Legrand SA (LR) Earnings Call Transcript & Summary

Ladies and gentlemen, dear shareholders, welcome and thank you for being with us for this combined general meeting of our group. That is our annual meeting, which will be an opportunity to review the 2023 records and achievements. You know that at Legrand, the value creation is integrated from the standpoint of financial indicators as well as the CSR road map that are part and parcel of our business strategy from the financial and nonfinancial items, we have delivered in 2023. And even so in 2024, this is demonstrating the resilience of its model with an allocation of equity, which is well balanced. Later on, we will offer a EUR 2.09 dividend that is plus 10% while will we keep investing in innovation and acquisitions. A performing company is also a well-governed company with a diversified Board of Directors carrying on its natural cycle of renewal. And we'll have the opportunity to thank later on Annalisa Loustau, whose terms of office is coming to an end today for her contribution as a Director and Chairwoman of the compensation company, and we will also submit your vote, Jean-Marc Chéry's renewal in-charge of CSR as well as the appointment and the election of Rekha Menon, a new director whose background will be revealed later on. Also saying goodbye to Daniel Buisson, one of our 2 workers' representative directors who is going to retire after 43 years of career, whom I also would like to thank. I suggest we start with some housekeeping information for this combined general meeting, your admission card as well as a digital tablet was given to you to vote on the resolutions. We have next to me, Benoît Coquart, the CEO of the group; Franck Lemery, the CFO of the group; as well as Emmanuelle Levine, who is the Legal Director for the Group and Secretary of the Board of Directors. It is a public meeting open to the public. It is also webcasted in -- it's French and English webcast on our website, www.legrandgroup.com. We'll first have to elect our bureau. The two scrutineers are the shareholders with the highest number of shares and who have accepted this function. Based on the list given to us by Societe Generale, the shareholders present in their room accounting for the highest number of shares are Mr. Olivier Bazil and Mr. Gilles Schnepp. [indiscernible] scrutineers, we would appoint as Secretary to our combined shareholders meeting, Mrs. Emmanuelle Levine, our bureau is made now. Regarding the quorum, I'll ask Emmanuelle to remind you what are the rules for the quorum.

Thank you, Morera Angeles. The quorum for an ordinary meeting for a first invitation is 20% of the shares. And for an extraordinary meeting is 25%. The provisional quorum stands at 80.08% of shareholders with voting rights. So the quorum required by law is valid.

And our meeting may start its deliberation. Based on this information, therefore, I declare officially this meeting is open. Emmanuelle can you confirm that all the preliminary documents have been made available to the shareholders?

Yes. Reports from the Board on financial statements, consolidated financial statement as of December 31, 2023, as well as the text of resolutions and all the documents as per the French law have been made available to the shareholders in the -- as per the legal requirements. I also would like to inform you about the presence of statutory debtors and Board of Directors, President, Mr. Gaël Lamant; and [indiscernible] for PwC. The first one for [ Lazard ]. We also remind you that it is a combined meeting with ordinary and extraordinary resolutions that Mrs. Emmanuelle Levine will further detail later on at the end of our presentation. Ordinary resolutions are resolutions 1 to 15 as well as resolution #28 extraordinary resolutions are resolution 16 to 27. I also would like to mention that we haven't received any request for new resolutions or items to be added to the agenda from the shareholders or for the Central Economic and Social committee. It is planned to end our meeting after the vote of resolution at 5:00 p.m. I will spare you the reading of the Board of Directors' meetings in minutes. You will find all the text in the reports and documents which are made available to you on the website, of the company as well as the head office of the company. Now we are ready to start with our agenda this afternoon, which is now readable here of Mr. Coquart, our CEO, will report about the profitable and responsible growth, our mid- and long-term objective at Legrand, then we will discuss the 2023 financial performance with Franck Lemery, who is the CFO, who will be reporting about the financial performance, 2023, first quarter 2024, the outlook as well as the dividend and equity allocation and Virginie Gatin, in charge of CSR who will be presenting the CSR achievements and the ESG policy for the second year of our fifth road map. Then we'll talk about corporate governance, Michel Landel, who is the Head of the Governance and Nomination Committee and lead directors will tell us about the Board of Directors' composition. And we'll be presenting profiles submitted to a vote as well as the achievements of the Board and its committees in 2023. Mr. Loustau Elia, the Chairwoman of the Compensation Committee will be representing the compensation items for 2023 and 2024. Emmanuelle Levine will then present the 28 resolutions, which will be submitted to vote and the statutory auditors will comment on their report. Then we'll have a Q&A session, and then we'll vote on the resolutions. Now I'm giving the floor to Benoît Coquart for the first part of this meeting.

Thank you, Mrs. Garcia-Poveda. It's a great pleasure to be with you, just like every year. I'd like to remind you the business model of Legrand, you're very familiar with. Before giving the floor to my colleague, we are have this trend that are helping us for the future electrification, demography, the need for energy efficiency, digitization of the economy. So there are promising avenues for growth. And on this market, driven by these trends, we have unique positioning in the industry. We are the only pure player that is specifically focusing in the building sector. We have a crystal clear strategy in terms of acquisitions and organic growth. As Angeles has said, we also have an integrated performance approach, financial and CSR approaches and an agile team and dedicated teams. So our sales, as you know, it's well balanced. God bless user between North America and Europe, 40% approximately, then the rest of the world for 20%, mainly Asia. And we have 4 main end markets, residential, nonresidential, that is office buildings, schools, hospitals, hotels, et cetera, data centers. It is a driver in other areas accounting for 5% of our sales and renovation accounting for 45%, 55% for the new build. Our ecosystem is very rich, many different players, very small players let's say, those who are installing our products fitters, electricians who will come and change switch at your home or up to big integrated companies are big customers such as Google, Amazon, Microsoft working on data centers. We also work a lot with our distributors product specifiers. And for each of these players will make sure that an added value is brought. Thanks to the quality of our product and our brand, the easiness of installation, et cetera. I would have loved to describe the whole range of products, but it is far too big. We have 300,000 product references. You have here the functions in buildings, some very traditional things such as power supply, switchers for which we're well known in France and elsewhere, but then you also the protection system. So circuit breakers. But far more than that, we also have smart houses with the capacity to remotely control your power supply at home. We have electric vehicle charging stations, a very wide range of products for clean rooms of data centers and servers way to optimize lighting. So probably the widest range of products on the market with 300,000 product references. And this means investing regularly in R&D. On average, 5% of our sales in the long run are invested every year in R&D. This is shown here with a few examples of new products that we've launched in the past quarters. So innovation for Legrand is an extremely important driver for growth. Including when the market is a bit sluggish, we still invest in R&D. Now rather than giving you too many examples, I suggest we watch a short video on the latest range of products that we've launched in France. [Presentation]

So as you've understood, is the new range, Céliane, the iconic range that we're marketing in France, what you've seen from this film is that its innovation not only in terms of cosmetic aspects or mechanical aspects, we try to innovate in all areas, including packaging. We no longer use single-use plastics with greener packaging solutions easier to cable systems for the fitters, et cetera. Second driver for our growth acquisitions. It's a highly fragmented market, at least 4,000 competitors, at least, many more certainly. And or not least, we have 350 sites targets that are of interest for Legrand. And as you know, up to 6 acquisitions can be made every year. We will review the 2023 with Franck and the ones we've launched in 2024, we have a highly selective approach. We know how to dock in these companies, and that will remain as a growth driver for the group. You have here all the logos and the names of the acquisitions that have been made since 2010. So that's 14 years ago, that's a EUR 6 billion invested and what is also extremely interesting is that at the bottom of the page, you can read that there are 3 main categories, historical segment, but it's only 15% of ourselves, circuit breakers, tubes, et cetera. In other areas where Legrand was not present before the acquisitions, this is what we call adjacent segments allowing us to meet a new profile of customers. So architectural lighting in the United States or audiovisual solutions, that's 45% of the acquired sales since 2010. And then more than 40% of the acquired sales in 2010 are the faster expanding segment for data centers, et cetera. So that's the areas where we would like to drive our growth. So between 2010 and 2023, the scope effect has been of plus 3.9% per year. So it's a recurring driver for growth, so 2% to 5% of a scope effect every year. Now these segments or fast expanding segments is a clear driver for the group and in total, their percentage in the sales of the group went from 18% in 2015 to 36% in 2023, and we're aiming for 50% in the midterm. So we would have 2 pillars, if you wish, the infrastructure, electric and digital classic typical products, circuit breakers, cable trays, cabinets, et cetera. And the other half for the fast expanding segments energy efficiency and data centers. Now briefly, we'll review these segments, starting with the data centers. Today, we have a complete offer for the white rooms and gray rooms, the technical room, so to speak, we have pictures of what we offer for these buildings. This is an expanding sector, which will grow even faster because of artificial intelligence, the chat GPT and others and these robust infrastructure to build their models. And for the last quarters, we've observed a rather fast growth rate over the last quarters. But there is a need to reduce energy consumption in this sector if the global energy consumption of data centers may represent up to 5% of energy consumption worldwide. So we need to optimize it. So we've made a series of acquisitions. You have here a short list of those that have been acquired since 2018. Three were made since the beginning of 2023, ZPE Systems, Teknica in Chile and Netrack in India. And in terms of sales, it was 15% last year, but the growth is even bigger in absolute terms. So data center is accounting for EUR 400 million in 2018. And last year, they are accounting for EUR 1.2 billion. That's 3x the sales from data centers through organic and external growth. Then you have connected products. That's a bit more conventional. The strategy of Legrand is to use a traditional family and to connect it to improve its uses like switches, for instance, you can connect it so that you're afar and when your fridge breaks down, for instance, you can have a lighting scenario. You can remotely switch on or switch off the light. You can simulate your presence at home. So for a few additional EUR 100 for a house or an apartment, you can make a better use of all these systems. And we try to do that on all products on thermal states on various door locks, et cetera. Now for the families of products today, these account for 6% of user interfaces, 92% of the charging stations. So some categories of products have switched to connected products. That's true for EV charging stations. When they're not connected to your smartphone or the invoicing system doesn't have any added value. So 92% of the sales are made with connected EV charging stations, but still is to be -- a lot to be done for protection panels or others where it's only 3% to 6% for wiring devices as well. So we need to further improve this on the few hundred families of products that family has energy efficiency products. To conclude, Legrand's got a comprehensive offer, which makes it possible to make significant CO2 and energy savings in any type of building. We have an offer for residential buildings for service buildings and for data centers. Now these are product families that are very buoyant and will continue to be so. We know what the governmental ambitions are in 45% of CO2 emissions worldwide will have to be done away with we can't reach carbon neutrality by 2060, if buildings are not made massively more efficient. And we have solutions to achieve just that. We have saved our customers nearly 9.5 million tons worth of CO2 in the first 2 years. And ultimately, they will have 12 saved once our road map has reached completion. We'll come back to that later when we talk about CSR. Energy efficiency products account for 1/4 of our sales, all types of buildings taken together, data centers, residential and service buildings. Now this will only make sense if we continue to create value. These are figures for the last 5 years. We see a handsome increase in sales, 40%. The operating adjusted EBIT on sales is just over 20%. The adjusted net profit per share is up 50%, and the free cash flow is up 112%. Clearly, the strategy is successful, and we've grown our sales. We've grown our margins, and we've increased our cash flow. Performance is one thing in the financial area, but it's another in the nonfinancial area, we were able, over the last 5 years to reduce our CO2 emissions, our direct emissions of Scope 1 and 2 by 53% with an increase in sales again of 40 so for EUR 1 worth of sales, we've divided by 3 our emissions. So that's a significant achievement. And another indicator of the HR variety shows that in the managerial positions held by women, we've made good progress. These are grades 14 plus, we stood at 29% last year where we had achieved that and manager races jumped from 15% to 26%. A further word about HR. Employee shareholding. Last year, we launched the first international employee share purchase plan. It covered about 63% of our employees in the major countries, it was nondilutive. It was achieved by a share buyback. And the subscription rate was well above international averages, it stood at 36%. And in France, it was 65%, which is quite handsome results. We are quite satisfied to see that our employees have confidence in the local model. Now a few words about added value. It is critical to ensure that, that is balanced, and that has long been our concern. You can see the allocation of added value over the long term. These figures are pretty flat over time, this is an average over 4 years. But if you look at the average over 10 years, it would be about the same. Just over half of the value is generated by our employees, 54%. 21% is dedicated to investments in development and 25% other stakeholders, 13% shareholders through the dividend and some for governments and our lenders. So that distribution is well balanced. And again, it's been pretty flat over time, and we think that's the right way to allocate your value creation or your accretive value. We have ambitious midterm targets. We intend sales growth of some 5% to 10%. And an adjusted operating margin of some 20% and free cash flow of 13% to 15%. So growth will be buoyant. We'll continue to be profitable and we'll generate free cash flow. At the same time, we'll continue to be very ambitious when it comes to protecting the climate. We have been rated by the SBTi, on our GHG emissions across the entire value chain. We intend to reach our goal. 2050 is a long way away, but 2030 target is even more ambitious than it was. We will continue to foster diversity and inclusion in the workplace, and we will continue to be eco responsible and make sure that 80% of our sales are made through eco-responsible products in 2030. Thank you very kindly. I'll hand back the floor to our Chair.

Thank you very kindly Benoît. Franck Lemery has the floor to report on our financial performance, past and future.

Thank you kindly. Ladies and gentlemen, good afternoon. I'm delighted to be here with you to be able to report back to how Legrand has been faring. Now before we jump into the figures, let's take a quick look at 2023 in pictures. [Presentation]

Now let's take a look at the figures. We did very well last year. Let's take a look at net sales figure. What you can see here is that it was slightly up and what is particularly remarkable is that if you look at the 2 main strategic levers, i.e., organic growth and external growth, well, Legrand's growth in 2023 is nearly 5%, whereas the market as Angeles told you was quite tough. Now if you look at the organic growth, 2.7%. Well, there are 2 things to note here. The first is that this is a handsome performance, given that once again, the market was very tough. It was more than sluggish, and we did well for 3 reasons. The first reason is that our employees and our sales forces did a very good job. Second contributor, the pricing power, Legrand's ability to do a good job selling the added value of its products. And that pricing power was implemented quite reasonably. The third contributing factor which allowed us to boost our sales was the impact of the fastest-growing segments, which grew nearly by nearly 11%. Each segment grew by some 2 figures. Now in geographical terms, this organic growth was 2 zones around 6%; and then North and Central America, down 2%. Europe did very well at 6% growth in a very difficult market because energy efficiency is such a significant driver at the moment, in Europe, the U.S. did very well in data centers, a strong contributor in the U.S. but unfortunately, exposed to the nonresidential market, i.e., the office building market, which is sluggish. And then the rest of the world grew by nearly 6%, very good performance with an outstanding performer, India and China, which, in spite of the complexity of its market grew for local. Let's take a look at the adjusted operating margin. Again, 2023 was an excellent year. Legrand has got an adjusted operating margin, which is greater than that of the market, about 20% generally in 2023. The adjusted operating margin was 21%. And you can see that this margin was bolstered by Legrand's strength. The pricing power that I mentioned and very careful management of investments, our spending was very carefully managed and slightly dilutive acquisitions. Legrand is more profitable than most of its competitors. So when we make acquisitions, they are slightly dilutive when it comes to our profitability, but then we shore them up and then we bring them in line with our standards. So those are the 3 main characteristics of 2023 performance and the profitability was more than satisfactory as a result. Another characteristics of the group's model is that we convert this profitability into cash. In 2023, we generated a lot of cash. I will look at the middle column, primarily the free cash flow in absolute terms, EUR 1.6 billion. That's almost 19% of sales and the conversion ratio stands at 138%. Now one of the positive effects of this free cash flow generation is that the balance sheet structure is very sound at the end of 2023 with net debt-to-EBITDA ratio 1 and a debt structure, which is also very sound, 90% of our gross debt is fixed rate. So free cash flow and this sound debt structure makes us very confident in our ability to self-finance our acquisitions. Let's step back a moment and look at how the 2023 performance was achieved. What sorts of initiatives did we undertake to achieve these results? Well, there were 2 types of approaches taken to improve our growth. First, was innovation and the launch of new products. You've seen them in the previous video clip, so I won't go into the details. But just a quick look at these slides to show you that we are very successful at innovating in both traditional products and also in areas where growth is brisker. And the second growth driver at Legrand acquisitions. And in 2023, we did a very good job there. We made 5 acquisitions well within the average number of acquisitions over the last 10 years, which brought in EUR 200 million in sales and an additional characteristic of 2023 is that these acquisitions were highly focused in those various segments, which are the most buoyant. We managed the company through innovation and investments into new businesses. And we also were very careful to carefully target our management efforts to deliver performance. A few examples of this on the left, you can see that we worked hard to optimize our industrial footprint, the plants, the premises, the buildings and this is one of our strengths by making regular acquisitions, 5 a year, we acquire new premises, new production sites, and that makes it possible to optimize our industrial footprint. The second type of managerial initiatives that we undertook in 2023 was to increase our innovation capability to add to our product portfolio. And we were able to redirect our flows to India, where there was double-digit growth of R&D. And we surpassed the 20% mark of total group R&D dedicated to software and firmware. So that now 1 out of every 5 engineers in research and development at Legrand works on either software or firmware. No, I won't go back over what the video clip showed you. Let me just recall that we've continued to optimize our operational performance. We increased our industrial investments, and we worked hard on health and safety of our employees in the manufacturing plant of the future. For dot 0, you might call it. Now the first quarter results for 2024. This first quarter has been, of course, affected by the business climate market is sluggish, and this has been evident in our sales. It is down some 5.6% and minus 3.7% for acquisitions and organic growth, which is a pretty good performance given the situation on the market. Second characteristic of this first quarter, typical of Legrand well, profitability stands at 20.6%. That's excellent. In absolute terms and the net performance EUR 300 million, which is 13% of the group's performance. And so it's been a difficult quarter, but a successful quarter nonetheless. Now in spite of this sluggish market, we've continued to invest. We've invested into new products. We have continued to invest into acquisitions. We made 3 acquisitions in the first quarter, which is an excellent pace because, again, we make 5 on average, and we're going to continue at this rate. What we can observe already is that the acquisitions we did make during the first quarter were focused those most buoyant segments, we didn't invest exclusively in the most buoyant segment. Sometimes, we make investments that allow us to move into new markets or new geographic areas. But this quarter around, we made 3 acquisitions into the most buoyant segments, connected health, data centers and connected residential systems that we used to call home robotics. Now let's try and see what would be the objective is for 2024. In this challenging market, particularly when you know the French market, the 3 objectives is that we want to keep on growing and growth is going to be maintained a low single-digit so between 2% to 3%. If I were to give you figures, to translate the English, thanks to organic growth and through acquisitions. We still aim for high operating margin between 20% and 20.8% before acquisitions. And once again, regardless of the market situations, we will invest and our CSR commitment is that we want to meet our objective that is at least 100% achievement rate. Now let's talk about our relations with shareholders and share with you 3 pieces of information. So the annual yield since Legrand, since the IPO, so plus 12% yield since 2006. A dividend that has increased by 10%, EUR 2.09. As you can read it has been growing steadily over the last year. So one should keep in mind that this growth is also supporting the group growth as to the funds and finance allocation. That's a very clear policy. It's also part of -- most of the cash that is generated is earmarked towards acquisition and some 50% of the net income with a return for the investment. That is an attractive dividend. Another thing regarding our shareholders, which is not so quantitative, but rather qualitative, it is important for us to maintain a dialogue with our shareholders as frequently as possible. So this is done via the Legrand Group website with statutory information, but also regular news that we're sharing with you. There is a letter to -- there are letters to shareholders, the shareholders guide, you may be invited to visit some of our sites. And we have a toll-free number, which you may call whenever you need. And we also have a series of tools that are made available for you. So voting for the general meeting, so e-voting, answering your questions that are in writing by e-mail or during the general meeting. And as soon as we set new ambitions, particularly CSR, we will survey all the stakeholders of the group that is you, as shareholders as well, so that we listen to you as shareholders. So that's for the financial report.

Thank you very much, Franck. Now after this financial performance, we are going to talk about the nonfinancial performance, and we'll listen to Virginie Gatin.

Good afternoon. I'll be presenting our CSR policy and our 2023 achievements on this topic. So let's have a look at our history, 20 years of history the sustainable development function was set up at Legrand, we are now at the fifth road map, which goes up to 2024, and I'll be reviewing the 2023 achievements of the fifth road map. Four pillars in this road map, diversity and inclusion, reducing our carbon footprint, everything that's related to the climate, how to promote circular economy in the company and being a responsible business, which is absolutely key for us. If we consider these 4 pillars and 15 priorities for 2023, all in all, the achievement rate stands at 118%. And if we go per pillar for diversity and inclusion, it's 111% of our objectives that have been achieved in 2023 for the reduction of our carbon footprint, it's 149%. As Benoît has explained, we have reduced our carbon footprint on Scope 1 and 2 for a circular economy, which is a bit more complicated, the achievement rate in 2023 is at 89%, and as to our responsible business, 111% to make it more tangible. Let's have a look at the examples of the achievement for diversity and inclusion. We have a high-grade 14-plus female managers, 21.1%. So it's been steadily increasing over the last years, and that's something we're pushing for. The objective is 30% for 2024 67.8% work in entities. We have these GEEIS-Diversity labeled. And that's something that we have further deployed. And we also have now over 4,000 new opportunities that have been offered to early in careers, the objective being a minimum of 1,000. As to the footprint reduction -- CO2 footprint reduction, as Benoît explained, a very nice achievement in 2022-2023. We've reduced by 40% of Scope 1 and Scope 2 over 2 years better than what we targeted. And of course, it's an extremely important trajectory, considering the global challenges on this aspect. And also, over the last 2 years, we have committed 195 key suppliers so that they would be reducing their CO2 emissions by an average of 30% by 2030, along with us for a circular economy, which is a bit more complicated, but still we're making headways. We've used in 2023, some 6% of recycled plastics in our products and 32% of recycled metals. So we're doing well with metals. There is still a lot to be done for plastics, but this is improving. And 73% of our sales were with product for which we would provide the environmental information or profile to our customers. That is what is the environmental impact of the product through its life cycle. That's an information provided to our customers. Now as to our action as a responsible employer. 90% of our employees are covered by the Serenity On program, which is a wider range of care for all our employees and their family members. So the frequency rate of workplace accident has reduced by 19% over 2 years and 95% of our employees have enjoyed at least 6 hours of training in 2023 and we'll push it up to 7 hours of training for 2024. Now other initiatives we wanted to share with you were, for instance, at the time of the energy crisis when all the prices went up, we are committed to further improve our energy consumption and reduced by 15% of energy consumption over 2 years. On a like-for-like basis, we have in fact, reduced by 17% of energy consumption at the end of 2023 versus 2021. Now increasingly rely on renewable energy. 82% of renewable electricity used by the group in 2023, and in addition, we have more and more of our industrial sites with the PV panels. There were 28 sites with such PV panels at the end of 2023, the ESG commitments are recognized. We were A- at CDP, and this has improved. We have to carry on with our efforts and we also recognized by the CDP as a leader in suppliers' engagement for our customers. Our customers have rated the transparency of the information we have provided on climate-related matters. We also support local communities via the Legrand foundation with Electriciens Sans Frontieres, but also, we have provided active support to victims. Unfortunately, there was this earthquake in Morocco, and we have provided support to the victims of the earthquake. Beyond these achievements, Benoit said it, there is a commitment which was validated by the SBTi, that is our net zero commitment. We will explain it further with a video. [Presentation]

So as you've understood, we are very ambitious with these commitments with net zero by 2050, reducing our CO2 emissions in all the value chain on scope 1 and 2 by 90% by 2050 and utilize those emissions that cannot be reduced. And therefore, we want to further commit ourselves by 2030, reducing by 42% our emissions versus 2022. And for Scope 3, minus 25% for -- by 2023. And we will tell you more about this road map in the forthcoming weeks.

Thank you, Virginie. You'll have noted that we are very ambitious in the group that's quite in line with our [indiscernible] and our values. Now we're going to talk about governance and who is better positioned than Michel Landel, our lead directors to report about this corporate governance.

Thank you, Angeles. Good afternoon, ladies and gentlemen. So I'll be talking about governance. And as you know, this company is highly demanding regarding governance. And this means complying with the highest standards. So we have separate corporate governance sector. The Board membership is in line with the best practices and in compliance with all the Afep-Medef codes with a strong involvement of the members of the Board with an average attendance rate close to 92% and finally, expertise that is complementary within the Board. Regarding the composition of the Board of Directors, I'd like to remind you our objectives that is maintaining the number of directors between 10 to 12 members. An independent directors, plus 70% gender quality, gender representativeness that is equal, diversity of all backgrounds and making this Board more international. During this meeting, as Angeles said earlier, you will be invited to express yourself as through the appointment of a new Director, Mrs. Rekha Menon from India. She has worked for some 20 years for Accenture India, for which she was a Chair and Senior Managing Director. And in addition to our experience in CSR, digital technology and strategy we will -- the Board will enjoy a thorough knowledge of the Asian market, particularly the Indian market. As Franck said earlier, India is the fourth country for the group, where the growth rate is highly sustained. Unfortunately, Rekha Menon couldn't be with us today. So she has had a video recorded, and we will watch it together.

Hello. I'm Rekha Menon, and thank you for the opportunity to introduce myself virtually. I'm based out of Bangalore in India, and I've had a multifaceted career. I was a technology entrepreneur. And then for the last 20 years, I was with Accenture, which is over a $64 billion global organization. I retired in 2023 as the Chairperson and Senior Managing Director for Accenture in India, its largest geography. In my earlier roles, I've had experience across China, Philippines, Middle East and ASEAN. Currently, besides being an adviser to corporate and start-ups, I also serve on the Board of Biocon Limited, Invest India and XLRI Xavier school for business, which is my alma mater. I admire Legrand for its business strategy, its consistent shareholder value creation, and it's value systems. I hope to contribute with my international experience of growing geographies to scale, especially focused on technology, people and ESG. Thank you.

She is not with us, but we welcome her. And also, you will be invited to vote upon the renewal of the term of office of Mr. Jean-Marc Chéry, who provided he's elected would be renewed as Chair of the commitments and CSR Committee so much so that at the end of this meeting and provided you have approved, the Board would be made of 75% of independent directors and the Medef recommends 50% -- 42% of women, 7 nationalities. In addition, your Board would also enjoy great diversity of background and expertise that are complementary to rely on for its future work. As far as my role as the Lead Director in 2023 I've worked on the assessment and of the Board and its committees with a 3-year cycle and this year was done externally. And this evaluation concluded that the Board is operating satisfactorily. I've also attended nonexecutive Board meetings, and we've had maintained a constant dialogue with the Chairwoman of the Board, the members of the Board and the CEO and the CFO. As you can read on this slide, the activity of the Board was quite dense with attendance rates, which are rather high, 93% for the Board and 91% for the committees. On the next 4 slides, you'll see a breakdown of the business that the Board attended to directly and through its various committees. We worked hard to review the risk map, and we looked very closely at how to address those risks. That was the audit committee. Then the CSR and Commitments Committee worked hard on reviewing acquisitions, worked hard on the 2023 budget in area of CSR, they look closely at the road map and achievements and looked forward to the 2025-2027 CSR period. The Compensation Committee under the chairmanship of Annalisa Loustau performed a significant amount of work, and that she will be reporting to you about that, the Nomination and Governance Committee for its part, worked on the succession planning of the Board. After this meeting has voted, should you decide to retain the candidates we have put up for election, you will see the following members of the Board. Thank you very kindly for your attention.

Thank you very kindly, Michel. We will now turn to the compensation of the directors and Annalisa Loustau will report on that. She's the Chair of the compensation.

Good evening, ladies and gentlemen. We will now turn to the compensation policy for our directors. You will be approving this ex-post and approving our plans for 2024 ex-ante. Now how did we proceed? We have compensation policy, which is simple, transparent and responsible or fully accountable. In accordance with the best governance practices, the compensation policy does not provide for any annual variable compensation or for long-term compensation, neither compensation for serving as a Director. In line with Apef-Medef code the compensation policy of our directors states that the variable portion of the compensation granted to directors should be predominant. And for the Chief Executive Officer, the structure of the compensation has got to be aligned with the interest of stakeholders and the company's objectives, notably in line with the medium-term corporate strategy. And we set the bar high when it comes to the performance. The performance criteria corresponds to key factors of the company is profitable, sustainable and responsible growth. You have seen how important CSR is for Legrand and the CEO's compensation package takes that into account. Let's come to the compensation of the Chair of the Board of Directors, again, as approved at last year's general meeting, the total was EUR 625,000 and we are putting to your vote and asking for you to approve the similar amount for 2024. The compensation of the CEO, as you can see on the screen, we have 3 columns illustrated here. The first was the target compensation approved by you last year. We're in the middle of asking you to approve the 2023 ex-post compensation and then the 2024 Ex-ANTE compensation. Now 2023 was made up of a fixed compensation of EUR 900,000, annual variable compensation of the same amount, which could have vary between 0 and 150% of the target, depending on the successful achievement of the performance criteria or fulfillment. And then the long-term variable compensation, which was twice the fixed compensation and the benefits in kind, EUR 6,135 for a total of EUR 3,606,135. Now the ex-post total was EUR 3,675,227 made up of the variable compensation as assessed very, very carefully by the Board, which ruled that the objectives have been met within 129% of our target. The long-term variable compensation was computed with outside advice and for the ex-ante package of 2024, we're asking you to approve the same amount as was approved last year. A further word about the compensation of the CEO, the variable portion is quite significant weighing in at 75% of the total, whereas the fixed compensation only amounts to 25%, which breaks down as 50% for the long-term variable compensation and 25% the annual variable compensation. The second issue is CSR. And again, you know how important it is to Legrand's Board and so we have made them weigh heavily in the balance when it comes to the CEO's compensation, 25% of the long-term variable compensation, 20% for the annual variable compensation. And lastly, the compensation of the directors. You can see how we've broken down the various components. There's a fixed portion of EUR 25,000. There's a variable portion per meeting attended of EUR 5,000, EUR 3,000 for each participation in the subcommittees. And then we have EUR 10,000 for the Competition Committee and EUR 20,000 for the Chairman of the Audit Committee. The variable portion is greater than the fixed based on best practices. So we are asking you to approve the same levels for 2024 the members of the Board travel from some distance to attend the meeting. This takes them time. And so we're suggesting an additional EUR 10,500 additional for those directors who travel from outside Europe to attend or based outside of Europe. And that would not be paid out if they attended virtually. In 2023, the total amount paid to the directors EUR 105,000. You may refer to the annual report to read how much was paid to each of the directors 6, 2, 3 and 4. So that concludes my presentation of the compensation of the members of the Board. Thank you for your kind attention. I'll now hand over to the President.

Thank you, Annalisa. Indeed, this will be Analisa Loustau's last participation in this meeting and on behalf of the Board and on behalf of all of you, I'd like to thank her very warmly with a warm round of applause for her efforts. Very well. The time has now come to read out to you the resolutions, which we are putting to you for approval, Emmanuelle. The first 3 resolutions apply to the approval of the company's financial statements, consolidated financial statements and allocation of results and determination of dividend, EUR 2.09 per share is the amount of dividend, which will be taken out of the distributable benefit. The dividend will be paid out on May 31, 2024, and that will be paid out on June 4, 2024. So fourth and fifth resolutions pertain to the appointment of Mazars & Associates as statutory auditors as well as PwC audited statutory auditors in charge of certifying sustainability information. Resolution 6, approval of the information referred to in article L.22-10-9 I in the French Commercial Code in accordance with Article L.22-10-34 of the French Commercial Code, benefits of any kind paid during or granted in respect of 2023 to Angeles Garcia-Poveda, Chairwoman of the Board of Directors. That's number 7. Number 8. So you're approving ex-post the compensation paid to the Chairman of the Board of Directors and the CEO in 2023. The ninth and tenth pertain to the ex-ante payment for 2024 to the Chairman of the Board, the CEO and the directors. The 12th resolution pertains to establishing the overall package of the directors' compensation. 13th and 14th, the nomination of Rekha Menon as Director and the renewal of the term of office of Jean-Marc Chery for a period of 5 years. These terms would end in 2027 when we meet again to rule on the financial year 2026. And the 28th resolution will make it possible to conduct all of the formalities required on the exercise of our business. Now the 15th resolution is that we will implement a program share buyback program at EUR 150. The next resolution, which is an extraordinary resolution is designed to renew the permission granted to cancel shares as part of the share buyback program. Should you approve Resolutions 15 and 16, the Board of Directors will be allowed to trade its own shares and to carry out a share capital decrease by cancellation in treasury shares. The 17th grant authority to the Board of Directors for the purpose of carrying out one or more free share awards to staff members and company officers or related companies over a period of 38 months and 18 to 25 are designed to extend the financial authorizations, which will reach their term and approved by the general assembly of [indiscernible] 2022. You will allow the Board of Directors to issue securities in certain situations and under certain conditions, depending on market opportunities and the group's need for funding in order to protect the rights of all the shareholders. These delegations will be limited in time, in amount, and we'll have caps that are governed by existing legislation and market practices. So we suggest that financial delegations granted to the Board of Directors be limited to a period of 26 months with a maximum value for each authorization beyond which the Board would have to convene a general meeting to obtain a new authorization. For resolutions without preferential subscription rights, the authorizations would not give rise to capital increases of more than EUR 100 million. For resolutions with maintenance of the preferential subscription rights, the authorizations would not give rise to capital increases of greater than EUR 200 million. And this amount is also an overall ceiling, which applies to all the financial delegations excluding the 22nd, which has to do with increasing the share capital by incorporation of reserves, earnings, premiums or other items, which may be capitalized under the applicable regulations, 21, delegation of authority to the Board of Directors to increase the amount of issuances carried out with or without preferential subscription rights pursuant to the 18th, 19th and 20th resolution in the event of excess demand. 26th The modification of Article 9.1 of the statute of the society, which make it possible to stagger the directors' terms in '25, 7.5 and 9.6 of the company's article association to reflect changes in the legislation. Thank you very kindly. We will now hear our statutory auditors' reports, and they will be represented by [indiscernible] from Mazars.

Ladies and gentlemen, good afternoon. Now, your statutory auditors are pleased to present a summary presentation of all our reports. These reports have been made available in pursuant to our custom, I will restrict myself to the main points. We reported on the main item, certification of the consolidated accounts, certification of the individual accounts of Legrand SA and related third-party agreements and capital transactions planned by the business. Now as to the second resolution, I can confirm that we certified unreservedly the consolidated accounts for 2023 as per IFRS standards. We described at length 2 points. We looked at the recoverable goodwill and brands with indefinite duration. And we looked at the risk of possible lawsuits. We reviewed the accounting measures that were applied and we're assured that the calculations made by the company were reasonable and that the information provided in the appendices were comprehensive. As to the first resolution, I confirm that the individual accounts of Legrand SA have also been certified unreservedly and the main analysis that we made there was the usage value of the shares. We additionally issued a report on third-party agreements related to third-party agreements where we indicated that no related third party agreement was entered into during the financial year, and nothing was planned. The resolution pertaining to the extraordinary business of this meeting. We produced 4 reports on delegations and authorizations to be granted to your Board of Directors to undertake various transactions on the company's capital. We have no observations to make about those operations, which are fully in line with the code of commerce and the final conditions under which any capital increase would be undertaken being unknown, we cannot rule at this time. Thank you very kindly for your attention.

Thank you, [indiscernible]. Ladies and gentlemen, dear shareholders, the time has now come to give you the floor. You heard from Franck how important it is to engage in a dialogue with our shareholders. We received written questions from 1 shareholder, and answers to those questions are posted on the website for your perusal. Now in order to foster dialogue, let me remind you that we opened up a window between the 23rd and 25th to send in your questions by e-mail -- to the 28th, pardon me. And we would like to ask you now for your live questions to be brief so that as many people as possible can ask their questions.

So we will start with you, sir. Number 1 there.

Good afternoon. I'm an individual shareholder. You are posting very ambitious targets when it comes to global warming. Could you tell us what the impact of those decisions will be on your investments and on your financial performance?

Can everybody hear me? Good afternoon, sir. It's quite an important question indeed because the sustainable development initiatives imply a cost, which might be significant. And we do not have a global amount because it's diluted in the whole organization. Of course, when you replace a plastic packaging by a transparent paper or clear paper. When you have an approach to reduce the frequency rate of accident at work, it has a cost. PV panels on our roofs also involve an investment, but I think that for Legrand, this investment is profitable even though I cannot quantify this investment at this stage. All these initiatives in relation to sustainable development will have a benefit, a profit like, for instance, reducing the frequency rate improves well-being at work, productivity and when we show our customers that we are able to reduce the single-use plastic packaging, it is also encouraging them to use the Legrand devices. So it's a general trend, this sustainable development trend. And there's no way we will be going backwards. We are very ambitious on this topic. And in terms of cost, it's well controlled when you consider our margin, it's an operating margin of 20%. It was roughly 20% 20 years ago. In the same time, we've made a lot of acquisitions and implemented a lot of sustainable development related initiatives. But these investments are necessary, they are not in a contradiction with a very nice financial performance, and it's like the cost of quality. You might say, well, quality of a product has a cost indeed, but we're not going to sell low-range products. So it's the same approach.

There is somebody #2.

Good afternoon. Bruno Roger, I'm an individual shareholder. Maybe to Mr. Coquart, I'd like to understand at the end of 2023, what was the overall exposure of Legrand to Amazon if we consider our business in North America, for instance, what is the sales that were made with Amazon in North America and the purchasing power of Amazon, does that imply that your pricing is lower with Amazon as opposed to other big American customers.

Well Amazon for us is 2 things. That's the distribution structure, that is the amazon.com selling online or via some marketplace some Legrand products via for individual customers or professional customers. Amazon is one of our customers, just like any other customer, it's not the biggest customer. Why? Well, because our electricians and fitters quite often find a more added value when they go via the traditional channels where they can grant us training, longer times to pay their bills, et cetera. So the standard conditions with Amazon as a customer. It is a significant customer for data centers. You know that Amazon is a big operator of data centers via AWS. It's a subsidiary just like Google, Oracle and Microsoft, it is a customer we work well with valuing what we're doing with $3.8 million in the United States. So it's a few percent of our total sales in the U.S. now via distribution in Amazon as a data center operator is a quite respectable client with whom we work rather well. We have good business relations, but it's not -- it's still a small customer.

Number 3 and then back to the other side of the room with number 1.

Mrs. Chair. I represented the RPD association for individual shareholders. I have an observation. We've read in the invitation letter available on the paper and electronic format. In Page 6, you are mentioning the 2022 sales, net sales, we are talking about the 2023 meeting if my memory is right. Second comment, you have had excellent business result. Congratulations. The added value distribution is quite appealing with 50% for your teams, and if you want to increase the number of individual shareholders with Legrand maybe a bit more should be done for these individual shareholders that is a proper cocktail and a gift could be offered to the individual shareholders. So you see, I'm not the only one asking for it. You've mentioned earlier also that artificial intelligence is a driver for Legrand in the forthcoming years. We do agree with this statement. However, but could you please tell us how generative AI is going to help you in the way you address your product portfolio with your sales teams? And will that mean productivity gains from the company?

So for the first observation, there is -- of course, this is the 2023 shareholders meeting on the same page, you have the 2023 financial statements and the consolidated financial statements for 2023. And on this page, on top of that, there is an explanation as to the variation of our financial statements between 2022 and 2023. So all the figures are in the leaflet on Page 6.

I'll take the 2 other questions. as to your observation. Okay we've agreed with Mrs. Chair last year. Giving you a gift is always a present. Now Legrand, well, you're familiar with the Legrand products. These are -- those people who are experienced in DIY. We have very few products which could be standard consumer goods if we had, had other products because we were selling other types of products that would have been easier. The times are changing indeed. Comments by the shareholders cannot be heard by the interpreters.

Now regarding artificial intelligence, there are indeed 2 main things to be said about it. So there are the data centers. On the one hand, there is a figure which is quite striking a rack is what we use for servers, a conventional one, it's a 6 or 8 kilowatts per rack. I want to run the generative AI. It's 40 up to 100 or even 200-kilowatt per hour. So if you go from 6 to 200-kilowatt per hour. So a huge consumption of energy. So we will need electrical panels, low voltage that are more solid, bus bars that will have greater intensity. You have smarter PDUs, et cetera. All this means also a huge investment per racks for Legrand. So that's for generative AI, which will be a significant driver for growth. Now for the second part, that's in line with your question. We are working on proof of concept, PUCs where we test a series of projects, the coding of software. We're running tests to see if the codes that have been written by the operators are relevant. Technical documentation can -- you can now find technical documentation more easily, you have the information better structured. We are testing things with our sales teams to see from low levels, signals those customers that are high potential customers, those who might be leaving us. So there are several proofs of concept underway and we're running tests and we try to see if there is a return on investment with this proof of concept. And if so, they will be massively deployed. Now this productivity gain is interesting. It is a common concern for all companies in France. So all global companies will improve their productivity. That's for sure. But the business impact via the data center is specific to Legrand, and that could be quite significant.

Now I think there was another question.

Good afternoon. In France, there is on fire every 5 minutes, 80% of the residential electrical installations that are more than 10 years old. Quite often, these fires are due to short circuits and flawed electrical installations. Now, do you have any products or solutions or approaches that are aimed at raising awareness among users on these problems, which may result in a terrible situation with fires in homes with casualties and my second question is about your -- the equity is the -- and I would like to know how things have changed since the Schneider episode.

No, thank you for this first question. It's very good sir that you're reminded that electrical devices may be hazardous, there are thousands of those fires that are due to these electrical installations, thanks to the standards and the quality of the customers, we are good at installing this. You have a 230, 240-volt cables that can be -- may kill people. So we, first of all, focus on the quality of our product with protection systems, we test our products in our production sites. We test the finished products. I'll spare you all the details, but Legrand is usually providing high-quality products. We're often told that our products are expensive, but the quality has a price. We train also our partners, installers when they use our products and also design products that are easier to fit and install like if you have an electric table, you automatically have the clipping of the cable, so that there is no manual operation on the cable. So many tips and things for the fitters and installers. We also work with the standardization organizations and regulatory body to test our equipment. For instance, we were the drivers in developing the electric diagnosis so that when a house or an apartment is being sold, a certain number of security items are being checked to make sure that the electrical installation is fit for purpose. But thank you for your question. It's good to remind that these products are being tested. Now regarding the shareholding structure, it has changed a lot since the unlocking from Schneider to leading shareholders [indiscernible] controlling shareholders. And some have left. And since then, we have a floating structure, which is rather high more than 94%. Now is the family still present? Yes. It's an individual shareholder in Legrand accounting for 5% of our Legrand's equity.

Back to #1. No, there was another gentleman there. Okay. Same person.

Okay. Good afternoon, [indiscernible] I'm an individual shareholders, and I've been a shareholder since 1997. Setting aside the episodes you've just mentioned. I have 2 questions run about copper. Copper is needed to -- for electricity, the price of copper has been very volatile over the last years. When do you -- how do you protect yourselves from this exposure and do you use other solutions like you were talking about recycled metals earlier? Second question, regarding external growth, and that is acquisitions, you buy many companies year in year out. Could you give us a bit more details about their companies? Are these old companies or new companies. And why do they accept to join Legrand? Is it because their managers are retiring and selling their business? Or is it because they've reached the maximum of their business development. And therefore, that's why you -- they accept to join the Legrand Group.

Well, a very low exposure to copper, 2% to 3% of our sales closer to more than 3. Of course, when the copper is at $6,000, it's more interesting for us than when the copper is at $12,000. But it doesn't have a significant impact on our books. We do not depend on one particular raw material, if you consider copper, silver, other metals, plastics, et cetera. We are not dependent on one specific raw material. But of course, when these raw materials prices are going up, we'll have to price up our products. Now to the businesses we acquire #1, #2 in their sector. Of course, we would go preferably for data center-related companies. It's a company that has a very good market share on their market segment because in our business, when you're a leader, you have a good management, you have high-quality products. They have the right teams. You are profitable, you generate cash flow, et cetera. So everything is aligned. Now as to the latest acquisitions we made for innovation in the Netherlands, they are the super leader for software for health care systems in Belgium and the Netherlands now [indiscernible] in India. It's a small business, but they are #1 for the racks of data centers in India in their region. So this is the type of profile we're targeting and that's 90% of our acquisitions. Why do they sell? Well, usually, it's because there are family businesses, they were developed by one businessman, who started in his garage and then has grown with his business and when those people reach the age of 80, 85 years old, they've developed their business, they do not necessarily have heir to transfer their business to. And usually, they know Legrand because they have business relations with us and then they ask us whether we are interested in acquiring them. That's for most of the cases. It's an issue of succession.