Ayant collaboré à la réalisation du volume « Améliorer la gouvernance de votre OSBL » des auteurs Jean-Paul Gagné et Daniel Lapointe, j’ai obtenu la primeur de la publication d’un chapitre sur mon blogue en gouvernance.
Le volume a paru en mars. Pour vous donner un aperçu de cette importante publication sur la gouvernance des organisations sans but lucratif (OSBN), j’ai eu la permission des éditeurs, Éditions Caractère et Éditions Transcontinental, de publier l’intégralité du chapitre 4 qui porte sur la composition du conseil d’administration et le recrutement d’administrateurs d’OSBL.
Je suis donc très fier de vous offrir cette primeur et j’espère que le sujet vous intéressera suffisamment pour vous inciter à vous procurer cette nouvelle publication.
Vous trouverez, ci-dessous, un court extrait de la page d’introduction du chapitre 4. Je vous invite à cliquer sur le lien suivant pour avoir accès à l’intégralité du chapitre.
Vous pouvez également feuilleter cet ouvrage en cliquant ici
Bonne lecture ! Vos commentaires sont les bienvenus.
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Les administrateurs d’un OSBL sont généralement élus dans le cadre d’un processus électoral tenu lors d’une assemblée générale des membres. Ils peuvent aussi faire l’objet d’une cooptation ou être désignés en vertu d’un mécanisme particulier prévu dans une loi (tel le Code des professions).
L’élection des administrateurs par l’assemblée générale emprunte l’un ou l’autre des deux scénarios suivants:
1. Les OSBL ont habituellement des membres qui sont invités à une assemblée générale annuelle et qui élisent des administrateurs aux postes à pourvoir. Le plus souvent, les personnes présentes sont aussi appelées à choisir l’auditeur qui fera la vérification des états financiers de l’organisation pour l’exercice en cours.
2. Certains OSBL n’ont pas d’autres membres que leurs administrateurs. Dans ce cas, ces derniers se transforment une fois par année en membres de l’assemblée générale, élisent des administrateurs aux postes vacants et choisissent l’auditeur qui fera la vérification des états financiers de l’organisation pour l’exercice en cours.
La cooptation autorise le recrutement d’administrateurs en cours d’exercice. Les personnes ainsi choisies entrent au CA lors de la première réunion suivant celle où leur nomination a été approuvée. Ils y siègent de plein droit, en dépit du fait que celle-ci ne sera entérinée qu’à l’assemblée générale annuelle suivante. La cooptation n’est pas seulement utile pour pourvoir rapidement aux postes vacants; elle a aussi comme avantage de permettre au conseil de faciliter la nomination de candidats dont le profil correspond aux compétences recherchées.
Dans les organisations qui élisent leurs administrateurs en assemblée générale, la sélection en fonction des profils déterminés peut présenter une difficulté : en effet, il peut arriver que les membres choisissent des administrateurs selon des critères qui ont peu à voir avec les compétences recherchées, telles leur amabilité, leur popularité, etc. Le comité du conseil responsable du recrutement d’administrateurs peut présenter une liste de candidats (en mentionnant leurs qualifications pour les postes à pourvoir) dans l’espoir que l’assemblée lui fasse confiance et les élise. Certains organismes préfèrent coopter en cours d’exercice, ce qui les assure de recruter un administrateur qui a le profil désiré et qui entrera en fonction dès sa sélection.
Quant à l’élection du président du conseil et, le cas échéant, du vice-président, du secrétaire et du trésorier, elle est généralement faite par les administrateurs. Dans les ordres professionnels, le Code des professions leur permet de déterminer par règlement si le président est élu par le conseil d’administration ou au suffrage universel des membres. Comme on l’a vu, malgré son caractère démocratique, l’élection du président au suffrage universel des membres présente un certain risque, puisqu’un candidat peut réussir à se faire élire à ce poste sans expérience du fonctionnement d’un CA ou en poursuivant un objectif qui tranche avec la mission, la vision ou encore le plan stratégique de l’organisation. Cet enjeu ne doit pas être pris à la légère par le CA. Une façon de minimiser ce risque est de faire connaître aux membres votants le profil recherché pour le président, profil qui aura été préalablement établi par le conseil. On peut notamment y inclure une expérience de conseil d’administration, ce qui aide à réduire la période d’apprentissage du nouveau président et facilite une transition en douceur.
Voici le billet qui a attiré l’attention du plus grand nombre de lecteurs sur mon blogue depuis le début. Celui-ci a été publié le 30 octobre 2011. Je l’ai mis à jour afin que les nombreuses personnes intéressés par la gouvernance des OBNL puissent être mieux informées. L’Institut canadien des comptables agréés (ICCA) a produit des documents pratiques, pertinents, synthétiques et accessibles sur presque toutes les questions de gouvernance. Il est également important de noter que l’ICCA accorde une attention toute particulière aux pratiques de gouvernance des organismes sans but lucratif (OSBL = OBNL).
Ainsi, l’ICCA met à la disposition de ces organisations la collection 20 Questions pour les OSBL qui comprend des questions que les administrateurs d’organismes sans but lucratif (OSBL=OBNL) devraient se poser concernant des enjeux importants pour la gouvernance de ce type d’organismes. Ces documents sont révisés régulièrement afin qu’ils demeurent actuels et pertinents. Si vous avez des questions dans le domaine de la gouvernance des OBNL, vous y trouverez certainement des réponses satisfaisantes.Si vous souhaitez avoir une idée du type de document à votre disposition, vous pouvez télécharger le PDF suivant:
Le présent cahier d’information aidera les administrateurs d’OSBL à assumer leurs principales responsabilités à cet égard, soit : le recrutement, l’évaluation et la planification de la relève du directeur général ou du principal responsable au sein du personnel, l’établissement de la rémunération du directeur général et l’approbation de la philosophie de rémunération de l’organisme, ainsi que la surveillance des politiques et pratiques en matière de ressources humaines de l’organisme pris dans son ensemble.
20 Questions que les administrateurs d’organismes sans but lucratif devraient poser sur les risques a été rédigé pour aider les membres des conseils d’administration des OSBL à comprendre leur responsabilité à l’égard de la surveillance des risques.
20 Questions que les administrateurs des organismes sans but lucratif devraient poser sur l’obligation fiduciaire vise à aider les membres des conseils d’administration d’OSBL à comprendre leurs obligations fiduciaires et à s’en acquitter en leur fournissant un résumé des principes juridiques et des pratiques de pointe en matière de gouvernance pour ces organismes.
Ce cahier d’information décrit brièvement les principaux éléments de gouvernance des organismes sans but lucratif et des responsabilités des administrateurs. Il sera utile non seulement aux administrateurs éventuels, nouveaux et expérimentés, mais aussi aux comités des candidatures et aux organisateurs des séances d’orientation et de formation des administrateurs. Il est le premier d’une série de cahiers d’information destinés aux administrateurs d’organismes sans but lucratif et portant sur des aspects particuliers de la gouvernance de ces organisations.
La viabilité d’un organisme sans but lucratif, soit sa capacité de poursuivre et de financer ses activités année après année, est l’une des principales responsabilités du conseil. Les administrateurs doivent comprendre la raison d’être de l’organisme, les intérêts de ses parties prenantes et la façon dont il gère les risques auxquels il est exposé. Ils doivent également participer activement à l’élaboration de la stratégie de l’organisme et à son approbation.
Le document 20 Questions que les administrateurs des organismes sans but lucratif devraient poser sur le recrutement, la formation et l’évaluation des membres du conseil explore les défis que doivent relever les OSBL pour recruter les personnes aptes à siéger à leur conseil d’administration. Il souligne aussi l’importance qu’il convient d’accorder à la formation et au perfectionnement des administrateurs ainsi qu’à l’évaluation régulière du conseil et de ses membres.
Les administrateurs sont exposés à divers risques juridiques du fait de leur association avec une société et de leur obligation fiduciaire à son égard. De plus en plus, ils s’intéressent aux conditions de leur indemnisation et de leur assurance et se tournent vers leurs conseillers professionnels pour vérifier qu’ils disposent d’un niveau de protection adéquat. Il est recommandé aux conseils de s’intéresser activement aux dispositions prises par la société en ce qui concerne l’indemnisation et l’assurance relatives à la responsabilité civile des administrateurs et des dirigeants.
À chaque semaine, j’ai l’intention de donner la parole à Johanne Bouchard* qui agira à titre d’auteure invitée sur mon blogue en gouvernance.
Son troisième billet se retrouve dans le e-Book 1 publié sur son site. Sous l’entête « What I write about », blogs in French, l’on retrouve tous les articles en français.
L’auteure a une solide expérience d’interventions de consultation auprès de conseils d’administration de sociétés américaines et d’accompagnements auprès de hauts dirigeants de sociétés publiques. Dans ce billet, elle aborde ce que, selon elle, doivent être les qualités des bons administrateurs.
Quels conseils, simples et concrets, une personne qui connaît bien la nature des conseils d’administration, peut-elle prodiguer aux administrateurs eu égard aux qualités et aux comportements à adopter dans leurs rôles de fiduciaires ?
Bonne lecture ! Vos commentaires sont les bienvenus.
Siéger à un conseil d’administration : comment exceller ?
par
Johanne Bouchard
C’est un privilège de servir au sein d’un conseil d’administration. Servir au sein d’un conseil est l’occasion de vraiment faire une différence dans la vie des gens, puisque les décisions que vous prenez peuvent avoir un effet significatif, non seulement sur l’entreprise, mais aussi sur les individus, les familles, et même sur les communautés entières. Vous êtes un intervenant-clé dans l’orientation et la stratégie globale, qui, à son tour, détermine le succès de l’entreprise et crée de la valeur ajoutée pour les actionnaires.
En 2014, Bryan Stolle, un des contributeurs de la revue Forbes, également investisseur au MohrDavidowVentures, a examiné le sujet dans un billet de son blogue. Il a écrit : « L’excellence d’un conseil d’administration est le résultat de l’excellence de chacun de ses membres ». Il poursuit en soulignant ce qu’il considère en être les principaux attributs. Je suis d’accord avec lui mais j’aimerais ajouter ce qui, selon moi, fait la grandeur et la qualité exceptionnelle d’un membre de conseil d’administration.
Intention
D’abord et avant tout, être un excellent membre de conseil d’administration commence avec « l’intention » d’en être un, avec l’intention d’être bienveillant, et pas uniquement avec l’intention de faire partie d’un conseil d’administration. Malheureusement, trop de membres ne sont pas vraiment résolus et déterminés dans leur volonté de devenir membres d’un conseil.
La raison de se joindre à un conseil doit être authentique, avec un désir profond de bien servir l’entité. Être clair sur les raisons qui vous poussent à vous joindre au conseil est absolument essentiel, et cela aide à poser les jalons de votre réussite comme administrateur. En adhérant à un conseil d’administration, votre devoir, ainsi que celui de vos collègues administrateurs, est de créer une valeur ajoutée pour les actionnaires.
Attentes
Ensuite, vous devez comprendre ce que l’on attend de vous et du rôle que vous serez appelé à jouer au sein du conseil d’administration. Trop de membres d’un conseil ne comprennent pas leur rôle et saisissent mal les attentes liées à leur charge. Souvent, le président du conseil et le chef de la direction ne communiquent pas suffisamment clairement leurs attentes concernant leur rôle.
Ne tenez rien pour acquis concernant le temps que vous devrez consacrer à cette fonction et ce qu’on attendra de votre collaboration. Est-ce qu’on s’attend à ce que vous soyez présent à toutes les réunions, que vous siégiez à un comité ou que vous participiez aux conférences téléphoniques entre les réunions normalement prévues ? Votre réseau suffit-il, à ce stade-ci de la croissance de l’entreprise, pour répondre au recrutement de nouveaux talents et pour créer des partenariats ? Est-ce que votre expérience de l’industrie est adéquate; comment serez-vous un joueur-clé lors des discussions ? Y aura-t-il un programme d’accueil et d’intégration des nouveaux administrateurs pour faciliter votre intégration au sein du conseil. De plus, comment prévoyez-vous atteindre un niveau suffisant de connaissance des stratégies commerciales de l’entreprise? Soyez clairs en ce qui concerne les attentes.
Exécution
Vous devez honorer les engagements associés à votre responsabilité de membre du conseil d’administration. Cela signifie :
Être préparé : se présenter à une réunion du conseil d’administration sans avoir lu l’ordre du jour au préalable ainsi que les documents qui l’accompagnent est inacceptable. Cela peut paraître évident, mais vous seriez surpris du nombre de membres de conseils coupables d’un tel manque de préparation. De même, le chef de la direction, soucieux d’une gestion efficace du temps, a la responsabilité de s’assurer que le matériel soit adéquatement préparé et distribué à l’avance à tous les administrateurs.
Respecter le calendrier : soyez à l’heure et assistez à toutes les réunions du conseil d’administration.
Participation
Écoutez, questionnez et ne prenez la parole qu’au moment approprié. Ne cherchez pas à provoquer la controverse uniquement dans le but de vous faire valoir, en émettant un point de vue qui n’est ni opportun, ni pertinent. N’intervenez pas inutilement, sauf si vous avez une meilleure solution ou des choix alternatifs à proposer.
Bonnes manières
Il est important de faire preuve de tact, même lorsque vous essayez d’être directs. Évitez les manœuvres d’intimidation; le dénigrement et le harcèlement n’ont pas leur place au sein d’une entreprise, encore moins dans une salle du conseil. Soyez respectueux, en particulier pendant la présentation du comité de direction. Placez votre cellulaire en mode discrétion. La pratique de bonnes manières, notamment les comportements respectueux, vous permettront de gagner le respect des autres.
Faites valoir vos compétences
Vos compétences sont uniques. Cherchez à les présenter de manière à ce que le conseil d’administration puisse en apprécier les particularités. En mettant pleinement à profit vos compétences et en participant activement aux réunions, vous renforcerez la composition du conseil et vous participerez également à la réussite de l’entreprise en créant une valeur ajoutée pour les actionnaires.
Ne soyez pas timide
Compte tenu de la nature stratégique de cette fonction, vous devez avoir le courage de faire connaître votre point de vue. Un bon membre de conseil d’administration ne doit pas craindre d’inciter les autres membres à se tenir debout lorsque qu’il est conscient des intérêts en cause, ni d’être celui qui saura clairement faire preuve de discernement. Un bon membre de conseil d’administration doit être prêt à accomplir les tâches les plus délicates, y compris celles qui consistent à changer la direction de l’entreprise et le chef de la direction, quand c’est nécessaire, et avant qu’il ne soit trop tard.
Évitez les réclamations monétaires non justifiées
Soyez conscients des émoluments d’administrateur qu’on vous paie. N’abusez pas des privilèges. Les conséquences sont beaucoup trop grandes pour vous, pour la culture de l’entreprise et pour la réputation du conseil. Si vous voulez que je sois plus précise, je fais référence aux déclarations de certaines dépenses que vous devriez payer vous-même. Sachez que quelqu’un du service de la comptabilité examine vos comptes de dépenses, et que cela pourrait facilement ternir votre réputation si vous soumettiez des dépenses inacceptables.
Faites preuve de maturité
Vous vous joignez à un conseil qui agit au plus haut niveau des entreprises (privée, publique ou à but non lucratif), dont les actions et les interventions ont une grande incidence sur les collectivités en général. Gardez confidentiel ce qui est partagé lors des réunions du conseil, et ne soyez pas la source d’une fuite.
Maintenez une bonne conduite
Le privilège de siéger au sein d’un conseil d’administration vous expose à une grande visibilité. Soyez conscients de votre comportement lors des réunions du conseil d’administration et à l’extérieur de la salle de réunion; évitez de révéler certains de vos comportements inopportuns.
Confiance et intégrité
Faites ce que vous avez promis de faire. Engagez-vous à respecter ce que vous promettez. Tenez votre parole et soyez toujours à votre meilleur et fier d’être un membre respectable du conseil d’administration.
Valeurs
Un bon membre de conseil d’administration possède des valeurs qu’il ne craint pas de révéler. Il est confiant que ses agissements reflètent ses valeurs.
Un bon membre de conseil est un joueur actif et, comme Stolle l’a si bien noté, de bons administrateurs constituent l’assise d’un bon conseil d’administration. Ce conseil d’administration abordera sans hésiter les enjeux délicats, tels que la rémunération du chef de la direction et la planification de la relève – des éléments qui sont trop souvent négligés.
Un bon membre du conseil d’administration devrait se soucier d’être un modèle et une source d’inspiration en exerçant sa fonction, que ce soit à titre d’administrateur indépendant, de président, de vice-président, de président du conseil, d’administrateur principal, de président d’un comité – quel que soit son rôle – il devrait avoir la maturité et la sagesse nécessaires pour se retirer d’un conseil d’administration avec grâce, quand vient le temps opportun de le faire.
Enfin, prenez soin de ne pas être un membre dysfonctionnel, ralentissant les progrès du conseil d’administration. Bien qu’étant un administrateur indépendant, chacun a le même devoir qu’un joueur d’équipe.
Je vous invite à aspirer à être un bon membre de conseil d’administration et à respecter vos engagements. Siéger à un trop grand nombre de conseils ne fera pas de vous un meilleur membre.
Je conduis des évaluations du rendement des conseils d’administration, et, je vous avoue, en toute sincérité, que de nombreux administrateurs me font remarquer que certains de leurs collègues semblent se disperser et qu’ils ne sont pas les administrateurs auxquels on est en droit de s’attendre. Vous ne pouvez pas vous permettre de trop « étirer l’élastique » si vous voulez pleinement honorer vos engagements. Rappelez-vous que c’est acceptable de dire « non » à certaines demandes, d’être sélectif quant à ce que vous souhaitez faire, mais il est vital de bien accomplir votre charge dans le rôle que vous tenez.
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*Johanne Bouchard est maintenant consultante auprès de conseils d’administration, de chefs de la direction et de comités de direction. Johanne a développé une expertise au niveau de la dynamique et la de composition d’un conseil d’administration. Après l’obtention de son diplôme d’ingénieure en informatique, sa carrière l’a menée à œuvrer dans tous les domaines du secteur de la technologie, du marketing et de la stratégie à l’échelle mondiale.
Voici une discussion très intéressante paru sur le groupe de discussion LinkedIn Board of Directors Society, et initiée par Jean-François Denault, concernant la nécessité de faire appel à un comité exécutif.
Je vous invite à lire les commentaires présentés sur le fil de discussion du groupe afin de vous former une opinion.
Personnellement, je crois que le comité exécutif est beaucoup trop souvent impliqué dans des activités de nature managériale.
Dans plusieurs cas, le CA pourrait s’en passer et reprendre l’initiative !
I’m looking for feedback for a situation I encountered.I am a board member for a non-profit. Some of us learned of an issue, and we brought it up at the last meeting for an update.We were told that it was being handled by the Executive Committee, and would not be brought up in board meetings.It is my understanding that the executive committee’s role is not to take issues upon themselves, but to act in interim of board meetings. It should not be discussing issues independently from the board.Am I correct in thinking this? Should all issues be brought up to the board, or can the executive committee handle situations that it qualifies as « sensitive »?
Depends whether it’s an operational matter I guess – e.g. a staffing issue below CEO/Director level. If it’s a matter of policy or strategy, or impacts on them, then the Board is entitled to be kept informed, surely, and to consider the matter itself.
Helping boards improve their performance and contributionI’ll respond a bit more broadly, Jean-François. While I am not opposed to the use of executive committees, a red flag often goes up when I conduct a governance review for clients and review their EC mandate and practices. There is a slippery slope where such committees find themselves assuming more accountability for the board’s work over time. Two classes of directors often form unintentionally as a result. Your situation is an example where the executive committee has usurped the board’s final authority. While I don’t recommend one approach, my inclination is to suggest that boards try to function without an executive committee because of the frequency that situations similar to the one you describe arise at boards where such committees play an active role. There are pros and cons, of course, for having these committees, but I believe the associated risk often warrants reconsideration of their real value and need.
I currently sit on the EC and have been in that role with other boards. Although I can see the EC working on projects as a subset of the board we Always go back to the full board and disclose those projects and will take items to the full board for approval. The board as a whole is accountable for decisions! There has to be transparency on the board! I found this article for you. http://www.help4nonprofits.com/BrainTeaser/BrainTeaser-Role_of_Executive_Committee.htm , which concurs to John’s comment. If used correctly the EC or a subset of the board can work on board issues more efficiently then venting through the full board, but they should always go back to the Full board for consideration or approval.
I have experienced couple of EB’s and unless the company is in deep financial or legal trouble for the most part the took away from the main board and in the whole worked ok but not great. If the board has over 10 to 15 board members it is almost a requirement but the board them is there for optics more than or effective and efficient decision making
Experienced CEO & Board member of Domestic and European companies.
I think Mr. Dinner, Mr. Molina, and Mr. Chapman summed it up beautifully:
– You cannot have two classes of Directors
– You have to have transparency and every Board member is entitled to the same information
– A Board of 10-15 members is inefficient and may need committees, but that does not change the fact that all Board members are entitled to have input into anything that the Board decides as a body.
– An Executive Committee is a sub-committee of the entire Board, not an independent body with extraordinary powers.
I agree with John, executive committees tend to be a slippery slope to bad governance. The board of directors has the responsibility of direction and oversight of the business or organization. If anything goes substantially wrong, the board of directors will also be accountable, legally. The rules of thumb for any and all committees is
– Committees must always be accountable to the board of directors, not the other way around.
– Committees must always have limits defined by the board of directors on authority and responsibility, and should have limits on duration.
– Committees should always have a specific reason to exist and that reason should be to support the board of directors in addressing it’s responsibilities.
Judging from the responses, we need to clearly define the context of what an Executive Committee is. Every organization can have it’s own function/view of what an Executive Committee is.
From my experience, an Executive Committee is under the CEO and reflects a group of trusted C-level executives that influence his decisions. I have had NO experience with Executive Boards other than the usual specific Board Committees dealing with specific realms of the organization.
So coming from this perspective, the Executive Committee is two steps down from the organizational pecking order and should be treated or viewed in that context..
President & CEO at Prevention Pharmaceuticals Inc.
I concur with Mr. James Clouser (above).
They should be avoided except in matters involving a performance question regarding C-Level Executive Board member, where a replacement may be sought.
James hit the nail on the head. Executive committees are a throwback to times when we didn’t have the communication tools we do now. They no longer have a reason for their existence. All directors, weather on a not for profit or a corporate board have equal responsibilities and legal exposures. There is no room or reason for a board within a board in today’s world.
My experience is; Board members have the last say in all policy issues- especially when it concerns operational matter. But in this case, where there is Executive Committee, what it sounds like is that, the organization in question has not clearly identified, nor delineated the roles of each body- which seem to have brought up the issue of ‘conflict’ in final decision- making. Often Executive Committees are created to act as a buffer or interim to the Board, this may sometime cause some over-lapping in executive decision-making.
My suggestion is for the organization to assess and evaluate its current hierarchy- clearly identify & define roles-benefits for creating and having both bodies, and how specific policies/ protocol would benefit the organization. In other words, the CEO needs to define the goals or benefits of having just a Board or having both bodies, and to avoid role conflict or over-lap, which may lead to confusion, as it seems to have been the case here.
CEO / PRESIDENT/BOARD OF DIRECTORS /PRIVATE EQUITY OPERATING PARTNER known for returning growth to stagnant businesses
The critical consideration for all board members is ‘ fiduciary accountability’ of all bod members. With that exposure , all bod members should be aware of key issues .
I think for large organizations, that executive committees still have an important role as many board members have a great deal going on and operational matters may come up from time to time that need to be handled in a judicial manner. While I think that the Executive committee has an important, at times critical role for a BOD, it is also critical that trust is built between the executive Committee and the BOD. This is only done when the executive committee is transparent, and pushes as many decisions that it can to the full board. If the committee does not have time to bring a matter to the full BOD, then they must convey to the BOD the circumstances why and reasoning for their decision. It is the executive committees responsibility to build that trust with the BOD and work hard to maintain it. All strategic decisions must be made by the full BOD. It sounds like you either have a communication failure, governance issue, or need work with your policies and procedures or a combination of issues.
Voici un document appréciable et remarquable qui illustre les principales données sur la gouvernance des sociétés américaines en les présentant sous forme chiffrée. Cet article est paru dans Harvard Law School forum par Ann Yerger, directrice générale du « Center for Board Matters » d’Ernst & Young.
L’auteur a compilé les données de plus de 3 000 sociétés publiques aux États-Unis, en les présentant selon les 5 indices les plus importants : S&P 500, S&P MidCap 400, S&P SmallCap 600, S&P 1500 et Russell 3000.
On se pose souvent des questions sur le profil de la gouvernance, notamment sur la composition des CA ; l’étude répond bien à ces interrogations et est facile à comprendre.
La présentation sous forme de tableaux et d’infographies est très explicite.
* Numbers based on all directorships in each index; gender diversity data represents average number of women directors on a board (and the percentage this represents)
Board Meetings and Size
Board meetings and size
S&P 500
S&P MidCap 400
S&P SmallCap 600
S&P 1500
Russell 3000
Board meetings
8
7
8
8
8
Board size
10.8
9.3
8.3
9.4
8.8
Board Leadership Structure
Board leadership structure*
S&P 500
S&P MidCap 400
S&P SmallCap 600
S&P 1500
Russell 3000
Separate chair/CEO
47%
57%
61%
55%
56%
Independent chair
28%
37%
42%
36%
36%
Independent lead director
54%
51%
41%
48%
40%
* Percentage based on portion of index; data through 31 Dec 2015
Board Elections
Board elections*
S&P 500
S&P MidCap 400
S&P SmallCap 600
S&P 1500
Russell 3000
Annual elections
91%
62%
55%
69%
60%
Majority voting in director elections
88%
60%
38%
62%
44%
* Percentage based on portion of index; data through 31 Dec 2015
Board and Executive Compensation
Board and executive compensation
S&P 500
S&P MidCap 400
S&P SmallCap 600
S&P 1500
Russell 3000
Independent directors
$291,987
$310,238
$171,120
$248,625
$226,053
CEO 3-yr average pay
$12.4 million
$6.2 million
$3.3 million
$7.1 million
$5.6 million
NEO 3-yr average pay
$4.7 million
$2.2 million
$1.2 million
$2.6 million
$2.1 million
Average pay ratio: CEO / NEO
2.6 times
2.8 times
2.8 times
2.7 times
2.7 times
* Numbers based on all directorships and executive positions in each index
Russell 3000 Opposition in Votes in Director Elections
Russell 3000: Opposition votes in director elections
Full year 2015
Year to date 2016
Total elections
17,808
15,529
Average opposition votes received (support)
4.0% (96.0%)
4.1% (95.9%)
Russell 3000: Opposition votes received by board nominees
Full year 2015
Year to date 2016
Directors with less than 80% support (% of nominees)
4.0%
4.0%
Number of directors
709
615
Directors with less than 50% support (% of nominees)
0.3%
0.3%
Number of directors
56
46
Say-on-Pay Proposals
Russell 3000: Say-on-Pay proposals voted
Full year 2015
Year to date 2016
Total proposals voted
2,194
1,850
Proposals with less than 70% support (% of proposals)
8.0%
6.7%
Number of proposals
175
124
Proposals with less than 50% support (% of proposals)
2.6%
1.5%
Number of proposals
56
27
Say-on-Pay proposals vote support
Full year 2015
Year to date 2016
S&P 500
92.0%
91.5%
S&P 1500
91.6%
91.8%
Russell 3000
91.3%
91.5%
Shareholder Proposals
Shareholder proposal categories
Number voted
Portion of voted proposals
Environmental/social
199
39%
Board-focused
163
32%
Compensation
56
11%
Anti-takeover/strategic
86
17%
Routine/other
7
1%
All
511
100%
Top shareholder proposals by vote support*
Average support
Eliminate Classified Board
74.7%
Adopt Majority Vote to Elect Directors
68.5%
Eliminate Supermajority Vote
61.0%
Adopt/Amend Proxy Access
51.8%
Allow Shareholders to Call Special Meeting
41.9%
Allow Shareholders to Act by Written Consent
39.7%
Increase/Report on Board Diversity
35.4%
Address Corporate EEO/Diversity
32.5%
Appoint Independent Board Chair
29.2%
Review/Report on Climate Related Risks
28.6%
* Based on topics where at least 5 shareholder proposals went to a vote
Top shareholder proposals by number voted*
Number voted
Adopt/Amend Proxy Access
76
Appoint Independent Board Chair
47
Review/Report on Lobbying Activities
40
Review/Report on Political Spending
29
Address Human Rights
23
Adopt Majority Vote to Elect Directors
22
Limit Post-Employment Executive Pay
21
Report on Sustainability
20
Allow Shareholders to Call Special Meeting
18
Review/Report on Climate Related Risks
18
* Based on topics where at least 5 shareholder proposals went to a vote
Voici un article de James McRitchie, publié dans Corporate governance, qui commente succinctement le dernier volume de Richard Leblanc.
Comme je l’ai déjà mentionné dans un autre billet, le livre de Richard Leblanc est certainement l’un des plus importants ouvrages (sinon le plus important) portant sur la gouvernance du conseil d’administration.
Je vous encourage à prendre connaissance de la revue de M. McRitchie, et à vous procurer cette bible.
I continue my review of The Handbook of Board Governance: A Comprehensive Guide for Public, Private, and Not-for-Profit Board Member. With the current post, I provide comments on Part 2 of the book, What Makes for a Good Board? See prior introductory comments and those on Part 1. I suspect the book will soon be the most popular collection of articles of current interest in the field of corporate governance.
The Handbook of Board Governance: Director Independence, Competency, and Behavior
Dr. Richard Leblanc‘s chapter focuses on the above three elements that make an effective director. Regulations require independence but not industry expertise; both are important elements. Leblanc cites ways director independence is commonly compromised and how independence ‘of mind’ can be enhanced. He then applies most of the same principles to choosing external advisors. Throughout the chapter he employees useful exhibits that reinforce the text with bullet points, tables, etc. for quick reference.
Director competency matrices have become relatively commonplace, although not ubiquitous. Leblanc not only provides a sample and scale, he reminds readers that being a CEO is an experience, not a competency and experience is not synonymous with competency. A sample board diversity matrix is also presented with measurable objectives for age, gender, ethnicity and geography.
Director behavior is the last topic in Leblanc’s chapter. Of course, each board needs to define how its directors are to act, subject to self- and peer-assessment but Leblanc’s ten behaviors is a good starting place:
Independent Judgment
Integrity
Organizational Loyalty
Commitment
Capacity to Challenge
Willingness to Act
Conceptual Thinking Skills
Communication Skills
Teamwork Skills
Influence Skills
That’s just one list of many. Leblanc’s examples and commentary on each adds color and depth. Under the UK’s Corporate Governance Code, director reviews are required to be facilitated by an independent provider every two or three years. Great advice for boards elsewhere as well. As Leblanc reminds readers:
« Proxy access and other renewal reforms are the direct result of boards steadfastly resisting director recruitment on the basis of competencies, the removal of underperforming directors; and the lack of boardroom refreshment, diversification, and renewal ».
L’étude de David Larcker*, professeur de comptabilité à la Stanford Graduate School of Business, publié dans le forum du Harvard Law School, examine la controverse eu égard à la combinaison des fonctions de PDG et de président du conseil. Environ 50 % des grandes sociétés américaines sont présidées par un administrateur indépendant, comparativement à 23 % il y a 15 ans.
Toute la question du bien-fondé de la dualité des rôles PDG/Chairman est encore ambiguë, même si les experts de la gouvernance et les actionnaires activistes sont généralement d’accord avec la séparation des fonctions.
L’auteur a procédé à une enquête auprès des 100 plus grandes sociétés ainsi qu’auprès des 100 plus petites entreprises du Fortune 1000, afin d’étudier l’évolution de ce phénomène au cours des 20 dernières années.
Il ressort de ces études que les grandes sociétés sont beaucoup plus incitées (par les actionnaires) à séparer les deux fonctions que les entreprises plus petites (57 % vs 3 %).
En fait, les 100 plus petites entreprises du Fortune 1000 ne sont pas ciblées par les actionnaires pour opérer ce changement.
In recent years, companies have consistently moved toward separating the chairman and CEO roles. According to Spencer Stuart, just over half of companies in the S&P 500 Index are led by a dual chairman/CEO, down from 77 percent 15 years ago. In theory, an independent chairman improves the ability of the board of directors to oversee management. However, separation of the chairman and CEO roles is not unambiguously positive, and there is little research support for requiring a separation of these roles. Still, shareholder activists and many governance experts remain active in pressuring companies to divide their leadership structure.
Given the controversy over chairman/CEO duality, we examined in detail the leadership structures of publicly traded corporations and the circumstances under which they are changed. Our sample includes the 100 largest and 100 smallest companies in the Fortune 1000 in 2016. The measurement period includes the 20-year period 1996-2015.
We find that board leadership structures are not stable. Only a third (34 percent) of companies made no changes during the entire 20-year measurement period. Slightly under half of these consistently maintained separate chairman and CEO positions (such as Costco, Intel, and Walgreens); slightly more than half of these consistently combined them (such as Amazon, Berkshire Hathaway, and ExxonMobil). Still, these companies are the exception rather than the rule. It is significantly more likely that a company makes at least one change to board leadership structure (combination or separation) over time. On average, companies made 1.7 changes, or approximately 1 change every 12 years. Changes are more frequent among large companies (2.2 changes, on average) than smaller companies (1.3 changes). In both cases, companies are slightly more likely to separate the roles than to combine them.
Most separations occur during the succession process, with the former CEO, founder, or other officer continuing to serve as chair on either a temporary or permanent basis. Of the 171 separations in our sample, 134 (78 percent) are associated with an orderly succession. This is true of both small and large companies. However, large companies are significantly more likely to separate the roles temporarily, whereas smaller companies are more likely to do so permanently.
Approximately a quarter (22 percent) of separations are not part of an orderly succession. Nine percent follow an abrupt resignation of the CEO, 6 percent a governance issue (such as accounting restatement or CEO scandal), 3 percent a merger, 2 percent a shareholder vote, and 2 percent are required of the company as part of a government bailout.
The decision to combine the chairman and CEO roles tends to be more uniform. The vast majority of combinations (91 percent) involve an orderly succession at the top. Only 9 percent are associated with a merger, sudden resignation, or governance-related issue. In 90 percent of combinations, the current CEO is given the additional title of chair; in 10 percent of cases, a new CEO is recruited to become dual chair/CEO.
Most interesting, perhaps, is the frequency with which companies “permanently” separate the leadership roles only to recombine them at a later date. Slightly over one-third (34 percent) of companies in our sample permanently separated the chairman and CEO roles and later recombined them during the 20-year measurement period. Best Buy split the roles for nearly 13 years when founder and chairman Richard Schultze stepped down as CEO in 2002; Schultze eventually resigned from the board and when his successor as chairman retired in 2015, then-CEO Hubert Joly was given the additional title of board chair. The company gave no public explanation of its decision to recombine the roles. Bank of America and Walt Disney both separated the chairman and CEO roles following shareholder votes and subsequently recombined them 5 and 9 years later, respectively, under different management. In both cases, the board justified the decision to recombine as rewarding the successful leadership of the current CEO.
In the cases of Bank of America and Walt Disney, the decisions to recombine the roles were highly controversial. Across the entire sample, however, shareholder response was unexpectedly varied. Only 34 percent of the companies that separated and recombined the chairman and CEO roles were targeted by shareholder-sponsored proxy proposals to require separation. Average support for these proposals was 33 percent, not significantly different from companies that consistently maintain a dual chairman/CEO structure (34 percent support) or that separate the roles temporarily during succession (36 percent support). It was also not significantly different from the average support across the total universe of companies that face shareholder-sponsored proposals requiring separation (32 percent).
Finally, it is interesting to note that pressure to separate the chairman and CEO roles seems to center almost exclusively on large companies. Only 3 of the 95 small companies in our sample were the target of a shareholder proposal to require an independent chairman over the entire 20-year measurement period, even though their board leadership structures are not significantly different from those of larger corporations. By contrast, a majority (56 out of 92) of large companies were targeted at least once. This suggests that the companies that shareholders target to advocate for independent board leadership might not necessarily be those with the most egregious governance problems but instead those that are the most visible public targets.
*David Larcker is Professor of Accounting at Stanford Graduate School of Business. This post is based on a paper authored by Professor Larcker and Bryan Tayan, Researcher with the Corporate Governance Research Initiative at Stanford Graduate School of Business.
Voici une « lettre ouverte » publiée sur le forum de la Harvard Law School on Corporate Governance par un groupe d’éminents dirigeants de sociétés publiques (cotées) qui présente les principes de la saine gouvernance : « The Commonsense Principles of Corporate Governance »*.
Les principes sont regroupés en plusieurs thèmes :
La composition du CA et la gouvernance interne
Composition
Élection des administrateurs
Nomination des administrateurs
Rémunération des administrateurs et la propriété d’actions
Structure et fonctionnement des comités du conseil
Nombre de mandats et âge de la retraite
Efficacité des administrateurs
Responsabilités des administrateurs
Communication des administrateurs avec de tierces parties
Activités cruciales du conseil : préparer les ordres du jour
Le droit des actionnaires
La reddition de comptes et la divulgation des activités
Le leadership du conseil
La planification de la relève managériale
La rémunération de la direction
Le rôle du gestionnaire des actifs des clients dans la gouvernance des sociétés
Bonne lecture ! Vos commentaires sont les bienvenus.
The following is a series of corporate governance principles for public companies, their boards of directors and their shareholders. These principles are intended to provide a basic framework for sound, long-term-oriented governance. But given the differences among our many public companies—including their size, their products and services, their history and their leadership—not every principle (or every part of every principle) will work for every company, and not every principle will be applied in the same fashion by all companies.
I. Board of Directors—Composition and Internal Governance
a. Composition
Directors’ loyalty should be to the shareholders and the company. A board must not be beholden to the CEO or management. A significant majority of the board should be independent under the New York Stock Exchange rules or similar standards.
All directors must have high integrity and the appropriate competence to represent the interests of all shareholders in achieving the long-term success of their company. Ideally, in order to facilitate engaged and informed oversight of the company and the performance of its management, a subset of directors will have professional experiences directly related to the company’s business. At the same time, however, it is important to recognize that some of the best ideas, insights and contributions can come from directors whose professional experiences are not directly related to the company’s business.
Directors should be strong and steadfast, independent of mind and willing to challenge constructively but not be divisive or self-serving. Collaboration and collegiality also are critical for a healthy, functioning board.
Directors should be business savvy, be shareholder oriented and have a genuine passion for their company.
Directors should have complementary and diverse skill sets, backgrounds and experiences. Diversity along multiple dimensions is critical to a high-functioning board. Director candidates should be drawn from a rigorously diverse pool.
While no one size fits all—boards need to be large enough to allow for a variety of perspectives, as well as to manage required board processes—they generally should be as small as practicable so as to promote an open dialogue among directors.
Directors need to commit substantial time and energy to the role. Therefore, a board should assess the ability of its members to maintain appropriate focus and not be distracted by competing responsibilities. In so doing, the board should carefully consider a director’s service on multiple boards and other commitments.
b. Election of directors
Directors should be elected by a majority of the votes cast “for” and “against/withhold” (i.e., abstentions and non-votes should not be counted for this purpose).
c. Nominating directors
Long-term shareholders should recommend potential directors if they know the individuals well and believe they would be additive to the board.
A company is more likely to attract and retain strong directors if the board focuses on big-picture issues and can delegate other matters to management (see below at II.b., “Board of Directors’ Responsibilities/Critical activities of the board; setting the agenda”).
d. Director compensation and stock ownership
A company’s independent directors should be fairly and equally compensated for board service, although (i) lead independent directors and committee chairs may receive additional compensation and (ii) committee service fees may vary. If directors receive any additional compensation from the company that is not related to their service as a board member, such activity should be disclosed and explained.
Companies should consider paying a substantial portion (e.g., for some companies, as much as 50% or more) of director compensation in stock, performance stock units or similar equity-like instruments. Companies also should consider requiring directors to retain a significant portion of their equity compensation for the duration of their tenure to further directors’ economic alignment with the long-term performance of the company.
e. Board committee structure and service
Companies should conduct a thorough and robust orientation program for their new directors, including background on the industry and the competitive landscape in which the company operates, the company’s business, its operations, and important legal and regulatory issues, etc.
A board should have a well-developed committee structure with clearly understood responsibilities. Disclosures to shareholders should describe the structure and function of each board committee.
Boards should consider periodic rotation of board leadership roles (i.e., committee chairs and the lead independent director), balancing the benefits of rotation against the benefits of continuity, experience and expertise.
f. Director tenure and retirement age
It is essential that a company attract and retain strong, experienced and knowledgeable board members.
Some boards have rules around maximum length of service and mandatory retirement age for directors; others have such rules but permit exceptions; and still others have no such rules at all. Whatever the case, companies should clearly articulate their approach on term limits and retirement age. And insofar as a board permits exceptions, the board should explain (ordinarily in the company’s proxy statement) why a particular exception was warranted in the context of the board’s assessment of its performance and composition.
Board refreshment should always be considered in order to ensure that the board’s skill set and perspectives remain sufficiently current and broad in dealing with fast-changing business dynamics. But the importance of fresh thinking and new perspectives should be tempered with the understanding that age and experience often bring wisdom, judgment and knowledge.
g. Director effectiveness
Boards should have a robust process to evaluate themselves on a regular basis, led by the non-executive chair, lead independent director or appropriate committee chair. The board should have the fortitude to replace ineffective directors.
II. Board of Directors’ Responsibilities
a. Director communication with third parties
Robust communication of a board’s thinking to the company’s shareholders is important. There are multiple ways of going about it. For example, companies may wish to designate certain directors—as and when appropriate and in coordination with management—to communicate directly with shareholders on governance and key shareholder issues, such as CEO compensation. Directors who communicate directly with shareholders ideally will be experienced in such matters.
Directors should speak with the media about the company only if authorized by the board and in accordance with company policy.
In addition, the CEO should actively engage on corporate governance and key shareholder issues (other than the CEO’s own compensation) when meeting with shareholders.
b. Critical activities of the board; setting the agenda
The full board (including, where appropriate, through the non-executive chair or lead independent director) should have input into the setting of the board agenda.
Over the course of the year, the agenda should include and focus on the following items, among others:
A robust, forward-looking discussion of the business.
The performance of the current CEO and other key members of management and succession planning for each of them. One of the board’s most important jobs is making sure the company has the right CEO. If the company does not have the appropriate CEO, the board should act promptly to address the issue.
Creation of shareholder value, with a focus on the long term. This means encouraging the sort of long-term thinking owners of a private company might bring to their strategic discussions, including investments that may not pay off in the short run.
Major strategic issues (including material mergers and acquisitions and major capital commitments) and long-term strategy, including thorough consideration of operational and financial plans, quantitative and qualitative key performance indicators, and assessment of organic and inorganic growth, among others.
The board should receive a balanced assessment on strategic fit, risks and valuation in connection with material mergers and acquisitions. The board should consider establishing an ad hoc Transaction Committee if significant board time is otherwise required to consider a material merger or acquisition. If the company’s stock is to be used in such a transaction, the board should carefully assess the company’s valuation relative to the valuation implied in the acquisition. The objective is to properly evaluate the value of what you are giving vs. the value of what you are getting.
Significant risks, including reputational risks. The board should not be reflexively risk averse; it should seek the proper calibration of risk and reward as it focuses on the long-term interests of the company’s shareholders.
Standards of performance, including the maintaining and strengthening of the company’s culture and values.
Material corporate responsibility matters.
Shareholder proposals and key shareholder concerns.
The board (or appropriate board committee) should determine the best approach to compensate management, taking into account all the factors it deems appropriate, including corporate and individual performance and other qualitative and quantitative factors (see below at VII., “Compensation of Management”).
A board should be continually educated on the company and its industry. If a Board feels it would be productive, outside experts and advisors should be brought in to inform directors on issues and events affecting the company.
The board should minimize the amount of time it spends on frivolous or non-essential matters—the goal is to provide perspective and make decisions to build real value for the company and its shareholders.
As authorized and coordinated by the board, directors should have unfettered access to management, including those below the CEO’s direct reports.
At each meeting, to ensure open and free discussion, the board should meet in executive session without the CEO or other members of management. The independent directors should ensure that they have enough time to do this properly.
The board (or appropriate board committee) should discuss and approve the CEO’s compensation.
In addition to its other responsibilities, the Audit Committee should focus on whether the company’s financial statements would be prepared or disclosed in a materially different manner if the external auditor itself were solely responsible for their preparation.
III. Shareholder Rights
Many public companies and asset managers have recently reviewed their approach to proxy access. Others have not yet undertaken such a review or may have one under way. Among the larger market capitalization companies that have adopted proxy access provisions, generally a shareholder (or group of up to 20 shareholders) who has continuously held a minimum of 3% of the company’s outstanding shares for three years is eligible to include on the company’s proxy statement nominees for a minimum of 20% (and, in some cases, 25%) of the company’s board seats. Generally, only shares in which the shareholder has full, unhedged economic interest count toward satisfaction of the ownership/holding period requirements. A higher threshold of ownership (e.g., 5%) often has been adopted for smaller market capitalization companies (e.g., less than $2 billion).
Dual-class voting is not a best practice. If a company has dual-class voting, which sometimes is intended to protect the company from short-term behavior, the company should consider having specific sunset provisions based upon time or a triggering event, which eliminate dual-class voting. In addition, all shareholders should be treated equally in any corporate transaction.
Written consent and special meeting provisions can be important mechanisms for shareholder action. Where they are adopted, there should be a reasonable minimum amount of outstanding shares required in order to prevent a small minority of shareholders from being able to abuse the rights or waste corporate time and resources.
IV. Public Reporting
Transparency around quarterly financial results is important.
Companies should frame their required quarterly reporting in the broader context of their articulated strategy and provide an outlook, as appropriate, for trends and metrics that reflect progress (or not) on long-term goals. A company should not feel obligated to provide earnings guidance—and should determine whether providing earnings guidance for the company’s shareholders does more harm than good. If a company does provide earnings guidance, the company should be realistic and avoid inflated projections. Making short-term decisions to beat guidance (or any performance benchmark) is likely to be value destructive in the long run.
As appropriate, long-term goals should be disclosed and explained in a specific and measurable way.
A company should take a long-term strategic view, as though the company were private, and explain clearly to shareholders how material decisions and actions are consistent with that view.
Companies should explain when and why they are undertaking material mergers or acquisitions or major capital commitments.
Companies are required to report their results in accordance with Generally Accepted Accounting Principles (“GAAP”). While it is acceptable in certain instances to use non-GAAP measures to explain and clarify results for shareholders, such measures should be sensible and should not be used to obscure GAAP results. In this regard, it is important to note that all compensation, including equity compensation, is plainly a cost of doing business and should be reflected in any non-GAAP measurement of earnings in precisely the same manner it is reflected in GAAP earnings.
V. Board Leadership (Including the Lead Independent Director’s Role)
The board’s independent directors should decide, based upon the circumstances at the time, whether it is appropriate for the company to have separate or combined chair and CEO roles. The board should explain clearly (ordinarily in the company’s proxy statement) to shareholders why it has separated or combined the roles.
If a board decides to combine the chair and CEO roles, it is critical that the board has in place a strong designated lead independent director and governance structure.
Depending on the circumstances, a lead independent director’s responsibilities may include:
Serving as liaison between the chair and the independent directors
Presiding over meetings of the board at which the chair is not present, including executive sessions of the independent directors
Ensuring that the board has proper input into meeting agendas for, and information sent to, the board
Having the authority to call meetings of the independent directors
Insofar as the company’s board wishes to communicate directly with shareholders, engaging (or overseeing the board’s process for engaging) with those shareholders
Guiding the annual board self-assessment
Guiding the board’s consideration of CEO compensation
Guiding the CEO succession planning process
VI. Management Succession Planning
Senior management bench strength can be evaluated by the board and shareholders through an assessment of key company employees; direct exposure to those employees is helpful in making that assessment.
Companies should inform shareholders of the process the board has for succession planning and also should have an appropriate plan if an unexpected, emergency succession is necessary.
VII. Compensation of Management
To be successful, companies must attract and retain the best people—and competitive compensation of management is critical in this regard. To this end, compensation plans should be appropriately tailored to the nature of the company’s business and the industry in which it competes. Varied forms of compensation may be necessary for different types of businesses and different types of employees. While a company’s compensation plans will evolve over time, they should have continuity over multiple years and ensure alignment with long-term performance.
Compensation should have both a current component and a long-term component.
Benchmarks and performance measurements ordinarily should be disclosed to enable shareholders to evaluate the rigor of the company’s goals and the goal-setting process. That said, compensation should not be entirely formula based, and companies should retain discretion (appropriately disclosed) to consider qualitative factors, such as integrity, work ethic, effectiveness, openness, etc. Those matters are essential to a company’s long-term health and ordinarily should be part of how compensation is determined.
Companies should consider paying a substantial portion (e.g., for some companies, as much as 50% or more) of compensation for senior management in the form of stock, performance stock units or similar equity-like instruments. The vesting or holding period for such equity compensation should be appropriate for the business to further senior management’s economic alignment with the long-term performance of the company. With properly designed performance hurdles, stock options may be one element of effective compensation plans, particularly for the CEO. All equity grants (whether stock or options) should be made at fair market value, or higher, at the time of the grant, with particular attention given to any dilutive effect of such grants on existing shareholders.
Companies should clearly articulate their compensation plans to shareholders. While companies should not, in the design of their compensation plans, feel constrained by the preferences of their competitors or the models of proxy advisors, they should be prepared to articulate how their approach links compensation to performance and aligns the interests of management and shareholders over the long term. If a company has well-designed compensation plans and clearly explains its rationale for those plans, shareholders should consider giving the company latitude in connection with individual annual compensation decisions.
If large special compensation awards (not normally recurring annual or biannual awards but those considered special awards or special retention awards) are given to management, they should be carefully evaluated and—in the case of the CEO and other “Named Executive Officers” whose compensation is set forth in the company’s proxy statement—clearly explained.
Companies should maintain clawback policies for both cash and equity compensation.
VIII. Asset Managers’ Role in Corporate Governance
Asset managers, on behalf of their clients, are significant owners of public companies, and, therefore, often are in a position to influence the corporate governance practices of those companies. Asset managers should exercise their voting rights thoughtfully and act in what they believe to be the long-term economic interests of their clients.
Asset managers should devote sufficient time and resources to evaluate matters presented for shareholder vote in the context of long-term value creation. Asset managers should actively engage, as appropriate, based on the issues, with the management and/or board of the company, both to convey the asset manager’s point of view and to understand the company’s perspective. Asset managers should give due consideration to the company’s rationale for its positions, including its perspective on certain governance issues where the company might take a novel or unconventional approach.
Given their importance to long-term investment success, proxy voting and corporate governance activities should receive appropriate senior-level oversight by the asset manager.
Asset managers, on behalf of their clients, should evaluate the performance of boards of directors, including thorough consideration of the following:
To the extent directors are speaking directly with shareholders, the directors’ (i) knowledge of their company’s corporate governance and policies and (ii) interest in understanding the key concerns of the company’s shareholders
The board’s focus on a thoughtful, long-term strategic plan and on performance against that plan
An asset manager’s ultimate decision makers on proxy issues important to long-term value creation should have access to the company, its management and, in some circumstances, the company’s board. Similarly, a company, its management and board should have access to an asset manager’s ultimate decision makers on those issues.
Asset managers should raise critical issues to companies (and vice versa) as early as possible in a constructive and proactive way. Building trust between the shareholders and the company is a healthy objective.
Asset managers may rely on a variety of information sources to support their evaluation and decision-making processes. While data and recommendations from proxy advisors may form pieces of the information mosaic on which asset managers rely in their analysis, ultimately, their votes should be based on independent application of their own voting guidelines and policies.
Asset managers should make public their proxy voting process and voting guidelines and have clear engagement protocols and procedures.
Asset managers should consider sharing their issues and concerns (including, as appropriate, voting intentions and rationales therefor) with the company (especially where they oppose the board’s recommendations) in order to facilitate a robust dialogue if they believe that doing so is in the best interests of their clients.
*The Commonsense Principles of Corporate Governance were developed, and are posted on behalf of, a group of executives leading prominent public corporations and investors in the U.S.
The Open Letter and key facts about the principles are also available here and here.
Les conseils d’administration sont de plus en plus confrontés à l’exigence d’évaluer l’efficacité de leur fonctionnement par le biais d’une évaluation annuelle du CA, des comités et des administrateurs.
En fait, le NYSE exige depuis dix ans que les conseils procèdent à leur évaluation et que les résultats du processus soient divulgués aux actionnaires. Également, les investisseurs institutionnels et les activistes demandent de plus en plus d’informations au sujet du processus d’évaluation.
Les résultats de l’évaluation peuvent être divulgués de plusieurs façons, notamment dans les circulaires de procuration et sur le site de l’entreprise.
L’article publié par John Olson, associé fondateur de la firme Gibson, Dunn & Crutcher, professeur invité à Georgetown Law Center, et paru sur le forum du Harvard Law School, présente certaines approches fréquemment utilisées pour l’évaluation du CA, des comités et des administrateurs.
On recommande de modifier les méthodes et les paramètres de l’évaluation à chaque trois ans afin d’éviter la routine susceptible de s’installer si les administrateurs remplissent les mêmes questionnaires, gérés par le président du conseil. De plus, l’objectif de l’évaluation est sujet à changement (par exemple, depuis une décennie, on accorde une grande place à la cybersécurité).
C’est au comité de gouvernance que revient la supervision du processus d’évaluation du conseil d’administration. L’article décrit quatre méthodes fréquemment utilisées.
(1) Les questionnaires gérés par le comité de gouvernance ou une personne externe
(2) les discussions entre administrateurs sur des sujets déterminés à l’avance
(3) les entretiens individuels avec les administrateurs sur des thèmes précis par le président du conseil, le président du comité de gouvernance ou un expert externe.
(4) L’évaluation des contributions de chaque administrateur par la méthode d’auto-évaluation et par l’évaluation des pairs.
Chaque approche a ses particularités et la clé est de varier les façons de faire périodiquement. On constate également que beaucoup de sociétés cotées utilisent les services de spécialistes pour les aider dans leurs démarches.
La quasi-totalité des entreprises du S&P 500 divulgue le processus d’évaluation utilisé pour améliorer leur efficacité. L’article présente deux manières de diffuser les résultats du processus d’évaluation.
(1) Structuré, c’est-à-dire un format qui précise — qui évalue quoi ; la fréquence de l’évaluation ; qui supervise les résultats ; comment le CA a-t-il agi eu égard aux résultats de l’opération d’évaluation.
(2) Information axée sur les résultats — les grandes conclusions ; les facteurs positifs et les points à améliorer ; un plan d’action visant à corriger les lacunes observées.
Notons que la firme de services aux actionnaires ISS (Institutional Shareholder Services) utilise la qualité du processus d’évaluation pour évaluer la robustesse de la gouvernance des sociétés. L’article présente des recommandations très utiles pour toute personne intéressée par la mise en place d’un système d’évaluation du CA et par sa gestion.
Voici trois articles parus sur mon blogue qui abordent le sujet de l’évaluation :
More than ten years have passed since the New York Stock Exchange (NYSE) began requiring annual evaluations for boards of directors and “key” committees (audit, compensation, nominating/governance), and many NASDAQ companies also conduct these evaluations annually as a matter of good governance. [1] With boards now firmly in the routine of doing annual evaluations, one challenge (as with any recurring activity) is to keep the process fresh and productive so that it continues to provide the board with valuable insights. In addition, companies are increasingly providing, and institutional shareholders are increasingly seeking, more information about the board’s evaluation process. Boards that have implemented a substantive, effective evaluation process will want information about their work in this area to be communicated to shareholders and potential investors. This can be done in a variety of ways, including in the annual proxy statement, in the governance or investor information section on the corporate website, and/or as part of shareholder engagement outreach.
To assist companies and their boards in maximizing the effectiveness of the evaluation process and related disclosures, this post provides an overview of several frequently used methods for conducting evaluations of the full board, board committees and individual directors. It is our experience that using a variety of methods, with some variation from year to year, results in more substantive and useful evaluations. This post also discusses trends and considerations relating to disclosures about board evaluations. We close with some practical tips for boards to consider as they look ahead to their next annual evaluation cycle.
Common Methods of Board Evaluation
As a threshold matter, it is important to note that there is no one “right” way to conduct board evaluations. There is room for flexibility, and the boards and committees we work with use a variety of methods. We believe it is good practice to “change up” the board evaluation process every few years by using a different format in order to keep the process fresh. Boards have increasingly found that year-after-year use of a written questionnaire, with the results compiled and summarized by a board leader or the corporate secretary for consideration by the board, becomes a routine exercise that produces few new insights as the years go by. This has been the most common practice, and it does respond to the NYSE requirement, but it may not bring as much useful information to the board as some other methods.
Doing something different from time to time can bring new perspectives and insights, enhancing the effectiveness of the process and the value it provides to the board. The evaluation process should be dynamic, changing from time to time as the board identifies practices that work well and those that it finds less effective, and as the board deals with changing expectations for how to meet its oversight duties. As an example, over the last decade there have been increasing expectations that boards will be proactive in oversight of compliance issues and risk (including cyber risk) identification and management issues.
Three of the most common methods for conducting a board or committee evaluation are: (1) written questionnaires; (2) discussions; and (3) interviews. Some of the approaches outlined below reflect a combination of these methods. A company’s nominating/governance committee typically oversees the evaluation process since it has primary responsibility for overseeing governance matters on behalf of the board.
1. Questionnaires
The most common method for conducting board evaluations has been through written responses to questionnaires that elicit information about the board’s effectiveness. The questionnaires may be prepared with the assistance of outside counsel or an outside advisor with expertise in governance matters. A well-designed questionnaire often will address a combination of substantive topics and topics relating to the board’s operations. For example, the questionnaire could touch on major subject matter areas that fall under the board’s oversight responsibility, such as views on whether the board’s oversight of critical areas like risk, compliance and crisis preparedness are effective, including whether there is appropriate and timely information flow to the board on these issues. Questionnaires typically also inquire about whether board refreshment mechanisms and board succession planning are effective, and whether the board is comfortable with the senior management succession plan. With respect to board operations, a questionnaire could inquire about matters such as the number and frequency of meetings, quality and timeliness of meeting materials, and allocation of meeting time between presentation and discussion. Some boards also consider their efforts to increase board diversity as part of the annual evaluation process.
Many boards review their questionnaires annually and update them as appropriate to address new, relevant topics or to emphasize particular areas. For example, if the board recently changed its leadership structure or reallocated responsibility for a major subject matter area among its committees, or the company acquired or started a new line of business or experienced recent issues related to operations, legal compliance or a breach of security, the questionnaire should be updated to request feedback on how the board has handled these developments. Generally, each director completes the questionnaire, the results of the questionnaires are consolidated, and a written or verbal summary of the results is then shared with the board.
Written questionnaires offer the advantage of anonymity because responses generally are summarized or reported back to the full board without attribution. As a result, directors may be more candid in their responses than they would be using another evaluation format, such as a face-to-face discussion. A potential disadvantage of written questionnaires is that they may become rote, particularly after several years of using the same or substantially similar questionnaires. Further, the final product the board receives may be a summary that does not pick up the nuances or tone of the views of individual directors.
In our experience, increasingly, at least once every few years, boards that use questionnaires are retaining a third party, such as outside counsel or another experienced facilitator, to compile the questionnaire responses, prepare a summary and moderate a discussion based on the questionnaire responses. The desirability of using an outside party for this purpose depends on a number of factors. These include the culture of the board and, specifically, whether the boardroom environment is one in which directors are comfortable expressing their views candidly. In addition, using counsel (inside or outside) may help preserve any argument that the evaluation process and related materials are privileged communications if, during the process, counsel is providing legal advice to the board.
In lieu of asking directors to complete written questionnaires, a questionnaire could be distributed to stimulate and guide discussion at an interactive full board evaluation discussion.
2. Group Discussions
Setting aside board time for a structured, in-person conversation is another common method for conducting board evaluations. The discussion can be led by one of several individuals, including: (a) the chairman of the board; (b) an independent director, such as the lead director or the chair of the nominating/governance committee; or (c) an outside facilitator, such as a lawyer or consultant with expertise in governance matters. Using a discussion format can help to “change up” the evaluation process in situations where written questionnaires are no longer providing useful, new information. It may also work well if there are particular concerns about creating a written record.
Boards that use a discussion format often circulate a list of discussion items or topics for directors to consider in advance of the meeting at which the discussion will occur. This helps to focus the conversation and make the best use of the time available. It also provides an opportunity to develop a set of topics that is tailored to the company, its business and issues it has faced and is facing. Another approach to determining discussion topics is to elicit directors’ views on what should be covered as part of the annual evaluation. For example, the nominating/governance could ask that each director select a handful of possible topics for discussion at the board evaluation session and then place the most commonly cited topics on the agenda for the evaluation.
A discussion format can be a useful tool for facilitating a candid exchange of views among directors and promoting meaningful dialogue, which can be valuable in assessing effectiveness and identifying areas for improvement. Discussions allow directors to elaborate on their views in ways that may not be feasible with a written questionnaire and to respond in real time to views expressed by their colleagues on the board. On the other hand, they do not provide an opportunity for anonymity. In our experience, this approach works best in boards with a high degree of collegiality and a tradition of candor.
3. Interviews
Another method of conducting board evaluations that is becoming more common is interviews with individual directors, done in-person or over the phone. A set of questions is often distributed in advance to help guide the discussion. Interviews can be done by: (a) an outside party such as a lawyer or consultant; (b) an independent director, such as the lead director or the chair of the nominating/governance committee; or (c) the corporate secretary or inside counsel, if directors are comfortable with that. The party conducting the interviews generally summarizes the information obtained in the interview process and may facilitate a discussion of the information obtained with the board.
In our experience, boards that have used interviews to conduct their annual evaluation process generally have found them very productive. Directors have observed that the interviews yielded rich feedback about the board’s performance and effectiveness. Relative to other types of evaluations, interviews are more labor-intensive because they can be time-consuming, particularly for larger boards. They also can be expensive, particularly if the board retains an outside party to conduct the interviews. For these reasons, the interview format generally is not one that is used every year. However, we do see a growing number of boards taking this path as a “refresher”—every three to five years—after periods of using a written questionnaire, or after a major event, such as a corporate crisis of some kind, when the board wants to do an in-depth “lessons learned” analysis as part of its self-evaluation. Interviews also offer an opportunity to develop a targeted list of questions that focuses on issues and themes that are specific to the board and company in question, which can contribute further to the value derived from the interview process.
For nominating/governance committees considering the use of an interview format, one key question is who will conduct the interviews. In our experience, the most common approach is to retain an outside party (such as a lawyer or consultant) to conduct and summarize interviews. An outside party can enhance the effectiveness of the process because directors may be more forthcoming in their responses than they would if another director or a member of management were involved.
Individual Director Evaluations
Another practice that some boards have incorporated into their evaluation process is formal evaluations of individual directors. In our experience, these are not yet widespread but are becoming more common. At companies where the nominating/governance committee has a robust process for assessing the contributions of individual directors each year in deciding whether to recommend them for renomination to the board, the committee and the board may conclude that a formal evaluation every year is unnecessary. Historically, some boards have been hesitant to conduct individual director evaluations because of concerns about the impact on board collegiality and dynamics. However, if done thoughtfully, a structured process for evaluating the performance of each director can result in valuable insights that can strengthen the performance of individual directors and the board as a whole.
As with board and committee evaluations, no single “best practice” has emerged for conducting individual director evaluations, and the methods described above can be adapted for this purpose. In addition, these evaluations may involve directors either evaluating their own performance (self-evaluations), or evaluating their fellow directors individually and as a group (peer evaluations). Directors may be more willing to evaluate their own performance than that of their colleagues, and the utility of self-evaluations can be enhanced by having an independent director, such as the chairman of the board or lead director, or the chair of the nominating/governance committee, provide feedback to each director after the director evaluates his or her own performance. On the other hand, peer evaluations can provide directors with valuable, constructive comments. Here, too, each director’s evaluation results typically would be presented only to that director by the chairman of the board or lead director, or the chair of the nominating/governance committee. Ultimately, whether and how to conduct individual director evaluations will depend on a variety of factors, including board culture.
Disclosures about Board Evaluations
Many companies discuss the board evaluation process in their corporate governance guidelines. [2] In addition, many companies now provide disclosure about the evaluation process in the proxy statement, as one element of increasingly robust proxy disclosures about their corporate governance practices. According to the 2015 Spencer Stuart Board Index, all but 2% of S&P 500 companies disclose in their proxy statements, at a minimum, that they conduct some form of annual board evaluation.
In addition, institutional shareholders increasingly are expressing an interest in knowing more about the evaluation process at companies where they invest. In particular, they want to understand whether the board’s process is a meaningful one, with actionable items emerging from the evaluation process, and not a “check the box” exercise. In the United Kingdom, companies must report annually on their processes for evaluating the performance of the board, its committees and individual directors under the UK Corporate Governance Code. As part of the code’s “comply or explain approach,” the largest companies are expected to use an external facilitator at least every three years (or explain why they have not done so) and to disclose the identity of the facilitator and whether he or she has any other connection to the company.
In September 2014, the Council of Institutional Investors issued a report entitled Best Disclosure: Board Evaluation (available here), as part of a series of reports aimed at providing investors and companies with approaches to and examples of disclosures that CII considers exemplary. The report recommended two possible approaches to enhanced disclosure about board evaluations, identified through an informal survey of CII members, and included examples of disclosures illustrating each approach. As a threshold matter, CII acknowledged in the report that shareholders generally do not expect details about evaluations of individual directors. Rather, shareholders “want to understand the process by which the board goes about regularly improving itself.” According to CII, detailed disclosure about the board evaluation process can give shareholders a “window” into the boardroom and the board’s capacity for change.
The first approach in the CII report focuses on the “nuts and bolts” of how the board conducts the evaluation process and analyzes the results. Under this approach, a company’s disclosures would address: (1) who evaluates whom; (2) how often the evaluations are done; (3) who reviews the results; and (4) how the board decides to address the results. Disclosures under this approach do not address feedback from specific evaluations, either individually or more generally, or conclusions that the board has drawn from recent self-evaluations. As a result, according to CII, this approach can take the form of “evergreen” proxy disclosure that remains similar from year to year, unless the evaluation process itself changes.
The second approach focuses more on the board’s most recent evaluation. Under this approach, in addition to addressing the evaluation process, a company’s disclosures would provide information about “big-picture, board-wide findings and any steps for tackling areas identified for improvement” during the board’s last evaluation. The disclosures would identify: (1) key takeaways from the board’s review of its own performance, including both areas where the board believes it functions effectively and where it could improve; and (2) a “plan of action” to address areas for improvement over the coming year. According to CII, this type of disclosure is more common in the United Kingdom and other non-U.S. jurisdictions.
Also reflecting a greater emphasis on disclosure about board evaluations, proxy advisory firm Institutional Shareholder Services Inc. (“ISS”) added this subject to the factors it uses in evaluating companies’ governance practices when it released an updated version of “QuickScore,” its corporate governance benchmarking tool, in Fall 2014. QuickScore views a company as having a “robust” board evaluation policy where the board discloses that it conducts an annual performance evaluation, including evaluations of individual directors, and that it uses an external evaluator at least every three years (consistent with the approach taken in the UK Corporate Governance Code). For individual director evaluations, it appears that companies can receive QuickScore “credit” in this regard where the nominating/governance committee assesses director performance in connection with the renomination process.
What Companies Should Do Now
As noted above, there is no “one size fits all” approach to board evaluations, but the process should be viewed as an opportunity to enhance board, committee and director performance. In this regard, a company’s nominating/governance committee and board should periodically assess the evaluation process itself to determine whether it is resulting in meaningful takeaways, and whether changes are appropriate. This includes considering whether the board would benefit from trying new approaches to the evaluation process every few years.
Factors to consider in deciding what evaluation format to use include any specific objectives the board seeks to achieve through the evaluation process, aspects of the current evaluation process that have worked well, the board’s culture, and any concerns directors may have about confidentiality. And, we believe that every board should carefully consider “changing up” the evaluation process used from time to time so that the exercise does not become rote. What will be the most beneficial in any given year will depend on a variety of factors specific to the board and the company. For the board, this includes considerations of board refreshment and tenure, and developments the board may be facing, such as changes in board or committee leadership. Factors relevant to the company include where the company is in its lifecycle, whether the company is in a period of relative stability, challenge or transformation, whether there has been a significant change in the company’s business or a senior management change, whether there is activist interest in the company and whether the company has recently gone through or is going through a crisis of some kind. Specific items that nominating/governance committees could consider as part of maintaining an effective evaluation process include:
Revisit the content and focus of written questionnaires. Evaluation questionnaires should be updated each time they are used in order to reflect significant new developments, both in the external environment and internal to the board.
“Change it up.” If the board has been using the same written questionnaire, or the same evaluation format, for several years, consider trying something new for an upcoming annual evaluation. This can bring renewed vigor to the process, reengage the participants, and result in more meaningful feedback.
Consider whether to bring in an external facilitator. Boards that have not previously used an outside party to assist in their evaluations should consider whether this would enhance the candor and overall effectiveness of the process.
Engage in a meaningful discussion of the evaluation results. Unless the board does its evaluation using a discussion format, there should be time on the board’s agenda to discuss the evaluation results so that all directors have an opportunity to hear and discuss the feedback from the evaluation.
Incorporate follow-up into the process. Regardless of the evaluation method used, it is critical to follow up on issues and concerns that emerge from the evaluation process. The process should include identifying concrete takeaways and formulating action items to address any concerns or areas for improvement that emerge from the evaluation. Senior management can be a valuable partner in this endeavor, and should be briefed as appropriate on conclusions reached as a result of the evaluation and related action items. The board also should consider its progress in addressing these items.
Revisit disclosures. Working with management, the nominating/governance committee and the board should discuss whether the company’s proxy disclosures, investor and governance website information and other communications to shareholders and potential investors contain meaningful, current information about the board evaluation process.
Endnotes:
[1] See NYSE Rule 303A.09, which requires listed companies to adopt and disclose a set of corporate governance guidelines that must address an annual performance evaluation of the board. The rule goes on to state that “[t]he board should conduct a self-evaluation at least annually to determine whether it and its committees are functioning effectively.” See also NYSE Rules 303A.07(b)(ii), 303A.05(b)(ii) and 303A.04(b)(ii) (requiring annual evaluations of the audit, compensation, and nominating/governance committees, respectively). (go back)
[2] In addition, as discussed in the previous note, NYSE companies are required to address an annual evaluation of the board in their corporate governance guidelines. (go back)
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*John Olson is a founding partner of the Washington, D.C. office at Gibson, Dunn & Crutcher LLP and a visiting professor at the Georgetown Law Center.
Voici les éléments de la proposition de Theresa May eu égard à la nouvelle gouvernance corporative de la Grande-Bretagne.
Ce texte est de Martin Lipton de la firme Wachtell, Lipton, Rosen & Katz. C’est un résumé des principaux points évoqués aujourd’hui par la ministre.
Bonne lecture !
Corporate Governance—A New Paradigm from the U.K.
1. Stakeholder, not shareholder, governance.
2. Board diversity: consumers and workers to be added.
3. Protection from takeover for national champions like Cadbury and AstraZeneca.
4. Binding, not advisory, say-on-pay.
5. Long-term, not short-term, business strategy.
6. Greater corporate transparency.
7. Stricter antitrust.
8. Higher taxes and crack down on tax avoidance and evasion.
9. It is not anti-business to suggest that big business needs to change. Better governance will help these companies to take better decisions, for their own long-term benefit and that of the economy overall.
Voici les principaux résultats eu égard aux propositions des actionnaires lors des assemblées annuelles de 2016. Ce sont des données relatives aux grandes sociétés publiques américaines.
Je crois qu’il est intéressant d’avoir le pouls de l’évolution des propositions des actionnaires, car cela révèle l’état de la gouvernance dans les grandes corporations ainsi que le niveau d’activités des activistes.
Cet article, publié par Elizabeth Ising, associée et co-présidente de la « Securities Regulation and Corporate Governance practice group » de la firme Gibson, Dunn & Crutcher, est paru sur le forum de HLS hier.
L’auteure présente les résultats de manière très illustrée, sans porter de jugement.
Personnellement, je constate un certain essoufflement des propositions des actionnaires en 2016. Dans plusieurs cas cependant les entreprises ont remédié aux lacunes de gouvernance.
This post provides an overview of shareholder proposals submitted to public companies for 2016 shareholder meetings, including statistics, notable decisions from the staff of the Securities and Exchange Commission on no-action requests, and information about litigation regarding shareholder proposals. All shareholder proposal data in this post is as of June 1, 2016 unless otherwise indicated.
Submitted Shareholder Proposals
Overview
Fewer Proposals Submitted: According to ISS data, shareholders have submitted fewer shareholder proposals for 2016 meetings than they did for 2015 meetings.
However, the number of proposals submitted for 2016 meetings is still higher than the approximate number of proposals submitted for 2014 and 2013 meetings.
Support Declined: Average support for shareholder proposals is at its lowest in four years. [1]
Only 14.5% of proposals (61 proposals) voted on at 2016 meetings received support from a majority of votes cast, compared to 16.7% of proposals (75 proposals) at 2015 meetings.
Focus Remains on Governance
Across five broad categories of shareholder proposals, the approximate number of proposals submitted for 2016 meetings (as compared to 2015 meetings) was as follows:
For the second year in a row, governance & shareholder rights proposals were the most frequently submitted proposals, largely due to the yet again unprecedented number of proxy access shareholder proposals submitted (201 proposals (or 21.9% of all proposals) submitted for 2016 meetings versus 108 proposals submitted for 2015 meetings).
Proxy Access Proposals Continue to Dominate
The most common 2016 shareholder proposal topics, along with the approximate numbers of proposals submitted and as compared to the most common 2015 shareholder proposal topics, were [2][3]:
Most Active Proponents
Chevedden & Co.: As is typically the case, John Chevedden and shareholders associated with him (including James McRitchie) submitted by far the greatest number of shareholder proposals—approximately 227 for 2016 meetings.
Most of these proposals (66.6%) have either been voted on or are pending. Twenty-three percent have been omitted after obtaining relief through the SEC no-action process; another 7% have ultimately not been included in proxy statements or have not been properly presented at the meeting; and only 3.1% of these proposals have been withdrawn.
By way of comparison, shareholder proponents withdrew approximately 19.2% of the proposals submitted for 2016 meetings, up from approximately 17% of the proposals withdrawn for 2015 meetings.
NYC Pension Funds: This season once again saw a large number of proposals submitted by the New York City Comptroller on behalf of five New York City pension funds, which submitted or cofiled at least 79 proposals (as compared to 86 proposals submitted for 2015 meetings), including approximately 72 proxy access proposals, [4] as part of the Comptroller’s continuation of its “Boardroom Accountability Project” for 2016.
Only 34.6% of these proposals have either been voted on or are pending; most (55.6%) of these proposals have been withdrawn. The remainder (9.8%) have been omitted or not otherwise included in proxy statements.
Other Proponents
Some of the Same Players (But Not Everyone Returned in 2016): As was true for 2015 meetings, with the exception of Calvert Asset Management and UNITE HERE!, several of the same proponents that were reported to have submitted or co-filed at least 20 proposals each for 2015 meetings, did so again for 2016 meetings:
Same Subject Areas: As reflected in the chart above, the focus of these proponents remained largely consistent with their focus for 2015 meetings.
Public Pension Funds: In addition to the New York City and New York State pension funds, several other state pension funds submitted shareholder proposals as well:
California State Teachers’ Retirement System (18 proposals, largely focused on governance matters and climate change);
Connecticut Retirement Plans and Trust Funds (14 proposals, largely focused on governance, social, and political matters);
City of Philadelphia Public Employees Retirement System (10 proposals, largely focused on political and lobbying matters);
North Carolina Retirement Systems (two board diversity proposals);
California Public Employees’ Retirement System (one proxy access proposal); and
Firefighters’ Pension System of Kansas City, Missouri (one majority voting in director elections proposal).
Shareholder Proposal Voting Results
Majority Voting in Director Elections Receives the Highest Support
The following are the principal topics addressed in proposals that received high shareholder support at a number of companies’ 2016 meetings:
Majority Voting in Uncontested Director Elections: Ten proposals voted on averaged 74.2% of votes cast, compared to 76.6% in 2015;
Amendment of Bylaws or Articles to Remove Antitakeover Provisions: Two proposals voted on averaged 70.6% of votes cast, compared to 79% in 2015;
Board Declassification: Three proposals voted on averaged 64.5% of votes cast, compared to 72.6% in 2015;
Elimination of Supermajority Vote Requirements: Thirteen proposals voted on averaged 59.6% of votes cast, compared to 53.0% in 2015;
Proxy Access: Fifty-eight proposals voted on averaged 48.7% of votes cast, compared to 54.6% in 2015;
Shareholder Ability to Call Special Meetings: Sixteen proposals voted on averaged 39.6% of votes cast, compared to 44.4% in 2015; and
Written Consent: Thirteen proposals voted on averaged 43.4% of votes cast, compared to 39.4% in 2015.
Majority Votes on Shareholder Proposals
The table below shows the principal topics addressed in proposals that received a majority of votes cast at a number of companies:
[1] As of June 1, 2016, voting results were available through the ISS databases for a total of 422 proposals. As a matter of practice, the vast majority of shareholder proposals submitted to companies for shareholder meetings are submitted under Rule 14a-8 rather than pursuant to companies’ advance notice bylaws. However, because the ISS data does not indicate whether a shareholder proposal has been submitted under Rule 14a-8 or under a company’s advance notice bylaws, it is possible that the ISS data includes voting results for shareholder proposals not submitted pursuant to Rule 14a-8. This discrepancy is likely to account for only a very small number of proposals. (go back)
[2] Includes all corporate civic engagement proposals, except proposals relating to charitable contributions (one submitted as of June 1, 2016 for 2016 meetings). (go back)
[3] Includes proposals relating to (i) reports on climate change; (ii) greenhouse gas emissions; and (iii) climate change action (i.e., proposals requesting increasing return of capital to shareholders in light of climate change risks). Note that climate change is a subtopic of the environmental and social category of proposals. (go back)
Voici une liste des billets en gouvernance les plus populaires publiés sur mon blogue au deuxième trimestre de 2016.
Cette liste de 15 billets constitue, en quelque sorte, un sondage de l’intérêt manifesté par des milliers de personnes sur différents thèmes de la gouvernance des sociétés. On y retrouve des points de vue bien étayés sur des sujets d’actualité relatifs aux conseils d’administration.
Que retrouve-t-on dans ce blogue et quels en sont les objectifs?
Ce blogue fait l’inventaire des documents les plus pertinents et les plus récents en gouvernance des entreprises. La sélection des billets est le résultat d’une veille assidue des articles de revue, des blogues et des sites web dans le domaine de la gouvernance, des publications scientifiques et professionnelles, des études et autres rapports portant sur la gouvernance des sociétés, au Canada et dans d’autres pays, notamment aux États-Unis, au Royaume-Uni, en France, en Europe, et en Australie.
Je fais un choix parmi l’ensemble des publications récentes et pertinentes et je commente brièvement la publication. L’objectif de ce blogue est d’être la référence en matière de documentation en gouvernance dans le monde francophone, en fournissant au lecteur une mine de renseignements récents (les billets) ainsi qu’un outil de recherche simple et facile à utiliser pour répertorier les publications en fonction des catégories les plus pertinentes.
Quelques statistiques à propos du blogue Gouvernance | Jacques Grisé
Ce blogue a été initié le 15 juillet 2011 et, à date, il a accueilli plus de 192000 visiteurs. Le blogue a progressé de manière tout à fait remarquable et, au30 juin 2016, il était fréquenté pardes milliers devisiteurs par mois. Depuis le début,j’aiœuvré à la publication de 1373billets.
En 2016, j’estime qu’environ 5000 personnes par mois visiteront le blogue afin de s’informer sur diverses questions de gouvernance. À ce rythme, on peut penser qu’environ 60000 personnesvisiteront le site du blogue en 2016.
On note que 80 % des billets sont partagés par l’intermédiaire de différents moteurs de recherche et 20 % par LinkedIn, Twitter, Facebook et Tumblr.
Voici un aperçu du nombre de visiteurs par pays :
Canada (64 %)
France, Suisse, Belgique (20 %)
Maghreb [Maroc, Tunisie, Algérie] (5 %)
Autres pays de l’Union européenne (3 %)
États-Unis [3 %]
Autres pays de provenance (5 %)
En 2014, le blogue Gouvernance | Jacques Grisé a été inscrit dans deux catégories distinctes du concours canadien Made in Blog [MiB Awards] : Business et Marketing et médias sociaux. Le blogue a été retenu parmi les dix [10] finalistes à l’échelle canadienne dans chacune de ces catégories, le seul en gouvernance. Il n’y avait pas de concours en 2015.
Vos commentaires sont toujours grandement appréciés. Je réponds toujours à ceux-ci.
N.B. Vous pouvez vous inscrire ou faire des recherches en allant au bas de cette page.
Bonne lecture !
Voici les Tops 15 du second trimestre de 2016 du blogue en gouvernance
Les autorités réglementaires, les firmes spécialisées en votation et les experts en gouvernance suggèrent que les rôles et les fonctions de président du conseil d’administration soient distincts des attributions des PDG (CEO).
En fait, on suppose que la séparation des fonctions, entre la présidence du conseil et la présidence de l’entreprise (CEO), est généralement bénéfique, c’est-à-dire que des pouvoirs distincts permettent d’éviter les conflits d’intérêts, tout en rassurant les actionnaires.
C’est ce que les professeurs de finance Harley Ryan*, Narayanan Jayaraman et Vikram Nanda ont tenté de valider empiriquement dans leur récente étude sur le sujet. L’article a paru aujourd’hui dans le forum du Harvard Law School on Corporate Governance. Comme on le sait, la plupart des études antérieures ne sont pas concluantes à cet égard.
Les auteurs ont proposé un modèle d’apprentissage de la dualité des deux fonctions en identifiant une stratégie basée sur la préparation de la relève : “passing the baton” (PTB). Dans ce modèle, les administrateurs s’allouent une période de probation afin de bien connaître les habiletés de leurs nouveaux CEO.
Si les membres du CA sont rassurés sur les talents du CEO et s’ils sont satisfaits de ses performances, ils lui attribuent également le poste de « chairman ». Le pouvoir accru du CEO améliore la rétention des meilleurs éléments.
Les résultats de la recherche montrent que les CEO qui ont obtenu le titre de « chairman » dans ces conditions (PTB) tendent à mieux réussir qu’avant la nomination à ce poste. De plus, les actionnaires sont plutôt réceptifs à ce mode de nomination, surtout si la promotion est faite dans un court délai, car cela leur indique que le CEO constitue une valeur sûre pour l’organisation.
Les auteurs insistent sur l’importance de considérer les mécanismes d’apprentissage en place (PTB) ainsi que les objectifs de rétention des meilleurs CEO dans l’évaluation des structures de gouvernance.
Ainsi, les actionnaires ne sont pas toujours nécessairement mieux servis par la séparation des deux rôles. Notons cependant qu’en général, les sociétés cotées ont de plus en plus tendance à séparer les deux fonctions.
Le billet paru sur mon blogue le 17 novembre 2015 fait état de la situation à ce jour :
Les études contemporaines démontrent une nette tendance en faveur de la séparation des deux rôles. Le Canadian Spencer Stuart Board Index estime qu’une majorité de 85 % des 100 plus grandes entreprises canadiennes cotées en bourse ont opté pour la dissociation entre les deux fonctions. Dans le même sens, le rapport Clarkson affiche que 84 % des entreprises inscrites à la bourse de Toronto ont procédé à ladite séparation. Subsistent cependant encore de nos jours des entreprises canadiennes qui permettent le cumul. L’entreprise Air Transat A.T. Inc en est la parfaite illustration : M. Jean-Marc Eustache est à la fois président du conseil et chef de la direction. A contrario, le fond de solidarité de la Fédération des travailleurs du Québec vient récemment de procéder à la séparation des deux fonctions.
Aux États-Unis en 2013, 45 % des entreprises de l’indice S&P500 (au total 221 entreprises) dissocient les rôles de PDG et de président du conseil. Toutefois, les choses ne sont pas aussi simples qu’elles y paraissent : 27 % des entreprises de cet indice ont recombiné ces deux rôles. Évoquons à ce titre le cas de Target Corp dont les actionnaires ont refusé la dissociation des deux fonctions .
Est-ce dans l’air du temps ? Est-ce le résultat d’études sérieuses sur les principes de bonne gouvernance ?
Comme on dit souvent en management : Ça dépend des cas !
Considerable disagreement exists on the merits of CEO-Chair duality. In recent years, there has been growing regulatory and investor pressure to split the titles of CEO and Chairman of the Board. In fact, there is a significant trend towards separation of the two titles. However, the empirical evidence in the literature is inconclusive on the impact of separating these roles. We argue that the inconclusive evidence arises from endogenous self-selection that complicates empirical identification strategies and the ability to recognize the correct counterfactual firms.
In our paper, Does Combining the CEO and Chair Roles Cause Poor Firm Performance?, which was recently made publicly available on SSRN, we propose a learning model of CEO-chair duality and implement an identification strategy to address sample selection issues. Our model and identification is based on “passing the baton” (PTB) firms that award the chair position after a probationary period during which the board of directors learns about the ability of the CEO. In the model, the board optimally awards the additional position of board chair if the CEO demonstrates sufficient talent. The increase in CEO power improves the retention of high-quality CEOs by mitigating concerns about the board reneging on compensation contracts. The model delivers several implications that we test in our empirical analysis.
Using a very large sample of over 22,000 firm-year observations for the period 1995-2010, we explore the determinants and consequences of the combining the two roles. Firms that always combine the two roles, always separate the roles, or award the additional title following a period of evaluation exhibit significantly different firm characteristics, which suggest self-selection. We find that PTB firms are more likely to be from industries that are less homogenous. This is consistent with a learning rationale underlying PTB strategies: CEO performance is harder to benchmark in such industries and reneging on contracts may be of greater concern to CEOs. We also find that firms with more business segments are more likely to combine the two roles. These findings suggest that more complex organizations are better served by combining the roles of the CEO and the Chairman.
Overall, CEOs that receive the additional title of board chair outperform their industry benchmark before receiving both titles. In firms that combine the roles after observing the CEO’s performance under a separate board chair, the combination is positively related to both firm and industry performance in the two years prior to the combination. As predicted by our model, a naïve analysis of the post-chair appointment performance, one that fails to control for selection issues and mean reversion in performance data, indicates a significant drop in firm performance relative to the pre-chair period. However, in a matched sample of firms where the matching criteria includes the pre-appointment performance and firm attributes that predict a high propensity for using a PTB succession strategy, there is no evidence of post-appointment underperformance. These results suggest that the pass-the-baton succession process appears to be an equilibrium mechanism in which some firms optimally use the PTB structure to learn about the CEO and then award the additional title of board chair to increase the odds of retaining talented CEOS. Thus, the evidence is broadly consistent with the learning hypothesis that the additional title is awarded by the board after evaluating the ability of the CEO.
Our model suggests that, ceteris paribus, talented CEOs in a weaker bargaining position relative to the board will tend to be promoted to chair more quickly. The reason is that more vulnerable CEOs are more likely to pursue outside opportunities. Supportive of the prediction, we find that when the board is more independent, is not coopted and the CEO is externally sourced—the promotion to chair occurs more quickly. These findings are also counter to the notion that agency considerations and influence are central to the CEO being appointed chairman. We also show that stockholders react positively to combinations that occur early in the CEO’s tenure, which suggests that early promotions reveal directors’ private information about the quality of the CEO to the market. This is inconsistent with alternative explanations such as an incentive rationale for PTB or agency problem, since both of these alternatives would suggest a negative market reaction to such promotions.
A major implication of our analysis for researchers is that one should consider learning mechanisms and retention objectives when evaluating various board structures. Structures that are seemingly incompatible with effective monitoring may in fact be optimal when one considers the impact of learning on retention. For governance activists and policy makers, the implications of our analysis are straightforward: the results call into question the prevailing wisdom that suggests that shareholders will always be better served by separating the two roles. Thus, those who seek to reform governance should be cautious in proposing to unambiguously separate the roles of CEO and board chair. Forcing separation by fiat is likely not an ideal policy. Overall our evidence suggests that having one type of executive and board leadership structure is not optimal for all firms.
Harley Ryan* is Associate Professor of Finance at Georgia State University, Narayanan Jayaraman is Professor of Finance at Georgia Institute of Technology et Vikram Nanda is Professor of Finance at the University of Texas at Dallas.
Les théories contemporaines de la gouvernance sont basées sur le modèle de la « maximisation de la valeur aux actionnaires ».
Dans un article paru sur le forum du Harvard Law School on Corporate Governance, l’auteur Marc Moore* explique que, malgré l’émergence d’autres paradigmes des rouages de la gouvernance moderne (Post — Shareholders-Values | PSV), c’est encore le modèle de la maximisation de la valeur aux actionnaires qui domine.
C’est ainsi que le nouveau modèle de réallocation des profits des PSV, qui favoriserait le développement interne de l’entreprise et les investissements à long terme, cède le pas, la plupart du temps, à la redistribution des surplus aux actionnaires, notamment par la voie des dividendes ou par le rachat des actions.
Voici comment l’auteur conclut son article. Quel est votre point de vue ?
The somewhat uncomfortable truth for many observers is that, for better or worse, the American system of shareholder capitalism, and its pivotal corporate governance principle of shareholder primacy, are ultimately products of our own collective (albeit unintentional) civic design. Accordingly, while in many respects the orthodox shareholder-oriented corporate governance framework may be a social evil; it is nonetheless a necessary evil, which US worker-savers implicitly tolerate as the effective social price for sustaining a system of non-occupational income provision outside of direct state control. Until corporate governance scholars and policymakers are capable of coordinating their respective energies towards somehow alleviating US worker-savers’ significant dependence on corporate equity as a source of non-occupational wealth gains, the shareholder-oriented corporation is likely to remain a socially indispensable phenomenon. To those who rue this prospect, it might be retorted “better the devil you know than the devil you don’t.”
Despite their differences of opinion on other issues, most corporate law and governance scholars have tended to agree upon one thing at least: that the overarching normative objective of corporate governance—and, by implication, corporate law—should be the maximization (or, at least, long-term enhancement) of shareholder wealth. Indeed this proposition—variously referred to as the “shareholder wealth maximization”, “shareholder value”, or “shareholder primacy” norm—is so ingrained within mainstream corporate governance thinking that it has traditionally been subjected to little serious policy or even academic question. However, the zeitgeist would appear to be slowly but surely changing. The financial crisis may not quite have proved the watershed moment it was initially heralded as in terms of resetting dominant currents of economic or political opinion. Nonetheless, in the narrower but still important domain of corporate governance thinking and policymaking, the past decade’s events have triggered the onset of what promises to be a potentially major paradigm shift in the direction of an evolving “Post-Shareholder-Value” (or “PSV”) consensus.
On an academic level, this movement is represented by a growing body of influential legal and economic scholarship which contests most of the staple ideological tenets of orthodox corporate governance theory. Amongst the most noteworthy contributions to this literature are Professor Lynn Stout’s influential 2012 book The Shareholder Value Myth (Berret-Koehler), and also Professor Colin Mayer’s excellent 2013 work Firm Commitment: Why the corporation is failing us and how to restore trust in it (Oxford University Press). In particular, proponents of the PSV paradigm typically dismiss the common neo-classical equation of shareholder wealth maximization with economic efficiency in the broader social sense. They also typically eschew individualistic understandings of the firm in terms of its purported internal bargaining dynamics, in favour of alternative conceptual models which celebrate the distinctive value of the corporation’s inherently autonomous corporeal features.
Evidence of a potential drift from the formerly dominant shareholder primacy paradigm in corporate governance is additionally apparent on a practical policy-making level today, not least in the rapid proliferation of Benefit Corporations as a viable and popular alternative legal form to the orthodox for-profit corporation. At the same time, the increasing use by US-listed firms of dual-class voting structures designed to insulate management from outside capital market pressures, coupled with the seemingly greater flexibility afforded to boards over recent years in defending against unwanted takeover bids from so-called corporate “raiders,” both provide additional cause to question the longevity of the shareholder-oriented corporate governance status quo.
But while evolving PSV institutional mechanisms such as Benefit Corporations and dual-class share structures are prima facie encouraging from a social perspective, there is cause for scepticism about their capacity to become anything more than a relatively niche or peripheral feature of the US public corporations landscape. This is principally because such measures, in spite of their apparent reformist potential, are still ultimately quasi-contractual and thus essentially voluntary in nature, meaning that they are unlikely to be adopted in a public corporations context except in extraordinary instances. From a normative point of view, moreover, it is arguable that such measures—irrespective of the extent of their take-up over the coming years—ultimately should remain quasi-contractual and voluntary in nature, as opposed to being placed on any sort of mandatory basis.
In this regard, it should be respected that public corporations are not only the predominant organizational vehicle for conducting large-scale industrial production projects over indefinite time horizons, as academic proponents of the PSV position have vigorously emphasized. Of comparable importance and ingenuity is that fact that—in the United States at least—public corporations are also a necessary structural means of enabling the residual income streams accruing from successful industrial projects to fund the provision of socially essential financial services, via the medium of public capital (and especially equity) markets. Unfortunately, though, these two dimensions of the public corporation are not always mutually compatible. Rather, it would seem that more often than not they are prone to antagonize, rather than complement, one another. This is especially so when it comes to the periodically-vexing managerial question of whether a firm’s residual earnings should be committed internally to the sustenance and development of the productive corporate enterprise itself, or else distributed externally to shareholders in the form of either enhanced dividends or stock buybacks. The problem is that the evolving PSV corporate governance paradigm—as manifested on both an intellectual and policy level today—focuses exclusively on the former of those dimensions at the expense of the latter.
The somewhat uncomfortable truth for many observers is that, for better or worse, the American system of shareholder capitalism, and its pivotal corporate governance principle of shareholder primacy, are ultimately products of our own collective (albeit unintentional) civic design. Accordingly, while in many respects the orthodox shareholder-oriented corporate governance framework may be a social evil; it is nonetheless a necessary evil, which US worker-savers implicitly tolerate as the effective social price for sustaining a system of non-occupational income provision outside of direct state control. Until corporate governance scholars and policymakers are capable of coordinating their respective energies towards somehow alleviating US worker-savers’ significant dependence on corporate equity as a source of non-occupational wealth gains, the shareholder-oriented corporation is likely to remain a socially indispensable phenomenon. To those who rue this prospect, it might be retorted “better the devil you know than the devil you don’t.”
The complete paper is available for download here.
Marc Moore* is Reader in Corporate Law and Director of the Centre for Corporate and Commercial Law (3CL) at the University of Cambridge. This post is based on a recent paper by Dr. Moore. Related research from the Program on Corporate Governance includes The Case for Increasing Shareholder Power by Lucian Bebchuk.
Je crois que cet article intéressera tous les administrateurs siégeant à des conseils d’administration. Personnellement, je suis très heureux de constater que la démarche ait consisté en des rencontres avec des groupes d’administrateurs chevronnés.
Plusieurs messages très pertinents ressortent des rencontres. Ils sont regroupés selon les catégories suivantes :
La taille du conseil
La composition du conseil
La présidence du conseil
L’évaluation du conseil
Information et prise de décision
Les comités du conseil
Je vous invite à lire l’ensemble du document sur le site de l’IGOPP. Voici un extrait de cet article.
« Une longue expérience comme administrateur de sociétés mène souvent au constat que la qualité de la gouvernance et l’efficacité d’un conseil tiennent à des facteurs subtils, difficilement quantifiables, mais tout aussi importants, voire plus importants, que les aspects fiduciaires et formels.
Cette dimension informelle de la gouvernance prend forme et substance dans les échanges, les interactions sociales, l’encadrement des discussions, le style de leadership du président du conseil, dans tout ce qui se passe avant et après les réunions formelles ainsi qu’autour de la table au moment des réunions du conseil et de ses comités.
Cela est vrai pour tout type de sociétés, que ce soient une entreprise cotée en bourse, un organisme public, une société d’État, une coopérative ou un organisme sans but lucratif.
L’IGOPP estime que pour relever encore l’efficacité des conseils d’administration il est important de bien comprendre ce qui peut contribuer à une dynamique productive entre les membres d’un conseil.
Pourtant, alors que les études sur tous les aspects de la gouvernance foisonnent, cet aspect fait l’objet de peu de recherches empiriques, et ce pour une raison bien simple. Les conseils d’administration ne peuvent donner à des chercheurs un accès direct à leurs réunions ni à leur documentation en raison des contraintes de confidentialité.
Le professeur Richard Leblanc, grâce au réseau de son directeur de thèse de doctorat et co-auteur James Gillies, a pu, rare exception, observer un certain nombre de conseils d’administration en action. Ils ont publié en 2005 un ouvrage Inside the Boardroom, lequel propose une intéressante typologie des comportements dominants des membres de conseil au cours de réunions.
Depuis aucune autre étude empirique n’a été menée sur le sujet. D’ailleurs, l’ouvrage de Leblanc et Gillies, se limitant aux comportements observables lors de réunions formelles, ne nous éclairait que sur une partie du phénomène »
…
« L’IGOPP a voulu mieux comprendre cette dynamique et, si possible, proposer aux administrateurs et présidents de conseil des suggestions pouvant améliorer la qualité de la gouvernance.
L’IGOPP a donc invité des membres de conseil expérimentés et férus de gouvernance pour un échange sur cet enjeu. Les 14 personnes suivantes ont accepté promptement notre invitation et nous les en remercions chaleureusement:
Jacynthe Côté
Gérard Coulombe
Isabelle Courville
Paule Doré
Jean La Couture
Sylvie Lalande
John LeBoutillier
Brian Levitt
David L. McAusland
Marie-José Nadeau
Réal Raymond
Louise Roy
Guylaine Saucier
Jean-Marie Toulouse, qui a agi comme modérateur des discussions.
Collectivement, nos interlocuteurs siègent au sein de 75 conseils, dont 34 sont des sociétés ouvertes parmi lesquelles 14 ont leur siège hors Québec.
Nous avons tenu quatre sessions, chacune comptant un petit nombre d’administrateurs, de façon à ce que les discussions permettent à tous de s’exprimer pleinement.
Ces sessions furent riches en commentaires, observations pertinentes et suggestions utiles ».
Plusieurs messages très pertinents ressortent des rencontres. Ils sont regroupés selon les catégories suivantes :
La taille du conseil
La composition du conseil
La présidence du conseil
L’évaluation du conseil
Information et prise de décision
Les comités du conseil
En conclusion, l’auteur mentionne que « ce texte tente de rendre justice aux échanges entre les 14 administrateurs chevronnés qui ont participé à cette recherche de pistes d’amélioration de la dynamique des conseils d’administration et donc de la gouvernance de nos sociétés ».
Aujourd’hui, je vous propose la lecture d’un article paru dans la revue European Journal of Risk Regulation (EJRR) qui scrute le scandale de Volkswagensous l’angle juridique, mais, surtout, sous l’angle des manquements à la saine gouvernance.
Le texte se présente comme un cas en gouvernance et en management. Celui-ci devrait alimenter les réflexions sur l’éthique, les valeurs culturelles et les effets des pressions excessives à la performance.
Vous trouverez, ci-dessous, l’intégralité de l’article avec le consentement de l’auteure. Je n’ai pas inclus les références, qui sont très abondantes et qui peuvent être consultées sur le site de la maison d’édition lexxion.
Like some other crises and scandals that periodically occur in the business community, the Volkswagen (“VW”) scandal once again highlights the devastating consequences of corporate misconduct, once publicly disclosed, and the media storm that generally follows the discovery of such significant misbehaviour by a major corporation. Since the crisis broke in September 2015, the media have relayed endless détails about the substantial negative impacts on VW on various stakeholder groups such as employees, directors, investors, suppliers and consumers, and on the automobile industry as a whole (1)
The multiple and negative repercussions at the economic, organizational and legal levels have quickly become apparent, in particular in the form of resignations, changes in VW’s senior management, layoffs, a hiring freeze, the end to the marketing of diesel-engined vehicles, vehicle recalls, a decline in car sales, a drop in market capitalization, and the launching of internal investigations by VW and external investigations by the public authorities. This comes in addition to the threat of numerous civil, administrative, penal and criminal lawsuits and the substantial penalties they entail, as well as the erosion of trust in VW and the automobile industry generally (2).
FILE PHOTO: Martin Winterkorn, chief executive officer of Volkswagen AG, reacts during an earnings news conference at the company’s headquarters in Wolfsburg, Germany, on Monday, March 12, 2012. Volkswagen said 11 million vehicles were equipped with diesel engines at the center of a widening scandal over faked pollution controls that will cost the company at least 6.5 billion euros ($7.3 billion). Photographer: Michele Tantussi/Bloomberg *** Local Caption *** Martin Winterkorn
A scandal of this extent cannot fail to raise a number of questions, in particular concerning the cause of the alleged cheating, liable actors, the potential organizational and regulatory problems related to compliance, and ways to prevent further misconduct at VW and within the automobile industry. Based on the information surrounding the VW scandal, it is premature to capture all facets of the case. In order to analyze inmore depth the various problems raised, we will have to wait for the findings of the investigations conducted both internally by the VW Group and externally by the regulatory authorities.
While recognizing the incompleteness of the information made available to date by VW and certain commentators, we can still use this documentation to highlight a few features of the case that deserve to be studied from the standpoint of corporate governance.
This Article remains relatively modest in scope, and is designed to highlight certain organizational factors that may explain the deviant behaviour observed at VW. More specifically, it submits that the main cause of VW’s alleged wrongdoing lies in the company’s ambitious production targets for the U.S. market and the time and budget constraints imposed on employees to reach those targets. Arguably, the corporate strategy and pressures exerted on VW’s employees may have led them to give preference to the performance priorities set by the company rather than compliance with the applicable legal and ethical standards. And this corporate misconduct could not be detected because of deficiencies in the monitoring and control mechanisms, and especially in the compliance system established by the company to ensure that legal requirements were respected.
Although limited in scope, this inquiry may prove useful in identifying means to minimize, in the future, the risk of similar misconduct, not only at VW but wihin other companies as well (3). Given the limited objectives of the Article, which focuses on certain specific organizational deficiencies at VW, the legal questions raised by the case will not be addressed. However, the Article will refer to one aspect of the law of business corporations in the United States, Canada and in the EU Member States in order to emphasize the crucial role that boards in publicly-held companies must exercise to minimize the risk of misconduct (4).
II. A Preliminary Admission by VW: Individual Misconduct by a few Software Engineers
When a scandal erupts in the business community following a case of fraud, embezzlement, corruption, the marketing of dangerous products or other deviant behaviour, the company concerned and the regulatory authorities are required to quickly identify the individuals responsible for the alleged misbehaviour. For example, in the Enron, WorldCom, Tyco and Adelphia scandals of the early 2000s, the investigations revealed that certain company senior managers had acted fraudulently by orchestrating accounting manipulations to camouflage their business’s dire financial situation (5).
These revelations led to the prosecution and conviction of the officers responsible for the corporations’ misconduct (6). In the United States, the importanace of identifying individual wrongdoers is clearly stated in the Principles of Federal Prosecutions of Business Organizations issued by the U.S. Department of Justice which provide guidelines for prosecutions of corporate misbehaviour (7). On the basis of a memo issued in 2015 by the Department of Justice (the “Yatesmemo”) (8), these principles were recently revised to express a renewed commitment to investigate and prosecute individuals responsible for corporate wrongdoing.While recognizing the importance of individual prosecutions in that context, the strategy is only one of the ways to respond to white-collar crime. From a prevention standpoint, it is essential to conduct a broader examination of the organizational environment in which senior managers and employees work to determine if the enterprise’s culture, values, policies, monitoring mechanisms and practices contribute or have contributed to the adoption of deviant behaviour (9).
In the Volkswagen case, the company’s management concentrated first on identifying the handful of individuals it considered to be responsible for the deception, before admitting few weeks later that organizational problems had also encouraged or facilitated the unlawful corporate behaviour. Once news broke of the Volkswagen scandal, one of VW’s officers quickly linked the wrongdoing to the actions of a few employees, but without uncovering any governance problems or misbehaviour at the VW management level (10).
In October 2015, the President and Chief Executive Officer of the VW Group in the United States, Michael Horn, stated in testimony before a Congressional Subcommittee: “[t]his was a couple of software engineers who put this for whatever reason » […]. To my understanding, this was not a corporate decision. This was something individuals did » (11). In other words, the US CEO considered that sole responsibility for the scandal lay with a handful of engineers working at the company, while rejecting any allegation tending to incriminate the company’s management.
This portion of his testimony failed to convince the members of the Subcommittee, who expressed serious doubts about placing sole blame on the misbehaviour of a few engineers, given that the problem had existed since 2009. As expressed in a sceptical response from one of the committee’s members: « I cannot accept VW’s portrayal of this as something by a couple of rogue software engineers […] Suspending three folks – it goes way, way higher than that » (12).
Although misconduct similar to the behaviour uncovered at Volkswagen can often be explained by the reprehensible actions of a few individuals described as « bad apples », the violation of rules can also be explained by the existence of organizational problems within a company (13).
III. Recognition of Organizational Failures by VW
In terms of corporate governance, an analysis of misbehaviour can highlight problems connected with the culture, values, policies and strategies promoted by a company’s management that have a negative influence on the behaviour of senior managers and employees. Considering the importance of the organizational environment in which these players act, regulators provide for several internal and external governance mechanisms to reduce the risk of corporate misbehaviour or to minimize agency problems (14). As one example of an internal governance mechanism, the law of business corporations in the U.S., Canada and the EU Member States gives the board of directors (in a one-tier board structure, as prescribed Under American and Canadian corporation law) and the management board and supervisory board (in a two tier board structure, as provided for in some EU Member States, such as Germany) a key role to play in monitoring the company’s activities and internal dealings (15). As part of their monitoring mission, the board must ensure that the company and its agents act in a diligent and honest way and in compliance with the regulations, in particular by establishing mechanisms or policies in connection with risk management, internal controls, information disclosure, due diligence investigation and compliance (16).
When analysing the Volkswagen scandal from the viewpoint of its corporate governance, the question to be asked is whether the culture, values, priorities, strategies and monitoring and control mechanisms established by the company’s management board and supervisory board – in other words « the tone at the top »-, created an environment that contributed to the emergence of misbehaviour (17).
In this saga, although the initial testimony given to the Congressional Subcommittee by the company’s U.S. CEO, Michael Horn, assigned sole responsibility to a small circle of individuals, « VW’s senior management later recognized that the misconduct could not be explained simply by the deviant behaviour of a few people, since the evidence also pointed to organizational problems supporting the violation of regulations (18). In December 2015, VW’s management released the following observations, drawn from the preliminary results of its internal investigation:
« Group Audit’s examination of the relevant processes indicates that the software-influenced NOx emissions behavior was due to the interaction of three factors:
– The misconduct and shortcomings of individual employees
– Weaknesses in some processes
– A mindset in some areas of the Company that tolerated breaches of rules » (19).
Concerning the question of process,VW released the following audit key findings:
« Procedural problems in the relevant subdivisions have encouraged misconduct;
Faults in reporting and monitoring systems as well as failure to comply with existing regulations;
IT infrastructure partially insufficient and antiquated. » (20)
More fundamentally, VW’s management pointed out at the same time that the information obtained up to that point on “the origin and development of the nitrogen issue […] proves not to have been a one-time error, but rather a chain of errors that were allowed to happen (21). The starting point was a strategic decision to launch a large-scale promotion of diesel vehicles in the United States in 2005. Initially, it proved impossible to have the EA 189 engine meet by legal means the stricter nitrogen oxide requirements in the United States within the required timeframe and budget » (22).
In other words, this revelation by VW’s management suggests that « the end justified the means » in the sense that the ambitious production targets for the U.S. market and the time and budget constraints imposed on employees encouraged those employees to use illegal methods in operational terms to achieve the company’s objective. And this misconduct could not be detected because of deficiencies in the monitoring and control mechanisms, and especially in the compliance system established by the company to ensure that legal requirements were respected. Among the reasons given to explain the crisis, some observers also pointed to the excessive centralization of decision-making powers within VW’s senior management, and an organizational culture that acted as a brake on internal communications and discouraged mid-level managers from passing on bad news (23).
IV. Organizational Changes Considered as a Preliminary Step
In response to the crisis, VW’s management, in a press release in December 2015, set out the main organizational changes planned to minimize the risk of similar misconduct in the future. The changes mainly involved « instituting a comprehensive new alignment that affects the structure of the Group, as well as is way of thinking and its strategic goals (24).
In structural terms, VW changed the composition of the Group’s Board of Management to include the person responsible for the Integrity and Legal Affairs Department as a board member (25). In the future, the company wanted to give « more importance to digitalization, which will report directly to the Chairman of the Board of Management, » and intended to give « more independence to brand and divisions through a more decentralized management (26). With a view to initiating a new mindset, VW’s management stated that it wanted to avoid « yes-men » and to encourage managers and engineers « who are curious, independent, and pioneering » (27). However, the December 2015 press release reveals little about VW’s strategic objectives: « Strategy 2025, with which Volkswagen will address the main issues for the future, is scheduled to be presented in mid 2016 » (28).
Although VW’s management has not yet provided any details on the specific objectives targeted in its « Strategy 2025 », it is revealing to read the VW annual reports from before 2015 in which the company sets out clear and ambitious objectives for productivity and profitability. For example, the annual reports for 2007, 2009 and 2014 contained the following financial objectives, which the company hoped to reach by 2018.
In its 2007 annual report,VW specified, under the heading « Driving ideas »:
“Financial targets are equally ambitious: for example, the Volkswagen Passenger Cars brand aims to increase its unit sales by over 80 percent to 6.6 million vehicles by 2018, thereby reaching a global market share of approximately 9 percent. To make it one of the most profitable automobile companies as well, it is aiming for an ROI of 21 percent and a return on sales before tax of 9 percent.” (29).
Under the same heading, VW stated in its 2009 annual report:
“In 2018, the Volkswagen Group aims to be the most successful and fascinating automaker in the world. […] Over the long term, Volkswagen aims to increase unit sales to more than 10 million vehicles a year: it intends to capture an above-average share as the major growth markets develop (30).
And in its 2014 annual report, under the heading « Goals and Strategies », VW said:
“The goal is to generate unit sales of more than 10 million vehicles a year; in particular, Volkswagen intends to capture an above-average share of growth in the major growth markets.”
Volkswagen’s aim is a long-term return on sales before tax of at least 8% so as to ensure that the Group’s solid financial position and ability to act are guaranteed even in difficult market periods (31).
Besides these specific objectives for financial performance, the annual reports show that the company’s management recognized, at least on paper, the importance of ensuring regulatory compliance and promoting corporate social responsibility (CSR) and sustainability (31). However, after the scandal broke in September 2015, questions can be asked about the effectiveness of the governance mechanisms, especially of the reporting and monitoring systems put in place by VW to achieve company goals in this area (33). In light of the preliminary results of VW’s internal investigation (34), as mentionned above, it seems that, in the organizational culture, the commitment to promote compliance, CSR and sustainability was not as strong as the effort made to achieve the company’s financial performance objectives.
Concerning the specific and challenging priorities of productivity and profitability established by VW’s management in previous years, the question is whether the promotion of financial objectives such as these created a risk because of the pressure it placed on employees within the organizational environment. The priorities can, of course, exert a positive influence and motivate employees to make an even greater effort to achieve the objectives (35). On the other hand, the same priority can exert a negative influence by potentially encouraging employees to use all means necessary to achieve the performance objectives set, in order to protect their job or obtain a promotion, even if the means they use for that purpose contravene the regulations. In other words, the employees face a « double bind » or dilemma which, depending on the circumstances, can lead them to give preference to the performance priorities set by the company rather than compliance with the applicable legal and ethical standards.
In the management literature, a large number of theoretical and empirical studies emphasize the beneficial effects of the setting of specific and challenging goals on employee motivation and performance within a company (36). However, while recognizing these beneficial effects, some authors point out the unwanted or negative side effects they may have.
As highlighted by Ordóñez, Schweitzer, Galinsky and Bazerman, specific goal setting can result in employees focusing solely on those goals while neglecting other important, but unstated, objectives (37). They also mention that employees motivated by « specific, challenging goals adopt riskier strategies and choose riskier gambles than do those with less challenging or vague goals (38). As an additional unwanted side effet, goal setting can encourage unlawful or unethical behaviour, either by inciting employees to use dishonest methods to meet the performance objectives targeted, or to “misrepresent their performance level – in other words, to report that they met a goal when in fact they fell short (39). Based on these observations, the authors suggest that companies should set their objectives with the greatest care and propose various ways to guard against the unwanted side effects highlighted in their study. This approach could prove useful for VW’s management which will once again, at some point, have to define its objectives and stratégies.
V. Conclusion
In the information released to the public after the emissions cheating scandal broke, as mentioned above, VW’s management quickly stated that the misconduct was directly caused by the individual misbehaviour of a couple of software engineers. Later, however, it admitted that the individual misconduct of a few employees was not the only cause, and that there were also organizational deficiencies within the company itself.
Although the VW Group’s public communications have so far provided few details about the cause of the crisis, the admission by management that both individual and organizational failings were involved constitutes, in our opinion, a lever for understanding the various factors that may have led to reprehensible conduct within the company. Based on the investigations that will be completed over the coming months, VW’s management will be in a position to identify more precisely the nature of these organizational failings and to propose ways to minimize the risk of future violations. During 2016, VW’s management will also announce the objectives and stratégies it intends to pursue over the next few years.
Un actionnaire activiste (Hedge Funds) qui veut faire élire un de ses partisans à un conseil d’administration ciblé peut-il le rémunérer afin qu’il puisse faire campagne pour son élection à un poste d’administrateur ?
Quelle est la loi à cet égard ? Quelles sont les recommandations de la firme ISS dans ces cas ?
La laisse dorée (« golden leash »), comme on appelle ce lien avec le promoteur de la campagne électorale, est-elle congruente avec le droit des actionnaires ? Ou, cette pratique est-elle sujette à d’éventuels conflits d’intérêts au détriment des actionnaires ?
Il semble bien que cette pratique soit de plus en plus répandue et qu’elle soit « légale », bien que la SEC n’ait pas dit son dernier mot à ce stade-ci. La pratique est appuyée par les grandes firmes de conseil en votation (ISS et Glass Lewis).
L’article publié par Andrew A. Schwartz*, professeur à l’École de droit de l’Université du Colorado, est paru aujourd’hui sur le forum de la HBL School on Corporate Governance. On y présente différentes problématiques, telles que la volonté des CA de bloquer l’élection d’administrateurs externes et la volonté des fonds activistes de remplacer certains administrateurs par des candidats favorables aux changements stratégiques souhaités.
Je crois que vous serez intéressés par une meilleure compréhension de ces pratiques, de plus en plus fréquentes, tolérées et non réglementées.
Qu’en pensez-vous ? Vos opinions sont les bienvenues et elles sont appréciées de nos lecteurs.
There is a battle in progress between activist hedge funds and public companies over so-called “golden leash” payments. This is where an activist shareholder running a proxy contest promises to pay her slate of director-candidates a supplemental compensation, over and above the ordinary director fees paid by the company to all directors. The purpose of the golden leash, according to the hedge funds that invented it, is to help activists recruit highly qualified people to challenge incumbent board members and, once on the board, to push for business decisions that will benefit all shareholders. Because the golden leash serves to enhance corporate democracy by helping activists mount effective proxy contests to challenge the incumbent board, the advisory services ISS and Glass Lewis have voiced support for the practice, as have some othercommentators.
Many others, however, have expressed concern that the golden leash, by placing a director ‘on the payroll’ of a third party, creates an obvious incentive for her to favor the interests of her sponsor, even at the expense of the corporation or the shareholders as a whole. Thus Columbia Professor John Coffee has analogized the golden leash to a bribe, and UCLA Professor Stephen Bainbridge has called it illegal nonsense. On the suggestion of Wachtell, Lipton, Rosen and Katz, dozens of public companies adopted bylaws that prohibited golden leash payments on their boards. Although most of those bylaws were later retracted in the face of ISS opposition, the battle still rages.
So, should we ban the golden leash—or should we laud it? Both sides of the debate make strong arguments, but I think that neither has focused sufficient analytical attention on the nature of the golden leash itself. Before deciding whether to criticize or defend the golden leash, it is surely vital to understand it first, and I undertake that analysis in my latest article, Financing Corporate Elections. In my view, the golden leash is not, or not only, a payment for service performed as a director. Rather, the golden leash can best be understood as a form of campaign contribution paid by the activist sponsor to a director-candidate in a contested proxy contest. At its most basic, the golden leash is a payment of contingent consideration from an activist to a director-candidate in order to encourage the latter to launch a campaign for office; and the same activist is also willing to bear the costs of running the campaign. This fits well into the conceptual framework of third-party campaign finance, where one party pays the expenses of the political campaign of another.
Accepting the golden leash as a campaign contribution, what are the rules or limits on corporate campaign finance? Are there legal limits on who may contribute to a director-candidate or her campaign, or how much they may contribute? May an incumbent board impose such limits by amending its bylaws? What about disclosure? These are all new questions for corporate elections, and there is no case law on point. Yet analogous questions regarding political campaign finance have been analyzed and resolved for decades under the First Amendment and a line of doctrine derived from the landmark Supreme Court case of Buckley v. Valeo, decided in 1976. The so-called “Buckley framework” is premised in part on a concern that incumbent officeholders may impose such tight limits on campaign finance that they neutralize their political competitors and entrench the incumbents in office. In order to protect our republican form of democracy, Buckley thus imposes strict scrutiny, meaning the government must prove that its campaign finance law or regulation furthers a “compelling interest” and is “narrowly tailored” to achieve that interest.
I contend in Financing Corporate Elections that the underlying logic of the Buckley framework is transferrable to the corporate context via the famous Blasius doctrine of Delaware law. [1] Incumbent directors, just like incumbent politicians, have an interest in perpetuating themselves in office, and it is easy to imagine that an incumbent board might impose limits on financing corporate elections that have the effect of hindering insurgent campaigns (and thus entrenching the incumbents). I therefore argue that Blasius should be understood to call for a Buckley-like analysis of corporate campaign finance regulation. My proposed “Blasius-Buckley framework” would ask courts to strictly scrutinize board-imposed campaign finance regulations to determine whether they advance a compelling corporate interest in a narrowly tailored fashion.
How would this insight apply to the golden leash and efforts to limit or ban it? Since the golden leash is a form of campaign contribution, then a board-imposed bylaw that regulates it is just the type of campaign finance regulation that should, in my view, be analyzed using the Blasius-Buckley framework. The first issue under Blasius-Buckley is whether there is a compelling corporate interest in regulating the golden leash, and here the answer is almost certain to be yes. The golden leash poses a direct threat to the foundational corporate interest in having a board of directors whose loyalty unquestionably lies with the corporation and its shareholders. When one party makes large payments directly to a director-candidate, as in the golden leash, this clearly raises the specter that the candidate will follow the sponsor’s commands or advance its interests, even if doing so may not be in the best long-term interest of the corporation or its shareholders as a whole. A corporation surely has a compelling interest in preventing this sort of subversion.
The second prong of the Blasius-Buckley framework goes to narrow tailoring, and this part of the analysis would depend on the precise nature of the limits placed by the incumbent directors. An incumbent board that places too-strict limits on the golden leash may thereby hamstring their rivals and effectively entrench themselves in office, which would offend the core value of shareholder sovereignty. Hence, a bylaw that were to ban the golden leash entirely, as the model bylaw proposed by Wachtell, Lipton, Rosen & Katz appears to do, would probably not pass muster under the narrow-tailoring prong of Blasius-Buckley. But less-draconian bylaws that merely seek to regulate the golden leash would probably survive. Disclosure requirements, reasonable limits on the size and form of golden leash payments, and restrictions on the source of such payments, would likely all qualify as narrowly tailored.
Cet article de Avery Blank * publié dans le magazine Forbes le 8 juin 2016, est très court et tout à fait pertinent. Il ne faut pas attendre d’être à la retraite pour s’intéresser à des postes sur des conseils d’administration.
Comme le dit l’auteure, un mandat d’administrateur constitue une stratégie pour faire avancer sa carrière, plutôt qu’un plan de retraite…
On évoque trois étapes pour se démarquer dans sa carrière :
(1) le fait de siéger à un CA démontre que vous possédez du leadership et que vous faites preuve d’un bon jugement ;
(2) Vous contribuez à asseoir votre crédibilité et vous assurez votre visibilité au niveau de votre organisation ;
(3) Vous développez un réseau de contacts qui peut être mis à profit dans votre carrière.
Voici les points qui sont présentés avec un peu plus de détails dans l’article.
Being a board member is an advancement strategy (Credit: Shutterstock).
In response to my How To Get On A Board By 30 article, one reader shared with me that “It’s about time that AARP membership is not required for board service.” She is right. Board membership is not a retirement plan, it is an advancement strategy. Leveraging the years you have in front of you will help you to achieve your goals and then some. Being a board member is not the endgame, it is just the beginning.
Here are the three ways being a board member helps you to advance.
1. Positions you as a leader and assumes good judgment
When you are a member of a board, you are seen as a leader. You have been elected or appointed to oversee an organization. Someone else or a group of people has selected you to look after the best interest(s) of an organization. This is more than “hey, they like me.” They trust you. They are looking to you to make considered decisions and come to sensible conclusions. When others see you as a leader and having good judgment, they will respect and trust you too.
Having good judgment need not mean falling in line either. Take Facebook board member and venture capitalist Peter Thiel. Thiel admitted that he, independently, has funded lawsuits against news outlet Gawker Media, which goes against Facebook’s values in its users being able to express themselves and freely publish on the platform. Did Thiel exercise good judgment? Facebook COO Sheryl Sandberg said that Thiels’ actions have placed Facebook executives in a difficult position but that he will remain on the board. She suggested that independently-minded board members also make great board members. The question of whether Thiel exercised good judgment ultimately lies with Facebook shareholders who will have their annual stockholder meeting on June 20.
2. Adds credibility and visibility for you and your organization
Being a board member of an organization tells others that you are someone worthwhile knowing. People will reach out to you, wanting to get to know more about you, your career, and your role as a board member.
It also provides you with another outlet to become known. No longer are you just associated with the entity for whom you work, but you now are connected with another organization. Your name will become known in other circles. So, too, will your board membership help the company with which you currently work. Along with your name will be your affiliation. What is good for you is good for your company, as well. (If you work for an organization, review your organization’s Code of Conduct as many organizations will require approval by the conflicts committee before accepting a board appointment.)
You get more exposure to people and opportunities when you are a board member. Once you are a member of a board, it is not uncommon to start receiving invitations to sit on other boards. As a board member, you are a member of a club of individuals that have already been vetted (to a certain degree). It becomes easier and quicker to assume roles on other boards when you have one under your belt.
I hear many executives say that when they retire, they will sit on a board or two. Imagine the possibilities if they had assumed board memberships years or decades before retirement. Do not wait until you are at the end of your career to become a board member. Leverage your skills and expertise to find the right board opportunity now. The opportunities can be exponential.
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*Avery Blank is a millennial lawyer, strategist, and women’s advocate who holds seats on boards and councils.
Les conseils d’administration sont de plus en plus confrontés à l’exigence d’évaluer l’efficacité de leur fonctionnement par le biais d’une évaluation annuelle du CA, des comités et des administrateurs.
En fait, le NYSE exige depuis dix ans que les conseils procèdent à leur évaluation et que les résultats du processus soient divulgués aux actionnaires. Également, les investisseurs institutionnels et les activistes demandent de plus en plus d’informations au sujet du processus d’évaluation.
Les résultats de l’évaluation peuvent être divulgués de plusieurs façons, notamment dans les circulaires de procuration et sur le site de l’entreprise.
L’article publié par John Olson, associé fondateur de la firme Gibson, Dunn & Crutcher, professeur invité à Georgetown Law Center, et paru sur le forum du Harvard Law School, présente certaines approches fréquemment utilisées pour l’évaluation du CA, des comités et des administrateurs.
On recommande de modifier les méthodes et les paramètres de l’évaluation à chaque trois ans afin d’éviter la routine susceptible de s’installer si les administrateurs remplissent les mêmes questionnaires, gérés par le président du conseil. De plus, l’objectif de l’évaluation est sujet à changement (par exemple, depuis une décennie, on accorde une grande place à la cybersécurité).
C’est au comité de gouvernance que revient la supervision du processus d’évaluation du conseil d’administration. L’article décrit quatre méthodes fréquemment utilisées.
(1) Les questionnaires gérés par le comité de gouvernance ou une personne externe
(2) les discussions entre administrateurs sur des sujets déterminés à l’avance
(3) les entretiens individuels avec les administrateurs sur des thèmes précis par le président du conseil, le président du comité de gouvernance ou un expert externe.
(4) L’évaluation des contributions de chaque administrateur par la méthode d’auto-évaluation et par l’évaluation des pairs.
Chaque approche a ses particularités et la clé est de varier les façons de faire périodiquement. On constate également que beaucoup de sociétés cotées utilisent les services de spécialistes pour les aider dans leurs démarches.
La quasi-totalité des entreprises du S&P 500 divulgue le processus d’évaluation utilisé pour améliorer leur efficacité. L’article présente deux manières de diffuser les résultats du processus d’évaluation.
(1) Structuré, c’est-à-dire un format qui précise — qui évalue quoi ; la fréquence de l’évaluation ; qui supervise les résultats ; comment le CA a-t-il agi eu égard aux résultats de l’opération d’évaluation.
(2) Information axée sur les résultats — les grandes conclusions ; les facteurs positifs et les points à améliorer ; un plan d’action visant à corriger les lacunes observées.
Notons que la firme de services aux actionnaires ISS (Institutional Shareholder Services) utilise la qualité du processus d’évaluation pour évaluer la robustesse de la gouvernance des sociétés. L’article présente des recommandations très utiles pour toute personne intéressée par la mise en place d’un système d’évaluation du CA et par sa gestion.
Voici trois articles parus sur mon blogue qui abordent le sujet de l’évaluation :
More than ten years have passed since the New York Stock Exchange (NYSE) began requiring annual evaluations for boards of directors and “key” committees (audit, compensation, nominating/governance), and many NASDAQ companies also conduct these evaluations annually as a matter of good governance. [1] With boards now firmly in the routine of doing annual evaluations, one challenge (as with any recurring activity) is to keep the process fresh and productive so that it continues to provide the board with valuable insights. In addition, companies are increasingly providing, and institutional shareholders are increasingly seeking, more information about the board’s evaluation process. Boards that have implemented a substantive, effective evaluation process will want information about their work in this area to be communicated to shareholders and potential investors. This can be done in a variety of ways, including in the annual proxy statement, in the governance or investor information section on the corporate website, and/or as part of shareholder engagement outreach.
To assist companies and their boards in maximizing the effectiveness of the evaluation process and related disclosures, this post provides an overview of several frequently used methods for conducting evaluations of the full board, board committees and individual directors. It is our experience that using a variety of methods, with some variation from year to year, results in more substantive and useful evaluations. This post also discusses trends and considerations relating to disclosures about board evaluations. We close with some practical tips for boards to consider as they look ahead to their next annual evaluation cycle.
Common Methods of Board Evaluation
As a threshold matter, it is important to note that there is no one “right” way to conduct board evaluations. There is room for flexibility, and the boards and committees we work with use a variety of methods. We believe it is good practice to “change up” the board evaluation process every few years by using a different format in order to keep the process fresh. Boards have increasingly found that year-after-year use of a written questionnaire, with the results compiled and summarized by a board leader or the corporate secretary for consideration by the board, becomes a routine exercise that produces few new insights as the years go by. This has been the most common practice, and it does respond to the NYSE requirement, but it may not bring as much useful information to the board as some other methods.
Doing something different from time to time can bring new perspectives and insights, enhancing the effectiveness of the process and the value it provides to the board. The evaluation process should be dynamic, changing from time to time as the board identifies practices that work well and those that it finds less effective, and as the board deals with changing expectations for how to meet its oversight duties. As an example, over the last decade there have been increasing expectations that boards will be proactive in oversight of compliance issues and risk (including cyber risk) identification and management issues.
Three of the most common methods for conducting a board or committee evaluation are: (1) written questionnaires; (2) discussions; and (3) interviews. Some of the approaches outlined below reflect a combination of these methods. A company’s nominating/governance committee typically oversees the evaluation process since it has primary responsibility for overseeing governance matters on behalf of the board.
1. Questionnaires
The most common method for conducting board evaluations has been through written responses to questionnaires that elicit information about the board’s effectiveness. The questionnaires may be prepared with the assistance of outside counsel or an outside advisor with expertise in governance matters. A well-designed questionnaire often will address a combination of substantive topics and topics relating to the board’s operations. For example, the questionnaire could touch on major subject matter areas that fall under the board’s oversight responsibility, such as views on whether the board’s oversight of critical areas like risk, compliance and crisis preparedness are effective, including whether there is appropriate and timely information flow to the board on these issues. Questionnaires typically also inquire about whether board refreshment mechanisms and board succession planning are effective, and whether the board is comfortable with the senior management succession plan. With respect to board operations, a questionnaire could inquire about matters such as the number and frequency of meetings, quality and timeliness of meeting materials, and allocation of meeting time between presentation and discussion. Some boards also consider their efforts to increase board diversity as part of the annual evaluation process.
Many boards review their questionnaires annually and update them as appropriate to address new, relevant topics or to emphasize particular areas. For example, if the board recently changed its leadership structure or reallocated responsibility for a major subject matter area among its committees, or the company acquired or started a new line of business or experienced recent issues related to operations, legal compliance or a breach of security, the questionnaire should be updated to request feedback on how the board has handled these developments. Generally, each director completes the questionnaire, the results of the questionnaires are consolidated, and a written or verbal summary of the results is then shared with the board.
Written questionnaires offer the advantage of anonymity because responses generally are summarized or reported back to the full board without attribution. As a result, directors may be more candid in their responses than they would be using another evaluation format, such as a face-to-face discussion. A potential disadvantage of written questionnaires is that they may become rote, particularly after several years of using the same or substantially similar questionnaires. Further, the final product the board receives may be a summary that does not pick up the nuances or tone of the views of individual directors.
In our experience, increasingly, at least once every few years, boards that use questionnaires are retaining a third party, such as outside counsel or another experienced facilitator, to compile the questionnaire responses, prepare a summary and moderate a discussion based on the questionnaire responses. The desirability of using an outside party for this purpose depends on a number of factors. These include the culture of the board and, specifically, whether the boardroom environment is one in which directors are comfortable expressing their views candidly. In addition, using counsel (inside or outside) may help preserve any argument that the evaluation process and related materials are privileged communications if, during the process, counsel is providing legal advice to the board.
In lieu of asking directors to complete written questionnaires, a questionnaire could be distributed to stimulate and guide discussion at an interactive full board evaluation discussion.
2. Group Discussions
Setting aside board time for a structured, in-person conversation is another common method for conducting board evaluations. The discussion can be led by one of several individuals, including: (a) the chairman of the board; (b) an independent director, such as the lead director or the chair of the nominating/governance committee; or (c) an outside facilitator, such as a lawyer or consultant with expertise in governance matters. Using a discussion format can help to “change up” the evaluation process in situations where written questionnaires are no longer providing useful, new information. It may also work well if there are particular concerns about creating a written record.
Boards that use a discussion format often circulate a list of discussion items or topics for directors to consider in advance of the meeting at which the discussion will occur. This helps to focus the conversation and make the best use of the time available. It also provides an opportunity to develop a set of topics that is tailored to the company, its business and issues it has faced and is facing. Another approach to determining discussion topics is to elicit directors’ views on what should be covered as part of the annual evaluation. For example, the nominating/governance could ask that each director select a handful of possible topics for discussion at the board evaluation session and then place the most commonly cited topics on the agenda for the evaluation.
A discussion format can be a useful tool for facilitating a candid exchange of views among directors and promoting meaningful dialogue, which can be valuable in assessing effectiveness and identifying areas for improvement. Discussions allow directors to elaborate on their views in ways that may not be feasible with a written questionnaire and to respond in real time to views expressed by their colleagues on the board. On the other hand, they do not provide an opportunity for anonymity. In our experience, this approach works best in boards with a high degree of collegiality and a tradition of candor.
3. Interviews
Another method of conducting board evaluations that is becoming more common is interviews with individual directors, done in-person or over the phone. A set of questions is often distributed in advance to help guide the discussion. Interviews can be done by: (a) an outside party such as a lawyer or consultant; (b) an independent director, such as the lead director or the chair of the nominating/governance committee; or (c) the corporate secretary or inside counsel, if directors are comfortable with that. The party conducting the interviews generally summarizes the information obtained in the interview process and may facilitate a discussion of the information obtained with the board.
In our experience, boards that have used interviews to conduct their annual evaluation process generally have found them very productive. Directors have observed that the interviews yielded rich feedback about the board’s performance and effectiveness. Relative to other types of evaluations, interviews are more labor-intensive because they can be time-consuming, particularly for larger boards. They also can be expensive, particularly if the board retains an outside party to conduct the interviews. For these reasons, the interview format generally is not one that is used every year. However, we do see a growing number of boards taking this path as a “refresher”—every three to five years—after periods of using a written questionnaire, or after a major event, such as a corporate crisis of some kind, when the board wants to do an in-depth “lessons learned” analysis as part of its self-evaluation. Interviews also offer an opportunity to develop a targeted list of questions that focuses on issues and themes that are specific to the board and company in question, which can contribute further to the value derived from the interview process.
For nominating/governance committees considering the use of an interview format, one key question is who will conduct the interviews. In our experience, the most common approach is to retain an outside party (such as a lawyer or consultant) to conduct and summarize interviews. An outside party can enhance the effectiveness of the process because directors may be more forthcoming in their responses than they would if another director or a member of management were involved.
Individual Director Evaluations
Another practice that some boards have incorporated into their evaluation process is formal evaluations of individual directors. In our experience, these are not yet widespread but are becoming more common. At companies where the nominating/governance committee has a robust process for assessing the contributions of individual directors each year in deciding whether to recommend them for renomination to the board, the committee and the board may conclude that a formal evaluation every year is unnecessary. Historically, some boards have been hesitant to conduct individual director evaluations because of concerns about the impact on board collegiality and dynamics. However, if done thoughtfully, a structured process for evaluating the performance of each director can result in valuable insights that can strengthen the performance of individual directors and the board as a whole.
As with board and committee evaluations, no single “best practice” has emerged for conducting individual director evaluations, and the methods described above can be adapted for this purpose. In addition, these evaluations may involve directors either evaluating their own performance (self-evaluations), or evaluating their fellow directors individually and as a group (peer evaluations). Directors may be more willing to evaluate their own performance than that of their colleagues, and the utility of self-evaluations can be enhanced by having an independent director, such as the chairman of the board or lead director, or the chair of the nominating/governance committee, provide feedback to each director after the director evaluates his or her own performance. On the other hand, peer evaluations can provide directors with valuable, constructive comments. Here, too, each director’s evaluation results typically would be presented only to that director by the chairman of the board or lead director, or the chair of the nominating/governance committee. Ultimately, whether and how to conduct individual director evaluations will depend on a variety of factors, including board culture.
Disclosures about Board Evaluations
Many companies discuss the board evaluation process in their corporate governance guidelines. [2] In addition, many companies now provide disclosure about the evaluation process in the proxy statement, as one element of increasingly robust proxy disclosures about their corporate governance practices. According to the 2015 Spencer Stuart Board Index, all but 2% of S&P 500 companies disclose in their proxy statements, at a minimum, that they conduct some form of annual board evaluation.
In addition, institutional shareholders increasingly are expressing an interest in knowing more about the evaluation process at companies where they invest. In particular, they want to understand whether the board’s process is a meaningful one, with actionable items emerging from the evaluation process, and not a “check the box” exercise. In the United Kingdom, companies must report annually on their processes for evaluating the performance of the board, its committees and individual directors under the UK Corporate Governance Code. As part of the code’s “comply or explain approach,” the largest companies are expected to use an external facilitator at least every three years (or explain why they have not done so) and to disclose the identity of the facilitator and whether he or she has any other connection to the company.
In September 2014, the Council of Institutional Investors issued a report entitled Best Disclosure: Board Evaluation (available here), as part of a series of reports aimed at providing investors and companies with approaches to and examples of disclosures that CII considers exemplary. The report recommended two possible approaches to enhanced disclosure about board evaluations, identified through an informal survey of CII members, and included examples of disclosures illustrating each approach. As a threshold matter, CII acknowledged in the report that shareholders generally do not expect details about evaluations of individual directors. Rather, shareholders “want to understand the process by which the board goes about regularly improving itself.” According to CII, detailed disclosure about the board evaluation process can give shareholders a “window” into the boardroom and the board’s capacity for change.
The first approach in the CII report focuses on the “nuts and bolts” of how the board conducts the evaluation process and analyzes the results. Under this approach, a company’s disclosures would address: (1) who evaluates whom; (2) how often the evaluations are done; (3) who reviews the results; and (4) how the board decides to address the results. Disclosures under this approach do not address feedback from specific evaluations, either individually or more generally, or conclusions that the board has drawn from recent self-evaluations. As a result, according to CII, this approach can take the form of “evergreen” proxy disclosure that remains similar from year to year, unless the evaluation process itself changes.
The second approach focuses more on the board’s most recent evaluation. Under this approach, in addition to addressing the evaluation process, a company’s disclosures would provide information about “big-picture, board-wide findings and any steps for tackling areas identified for improvement” during the board’s last evaluation. The disclosures would identify: (1) key takeaways from the board’s review of its own performance, including both areas where the board believes it functions effectively and where it could improve; and (2) a “plan of action” to address areas for improvement over the coming year. According to CII, this type of disclosure is more common in the United Kingdom and other non-U.S. jurisdictions.
Also reflecting a greater emphasis on disclosure about board evaluations, proxy advisory firm Institutional Shareholder Services Inc. (“ISS”) added this subject to the factors it uses in evaluating companies’ governance practices when it released an updated version of “QuickScore,” its corporate governance benchmarking tool, in Fall 2014. QuickScore views a company as having a “robust” board evaluation policy where the board discloses that it conducts an annual performance evaluation, including evaluations of individual directors, and that it uses an external evaluator at least every three years (consistent with the approach taken in the UK Corporate Governance Code). For individual director evaluations, it appears that companies can receive QuickScore “credit” in this regard where the nominating/governance committee assesses director performance in connection with the renomination process.
What Companies Should Do Now
As noted above, there is no “one size fits all” approach to board evaluations, but the process should be viewed as an opportunity to enhance board, committee and director performance. In this regard, a company’s nominating/governance committee and board should periodically assess the evaluation process itself to determine whether it is resulting in meaningful takeaways, and whether changes are appropriate. This includes considering whether the board would benefit from trying new approaches to the evaluation process every few years.
Factors to consider in deciding what evaluation format to use include any specific objectives the board seeks to achieve through the evaluation process, aspects of the current evaluation process that have worked well, the board’s culture, and any concerns directors may have about confidentiality. And, we believe that every board should carefully consider “changing up” the evaluation process used from time to time so that the exercise does not become rote. What will be the most beneficial in any given year will depend on a variety of factors specific to the board and the company. For the board, this includes considerations of board refreshment and tenure, and developments the board may be facing, such as changes in board or committee leadership. Factors relevant to the company include where the company is in its lifecycle, whether the company is in a period of relative stability, challenge or transformation, whether there has been a significant change in the company’s business or a senior management change, whether there is activist interest in the company and whether the company has recently gone through or is going through a crisis of some kind. Specific items that nominating/governance committees could consider as part of maintaining an effective evaluation process include:
Revisit the content and focus of written questionnaires. Evaluation questionnaires should be updated each time they are used in order to reflect significant new developments, both in the external environment and internal to the board.
“Change it up.” If the board has been using the same written questionnaire, or the same evaluation format, for several years, consider trying something new for an upcoming annual evaluation. This can bring renewed vigor to the process, reengage the participants, and result in more meaningful feedback.
Consider whether to bring in an external facilitator. Boards that have not previously used an outside party to assist in their evaluations should consider whether this would enhance the candor and overall effectiveness of the process.
Engage in a meaningful discussion of the evaluation results. Unless the board does its evaluation using a discussion format, there should be time on the board’s agenda to discuss the evaluation results so that all directors have an opportunity to hear and discuss the feedback from the evaluation.
Incorporate follow-up into the process. Regardless of the evaluation method used, it is critical to follow up on issues and concerns that emerge from the evaluation process. The process should include identifying concrete takeaways and formulating action items to address any concerns or areas for improvement that emerge from the evaluation. Senior management can be a valuable partner in this endeavor, and should be briefed as appropriate on conclusions reached as a result of the evaluation and related action items. The board also should consider its progress in addressing these items.
Revisit disclosures. Working with management, the nominating/governance committee and the board should discuss whether the company’s proxy disclosures, investor and governance website information and other communications to shareholders and potential investors contain meaningful, current information about the board evaluation process.
Endnotes:
[1] See NYSE Rule 303A.09, which requires listed companies to adopt and disclose a set of corporate governance guidelines that must address an annual performance evaluation of the board. The rule goes on to state that “[t]he board should conduct a self-evaluation at least annually to determine whether it and its committees are functioning effectively.” See also NYSE Rules 303A.07(b)(ii), 303A.05(b)(ii) and 303A.04(b)(ii) (requiring annual evaluations of the audit, compensation, and nominating/governance committees, respectively). (go back)
[2] In addition, as discussed in the previous note, NYSE companies are required to address an annual evaluation of the board in their corporate governance guidelines. (go back)
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*John Olson is a founding partner of the Washington, D.C. office at Gibson, Dunn & Crutcher LLP and a visiting professor at the Georgetown Law Center.
Chaque année, la firme ISS produit un rapport très attendu sur les pratiques relatives aux conseils d’administration.
L’étude publiée par Carol Bowie*, directrice de la recherche à Institutional Shareholder Services (ISS), et parue sur le forum du HLS, présente de façon claire l’état de la situation, les tendances qui se dessinent ainsi que les nouvelles normes qui prévalent dans les entreprises du S&P 500, du MidCap 400 et du SmallCap 600.
Par exemple, 88 % des entreprises du S&P 500 ont adopté la pratique du vote majoritaire, délaissant ainsi la pratique de la pluralité des voix.
Également, plus de 80 % des entreprises du S&P 500 soumettent leurs administrateurs à des élections annuelles, délaissant ainsi l’habitude des « Staggered Boards » (élections des administrateurs à des périodes différentes).
En ce qui concerne la réalité de la diversité des conseils d’administration, on note des progrès continus, mais lents. Ainsi, 98 % des entreprises du S&P 500 ont au moins une femme sur le conseil, et 79 % ont au moins un membre d’une minorité sur le conseil. Au total, environ 20 % de femmes siègent à des conseils d’administration et 17 % des administrateurs proviennent de minorités diverses.
Enfin, l’étude montre que 13,3 % de tous les postes d’administrateurs ont été pourvus par de nouvelles recrues (moins de 2 ans sur le CA).
Je vous invite à jeter un œil aux tableaux qui ponctuent le rapport.
ISS’ latest update of the structure and composition of boards and individual director attributes at Standard & Poor’s U.S. “Super 1,500” companies (i.e., companies in the S&P 500, MidCap 400, and SmallCap 600 indices) found a number of new and continuing trends in board practices and director attributes at these key index companies.
Majority Votes for Directors and Annual Board Elections are the New Normal
Based on analysis of public filings (primarily proxy statements) related to shareholder meetings occurring from July 1, 2014, through June 30, 2015, the study reports that annual board elections and majority vote standards for those elections are now the norm across the S&P 1500. While larger companies initially led the way in adopting these accountability enhancements, the pace of abandoning staggered board terms at smaller companies picked up speed in 2015. Also, Small- and MidCap companies adopted majority vote standards for board elections at a faster pace than their S&P 500 counterparts in 2015—increasing by 4 and 3 percentages points, respectively among the Small- and MidCap firms. For the third consecutive year, well over half of all study companies have majority voting standards, which is now the clear market standard at S&P 500 companies, with over 88 percent of companies in the index having adopted the practice. Only 61 total S&P 500 companies maintain a plurality vote standard, down from 67 last year and 87 in 2013.
There has also been a significant increase over the last five years in the number of companies holding annual elections, both at the S&P 1500 and at each constituent index. The proportion is significantly higher at S&P 500 companies, where it has risen more than 20 percentage points in the last five years. Still, over 60 percent of S&P 1500 companies (and over 80 percent of S&P 500 companies) now hold annual elections for all directors, While the prevalence has increased in the S&P 1500 every year since 2009, the largest jump occurred last year, when it rose from 60 to 64 percent, driven by an 8 percentage point increase at the S&P 500, where only 84 boards now hold staggered elections.
Many companies completed the gradual removals of their classified board structures that had begun in response to a large wave of shareholder proposals offered in a campaign organized by the now defunct Shareholder Rights Project at Harvard Law School. A majority of SmallCap companies held annual elections for the first time in 2014, a trend that has continued, as an additional 2 percent of the index’s companies held annual elections in 2015. Bucking the trend were the MidCap companies, which showed a slight decrease in the proportion holding annual elections in 2015, after steading increases in 2009 through 2014.
Board Diversity
Many corporate governance experts believe that the interplay of different backgrounds and perspectives enhances the effectiveness of boards and facilitates greater long-term corporate success. Some advocates for board diversity believe that a “tone at the top” will penetrate the corporate hierarchy and lead to increased diversity across all ranks of employment.
Companies with larger market caps generally have higher levels of gender and racial/ethnic diversity than those with smaller valuations. As of ISS’ latest analysis, almost all S&P 500 companies have at least one female or minority director, while 90 percent of MidCap boards and 78 percent of SmallCap boards have at least one female or minority member. There has been a market-wide increase over the past five years in board diversity:
Ninety-eight percent of S&P 500 boards have at least one female member and 79 percent have at least one minority, up from 89 and 63 percent in 2010, respectively;
Eighty-four percent of MidCap boards have at least one female member and 53 percent have at least one minority, increased from 74 and 36 percent in 2010, respectively; and
Sixty-nine percent of SmallCap boards have at least one female member and 41 percent have at least one minority, increased from 54 and 22 percent in 2010, respectively.
More than 88 percent of S&P 1500 companies have at least one female or minority director, and a majority of the S&P 1500 have either one female and/or one minority, who, in some instances, are the same individual. Minority women hold 329 directorships, an increase from 279 in 2014. Although this represents an absolute increase, the proportion of S&P 1500 directorships held by minority women has remained at approximately 2.4 percent since 2010.
New Directors
In 2015, 1,833 seats, or about 13.3 percent of all directorships, were filled by directors with less than two years’ tenure and who were elected for the first time in 2014 or 2015 (“new” directors). That compares with about 12 percent of all directorships filled by “new” directors in last year’s analysis, suggesting a slight increase in the turnover rate. The characteristics of these new directors were analyzed to develop a better understanding of what companies may be considering when choosing new director candidates.
New directors are generally younger than directors with tenures of over two years. Also, the average age difference is 5.3 years, an increase from 2014.
Fifty-three percent of new directors serve on only one board, which continues the trend identified in last year’s study, which found that nominating committees are bringing on directors who have no prior board experience. However, a majority of open S&P 500 positions, 56 percent, were filled by a director who sits on at least one other board, which drives the “average” number of outside boards for new directors up to nearly one and underscores the fact that market leading companies seek directors with a track record. New directors are more likely than those with more than two years tenure to be outside hires; 46 percent of all directors joining boards in 2014 and 2015 sit on only one board and are not executives of the companies whose boards they have joined.
Similarly, the percentage of new directors who are female or identified as an ethnic/racial minority continues to exceed the proportion of longer-tenured female- and minority-held S&P 1500 directorships. While the proportion of new directorships held by females has increased for several consecutive years, this momentum seems to be slower for minority directors. Minority directors comprised 16 percent of new directorships in 2015, compared to 10 percent of all new directors in 2014. Female directors filled 27 percent of new directorships in 2015, up from 22 percent in 2014, and 20 percent in 2013. This increase highlights both the overall growth in the number of directorships held by women and the acceleration in the growth of female directorships.
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*This post is based on a recent publication authored by ISS U.S. Research analysts Andrew Borek, Liz Williams, and Rob Yates. Information on how to obtain the full report is available here.
Gouvernance | Jacques Grisé 