Voici un sujet d’actualité brûlant sur le harcèlement sexuel au travail et les questions que le management des entreprises doit se poser à cet égard.
L’article publié par Arthur H. Kohn* sur le site de Harvard Law School on Corporate Governance, est très pertinent, autant pour la direction des organisations, que pour les administrateurs de sociétés.
Les auteurs présentent une série de huit (8) questions fondamentales auxquelles les responsables doivent répondre afin de bien s’acquitter de leurs responsabilités.
Il faut voir les questions comme une check-list des activités de diagnostic eu égard aux situations de harcèlement sexuel et de diverses formes d’inconduite.
J’espère que cette lecture sera utile aux gestionnaires soucieux de la qualité de l’environnement de travail des entreprises.
In recent months, sexual harassment allegations against well-known figures across a growing number of industries have become a common feature in news headlines. In the wake of these allegations, many companies have concluded that their current policies and procedures related to sexual harassment and discrimination are inadequate. Against the backdrop of this rapidly evolving landscape, companies are considering how to improve their policies and procedures not only to appropriately and effectively respond to allegations of sexual harassment, but also to deter inappropriate behavior going forward and foster an environment of openness, diversity and inclusion in their workplaces. To that end, below are 8 key questions that companies should be asking themselves in developing policies and procedures to confront sexual harassment and other forms of misconduct in today’s workplace.
The 8 Questions Companies Should Be Asking Themselves
1. Have we thought broadly, globally and proactively in developing our policies and procedures about workplace harassment?
Under both U.S. federal and state law, companies are incentivized to have policies and procedures in place that address sexual harassment and contain clear guidelines about what to do in the event an employee is sexually harassed. In addition to ensuring that their sexual harassment policies comply with applicable federal and state law, companies should consider developing other internal policies and trainings for employees and executives concerning inappropriate, offensive, or abusive behavior, including:
Policies concerning bullying, discrimination, retaliation, consensual relationships and nepotism.
Code of conduct, affirmatively establishing the expected company culture.
Trainings on unconscious bias, sensitivity in the workplace and behavioral responses to harassment and discrimination (e.g., understanding the “freeze” response to harassment).
In developing these policies and trainings, consideration should be given to the fact that the public’s perception of what constitutes harassment or inappropriate behavior has already begun, and will continue, to change. Likewise, some conduct that is unlikely to provide a basis for a legal claim against a company under the current state or federal law applicable to the company, may be the subject of future legislation. In addition, thinking not just about deterring illegal conduct but about fostering an environment in which such conduct is unlikely to occur is important. Training on unconscious bias, sensitivity in the workplace and behavioral responses to harassment and discrimination are just some ways in which the culture of a company can be improved.
As part of a comprehensive approach to developing policies on harassment, companies may also consider examining perspectives on harassment in foreign jurisdictions, including looking to local rules for guidance. Global organizations should not only adopt uniform policies across geographical areas that reflect global standards of conduct, but also should make sure that any local law requirements are adopted through addenda in relevant jurisdictions.
2. Do our employees trust the company’s procedure for reporting harassment?
If the behavior complained of is not expressly covered by a company’s sexual harassment policy or applicable law, employees may not think they have recourse through the company’s reporting procedures. Even if a company has put in place a clear procedure for reporting violations, employees may not use it if they do not trust that their complaints will be investigated thoroughly and without any repercussions. Employees may have the perception that the priorities of the individuals designated to receive complaints are more aligned with the accused or that these designated individuals have an obligation to presume innocence. Employees may moreover fear that their allegations will be perceived as overreactions or that they will face retaliation, particularly where the alleged perpetrator is a senior person or high performer. Where this is the case, employees may decide to escalate their complaints by going outside of their companies’ reporting procedures, including by sharing their stories more broadly:
through the press (Harvey Weinstein);
on social media (#MeToo);
on anonymous forums that are, or may become, open to the public (the “Sh%&ty Media Men” spreadsheet, Glassdoor.com, Blind conversation app); and
calling anonymous hotlines set up by organizations outside the company (National Organizations for Women; Equal rights advocates).
In light of this, companies should take steps to ensure that their human resources (“H.R.”) functions are sufficiently staffed and trained on how to handle concerns about harassment that they encounter outside of regular reporting channels. Companies may also consider having those in H.R. functions proactively monitor forums and other websites for allegations of harassment as a complement to their existing processes. A company’s failure to respond to allegations made in the press or on social media or to provide appropriate reporting mechanisms for harassment claims may contribute to a determination that the company has not exercised reasonable care in preventing and addressing harassment, thereby exposing the company to liability. In addition to legal risks, the publication of harassment allegations can also expose a company to reputational harm, which may be mitigated by a company’s proactive response to the allegations.
Companies should also take steps to ensure that all information concerning harassment allegations, even if not raised through the company’s reporting procedures or raised anonymously, is shared with appropriate individuals within the organization and also promptly escalated to senior management or the board. In order to comprehensively address allegations of harassment or unhealthy workplace cultures, it is essential that all known information about alleged violations be promptly and regularly escalated to senior management or the board.
3. Who is responsible for receiving complaints and do they have adequate resources and training?
Even if a company’s reporting procedures designate particular individuals as responsible for receiving complaints, employees may bring allegations to non-designated employees, including their managers and mentors. Employees may also report allegations directly to senior management. For example, recently developed apps like AllVoices enable victims of sexual harassment or discrimination to anonymously report incidents to a company’s CEO and board. Companies should thus ensure that senior management, as well as all employees and others who may receive complaints of harassment, receive training on how to respond to allegations of harassment and are well-versed on how to promptly escalate complaints within the organization. Employees should be reminded that they should never discourage someone from bringing forward an allegation of harassment and that any such allegations must be taken seriously and reported properly. As noted above, companies should also ensure that all information relevant to harassment allegations is shared with the appropriate individuals and escalated to senior management or the board on a regular basis.
Companies should also consider taking steps to assess the work environment before a complaint of harassment arises. For example, companies may consider conducting anonymous surveys of employees on their experiences in the workplace and the current harassment procedures, administering “climate assessments” in particular areas of the business, including H.R., holding skip-level meetings for senior management to gain insight into the culture at various levels of the organization, and establishing a clear open door policy to encourage openness between employees and senior management.
4. Who should be in charge of conducting investigations and do those in charge have adequate resources and independence?
Substantial consideration should be given to who is in charge of conducting an investigation into complaints of sexual harassment and to whether those directing the investigation are sufficiently independent. Companies may consider forming a committee consisting of representatives from different parts of the company to direct any harassment related investigations, including determining who should have responsibility for conducting the investigation. Depending on the nature of the allegations, an investigation by personnel in an H.R. function may be appropriate and cost effective. For allegations involving senior management or that involve pervasive behavior by a group or area within a company, a company may also consider bringing in outside counsel. In that scenario, consideration should be given to who retains the counsel and whether counsel is sufficiently independent.
Companies should also ensure that their investigations are conducted with the utmost confidentiality and assure employees that their harassment complaints are confidential and that they will be protected against retaliation. If, however, a company ultimately decides to settle with a complaining employee, it may consider reevaluating the use of non-disclosure agreements (“NDAs”), either in settlements or in existing employment contracts, which could be perceived as “hush money” or as perpetuating abusive work environments by protecting perpetrators, and which are the subject of proposed legislation in some state legislatures.
5. Has a disclosure obligation been triggered?
Additional considerations may apply with respect to responding to and preventing misconduct by senior executives. Such misconduct can create or exacerbate an abusive work environment and lead to serious reputational injury for the company. If allegations are made against an executive officer, the company should determine when and how to involve the board in dealing with those allegations. Public companies should also keep in mind that the change in employment conditions, resignation or termination of certain executives must be disclosed on a Form 8-K in the U.S., and that other foreign jurisdictions may have similar disclosure requirements.
Companies may also consider whether to review their contracts with senior executives to ensure that the contracts include provisions that require and incentivize compliance with the company’s behavioral expectations. To that end, some companies have chosen to consider, with respect to their new and existing contracts, what rights they have to terminate senior executives for cause for violations of the company’s harassment policies and to deny indemnification in such situations. One reason to consider negotiating arrangements with these protections in place is that payment of large severance packages can cause reputational harm to a company based on the perception that it is being “soft” on executives whose behavior violated its policies or rewarding executives for inappropriate behavior. On the other hand, these negotiations may present real challenges.
6. Does senior management communicate the message that harassment of any type will not be tolerated?
The adoption of strong internal codes of conduct, policies and robust procedures will have limited efficacy if senior management does not make clear that it will not tolerate harassment of any kind or by any perpetrator. Management’s failure to swiftly investigate claims of harassment or to penalize abusive behavior can exacerbate an already hostile work environment. Further, as noted above, consideration should be given to ensuring that management cannot be reasonably perceived as rewarding senior executives who do not comply with the company’s behavioral expectations or silencing victims of abuse.
Companies should encourage senior management to takes steps to facilitate openness and increased communication with their employees even before a complaint arises. Senior management should also regularly remind employees of the existence of their company’s policies and procedures related to harassment and should participate in trainings.
7. Is the board sufficiently informed on the company’s policies and procedures relating to sexual harassment?
Board members may be exposed to claims of breach of fiduciary duty following claims of sexual harassment perpetrated by executive officers or other employees of the company. In particular, public companies may face serious financial consequences following allegations of harassment at the company as a result of such claims. Boards should also be aware that there are financial risks that are not directly tied to payment of civil damages or to legal and remediation costs related to sexual harassment. The media has recently reported numerous incidents of allegations where executives have been accused of sexual harassment and other misconduct, and the companies have seen their stock price fall or lost advertising revenue, customers and business opportunities. In light of these risks and, most importantly, to protect the safety of the company’s employees, the board should periodically review the company’s sexual harassment policies, including training and reporting channels. The board should also ensure that it is being informed of violations of these policies, as appropriate, and has a sense of the day-to-day workplace culture as it relates to sexual harassment and other forms of inappropriate workplace behavior.
8. Does the company have effective standards, policies and processes, including diligence processes, to address sexual harassment issues at potential investment targets and existing subsidiaries and/or portfolio companies?
Companies may face major reputational and financial repercussions based on the misconduct of other companies that they have acquired or in which they have invested. During the diligence process, consideration should be given to inquiring into the target’s or partner’s implementation and maintenance of harassment policies and procedures, the existence of appropriate controls, and whether the investment target or its key personnel have a history of incidents, investigations or allegations of harassment issues. In addition, in appropriate circumstances, consideration should be given to engaging local counsel for investments outside the U.S. to consider whether the company’s policies comply with applicable local rules, and the impact any non-compliance could have post acquisition.
Private equity sponsors and other similar organizations should consider reevaluating policies and procedures at existing portfolio companies and subsidiaries in light of recent developments, and may further consider putting in place reporting requirements to ensure that portfolio companies and subsidiaries have implemented effective policies and ongoing training. Companies may also consider steps that can be taken internally to effectively implement appropriate policies, procedures, and training at their portfolio companies and subsidiaries. For example, consideration should be given to whether a company can leverage its own practices and policies across its portfolio companies and subsidiaries.
Conclusion
Sexual harassment related allegations are increasingly making headlines and rapidly changing perceptions concerning harassment and abusive behaviors. While the allegations initially centered on the entertainment industry, sexual harassment in the workplace has now become a major issue in a growing number of industries, including technology and finance. Companies across all industries are responding by developing strategies for tackling harassment in the workplace and minimizing risk by implementing strong policies, procedures, and complaint systems. To do so, it is essential that companies ask the right questions.
L’une des questions prédominantes — et souvent controversées — dans l’évaluation des principes de saine gouvernance concerne l’indépendance des administrateurs.
L’Institut sur la gouvernance (IGOPP) propose une approche nouvelle et originale sur la question de l’indépendance des membres des conseils d’administration.
Dans un document « L’indépendance des conseils : un enjeu de légitimité », l’IGOPP propose que toute organisation dotée d’un conseil d’administration cherche à constituer un conseil qui soit à la fois légitime et crédible.
L’enjeu n’est pas tellement l’indépendance des conseils mais bien leur légitimité et leur crédibilité. La qualité d’indépendance ne prend son sens que si elle contribue à rehausser la légitimité d’un conseil.
C’est par sa légitimité qu’un conseil acquiert le droit et l’autorité de s’imposer à la direction d’une organisation. Les conseils d’organisations publiques ou privées, sans actionnaire ou sans actionnaire actif détenant plus de 10 % du capital-actions ordinaire, devraient être composés d’une majorité nette d’administrateurs indépendants. De plus, tous leurs comités statutaires devraient être composés exclusivement de membres indépendants.
L’article ci-dessous, écrit à la suite d’une table ronde réunissant plusieurs spécialistes de la gouvernance européenne, aborde trois sujets incontournables, en tentant de tirer des enseignements pour le futur :
(1) l’indépendance des administrateurs et la pertinence du concept
(2) les divers aspects de la rémunération et les obligations fiduciaires
(3) l’identification des actionnaires et les questions de procuration des votes
Dans ce billet, nous vous proposons les questionnements reliés à l’indépendance des administrateurs.
L’indépendance est-elle une bonne idée ?
Quels sont les problèmes liés à l’indépendance ?
Quels sont les résultats de recherche qui montrent que l’indépendance améliore la qualité de la gouvernance ?
Comment composer avec l’influence des gestionnaires et des conflits d’intérêts ?
L’article publié par Christian Strenger*est paru sur le site de Harvard Law School Forum on Corporate Govervance.
Alors, selon vous, pourquoi l’indépendance des administrateurs est-elle un gage de bonne gouvernance ?
Bonne lecture ! Vos commentaires sont les bienvenus.
L’indépendance des administrateurs : panacée ou boîte de Pandore?
Board Independence: the Quality Question and dealing with Insider Issues
Background
A reliable formula for board effectiveness has been elusive, but the importance of effective boards warrants ongoing reflection and research by both academics and practitioners.
In spite of the diversity of governance models around the world, the concept of independence plays a prominent role in most, if not all, codes of governance globally as an intrinsic component of good board structure. For example, independence features, to varying degrees of emphasis, in the governance frameworks of the US, UK, Germany and Japan. It is also reflected in global frameworks, such as the ICGN Global Governance Principles or the OECD Corporate Governance Principles.
But what does independence mean in a corporate governance context, and does it deliver what we want it to? This session seeks to challenge how we think about independence and addresses several fundamental questions relating to boards and corporate governance:
Is board independence essential to quality in corporate governance—or is independence simply a placebo that doesn’t do anything but makes us feel better?
What do we expect board independence to achieve in practical terms?
Are independent directors really in a position to monitor and control corporate insiders?
These are questions that have relevance for company managers and directors, but also for investors, regulators and stakeholders.
Role of boards
A company’s board of directors is at the core of its corporate governance. Boards play a range of advisory and control functions. This includes strategic direction and risk/control oversight, along with the monitoring and reward of executive management.
At a more overarching level, agency theory suggests that one of the key roles of the board is to serve as an agent protecting the interests of shareholders vis-à-vis company management or controlling owners. This reflects a duty of care to support the company’s long-term success and sustainable value creation and to ensure the alignment of interests between management, controlling owners, minority investors—taking into account stakeholder interests as well.
Why is independence a good idea?
Shareholders and other stakeholders expect boards to have the ability and authority to think and act independently from company executives or controlling owners. The board may be unable to serve effectively in its agency role if its directors’ judgements are not free of conflicts or any other external influence other than promoting the long-term success of the firm.
What are the problems related to independence?
It is important to recognise that independence has to be looked at in the context of how it affects board processes, decisions and overall governance. Yet spite of the inherent virtues of independence, its realisation in practice is not an easy fix; nor does it intrinsically enhance board effectiveness. A director must be able to contribute something other than independence alone, whether that is in the form of sector knowledge, commercial experience, international experience, technical skills or other areas that support the board’s oversight of company management.
Moreover, independence is ultimately a state of mind, not a product of definitions. There are many different sets of criteria that seek to define independence for individual directors. While these sorts of criteria can be useful, they can also be crude, misleading or incomplete.
The Lehman Brothers board in 2008, the year of its demise, was an example of a nominally independent board. But was this board able to operate independently of a strong Chair/CEO? Was there enough financial sector expertise amongst this group of independent directors to provide a rigorous challenge? (See Annex 1 in the complete publication).
Does independence ensure quality? What is the evidence?
Independence may be real, but it can be hard, if not impossible, to measure in a meaningful way. It is much easier to measure structural features of boards than it is to measure the quality of board processes. But sometimes what is easily measurable is not worth measuring. So while it is possible (and very common) to calculate simple ratios, such as independent directors/total directors a common gauge of board independence, they may not tell us much. Indeed, the evidence of empirical studies using simplistic/conventional measures of independence has been inconclusive (See Annex 2).
Many board attributes, including independence, which are regarded as “best practice” lack clear empirical grounding, at least in an econometric context. So, in many features of our corporate governance codes we are dealing in effect with opinions more than facts.
How to deal with insider influence and vested interests?
Insider influences can vary depending on the nature of the company. For widely-held companies, the vested interests of executive management often take the form of high pay for limited performance. In controlled companies vested interests may be the controlling owners themselves in terms of entrenchment and self-dealing.
Are independent directors really equipped to challenge these insiders? Or is that possibly asking for a bit too much? The empirical evidence cited above suggests that independent directors may not have a meaningful impact on board governance. But the evidence does suggest in the area of audit committees that independence is important. This makes logical sense, but it also suggests that for an independent director to provide meaningful oversight, independence must be combined with other important attributes, including sectoral knowledge and financial expertise. Independence as a determinant of board effectiveness therefore may be a necessary, but not a sufficient, condition.
Conclusion
We need to recognise that independence may be overrated, or at least not always live up to its billing. At least as it is conventionally defined, independence has not proven to be a panacea or silver bullet to ensure good corporate governance. At the same time, however, the concept of board independence is important and worth preserving, if nothing else as an aspirational ideal.
Discussion Results
Independent directors seem to be an intuitive solution for the agency problem stemming from the separation of ownership and control, but also for limiting the power of controlling shareholders in a corporation.
The starting point of the discussion was: Why do we need independence in the first place? As investors and other stakeholders want to see their interests served and protected by the board, the absence of potential conflicts of interest between non-executive directors and managers or undue influence from a major shareholder are the answers. Disclosure of meaningful ties of the non-executive directors to the management or controlling shareholders is important. The discussion also emphasized that reasonable diversity can be a contributing factor for board independence, and that truly independent board members can play a key role in avoiding too much convergence in decision making, as well as in focusing on the well-being of the company itself, and not any separate vested interests. While the discussion highlighted many benefits of board independence, it also pointed to potential costs: board independence may come with costs relating to problems in information flows, access to information and processing. Thus, it is important to complement board independence with proper board procedures and processes.
A key point of the discussion was the definition of independence itself. Besides the obligatory disclosure of relevant ties of a non-executive board member to management or controlling shareholders, regulators tried to formalize criteria to define independent board members. Academic literature also strives to evaluate how predefined criteria affect company decisions. However, results of these efforts are mixed and can hardly achieve “true” independence. The description of certain characteristics could introduce independence on paper, but may not reflect correctly the individual case of a board member. A predefined strict categorization would in practice suffer from a “ticking the box” approach. Independence from a controlling shareholder is equally hard to define as thresholds for shareholdings may not reflect the individual circumstances. The discussion also highlighted that strict definitions of independence might also require companies to replace experienced board members with new independent board members. That could lead to a temporary loss of experience and industry expertise.
Ways for the Future:
The realistic description of board independence needs a detailed assessment of the individual and a disclosure of ties of a non-executive board member to the management or controlling shareholders. Furthermore, disclosure of the selection process of the nomination committee should bring important insights for investors and the stakeholders.
The discussion further emphasized that formal characteristics alone could be misleading to determine the independence of a board member, focusing on “independence in mind” as an important aspect. As this factor is difficult to gauge or measure, investors may have to communicate with the chair in individual cases.
A sensible and company specific skillset of personnel management, industry knowledge and experience must be represented in the board as a priority, as formal independence alone is not a sufficient prerequisite for the selection process. The discussion emphasized that extensive information is key to allow proper evaluation of true independence. This should be complemented by sufficient access to the chair for communication with investors. The latest German code revision emphasizes that chairs make themselves available to investors for such supervisory board related issues.
Ways for the Future:
Full disclosure of important ties between individual board members with management and controlling shareholders should be obligatory. To properly evaluate the board member proposals, the disclosure of the skillsets of board members and the selection process would bring further important insights for investors. An idea proposed to support the process was the development of a “board skills matrix” for individual boards.
The discussion highlighted the key role of the nomination committee in the identificatio n and evaluation of independent directors. It was therefore suggested that the chair of the nomination committee should make himself available to investors. This point was controversially discussed due to possible loss of a “One Voice” communication strategy, so that communication should be confined to the chair of the supervisory board.
Another important point of the discussion was the regular evaluation of non-executive board members, as this may bring improvements for independent guidance and decision making of the full board. It could also identify areas of strength and weaknesses for an improved performance of both boards. A key prerequisite for a successful evaluation is the independence of the conducting leader.
The discussants raised the issue of the differences emerging from national governance environments, such as different shareholder structures and cultural differences. While the Anglo American approach to independence appears to work in the UK, this differs from continental European countries such as Germany and France.
Ways for the Future:
A solution to cross-country differences is the development of “local optima” that reflect the special circumstances in each country, rather from pursuing a “one fits all” approach.
Conclusion
The participants concluded that board independence remains a central issue in the corporate governance debate. The discussion identified definition issues as critical. It was also highlighted that full disclosure of the individual independence is important. Formal independence alone does not ensure board or director effectiveness. It must be accompanied with skills, knowledge and experience to obtain satisfactory board work results. Disclosure on the individual board members’ selection process and independence characteristics should be made available to investors and the other stakeholders.
*Christian Strengeris Academic Director at the Center for Corporate Governance at HHL Leipzig Graduate School of Management. This post is based on a publication by Mr. Strenger and Jörg Rochell, President and Managing Director at ESMT Berlin, for a symposium held in Berlin on November 9, 2017, sponsored by ESMT Berlin and the Center for Corporate Governance at HHL Leipzig Graduate School of Management.
Voici un article très intéressant qui présente une vision différente de la gouvernance à l’« Américaine ».
Les auteurs XAVIER HOLLANDTS et BERTRAND VALIORGUE sont enseignants-chercheurs en stratégie et gouvernance des entreprises. L’article vient de paraître sur le site LesEchos.fr.
Le projet français de loi « Pacte » a pour objectif de repenser les grandes notions de gouvernance, notamment la place de la participation des salariés à titre d’administrateur à part entière.
L’article examine trois idées reçues qu’il est important de bien élucider :
(1) la participation permet d’équilibrer le rapport capital/travail
(2) la participation améliore le dialogue social
(3) la participation améliore la performance
Bonne lecture ! Vos commentaires sont les bienvenus.
Voilà de quelle manière les auteurs concluent leur article :
Compte tenu de ces éléments, faut-il promouvoir la participation des salariés à la gouvernance des entreprises ? Oui car l’accroissement de cette participation nous semble nécessaire pour deux raisons. L’arrivée d’administrateurs élus par les salariés au sein des conseils d’administration va permettre de recentrer les discussions sur l’entreprise, son projet stratégique, les investissements de long terme et son apport au progrès social et environnemental. Cette arrivée va redonner tout leur sens et prérogatives aux conseils d’administration.
La participation des salariés à la gouvernance va en outre apporter des éclairages et des moyens nouveaux pour gérer l’actif clé de la performance des entreprises : le capital humain. Les administrateurs salariés vont aider les dirigeants à mieux prendre en compte et développer cet actif qui est facteur majeur de compétitivité, d’innovation et de performance durable. On objectera alors que d’autres parties prenantes jouent aussi un rôle clé dans le processus de création de valeur et que leur présence au sein des conseils d’administration serait bienvenue. Ceux-là n’auraient pas tort.
Les résultats sont présentés sous forme de questions relatives à la sécurité informatique :
Le CA doit-il être le responsable de la surveillance de cette activité ?
Votre CA nécessite-t-il plus d’expertise dans le domaine de la cybersécurité ?
Avons-nous toutes les compétences requises au sein du CA ?
Possédons-nous les informations nécessaires pour la supervision des risques de cybersécurité ?
Le CA, et notamment son président, a-t-il développé un niveau de relation ouverte avec le responsable des technologies (CISO) ?
Comment savoir si les contrôles mis en place pour prévenir les brèches dans les systèmes sont efficaces ?
Les auteurs donnent un exemple de tableau de bord utile pour les CA :
Despite how pervasive the threats are, 44% of the 9,500 executives surveyed in PwC’s 2018 Global State of Information Security® Survey say they don’t have an overall information security strategy. That gives you a sense of how much work companies still need to do. Overseeing cyber risk is a huge challenge, but we have ideas for how directors can tackle cybersecurity head-on.
L’article présente également une mine d’informations eu égard aux enjeux, aux défis et aux actions qu’un CA doit entreprendre pour assurer une solide sécurité informatique.
Je vous invite à lire les conclusions de l’étude de PwC ci-dessous. Pour plus d’information sur ce sujet, vous pouvez consulter le rapport complet.
Directors can add value as their companies struggle to tackle cyber risk. We put the threat environment in context for you and outline the top issues confronting companies and boards. And we identify concrete steps for boards to up their game in this complex area.
You don’t need us to tell you that cyber threats are everywhere. Breaches make headlines on
what seems like a daily basis. They also cost companies—in money and reputation. Indeed, cyber threats are among US CEOs’ top concerns, according to PwC’s 20th Global CEO Survey.
The pace of cyber breaches isn’t slowing. In part, we’re making it too easy for attackers. How? Employees fall for sophisticated phishing schemes, neglect to install security updates or use weak passwords. We are also doing more work on mobile devices, which tend not to be as well protected. And companies don’t always invest enough in cybersecurity or patch their systems promptly when problems are discovered.
The nature of cyber threats is also evolving. The self-propagating WannaCry attack, for instance, could infect a computer even if the user didn’t click on the link. Indeed, 2017 saw a number of major ransomware attacks that froze computer systems—keeping some companies offline for weeks.
Despite how pervasive the threats are, 44% of the 9,500 executives surveyed in PwC’s 2018 Global State of Information Security® Survey say they don’t have an overall information security strategy. That gives you a sense of how much work companies still need to do. Overseeing cyber risk is a huge challenge, but we have ideas for how directors can tackle cybersecurity head-on.
Challenge:
How can our board understand whether management’s cybersecurity and IT program reduces the risk of a major cyberattack or data breach—or actually makes the company more vulnerable?
Many directors are not confident that management has a handle on cyber threats. PwC’s 2017 Annual Corporate Directors Survey found that only 39% of directors are very comfortable that their company has identified its most valuable and sensitive digital assets. And a quarter had little or no faith at all that their company has identified who might attack.
There are obviously many moving parts that management needs to get right. Many companies align their programs and investments with a cybersecurity framework to help ensure they’re addressing everything they should.
For a board to oversee cyber risks effectively, it needs the right information on how the company addresses those risks. But 63% of directors say they’re not very comfortable that their company is providing the board with adequate cybersecurity metrics. [1]
Boards also shortchange the time they give to discussing cyber risks. We often see board agendas allocate relatively little time to the topic.
Another part of the challenge is that few boards have directors with current technology or cybersecurity expertise. And that puts directors at a disadvantage in being able to figure out if management is doing enough to address this area of significant risk.
Why does cybersecurity often break down in companies?
Common issues
Why they matter
There’s no inventory of the company’s digital assets
Companies can’t protect assets they don’t know about. Management should be able to explain what information and data they hold, why it’s needed, where it is (within the company’s systems or with third parties) and whether it’s properly protected. They should also know which data is most valuable (the crown jewels).
The company doesn’t know which third parties it digitally connects with
A company may interact—and even share sensitive information—with thousands of suppliers and contractors. Hackers often target these third parties as a way to get into a company’s network. Yet more than half of companies don’t keep a comprehensive inventory of the third parties they share sensitive information with. [2]
The company hasn’t identified who is most likely to come after its data
Knowing who might attack helps the company better anticipate how they might attack. That in turn may help the company put up better defenses.
The company has poor cyber hygiene
Systems that aren’t properly configured are more vulnerable to attacks. So companies should employ leading practices, like multi-factor authentication, to protect highly sensitive information. They also need to do the basics right—like removing access on a timely basis for people who leave the company or change jobs.
The company hasn’t patched known system vulnerabilities
System vulnerabilities are being uncovered constantly. But not all software companies push out patches to users. So the company needs to ensure someone regularly monitors to see if patch updates are available. And then make sure those fixes get made.
The company has a wide attack surface
Providing more ways to access company systems makes things easier for employees, customers and third parties. And for hackers. So companies need stronger controls (such as multi-factor authentication). And they need to increase their monitoring for suspicious activity.
Employees aren’t trained on their role in security
Current employees are the top source of security incidents—whether intentional or not. [3] Yet only half (52%) of executives say their company has an employee security awareness training program. [4]
Cybersecurity is viewed as the CISO’s responsibility
A chief information security officer (CISO) can’t do the job alone. Other groups like Infrastructure or Operations need to cooperate and provide resources to address cyber issues.
Board action:
Focus on getting the right information and building relationships with the company’s tech and security leaders so you get a better sense of whether management is doing enough
This is a really tough area to oversee. Here are a number of questions to help as you address it.
1. Since cybersecurity is really a business issue, should the full board oversee it?
Half of directors say their audit committee is responsible for cyber risk, and 16% give it to either a separate risk committee or a separate IT committee. Only 30% say it’s a full board responsibility. [5] If the full board doesn’t want to oversee cyber risk, ensure that, at a minimum, whichever committee is assigned the responsibility provides regular and comprehensive reporting up to the whole board. And consider moving it from the already overloaded audit committee to another board committee.
2. Does our board need greater cybersecurity or technology expertise?
For some companies, the answer will be to recruit a director with serious expertise in cybersecurity. But others won’t choose to close their skill gap by adding a new director. People with these skills are hard to find, especially since the technology landscape is changing so quickly. Some boards may not have room to add another member. Others may not want to add someone with such specific expertise unless they’re confident that person could handle other board matters as well. So instead they look for other ways to address any gap, including continuing education and using outside advisors.
3. Is everyone in the room who needs to be?
The cybersecurity discussion should include business, technology and risk management leaders—as well as the CEO and CFO. Why? For one, it reinforces that cyber is an enterprise-wide issue—and that directors expect everyone to be accountable for managing the risk. The discussion also may expose other areas where there are security gaps. For example, while a CISO will often cover IT, many industrial organizations also need to protect OT—the operational technology that directs what happens in physical plants or processes. So if the CISO isn’t covering OT, the board needs to hear from whoever is.
4. Do we have the information we need to oversee cyber risk?
First, consider whether you have the basic information you need on the company’s IT environment. Without this background, it’s tough to make sense of the level of risk the company faces. There are a few key areas:
The nature of the company’s systems.
Are they developed in-house, purchased and customized or in the cloud?
Are any no longer supported by vendors?
Is the company running multiple versions of key systems in different divisions?
To what extent has the company integrated the systems of companies it acquired?
The security resources.
Where does IT security report?
What are IT security’s resources and budget? How do they compare to industry benchmarks?
Has the company adopted a cybersecurity framework (e.g., NIST, ISO 27001)?
This type of basic information doesn’t change much, so directors likely only need periodic refreshers.
On the other hand, directors will want more frequent reporting on what does change. Each company needs to figure out which items—quantitative and qualitative—are most relevant. It’s also helpful for directors to see whether management believes cyber risk is increasing, stable or decreasing.
A good dashboard gives directors an at-a-glance understanding of the state of the company’s cyber risk. There are a number of different approaches to assembling a dashboard. One is to simply classify issues between external and internal factors, like the example we show below.
If boards sense the dashboard isn’t giving a complete or accurate picture, they shouldn’t be afraid to challenge what’s presented in it. Read more to find out how.
Example of what a dashboard might look like
5. Have we built a relationship that allows the CISO to be candid with us?
The CISO has a lot of responsibility but doesn’t always have the authority to insist that other technology and business leaders fall in line. A strong relationship with the board helps the CISO feel comfortable giving directors the true picture (warts and all) of cyber risks, including his or her views on whether resources are adequate. Periodic private sessions with the CISO are a key part of understanding whether the company is doing enough to manage these risks.
6. How can we know whether the controls and processes designed to prevent data breaches are working?
Speaking to objective groups, such as internal audit, can offer the board different perspectives. The board may also want to hire its own outside consultants to periodically review the state of cybersecurity at the company and report back to the board.
How can directors improve their knowledge of cybersecurity?
Hold deep-dive discussions about the company’s situation. That could include the company’s cybersecurity strategy, the types of cyber threats facing the company and the nature of the company’s “crown jewels.”
Attend external programs. There are a number of conferences that focus on the oversight of cyber risk.
Ask management what it has learned from connecting with peers and industry groups.
Ask law enforcement (e.g., the FBI) and other experts to present on the threat environment, attack trends and common vulnerabilities. Then discuss with management how the company is addressing these developments.
Challenge:
Given that companies are under constant attack, how can directors understand whether their company is adequately prepared to handle a breach?
No company is immune to the threat of a breach. One particularly scary aspect of cybersecurity is that companies may only know they’ve been breached when an outside party, such as the FBI, notifies them. Then there’s the question of what the company needs to do once it discovers a breach. Obviously it needs to investigate and patch its systems. But there’s much more.
Nearly all US states and many countries have laws requiring entities to notify individuals when there’s been a security breach involving personally identifiable information. These laws often set a deadline for notification—sometimes as short as 72 hours. The data breach notification laws change from time to time, making it a challenge to keep up to date. Separately, companies should also consider any potential SEC disclosure requirements regarding cyber risks and incidents.
Breaches can mean significant fines from regulatory agencies, as well as class-action lawsuits. They can also damage a company’s reputation and brand—resulting in loss of customers, as well as investors possibly losing confidence in the company. And as we have seen with some breaches, senior executives can lose their jobs.
Breaches also mean more costs to companies—to investigate, remediate and compensate those who were harmed. Only half of US companies have cyber insurance, [6] despite the growing number and size of incidents. In part, there’s still some skepticism on how claims will be covered.
Given how likely a breach is and how much companies need to do to respond, it’s surprising that 54% of executives say their companies don’t have an incident response plan. [7] Yet companies that responded well to a breach—thanks to better preparation—usually come out of the crisis better than those that had to scramble.
Board action:
Regularly review the breach and crisis management plan and lessons learned from management’s testing
It’s important to ask management about the company’s cyber incident response and crisis management plan on a regular basis. If there isn’t one, press management for a timeline to develop and test one.
If there is a plan, discuss what it entails and how the company intends to continue operating in the event of a disruptive attack. It should also identify everyone who needs to be involved, which could include the communications team, finance leaders, business leaders, legal counsel and the broader crisis response team, as well as IT specialists. The plan should specify which external resources are on retainer to support the internal teams. And who the company will work with on the law enforcement side.
A key part of the plan should cover breach notification and escalation procedures. When will the board be notified? What is the company’s plan to inform regulators? How and when will other stakeholders—including individuals whose personal information may have been lost—be informed?
Also ask management about plan testing and what changes were made as a result of the last test. Some directors even observe or participate in tabletop testing exercises to get a better appreciation for how management plans to address a cyber crisis.
Finally, have management explain if it has updated controls or recovery plans based on recent incidents at other organizations.
In conclusion…
As cyber threats persist, boards recognize they need to step up their cyber risk oversight. That starts when directors recognize that the responsibility for handling cyber risk goes well beyond the CISO. How? By insisting that cybersecurity be a business discussion, with the right senior executives in the room and a sophisticated understanding of the threats.
7PwC, Global State of Information Security® Survey 2018, October 2017.(go back)
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*Paula Loop is Leader at the Governance Insights Center, Catherine Bromilow is Partner at the Governance Insights Center, and Sean Joyce is US Cybersecurity and Privacy Leader at PricewaterhouseCoopers LLP. This post is based on a PwC publication by Ms. Loop, Ms. Bromilow, and Mr. Joyce.
Les investisseurs institutionnels (II) cherchent constamment à améliorer leur portefeuille d’entreprises dans une perspective à long terme.
Ainsi, les II sont à la recherche de moyens pour communiquer efficacement avec les sociétés dans lesquelles elles investissent.
L’étude menée par Steve W. Klemash, leader du EY Center for Board Matters, auprès de 60 grands investisseurs institutionnels américains tous azimuts, a tenté de déterminer les cinq plus importantes priorités à accorder aux choix des entreprises sous gestion.
Voici donc les cinq grands thèmes qui intéressent les investisseurs institutionnels dans la sélection des entreprises :
(1) La composition du conseil d’administration, avec un œil sur l’amélioration de la diversité ;
(2) Un niveau d’expertise des administrateurs qui est en lien avec les objectifs d’affaires de l’entreprise ;
(3) Une attention accrue accordée aux risques de nature climatique ou environnemental ;
(4) Une attention marquée accordée à la gestion des talents
(5) Une rémunération qui est très bien alignée sur la performance et la stratégie.
Je vous propose un résumé des principaux résultats de travaux de recherche de EY. Pour plus de détails, je vous invite à consulter l’article ci-dessous.
Les cinq grandes priorités des investisseurs institutionnels en 2018
1. La composition du conseil d’administration, avec un œil sur l’amélioration de la diversité
2. Un niveau d’expertise des administrateurs qui est en lien avec les objectifs d’affaires de l’entreprise
3. Une attention accrue accordée aux risques de nature climatique ou environnemental
4. Une attention marquée accordée à la gestion des talents
5. Une rémunération qui est très bien alignée sur la performance et la stratégie
Investor priorities as seen through the shareholder proposal lens
For a broader perspective of investor priorities, a review of the top shareholder proposal topics of 2017, based on average support, shows that around half focus on environment and social topics. While the average support for many of these proposal topics appear low, this understates impact. Environmental and social proposals typically see withdrawal rates of around one-third, primarily due to company-investor successes in reaching agreement. Depending on the company situation and specific proposal being voted, some proposals may receive strong support of votes cast by a company’s broader base of investors.
Conclusion
Institutional investors are increasingly asking companies about how they are navigating changing business environments, technological disruption and environmental challenges to achieve long-term, sustained growth. By addressing these same topics in their interactions with and disclosures to investors, boards and executives have an opportunity to highlight to investors how the company is positioned to navigate business transformations over the short- and long-term. This opportunity, in turn, enables companies to attract the kind of investors that support the approach taken by the board and management. Like strong board composition, enhanced disclosure and investor engagement efforts can serve as competitive advantages.
Questions for the board to consider
– Are there opportunities to strengthen disclosures around the board’s composition and director qualifications and how these support company strategy?
– Do the board and its committees have appropriate access to deep, timely expertise and open communication channels with management as needed for effective oversight?
– Do the board and management understand how key investors generally view the company’s disclosures and strategic initiatives regarding environmental and social matters?
– How does the board define and articulate its oversight responsibilities with regard to talent? And does the board believe that the company has an adequate plan for talent management considering recent employee and employment-related developments and the company’s competitive position?
– To what extent have the board and management offered to dialogue with the governance specialists at their key investor organizations, whether active or passive, and including the largest and smallest, vocal shareholder proponents?
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*Steve W. Klemash* is EY Americas Leader at the EY Center for Board Matters. This post is based on an EY publication by Mr. Klemash.
Voici une étude d’Equilar qui montre une diminution constante dans la durée d’exercice des CEO aux États-Unis au cours des 5 dernières années.
Le rapport a été publié par Dan Marcec directeur des communications de la firme.
Ainsi, la présence en poste des CEO est passée d’une médiane de 6 ans, en 2013, à 5 ans, en 2017.
On note également que plus du quart des CEO restent en poste plus de 10 ans, comparativement à 38,1 % qui sont en poste entre un an et cinq ans.
L’article présente également un tableau qui montre les raisons des départs des CEO : (1) démissions (2) retraites (3) congédiement. On note que seulement 10 CEO ont été congédiés sur une période de dix ans. On peut dire que l’emploi est assez stable !
Enfin, l’étude montre que l’accroissement du taux des départs n’a pas donné lieu à des progrès dans le cadre de la diversité. En effet, comme le montre le tableau suivant, le nombre de femmes CEO de grandes entreprises est passé de 3,7 %, en 2013, à 5,6 % en 2017. La fonction de CEO dans ces entreprises est encore réservée presque exclusivement aux hommes.
Vous pouvez prendre connaissance de cet article paru sur le site du Harvard Law School Forum :
Ma veille en gouvernance m’amène à vous proposer la lecture d’un article publié par Demi Derem* et Elizabeth Maiellano sur les défis posés par un ensemble de directives récemment approuvées par le Parlement européen et qui traitent du droit des actionnaires : « Shareholder Rights Directive (SRD) ».
La Commission Européenne (CE) veut que les entreprises cotées aient une meilleure connaissance de leurs investisseurs et qu’elles soient en mesure d’interagir d’une manière claire et transparente avec eux. Voici un extrait qui montre l’ampleur des nouvelles directives.
The SRD also grants shareholders the right to vote on companies’ remuneration policies, which may increase the policy analysis and assessment required by the buy-side. Similarly, the SRD requires that any material transaction (as defined by national regulators) between a listed company and a related third party must be announced and approved by the shareholders and the board.
Depending on national requirements, the announcement may also need to be accompanied by a report about the impact of the transaction from an independent third party, the board or a committee of independent directors.
La lecture de cet article montre que les entreprises ont peu de temps pour se conformer aux directives. Les auteurs explorent les impacts de l’adoption de ces règles sur les principaux intéressés, notamment sur les investisseurs institutionnels et les firmes d’intermédiation.
All parties in the shareholder communication chain need to prepare for the enhanced requirements of the new Shareholder Rights Directive—and try to influence its local implementation to encourage a harmonised approach.
The new Shareholder Rights Directive (SRD), adopted by the European Council and approved by the European Parliament this spring, is a laudable initiative intended to encourage shareholder engagement in listed companies in Europe and improve the transparency of related processes— including proxy voting. The European Commission (EC) wants to see proof that companies understand their investors and communicate with them in a clear and transparent manner.
The new SRD updates its 2007 predecessor and introduces some new requirements related to remunerating directors, identifying shareholders, facilitating the exercise of shareholder rights, transmitting information and providing transparency for institutional investors, asset managers and proxy advisors. The majority of the SRD is required to be translated into national law by European member states by June 2019 (although some elements will not come into force until September 2020).
Given the complexities introduced by the new SRD, firms across the shareholder communication chain need to begin preparing now if they are to meet its requirements by 2019. These are expected to entail significant and potentially costly changes relating to process reforms and transparency requirements, impacting issuers, asset managers, custodians, central securities depositories (CSDs), and a range of other intermediaries and service providers.
The two-year member-state transposition process will involve adaptation of the SRD’s requirements to reflect domestic market structures and local legal processes. We encourage all affected firms to engage with the EC and national regulators, and share their views on how the SRD should be implemented. This is vital for achieving outcomes that are equitable and commensurate with the corporate governance benefits of the SRD. If national regulators opt for significantly different interpretations of the SRD, this would be challenging for industry participants.
For example, one global custodian has expressed concern about the risk of national divergence requiring compliance efforts to be tailored to each regulator’s interpretation, thereby increasing the complexity and cost of SRD implementation for firms operating in more than one market.
Another securities services firm believes that discrepancies in implementation dates in different jurisdictions will be problematic for global firms.
Institutional investor impact
Institutional investors and asset managers are likely to be affected by the SRD in a number of ways. For example, both will have to be more transparent about their engagement with investee companies and how they integrate shareholder engagement into their investment strategy. Under the SRD this information must be reported annually and made available on buy-side firms’ websites. These firms must also disclose annually their voting behaviour and explain significant votes and their use of proxy advisor services. The SRD introduces these requirements on a comply-or-explain basis.
The SRD also grants shareholders the right to vote on companies’ remuneration policies, which may increase the policy analysis and assessment required by the buy-side. Similarly, the SRD requires that any material transaction (as defined by national regulators) between a listed company and a related third party must be announced and approved by the shareholders and the board. Depending on national requirements, the announcement may also need to be accompanied by a report about the impact of the transaction from an independent third party, the board or a committee of independent directors.
These new requirements will result in the production of more data and more reporting before a vote, potentially creating a significant burden on asset managers and investors as they try to manage this information flow. This burden is likely to be particularly noticeable with related party transactions.
Intermediary implications
Intermediary firms will need to keep a close watch on national requirements for the adoption of specific identification standards and data items for shareholder transparency requirements. For instance, markets could set different minimum levels of holdings that must be disclosed.
In addition, the SRD refers to providing data in a standardised format but does not specify the standards, so these may be provided by the EC. However, if the disclosure of certain data items would breach some countries’ data privacy laws, national regulators would have to alter the local requirements.
Another change introduced by the SRD is that intermediaries will have to store shareholder information for at least 12 months after they become aware that someone has ceased to be a shareholder. Data storage and retention requirements are therefore likely to increase.
A particular concern for intermediaries is that the SRD requires them to transmit general meeting agenda and voting information “without delay”. National regulators could interpret this as a requirement for real-time or near-real-time reporting. If this means that vote information has to be transmitted immediately, intermediaries will need to introduce intraday processing support. Meanwhile, the need to use a standardised format could result in amendments to current SWIFT message formats, with associated costs. It is also likely that the volume of voting instructions and amendments will increase after implementation of the SRD.
One custodian has expressed concern about the lack of regulatory clarity on whether post-meeting announcements will also have to be transmitted immediately. The EC and national regulators will need to confirm the level of information that must be passed on to shareholders. Some intermediaries may face operational headaches if their current processes can support the transmission of voting information but not of other data items in the same standardised and immediate manner.
Intermediaries could face the brunt of the costs of SRD implementation, particularly because European member states can prohibit intermediaries from charging fees for the cost of changes related to disclosure. If regulators decide to mandate this, intermediaries will have to absorb all compliance costs rather than passing a percentage on to clients.
If regulators are more lenient, intermediaries may be able to pass on certain costs, but the SRD specifies that these must be proven to be proportionate to the cost of offering the service. Intermediaries could therefore have to pay for the full cost of transparency requirements in some jurisdictions, while providing an audit trail of operational costs (and facing questions about any inefficiencies) in others.
The bundling of proxy costs into custody fees may also need re-evaluating, because intermediaries will need to disclose their fees in relation to proxy services. The SRD stresses the need for “non-discriminatory and proportionate” fees and jurisdictions will also have the power to prohibit fees for proxy services. If some do prohibit fees, firms’ business models will need to be revised.
Widespread impact
Issuers and registrars will also be affected by the SRD in relation to the standardisation of meeting announcements and the provision of vote confirmation. And proxy service providers will be impacted, although global firms that already comply with some jurisdictions’ voluntary requirements in transparency and reporting will feel less short-term impact. They could face both opportunities and challenges—with the potential to deliver new services to help intermediaries to support requirements such as vote confirmation, but needing to invest to do so.
The SRD’s transposition period presents market participants with an opportunity to review the impact on their operations, engage with regulators and assess their readiness. It is something that the industry should embrace and collaborate on to get right.
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*Demi Derem is general manager for Investor Communication Solutions, International, at Broadridge, and Elizabeth Maiellano is vice president for product management, Investor Communication Solutions, International, at Broadridge. This article has been prepared in collaboration with Broadridge, a supporter of Board Agenda.
Aujourd’hui, je fais une première expérience de publication d’un billet en gouvernance parue sur le site du Harvard Law School Forum on Corporate Governance, le 6 février 2018.
En effet, j’édite la traduction en français d’un article publié par Abe M. Friedman*, CEO de la firme CamberView. Cette publication constitue, à mon avis, un moment décisif dans la conception de la gouvernance telle que vue par un investisseur avisé.
Comme plusieurs lecteurs sont particulièrement intéressés par les contenus en français, j’ai utilisé l’outil de traduction de Google pour faire ressortir les implications de la lettre annuelle aux PDG de Larry Fink, PDG de BlackRock.
Vous comprendrez que la traduction est perfectible, mais je crois qu’elle est compréhensible avec un minimum d’édition.
Je vous invite également à lire la dernière mise à jour des recommandations de BlackRock en vue des votes aux assemblées annuelles : Updated BlackRock Proxy Voting Guidelines
Bonne lecture !
Le mardi 16 janvier, Larry Fink, PDG de BlackRock, a publié sa lettre annuelle aux PDG décrivant une vision audacieuse liant la prospérité des entreprises à leur capacité à fournir de solides performances financières tout en contribuant positivement à la société. Intitulée « A Sense of Purpose », cette lettre souligne l’approche de plus en plus active de BlackRock en matière d’engagement actionnarial ; elle constitue son opinion selon laquelle les conseils d’administration jouent un rôle central dans la direction stratégique à long terme des sociétés ainsi que dans la prise en compte des facteurs de risque environnementaux, sociaux, de gouvernance (ESG) et de création de valeur à long terme.
La lettre est un autre signal d’un changement fondamental dans la pensée des gestionnaires d’actifs traditionnels sur des sujets que certains ont toujours considérés comme non économiques. Alors que la pression monte sur les grands gestionnaires d’actifs sur la façon dont ils « supervisent » les « portefeuilles » de leurs entreprises, ces questions sociales et environnementales sont de plus en plus considérées comme essentielles à la création de valeur et à la durabilité à long terme. La position d’avant-garde sur la responsabilité d’entreprise prise dans la lettre est un indicateur de la manière dont les attentes changeantes des propriétaires d’actifs sont intégrées dans le comportement des gestionnaires d’actifs. Pour les entreprises, ce changement a créé un nouvel ensemble d’attentes, et le potentiel d’un examen plus approfondi de la part des investisseurs qui pourraient continuer à croître dans les années à venir.
Thèmes clés — ESG, engagement des actionnaires, administrateurs et activisme
La lettre de cette année réitère un certain nombre de thèmes tirés des communications des années précédentes et explique comment BlackRock s’attend à ce que les sociétés améliorent la valeur à long terme pour les actionnaires.
ESG et importance de la diversité du conseil d’administration dans la création de valeur à long terme
La lettre de Fink souligne la conviction de BlackRock que la gestion des questions ESG est essentielle à une croissance durable. De l’avis de BlackRock, exercer la surveillance de ces défis ainsi que d’autres défis émergents à la création de valeur à long terme relève de la compétence du conseil, qui, selon M. Fink, devrait inclure une diversité de genres, d’ethnies, d’expériences et de façons de penser. Les entreprises devraient s’attendre à ce que BlackRock (et, avec le temps, d’autres grands investisseurs institutionnels) investisse plus de temps pour comprendre la gestion des risques des entreprises liée à leur impact plus large sur les communautés, la société et l’environnement. Cela signifie probablement un soutien croissant aux propositions d’actionnaires sur ces sujets et une pression accrue sur les conseils pour qu’ils démontrent qu’ils s’adressent sérieusement à ces questions.
Engagement des actionnaires
Citant le besoin d’être des « agents actifs et engagés pour le compte des clients investis avec BlackRock », la lettre appelle à un nouveau modèle d’engagement des actionnaires qui comprend des communications pendant toute l’année sur les moyens d’améliorer la valeur à long terme. Alors que M. Fink note que BlackRock a engagé des ressources importantes pour améliorer ses propres efforts d’intendance des investissements au cours des dernières années, il écrit que « la croissance de l’indexation exige que nous prenions maintenant cette fonction à un nouveau niveau. » BlackRock a l’intention de doubler la taille de ses équipes de supervision.
Le rôle du conseil dans la communication et la supervision de la stratégie d’entreprise pour la croissance à long terme
Revenant sur un thème commun des communications précédentes, la lettre de cette année souligne l’importance du conseil pour aider les entreprises à définir un cadre stratégique pour la création de valeur à long terme. Bien que le nombre moyen d’heures consacrées par les membres du conseil à leur rôle ait augmenté au cours des dernières années, M. Fink continue d’élever la barre, soulignant que les administrateurs, dont les compétences et l’expérience proviennent uniquement de réunions sporadiques, ne remplissent pas leur devoir envers les actionnaires. La lettre de cette année contient une liste de questions que les sociétés (c.-à-d. les conseils d’administration et la direction) devraient poser pour s’assurer qu’elles sont en mesure de maintenir leur rendement à long terme. Ces questions comprennent explicitement l’impact sociétal des entreprises et les importants changements structurels (tels que les conditions économiques, l’automation et les changements climatiques) qui influencent le potentiel de croissance.
S’engager sur l’activisme
Fink écrit qu’une « raison centrale de la montée de l’activisme — et des luttes intempestives par procuration — est que les entreprises n’ont pas été assez explicites sur leurs stratégies à long terme. » Il souligne, à titre d’exemple, la réforme fiscale récemment adoptée et son potentiel d’augmentation des flux de trésorerie après impôt, comme un moyen pour les activistes de cibler les entreprises qui ne communiquent pas efficacement leur stratégie à long terme. M. Fink encourage les entreprises à s’engager avec les investisseurs et autres parties prenantes au début du processus lorsque ceux-ci offrent « des idées précieuses — plus souvent que certains détracteurs ne le suggèrent », une observation cohérente avec le soutien sélectif de BlackRock aux activistes dans les luttes par procuration.
Recommandations aux émetteurs
Cette lettre représente une évolution significative de l’opinion publique de BlackRock sur la responsabilité des entreprises et des conseils d’administration de gérer activement les impacts sociétaux de leurs activités au bénéfice de toutes les parties prenantes. M. Fink affirme que l’objectif des propriétaires d’actifs est non seulement d’améliorer leurs rendements d’investissement, mais aussi de voir le secteur privé relever les défis sociaux qui assureront la « prospérité et la sécurité » de leurs concitoyens.
BlackRock n’est pas le seul à faire ce changement philosophique. Les derniers mois ont fourni des exemples de la façon dont cette nouvelle dynamique façonne les décisions de vote et d’investissement. L’été dernier, des résolutions sur la divulgation des risques climatiques ont été adoptées pour la première fois dans de grandes entreprises énergétiques. En novembre, State Street Global Advisors a révélé qu’elle avait voté contre les administrateurs de 400 entreprises qui, selon elle, n’avaient pas fait d’efforts pour accroître la diversité au sein du conseil. Plus tôt ce mois-ci, JANA Partners et CalSTRS se sont associés pour mener une campagne d’activisme sur la question de savoir si Apple permet aux parents de protéger leurs enfants en utilisant la technologie et JANA a également créé un fonds pour cibler d’autres entreprises.
Afin de répondre aux questions soulevées dans la lettre de M. Fink, les sociétés ouvertes devraient envisager :
Construire une pratique de l’engagement continu tout au long de l’année sur la gouvernance et la durabilité avec leurs meilleurs investisseurs afin de rester en contrôle de l’activisme et d’être au-devant des investisseurs face à un défi.
Expliquer le processus du conseil dans le développement de la stratégie à long terme, dans le rôle de supervision de l’entreprise ainsi que dans les discussions avec les investisseurs.
Présenter les investisseurs à une variété de membres de l’équipe de direction et, à l’occasion, à un ou plusieurs membres du conseil d’administration pour établir des relations et faire confiance, au fil du temps, à tous les dirigeants de l’entreprise.
Décrire comment les administrateurs cultivent la connaissance de l’entreprise en dehors des réunions formelles du conseil d’administration, afin de remplir leur mandat de protection des intérêts à long terme des investisseurs.
Aujourd’hui, je vous propose mon point de vue en lien avec l’article de Jean-François Thuot*, intitulé « Les principes de saine gouvernance (PSG) sont-ils valables et applicables à toutes les organisations ? », paru sur le site de l’Ordre des administrateurs agréés du Québec (OAAQ) ainsi que sur le site de LinkedIn.
L’auteur met principalement l’accent sur deux principes de gouvernance généralement reconnus (PGGR) qui ne s’appliquent pas très bien à certains types d’organisations telles les OBNL, les ordres professionnels et les nombreuses variantes d’associations. J’ajouterais à la liste de Jean-François les sociétés d’État, les petites entreprises (PME), les entreprises en démarrage (start-up) et les entreprises à contrôle familial.
Voici les deux éléments qui posent problème dans l’application des PGGR :
(1) les personnes élues par les membres de différentes régions et qui sont, de facto, administrateurs de l’organisation ;
(2) les modalités de l’utilisation d’un comité exécutif.
Il s’agit d’excellents questionnements et j’y suis fréquemment confronté !
À mon avis, aucune organisation ne peut se conformer aux PGGR, et c’est bien normal ! Mais, ces entités peuvent se rapprocher de ce modèle perfectible comme l’auteur le dit si bien lorsqu’il mentionne que les OBNL « gagneraient à se doter de solides conditions d’éligibilité à un poste d’administrateur, faisant une large part à la dimension de compétence ».
Également, l’auteur touche un point déterminant lorsqu’il questionne la quasi-nécessité, pour plusieurs organisations, de se doter d’un comité exécutif (CE).
À mon avis, le CE doit être créé dans tous les types d’organisations, même s’il n’est pas toujours utilisé ou actif.
Comme mentionné, le comité exécutif est malheureusement nécessaire dans les cas où les conseils d’administration sont de grandes tailles. Il n’est généralement pas utile, ou nécessaire, lorsque le CA est d’environ 8-10 personnes et que celui-ci se réunit au moins 5 fois par an.
Le CE est nécessaire s’il y a des décisions urgentes à prendre à court terme. Mais, de nos jours, les membres du CA sont facilement joignables et ils peuvent décider rapidement. De plus, les autres comités statutaires du conseil sont davantage sollicités dans leur sphère de compétence.
Les raisons que l’auteur évoque eu égard à l’inutilité d’un CE qui se réunit régulièrement (à tous les mois, par exemple) sont, à mon avis, toujours très valables : déresponsabilisation du CA et de ses administrateurs, concentration du pouvoir entre les mains d’un cercle d’initiés, perception que les CA de petite taille sont plus efficaces.
Je suis tout à fait d’accord avec la conclusion de l’auteur.
Ces deux exemples invitent à bien mesurer le contexte organisationnel dans lequel les PSG sont destinés à être appliqués. Il existe une diversité des modèles de gouvernance, ce que la vogue actuelle des PSG tend à nous faire oublier. Il faut espérer que la réflexion se développe pour mieux saisir les particularités des OBNL, des associations et des ordres professionnels, afin de donner les réponses appropriées aux défis qui les caractérisent en matière de gouvernance.
Je vous encourage à lire l’article de Jean-François, ci-dessous, qui s’interroge sur ces deux grandes difficultés dans l’application des règles de bonne gouvernance.
Largement issus des organisations privées à visée lucrative, les principes de saine gouvernance (PSG) ont été mis à l’honneur ces dernières années et leur légitimité est telle qu’il est généralement admis qu’on peut les exporter vers n’importe quelle organisation.
En grattant un peu toutefois, les limites de certains de ces principes finissent par apparaitre. J’aimerais ici donner deux exemples.
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*Jean-François Thuot, PhD, ASC, AdmA, conseiller, facilitateur stratégique pour OBNL et ordres professionnels: management associatif, affaires publiques, rédaction stratégique, formation.
Vous souhaitez en savoir davantage sur les tendances en ce qui concerne les actions à droits de vote multiples dans le contexte des É.-U. L’article* ci-dessous, publié sur le forum du Harvard Law School, fait le point sur ce sujet.
Comme vous le constaterez, les avis sont assez partagés sur les pratiques d’émission d’actions qui imposent des droits de vote différents selon les classes. Certaines compagnies, dont Snap inc., ont poussé un peu plus loin la logique des classes d’actions en proposant une catégorie d’action sans droit de vote.
Les compagnies qui ont osé offrir cette classe d’action ont connu des chutes de prix après l’offre publique d’achat (OPA). Cependant, cela n’a pas découragé d’autres entreprises de la Silicon Valley de faire des offres d’actions à droits de vote multiples. À cet égard, je vous renvoie à mon article du 17 mai 2017 intitulé « La gouvernance des entreprises à droit de vote multiple ».
Certaines bourses, dont la S&P Dow Jones, bannissent l’inscription de compagnies ayant ce type de structure, alors que d’autres, telles que le NYSE et le NASDAQ, sont beaucoup plus libérales…
Les deux plus grandes firmes de conseil en votation, ISS et Glass Lewis, ont de sérieuses réserves concernant ce type de structure de capital.
On sait qu’au Québec, cette structure d’actionnariat est assez répandue, et même encouragée.
À la lumière des tendances présentées dans l’article, quel est l’avenir de cette approche à l’émission d’actions ?
Bonne lecture ! Vos commentaires sont les bienvenus.
This past year has been marked by significant and, in some cases, opposing attitudes and practices with respect to multi-class share structures. We are likely to see some of this churn continue in 2018 as the various market participants continue to define or refine their positions on this issue.
In 2016, a coalition of investors and pension funds lobbied against multi-class structures and, in 2017, the Council for Institutional Investors (CII) was vocal about its view that one vote per share is central to good governance. This movement is largely in connection with a minority trend of multi-class high-vote/low-vote and, sometimes, no-vote equity structures. In the spring of 2017, the initial public offering (IPO) of Snap Inc. put significant pressure on the issue when Snap offered its no-vote common stock to the public, followed shortly by Blue Apron’s IPO, which sold a class of low-vote stock to the public, while its capital structure also has a class of non-voting stock. Both companies suffered significant stock price drops following their IPOs.
In response to growing market pressure, in summer 2017, the S&P Dow Jones banned companies with multiple share class structures from inclusion in several of its indices (while nonetheless allowing for the grandfathering of companies that are already included in the index), the FTSE Russell announced it would begin excluding from its indices those companies without publicly-held voting stock representing at least five percent of a company’s voting rights and, in November, MSCI announced its review of unequal voting structures and its decision to temporarily treat any securities of companies with unequal voting structures as ineligible for certain of its indices.
In addition, proxy advisory firms ISS and Glass Lewis piled on with the recent release of policies that result in their recommending voting against board and/or committee members at companies with dual-class structures, depending on other governance factors. Furthermore, Glass Lewis’ 2018 voting policies indicate that for companies with disproportionate voting and economic rights, it will carefully examine the voting turnout on proposals and if a majority of low-vote shareholders support a shareholder proposal or oppose a management proposal, Glass Lewis believes the board should demonstrate appropriate responsiveness to this voting outcome.
Despite this pressure, many companies, so far at least, seem undeterred in their pursuits of going public with a multi-class structure as a way of preserving founder or early investor control, in part in an attempt to combat the trend in increasing short-term, activist and other shareholder demands. Significant IPOs with dual-class stock occurred in the latter half of the year—after the indices’ ban—including Roku, CarGuus, StitchFix, Sogou and Qudian.
Importantly, NYSE and NASDAQ continue to permit, and even actively court, multi-class companies for listing. And momentum may be increasing internationally as well. After failing to attract the 2014 Alibaba IPO, the Hong Kong Exchange recognized its struggle to capture market-share for new technology companies with untraditional capital structures and issued a proposal to permit companies with multi-class structures to list IPOs on a new listing board. More recently, the Hong Kong government signaled its willingness to amending existing rules to permit multi-class companies to list under the status quo.
So far, the Securities and Exchange Commission (SEC) has largely side-stepped the issue in its regulatory agenda. In the fall U.S. Department of the Treasury report, the Treasury reiterated that corporate governance and shareholder rights are a matter of state law and recommended that the SEC’s role continue to be limited to reviewing the adequacy of disclosure and effects on shareholder voting for companies with dual-class stocks.
It may be premature to know the impact that the ban by many of the indices will have on the desire for companies to go public with multi-class structures. After all, many IPO companies are not eligible for immediate inclusion in any index (and each index has its own set of requirements). For instance, the S&P 500 has requirements on the length of public company trading (12 months), market capitalization ($6.1 billion) public float (50 percent of the class of stock) and performance (the sum of the four most recent consecutive quarters’ earnings must be positive), that make it impossible for a newly-public company to be listed inside a year and, for some companies, a significant number of years post-IPO.
The strength of the indices’ ban will be tested when a recently-public multi-class company achieves significant growth and would otherwise be eligible to be included in an index. Will some of the largest index-based funds, which may conceptually prefer equal voting rights for all shareholders, be satisfied with being left out of a company’s shareholder base because the company’s multi-class structure otherwise precludes it from being included in the index? According to an analysis conducted by State Street Global Advisors using data from FactSet, companies in the S&P 500 with multi-class stock structures outperformed their single-class counterparts by approximately 26 percent cumulatively over the 10-year period ending in 2016, and exclusion of those companies would have resulted in underperformance of the index by approximately 1.86 percent over the same period.
Already BlackRock, the world’s largest asset manager and a signatory on the coalition of investors advocating for equal rights for all shareholders, has publicly bristled at the thought of limiting returns for its clients due to the ban and has publicly disagreed with it, stating that “policymakers, not index providers, should set equity investing and corporate governance standards” and that it would support shareholder review of a company’s capital structure periodically through management proposals in the company’s proxy statement. Depending on stock performance of the IPO class of 2017, the first potential test case could occur as early as 2018 and this will be a development to monitor throughout the year.
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*Pamela Marcogliese is a partner and Elizabeth Bieber is an associate at Cleary Gottlieb Steen & Hamilton LLP. This post is based on a Cleary Gottlieb publication by Ms. Marcogliese and Ms. Bieber. Related research from the Program on Corporate Governance includes The Untenable Case for Perpetual Dual-Class Stock by Lucian Bebchuk and Kobi Kastiel (discussed on the Forum here).
Récemment, je suis intervenu auprès du conseil d’administration d’une OBNL et j’ai animé une discussion tournant autour des thèmes suivants en affirmant certains principes de gouvernance que je pense être incontournable.
J’ai regroupé les thèmes en 15 volets :
(1) Le conseil d’administration est souverain — il est l’ultime organe décisionnel.
(2) Le rôle des administrateurs est d’assurer la saine gestion de l’organisation en fonction d’objectifs établis. L’administrateur a un rôle de fiduciaire, non seulement envers les membres qui les ont élus, mais aussi envers les parties prenantes de toute l’organisation. Son rôle comporte des devoirs et des responsabilités envers celle-ci.
(3) Les administrateurs ont un devoir de surveillance et de diligence ; ils doivent cependant s’assurer de ne pas s’immiscer dans la gestion de l’organisation (« nose in, fingers out »).
(4) La décision la plus importante du conseil d’administration est le choix du premier dirigeant, c’est-à-dire le directeur général de l’organisation.
(5) Les administrateurs élus par l’assemblée générale ne sont pas porteurs des intérêts propres à leur groupe ; ce sont les intérêts supérieurs de l’organisation qui priment.
(6) Le président du conseil est le chef d’orchestre du groupe d’administrateurs ; il doit être en étroite relation avec le premier dirigeant et bien comprendre les coulisses du pouvoir. Il doit de plus s’assurer que chaque administrateur apporte une valeur ajoutée aux décisions du CA.
(7) Les membres du conseil doivent entretenir des relations de collaboration et de respect entre eux ; ils doivent viser les consensus et exprimer leur solidarité, notamment par la confidentialité des échanges.
(8) Les administrateurs doivent être bien préparés pour les réunions du conseil et ils doivent poser les bonnes questions afin de bien comprendre les enjeux et de décider en toute indépendance d’esprit. Pour ce faire, ils peuvent tirer profit de l’avis d’experts indépendants.
(9) La composition du conseil devrait refléter la diversité de l’organisation. On doit privilégier l’expertise, la connaissance de l’industrie et la complémentarité.
(10) Le conseil d’administration doit accorder toute son attention aux orientations stratégiques de l’organisation et passer le plus clair de son temps dans un rôle de conseil stratégique.
(11) Le rôle des comités du conseil (Ressources humaines, audit, gouvernance) est crucial ; ceux-ci doivent alimenter la réflexion des membres du conseil et faire des recommandations.
(12) La nécessité de fonctionner avec un comité exécutif varie selon la configuration du conseil d’administration de l’organisation.
(13) Chaque réunion devrait se conclure par un huis clos, systématiquement inscrit à l’ordre du jour de toutes les rencontres.
(14) Le président du comité de gouvernance doit mettre en place une évaluation du fonctionnement et de la dynamique du conseil.
(15) Les administrateurs doivent prévoir des activités de formation en gouvernance et en éthique.
Nous savons que le Dodd-Frank Act aux États-Unis oblige les entreprises publiques à publier le ratio indiquant la rémunération du CEO en comparaison avec la moyenne des salaires des employés.
L’obligation de publier ces ratios dans les rapports aux actionnaires commence cette année, et les entreprises doivent se préparer aux répercussions de cette divulgation.
L’article ci-dessous, publié par Joe Mallin, associé de la firme Pay Governance, paru sur le site du HLS Forum, met l’accent sur les impacts envisagés auprès des parties prenantes.
Quelles seront les retombées de la publication de ces statistiques tant redoutées ? C’est ce dont il est question dans ce court article.
Le graphique qui suit est assez révélateur d’un problème qui concerne les sociétés américaines et canadiennes !
Comment l’AMF réagira-t-elle à cette nouvelle donne ?
CEO = 184 x average worker pay – Canada CEO Pay – BayStreetEx
Key Takeaways
The CEO Pay Ratio will be published in 2018 proxy season.
As companies begin calculating their Ratios, it is also time to begin thinking about the timeframe immediately following the proxy statement publication and the possible reactions of key interested parties.
We suggest that companies determine how they want to respond to inquiries about the published CEO Pay Ratio and evaluate whether alternative Ratios should be calculated to provide appropriate context.
Companies will need to decide whether to be proactive or reactive to potential inquiries.
Interested Parties
A. The Media
We envision several likely outcomes as the media begins reporting on the CEO Pay Ratio. These include:
The local publication of tables comparing the CEO Pay Ratios of companies in specific geographies, such as large cities
Similar tables comparing companies across industries, likely by the national media
General conclusions between companies with higher versus lower Ratios (e.g., “high” = “bad”and “low” = “not as bad”)
We believe the tables published by both local and national media will include CEO pay, median employee pay, and the Ratio itself. Such tables will illustrate the fact that the CEO Pay Ratio consists of three parts, and the relationship among these components is key to understanding how employees may perceive its publication. This cross-company media comparison will be problematic: the SEC has stated it does not expect CEO Pay Ratios to be comparable across companies because of the variety of methodologies allowed for computing median employee pay. [1] This distinction is unlikely to make its way into media reports.
B. Employees
With the publication of the CEO Pay Ratio, employees will get a first glimpse into how their colleagues are paid, specifically the median pay of their colleagues. This will be a glimpse of just one number, but it will be a number they did not have access to before. As such, employees will be interested in two aspects of the CEO Pay Ratio:
Internal Comparisons to Median Pay—Employees will compare their own pay to the median employee’s pay. The obvious issue is that, by definition, half will be paid below the median; this could create a morale issue for those employees. Likewise, employees paid above the median could feel the same way if their pay is closer to the median than they had expected. Finally, the methodology used to calculate this median could complicate personal comparisons or cause other issues if the value of benefits are combined with direct compensation.
External Comparisons to Median Pay—Cross-company comparisons of median employee pay will be made. This will be especially prevalent among employees in the same geographic area and industry. Such comparisons could give the impression that a competitor pays more than one’s own company, and this could prompt employees to seek out a higher-paying competitor. This could become a key issue for companies in similar industries and regions, such as Silicon Valley. Will there be a competition to see who has the highest median employee pay? What would the recruiting implications be?
Overall, employees will likely pay more attention to the CEO Pay Ratio’s median employee pay aspect than to the CEO pay itself: CEO pay has been published for many years and should not be a surprise to employees. In addition, company employees may perceive the Ratio as a rather abstract number and have only mild interest in cross-company comparisons.
C. Investors
Early assumptions had been that investors were relatively uninterested in CEO Pay Ratio outcomes. This is due to the assumption the Ratio does not reveal information about the operations and future investment potential of a given company. However, a recent Institutional Shareholder Services (ISS) policy survey [2] indicates:
Only 16% of investors polled (primarily institutional investors) indicated they would not evaluate the CEO Pay Ratio as part of their investment evaluations.
The remaining investors indicated they would either:
Compare Ratios across companies and industries, or
Assess year-over-year changes in the Ratio for individual companies.
The key conclusion is that investors will look for Ratio differences across both companies and time, but any Ratio differences/changes in and of themselves will not likely be enough to change investment decisions. Such information will likely be considered in conjunction with other available information. At the same time, investors may inquire about what they perceive to be “high” Ratios and companies should be prepared for such inquiries.
Addressing Potential Issues
Most companies should be prepared to respond to questions related to the CEO Pay Ratio’s publication. Companies with what are perceived to be “low” ratios will get fewer inquiries, but should be prepared in any case. Responses to investor and media questions could be covered together, as we think they will be similar in nature.
Employee questions will be somewhat different, as they will be more focused on the median employee pay rather than the CEO Pay Ratio itself.
For example, companies may consider publishing multiple “supplemental” CEO Pay Ratios intended to provide context for media, investor and employee perceptions. For example, a significant number of relatively lower-paid, international, part-time, and/or seasonal employees would lower the median employee pay. Ratios will also likely vary significantly by industry: professional services firms with “high” median employee pay will generally have lower Ratios, and those with “low” median employee pay will have higher Ratios.
The supplemental calculations could take the form of Ratios based on:
Domestic employees only—for companies with significant employment in international locations
Salaried employees only—for companies with many lower-paid, non-salaried employees
Full-time employees only—for companies who employ many part-time employees
We believe these additional calculations may provide beneficial insight into the CEO Pay Ratio for employees, investors, and the media. In each case, the supplemental calculations will result in a lower Ratio along with insight into the initial Ratio’s calculation.
Investor/media relation functions should develop talking points to respond to inquiries, especially if their company’s initial CEO Pay Ratio may be perceived as “high”. The likelihood of media inquiries and the need for talking points is less likely among those companies whose CEO Pay Ratio may be perceived as “low”. This is particularly true concerning the media, whose sole focus will be on “high” CEO Pay Ratios. Prepared talking points can also form the basis for responding to employee issues; there should be a sense of cohesion across all responses to the various interested parties.
A key issue will be whether a company should be proactive or reactive to employee questions. Again, the initial CEO Pay Ratio may hold the answer: it may be appropriate to be proactive for a Ratio which may be perceived as “high” and reactive for one that may be perceived as “low”. However, individual Company facts and circumstances should influence this decision.
Conclusions
In general, the publication of CEO Pay Ratios for the first time will be prominently noted by the business media. It remains to be seen whether it will have its “fifteen minutes of fame,” or if it will face lingering scrutiny. However, the CEO Pay Ratio will likely become another aspect of the ongoing societal debate around income inequality and wealth concentration, which is not easily resolved either in this country or around the world.
In any case, we believe companies should begin developing appropriate responses to likely CEO Pay Ratio questions from their employees, investors and the media. Companies are currently in a period when the Ratios are being calculated, and now is the time to begin planning for publication and its after-effects. Be like the Boy Scouts: Be Prepared!
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Endnotes
1“Division of Corporation Finance Guidance on Calculation of Pay Ratio Disclosure.” The U.S. Securities and Exchange Commission. September 21, 2017.(go back)
2“Contextualizing CEO Pay Ratio Disclosure.” ISS Corporate Solutions Governance Insights. October 6, 2017.(go back)
Gouvernance | Jacques Grisé 