830 performance shares (i.e., 0.086% of the capital stock at December 31, 2022) to Patrick Koller .

The valuation of the grant, according to the standards used for the consolidated financial statements, amounts to €2,228,170, i.e., 203%  of the reference fixed compensation.

The internal and external conditions of Plan No. 14 as well as the objectives for the Chief Executive Officer are presented in the table below:

In case of deviation in the volumes of the worldwide automobile production compared to the Company's strategic plan figures for the year in question, the Board of Directors shall have the possibility to adjust mechanically the objectives of the internal financial criteria. This possibility is detailed in Chapter 5 “Capital stock and shareholding structure”.

An attendance condition (subject to standard exceptions) applies to all beneficiaries including the Chief Executive Officer. The vesting is completed after a four-year vesting period, it being stipulated that no holding period is stipulated by the plan.

The Chief Executive Officer must retain, in registered form and while he continues to hold office, at least 30% of all shares actually acquired under each plan. This threshold requirement ceases to apply when the Chief Executive Officer holds a number of shares corresponding to three years of base gross compensation, factoring in all the previously established plans, and becomes applicable again if the Chief Executive Officer no longer holds the number of target shares corresponding to this level of base gross compensation.

In accordance with the AFEP-MEDEF Code, Patrick Koller has made a formal commitment not to use any risk hedging transactions on the performance shares granted to him.

The Chief Executive Officer benefits from the same pension scheme as the one provided for the other members of the Group’s Executive Committee with a French contract. This plan includes a supplementary defined contributions pension scheme and a supplementary defined benefits pension scheme.

The main features of these schemes for the Chief Executive Officer are described in the summary table below, being reminded that following the freezing of past potential rights under defined benefits pension schemes governed by Article L. 137-11 of the French Social Security Code, complying with Law No. 2019-486 of May 22, 2019 and Order No. 2019-687 of July 3, 2019 transposing the directive on pension rights’ portability, Faurecia implemented two vested rights supplementary pension schemes for rights relating to periods of employment after January 1st, 2020 that complies with the new legal requirements set out in Article L. 137-11-2 of the French Social Security Code.

Further information on these pension schemes can be found in Note 25-2 to the consolidated financial statements.

Patrick Koller benefits from a severance payment of up to 24 months of compensation which was authorized by the Board of Directors on July 25, 2016 pursuant to the procedure of Article L. 225-42-1 of the French Commercial Code (now repealed) and approved by the General Meeting of May 30, 2017 in respect of its fifth resolution. It should be noted that this was adjusted during the review of the Chief Executive Officer’s package by the Board of Directors on February 14, 2020 solely in order to align the calculation methods for the reference compensation with those of the non-competition clause, and approved in accordance with the law by the General Meeting of June 26, 2020 as part of the vote on the compensation policy for the Chief Executive Officer for 2020 (16th resolution). The conditions of this compensation have remained unchanged since that date.

The terms and conditions of the termination payment granted to the Chief Executive Officer are described in the compensation policy for the Chief Executive Officer for 2022 and 2023, which appear respectively in Sections 3.3.4.1.3 “Compensation policy for the Chief Executive Officer” of the 2021 Universal Registration Document and this Universal Registration Document.

This payment was not triggered during the 2022 fiscal year.

Since the decision of the Board of Directors of February 14, 2020, Patrick Koller is subject to a non-compete commitment for a period of 12 months applicable in the event of his resignation, it being specified that the compensation due in return for this commitment became effective following the approval, in accordance with the law, by the General Meeting of the Board of Directors of June 26, 2020 of the 2020 compensation policy for the Chief Executive Officer in respect of the 16th resolution. The conditions of this non-compete commitment remained unchanged in 2022.

The terms of the non-compete commitment, and the related indemnity, to which the Chief Executive Officer is entitled, are described in the compensation policy for the Chief Executive Officer for 2022 and 2023 which appear respectively in Sections 3.3.4.1.3 “Compensation policy for the Chief Executive Officer” of the 2021 Universal Registration Document and this Universal Registration Document.

This payment was not triggered during the 2022 fiscal year.

Patrick Koller is subject to six months’ notice in the event of his resignation and has a non-solicitation commitment of 12 months. These provisions were decided by the Board of Directors on February 14, 2020 and became effective following the approval, by the General Meeting of June 26, 2020, of the 2020 compensation policy for the Chief Executive Officer in respect of the 16th resolution. The terms of the notice period and the non-solicitation commitment remained unchanged in 2022.

The terms of the notice period and the non-solicitation commitment are described in the compensation policy for the Chief Executive Officer for 2022 and for 2023 which appear respectively in Sections 3.3.4.1.3 “Compensation policy for the Chief Executive Officer” of the 2021 Universal Registration Document and this Universal Registration Document.

These measures were not triggered during the 2022 fiscal year.

Patrick Koller has been provided with a company car. The total amount of the benefits in kind is €15,378.

It is also specified that the Company paid, in respect of the supplementary medical/life/disability insurance plan, €6,964.

With the exception of the items described above, Patrick Koller did not receive any other compensation or benefits (including for his duties as a Company Board member).

For information, Patrick Koller receives compensation for his term of office on the HELLA Shareholders’ Committee (for more information, please refer to the HELLA annual report). Such approach is in line with German corporate standard (notably for listed companies controlled by another listed company).

Faurecia has an active engagement policy with its investors and proxy advisory firms during the financial roadshows to discuss governance as well as developments in governance and compensation-related best practices. Numerous meetings were held during the first quarter of 2022, and until the General Meeting in 2022, on compensation issues (see Section 3.1.2.4. “Governance structure and shareholder dialogue” of this Universal Registration Document).

The Board of Directors took their comments into account, in particular with regard to the stability of the compensation structure and the level of the fixed compensation of the Chief Executive Officer following the increase granted by the General Meeting in 2022. Also, for the sake of continuity, the structure of the compensation policy proposed by the Board of Directors for the 2023 financial year remains unchanged.

Faurecia has also taken into account the expectations of its shareholders and voting advisory agencies with regard to the growing importance of Environmental, Social and Governance (ESG) criteria in the assessment of executive performance. A criterion linked to the carbon neutrality trajectory has been integrated into the elements of the short-term variable compensation of the Chief Executive Officer (as well as those of all the beneficiaries of a variable compensation system in the Group) from year 2022, as presented in the 2022 Compensation Policy. Faurecia has also included in its Performance Share Plan No. 11 granted in 2019, an objective related to gender diversity and proposes to add a second ESG objective linked to carbon neutrality among the performance conditions applicable to the Performance Share Plans which would be awarded to the Chief Executive Officer in 2023.

The elements of compensation awarded or paid to the Chief Executive Officer are in accordance with the provisions adopted by the Board of Directors, upon recommendation of the Compensation Committee and voted by the General Meeting of Shareholders held on June 1, 2022 (12th resolution adopted with 85.19% of the votes).

The Company is compliant with the procedure for implementing the compensation policy as approved by the shareholders in the aforementioned General Meeting.

The compensation paid contributes to the long-term performance of the Company insofar as the criteria for variable compensation are consistent with the long-term strategy of the Group.

The tables below set out the compensation and benefits paid during fiscal years 2021 and 2022 or awarded in respect of these fiscal years to Patrick Koller, the Chief Executive Officer.

To the extent that all stock subscription options ceased to be in force, tables No. 4, No. 5 and No. 8 on options awarded or exercised during the fiscal year as defined by the AFEP-MEDEF Code and AMF recommendation No. 2021-02 are not applicable. This is also the case with regard to table No. 10 of the AFEP-MEDEF Code given that Patrick Koller does not receive multi-annual variable compensation in cash.

Lastly, the tables setting out the past granting of performance shares (table No. 9 of the AFEP-MEDEF Code and table No. 10 of AMF recommendation No. 2021-02) are set out in Chapter 5 “Capital stock and shareholding structure,” Section 5.2.2 “Potential capital stock”.

The total number of performance shares outstanding at December 31, 2021 which may vest to Patrick Koller (minus the number of shares already vested) represents a total of 414,728 shares, i.e. 0.21% of Faurecia’s capital at that date. This number is obtained after adjustment related to the capital increase.

This paragraph relates specifically to multiples of compensation between the level of compensation of executive corporate officers and the level of average and median compensation of Group employees in France. It also deals with the annual evolution of compensation for executive and non-executive corporate officers and Group employees in France, as well as Group performances’ evolution. Information is presented, for the 2018-2022 period, in accordance with the AFEP guidelines on compensation multiples updated in February 2021. It is also the case for the table on data.

The Group’s governance structure has been composed of a Chairman of the Board of Directors and a Chief Executive Officer.

The corporate office of Chairman of the Board of Directors has been held by Michel de Rosen since May 30, 2017. The corporate office of Chief Executive Officer has been held by Patrick Koller since July 1, 2016.

As for the employees’ scope to be taken into account, Faurecia SE, as the holding company of Faurecia group, and having only seven employees for a total France headcount of 9,262 employees, as of December 31, 2022 it has been decided to take into consideration a more representative scope for the Group’s business in France, and to take into account all French legal entities integrated into the Group from January 1st to December 31(2), according to AFEP-MEDEF Code (§26-2) and AFEP guidelines on compensation multiples, updated in February 2021.

It is specified that the Group’s French headcount represents, at the end of 2002, less than 10% of the Group’s total headcount and includes nearly 70% of non-executive employees.

The compensations taken into account in calculations are those of Faurecia French employees who were present throughout the entire year in question. The compensation for part-time employees has been recalculated to the full-time equivalent. The components of the compensations used for these ratios have been calculated on the basis of the fixed and variable compensation paid over the course of the fiscal years in question, including incentive plans and profit-sharing, as well as the performance shares granted, to the target, over the same fiscal years and recorded at fair value(3). Short-time working allowances were also taken into account. Only additional pension schemes that represent a posterior benefit to the contract and corporate offices were not taken into account.

The decrease of the Chief Executive Officer's compensation in 2022, for the purpose of the equity ratio, is mainly linked to the non-renewal of an exceptional performance share plan (ESPI) applicable in 2021 to all members of the Executive Committee and implemented as part of initiatives to strengthen the loyalty.

In addition, the performance criterion used to assess Group performance is the operating income. This criterion is established on a consolidated basis. 

(Table in accordance with AFEP guidelines on compensation multiples updated on February 2021)

The tables below present a summary of the compensation and benefits paid during the 2021 fiscal year or awarded in respect of this same fiscal year to the executive and non-executive corporate officers.

The AFEP-MEDEF Code requires detailed reporting on the application of its recommendations and explanations to be provided, if applicable, as to why a company may not have implemented some of them. As of the end of the 2022 fiscal year, the Company did not entirely comply with the recommendations contained in the AFEP-MEDEF Code on the following issues.

Pursuant to the bylaws, each Board member must hold at least 20 Faurecia shares throughout the term of office.

Furthermore, the internal rules of the Board of Directors provide that each Board member must hold 500 shares in the Company, including 20 shares provided for in the bylaws, during the entire term of their corporate office. However, Board members who do not receive compensation in respect of their directorship are only required to hold 20 shares provided for in the bylaws and, in accordance with the law, Board members representing employees are not required to hold a minimum number of shares.

The internal rules of the Board of Directors’ also state that the Chairman of the Board of Directors must hold shares corresponding to one year’s compensation (including the 500 shares held as a Board member) and must comply with this obligation within two years of being appointed as Chairman.

At December 31, 2022, the corporate officers held approximately 3.3% of the Company’s capital stock and 3.5% of the voting rights (including 3.1% of the capital stock and 3.3% of the voting rights held by Peugeot 1810).

Details of the number of shares held by each corporate officer can be found in the summary table in Section 3.1.2.1 “General information on the composition of the Board of Directors” and in the biographies of the Board members in Section 3.1.2.2 “Board members’ expertise, positions and corporate offices as of the date of this Universal Registration Document”. It is apparent from this information that, as at December 31, 2022, the directors comply with the holding obligations laid down in the bylaws and internal rules. 

Within the framework of an active conflict of interests management policy and to collect the information required under Annex 1 item 12 of European Regulation No. 2019/980, each year the Company provides its Board members with a detailed questionnaire allowing them to obtain the information required and thus make the necessary declarations.

To the Company’s knowledge and on the date this Universal Registration Document was drawn up, there is no family relationship between Faurecia’s corporate officers.

Moreover, to the Company’s knowledge and on the date this Universal Registration Document was drawn up, none of the members of the Board of Directors and Executive Management have, within the last five years:

• ■been found guilty of fraud;
• ■been incriminated by a statutory or regulatory authority (including designated professional bodies), with the exception of Jean-Bernard Lévy under the conditions described hereafter. Following an investigation from the Autorité des Marchés Financiers (AMF) in July 2016 concerning EDF’s financial information since July 1, 2013, objections were notified by the Board of the AMF to the Chairman and Chief Executive Officer of EDF on April 5, 2019. Jean-Bernard Lévy has been cleared by a decision, that has become final on this matter, from the Sanctions Commission of the AMF dated July 28, 2020;
• ■been publicly sanctioned by a statutory or regulatory authority (including designated professional bodies);
• ■been banned by a tribunal from serving as a member of an administrative, management or supervisory body or from being involved in the management of an issuer;
• ■been involved in a bankruptcy, receivership, liquidation, or receivership of companies having served as a member of an administrative, management or supervisory body.

To the Company’s knowledge and on the date this Universal Registration Document was drawn up, no potential conflicts of interest have been identified between the duties of each of the members of the Board of Directors and the Executive Management with regard to the Company and their private interests and/or other duties. It is specified that one Board member, Peter Mertens, has a minority interest in a start-up in which the Group has made a very small investment (less than 0.03% of the Group’s sales of the period during which the investment was made (2019)) and was appointed, in November 2019, as a Board member of this Company. It is noted that this investment was made prior to the effective appointment of Peter Mertens as a director of the Company, that the investment conditions are similar for all minority investors (including the Company), that the Company does not have voting rights on the Board of Directors of this start-up and that the decisions on this investment are not made at the level of the Board of Directors of the Company. In addition, in the event of a conflict of interest, the provisions of the rules of procedure on this subject will apply (for details of these rules, see Section 3.1.3.1 “Organization of the Board of Directors”, paragraph “Board members’ obligations”).

As part of the HELLA acquisition, Faurecia made a commitment for representation of the HELLA family pool on the Company’s Board of Directors. This commitment continues as long as the HELLA family pool holds at least 5% of the Company’s capital stock.

In accordance with the Investment Agreement of August 14, 2021 as subsequently amended, the HELLA family pool has undertaken not to sell:

• ■for a period of 18 months from the date of completion of the acquisition, i.e. until July 31, 2023, their shares held in the Company,
• ■during a period of 12 months as from the expiry of the preceding period described above, i.e. until July 31, 2024, more than 5% of Faurecia’s capital stock (as outstanding on July 31, 2023).

These lock-up commitments are subject to the usual exceptions in this respect, formalized in a contract under German law entered into between Faurecia and the members of the HELLA family pool on January 27, 2022 entitled the “Blocking Agreement”. Moreover, the Company has been informed of the execution by the HELLA family pool of a shareholders’ agreement constituting a concert action vis-à-vis Faurecia. This shareholders’ agreement also provides for preemptive rights to the benefit of the other members of the HELLA family pool on shares held by a member excluded from the shareholders’ agreement.

Lastly, to the Company’s knowledge and as of the date of this Universal Registration Document, there is no other restriction accepted by the members of the Board of Directors and senior management concerning the sale, in a certain period, of the Company’s shares they hold, with the exception of (i) the provisions of the bylaws or internal rules regarding shareholding (see Section 3.5.2 “Transactions in the Company’s securities by corporate officers” of this Universal Registration Document) and (ii) the holding obligation related to the allocation of performance shares to the Chief Executive Officer under the terms of which he must retain at least 30% of the shares actually acquired under each plan. This threshold requirement ceases to apply when the Chief Executive Officer holds a number of shares corresponding to three years of base gross compensation, factoring in all the previously established plans, and becomes applicable again if the Chief Executive Officer no longer holds the number of target shares corresponding to this level of base gross compensation.

In accordance with the law and bylaws, the Board of Directors can, within the limit of a total amount which its fixes, authorize the Chief Executive Officer to issue sureties, endorsements and guarantees on behalf of the Company.

In its meeting held on July 24, 2020, the Board of Directors authorized the Chief Executive Officer to issue sureties, endorsements and guarantees within the limits of a global amount of €50 million, up to a limit of €10 million per transaction, for a one-year period. If the Group is required to provide advance payment guarantees or performance bonds for contracts with successive partial deliveries, the Chief Executive Officer is authorized to provide guarantees representing a maximum of €5 million per transaction. It is specified that sureties, endorsements and guarantees provided to tax and customs regimes may be given without any limit on the amount.

Since the previous authorization had expired, the Board of Directors, in its meeting held on July 22, 2022, decided to renew the authorization granted to the Chief Executive Officer, according to the same terms as described above.

The Statutory Auditor’s special report on related-party agreements is included in Section 3.8.4 below. It does not mention any ongoing related-party agreements. In addition, as a reminder, no related-party agreement has been entered into during the last three fiscal years.

The table summarizing the current delegations of authority granted by the General Meeting in the area of capital increases and showing the use made of these delegations during the period is presented in Chapter 5, Section 5.2.1 “Authorized capital stock” of this Universal Registration Document.

The specific conditions governing shareholders’ participation in the General Meeting or the provisions of the bylaws which outline these conditions are included in Chapter 6, Section 6.1 “Legal information”.

Lastly, factors likely to affect a public takeover bid or exchange are described in Chapter 6, Section 6.1 “Legal information”.

Mobility is at the heart of major global challenges: urbanization, demographic growth, climate change, scarcity of resources and technological change. For FORVIA, mobility is more than just a means of transport. It occupies a central place in the lives of people, and must allow them to move freely while being respectful of the planet. This is why, as the seventh-largest automotive supplier in the world, FORVIA continues to grow by integrating sustainable development issues.

In 2022, FORVIA became the first global company in the automotive sector to be certified against the new SBTi standard Net-Zero. The Group is committed to achieving carbon neutrality by 2045 for all of its emissions. While sustainability and responsibility have been convictions shared by Faurecia and HELLA for many years, this pioneering certification is the marker of an ambitious and common sustainability strategy.

The Group’s goals are broken down into actions included in a CSR roadmap, called “Inspired to care”, with regularly monitored targets. It is based on major international reference frameworks, ongoing dialog with stakeholders and regulatory compliance. It motivates the 150,000 Group employees and its partners to embrace priority climate, ethical and product safety issues.

FORVIA is convinced that it plays a key role and is able to bring about positive change in the face of major global challenges. The Group wants to have a positive impact on society and the planet and is committed to:

• ■reducing its CO2 footprint and offering sustainable mobility solutions;
• ■investing in technology and new business models;
• ■engaging in an open, responsible and balanced dialog with its stakeholders;
• ■contributing to economic development and the creation of social value through local hiring;
• ■encouraging the greatest possible diversity in its recruitment and career management processes, while promoting working conditions adapted to individual needs;
• ■ensuring the training and career development of its employees.

Guided by the United Nations Sustainable Development Goals, FORVIA’s sustainable development strategy “Inspired to care” is structured around three pillars: Planet, Business, People. It is deployed using a roadmap.

Updated in 2022, this roadmap presents FORVIA’s commitments and associated action plans, objectives and performance indicators. It is deployed internally by the teams, and the results are measured against the Group’s expectations and commitments to its stakeholders.

(1)   NFPD : Key performance indicators related to non-financial risks, integrated into the Group risk mapping (see Chapter 2) and meeting the Non-Financial Performance Declaration.

(2) ✔ : Key performance indicators audited by Mazars.

(3) These data do not include SAS Automotive, which was acquired in 2020. The FR1t indicator including SAS was 1.49 in 2021.

A major player in Sustainable Mobility, FORVIA aims for CO2 neutrality by 2025 for scope 1 & 2 emissions and a reduction of 45% of controlled scope 3 emissions by 2030 by focusing on three main levers: “use less”, “use better” and “use longer”.

FORVIA has begun to reduce its CO2 footprint of all its sites thanks to energy savings and the use of low-carbon electricity. At the same time, Faurecia is reducing the footprint of its business activities through redesigned products using sustainable inputs, including recycled materials and biomass.

Committed to the circular economy, FORVIA invests and integrates recycled materials into its products whenever possible, and allows the refurbishment and extension of the life of its current and future systems. Finally, FORVIA offers innovative sustainable solutions for Sustainable Mobility that will help to avoid CO2 emissions. While investing in the future, the Group is committed to helping the automotive industry move towards zero emissions, notably through its ambition to become a leader in hydrogen technology.

FORVIA aims to achieve CO2 neutrality by 2045 for all of its emissions. Validated by the SBTi Net-Zero standard, this goal has two interim objectives. The first aims for CO2 neutrality for operations (scopes 1 & 2) from 2025. The second sets the reduction of 45% of its emissions for scope 3 by 2030. By 2045, FORVIA will focus on neutralizing its residual emissions with CO2-sequestering products.

The Vice President in charge of climate strategy and the sustainable transformation is responsible for ensuring the deployment of this CO2 trajectory within the Group, in particular by ensuring the consistency of this strategy with other environmental issues.

Since 2012, Faurecia has estimated its direct (scope 1)(1) and indirect (scope 2)(2) emissions and since 2016, has included its emissions related to the Group’s entire value chain, i.e. including upstream and downstream from its own business activity (scope 3)(3). Emissions displayed this year include HELLA.

In 2022, FORVIA updated its annual carbon footprint, in partnership with Deloitte. Several methodological improvements were made in order to refine the estimates, in particular for the significant items of the CO2 footprint (see Section “CO2 emissions calculation methodology”). FORVIA’s contribution to global greenhouse gas emissions in 2022 is estimated at 38.9 MtCO2eq (scopes 1, 2 and 3), i.e. an increase of 6% compared to 2019 (footprint recalculated according to the rules of the GHG protocol).

In 2022, FORVIA’s direct and indirect CO2 emissions (scopes 1 and 2) amounted to approximately 830,000 metric tons of CO2eq, a decrease of 31% compared to 2019. This reduction in emissions was driven by a decrease in energy consumption (-27% on scope 1, -14% on scope 2) and emission factors on scope 2 (-22% on weighted average) linked to the collection of emission factors from suppliers on part of the scope , the consumption of electricity from renewable sources of some sites via PPAs or on-site production, and finally the decarbonization of national electricity networks.

Scope 1 and 2 emissions represent around 2% of the Group’s total CO2 footprint.

FORVIA's scope 1 and 2 CO2 intensity is down 32% compared to 2019 (48 tonnes of CO2eq/€M of turnover) and 31% compared to 2021 (47 tCO2eq/€M of turnover) due to the drop in emissions and an increase in FORVIA's turnover.

Note: The year 2019 includes emissions from FCE and SAS from November 2018 to October 2019, and from Hella from January to December 2019 (12 months) to be aligned with the GHG Protocol. The sales figures used correspond to the energy reporting period except for Hella where the sales figures in 2019 and 2021 are those published for the period from June to May (without BHS in 2019 and 2021). For FCE, an estimate of revenue from November 2018 to March 2019, before the integration of the acquired entities into Faurecia's accounts, was made from the following months.

In application of the recommendations of the GHG protocol, the CO2 emissions relating to the reference year 2019 and to the year 2020 have been recalculated to take into account changes in scope and methodological improvements (see Section 4.6.3.2 Methodology for calculating CO2 emissions).

For scope 3.11 (use of products sold), a finer methodology was applied to the FCM CVI Business Group by obtaining more precise data. The methodology applied is the same as for the other Business Groups and the rest of FCM. Until now, the data used for FCM CVI were averages by product category. This methodological change led to a recalculation and a significant reduction in FCM CVI emissions for 2019 and 2021. This recalculation was carried out on the basis of volumes sold by product category.

Responsibility for climate-related issues lies at the highest level of FORVIA’s organization. Climate governance is integrated into sustainability issues (see Section 4.1.2.2.). The governance bodies of Faurecia and HELLA are responsible for defining, monitoring and reviewing FORVIA’s climate strategy and performance. FORVIA’s Climate Strategy and Sustainable Transformation Committee monitors the deployment of the climate strategy.

At the operational level, CO2 coordinators ensure the deployment of the strategy in the various functions and Business Groups. The CO2 “pioneer” network brings together around one hundred employees from all Group departments to coordinate the approach with employees (awards, best practice competitions, etc.).

CO2 targets are included in the criteria for the variable compensation of the Chief Executive Officer, Faurecia Top 300 leaders and Faurecia’s 4,800 managers (see Section 4.1.2.3).

The Group has also set an internal price for CO2 of €75/metric ton to anticipate and guide the development of its new products by integrating the CO2 impact.

Climate risk mapping is fully integrated into the Group’s risk mapping. In this context, it monitors the process and pace of the Group’s risk review. (see Section 2.2).

• ■The risk universe is updated annually on the basis of various data, including interviews with key stakeholders, and according to different categories (strategic, operational, compliance, financial, etc.) and by risk level (major, secondary, etc.).
• ■The mapping of the main risks is validated each year by Faurecia’s Executive Committee, the Audit Committee and the Board of Directors. It is reviewed quarterly by the Faurecia Risk Committee.
• ■In addition, the Audit Committee of Faurecia’s Board of Directors conducts an in-depth review of at least four risks each year. The climate transition risk was reviewed in 2022 by this Committee.

Also identified among the CSR risks included in the Non-Financial Performance Statement (see Section 4.7.1), the climate transition risk is audited by an external third party according to a moderate level of assurance (see Section 4.5).

As part of the CO2 neutrality project launched at the end of 2019, Faurecia’s Executive Committee was able to assess three forward-looking scenarios (economic, social and environmental – by 2050) related to the impact of climate change. These scenarios enabled the Executive Committee to take into account the internationalization of the costs of the climate transition, and then to integrate them into the Group’s risk matrix. Finally, the analysis of these scenarios shed light on the Group’s objectives and business strategy, in line with the objectives for 2025 and 2030 of the CO2 neutrality project.

In 2022, the scenarios were included in the Group’s risk matrix.

The scenarios below were selected based on the transition financing process: private sector, governments or global institutions. All scenarios have common assumptions regarding climate and population in 2040 and differ in socio-economic status and the trajectory of global warming towards 2080. Each corresponds to a different climatic trajectory according to the assumptions of the IPCC (+1.5°C/2.5°C in 2080 [RCP 2.6], +2.5°C/3.5°C in 2080 [RCP 4.5/6.0], +3.5°C/4.5°C in 2080 [RCP 8.5]).

The time horizon considered is 2050, halfway between Faurecia’s targets for 2025 and 2030 and the climate effects of 2080.

These scenarios were developed in 2020 in partnership with the Toulouse School of Economics, and in collaboration with the Collège de France.

With a global presence and more than 150,000 employees in 2022, FORVIA is convinced of the importance of promoting a culture of integrity, safety and vigilance wherever the Group operates.

A member of the United Nations Global Compact since 2004, Faurecia is committed to respecting and promoting the international conventions of the International Labor Organization (ILO) on human rights, labor standards and the environment in its business practices.

The Faurecia Code of Ethics contains all of its rules and principles, which must be understood and respected in all countries, by all employees and partners, in each line of business. Faurecia is therefore committed to:

• ■remaining vigilant and complying with the highest ethical standards (see Section 4.3.1): this is an essential part of the corporate culture, anchored in Faurecia’s convictions and values;
• ■guaranteeing a safe working environment for all staff working on its sites (see Section 4.3.2), whether they are employees or external parties;
• ■developing products and services of irreproachable quality and safety and technologies for an ever safer and smarter driving environment (see Section 4.3.3);
• ■building a responsible supply chain (see Section 4.3.4) through solid and lasting relationships with suppliers whose ethical and social values and environmental priorities are aligned with our own.

In 2022, Faurecia and HELLA continued to align their management systems with a common FORVIA approach, taking into account, among other things, the French anti-corruption law Sapin II.

Faurecia’s ethics and compliance program helps to build a strong culture of integrity. It includes policies and procedures that are the subject of training and communication campaigns.

Created in 2005 and revised several times, the Code of Ethics(5) of Faurecia encompasses respect for human rights and fundamental labor rights, economic and social dialog, respect for the environment, ethics and rules of conduct – in particular those related to the prevention and detection of corruption.

It includes updates to Faurecia’s compliance systems and tools resulting from the requirements of the Sapin II law. The Code is intended to strengthen the Group’s ethical culture. The Management Code and the other systems, such as the Anti-Corruption Code of Conduct and the Best Practices Guide in the fight against anti-competitive practices, translate many of the principles set out in the Code of Ethics into operational requirements (see also Chapter 2 of this document).

In accordance with the Sapin II law and the law on the duty of vigilance (see Section 4.3.4.4), Faurecia has set up an alert system to manage allegations of violations of regulations and the Group’s internal rules. Thus, employees (including temporary employees, subcontractors, etc.), partners, suppliers, and civil society (NGOs), civil society organizations and local communities have access to the reporting system described in the Code of Ethics.

Employees are invited to contact their line manager, the human resources manager or a compliance manager (including the Compliance Leaders identified within each division), orally or in writing.

The other method of reporting, accessible internally and externally to all stakeholders, is a dedicated whistle-blowing hotline – Speak-up, accessible via an internet link (http://faurecia.ethicspoint.com/). Depending on the nature and importance of the events reported, additional investigations may be launched, an inquiry may be set up or an Internal Audit decided upon.

The identity of any person using the hotline, as well as all the details enabling them to be identified, are protected and kept confidential by the persons responsible for them within Faurecia. These people are specially trained to receive and investigate this type of alert.

Alerts can be entered into the tool in the desired language by the whistle-blower. Upon receipt of this request, the investigation procedure is initiated in order to deal with it in accordance with the applicable internal and local rules. At the end of the investigation, corrective actions can be taken. The Compliance department (see Section 2) monitors the implementation of these actions and periodically reports on the trends identified.

This entire system is the subject of regular communications, which will be strengthened with civil society in 2023.

In order to maintain a strong ethics and compliance culture, the Compliance department has set up different training sessions accessible to all employees (including part-time employees, interns, consultants, etc.). These training courses are tailored to Faurecia’s risk profile with which local teams may be confronted.

Along with the Human Resources, Internal Audit and Control teams, the Compliance department ensures that all the identified people are effectively trained in the internal rules, in order to maintain a strong ethics and compliance culture in the Group.

• ■Over the last three years, a total of 43,573 employees (employees, consultants, interns, etc.) have taken Ethics (22,249) and Antitrust (21,324) MOOCs.
• ■By the end of 2022, 32,070 employees (employees, consultants, interns, etc.) took the Anti-corruption MOOC, including 96.2% of the target population.
• ■Refresher training sessions are regularly organized at the industrial sites and in the divisions, in particular on the risks of breaches of best practices in the fight against anti-competitive practices.

Employees also have access to practical guides on anti-competitive practices, reporting and managing conflicts of interest and the internal whistle-blowing procedure on allegations of non-compliance with the Code of Ethics. Significant communication efforts have ensured that these guides are widely distributed.

In 2020, in addition to these actions, and in the context of the Sapin II law in particular, the risk of corruption mapping was updated based on interviews and questionnaires sent to people exposed to the identified corruption risks. It is currently being updated on the basis of the new compliance indicators that were created and collected in 2021 and 2022. This risk mapping takes into account various quantified data to prepare remediation plans suited to the level of residual risk. The identification of these risks is integrated into Faurecia’s overall risk mapping process (see Chapter 2).

The Compliance department works closely with legal experts on antitrust issues and with the control functions, whether permanent or periodic, in order to ensure effective control of the risks identified.

In support of its overall business strategy and objectives, Faurecia’s tax policy complies with the Code of Ethics. It is entrusted to a global team of tax professionals and is based on a firm set of principles.

Faurecia complies with the letter and spirit of applicable laws and regulations, and relies on the relevant international standards (for example, the OECD guidelines).

Faurecia ensures that tax filings and payments are made in accordance with all local regulations. The Group also maintains all tax records and performs tax reporting as required by any law in countries in which the Group operates.

Faurecia is committed to showing integrity and total transparency and to establishing constructive relationships with the tax authorities. In the event of a legal interpretation that does not agree with the tax authorities, Faurecia is prepared to refer the matter to the competent court to defend the interpretation of the law made by the Group.

Faurecia manages tax affairs in a pro-active manner and does not use contrived or abnormal tax structures that are intended for tax avoidance, have no commercial substance and do not meet the spirit of local or international law. Faurecia does not use secret jurisdictions or so-called “tax havens” for tax avoidance.

The aim is to pay an appropriate amount of tax according to where value is created within the normal course of industrial or commercial activity. Consequently, all transfers of goods and services between companies within the Group are conducted on an arm’s length basis. The pricing of such transactions between Group companies is based on fair market terms and reflects the commercial nature of the transactions.

The assessment of taxes respects shareholder value and fully complies with all legal and regulatory obligations, in line with stakeholders’ expectations.

Faurecia wants to ensure that human rights are respected everywhere in the world, by all its stakeholders, in particular its employees, business partners and suppliers.

Signed by the Group’s highest governing bodies, the human rights policy is based on international standards: the International Charter of Human Rights, the fundamental conventions of the ILO (1998), the guiding principles of the United Nations on Business and Human Rights (2011) and the OECD Guidelines for Multinationals (2011). It is published on the Faurecia website.

This policy is part of a set of framework documents aimed at guaranteeing human rights:

• ■the Code of Ethics (see Section 4.3.1.1);
• ■the Code of Conduct for suppliers and service providers (see Section 4.3.4);
• ■the vigilance plan (see Section 4.3.4.4).

Faurecia’s human rights policy formalizes the Group’s commitment on ten key principles:

• prohibition of child labor;
• prohibition of all forms of forced labor and free choice of employment;
• freedom of association and the right to collective bargaining;
• non-discrimination and equal opportunities;
• salaries in accordance with local law and that ensure a decent life for employees;
• regulatory working hours with respect for the health and safety of employees and the work-life balance;
• development of employee education and training;
• right to health and safety of employees in the course of their activities;
• consideration of human rights and respect for local communities when acquiring and managing land or buildings;
• respect for human rights by all staff responsible for ensuring the safety of employees and buildings.

The policy also reiterates Faurecia’s commitments to preserve the environment and natural resources and the transition to a low-carbon economy, which are prerequisites for the respect of human rights and human health. These commitments include activities regulated by international conventions, such as the prohibition of the use of mercury and other specific chemicals and the management of hazardous waste.

To avoid any infringement, any negative impact or any abuse of rights, Faurecia’s human rights approach is based on a risk assessment, preventive measures, corrective action plans, and the collection of alerts via a whistle-blowing system (see Section 4.3.4.4).

Within its Business Groups, Faurecia annually analyzes the risks – at Group and local level – and the conclusions of the complaints procedure. Human rights or environmental violations would lead to prompt corrective measures.

Within the Business Group supply chains, Faurecia also relies on risk analysis to prevent and eliminate violations of human and environmental rights, in particular via its partner EcoVadis, which enables the Group to assess its suppliers. Faurecia reserves the right to verify the compliance of its suppliers with the obligations imposed concerning these issues: supplier self-assessments, on-site visits and audits. In the event of violations, corrective measures are taken, and Faurecia may ultimately re-examine the business relationship.

The men and women of FORVIA represent an essential pillar of the Group’s success, which must be able to rely on the best teams around the world to maintain a competitive advantage, anticipate future trends, remain agile and invest in innovation.

The Group is therefore committed to:

• ■promoting diversity and inclusion (see Section 4.4.2): FORVIA is convinced that employee commitment and the promotion of diversity are major drivers of performance, representing considerable competitive advantages for the Group; technological progress and innovation through constantly changing working practices;
• ■developing the employability (see Section 4.4.3) of its employees throughout their professional lives through learning, mobility and vocational training. It is the best guarantee that employees and the Company can benefit from technological progress and innovation through constantly changing work practices;
• ■developing constructive social dialog for employees (see Section 4.4.4);
• ■attracting and developing talent (see Section 4.4.5);
• ■supporting employee engagement with local communities (see Section 4.4.7).

The FORVIA Group has a total workforce of 157,460 people, including the HELLA workforce (43,647 people at the end of December 2022).

For Faurecia, the share of the total workforce increased by 2,673 people or 2.4% in 2022. The increase is due to the increase in the number of registered employees (+1,034 people) and the continuous adaptation of the temporary workforce (+1,639 people). The proportion of temporary employees was 20.3% (vs. 19.4% at the end of 2021).

Over the past few years, Faurecia has grown significantly, with a headcount of 90,656 people, including 22,536 managers and professionals on open-ended contracts at the end of 2022.

In 2022, the Group recorded an increase of 3,626 open-ended and fixed-term contracts, i.e. 16.1% more than in 2021.

In a context of growing tension in labor markets, the teams of Faurecia’s Talent Hubs, particularly in Mexico, the US, India and China, have stepped up their activities to attract the best talent. 2022 was marked by the introduction of artificial intelligence into recruitment, with the use of matching, which significantly expands the identification of potential candidates aligned with the Group’s needs. This same technology also makes it possible to recruit young graduates and more experienced managers, through virtual recruitment campaigns, highlighting the Group’s new employer brand and new mission.

Faurecia received more than 30,000 résumés from young graduates during recruitment forums that were held in a number of countries (France, Mexico, India, etc.). Lastly, the presence on social networks continued to increase by 25% (with, for example, 90,000 additional subscribers on LinkedIn).

“Being Faurecia” defines the Group’s culture and its management model, described and shared with all employees through:

• the Group’s values broken down into managerial values (entrepreneurship, autonomy, accountability) and behavioral values (respect, exemplarity, energy), enabling it to support the emergence of exemplary behavior within the organization;
• the Management Code for managers, explains the expected exemplary behavior. Training sessions are regularly organized for managers (see 4.4.5.2);
• organizational principles encourage decentralized decision-making processes in the different levels of the organization in order to strengthen the autonomy of the teams and facilitate decision-making.

The Being Faurecia culture creates an environment that holds teams accountable for their performance through a horizontal organization of autonomous teams with appropriate skills and resources.

In this context, the management of jobs and skills by supporting all career paths and talent management, the implementation of a learning organization and team spirit are particularly essential to the success of the Company.

Faurecia conducts an annual satisfaction survey of all employees. This survey measures and collects feedback from employees on all aspects of their relationship with the Company.

It focuses on two key indices:

• ■employee engagement which measures the level of motivation of employees in the performance of their work through job satisfaction; the recommendation of Faurecia as a responsible employer; pride in belonging and confidence in the strategy;
• ■the enablement of employees which measures the ability of employees to carry out their work through the understanding and commitment of employees to the Company’s strategy and culture, the quality of the relationship with the line manager, trust in general management, general perception of the Company, and well-being at work.

The other subjects addressed in the questionnaire relate to diversity, ethics and the whistle-blowing system, training and career development, compensation, health, safety, the environment, and the sustainable development strategy.

The results are analyzed at Group, country and plant level. It enables each level to management of Faurecia to analyze and compare the results internally but also externally via benchmarks. On the basis of these results, the management draws up specific action plans to respond to the points raised by their teams. In Poland, for example, in 2022, it focused on the 2021 results around: pride in belonging and recommendation of the Company, training and career development, compensation and benefits, work-life balance. The sites have also set up commitment and motivation plans to encourage the organization of events around sustainable development, sport, health, diversity, etc.

The 2022 results reflect the measures taken by the Group to meet the needs expressed by employees during the 2021 survey, such as the increase in the budget allocated to salary expenses and the share of individual performance bonuses, and the setting up of a flexible working policy to improve work-life balance.

As an engineering and production company, most of Faurecia’s activity is carried out on-site, in engineering centers and production plants. The interactions are numerous and allow a great collective efficiency and a high level of innovation. The Covid-19 crisis revealed the effectiveness of remote working for some clearly identified activities, and also showed the importance that employees place on office interactions for socialization, team dynamics, and creative and informal discussions about work.

Since 2021, remote working has been offered as an effective and complementary tool for working in offices and sites. Eligible employees (i.e. 13,000 employees concerned) can work remotely for up to eight days per month – in agreement with their manager – depending on the needs related to their presence on this site with their teams. The objective is to develop a hybrid work culture, combining the efficiency of face-to-face work (innovation, creativity) and the flexibility of remote working, thanks to the opportunities offered by the digitization of tools (video meetings, shared work software, etc.).

In 2022, the Group published its guidelines of flexible efficiency based on four pillars:

• eligibility of employees according to their profession;
• a policy focused on managerial responsibility in implementation;
• an adapted digital tool to inform teams of on-site presence;
• a revised travel policy to optimize the frequency and duration of trips and make the best use of digital alternatives.

The roll-out of these guidelines was accompanied by numerous online training and communication tools with weekly reminders for people eligible for teleworking. The purpose of the training sessions is to share best practices in flexible efficiency, for example, they cover:

• ■the organization of work and the planning of face-to-face and remote activities, in particular thanks to a new matrix to help choose between face-to-face and distance learning;
• ■the choice of the most appropriate meeting format and the conduct of meetings adapted to the challenges;
• ■socialization with teams and customers who must be the subject of special attention in a context of increasing digitization.

For the year ended December 31, 2022

This is a free translation into English of the independent third-party organization’s report issued in French and is provided solely for the convenience of English-speaking readers. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.

To the shareholders,

In our capacity as independent third-party organization, member of Mazars Group and accredited by COFRAC Inspection under number 3-1058 (scope of accreditation available on www.cofrac.fr), we have performed work to provide a reasoned opinion that expresses a limited level of assurance on the historical information (observed and extrapolated, hereinafter respectively the "Information") of the consolidated extra-financial performance statement, prepared in accordance with the entity’s procedures (hereinafter the “Guidelines”) for the financial year ended December 31, 2022, presented in the management report of the group (hereinafter the “Statement”), in application of the provisions of Article L. 310-1-1-1 of the Insurance Code which refers to Article L225-102-1 of the Commercial Code.

Based on the procedures we performed, as described in the "Nature and scope of our work” and the evidence we collected, nothing has come to our attention that causes us to believe that the consolidated non-financial statement is not presented in accordance with the applicable regulatory requirements and that the Information, taken as a whole, is not presented fairly in accordance with the Guidelines, in all material respects.

FORVIA consolidates and discloses indicators according to the guidelines proposed by the Global Reporting Initiative (GRI).

The period covered by this Non-Financial Performance Declaration corresponds to 2021. The previous Non-Financial Performance Declaration was published in Faurecia’s Universal Registration Document and made available at https://www.faurecia.com/.

The social, environmental and societal information contained in this chapter meets the requirements of Article L. 225-102-1 and Articles R. 225-105 et seq. of the French Commercial Code, transposing Directive 2014/95/EU of the European Parliament and of the Council of October 22, 2014: the “Non-Financial Performance Declaration” (NFPD). Given the nature of the business of Faurecia, the following topics: food waste, fight against food insecurity, respect for animal well-being, responsible, fair and sustainable food does not do not constitute main CSR risks and do not justify a development in this management report

The scope, as well as the methodologies for calculating the social, environmental and societal indicators are described in Sections 4.2, 4.4 and 4.3 respectively. Changes made to previous data or adjustments are specified in each section.