Good morning all. For those of you who don't know me yet, I am Ian Meakins, Chairman of Rexel's Board of Directors, and I am pleased to welcome you to the company's annual general meeting.
At my side are Guillaume Texier, CEO, Laurent Delabarre, Group Chief Financial Officer, Agnès Touraine, Chairwoman of the Nominations and Compensation Committee, and Isabelle Hoepfner-Léger, Group General Secretary and Secretary to the Board of Directors. I call the meeting to order and hand over to Guillaume Texier, CEO, to tell you about further information.
Good morning, everyone. First of all, we need to appoint the officers of the meeting. As Chairman of the Board of Directors, Ian Meakins will preside the meeting. The two shareholders, Rexel Actionnariat Classique France, represented by Ms. Isabelle Payne, and Rexel Actionnariat Classique International, represented by Peter Amman, President Willingur, appointed as tellers.
Isabelle Hoepfner-Léger will act as secretary. KPMG SA and PricewaterhouseCoopers Audit, the company's statutory auditors, are in attendance. The attendance sheet shows that we have reached a quorum of one-fifth of the shares entitled to vote for the ordinary part of the meeting, and a quorum of one quarter of voting shares for the extraordinary part of the meeting. Indeed, shareholders in attendance represented having voted by mail own together 265 million shares, 87.13% of voting shares.
Consequently, I declare the meeting constituted and able to validly deliberate. I inform you that all the documents required by law have been filed with the meeting. These documents have been made available to shareholders at the registered office and have been posted on Rexel website in the legal time limits. For the sake of simplicity, we will not read in full the following reports.
The management report of the Board of Directors on the company's activities and the annual consolidated financial statements for 2021. The management report includes the Board's report on corporate governance, the report of the Board on bonus shares, and the Board report that includes detailed explanations on the draft resolutions. The floor will be given to the statutory auditors for the presentation of the reports.
We'll be available to answer your questions. I remind you that the general meeting of shareholders has been convened to deliberate on the agenda set out in the notice of meeting published in the BALO and on pages 46 and 47 of the notice of meeting booklet, which you received when you entered the meeting. Finally, the meeting has.
Let me confirm that the company has not received any written question and that no draft resolution or item to be included in the agenda has been submitted. Let's begin with the presentations now. This is an important time for me because today is my first general meeting at Rexel. As you know, I joined Rexel Group as Chief Executive Officer on September 1. Patrick Berard has agreed to stay on until March 1 to work alongside me, ensure smooth transition in the implementing Rexel strategic roadmap presented in February 2021, and I thank him for this.
I would also like to take this opportunity to tell you how confident I am in Rexel, its amazing teams, and its executive committee, whose members you can see on the slide being shown right now, who work with me on a daily basis and who have mobilized to produce outstanding results in a context that is to say the least unusual, as we'll now show.
On this slide, you can see that 2021 has been a record year for Rexel, whatever indicator we look at. Our revenues, which hovered between EUR 13 billion and EUR 14 billion, rebounded strongly to EUR 14.7 billion, even before benefiting from the full effect of the Mayer acquisition. We posted by far our highest constant currency growth rate since 2007, at 15.6%. This is helped by the fact that 2021 was a recovery year.
Even over 2 years, our average growth rate is 3.7%, the highest in 10 years. Our EBITDA margin reached 6.2%, its best performance since our IPO in 2007. This performance is tied to 2 sets of factors that really go hand in hand and cannot be separated. First of all, external factors.
We've enjoyed a strong post-COVID-19 recovery, which has gone well beyond simply executing projects deferred to 2020, from 2020. We're now seeing that the boost for the sector from the savings redirected to the renovation stimulus plans will last longer. Second external factor, a general turn towards electrification.
Everyone's talking about it, but we're really starting to see the effects on our sales, especially with the growing awareness of sustainable development. And last but not least, the return of inflation.
After a decade of low inflation or even deflation in some product categories, these are all positive factors for us and factors that we believe will last. Finally, very important internal factors. The record results we're posting for 2021 would not have been achieved without the efforts of employees over the past few years, which have enabled our commercial success and improved margins, particularly through digital tools.
On slide 6, we take a closer look at the highlights of the year. Rexel's performance was achieved in a turbulent year. Yes, we had volume gains, but we had to achieve them without additional costs to generate leverage, and we improved productivity. Yes, there was inflation, which is generally positive for distributors, but it took discipline to pass it on our prices, which we did, especially thanks to our digital processes and tools.
Lastly, the keyword for 2021 was agility. We had to navigate between COVID-19 constraints, especially in second half of the year, and growing difficulties in the supply chain due to the availability of some products from our suppliers. In this uncertain environment, we were able to demonstrate our value to customers with appropriate product inventories, leveraging our long-standing relationships with the suppliers, and mobilizing our expertise through alternative solutions to customers when products ran out.
On slide 7, you can see that we are ahead of the targets we announced in our February 2021 strategic presentation. In terms of profitability, we stand at 6.2%. Adjusting for one-time items, we would be at 5.8%. We had forecast probably above 6% from 2023 onwards, excluding non-recurring items.
We're therefore one year ahead of schedule since our objectives for the year called for an EBITDA margin above 6%. We also expected to grow faster than our peers, and this is clearly the case. Our digital sales are up 27% in 2021 after a COVID-19 year, where we made a big leap forward in this area.
We're on track to reach 1/3 of our sales on the digital channel in the medium term, which was our goal. FCF conversion was above our target in 2021 with 6% conversion. Lastly, as far as acquisitions are concerned, we've had a busy year. We're extremely pleased with the transactions that have been completed, as we'll see shortly. On slide 8, you can see the progress made in bringing all our countries to our profitability target.
It shows clearly more than two-thirds of our sales are now achieved with an Adjusted EBITDA margin above 6% compared to 38% of our sales in 2020. This shows that profitability is improving throughout the company, driven by structural measures we've put in place to improve our business and productivity.
On slide 9, you can see that Rexel has resumed its acquisition strategy in a selective and disciplined manner with 5 transactions aimed at accelerating our growth. These five acquisitions have brought in EUR 1.2 billion in additional revenues, and that's all ahead of schedule in terms of integration and synergies, and we're very pleased.
In particular, I would like to mention the acquisition of Mayer in the U.S., which was completed in great condition and which significantly strengthens our position in the world's largest market.
We'll continue to seek out opportunities that meet our three acquisition criteria: strengthen market shares in electrical distribution, acquire additional services, and develop value-added models. On this slide, you can see we're positioned on a growing market, a booming market, and you can see this in these graphs.
On our Investor Day 2021, Patrick Berard presented how Rexel would benefit from the structural trends in electrification, the increase in electrical usages, and the growing demand for energy efficiency in a global context of accelerating energy transition.
What I like about these graphs, which come from the International Energy Agency, is that beyond the building sector, you can also see industry, which is another important market for Rexel. Players are serious. While players are serious about the net zero trajectory, there's more and more in the building, in the construction sector.
They will have to electrify massively. There's no other way. What's interesting for us is that electrification adds complexity and technicality. When we talk about grid balance, microgrids, electric vehicle charging capacity, automation, innovation, and connectivity, for example, all of these represent opportunities for us to sell more or add value through our complementary service offerings.
Slide 11 illustrates our model, which is fundamentally omnichannel. Rexel relies heavily on digital, as you will see on the next slides. We also believe that for our customers to be served effectively, we need more than that. For instance, we allow them to stay focused on the performance of their business, and this is increasingly crucial in the context of skilled labor shortage. We also offer efficient logistics and customized services right up to the last mile and sometimes under 2 hours, thanks to our dense network.
We provide expertise and training to customers either remotely or at the point of sale. We have a range of digital tools to increase our productivity and that of our customers. All of these bricks are important one way or another for our two main categories of customers, local customers and project customers.
There are specificities by country and by client, but the strength of this model, what makes it relevant for our customers, is the ability to offer all the functions developed by Rexel. On slide 12, we focus on the progress made in digital. In 2021, it accounted for nearly EUR 3.5 billion in revenue, nearly a quarter of our sales. In Europe, we're well above this level, with 35% of our sales coming from digital, and we are above 30% in eight countries in total.
In the U.S., we're also making progress and even including Mayer, which is a bit behind because digital sales account for 12% of sales in North America, and we see substantial room for growth. We should also note that in North America, the lower rate of digitization has to do with the fact that a much higher share of project business in this market, accounting for more than 1/3 of sales.
If we consider only warehouse sales as comparable to other markets, we would be closer to 18%. Digital transformation means more than just moving sales to the digital channel. It also means a complete overhaul of our organization to make it data-driven. This slide shows several examples. Digital transformation starts with a thorough analysis of our customer and product segmentation.
This allows us to gradually roll out our tools across the group and to implement our key digital initiatives such as customer churn, branch stock, next best offer, tracking and tracing, and EDI emailing. 2021 also included the launch of a supplier portal, which strengthens our partnership with our key suppliers and strengthens our role in the value chain.
Slide 13 highlights ESG topics and, more specifically, those related to sustainable development. Rexel is the only retailer and distributor with targets validated by the Science Based Targets initiative or SBTI, and 100% of its bond financing is conditional on meeting sustainable criteria as of this year. Rexel is already doing a lot in this area, but we can and must do more to further guide our customers towards the most sustainable solutions.
We must do the same in our own operations, and the example on the right shows it quite well. Thanks to our investment in a fully robotized store called AutoStore, located on the outskirts of Paris, we can offer an unparalleled value proposition, namely clean and responsible on-site delivery in two hours using electric vehicles and bicycles to reduce CO2 emissions by more than 30% compared to conventional delivery methods. We're accelerating the ramp-up of these forward-looking topics, and I will now show you the system in a video. Over now to Laurent Delabarre for the 2021 financial results.
Thank you very much, Guillaume, and good morning, everyone. Over now to the presentation of the group's financial results on slide 15. Slide 15 shows the group's sales for 2021, their geographical distribution, and a comparison versus 2019 and 2020.
At group level, like for like sales growth was up 15.6% on 2020. In addition, the level of activity is higher than before the crisis, with sales growth up 8.3% compared to 2019, thanks to all geographies and more specifically Europe, which grew by 11.8%. On slide 16, we're looking at our annual sales performance.
Our sales rose by 15.6% on a constant currency basis and by 16.7% on a reported basis to EUR 14.7 billion. Reported sales benefited from a favorable 1.2 consolidation scope effect over the year, thanks in particular to the acquisitions of Mayer in the U.S. and the specialized distribution business with electricity suppliers in Canada. The currency effect was neutral for fiscal year 2021.
On slide 17, you can see that the 2021 sales growth of 15.6% benefited from a strong contribution from volumes of 5.9% and sustained sales price increases in both cable products up 5.2% and non-cable products up 4.5%. This inflation in sales price has accelerated over the quarters throughout 2021.
For year 2022, we expect a lower contribution from cable prices than in 2021 due to a more difficult base effect. On the other hand, a positive contribution from prices of products other than cables, thanks to the carryover effect of price inflation, particularly in the second half of 2021 in Europe.
To additional price increases by suppliers to offset the continuing rise in raw material costs. Going now to slide 18. Slide 18 shows the elements that led to a record Adjusted EBITDA margin of 6.2%, up one hundred and ninety-six basis points. This increase was all the stronger because we did not benefit in 2021 from the 15 basis points of the COVID related effects that supported our Adjusted EBITDA margin in 2020.
The increase in 2021 comes from a positive operating leverage of 170 basis points resulting from a strong volume growth and price increases. A net positive non-recurring effect of 40 basis points resulting from a one-off positive gross margin gain of 80 basis points due to the inflation of the price of inventories excluding cable.
On the other hand, a one-off negative effect of 40 basis points due to the increase in performance-related bonuses, in particular, our sales people, in the context of better activity than anticipated in our initial budget. Last but not least, we also had a productivity impact. 36 basis points linked to the structural adjustment measures implemented in the second half of 2020, which compensated the cost inflation of 34 basis points. Going to slide 19.
As you can see, each geography contributed to our record profitability. First of all, looking at gross margin and excluding the positive one-off effect of the gain related to price inflation of non-cable inventories, our gross margin benefited from pricing initiatives in all geographies. Also from strong commercial selectivity in our North American project business. Let's turn to the Adjusted EBITDA margin.
Profitability improved in all regions, even when adjusted for positive one-off effects. Europe's Adjusted EBITDA margin was 7.1%, up 174 basis points, including approximately 20 basis points for non-recurring items, largely due to the combination of the positive impact of gross margin, robust sales growth, as well as the implementation of structural measures. North America's Adjusted EBITDA margin was up 6.5%, up from 5.5 in the previous year.
That's 278 basis points, of which approximately 100 basis points related to non-recurring items, largely due to factors similar to those seen in Europe. The Asia Pacific's Adjusted EBITDA margin was 2.4%, up 52 basis points. They're largely driven by growth in the Pacific. We are now on slide 20, looking at how we achieved historically high net income and recurring net income in 2021.
In addition to a strong increase in Adjusted EBITDA compared to 2020, which is historically high, we benefited from a non-recurring favorable effect of EUR 58 million linked to copper prices and the absence of exceptional goodwill impairment charges, which had impacted the other income and expenses line in 2020.
Our recurring net income also benefits from reduction in financial expenses of approximately EUR 12 million, thanks to the refinancing strategy implemented in the recent years and the sharp reduction in the group's debt level. I would like to draw your attention to the fact that the financial expense carried forward increases in 2021, but only because of non-recurring items linked to the EUR 23 million in expenses for early repayment of the two bonds that we refinanced with two issues linked to sustainable development objectives.
Let me also add that our income tax rate was 23.2% following the recognition of an exceptional deferred tax benefit of EUR 32.2 million due to better-than-expected future taxable income in countries carrying forward tax losses.
Adjusted for non-recurring impacts, the effective tax rate was 27.3% compared with 30.7% for fiscal 2020, down 340 basis points, thanks in particular to the reduction in tax rates in France. From 2022 and onwards, we confirm our guidance of an effective tax rate below 30%.
As a result, net income was EUR 589 million compared with a negative EUR 261 million for the previous year, and our recurring net income was EUR 575 million, up 107%, reaching a historically high level. We generated record free cash flow before interest and taxes, reaching EUR 681 million, reflecting the robust operating result.
Excluding the atypical year of 2020, the free cash flow conversion level is 65.7%, which is higher than in 2019. Free cash flow after interest and taxes amounted to EUR 426 million after payment of EUR 56 million in interest and EUR 199 million in income tax. The free cash flow includes a significant cash outflow from operating working capital requirement of nearly EUR 324 million to finance the strong rebound in sales well above the level of 2019.
At the same time, the change in non-operational capital requirement generated a positive cash flow of EUR 116 million, largely from the provisioning of variable compensation to be dispersed H1 2022. Allow me to share a few elements on the evolution of investments, CapEx.
Gross CapEx amounted to EUR 103 million, 50% in IT and digital, representing a ratio of 0.7% of sales, slightly below our target of 0.9%, but achieved on a level of sales above forecast. The financial investment of EUR 439 million is linked to the 5 acquisitions carried out in 2021, including Mayer in the U.S. and the specialized distribution business with electricity suppliers in Canada.
This leads to a level of net that's slightly higher than last year at EUR 1.55 billion, while at the same time, our leverage ratio is at 1.37 times, has reached an all-time low. One essential part of this presentation, and we're now leaving the consolidated financial statement of the Rexel group and moving to the parent company financial statements of Rexel S.A.
Operating expenses amounted to EUR 45.2 million, up compared to the last year, mainly due to a non-recurring charge of EUR 11.1 million related to refinancing operations and EUR 5 million related to central projects. 26.9 million, an improvement on 2020, thanks mainly to our bond refinancing policy and the overall company's debt reduction.
We're looking at EUR 22.9 million down from 2020 due to the absence of tax losses in 2021. As a result, Rexel S.A.'s net income was -EUR 53.2 million, compared with -EUR 6.8 million in 2020. On slide 23, we present our proposed distribution of dividends for fiscal year 2021 to be paid in 2022.
Rexel proposes to increase the dividend by 63% to EUR 0.75 per share. That's EUR 0.29 more than last year, payable in cash on June 7, 2022. This distribution is submitted to your approval and forms part of the resolutions. It represents a payout ratio of 40% of the net recurring income in line with our dividend policy.
This distribution offers a yield of 3.8% based on yesterday's closing share price. Now, let me introduce the sales for the first quarter of 2022. For the record, we are now on slide 25, showing the highlights of the first quarter, 2022. Overall, we had a very good start to the year with like-for-like sales up 16% and growth in all regions.
What is very encouraging is that this growth was very balanced, fueled by both volume and price. Volumes contributed 283 basis points to growth in the quarter, despite ongoing product availability issues.
Pricing was also favorable on both cable and non-cable products. In addition to the carryover effect from last year, we passed on additional selling price increases, demonstrating our ability to pass on supplier price increases in the current inflationary environment.
Our business should continue to be supported by a strong order book, particularly in North America. Our performance highlights our ability to turn supply chain stresses into opportunities to assist customers and help them manage product shortages and labor availability issues, enabling them to realize productivity gains. This demonstrates the key role in the value chain played by distributors like Rexel.
If we look beyond the short term, our first quarter performance also demonstrates that we continue to benefit from strong underlying demand from electrification trends, illustrated by accelerated demand for green products such as photovoltaics, electric vehicles, and heating and cooling products, for example. Sales of photovoltaic products have accelerated in the Nordic countries amid rising energy prices.
We've seen double-digit growth in air conditioning and heating products in key European markets. Last but not least, I would like to point out that with the conflict in Ukraine, Rexel has decided to leave Russia, a country that was on the list of potential disposals. We had very little presence there with sales of approximately EUR 10 million in 2021. That's less than 0.1% of the company's overall sales.
We decided to sell this business entirely by a management buyout finalized March twenty-third. Let's now go to slide 26 to examine the contribution of our three geographic areas to our sales growth of +60% on a constant basis in Q1 2022. In Europe, our first quarter was up 13.6% compared to Q1 2021, resulting from a combination of further price increases on non-cable products and positive volume dynamics.
Now more specifically in France, we outperformed the market while in the U.K. and in Germany, sales growth accelerated significantly. We also benefited greatly from the faster growth of green products, such as those linked to electric vehicles, photovoltaic, as well as air conditioning and heating systems.
In North America, we posted constant day sales growth of 21.6% in the quarter, driven by the U.S. and Canada. As indicated, the region benefited from both an acceleration in volumes and strong price increases. Finally, order books improved significantly in both countries.
Now, specifically in the U.S., where we benefited from continued positive momentum in the residential and commercial markets, combined with an overall acceleration in industrial activity that is benefiting from a favorable base effect.
Please allow me to confirm also that the integration of the Mayer acquisition is proceeding according to plan, and we are on track to reach our synergy ambitions as revised upwards in February. In Canada, the acceleration of growth was also driven by the recovery of the industrial market. Notably, thanks to demand in the mining industry, as well as oil and gas.
Finally, in Asia Pacific, sales rose 5.5% in Q1 2022, largely driven by positive price trends. There again, more specifically, the acceleration of sales in China was driven by price increases, while volume remained impacted by the shortage of e-electronic components. We also expect the recent containment or lockdown to have an impact on the upcoming quarter.
Australia benefited from an acceleration in price increases, but business got off to a fairly weak start due to flooding in the region of Sydney and Brisbane and a labor shortage in the context of the pandemic. With that, I would like to hand over to Guillaume again, who will present the company's outlook.
Merci, Laurent. Thank you, Laurent. On slide 28, we can see the record level of orders continuing into the new year, which bodes well for the coming quarters. This is due to several factors, strong underlying demand, delays in project executing due to labor shortages and product scarcity that have disrupted the business, and also customers placing preorders to ensure product availability.
Let me illustrate my point with the trends in the U.S., Canada, France, and China. You can see on the graphs here. Even though the weight of backlog business varies from one country to another, between 30% for the U.S. and 5% for France, this shows the positive trend in these countries and gives us some visibility on part of our business for the coming quarters.
I will conclude this section with our outlook for 2022 and express my confidence in the strengths of Rexel that we have outlined today. The global environment marked by supply and inflation tensions is in line with the fourth quarter, where we delivered excellent results. Indeed, provided we manage supply chain constraints well and pass it on to prices, there are situations in which the added value of a professional distributor becomes quite clear.
A new parameter in our landscape, mainly affecting Europe, is the dramatic situation in Ukraine and Russia. Predicting precisely what the impact will be on Rexel is obviously difficult at this point, but let me give you some qualitative indications. First, as Laurent told you, we sold our Russian business, which account for less than 0.1% of our worldwide sales in the early days of the conflict.
Second, it is clear that these events will add to supply chain stress, primarily on the inflation side. Increases in energy and raw material costs must be passed on, and this is already starting to happen. Third, we're seeing a positive impact on electrification trends. Rising energy bills in most European countries make any energy-saving project much more attractive.
For example, we're seeing an increase, like Laurent mentioned, in solar projects in many European countries, and we expect to see the same acceleration in other so-called green products, such as heat pumps or charging stations for electric vehicles. Lastly, there will probably be a macroeconomic effect across the board because of the conflict, but it's hard to assess it at this point.
In a context where order books are full and the supply chain is the main hurdle, we have not seen, at this point, any change in trend that can be associated with the situation. In this context, we're confident that we will achieve the objectives we communicated a few months ago. Namely, like-for-like sales growth of 4%-6%, as Jeff said, EBITDA margin above 6%, and a free cash flow conversion of over 60%.
Lastly, regarding our transformation and growth drivers, we've already made significant progress, but we can and must go further. Slide 30 shows you what we have achieved and where there is still potential. We are considering, for instance, that deleveraging is largely complete, allowing us to allocate more to acquisitions or shareholder return. We're also well advanced in operations excellence and digital, and we will continue to make progress.
Similarly, we'll also accelerate growth by continuing our efforts while benefiting from structural trends such as electrification and the energy transition. The areas that offer even more opportunity are acquisitions and ESG, where we're seeing significant potential to build on our existing strengths. We will have the opportunity to elaborate on our strategic roadmap during an investor presentation on June 16 in Zurich at our largest branch.
Now we introduce you to corporate responsibility. Sustainable development is part of Rexel's DNA. Very early on, more than 15 years ago, we decided to make it a driver for our performance. It's been a long road, in which we learned first from the best. We then got structured to best meet the expectation of the stakeholders and developed our first sustainable development strategy, also creating the Rexel Foundation in 2013. This was rewarded, and Rexel has included...
was included in the podium of the best non-financial ratings and rankings in recent years. I'm very proud, for instance, that Corporate Knights ranked us as the world's most sustainable company in our sector in 2021, 11th out of 8,000 companies in all industries. This is a recognition of our commitment.
Today, we're convinced that Rexel can and must go further by being a committed player in the sustainable transition of the electrical sector, and in particular, of our customers. Stimulus plans around the world include an energy transition component.
Demand for efficient electrical products will grow to support governments' climate plans. In this context, Rexel's ability to include sustainable development in its business will be a major driver of performance and growth in the coming years.
Our ambition has always been to make Rexel a company that creates value for all players in the world of energy. Each of our four pillars of Rexel's corporate responsibility contributes to creating value for our employees, our shareholders, our customers, and suppliers, acting ethically and with integrity, involving and supporting employees, improving our environmental performance, and promoting responsible practices in the value chain.
The first pillar is ethics and responsibility, which are at the heart of Rexel's activities. The group believes that responsible business management contributes to strengthening its attractiveness and competitiveness and to preserving its reputation over the long-term. Rexel has set up a compliance program common to all subsidiaries, including a code of conduct and many procedures. The whistleblowing system is available to all employees and third parties.
The group's ethics and compliance requirements are supported by a network of compliance officers and a network of ethics correspondents who work closely with local management. Finally, there is a common training program for all employees on the subject of compliance. Second pillar, involving and supporting employees. There are 26,000 employees at Rexel who contribute to the success of our company.
Involving and supporting this community is a daily challenge. We want everyone to be proud to be part of Rexel. The survey launched in 2021 among all employees has shown that 90% of employees say they are proud to work for their company. Our roadmap is based on three main thrusts: attracting and retaining talent, and especially through active career management.
Compensation policies, promoting employee commitment employability by further developing the very specific know-how of Rexel employees and offering a differentiating customer experience and accelerating diversity and inclusion. In 2021, Rexel employees were asked to respond to a survey on this topic, and 89% of respondents considered that their line manager works effectively with people who are not like him or her.
Third pillar, improving our operational environmental performance because efficiency is Rexel's DNA. We are committed every day to improving our environmental performance. Rexel has joined the Science Based Targets initiative, SBTI, and has set two ambitious climate targets, reducing its greenhouse gas emissions from internal consumption, buildings, and vehicles by 35% by 2030 compared to 2016, and reducing the carbon intensity of Rexel by 45% by 2030 compared to 2016.
Finally, our fourth pillar, promoting responsible practices in the value chain. If we want to reduce our impact, our carbon impact, and develop responsible resource management, we have to do this with our suppliers and clients involving the entire value chain. This is why we have been assessing the CSR performance of our direct purchases since 2016, and why we have adopted a responsible supplier charter, which is gradually being rolled out to our suppliers.
Finally, we're convinced there will be no energy transition without solidarity. This is why the Rexel Foundation has made the fight against fuel poverty, energy poverty its priority. Discover sections in the film, a short film. I will now hand over to Agnès Touraine, who will present the corporate governance.
Merci, Guillaume. Thank you, Guillaume. Good morning, everyone. I'm Agnès Touraine, Chairman of the Nominating and Compensation Committee. It is my pleasure to present the corporate governance and the compensation policy. Let's start with the nomination of Guillaume Texier. He was nominated in 2021 appointed as the I would like to remind you that as part of Patrick Berard's succession, the board of directors, which met on March 25, appointed Guillaume Texier as our new CEO, effective September 1, 2021 for a period of four years.
Guillaume Texier was selected after an extensive search process conducted by the nominating committee with the assistance of recruitment firm, and he was considered the best candidate to succeed Patrick Berard, and this has confirmed since. Guillaume Texier has spent a large part of his career at Saint-Gobain, which he joined in 2005. He held several positions
In management and executive positions, especially abroad. He was also Chief Financial Officer from 2016 to 2018, and then Deputy Chief Executive Officer from 2019 to 2021, in charge of France, Southern Europe, Middle East, and Africa region. He joined the board of directors as director on September 1, 2021 for a 4-year term. I'm going to now present the board of directors. Thank you. We have 12 board members.
You may not have seen them all. We have Ian Meakins, we have François Henrot online. Marcus Alexanderson, who's a non-independent director. François Auqué who's an independent director and Chairman of the Audit and Risk Committee. Julien Bonnel, who is a director representing employees. Brigitte Cantaloube, who's an independent director. Barbara Dalibard, who is an independent director as well.
Toni Killebrew, who is Director representing employees. Elen Phillips, an Independent Director. Maria Richter, an Independent Director who unfortunately has COVID and is with us online. Guillaume Texier, whom you know, and Agnès Touraine, myself, I also work as an Independent Director.
Herna Verhagen and Patrick Berard have been replaced by Barbara Dalibard and Guillaume Texier on the Board of Directors in 2021. The composition of the Board is in line with best practices. It has eight independent members, that's 80% of the Board. Five women, that's 50% of the Board members.
We're better than compliance with a 40% threshold set by Article of the French Commercial Code, and the rates are expressed excluding Directors representing employees, five members of foreign nationality, and two Directors representing our employees.
The composition of the Board of Directors also complies with our diversity policy, which is based on the following principles, presence of members with complementary and recognized professional skills and qualifications, the presence of independent and dependent members, diversity of nationalities and multicultural dimension, a balanced representation of men and women.
The Board of Directors met 17 times in 2021 with an average attendance rate of 97%. Its level of activity was intense during the year for several reasons. First of all, the context of succession of the general manager, the preparation of the new strategic roadmap, and the health crisis. As you've seen, 2021 was a record year in terms of financial performance. On slide 35, you have the composition of the Board of Directors.
In order to carry out its missions and facilitate its decisions, the Board of Directors relies on the opinions and recommendations of three committees, the Audit and Risk Committee, the Appointments Committee, and the Compensation Committee. The Audit and Risk Committee met 5 times in 2021 with an attendance rate of 100%.
During the year, its activities included the review of annual financial statements for the year ending December 31, 2020. The interim financial statements as of June 30, 2021, and the quarterly revenues for the first and third quarters, the proper functioning of internal control bodies, the financing and refinancing arrangements, as well as risks. The Appointments Committee met 10 times this year with an attendance rate of 100%.
During the year, its activities consisted particularly of reviewing the composition of Board of Directors, the nomination of the new director, Barbara Dalibard, due to the departure of Herna Verhagen. The Compensation Committee met seven times with an average attendance rate of 98%.
Its activities included the review of the compensation of corporate officers, the review of the main features of free share allocation plans, and so on. The three committees are chaired by independent members and two or three by women, which is in line with the AFEP-MEDEF code. Let's now go to the nominations and renewals.
The Board of Directors on December third decided to co-opt Barbara Dalibard as an independent director on the board, replacing Herna Verhagen, who resigned on November 29, 2021. The ratification of this co-optation is submitted to your vote. I think the best thing is for Barbara to introduce herself. Barbara?
Good morning and hello, everyone. I'm absolutely honored. I was able to better understand the company, the business. I would like to thank Ian Meakins and my colleagues, Guillaume, of course, and the entire management team for all the support they've given me throughout my early days.
Here is some of my background information. I'm very much an IT person. I used to be with Orange, France Télécom, Bull. I used to be with Alcatel and Verizon, a U.S. operator and during the past six years, I was with SITA. SITA is the data exchange leader in the aerospace industry. That's data between airlines, airports, air traffic controllers.
Throughout this period, I was very passionate and worked a lot on transforming businesses. Digital transformation, as we call it. Really digital has really changed the customer experience, customer journey. It has increased operational efficiency as well. It has improved customer relations, and it has changed business models with the emergence of new businesses.
When you look at Rexel, as Guillaume said. When you look at new technologies with connected objects, AI, robotics, and the fact there is more and more transformation coming from climate change and an increased need to make our energy greener, we're seeing that we have huge levers. Rexel is really at the crossroads of this. I'm very passionate about this, and with your support, I will, you know, I would like to be part of this adventure and provide my modest contribution.
Thank you. Barbara. Now we continue with the appointments of directors and renewals of terms of office. Since Barbara was co-opted, her term of office needs to be renewed at this meeting, so it's going to be submitted to your vote. François Auque, also the Chairman of the audit committee, there will be an anticipated renewal in accordance with provisions of Article 14.2 of the company's bylaws, providing that the board is to be renewed by one quarter, adjusted to the higher unit every year, so that it can be fully renewed every four years.
If the proposed ratification and renewals are approved, the number of directors, the percentage of women on the board of directors and percentage of independent members as presented above will remain unchanged. Thank you. Let's now turn to the review of executive compensation. Okay, about executive compensation.
Here you can see the resolution we'll be submitting to your vote. For the Chairman of the Board of Directors, a non-executive corporate officer, Ian Meakins. There's the 2022 remuneration policy, the so-called say on pay ex ante vote. His compensation paid in respect of 2021, the so-called say on pay ex post vote. That's the fifth and ninth resolutions. For board members, an ex ante vote on the compensation, sixth resolution.
For the following CEOs, executive corporate officers, the 2022 compensation policy, the so-called say on pay ex ante vote. Seventh resolution for Guillaume Texier, CEO since September 1, 2021, and the compensation paid in respect of 2021 to the two successive directors, Patrick Berard from January till August and Guillaume Texier from September to December 2021, the so-called say on pay ex post vote. Tenth and eleventh resolutions.
You see, we have more than one CEO, so we have these as many votes. There's also an ex post vote on the information relating to the compensation of all corporate officers and a vote on the renewal of the delegation of authority to the board to grant bonus shares to group employees. That's resolution 22. Let us now talk about the compensation of officers based on the Compensation Committee's recommendations.
The recommendations are drawn up with the help of independent firms such as Mercer and Willis Towers Watson. The compensation policy is based on being reasonable, consistent, and fixed for the mandate. The median for the basic salary for Patrick Berard is first quartile and even a bit below.
About the variable pay, it's in the third quartile of CEO compensations with variable or bonus conditions that are stringent to meet our shareholders' requirements. More than three-quarters of the CEO's total compensation is subject to performance conditions. These conditions are consistent with the compensation principles that apply to all employees and of course, consistent with market practices for high-level executive recruitment.
It's important to know that the compensation policy is fixed and set for the duration of the term. We comply with the recommendations of the AFEP-MEDEF code, and we have a constant concern for transparency. Regarding now the compensation of 2020 to 2022 for Ian Meakins.
Based on the compensation was reviewed and went up to EUR 300,000 for the duration of his term in office following his appointment to Chairman of the Compass Group on December 1, 2020. No other compensation is paid. As a result, his gross annual compensation amounts to EUR 300,000 and is submitted to your approval.
Compensation for the year 2021 ex ante. This is unchanged for 2022, i.e., EUR 300,000. About the directors' compensation. Here you can see the details of these compensations. We would like to renew this policy without change as it was applied in 2020.
It's 100,000 EUR for the vice president, 20,000 EUR per meeting, with a limit of 40,000 EUR for members who chair a committee, an additional chair of EUR 15,000-EUR 25,000 depending on the committee, and a travel allowance of EUR 2,500 for members who must travel intercontinentally to attend board and committee meetings. The compensation actually paid is adjusted, taking into account the actual length of the director's term of office to review your question.
The overall budget is EUR 1.315 million, which is unchanged, and effective frame is actually lower. Let's now look at compensation components paid to Patrick Berard, CEO until August 31, 2021. It's ex-post say on pay. The fixed compensation is EUR 466,667, taking into account the 8-month period.
The variable compensation for the same period was 130% of the fixed part. The achievement rate is as follows. Financial targets, 35%. Individual objectives, 25%. Financial objectives, 148%. Individual objectives, 100%. An overall performance, 136.1%, for an amount of EUR 825,522. Benefits in kind.
There's a corporate company car valued at EUR 4,901. Patrick Berard did not receive any shares in 2021. As to equity ratios, they went up a little bit because the compensation had been reduced in Q4 2020, remember, because of the health crisis for executive directors, the CEO, and members of the board.
Because the valuation of shares effectively delivered in 2021 went up significantly because of the rising stock market price at the time of effective deliveries. Details of individual performance. You often ask us about this, about digital transformation criteria. First, digital sales penetration. It went up by 197 basis points from 2020 to 2021, reaching 22.8%, making Rexel a major digital player at the forefront of its industry.
It was fully attributed, allocated. Rexel relies more and more on the use of digital technology and data analysis to reduce customer churn, and alert system provides sales representatives with information. Rexel also supports artificial intelligence since October 2020, and the launch with Total, L'Oréal, Capgemini, and Kering of Hi! PARIS, an interdisciplinary research center of excellence in the fields of AI and analytics.
The group is, of course, paying close attention and is very demanding in terms of cybersecurity, and has set up a program to protect the identity of users' data and Rexel services. The Compensation Committee and the Board, seeing these criteria, suggested granting 100% of the variable share for digital transformation. Second criterion for Patrick Berard is stability and development of a high-performing management team.
Patrick Berard was highly active in recruiting executives and facilitated transition. He was a driver in the transition, both its possibility and actual implementation. I think we can say that he passed the baton in a very constructive way. We can thank Patrick Berard for this, for giving us a smooth transition, which is a very significant success factor. 100% for this transition, which was key. Third criterion, CSR policy.
As a player in the energy transition, Guillaume told you, Rexel has set ambitious environmental targets well below two degrees of the Paris Agreement and approved by the SBTI. It also successfully completed a EUR 300 million sustainability-linked bond issue on April 27, linked to the achievement of its GHG reduction targets.
The D&I program, diversity and inclusion, was finalized in early 2021 for the next five years. The 2021 objectives have been reached, so 100% here again. Overall, it adds up to 100% for each of the three criteria, accounting for one-third of the variable compensation.
To conclude on Patrick Berard's compensation, the board is very satisfied with how Patrick Berard led the company all the way to and through the transition, and acknowledge this in its compensation to reward him for his true added value and the fact that Rexel, when you came in, was in a good situation, Guillaume, right?
Let's now talk about Guillaume Texier's expose on pay. Compensation due or awarded in effect of 2021 to Guillaume Texier as CEO as of September 1, 2021. That's the expose on pay. The compensation is, of course, consistent with the compensation policy you approved on April 22, 2021, ex-ante last year. Quickly, description of the components of the compensation. A fixed part paid for 2021 for four months. This amounts to EUR 266,667.
A variable compensation which was 120% of the fixed compensation, with rates of achievement of 148% for financial targets at 30%, and 30% for individual objectives. This adds up to 100% and an overall performance of 133.7% of the target variable compensation and a 2021 variable short-term part of EUR 427,745. Benefit in kind, a company car as well as unemployment coverage specific to officers and provided for in our compensation policy, both valued at EUR 7,573 for the period under review.
Guillaume Texier was granted 35,000 shares in October 2021, valued at EUR 565,250, taking into account an IFRS 2 fair value of EUR 16.15. About the recruitment allowance. In accordance with the compensation policy adopted by the board on March 25, 2021, we decided to pay Guillaume Texier an induction allowance of EUR 800 thousand, which is 50% lower than the estimated loss of long-term variable compensation suffered by Guillaume Texier as a result of the job he previously chose within the Saint-Gobain Group.
This corresponds to an allocation of bonus shares. This level of compensation is in line with the compensation policy and does not exceed two-thirds of 2 years' total compensation for the previous position.
This compensates for less than 50% of the sum he suffered, and this was already approved ex-ante in 2020. It's now submitted to ex-post vote today. Equity ratios. It's hard to discuss because it can't be compared to the previous year.
His effective payment compensation effectively in 2021 is solely the fixed compensation, so the equity ratio will be recalculated in 2021, taking into account the full components. The variable compensation will be paid according to provisions only after your approval, of course. Reg arding the details of variable criteria.
First of all, two women who were appointed on the executive committee to the position of Director of Strategy and position of Secretary General, which is part of a successful management team, Guillaume and Rexel has shown commitment to more diversity in the executive board, and I think that this is a strong sign for everyone.
Recruitment of a woman to replace the Director General of Switzerland and recruitment of general managers in progress in two countries of the group. They've given 100% to that criteria. There is the update of the medium-term plan, the construction of the 2022 budget, and the preparation of the strategic plan for April 2022.
In this context, in 2021, we had the appointment of a Director of Strategy with a strategic plan, which was already at very advanced at the end of 2021. The board considered that this criterion was met at 100%.
We've had a first 100 days report, which was the third criterion, and we've had a presentation to the board of directors in October after the first 50 days and another presentation at the end of the first 100 days.
This was in December 2021, and the criterion was confirmed 100%. That's an overall assessment of 100% for each of the 3 criteria accounting for one-third. Let's now go to the remuneration policy of Guillaume Texier as the Chief Executive Officer for year 2022 ex ante say on pay.
Fixed remuneration EUR 800,000 unchanged. Target compensation of 120%, that's EUR 960,000. Total annual target compensation EUR 1.76 million. The variable annual target portion is subject to performance conditions, and the Board of Directors aims to position the annual fixed compensation of Corporate Officers at the median of the reference market.
A It is also important to propose a more dynamic short-term variable compensation package for the CEO, Chief Executive Officer, as well as a more long-term variable compensation package that is fully subject to demanding performance conditions. We talked about the fixed remuneration. Variable compensation, the target variable portion is determined as a percentage of fixed compensation, 70% of financial objectives, non-financial objectives, 30%.
Concerning the quantitative and financial structure, the 70%, 40% is gross margin, 40% is volume-Adjusted EBITDA, and 20% is an average operating working capital criterion. As far as the qualitative individual structure, that's the 30%. 25% of that is on company sustainable development, that's CSR. 25% on the strategic roadmap, 25% on the continued company's digital transformation, 25% on successful talent management in a difficult context, with respect to talents.
As far as sustainable development is concerned, that's the 25%. We're being asked to make substantial progress on each dimension of Rexel's sustainability roadmap, including internal efforts on Scope 1 and Scope 2. The role of Rexel's suppliers.
The green products and training and awareness raising of Rexel employees on the subject of sustainable development measured by the number of training hours and thanks to a survey. 25% on the strategic roadmap. We have to establish a detailed strategic plan with the objective of a formal presentation to the markets during 2022. This will be in June, Guillaume. Digital transformation.
Here we expect continued implementation of Rexel's digital roadmap, measured by the improvement in the share of online sales and the number of specific data tools deployed and talent. The progress and development of succession plans for the members of the executive committee and, more generally speaking, the organization of talent management within Rexel. Moving on to the performance remuneration of the CEO and performance shares.
Performance shares are subject to 100% performance and attendance conditions or requirements. They're allocated within the overall budget granted by the general meeting of shareholders. Resolution 22, that's a maximum of 1.4% of the share capital over a 26-month period, and within the specific additional limits applicable to Rexel's corporate officers since 2015.
The value of shares granted to a corporate officer may not exceed 100% of his or her fixed and variable annual target compensation, and the total number of shares granted to corporate officers may not exceed 10% of the total number of shares allocated to all beneficiaries. This remains unchanged. The CEO must retain at least 20% of the shares acquired throughout these plans until the end of his or her term of office as CEO.
A few words now on severance pay. It is limited to 18 months of the reference monthly compensation. The monthly reference compensation is the sum of the basic salary and the average of the variable compensation during the last two years of office. Guillaume Texier does not have a non-competition clause. The conditions for granting this compensation are precisely described in the universal registration document.
They comply with the requirements of AFEP-MEDEF code, in particular the payment, which is subject to demanding performance conditions. Payment of 60% indemnity would depend on the level of EBITDA and 40% on the working capital, the average operating working capital requirements. Exceptional compensation. There are again strict granting conditions with very specific circumstances, in particular, in case of major transactions for the group.
A cap of 100% of the annual fixed compensation and payments subject to prior approval of the general assembly. Pension plan Article 82, which is a medium-term collective savings scheme. Guillaume Texier will benefit from Article 82 plan as of January 1, 2022 in accordance with the compensation policy applicable to the CEO. Last but not least, there is a startup allowance.
The CEO is eligible to receive a severance payment proportionate to the loss effectively incurred upon this change of function. Let's now move on to the variable compensation, the long-term incentive plan. Subject to your approval, we will continue to grant Rexel S.A. shares to a few selected beneficiaries with a view to retention. We're in a very competitive market. We need to retain talents.
Our LTI is a three-year retention and loyalty tool in a win-win scheme for shareholders and beneficiaries. It's a pretty ambitious plan. It's not for only 40 or 50 people. It will include up to 1,000 people. Let's take a quick look at the trigger levels. We looked at the trigger levels, went from 75%-85%, and we've reduced the maximum performance levels from 150 to 115, taking into account your feedback.
As the three-year targets are very ambitious by construction, we consider that the revised trigger levels are acceptable and do not reward disappointing performance. The reduction of the maximum performance also avoids that the potential outperformance on one criterion overcompensates for the potential underperformance on another sub-criterion.
Remembering here that the performance of criteria may not exceed 115% in any case. We have updated the performance criteria in accordance with Rexel's strategic plan. EBITDA , which represents 40%, cash conversion, 20%, and TSR, 20%. Here again, notice the CSR criteria, which is important and very much in line with Rexel's ESG ambitions. They were chosen in accordance with the plans.
The expected level of achievement and the performance achieved will be communicated in a very precise manner, ex-post in the universal registration document. The ex-ante communication of the objectives would not preserve the interest of the company by communicating indications on its long-term strategy in a highly competitive environment.
You will receive a lot of indications during the presentation in June. Thank you so much for your patience for the ex-post and ex-ante remuneration policy. I'm giving the floor now to our statutory auditors.
Good morning, ladies and gentlemen. On behalf of the statutory auditors, KPMG and PwC, we are going to report to you on our audits of the financial statements for the year ended December 31, 2021.
We've summarized the key points on our reports below. Here again, we've summarized the key points. First of all, a quick update and reminder of our mission and diligence. The objective for us is to express an opinion on the financial statements based on our audit.
Our objective is to obtain reasonable assurance about whether the financial statements taken as a whole are free of material misstatement in accordance with the accounting rules and principles. Our approach is adapted to the group's organization and activities, but also the complex and evolving context this year linked to the COVID-19 pandemic.
We focused on verifying current operations as well as exceptional items such as acquisitions, disposals, restructuring operations or financing operations. Our findings were presented in a report to the Audit and Risk Committee. We verified all the data that was given to us as part of the Green Taxonomy, based on the new electronic ESEF format.
As far as the key points of the audit are concerned, based on a good judgment, as you can see on this slide, in the consolidated account, we looked at the recoverable amount of goodwill and other intangible assets. The second point is relative to supplier discounts for the annual accounts.
This concerns the evaluation of equity investments. Our conclusions were expressed during the Audit Committee and to the Board of Directors on February 10, 2022. In conclusion, we issued a report with no reserves regarding the consolidated accounts as well as the annual accounts.
Last but not least, as far as specific verifications are concerned, we have no specific comments to make about the sincerity and consistency of the accounts based on the information that were given in your management report and all other documents provided.
We made sure that all documents were sincere and accurate when it comes to remuneration and other benefits paid out to directors, as well as the other benefits. I'm now going to move to our special report on regulated agreements. In accordance with the French Commercial Code, we have been advised that no agreements were authorized and entered into during the year.
Concerning the reports of the statutory auditors appointed, regarding the consolidated accounts on moderate assurance on compliance, on the declaration and the sincerity of the information which is being given to us, namely, the results of policies and certain key performance indicators. Here again, no significant anomalies were found. Regarding our special reports, I'm going to summarize the special reports on which you will have to vote.
Our first report is on the capital reduction. 10% of the total capital for a duration of 18 months. We have no specific comments or observations on the causes or the terms and conditions of this capital reduction.
This is resolution 19. As far as the issue price of equity securities limited to savings accounts holders, that's the 20th resolution. We have no specific comments to make regarding the modalities of the price and the pricing. We have no opinion on the final conditions of this issuance and the proposal to the terms and conditions.
Last but not least, we have no opinion on the choice of the elements for calculating the issue price of the equity securities, nor on the final terms and conditions, and on the proposal to cancel the preferential subscription right under the twentieth and twenty-first resolutions.
We have no opinion, no comment to make on the authorization to grant existing and future bonus shares, which is the final two resolutions. We have no comments to make. This is a very brief summary of our report for the year ended December thirty-first. Thank you very much for your attention. Guillaume?