Le pouvoir démesuré des firmes de conseil en votation !

Voici un article publié par Daniel M. Gallagher* sur le blogue de Harvard Law School on Corporate Governance. L’auteur met sérieusement en question le pouvoir et l’influence des conseillers en votation.

L’article examine les conséquences de la montée des firmes de conseillers en votation et leur influence sur les décisions des investisseurs.

Je sais, c’est un article un peu long mais je crois qu’il vous donnera l’heure juste sur l’historique de l’évolution des « Proxy Advisers » et sur certaines actions qui pourraient être entreprises pour les contrôler !

Bonne lecture ! Vos commentaires sont les bienvenus.

In addition, as I have stated in the past, I believe that the Commission should fundamentally review the role and regulation of proxy advisory firms and explore possible reforms, including, but not limited to, requiring them to follow a universal code of conduct, ensuring that their recommendations are designed to increase shareholder value, increasing the transparency of their methods, ensuring that conflicts of interest are dealt with appropriately, and increasing their overall accountability. I do not believe that the Commission should be in the business of comprehensively regulating proxy advisory firms—as we’ve seen from the 2006 NRSRO rule, such regulation often is simply ineffective—but there may be additional steps that we can take to promote transparency and best practices.

Outsized Power & Influence: The Role of Proxy Advisers

Shareholder voting has undergone a remarkable transformation over the past few decades. Institutional ownership of shares was once negligible; now, it predominates. This is important because individual investors are generally rationally apathetic when it comes to shareholder voting: value potentially gained through voting is outweighed by the burden of determining how to vote and actually casting that vote. By contrast, institutional investors possess economies of scale, and so regularly vote billions of shares each year on thousands of ballot items for the thousands of companies in which they invest.

For example, an investor purchasing a share of an S&P 500 index mutual fund would likely have no interest in how each proxy is voted for each of the securities in each of the companies held by that fund. Indeed, it would defeat the purpose of selecting such a low-maintenance, lost-cost investment alternative. And so it is left to the investment adviser to the index fund to vote on the investor’s behalf. This enhanced reliance on the investment adviser to act on behalf of investors inevitably results in a classic agency problem: how do we make sure that the investment adviser is voting those shares in the investor’s best interest, and not the adviser’s?

The Rise of Proxy Advisory Firms

The Commission took up this very issue in a rulemaking in 2003, putting in place disclosures to inform investors how their funds’ advisers are voting, as well as outlining clear steps that advisers must undertake to ensure that they vote shares in the best interest of their clients. But every regulatory intervention carries with it the risk of unintended consequences. And the 2003 release has since proved that to be true—to the point where the costs of the unintended consequences now arguably dwarf those benefits originally sought to be achieved. How exactly did this happen?

Proxy Voting by Investment Advisers

In the 2003 release, the SEC took on one specific manifestation of the general agency problem discussed above: that an adviser could have a conflict of interest when voting a client’s securities on matters that affect the adviser’s own interests (e.g., if the adviser is voting shares in a company whose pension the adviser also manages). To remedy this issue, the release stated that an investment adviser’s fiduciary duty to its clients requires the adviser to adopt policies and procedures reasonably designed to ensure that it votes its clients’ proxies in the best interest of those clients. Further, the Commission noted that “an adviser could demonstrate that the vote was not a product of a conflict of interest if it voted client securities, in accordance with a pre-determined policy, based upon the recommendations of an independent third party.” From these statements, two specific unintended consequences arose.

First, some investment advisers interpreted this rule as requiring them to vote every share every time. This seemed, perhaps, to be the natural outgrowth of the Department of Labor’s 1988 “Avon Letter,” which stated that “the fiduciary act of managing plan assets which are shares of corporate stock would include the voting of proxies appurtenant to those shares of stock.” As a result, investment advisers with investment authority over ERISA plan assets—and thus regulated by the Department of Labor as well as the SEC—were already required to cast a vote on every matter. Reading the SEC’s 2003 rule, some advisers may have assumed that the Commission intended to codify that result for all investment advisers.

A requirement to vote every share on every vote, however, gives rise to a significant economic burden for investment advisers who may own only relatively small holdings in a large number of companies. For example, one study found that “most institutional investor holdings are relatively small portions of each firm’s total securities. For example, in our sample … the mean (median) holding of an individual stock by institutional investors is 0.3% (0.03 %).” Given that institutional investors hold stock in hundreds or thousands of companies (for example, TIAA‐CREF holds stock in 7,000 companies), institutional investors—particularly the smaller ones—may not be able to invest in the costly research needed to ensure that they cast each vote in the best interest of their clients. The logical answer is to outsource the research function to a third party, who could do the needed research and sell voting recommendations back to investment advisers for a fee: a proxy advisory firm. While these firms already existed, the 2003 rule gave advisers new economic incentives to use them.

Second, proxy advisory firms noticed the suggestion in the 2003 rule that soliciting the views of an independent third party could overcome an adviser’s conflict of interest. In 2004, a proxy advisory firm requested—and received—“no-action” relief from the SEC staff that significantly expanded investment advisers’ incentive to use these firms. Specifically, the staff advised Institutional Shareholder Services (“ISS”) that “[A]n investment adviser that votes client proxies in accordance with a pre-determined policy based on the recommendations of an independent third party will not necessarily breach its fiduciary duty of loyalty to its clients even though the recommendations may be consistent with the adviser’s own interests. In essence, the recommendations of a third party who is in fact independent of an investment adviser may cleanse the vote of the adviser’s conflict.” Thus, rotely relying on the advice from the proxy advisory firm became a cheap litigation insurance policy: for the price of purchasing the proxy advisory firm’s recommendations, an investment adviser could ward off potential litigation over its conflicts of interest.

Finally, in a second 2004 no-action letter to Egan‐Jones, the staff affirmed that a key aspect of some proxy advisory firms’ business model—selling corporate governance consulting services to companies—“generally would not affect the firm’s independence from an investment adviser.” This determination is somewhat incredible, as it places the proxy advisory firm in the position of telling investment advisers how to vote proxies on corporate governance matters that had been the subject of the proxy advisory firm’s consulting services—a seemingly obvious, and insurmountable, conflict of interest.

In sum, the 2003 release and the 2004 no-action letters set the stage for proxy advisory firms to wield the power of the proxy, through investment adviser firms that had economic, regulatory, and liability incentives to rotely rely on the proxy advisory firms’ recommendations and through the SEC staff’s assurances that this arrangement was just fine, despite the obvious conflicts of interest involved throughout. But it would take some additional developments for proxy advisory firms to attain the dominant voice in American corporate governance that they have today.

Subsequent Developments

Since 2003–2004, some features of the SEC regulatory regime have acted to deepen investment advisers’ reliance on proxy advisory firms. First, the quantity of company disclosures has increased significantly over the past few years. For example, the SEC in 2006 adopted revisions to the proxy and periodic reporting rules to require extensive new disclosures about “executive and director compensation, related person transactions, director independence and other corporate governance matters and security ownership of officers and directors.” The new rule generated reams of new disclosures that were long, complex, and focused on regulatory compliance rather than telling the company’s compensation story. The sheer volume of information that an investment adviser would have to review in order to make a fully-informed voting decision is difficult even to organize, much less to read and digest.

Second, the average number of items on which investors are asked to vote has also been on the rise. This trend is attributable at least in part to the Dodd‐Frank twin advisory votes on executive compensation: a vote for how often to approve executive pay (“say-on-frequency”), and a vote to in fact approve (or disapprove) that pay (“say-on-pay”). We have also seen a continued increase in shareholder proposals that SEC rules generally compel companies to include in the proxy to be voted on, which in turn reflects increased activism around shareholder voting.

As a result, the economic imperative to use proxy advisory firms that the vote-every-share-every-time interpretation of the 2003 rulemaking created has only deepened over time. At the same time, serious questions emerged, particularly in the corporate community, about the power being wielded by proxy advisory firms in making their recommendations. These recommendations are of course provided contractually to investment advisers; proxy advisory firms have no fiduciary duty to shareholders, nor do they have any interest or stake in the companies that are the subject of the recommendations.

In particular, corporate observers raised two key questions about proxy advisory firms: are their recommendations infected by conflicts of interest, and even assuming they are not, do they have the capacity to produce accurate, transparent, and useful recommendations?

With regard to the former question, as alluded to in the Egan-Jones no-action letter, proxy advisory firms may have other, complementary lines of business. For example, in addition to selling vote recommendations to institutional investors (along with voting platforms, data aggregation, and other auxiliary services), they may also sell consulting services to companies that want to ensure that they have structured their governance and other proxy votes so as to avoid “no” recommendations from the proxy advisory firms. The sale of voting recommendations to institutional investors creates a risk that proxy advisory firms, in formulating their core voting recommendations, will be influenced by some of their largest customers (e.g., union or municipal pension funds) to recommend a voting position that would benefit them. The sale of consulting services to companies creates a risk that proxy advisory firms would be lenient in formulating voting recommendations for companies that are their clients and harsh in crafting the recommendations for those companies that have refused to retain their services.

With regard to the latter question, proxy advisory firms themselves face the same difficulties as institutional investors faced before they determined to outsource their voting: how does one formulate timely, high-quality recommendations for thousands of votes at thousands of companies based on millions of pages of data—all while competing on price with other firms? To put it charitably, they just do the best they can. But their best often is simply not good enough: proxy advisory firms publish some recommendations that are based on clear, material mistakes of fact. Moreover, they base some recommendations on a cookie-cutter approach to governance—i.e., in favor of all proposals of a certain type, like de-staggering boards or removing poison pills, even if there is a sound basis for challenging the assumption that an otherwise beneficial governance reform might not be appropriate for a given company. As one academic article has argued:

[I]f the institutional investors are only using the proxy advisor voting recommendations to meet their compliance requirement to vote their shares, these investors will favor lower costs over robust research. This raises the question of whether these payments are sufficient to compensate proxy advisors for sophisticated analysis of firm-specific circumstances that is necessary to develop correct governance recommendations. If the price paid by institutional investors is low, this will motivate proxy advisory firms to base their voting recommendation on simple models that ignore the important nuances that affect the appropriate choice of corporate governance. It is unlikely that this type of low level research can actually identify the appropriate governance structure for individual firms.

Unfortunately companies have little access to proxy advisory firms in order either to correct a mistake of fact, or to explain why a generic corporate governance recommendation is the wrong result in the specific instance: letting companies appeal to the advisory firm is time-consuming and expensive, neither of which is consistent with the proxy advisory firm’s business model. As a result, while the companies that also hire a proxy advisory firm for its corporate consulting service may have some minimal degree of access (e.g., by being provided an opportunity to make limited comments on draft reports), smaller companies that are not clients generally are not afforded any such rights.

Advisers that rely rotely on the proxy advisory firm’s recommendations also tend not to afford companies an opportunity to tell their story. This is unsurprising: if the advisers wanted to make contextualized decisions about casting each vote, they would not have outsourced their vote in the first place. But it is also supremely ironic: a company that may want to engage in good faith with its shareholders may find that it has no meaningful opportunity to do so. This trend is deeply troubling to me. If an investment adviser is approached by a company with information indicating that the basis on which the adviser is casting its vote is fundamentally flawed, is it really consistent with the investment adviser’s fiduciary duties for the adviser to simply ignore that information? I think the rote reliance on proxy advisory firms has caused investment advisers to lose the forest for the trees: they are so focused on checking the compliance boxes to absolve conflicts of interest under our rules that they forget that they still have a broader fiduciary duty to investors to cast votes in the investors’ best interest. That fiduciary duty, I believe, cannot be satisfied through rote reliance on proxy advisory firms.

Regulatory Response

First Steps

These issues have been on the SEC’s radar for some time now, most notably when they were raised in the 2010 Concept Release on the U.S. Proxy System (the “Proxy Plumbing” release). This release outlined the conflict-of-interest and low-quality voting recommendation issues addressed above, and it requested comment on a long list of potential regulatory solutions. I raised this issue in a number of speeches in 2013 and 2014, and the Commission in December 2013 held a roundtable to examine key questions about the influence of proxy advisers on institutional investors, the lack of competition in this market, the lack of transparency in the proxy advisory firms’ vote recommendation process and, significantly, the obvious conflicts of interest when proxy advisory firms provide advisory services to issuers while making voting recommendations to investors. A wide range of other parties, including Congress, academia, public interest groups, the media, and a national securities exchange, have also been calling for reforms.

There has also been substantial interest and work regarding the role of proxy advisers on the international front. Recently, the European Commission introduced legislation to address the accuracy and reliability of proxy advisers’ analysis as well as their conflicts of interest. If adopted by the EU’s legislature, Article 3i (entitled “Transparency of proxy advisors”) would require proxy advisors to publicly disclose certain information in relation to the preparation of their recommendations, including the sources of information, total staff involved, and other meaningful data points. It would also require that member states ensure that proxy advisers identify and disclose without undue delay any actual or potential conflicts of interest or business relationships that may influence their recommendations and what they have done to eliminate or mitigate such actual of potential conflicts. While I may not often find myself in a position of agreeing with the European Commission, here I believe their proposal takes an incredible step forward and one that I commend them for promoting.

Staff Legal Bulletin No. 20

After the concept release and the roundtable, which provided a wealth of information and perspectives, the SEC staff on June 30th moved toward addressing some of the serious issues. The Division of Investment Management and the Division of Corporation Finance released Staff Legal Bulletin No. 20 (“SLB 20”), providing much-needed guidance and clarification as to the duties and obligations of proxy advisers, and to the duties and obligations of investment advisers that make use of proxy advisers’ services.

This guidance is a good initial step in addressing the serious deficiencies currently plaguing the proxy advisory process. In particular, it does three important things worth highlighting.

First, it clarifies the widespread misconception discussed above that the Commission’s 2003 release mandates that investment advisers cast a ballot for each and every vote. The guidance makes clear that this interpretation is wrong. Rather, an investment adviser and its client have significant flexibility in determining how the investment adviser should vote on the client’s behalf. The investment adviser and client can agree that votes will be cast always, sometimes (e.g., only on certain key issues), or never. They similarly can agree that votes will be cast in lockstep with another party (e.g., management, or a large institutional investor). Advisers could agree with investors in a mutual fund managed by the adviser that the adviser would only vote shares in companies representing more than a certain threshold percentage of the fund’s assets—and refrain from voting smaller holdings, vote them with management, or vote them some other way. While possibilities may not be endless, there is room for much more creativity than exists today.

Second, SLB 20 cautions against misguided reliance on the two 2004 staff no-action letters, which have been widely misinterpreted as permitting investment advisers to abdicate essentially all of their voting responsibilities to proxy advisers without a second thought. The guidance makes clear that investment advisers have a continuing duty to monitor the activities of their proxy advisers, including whether, among other things, the proxy advisory firm has the capacity to “ensure that its proxy voting recommendations are based on current and accurate information.” I have heard from many companies that proxy advisory firms sometimes produce recommendations based on materially false or inaccurate information, but they are unable to have the proxy advisory firm even acknowledge these claims, much less review them and determine whether to revise its recommendation in light of the corrected information.

While I encourage companies to attempt to work with proxy advisers, I also believe it is important for companies to bring this type of misconduct by proxy advisers to the attention of their institutional shareholders. As explained in the new guidance, investment advisers are required to take reasonable steps to investigate errors. Repeated instances of proxy advisers failing to correct recommendations they based on materially inaccurate information should cause investment advisers to question whether the proxy adviser can be relied upon. Separate and apart from the guidance they receive, I believe investment advisers’ broader fiduciary duty should compel them to review the corrected information provided by the company and consider it when determining how ultimately to cast their votes.

Third, SLB 20 makes clear that a proxy advisory firm must disclose to recipients of voting recommendations any significant relationship the proxy advisory firm has with a company or security holder proponent. This critical disclosure must clearly and adequately describe the nature and scope of the relationship, and boilerplate will not suffice.

Further Interventions?

While these reforms are much-needed, I am concerned that the guidance does not go far enough. SLB 20 provides some incremental duties and suggests ways that individual entities could structure their advisory relationship so as to reduce reliance on proxy advisory firms, but it has become clear to me that, over the past decade, the investment adviser industry has become far too entrenched in its reliance on these firms, and there is therefore a risk that the firms will not take full advantage of the new guidance to reduce that reliance.

I therefore intend to closely monitor how these reforms are being executed and whether they are solving the current significant problems in this space. In fact, if a company does experience difficulties in getting the proxy advisory firm to respond to the company’s concerns about the accuracy of the information on which the recommendation is based, and does therefore follow my suggestion to reach out directly to its institutional investors, I would encourage the company also to provide a copy of its shareholder communications directly to my office. I would be very interested to learn which complaints are being disregarded by proxy advisory firms and institutional investors. In addition, I believe SLB 20 should diminish the number of these complaints over time, and I will be very interested to discover whether this is in fact the case.

Finally, while I appreciate the important steps that are being taken above, I believe that the release of SLB 20 still may not fully address the fact that our rules have accorded to proxy advisors a special and privileged role in our securities laws—a role similar to that of nationally recognized statistical ratings organizations (“NRSRO”) before the financial crisis. I intend to continue to seek structural changes that will address this dangerous overreliance.

For example, the Commission could replace the two staff no-action letters with Commission-level guidance. Such guidance would seek to ensure that institutional shareholders are complying with the original intent of the 2003 rule and effectively carrying out their fiduciary duties. Commission guidance clarifying to institutional investors that they need to take responsibility for their voting decisions rather than engaging in rote reliance on proxy advisory firm recommendations would go a long way toward mitigating the concerns arising from the outsized and potentially conflicted role of proxy advisory firms.

In addition, as I have stated in the past, I believe that the Commission should fundamentally review the role and regulation of proxy advisory firms and explore possible reforms, including, but not limited to, requiring them to follow a universal code of conduct, ensuring that their recommendations are designed to increase shareholder value, increasing the transparency of their methods, ensuring that conflicts of interest are dealt with appropriately, and increasing their overall accountability. I do not believe that the Commission should be in the business of comprehensively regulating proxy advisory firms—as we’ve seen from the 2006 NRSRO rule, such regulation often is simply ineffective—but there may be additional steps that we can take to promote transparency and best practices.

In Sum

To be clear, I realize that proxy advisers can provide important information to institutional investors and others. But that business model should be able to stand or fall on its own merits—i.e., based on the usefulness of the information provided to the marketplace. The SEC’s rulebook should not accord proxy advisory firms a special, privileged role—or, if that privilege cannot be completely stripped away, proxy advisory firms should be subject to increased oversight and accountability commensurate with their role.

________________________________________________

Daniel M. Gallagher* is a Commissioner at the U.S. Securities and Exchange Commission. The following post is based on a Washington Legal Foundation working paper by Mr. Gallagher; the complete publication, including footnotes, is available here.

Les risques de gouvernance associés à l’OPA d’Alibaba

Lucian Bebchuk, professeur de droit, d’économique et de finance, et directeur des programmes sur la gouvernance corporative à la Harvard law School vient de publier un article très important dans le New York Times.

L’auteur met les investisseurs en garde contre de réels risques de gouvernance liés à l’offre publique d’achat (OPA) de l’entreprise chinoise Alibaba.

Je crois qu’il est utile de mieux comprendre les enjeux de gouvernance avant d’investir dans cette immense OPA.

Bonne lecture !

Wall Street is eagerly watching what is expected to be one of the largest initial public offering in history: the offering of the Chinese Internet retailer Alibaba at the end of this week. Investors have been described by the media as “salivating” and “flooding underwriters with orders.” It is important for investors, however, to keep their eyes open to the serious governance risks accompanying an Alibaba investment.

Several factors combine to create such risks. For one, insiders have a permanent lock on control of the company but hold only a small minority of the equity capital. Then, there are many ways to divert value to affiliated entities, but there are weak mechanisms to prevent this. Consequently, public investors should worry that, over time, a significant amount of the value created by Alibaba would not be shared with them.

In Alibaba, control is going to be locked forever in the hands of a group of insiders known as the Alibaba Partnership. These are all managers in the Alibaba Group or related companies. The Partnership will have the exclusive right to nominate candidates for a majority of the board seats. Furthermore, if the Partnership fails to obtain shareholder approval for its candidates, it will be entitled “in its sole discretion and without the need for any additional shareholder approval” to appoint directors unilaterally, thus ensuring that its chosen directors always have a majority of board seats.

Many public companies around the world, especially in emerging economies, have a large shareholder with a lock on control. Such controlling shareholders, however, often own a substantial portion of the equity capital that provides them with beneficial incentives. In the case of Alibaba, investors need to worry about the relatively small stake held by the members of the controlling Alibaba Partnership.

After the I.P.O., Alibaba’s executive chairman, Jack Ma, is expected to hold 7.8 percent of the shares and all the directors and executive officers will hold together 13.1 percent. Over time, insiders may well cash out some of their current holding, but Alibaba’s governance structure would ensure that directors chosen by the Alibaba Partnership will forever control the board, regardless of the size of the stake held by the Partnership’s members.

With an absolute lock on control and a limited fraction of the equity capital, the Alibaba insiders will have substantial incentives to divert value from Alibaba to other entities in which they own a substantial percentage of the equity. This can be done by placing future profitable opportunities in such entities, or making deals with such entities on terms that favor them at the expense of Alibaba.

Alibaba’s prospectus discloses information about various past “related party transactions,” and these disclosures reflect the significance and risks to public investors of such transactions. For example, in 2010, Alibaba divested its control and ownership of Alipay, which does all of the financial processing for Alibaba, and Alipay is now fully controlled and substantially owned by Alibaba’s executive chairman.

Public investors should worry not only about whether the Alibaba’s divesting of Alipay benefited Mr. Ma at the expense of Alibaba, but also about the terms of the future transactions between Alibaba and Alipay. Because Alibaba relies on Alipay “to conduct substantially all of the payment processing” in its marketplace, these terms are important for Alibaba’s future success.

Mr. Ma owns a larger fraction of Alipay’s equity capital than of Alibaba’s, so he would economically benefit from terms that would disfavor Alibaba. Indeed, given the circumstances, the I.P.O. prospectus acknowledges that Mr. Ma may act to resolve Alibaba-Alipay conflicts not in Alibaba’s favor.

The prospectus seeks to allay investor concerns, however, by indicating that Mr. Ma intends to reduce his stake in in Alipay within three to five years, including by having shares in Alipay granted to Alibaba employees. But stating such an intention does not represent an irreversible legal commitment. Furthermore, transfers of Alipay ownership stakes from Mr. Ma to other members of the Alibaba Partnership would still leave the Partnership’s aggregate interest to be decidedly on the side of Alipay rather than Alibaba.

Given the significant related party transactions that have already taken place, and the prospect of such transactions in the future, Alibaba tried to placate investors by putting in a “new related party transaction policy.” But this new policy hardly provides investors with solid protection. Unlike charter and bylaw provisions, corporate policies are generally not binding. Furthermore, Alibaba’s policy explicitly allows the board, where the nominees of Alibaba partnership will always have a majority, to approve any exceptions to the policy that the board chooses.

Of course, the Alibaba partners might elect not to take advantage of the opportunities for diversion provided to them by Alibaba’s structure. And, even if the partners do use such opportunities, the future business success of Alibaba might be large enough to make up for the costs of diversions and leave public investors with good returns on their investment.

Before jumping in, however, investors rushing to participate in the Alibaba I.P.O. must recognize the substantial governance risks that they would be taking. Alibaba’s structure does not provide adequate protections to public investors.

__________________________________________

Article relié :

Alibaba Raises the Fund-Raising Target for Its I.P.O. to $21.8 Billion (Sept. 15, 2014)

Une perspective française sur le « Say on Pay » et la réalité de la transparence

Ce matin, je porte à votre attention une courte vidéo produite par la chaîne française Xerfi Canal qui aborde le sujet du « Say on Pay », une importation du système réglementaire américain.

Entendez le point de vue de l’expert français Philippe Portier, avocat-associé au cabinet JeantetAssociés, qui répond aux questions Thibault Lieurade sur l’efficacité de ce dispositif appliqué au système de gouvernance français.

Quel est votre avis sur l’application de certaines mesures de gouvernance dans un contexte culturel différent ?

Voici une brève description du contenu. Bon visionnement !

Depuis la mi-2013 en France, les actionnaires des entreprises cotées assujetties au code de gouvernance AFEP-MEDEF émettent un avis sur les rémunérations des dirigeants. C’est le principe du Say on Pay.

L’objectif théorique est double :

(1) limiter l’inflation jugée inacceptable socialement des rémunérations des dirigeants et

(2) redonner du pouvoir aux actionnaires.

Rémunération des dirigeants : « say on pay » et transparence réelle

Philippe-Portier-Remuneration-des-dirigeants-say-on-pay-et-transparence-reelle — Philippe Portier | Rémunération des dirigeants : « say on pay » et transparence réelle

Les modèles de gouvernance fondés sur la prise en compte des intérêts des « Stakeholders » sont-ils efficaces ?

Dans ce billet, nous attirons votre attention sur une étude remarquable, récemment publiée par Franklin Allen, professeur d’économie à l’Université de Pennsylvanie et à Imperial College, Londres; Elena Carletti, professeure de finance à l’université Bocconi ; et Robert Marquez, professeur de finance à l’Université de Californie (Davis), paru sur le blogue de Harvard Law School Forum on Corporate Governance.

L’étude montre que les entreprises peuvent adopter deux modèles relativement distincts de gouvernance.

Le premier modèle, celui qui règne dans les pays Anglo-Saxons, adopte la perspective de la théorie de l’agence selon laquelle il doit exister une nette séparation des pouvoirs entre les actionnaires-propriétaires et les dirigeants de l’organisation. Dans ces pays (U.S., Canada, UK, Australie), les lois précisent assez clairement que les actionnaires sont les propriétaires de l’entreprise et que les managers ont le devoir fiduciaire d’agir en fonction de leurs intérêts, tout comme les administrateurs qui sont les représentants élus des actionnaires.

La situation canadienne est un peu particulière parce que certains jugements stipulent que les administrateurs doivent aussi tenir compte des conséquences des décisions sur les diverses parties prenantes.

Il y a plusieurs pays qui adoptent un deuxième modèle de gouvernance, un modèle qui accorde une importance capitale aux parties prenantes (Stakeholders), plus particulièrement aux employés.

Par exemple, en Allemagne, le système de cogestion exige un nombre égal de sièges d’actionnaires et d’employés au conseil de supervision. Les intérêts des parties prenantes sont également pris en compte par une représentation significative d’employés en Autriche, en France, aux Pays-Bas, au Danemark, en Suède.

D’autres pays tels que la Chine et le Japon ont des modèles de gouvernance qui se fondent sur des normes se rapportant aux consensus sociaux.

Quel modèle de gouvernance peut le mieux optimiser la performance des entreprises, tout en répondant aux impératifs de rentabilité, de compétitivité et de pérennité de ces dernières ?

Vous ne serez peut-être pas étonnés d’apprendre que le modèle Anglo-Saxon, fondé sur la propriété des actionnaires, n’est pas nécessairement le plus efficace ! Mais pourquoi ?

Voilà ce que cette étude examine en profondeur. Voici quelques extraits de l’article, dont la conclusion suivante :

« If workers and shareholders are made better off by co-determination and consumers are made worse off, then it is still likely that co-determination will be implemented. The reason is that workers and shareholders are usually better organized and are in a position to lobby in favor of co-determination, whereas consumers are dispersed. Such a political economy approach can help shed light on the emergence of stakeholder governance. In turn, the present study illustrates one of the likely consequences of the adoption of a stakeholder approach to corporate governance ».

Stakeholder Governance, Competition and Firm Value

….. These differences in firms’ corporate orientation are confirmed by the results of a survey of senior managers at a sample of major corporations in Japan, Germany, France, the US, and the UK, who were asked whether “A company exists for the interest of all stakeholders” or whether “Shareholder interest should be given the first priority” (Yoshimori, 2005). The results of the survey strongly suggest that stakeholders are considered to be very important in Japan, Germany and France, while shareholders’ interests represent the primary concern in the US and the UK. The same survey reports that firm continuity and employment preservation are important concerns for managers of corporations located in Japan, Germany and France, but not for those located in the US and the UK. All these considerations suggest that in many countries the legal system or social conventions have as a common objective the inclusion of parties beyond shareholders into firms’ decision-making processes. In particular, workers are seen as important stakeholders in the firm, with continuity of employment being an important objective.

In our paper, Stakeholder Governance, Competition and Firm Value, forthcoming in the Review of Finance, we examine these issues, and provide an understanding of how imposing stakeholder governance affects firms’ behavior even when this involves a trade-off between the interests of shareholders and those of other stakeholders. Our main idea is that stakeholder firms internalize the effects of their behavior on stakeholders other than shareholders. In particular, they are concerned with the benefits that their stakeholders would lose should the firm not survive. As a consequence, stakeholder firms are more concerned with avoiding bankruptcy since this prevents their stakeholders from enjoying their benefits. The different concern for survival affects firms’ strategic behavior in the product market and, in particular, the way they behave in the presence of uncertainty.

Specifically, we develop a model where firms compete in the product market with other firms, and have to choose the prices at which to sell their goods. Firms are subject to uncertainty, and can go bankrupt if they fail to turn a profit either because the expected sales did not quite materialize, or because costs turned out to be higher than anticipated. The possibility, and fear, of bankruptcy thus induces firms to be more conservative in their pricing policies, preferring to maintain a larger cushion between their revenues and their costs, than in seeking out (possibly) larger sales but at thinner margins.

A concern for stakeholders makes a firm even more concerned about avoiding bankruptcy to the extent that it may lead to dislocation of its workers, and makes it even more conservative in its pricing policies. While the direct consequence of this is to move a firm away from the objective of maximizing profits and thus shareholder value, there is an indirect effect coming through the interaction between competing firms in the product market: when one firm becomes less aggressive, other firms have an incentive to follow suit. This reduction in aggression (i.e., competition) industry-wide benefits the stakeholder-oriented firm, so much so that shareholders may in fact be better off when their firm can commit to internalizing stakeholder concerns. In other words, stakeholders’, such as employees, and shareholders’ interests become aligned through the competitive interactions among firms, rather than being at odds as they would appear to be if one ignores firms’ product market interactions.

We use this basic idea to study a number of issues ranging from state-mandated inclusion of stakeholders in corporate governance (e.g., the case of Germany), to globalization that makes it commonplace for firms from shareholder-oriented societies to compete with those from countries with a stakeholder orientation. We also study the implications of financial constraints for the capital structure of stakeholder-oriented firms, and show that the same conservative stance in the product market translates into more conservative capital structure.

Our study raises a number of unanswered questions about the ultimate effect of stakeholders’ orientations on firm behavior and value, and suggests directions for future research. One of the interesting questions is why some countries adopt stakeholder governance while others do not, and why governments adopt such governance although it may benefit firms and employees at the expense of consumers. There is a growing literature on corporate governance and political economy that emphasizes that the political process plays a very important part in determining the corporate governance structure in a country (see, e.g., Pagano and Volpin, 2005; Perotti and von Thadden, 2006; and Perotti and Volpin, 2007). For example, if workers and shareholders are made better off by co-determination and consumers are made worse off, then it is still likely that co-determination will be implemented …..

Toute la lumière sur les attentes envers les C.A. | L’état de situation selon Lipton

Aujourd’hui, je veux vous faire partager le point de vue de Martin Lipton*, expert dans les questions de fusion et d’acquisition ainsi que dans les affaires se rapportant à la gouvernance des entreprises, sur les enjeux des C.A.. L’auteur met l’accent sur les pratiques exemplaires en gouvernance et sur les comportements attendus des conseils d’administration.

Ce texte, paru sur le blogue du Harvard Law School Forum on Corporate Governance,résume très bien les devoirs et les responsabilités des administrateurs de sociétés de nos jours et renforce la nécessité, pour les conseils d’administration, de gérer les situations d’offres hostiles.

Bonne lecture ! Êtes-vous d’accord avec les attentes énoncées ? Vos commentaires sont les bienvenus.

The Spotlight on Boards

The ever evolving challenges facing corporate boards prompts an updated snapshot of what is expected from the board of directors of a major public company—not just the legal rules, but also the aspirational “best practices” that have come to have almost as much influence on board and company behavior.

Boards are expected to:

Establish the appropriate “Tone at the Top” to actively cultivate a corporate culture that gives high priority to ethical standards, principles of fair dealing, professionalism, integrity, full compliance with legal requirements and ethically sound strategic goals.

Choose the CEO, monitor his or her performance and have a succession plan in case the CEO becomes unavailable or fails to meet performance expectations.

Maintain a close relationship with the CEO and work with management to encourage entrepreneurship, appropriate risk taking, and investment to promote the long-term success of the company (despite the constant pressures for short-term performance) and to navigate the dramatic changes in domestic and world-wide economic, social and political conditions. Approve the company’s annual operating plan and long-term strategy, monitor performance and provide advice to management as a strategic partner.

Develop an understanding of shareholder perspectives on the company and foster long-term relationships with shareholders, as well as deal with the requests of shareholders for meetings to discuss governance and the business portfolio and operating strategy. Evaluate the demands of corporate governance activists, make changes that the board believes will improve governance and resist changes that the board believes will not be constructive. Work with management and advisors to review the company’s business and strategy, with a view toward minimizing vulnerability to attacks by activist hedge funds.

Organize the business, and maintain the collegiality, of the board and its committees so that each of the increasingly time-consuming matters that the board and board committees are expected to oversee receives the appropriate attention of the directors.

Plan for and deal with crises, especially crises where the tenure of the CEO is in question, where there has been a major disaster or a risk management crisis, or where hard-earned reputation is threatened by a product failure or a socio-political issue. Many crises are handled less than optimally because management and the board have not been proactive in planning to deal with crises, and because the board cedes control to outside counsel and consultants.

Determine executive compensation to achieve the delicate balance of enabling the company to recruit, retain and incentivize the most talented executives, while also avoiding media and populist criticism of “excessive” compensation and taking into account the implications of the “say-on-pay” vote.

Face the challenge of recruiting and retaining highly qualified directors who are willing to shoulder the escalating work load and time commitment required for board service, while at the same time facing pressure from shareholders and governance advocates to embrace “board refreshment”, including issues of age, length of service, independence, gender and diversity. Provide compensation for directors that fairly reflects the significantly increased time and energy that they must now spend in serving as board and board committee members. Evaluate the board’s performance, and the performance of the board committees and each director.

Determine the company’s reasonable risk appetite (financial, safety, cyber, political, reputation, etc.), oversee the implementation by management of state-of-the-art standards for managing risk, monitor the management of those risks within the parameters of the company’s risk appetite and seek to ensure that necessary steps are taken to foster a culture of risk-aware and risk-adjusted decision-making throughout the organization.

Oversee the implementation by management of state-of-the-art standards for compliance with legal and regulatory requirements, monitor compliance and respond appropriately to “red flags.”

Take center stage whenever there is a proposed transaction that creates a real or perceived conflict between the interests of stockholders and those of management, including takeovers and attacks by activist hedge funds focused on the CEO.

Recognize that shareholder litigation against the company and its directors is part of modern corporate life and should not deter the board from approving a significant acquisition or other material transaction, or rejecting a merger proposal or a hostile takeover bid, all of which is within the business judgment of the board.

Set high standards of social responsibility for the company, including human rights, and monitor performance and compliance with those standards.

Oversee relations with government, community and other constituents.

Review corporate governance guidelines and committee charters and tailor them to promote effective board functioning.

To meet these expectations, it will be necessary for major public companies

(1) to have a sufficient number of directors to staff the requisite standing and special committees and to meet expectations for diversity;

(2) to have directors who have knowledge of, and experience with, the company’s businesses, even if this results in the board having more than one director who is not “independent”;

(3) to have directors who are able to devote sufficient time to preparing for and attending board and committee meetings;

(4) to provide the directors with regular tutorials by internal and external experts as part of expanded director education; and

(5) to maintain a truly collegial relationship among and between the company’s senior executives and the members of the board that enhances the board’s role both as strategic partner and as monitor.

________________________________________________

* Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy

Communications entre administrateurs et actionnaires concernant la rémunération des hauts dirigeants !

Dans quelles circonstances les administrateurs doivent-ils intervenir directement auprès des actionnaires lorsque vient le temps de discuter des paramètres de la rémunération des hauts dirigeants ?

Quelles modalités doivent encadrer les activités de communication des administrateurs avec les actionnaires et les investisseurs ?

L’article de Jeremy L. Goldstein, paru sur le blogue du Harvard Law School Forum on Corporate Governance, aborde ces questions en présentant la problématique particulière de l’implication des administrateurs et en proposant des balises à considérer dans le choix des représentants.

Depuis que les entreprises ont l’obligation de consulter les actionnaires sur l’acceptabilité du plan de rémunération globale des hauts dirigeants (Say on Pay), il devient de plus en plus important de bien informer les actionnaires sur ces questions et d’entretenir des liens plus étroits avec ceux-ci. Bonne lecture !

Director Engagement on Executive Pay

Since the implementation of the mandatory advisory vote on executive compensation, shareholder engagement has become an increasingly important part of the corporate landscape. In light of this development, many companies are struggling to determine whether, when and how corporate directors should engage with shareholders on issues of executive compensation. Set forth below are considerations for companies grappling with these issues.

As a general matter, the chief executive officer of the company should be the corporation’s primary spokesperson. Having the chief executive officer speak with investors and other constituencies helps ensure that the company has a consistent message expressed by its primary architect. However, engaging on executive pay may be different than engaging on other topics for several reasons. Executive pay in general, and CEO pay in particular, is ultimately approved by the board and, accordingly, board members may be best suited to discuss it. In addition, investors sometimes perceive chief executives as being interested in issues of executive compensation. By engaging with shareholders, board members can help add credibility to, and show support for, the company’s programs and can demonstrate to investors that they are exercising their key oversight function. For these reasons, depending on the corporation’s particular facts and circumstances, board members may be best suited to engage with shareholders on issues of executive compensation.

Companies should take into account the following factors in determining whether a board member is the appropriate spokesperson on matters of executive pay:

Knowledge of the Pay Programs: The single most important consideration is whether a director has a strong command of the matters at issue. The purpose of shareholder engagement is to enhance credibility and build trust. These goals are best achieved by the selection of a spokesperson who understands the company’s executive pay program and communicates most effectively the rationale behind it.

Subject Matter to be Addressed: Discussions of CEO pay or similar matters may militate in favor of having a director speak with investors. If, however, the discussions are expected to focus on general compensation policy, other representatives may be better suited to the task.

Preference of the Shareholder: Different shareholders may prefer to speak with different company representatives. Some shareholders may prefer to speak with compensation committee members, while others may not wish to engage with the board at all. Understanding the desires of the investor base and accommodating those desires, where possible, is key to successful shareholder engagement.

Relationship of Individual with Shareholder: It is generally the case that either the lead director/independent chairman or a member of the compensation committee will be the spokesperson for the board on matters of executive pay. While the compensation committee chair might seem like the most logical choice for pay discussions because the compensation committee approves executive pay, selecting a lead director who is engaging with shareholders on other issues may help ensure consistency of message and messenger. A lead director/independent chairman who is also a member of the compensation committee may be an ideal choice.

If a corporation decides to have director engagement on matters of executive pay, such discussions should be integrated into the corporation’s overall communications strategy. Many companies have established a formal protocol for circumstances under which directors receive shareholder inquiries where requests for engagement are routed through the corporate secretary, or if the company has one, the company’s director of corporate governance. In addition, there should be a clear and fully developed understanding between management and the board regarding the nature of the topics to be discussed. Discussions should be limited to agenda items and directors should generally avoid allowing investors to move the conversation into matters of corporate strategy and financial performance unless expressly agreed in advance. Management should ensure that (1) it is fully aware of board engagement activities and (2) directors have appropriate information to respond to investor questions and deliver messages that are consistent with other corporate communications.

Companies should consider whether members of management should be present for the meetings with investors. Under most circumstances this is advisable to ensure that management is informed of the nature of the dialogue. The most likely candidates for attendance at such meetings are the general counsel, director of corporate governance, human resources executives and the head of investor relations. Whether or not these individuals attend, directors engaging with investors should provide the management team with investor feedback received during engagement so that the benefits of engagement may be fully realized. Finally, directors engaging with shareholders should be familiar with Regulation F-D so that information is not revealed to individual investors at a time that it is not disclosed to other market participants in a manner that violates the securities laws.

Shareholder outreach has for many companies become a year-round endeavor. Engaging with investors outside of the regular proxy season enables companies to establish relationships with shareholders before a crisis erupts at a time when investors are not inundated with requests for meetings. Year-round dialogue between directors and shareholders under appropriate circumstances can help a company build credibility, foster investor relations, enhance transparency and avoid surprises during proxy season when it may be too late to change investor sentiment.

Le point de vue sans équivoque de l’activiste Carl Icahn

Depuis quelques années, on parle souvent d’activistes, d’actionnaires activistes, d’investisseurs activistes ou de Hedge Funds pour qualifier la philosophie de ceux qui veulent assainir la gouvernance des entreprises et redonner une place prépondérante aux « actionnaires-propriétaires » !

Pour ceux qui sont intéressés à connaître le point de vue et les arguments d’un actionnaire activiste célèbre, je vous invite à lire l’article écrit par Carl Icahn le 22 août sur son site Shareholders’ Square Table (SST).

Vous aurez ainsi une très bonne idée de cette nouvelle approche à la gouvernance qui fait rage depuis quelque temps.

Je vous invite aussi à lire l’article de Icahn qui s’insurge contre la position de Warren Buffet de ne pas intervenir dans la décision de la rémunération globale « excessive » à Coke, suivi de la réponse de Buffet.

My article from Barron’s on Warren Buffett’s abstention from a vote on Coke’s executive-pay plan

À vous de vous former une opinion sur ce sujet ! Bonne lecture !

The Bottom Line | Carl Icahn

Among other things, I’m known to be a “reductionist.” In my line of work you must be good at pinpointing what to focus on – that is, the major underlying truths and problems in a situation. I then become obsessive about solving or fixing whatever they may be. This combination is what perhaps has lead to my success over the years and is why I’ve chosen to be so outspoken about shareholder activism, corporate governance issues, and the current economic state of America.

Currently, I believe that the facts “reduce” to one indisputable truth which is that we must change our system of selecting CEOs in order to stay competitive and get us out of an extremely dangerous financial situation. With exceptions, I believe that too many companies in this country are terribly run and there’s no system in place to hold the CEOs and Boards of these inadequately managed companies accountable. There are numerous challenges we are facing today whether it be monetary policy, unemployment, income inequality, the list can go on and on… but the thing we have to remember is there is something we can do about it: Shareholders, the true owners of our companies, can demand that mediocre CEOs are held accountable and make it clear that they will be replaced if they are failing.

I am convinced by our record that this will make our corporations much more productive and profitable and will go a long way in helping to solve our unemployment problems and the other issues now ailing our economy.

…….

Pourquoi nommer un administrateur indépendant comme président du conseil

Plusieurs se questionnent sur les raisons qui expliquent l’importance de choisir un administrateur indépendant comme président du conseil, même dans les entreprises dont le fondateur possède le contrôle.

Le court article de Gerard Buckley paru dans itbusiness le 25 août 2014 montre les avantages réels à se doter d’une gouvernance exemplaire.

Voici, selon l’auteur, neuf points à considérer dans le choix de cette option. Bonne lecture !

1. Increased share price on acquisition
2. Investor due diligence is smoother
3. Greater interest in follow-on investment rounds
4. Increased transparency through supplying shareholder information
5. Increased accountability of management
6. Stronger risk and crisis management policies
7. Stronger customer acquisition process resulted from customers’ appreciation that the company is stronger than its individual executives.
8. Competitors take notice of the seriousness of your company’s approach
9. Creates environment for innovative change

The use of a non-executive chairperson for a private corporation, including early and growth stage companies, allows the company to start acting as if the company is structured for success and is serious about its responsibilities to shareholders, customers, and staff.

9 reasons to name a non-executive chairperson to your board

It is natural for entrepreneurs and founders to want to control the destiny of their company. Facebook and Mark Zuckerberg are often cited as examples of why a founder should stay in control.

In this example, Zuckerberg owned less than 30 per cent of Facebook; however, he maintained a controlling vote through multiple voting rights. These voting rights enabled him to singlehandedly buy Instagram for over $1 billion without board approval.

Some entrepreneurial observers may say that this is a good thing. Others who have been schooled in corporate governance would suggest too much power rested in one shareholder’s hands, and one who holds less than 50 per cent of the equity of the company. This example of a lack of corporate governance points a founder in the direction of how a private company and its strategic direction should be directed and controlled, while maintaining the vision the founders had when they formed the company.

When a company accepts equity investment from outside shareholders, the shareholders have an expectation that their rights will be protected by the board of directors. For a growth stage company, these many responsibilities become burdensome. I agree with most founders that their primary responsibility is to drive product development and acquire profitable customers. A founder who is both comfortable with and understands the alignment of the vision and strategic direction should be comfortable handing off some of the leadership responsibilities that guide the company.

Best practices of corporate governance for a public company separate the role of CEO of the company and the chairperson of the board of directors, often referred to as the non-executive chairperson or lead director. Under this structure, the CEO manages the affairs of the company under the direction of the board, and the governance structure or board of directors and its members are managed by the non-executive chairperson. Many founders are concerned with a loss of control in this structure; however, they need not be. With a strong selection process that was developed from a skills matrix, and a desire to have open and regular communication between the two roles, the company should be positioned for success.

….

L’état des travaux de recherche relatifs à la contribution des investisseurs activistes

Ainsi que mon billet du 19 août en faisait état, le débat est de plus en plus vif en ce qui regarde la contribution des « Hedge Funds » à l’amélioration de la performance à long terme des entreprises ciblées.

Vous trouverez, ci-dessous, un court billet de Martin Lipton, partenaire fondateur de la firme Wachtell, Lipton, Rosen & Katz, paru sur le site du Harvard Law School Forum on Corporate Governance, qui décrit la problématique et les principaux enjeux liés au comportement des investisseurs « activistes ».

L’auteur accorde une grande place aux travaux d’Yvan Allaire et de François Dauphin de l’IGOPP (Institut sur la Gouvernance d’Organisations Privées et Publiques) qui pourfendent l’approche économétrique de la recherche phare de Bebchuk-Brav-Jiang.

Le résumé ci-dessous relate les principaux jalons relatifs à cette saga !

The post puts forward criticism of an empirical study by Lucian Bebchuk, Alon Brav, and Wei Jiang on the long-term effects of hedge fund activism; this study is available here, and its results are summarized in a Forum post and in a Wall Street Journal op-ed article. As did an earlier post by Mr. Lipton available here, this post relies on the work of Yvan Allaire and François Dauphin that is available here. A reply by Professors Bebchuk, Brav, and Jiang to this earlier memo and to the Allaire-Dauphin work is available here. Additional posts discussing the Bebchuk-Brav-Jiang study, including additional critiques by Wachtell Lipton and responses to them by Professors Bebchuk, Brav, and Jiang, are available on the Forum here.

The Long-Term Consequences of Hedge Fund Activism

The experience of the overwhelming majority of corporate managers, and their advisors, is that attacks by activist hedge funds are followed by declines in long-term future performance. Indeed, activist hedge fund attacks, and the efforts to avoid becoming the target of an attack, result in increased leverage, decreased investment in CAPEX and R&D and employee layoffs and poor employee morale.

Several law school professors who have long embraced shareholder-centric corporate governance are promoting a statistical study that they claim establishes that activist hedge fund attacks on corporations do not damage the future operating performance of the targets, but that this statistical study irrefutably establishes that on average the long-term operating performance of the targets is actually improved.

In two recent papers, Professor Yvan Allaire, Executive Chair of the Institute for Governance of Private and Public Organizations, has demonstrated that the statistics these professors rely on to support their theories are not irrefutable and do not disprove the real world experience that activist hedge fund interventions are followed by declines in long-term operating performance. The papers by Professor Allaire speak for themselves:

“Activist” hedge funds: creators of lasting wealth? What do the empirical studies really say?

Hedge Fund Activism and their Long-Term Consequences; Unanswered Questions to Bebchuk, Brav and Jiang

Les « Hedge Funds » contribuent-ils à assurer la croissance à long terme des entreprises ciblées ?

Voici un article publié par IEDP (International Executive Development Programs) et paru sur le site http://www.iedp.com

Comme vous le constaterez, l’auteur fait l’éloge des effets positifs de l’activisme des actionnaires qui, contrairement à ce que plusieurs croient, ajoutent de la valeur aux organisations en opérant un assainissement de la gouvernance.

Je sais que les points de vue concernant cette forme d’activisme sont très partagés mais les auteurs clament que les prétentions des anti-activistes ne sont pas fondées scientifiquement.

En effet, les recherches montrent que les activités des « hedges funds » contribuent à améliorer la valeur ajoutée à long terme des entreprises ciblées.

La lecture de cet article vous donnera un bon résumé des positions en faveur de l’approche empirique. Votre idée est-elle faite à ce sujet ?

Do Hedge Funds Create Sustainable Company Growth ?

Hedge funds get a bad press but are they really a negative force? Looking at their public face, on the one hand we see so the called ‘vulture’ funds that this month forced Argentina into a $1.5bn default, on the other hand we recall that the UK’s largest private charitable donation, £466 million, was made by hedge fund wizard Chris Cooper-Hohn. Looking beyond the headlines the key question is, do hedge funds improve corporate performance and generate sustainable economic growth or not?

Researchers at Columbia Business School, Duke Fuqua School of Business and Harvard Law School looked at this most important question and discovered that despite much hype to the contrary the long-term effect of hedge funds and ‘activists shareholders’ is largely positive. They tested the conventional wisdom that interventions by activist shareholders, and in particular activist hedge funds, have an adverse effect on the long-term interests of companies and their shareholders and found it was not supported by the data.

Their detractors have long argued that hedge funds force corporations to sacrifice long-term profits and competitiveness in order to reap quick short-term benefits. The immediate spike that comes after interventions from these activist shareholders, they argue, inevitably leads to long-term declines in operating performance and shareholder value.

Three researchers, Lucian Bebchuk of Harvard Law School, Alon Brav of Duke Fuqua School of Business, and Wei Jiang of Columbia Business School argue that opponents of shareholder activism have no empirical basis for their assertions. In contrast, their own empirical research reveals that both short-term and long-term improvements in performance follow in the wake of shareholder interventions. Neither the company nor its long-term shareholders are adversely affected by hedge fund activism.

Their paper published in July 2013 reports on about 2,000 interventions by activist hedge funds during the period 1994-2007, examining a long time window of five years following the interventions. It found no evidence that interventions are followed by declines in operating performance in the long term. In fact, contrary to popular belief, activist interventions are followed by improved operating performance during the five-year period following these interventions. Furthermore the researchers discovered that improvements in long-term performance, were also evident when the intervention were in the two most controversial areas – first, interventions that lower or constrain long-term investments by enhancing leverage, beefing up shareholder pay-outs, or reducing investments and, second, adversarial interventions employing hostile tactics.

There was also no evidence that initial positive share price spikes accompanying activist interventions failed to appreciate their long-term costs and therefore tend to be followed by negative abnormal returns in the long term; the data is consistent with the initial spike reflecting correctly the intervention’s long-term consequences.

‘Pumping-and-dumping’ (i.e. when the exit of an activist is followed by long-term negative returns) is much sited by critics. But no evidence was found of this. Another complaint, that activist interventions during the years preceding the financial crisis rendered companies more vulnerable, was also debunked, as targeted companies were no more adversely affected by the crisis than others.

In light of the recent events in Argentina it is salutary to recall this important research. The positive aspect of activist hedge fund activity that it reveals should be born in mind when considering the ongoing policy debates on corporate governance, corporate law, and capital markets regulation. Business leaders, policy makers and institutional investors should reject the anti-hedge fund claims often used by detractors as a basis for limiting the rights and involvement of shareholders, and should support expanding rather than limiting the rights and involvement of shareholders. Boards and their executives should carefully monitor these debates in order to prepare for corporate governance’s evolving policy environment.

La sauvegarde des grands principes de gouvernance | Le mirage du changement !

Voici un article qui présente la conduite des actionnaires activistes comme relativement symbolique, c’est-à-dire exempte de véritables enjeux critiques, paru récemment sur le blogue du Harvard Law School Forum on Corporate Governance.

Les auteurs Marcel Kahan et Edward Rock, professeurs de droit des affaires à l’Université de Pennsylvanie, ont observé que l’ensemble des positions des différents acteurs (actionnaires, activistes, administrateurs, dirigeants …) renforcent les grands principes de la gouvernance corporative en limitant les effets trop drastiques de leurs actions, tout en préservant l’intérêt des principaux protagonistes.

Les revendications des activistes, du point de vue de la gouvernance, sont largement symboliques et ont pour résultats la préservation de la primauté d’une « gouvernance orientée vers les intérêts des actionnaires », une gouvernance qui met l’accent sur les besoins des actionnaires.

La synthèse de l’article est présentée clairement au dernier paragraphe du texte ci-dessous. Quel est votre opinion à ce sujet ?

Croyez-vous que les manœuvres des activistes et des dirigeants donnent lieu à peu de changements significatifs et que celles-ci consistent surtout à renforcer le point de vue d’une gouvernance centrée sur le pouvoir des actionnaires plutôt que sur le pouvoir du conseil d’administration ?

Bonne lecture ! Vos commentaires sont appréciés.

Symbolic Corporate Governance Politics

« Corporate governance politics display a peculiar feature: while the rhetoric is often heated, the material stakes are often low. Consider, for example, shareholder resolutions requesting boards to redeem poison pills. Anti-pill resolutions were the most common type of shareholder proposal from 1987–2004, received significant shareholder support, and led many companies to dismantle their pills. Yet, because pills can be reinstated at any time, dismantling a pill has no impact on a company’s ability to resist a hostile bid. Although shareholder activists may claim that these proposals vindicate shareholder power against entrenched managers, we are struck by the fact that these same activists have not made any serious efforts to impose effective constraints on boards, for example, by pushing for restrictions on the use of pills in the certificate of incorporation. Other contested governance issues, such as proxy access and majority voting, exhibit a similar pattern: much ado about largely symbolic change.

What accounts for this persistent gap between rhetoric and reality? In our article, Symbolic Corporate Governance Politics, we consider several explanations drawn from “public interest” and “public choice” perspectives. Ultimately, we conclude that Thurman Arnold’s “symbolic” view of politics, developed in his magnum opus, The Folklore of Capitalism, complements these explanations to provide a fuller understanding.

From a “public interest” perspective, the pursuit by shareholder activists of reforms with minimal direct impact can be rationalized in a number of ways. For one, the cost of such activism is low, both in relation to the value of public companies and in relation to the portfolio on institutional investors. Moreover, even largely symbolic reforms can have a larger indirect impact: they may educate investors, directors, and managers about the importance of shareholder-centric governance; they may serve as show of strength of shareholder power and thereby lead directors, managers, and policy makes to pay more attention to shareholder interests; or they may be a first step in a longer battle for more meaningful reform.

From a “public choice” perspective, shareholder activists may pursue activism for its own sake, to keep themselves busy (and employed). And even if the stakes are low, pro-management forces may oppose meaningless changes to prove loyalty to their clients and generate business.

These explanations, however, leave several questions unanswered: Why the heated rhetoric? What explains the selection of the largely symbolic issues that are being pursued? If these issues are (wrongly) depicted as important, won’t their pursuit divert energy from other issues that are more consequential?

Thurman Arnold’s theory of the role of symbols, myth, and folklore can provide some answers. As a society, Arnold would argue, we need to believe that managers are held accountable even—and especially—in the largest corporations. It is only because “shareholders” exercise ultimate control over managers that it is acceptable that a small group of managers control huge concentrations of capital and get paid princely sums for doing so. This creates a tension. On the one hand, individual shareholders do not, in fact, play that role. On the other hand, large concentrations of capital are necessary for many businesses operating in world product and capital markets. It thus becomes necessary to develop a procedure for reconciling the ideal with practical reality by constantly attacking “the separation of ownership and control” on rational legal and economic ground, while at the same time never really interfering with it. The battles over shareholder power fulfill this function.

But to serve the ceremonial function of asserting shareholder control, shareholder activists must pick issues where the chances of success are reasonably high. Symbolic activism thus serves everyone’s interests. For shareholder activists, who lack strong monetary incentives that directly reward them for increasing share values, symbolic affirmations of shareholder power has allure and is likely to be supported by other shareholders. For managerialists, losing is acceptable and actual (as opposed to rhetorical) resistance is not too high. Activism keeps the activists busy. Plausible arguments for shareholder benefit, combined with low potential costs, assure little internal opposition.

Our analysis has several implications for governance debates. First, the rhetoric used by activists on all sides should be taken with a large pinch of salt: most issues described as momentous generally are not. Second, one should be aware that symbolic battles may divert attention (for better or for worse) from more meaningful reform. Third, shareholder activists and managers and their defenders all have more complex motivations than maximizing firm value or protecting privileges. Rather than epic battles between the forces of good and evil, governance debates typically involve disputes between different shades of grey. Finally, looking out through Thurman Arnold’s eyes, one may observe all the battles and conclude that we live, if not in the best of all possible worlds, then at least in a pretty good one. Despite the back and forth, corporate governance in the U.S. is characterized by a high degree of stability and slow paced, gradual change. Because we ritually affirm the principle of shareholder control—maintained by the symbolic, and largely harmless, disputes we have discussed in this article—the current system of corporate governance enjoys widespread support. Shareholder activism, rather than undermining the legitimacy of the current system, serves an important, legitimating function by showing that shareholders have power and that reform for the better is possible ».

The full paper is available for download here.

Séparation des fonctions de président du conseil et de chef de la direction : retour sur un grand classique !

Voici le deuxième billet présenté par le professeur Ivan Tchotourian de la Faculté de droit de l’Université Laval, élaboré dans le cadre de son cours de maîtrise Gouvernance de l’entreprise.

Dans le cadre d’un programme de recherche, il a été proposé aux étudiants non seulement de mener des travaux sur des sujets qui font l’actualité en gouvernance de l’entreprise, mais encore d’utiliser un format original permettant la diffusion des résultats. Le présent billet expose le résultat des recherches menées par Nadia Abida, Arnaud Grospeillet, Thomas Medjir et Nathalie Robitaille.

Ce travail revient sur les arguments échangés concernant la dissociation des fonctions de président du conseil d’administration et de chef de la direction. Ce billet alimente la discussion en faisant une actualité comparative des normes et des éléments juridiques, et en présentant les dernières statistiques en ce domaine.

Le papier initial des étudiants a été retravaillé par Nadia Abida afin qu’il correspondre au style du blogue . Bonne lecture ! Vos commentaires et vos points de vue sont les bienvenus.

« Je vous en souhaite bonne lecture et suis certain que vous prendrez autant de plaisir à le lire que j’ai pu en prendre à le corriger. Merci encore à Jacques de permettre la diffusion de ce travail et d’offrir ainsi la chance à des étudiants de contribuer aux riches discussions dont la gouvernance d’entreprise est l’objet ». (Ivan Tchotourian)

Séparation des fonctions de président du conseil et de chef de la direction : retour sur un grand classique

Nadia Abida, Arnaud Grospeillet, Thomas Medjir, Nathalie Robitaille

Anciens étudiants du cours DRT-6056 Gouvernance de l’entreprise

La séparation entre les fonctions de président du conseil d’administration (CA) et du chef de la direction est l’un des facteurs incontournables de l’indépendance des administrateurs. Cette dernière est un indicateur de pratique de bonne gouvernance d’entreprise. Cependant, et malgré l’importance avérée de la séparation des deux fonctions, nombre d’entreprises continuent à en pratiquer le cumul. Les arguments foisonnent de part et d’autre, et ne s’accordent pas sur la nécessité de cette séparation.

redaction-des-statuts-de-sa

Un retour sur une proposition d’actionnaires de la banque JP Morgan démontre la nécessité de ne pas laisser ce sujet sans réflexions. Cette proposition en faveur d’une séparation des fonctions a été émise à la suite d’une divulgation par la société d’une perte s’élevant à 2 milliards de dollars… perte essuyée sous la responsabilité de son PDG actuel [1].

Ce n’est un secret pour personne que cette société a un passif lourd avec des pertes colossales engendrées par des comportements critiquables sur lesquels la justice a apporté un éclairage. Les conséquences de cette gestion auraient-elles été identiques si une séparation des pouvoirs avait était mise en place entre une personne agissant et une personne surveillant ?

Silence du droit et positions ambiguës

Les textes législatifs (lois ou règlements) canadiens, américains ou européens apportent peu de pistes de solution à ce débat. La plupart se montrent en effet silencieux en ce domaine faisant preuve d’une retenue étonnamment rare lorsque la gouvernance d’entreprise est débattue. Dans ses lignes directrices [2], l’OCDE – ainsi que la Coalition canadienne pour une saine gestion des Entreprises dans ses principes de gouvernance d’entreprise [3] – atteste pourtant de l’importance du cloisonnement entre les deux fonctions.

De ce cloisonnement résulte l’indépendance et l’objectivité nécessaires aux décisions prises par le conseil d’administration. Au Canada, le comité Saucier dans son rapport de 2001 et le rapport du Milstein center [4] ont mis en exergue l’importance d’une telle séparation. En comparaison, la France s’est montrée plus discrète et il n’a pas été question de trancher dans son Code de gouvernement d’entreprise des sociétés cotées (même dans sa version amendée de 2013) [5] : ce dernier ne privilégie ainsi ni la séparation ni le cumul des deux fonctions [6].

Quelques chiffres révélateurs

Les études contemporaines démontrent une nette tendance en faveur de la séparation des deux rôles. Le Canadian Spencer Stuart Board Index [7] 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 [8]. 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 [9]. Évoquons à ce titre le cas de Target Corp dont les actionnaires ont refusé la dissociation des deux fonctions [10].

Il faut séparer les fonctions !

Pendant longtemps, il a été d’usage au sein des grandes sociétés par actions, que le poste de président du conseil soit de l’apanage du chef de la direction. Selon les partisans du non cumul, fusionner ces deux fonctions revient néanmoins à réunir dans une seule main un trop grand pouvoir et des prérogatives totalement antagonistes, voir même contradictoires. En ce sens, Yvan Allaire [11] souligne qu’il est malsain pour le chef de la direction de présider aussi le conseil d’administration. Rappelons que le CA nomme, destitue, rémunère et procède à l’évaluation du chef de la direction. La séparation des deux fonctions trouve pleinement son sens ici puisqu’elle crée une contre mesure du pouvoir : le président du CA est chargé du contrôle permanent de la gestion, et le directeur général est en situation de subordination par rapport au CA.

Sous ce contrôle, le directeur général ne peut être que plus diligent et prudent dans l’exercice de ses fonctions, puisqu’il doit en rendre compte au CA. Des idées et décisions confrontées et débattues sont de loin plus constructives que des décisions prises de manière unilatérale. N’y a-t-il pas plus d’esprit dans deux têtes que dans une comme le dit le proverbe ? De plus, les partisans du non cumul avancent d’autres arguments. Il en va ainsi de la rémunération de la direction. Le cumul des deux fonctions irait de pair avec la rémunération conséquente. Celui qui endosse les deux fonctions est enclin à prendre des risques qui peuvent mettre en péril les intérêts financiers de la société pour obtenir une performance et un rendement qui justifieraient une forte rémunération. Par ailleurs, le cumul peut entrainer une négligence des deux rôles au profit de l’un ou de l’autre. Aussi, le choix du non cumul s’impose lorsque l’implication de la majorité ou encore, de la totalité des actionnaires ou membres dans la gestion quotidienne de la société, est faible. Cette séparation permet en effet aux actionnaires ou aux membres d’exercer une surveillance adéquate de la direction et de la gestion quotidienne de ladite société [12].

Attention à la séparation !

Nonobstant les arguments cités plus haut, la séparation des deux fonctions ne représente pas nécessairement une meilleure gestion du conseil d’administration. Les partisans du cumul clament que non seulement l’endossement des deux fonctions par une seule personne unifie les ordres et réduit les couts de l’information, mais que c’est aussi un mécanisme d’incitation pour les nouveaux chefs en cas de transition. Cela se traduit par la facilité de remplacer une seule personne qui détient les deux pouvoirs, à la place de remplacer deux personnes. Par ailleurs, la séparation limiterait l’innovation et diluerait le pouvoir d’un leadership effectif [13] en augmentant la rivalité entre les deux responsables pouvant même aller jusqu’à semer la confusion.

Coûts et flexibilité du choix

En dépit de la critique classique du cumul des fonctions, les deux types de structures sont potentiellement sources de bénéfices et de coûts, bénéfices et coûts que les entreprises vont peser dans leur choix de structure. Les coûts de la théorie de l’agence impliquent des arrangements institutionnels lorsqu’il y a séparation entre les fonctions de président et de chef de la direction [14]. Ces coûts sont occasionnés par exemple par la surveillance du CA sur le chef de la direction. Il devient plus cher de séparer les deux fonctions que de les unifier.

Cependant, une antithèse présentée par Andrea Ovans [15] soutient qu’au contraire il est plus cher d’unifier les deux fonctions que de les séparer. Comment ? Simplement à travers la rémunération (salaire de base, primes, incitations, avantages, stock-options, et les prestations de retraite). L’imperméabilité entre les deux fonctions qui apparaît comme « la » solution en matière de bonne gouvernance pourrait ne pas l’être pour toutes les entreprises.

Si le cumul des fonctions et les autres mécanismes de surveillance fonctionnement bien, pourquoi faudrait-il prévoir un changement ? De surcroit, le « one size fits all » n’est pas applicable en la matière. Devrait-on prévoir les mêmes règles en termes de séparation pour les grandes et petites entreprises ? Rien n’est moins sûr… Le cumul des fonctions apparaît plus adapté aux entreprises de petite taille : ceci est dû à la fluidité de communication entre les deux responsables et à la faiblesse de la quantité d’informations à traiter [16].

[1] Investors seek to split JP Morgan CEO, Chairman http://www.wfaa.com/news/business/192146051.html, <en ligne>, date de consultation : 12 Juillet 2014.

[2] http://www.oecd.org/fr/gouvernementdentreprise/ae/gouvernancedesentreprisespubliques/34803478.pdf, <en ligne>, date de consultation : 12 juillet 2014. Dans le même sens, voir l’instruction générale 85-201 et le rapport Cadbury en 1992.

[3] CCGG : Principes de gouvernance d’entreprise pour la mise en place de conseils d’administration performants, http://www.ccgg.ca/site/ccgg/assets/pdf/Principes_de_gouvernance.pdf, <en ligne>, date de consultation : 12 juillet 2014

[4] « Split CEO/Chair Roles: The Geteway to Good Governance? », http://www.rotman.utoronto.ca/FacultyAndResearch/ResearchCentres/ClarksonCentreforBoardEffectiveness/CCBEpublications/SplitCEO.aspx, <en ligne>, date de consultation : 18 juillet 2014.

[5] Code de gouvernement d’entreprise des sociétés cotées (révisé en juin 2013), http://www.medef.com/fileadmin/www.medef.fr/documents/AFEP-MEDEF/Code_de_gouvernement_d_entreprise_des_societes_cotees_juin_2013_FR.pdf, <en ligne>, date de consultation : 15 juillet 2014.

[6] L’Union européenne ne s’est pas prononcée sur la séparation des deux fonctions. Voir à ce propos Richard Leblanc.

[7] Canadian Spencer Stuart Board Index 2013, https://www.spencerstuart.com/~/media/Canadian-Board-Index-2013_27Jan2014.pdf, <en ligne>, date de consultation : 12 Juillet 2014 ; p. 19.

[8] Public Submissions on Governance Issues, http://www.powercorporation.com/en/governance/public-submissions-governance-issues/may-12-2014-canada-business-corporations-act/#_ftn12, <en ligne>, date de consultation : 18 juillet 2014.

[9] Spencer Stuart Board Index 2013 (US), https://www.spencerstuart.com/~/media/PDF%20Files/Research%20and%20Insight%20PDFs/SSBI13%20revised%2023DEC2013.pdf, <en ligne>, date de consultation : 25 juillet 2014.

[10] Target shareholders narrowly reject splitting CEO, Chairman posts, http://www.bizjournals.com/twincities/news/2014/06/13/target-shareholders-narrowly-reject-splitting-ceo.html, <en ligne>, date de consultation : 18 juillet 2014.

[11] Yvan Allaire, « Un « bon » président du CA ? », http://droit-des-affaires.blogspot.ca/2007/11/un-bon-prsident-du-ca.html, <en ligne>, date de consultation : 23 juillet 2014.

[12] À ce propos, voir André Laurin, « La fonction de président de conseil d’administration », http://www.lavery.ca/upload/pdf/fr/DS_080203f.pdf, <en ligne>, date de consultation : 21 juillet 2014, p. 2.

[13] Aiyesha Dey, Ellen Engel and Xiaohui Gloria Liu, « CEO and Board Chair Roles: to Split or not to Split? », December 16, 2009, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1412827, <en ligne>, date de consultation : 22 juillet 2014.

[14] Idem.

[15] Voir Coûts élevés associés à la combinaison des rôles du président du conseil et du président de la société : https://jacquesgrisegouvernance.com/2014/06/29/couts-eleves-associes-a-la-combinaison-des-roles-du-president-du-conseil-et-du-president-de-la-societe/, <en ligne>, date de consultation : 21 juillet 2014.

[16] Aiyesha Dey, « What JPMorgan Shareholders Should Know About Splitting the CEO and Chair Roles », Research, http://blogs.hbr.org/2013/05/research-what-jpmorgan-shareho/, <en ligne>, date de consultation : 21 juillet 2014.

Les investisseurs réclament plus d’engagement et d’ouverture de la part du conseil d’administration

Les investisseurs et les actionnaires réclament avec de plus en plus d’insistance la possibilité d’engager des communications avec les administrateurs.

L’article d’Andrew Ross Sorkin* publié dans DealBook Column du NYT rappelle les principaux arguments des actionnaires activistes et des investisseurs institutionnels qui militent en faveur de cette exigence ainsi que les raisons traditionnelles qui amènent les conseils d’administration à rester à l’écart de ces récentes demandes.

Je crois, comme l’auteur, que les entreprises publiques doivent adopter des politiques qui encadrent clairement le processus d’engagement entre actionnaires/investisseurs et administrateurs de sociétés. Voici un extrait de cet article. Bonne lecture !

Investors to Directors, ‘Can We Talk?’

What if lawmakers never spoke to their constituents?

Oddly enough, that’s exactly how corporate America operates. Shareholders vote for directors, but the directors rarely, if ever, communicate with them.

Within the clubby world of directors, communicating with shareholders, big or small, is overtly frowned upon: “We endorse the principle that direct engagement involving directors should not be a routine method of engagement for most U.S. companies and for most investors,” according to the Conference Board Governance Center Task Force on Corporate/Investor Engagement.

That’s why it was so unusual for the chairmen of at least 1,000 large United States public companies to receive a letter this month from a group of shareholders representing more than $10 trillion in assets with a demand: Talk to us. The letter, signed by representatives of some of the biggest investment groups, including BlackRock, Vanguard and Calstrs, insisted that boards open up.

“Engagement between public company directors and their company’s shareholders is an idea whose time has come,” wrote the group, known as the Shareholder-Director Exchange. “We believe that U.S. public companies, in consultation with management, should consider formally adopting a policy providing for shareholder-director engagement.”

What was uncommon about the letter was that it came not from activist investors like Carl C. Icahn or William A. Ackman, but from institutional investors that until recently had traditionally always supported whatever a company’s board recommended. Now, those investors want a dialogue.

The reason boards have long shunned speaking with investors is multifaceted. Management — the chief executive, chief financial officer and so on — usually have meetings with the company’s biggest shareholders. Some directors avoid meetings. worried about speaking with one voice. Most don’t consider it their responsibility. Some are anxious about accidentally disclosing sensitive information. A memo to directors on this topic from the law firm Latham & Watkins was explicitly titled “Dangerous Talk?”

Some chief executives are insecure and don’t want shareholders to get too close to their boards for fear they will have undue influence. After all, most directors rely directly on management and their presentations to understand what’s going on inside the company and what shareholders think.

And then there is this: “Many top executives seem to think that board members cannot be trusted with such interactions,” according to Harvard Business Review. “Yet if directors cannot be trusted to meet with and listen to shareholders, how can they be expected to competently govern a corporation?”

…..

Vous pouvez également lire la lettre d’un investisseur institutionnel à l’intention du conseil d’administration, en particulier à l’attention du président du conseil, parue dans le Financial Times du 25 juillet 2014. Vous devrez vous inscrire pour consulter les pages du FT.

Investors want direct access to the boardroom

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Les investissements des fonds activistes créent-ils une réelle valeur à long terme ?

Récemment, plusieurs experts de la gouvernance des sociétés se sont questionnés (et prononcés) sur la nature de la création de valeur et sur les conséquences à long terme apportées par les fonds de couverture (« edge funds »).

Ce court billet de Martin Lipton, associé principal de la firme Wachtell, Lipton, Rosen & Katz, spécialisée dans les activités de fusions et acquisitions ainsi que dans les questions qui touchent la gouvernance et les stratégies d’affaires, est basé sur la réponse que la firme adresse à une importante étude empirique des auteurs Lucian Bebchuk, Alon Brav, and Wei Jiang sur les bénéfices à long terme des actionnaires activistes.

Cette étude est disponible au lien suivant : The Long-Term Effects of Hedge Fund Activism. Les résultats sont résumés dans un billet du Forum post et dans le Wall Street Journal op-ed article.

Ce qu’il y a de particulier dans ce court billet de Lipton, c’est qu’il vante les mérites d’une étude de l’IGOPP qui pourfend la méthodologie de l’étude économétrique de Bebchuk et al.

Je vous invite donc au débat qui fait rage dans les cercles de la gouvernance en vous référant au document des auteurs Allaire et Dauphin.

“Activist” hedge funds

Voici cette courte introduction de Lipton qui illustre parfaitement sa prise de position en faveur des arguments de l’étude de l’IGOPP. Bonne lecture ! Vos commentaires sont appréciés.

About a year ago, Professor Lucian Bebchuk took to the pages of the Wall Street Journal to declare that he had conducted a study that he claimed proved that activist hedge funds are good for companies and the economy. Not being statisticians or econometricians, we did not respond by trying to conduct a study proving the opposite. Instead, we pointed out some of the more obvious methodological flaws in Professor Bebchuk’s study, as well as some observations from our years of real-world experience that lead us to believe that the short-term influence of activist hedge funds has been, and continues to be, profoundly destructive to the long-term health of companies and the American economy.

Recently, the Institute for Governance of Private and Public Organizations issued a paper that more systematically examines the flaws of Professor Bebchuk’s econometric and statistical models, concluding that “the Bebchuk et al. paper illustrates the limits of the econometric tool kit, its weak ability to cope with complex phenomena; and when it does try to cope, it sinks quickly into opaque computations, remote from the observations on which these computations are supposedly based.” The paper also observes that “activist hedge funds operate in a world without any other stakeholder than shareholders. That is indeed a myopic concept of the corporation bound to create social and economic problems, were that to become the norm for publicly listed corporations.”

Further the Institute’s paper concludes: “[T]he most generous conclusion one may reach from these empirical studies has to be that “activist” hedge funds create some short-term wealth for some shareholders (and immense riches for themselves) as a result of investors, who believe hedge fund propaganda (and some academic studies), jumping in the stock of targeted companies. In a minority of cases, activist hedge funds may bring some lasting value for shareholders but largely at the expense of workers and bond holders; thus, the impact of activist hedge funds seems to take the form of wealth transfer rather than wealth creation.”

The Institute’s paper, “Activist” hedge funds, is well worth reading for its academically rigorous, as well as common sense, refutation of Bebchuk’s claims.

L’étendue de la divulgation des facteurs de risque attribuée aux mesures règlementaires

Je partage avec vous aujourd’hui les résultats d’une étude effectuée par Karen K. Nelson, professeure de comptabilité à l’Université Rice et Adam C. Pritchard, professeur de droit à l’Université du Michigan. Cette étude est présentée sommairement sur le blogue du Harvard Law School; elle concerne l’étendue de la divulgation des facteurs de risque lorsque l’on compare les mesures règlementaires volontaires aux mesures obligatoires imposées par la SEC.

L’étude montre les différences des deux situations règlementaires en termes de la quantité de risques divulgués, de l’importance des mises à jour annuelles et de la compréhension des facteurs de risques par les lecteurs.

Les auteurs font le constat que la divulgation des facteurs de risque ayant donné lieu à des contestations judiciaires est beaucoup plus complète dans les années qui suivent. L’étude conclue que les mesures de divulgation imposées ont porté fruits.

Voici un extrait de l’article. Bonne lecture !

Shift from Voluntary to Mandatory Disclosure of Risk Factors

In our paper, Carrot or Stick? The Shift from Voluntary to Mandatory Disclosure of Risk Factors, we investigate public companies’ disclosure of risk factors that are meant to inform investors about risks and uncertainties. We compare risk factor disclosures under the voluntary, incentive-based disclosure regime provided by the safe harbor provision of the Private Securities Litigation Reform Act, adopted in 1995, and the SEC’s subsequent disclosure mandate, adopted in 2005.

The PSLRA’s safe harbor provision shields firms from liability for forward-looking statements provided they are accompanied by “meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward looking statement.” The voluntary disclosure of risk factors provides a direct means for firms to reduce the often substantial expected costs of securities fraud class actions. Thus, the safe harbor provides an important incentive for public companies to disclose risk factors, but that incentive is likely to vary with firms’ perception of their potential vulnerability to securities class actions.

Risk factor disclosure shifted from a voluntary, incentive-based regime to a mandatory one in 2005 when the SEC added Item 1A to Form 10-K. Item 1A requires most public companies to disclose risk factors annually and update them quarterly as necessary in Form 10-Q.

We study how these two changes in the law affect the disclosure of risk factors. Our tests focus on three questions: First, we examine whether litigation risk plays an important role in firms’ disclosure practices, particularly during the voluntary disclosure period from 1996 to 2005. Second we test whether the SEC’s 2005 disclosure mandate narrows the gap between firms with a litigation–related incentive to provide risk factor disclosure and those compelled to disclose because of the mandate. Third, we assess whether differences in the quality of the disclosure affect its usefulness to investors in assessing firm risk.

To conduct our analyses, we use three metrics designed to capture characteristics of “meaningful” disclosure suggested by the PSLRA’s legislative history, subsequent court decisions, and the SEC:

(i) the amount of risk factor disclosure;

(ii) the extent to which the risk factors are updated year-to-year; and

(iii) the readability of the risk factors.

All else equal, risk factor disclosure is more “meaningful” if it is comprehensive, if it is not a boilerplate copy from the prior year, and if it can be understood by the average investor.

We use these disclosure metrics to investigate whether firms at greater risk of securities fraud lawsuits provide more “meaningful” risk factor disclosure, and how the SEC’s 2005 mandate affects this disclosure. Controlling for other factors that could affect the disclosure decision, we find that, on average, firms with greater litigation risk provide more risk factor disclosure, revise their disclosure more from year-to-year, and use more readable language than firms with low litigation risk. When we allow these effects to vary with the disclosure regime, we find significant differences in disclosure between high and low risk firms in the voluntary regime. After the SEC mandate in 2005, however, firms with low litigation risk increase converge with high risk firms in their risk factor disclosure.

We conclude that the SEC’s mandate had a material effect on the disclosure decisions of companies that had relatively little incentive to provide meaningful disclosure under the PSLRA’s safe harbor provision alone. We also find, however, that firms with high litigation risk continue to provide a significantly greater amount of risk factor disclosure in the mandatory regime. Moreover, in both disclosure regimes, high risk firms disclose significantly more risk factor information as litigation risk increases.

Finally, we find evidence that risk factor disclosures provide information useful to investors in assessing future firm risk, although here again the findings vary predictably with firms’ disclosure incentives and the disclosure regime. For firms with high litigation risk and hence greater incentive to provide meaningful disclosure, one-year-ahead beta and stock return volatility are increasing in the unexpected portion of risk factor disclosure. Moreover, in the voluntary disclosure regime, firms with high litigation risk provide risk factor disclosures that are significantly more informative about systematic and idiosyncratic risk than firms with low litigation risk. Subsequent to the SEC mandate, however, there is no statistical difference, consistent with a convergence in the meaningfulness of risk factor disclosures.

Overall, our findings suggest managers respond to high ex ante litigation risk with risk factor disclosures designed to reduce the expected costs of litigation. In contrast, low risk firms perceiving little net benefit to disclosure did not provide meaningful risk factor disclosure until compelled to do so by the SEC. Understanding risk factor disclosures is important to managers and legal counsel responsible for formulating a disclosure strategy, to regulators and courts charged with evaluating the quality of these disclosures, and to investors interested in assessing the risks posed by firms.

The full paper is available for download here.

Le vote obligatoire des actionnaires dans les cas de changements importants prévient-il les mauvaises transactions ?

Quelles transactions devraient requérir l’approbation obligatoire de tous les actionnaires ? L’article de Marco Becht, professeur de gouvernance corporative à l’Université libre de Bruxelles; Andrea Polo, du département d’économie et Business à l’Universitat Pompeu Fabra et Barcelona GSE; et Stefano Rossi du département de finance de Purdue University, s’intéresse à la limite du pouvoir qu’il est nécessaire de laisser aux actionnaires plutôt qu’au conseil d’administration.

En Grande-Bretagne (UK), les offres faites à des entreprises-cibles de grandes tailles sont considérées comme des transactions de classe 1 et donc obligatoirement sujettes à l’approbation des actionnaires. Les résultats de cette étude montrent que les bénéfices financiers résultant d’une telle approche sont très importants.

Plusieurs juridictions ont choisi d’exclure les acquisitions de tailles importantes du vote de l’actionnariat, au détriment de l’avoir des actionnaires selon l’étude. Bien entendu, lorsqu’une transaction change profondément la nature de l’entreprise et peut potentiellement avoir des conséquences importantes sur la valeur des actions, celle-ci doit être traitée lors d’une assemblée extraordinaire des actionnaires.

« Our paper infers that mandatory voting makes boards more likely to refrain from overpaying or from proposing deals that are not in the interest of shareholders »

Voici un extrait de l’article publié dans le Harvard Law School Forum on Corporate Governance and Financial Regulation. Vous pouvez télécharger tout le document ici.

Bonne lecture ! Vos commentaires, portant sur la souveraineté des C.A., sont les bienvenus.

Does Mandatory Shareholder Voting Prevent Bad Corporate Acquisitions ?

In our paper, Does Mandatory Shareholder Voting Prevent Bad Corporate Acquisitions?, which was recently made publicly available as an ECGI and Rock Center Working Paper on SSRN, we examine how much power shareholders should delegate to the board of directors. In practice, there is broad consensus that fundamental changes to the basic corporate contract or decisions that might have large material consequences for shareholder wealth must be taken via an extraordinary shareholder resolution (Rock, Davies, Kanda and Kraakman 2009). Large corporate acquisitions are a notable exception. In the United Kingdom, deals larger than 25% in relative size are subject to a mandatory shareholder vote; in most of continental Europe there is no vote, while in Delaware voting is largely discretionary.

The consequences for Delaware corporation shareholders are well documented in the relevant finance literature. A large percentage of deals initiated by U.S. acquirers destroy shareholder value with aggregate announcement losses running in billions of U.S. dollars. Shareholder voting exists, but it is voluntary and therefore endogenous. Deals facing potential shareholder opposition can be restructured to avoid a vote, as was recently the case with Kraft Inc.’s bid for Cadbury Plc, after public opposition from Warren Buffett. Shareholder voting in the United States is not a binding constraint and previous empirical studies based on U.S. data are rendered inconclusive.

Under the U.K. listing rules, bids for relatively large targets are called “Class 1 transactions” and are subject to mandatory shareholder approval. In a representative sample of acquirers listed on the main market in London, Class 1 transactions are associated with an aggregate gain to acquirer shareholders of $13.6 billion, over 1992-2010. Similar U.S. transactions in terms of size and other observable characteristics that are not subject to shareholder approval are associated with an aggregate loss of $210 billion for acquirer shareholders over the same period; and smaller Class 2 U.K. transactions, also not subject to shareholder approval, are associated with an aggregate loss of $3 billion. The findings are robust to various controls for deal characteristics and also hold at the U.K. mandatory voting threshold, where deals are very similar except in their voting status.

How does mandatory voting bring about these positive Class 1 results? Our paper infers that mandatory voting makes boards more likely to refrain from overpaying or from proposing deals that are not in the interest of shareholders. We find that shareholders never voted against Class 1 transactions ex-post and deals that were poorly received by the market at announcement were often dropped before they reached the voting stage. The results show that giving shareholder a direct decision right over large transactions can have a positive causal impact by discouraging bad corporate acquisitions.

Many jurisdictions have chosen to exclude large acquisitions from the list of fundamental changes that are outside the scope of delegated board authority. The advantages of board delegation such as reduced legal costs and greater speed and flexibility are shown to be preferred to explicit shareholder approval. This study shows that the benefits of mandatory voting on large corporate acquisitions can be large, shedding new light on this trade-off.

Le bon « comply or explain » selon la Commission européenne

Ce billet est une synthèse d’un article, plus long et davantage juridique, que le professeur Ivan Tchotourian publiera sur le blogue du BDE (Bulletin de Droit Économique de la Faculté de Droit de l’Université Laval).

Lorsque le blogue du BDE publiera l’article, le lecteur sera renvoyé à l’article de notre blogue. Bonne lecture !

Le bon « comply or explain » selon la Commission européenne

par Ivan Tchotourian

Le 9 avril 2014, la Commission européenne (1) a présenté dans la lignée du Plan d’action qu’elle a diffusé en décembre 2012 une proposition de Recommandation sur la qualité de l’information sur la gouvernance d’entreprise [1]. Certes non obligatoire, le signal envoyé par l’Union européenne n’en est pas moins significatif sur ce que devrait dorénavant être une bonne politique de « comply or explain » (2) de la part des entreprises. Que propose finalement la Commission européenne pour améliorer la situation ? Pas de recette miracle, mais des préconisations de bon sens qui sont les suivantes :

(1) Étendre la portée de la déclaration : les sociétés devraient rendre compte de la manière dont elles se sont conformées aux codes applicables en ce qui concerne les aspects susceptibles d’être les plus importants pour les actionnaires (paragraphe 5);

(2) Améliorer l’accessibilité de l’information : les sociétés sont encouragées à mettre en ligne les informations contenues dans leurs déclarations (paragraphe 6);

(3) Faire preuve d’une grande pédagogie dans la fourniture des informations…

(a) … De conformité : « Les informations peuvent être présentées sous la forme d’une déclaration générale ou bien disposition par disposition, du moment qu’elles sont informatives et utiles aux actionnaires, aux investisseurs et aux autres parties prenantes. Les sociétés devraient éviter de faire des déclarations trop générales, qui pourraient ne pas couvrir certains aspects importants pour les actionnaires, ainsi que des déclarations dans lesquelles elles se contentent de cocher des cases et qui n’ont qu’une faible valeur informative. De même, elles devraient également éviter de fournir des informations trop longues, qui pourraient ne pas permettre une bonne lecture » (considérant 16).

(b) … D’explication en cas de dérogation : la Commission européenne explicite la philosophie de la Section III de la Recommandation qui est le cœur de son initiative dans les considérants 17 et 18 que nous reprenons ici. « Il est très important que des informations appropriées sur les dérogations aux codes applicables et les raisons de ces dérogations soient communiquées, afin que les parties prenantes puissent prendre des décisions en connaissance de cause au sujet des sociétés. […] Les sociétés devraient clairement indiquer à quelles recommandations du code elles ont dérogé et, à chaque fois, fournir une explication concernant la manière dont la société y a dérogé, les raisons de cette dérogation, comment la décision de déroger à une recommandation a été prise, les limites dans le temps de la dérogation et les mesures qui ont été adoptées pour garantir que l’action de la société reste conforme aux objectifs de la recommandation et au code. Lorsqu’elles fournissent ces informations, les sociétés devraient éviter d’utiliser des formules toutes faites et mettre l’accent sur le contexte spécifique à la société qui explique la dérogation à une recommandation. Les explications devraient être structurées et présentées de telle manière qu’elles puissent être facilement comprises et utilisées. Il sera ainsi plus facile aux actionnaires d’engager un dialogue constructif avec la société ».

(4) Mettre en place un suivi efficace pour inciter les sociétés à se conformer à un code de gouvernement d’entreprise ou à expliquer le non-respect de ce code ((paragraphe 11).

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[1] Commission européenne, « Recommandation sur la qualité de l’information sur la gouvernance d’entreprise (« appliquer ou expliquer ») », 2014/208/UE, 9 avril 2014 : JOUE L. 109/43 12 avril 2014.

[2] Le « comply or explain » se trouve davantage explicité dans ses aspects juridiques sur le blogue « Gouvernance et services financiers » du Bulletin de droit économique : http://www.droit-economique.org/?page_id=2304.

Bras de fer entre Osisko et Goldcorp | Réflexions sur le rôle des administrateurs

Dans le cadre du cours à la maîtrise de Gouvernance de l’entreprise (DRT-6056) dispensé à la Faculté de droit de l’Université Laval, le professeur Ivan Tchotourian a bénéficié du Programme d’appui au développement pédagogique 2013-2014 et il a mis en place des méthodes innovantes d’apprentissage. Dans le cadre de ce programme, il a été proposé aux étudiants non seulement de mener des travaux de recherche sur des sujets qui font l’actualité en gouvernance de l’entreprise, mais encore d’utiliser un format original permettant la diffusion des résultats. Le présent billet expose le résultat des recherches menées par M. Philippe Côté et M^mesPatricia Gingras et Émilie Le-Huy.

Ce travail revient sur l’offre publique hostile qui a été lancée en janvier 2014 par l’entreprise Goldcorp sur la société québécoise aurifère Osisko et ouvre le débat entourant le contenu des devoirs fiduciaires des administrateurs.

Je vous en souhaite bonne lecture et suis certain que vous prendrez autant de plaisir à le lire que j’ai pu en prendre à le corriger. Merci encore à Jacques de permettre la diffusion de ce travail et d’offrir ainsi la chance à des étudiants de contribuer aux riches discussions dont la gouvernance d’entreprise est l’objet.

Ivan Tchotourian

Bras de fer entre Osisko et Goldcorp : réflexions sur le rôle des administrateurs

En janvier 2014, la minière vancouvéroise Goldcorp a lancé une offre publique d’achat dans le but de prendre le contrôle de la minière Osisko, une compagnie québécoise aurifère exploitée à Malartic, en Abitibi, et employant près de huit cent personnes. Osisko n’exploite pas seulement la plus grosse mine du Québec, mais aussi la plus grosse mine d’or du Canada.

D’« Osisko pour tous » à « tous pour Osisko »

Considérant que l’offre de Goldcorp ne s’insérait pas dans l’intérêt de la société et de ses parties prenantes, le conseil d’administration d’Osisko a fait connaître son désaccord à cette offre publique d’achat, devenue dès lors « hostile » (ci-après « OPA hostile »), et a multiplié depuis les mesures défensives dans l’espoir de contrer celle-ci et de protéger sa société. Elle a ainsi saisi la Cour supérieure[1] et sollicité de nouveaux investisseurs. Tel que l’illustre l’importante couverture médiatique entourant la guerre ouverte ayant cours entre Osisko et Goldcorp, cette dernière ne laisse personne indifférent. Il faut reconnaître qu’une prise de contrôle de la société Osisko par Goldcorp pourrait vraisemblablement mener à la perte d’un siège social important pour le Québec qui verrait un grand moteur économique lui échapper, ce qui n’est pas sans inquiéter les parties prenantes d’Osisko. La bataille d’Osisko a récemment connu un nouveau souffle avec l’arrivée d’un chevalier blanc, mettant à profit certaines des parties prenantes de sa société[2] et augmentant ainsi considérablement ses chances de bloquer l’OPA hostile de Goldcorp[3]. Soulignons toutefois que la partie est loin d’être gagnée puisque Goldcorp a récemment bonifié son offre afin de concurrencer celle du chevalier blanc d’Osisko, la minière torontoise Yamana[4].

Du « déjà-vu » sous le thème des OPA hostiles

Alors que l’aventure d’Osisko se poursuit, celle-ci ramène au premier plan les préoccupations énoncées par la communauté des affaires au cours des dernières années, alors que Rona et Fibrek faisaient face à la menace d’une OPA hostile. Elle rappelle également, par voie de conséquences, les recommandations que l’Autorité des marchés financiers (ci-après l’« AMF ») ainsi que le groupe de travail mandaté par le gouvernement (ci-après le « Groupe de travail ») ont respectivement formulées récemment en vue d’améliorer la protection des sociétés eu égard aux OPA hostiles[5]. Elle met à nouveau en lumière les incohérences du droit des sociétés et du droit boursier devant guider les décisions des administrateurs dans l’exercice de leur devoir fiduciaire. La bataille entre Osisko et Goldcorp relance un débat qui ne s’est finalement jamais conclu : quelle discrétion devrait être accordée aux administrateurs d’une société dans l’exercice des moyens défensifs visant à contrer une OPA hostile ?

Une question d’intérêt

Rappelons que les administrateurs d’une société doivent en tout temps agir dans l’intérêt de la société en vertu des lois québécoise et canadienne[6]. Ces lois ne définissant pas clairement le critère de « l’intérêt de la société », celui-ci demeure sujet à interprétation. Il appert d’ailleurs des récents développements en gouvernance qu’il y a effectivement matière à interprétation : l’intérêt de la société oscille toujours entre sa conception traditionnelle, fondée sur la primauté des actionnaires, soutenue par une réglementation boursière formaliste, commandant de favoriser les actionnaires envers et contre tout, et son courant plus libéral, largement influencé par nos voisins américains, puis supportée par d’importantes décisions de la Cour suprême du Canada, telles que les causes Peoples[7] et BCE[8]. Il en ressort ainsi que la grande déférence qu’accordent les tribunaux judiciaires aux décisions des administrateurs[9] se voit limitée, par ailleurs, par la réglementation des autorités canadiennes en valeurs mobilière qui leur commande de garantir le libre choix des actionnaires de la société, à qui l’OPA hostile est adressée[10]. Bien que cette réglementation se justifie aisément en raison du contrôle qu’elle permet d’exercer sur l’opportunisme des administrateurs de la société, il n’en demeure pas moins qu’elle réduit considérablement la discrétion des administrateurs dans l’évaluation du meilleur intérêt de la société, lequel prendra naturellement des allures traditionnelles.

L’espoir du renouveau

Par leur nature fortement inspirée du droit émanant du Delaware[11], les recommandations de l’AMF et du Groupe de travail semblent s’insérer dans une volonté de plus en plus populaire d’élargir la discrétion des administrateurs, afin qu’ils puissent considérer plus librement l’intérêt des parties prenantes dans l’exercice de leur pouvoir décisionnel face à une OPA hostile, ce qui pourrait contribuer d’autant à la clarification de leur devoir fiduciaire dans un tel contexte. Cependant, ces mesures n’auront rien d’une panacée tant que les autres provinces canadiennes n’adopteront pas des mesures semblables à celles proposées par l’AMF et n’emboîteront pas le pas au Québec, ce qui est loin d’être chose faite[12].

Le dernier acte

Pour l’heure, il semble bien que le salut d’Osisko repose entièrement sur l’ardeur de ses administrateurs à préserver l’intérêt à long terme de la société, qui s’inscrit du même coup dans l’intérêt de ses parties prenantes. Dans un monde où le meilleur intérêt de la société ne fait pas consensus, laissant planer le spectre d’une lourde responsabilité à l’encontre de toute décision des administrateurs s’éloignant de la traditionnelle conception de la primauté des actionnaires, il y a lieu de se demander jusqu’où les administrateurs pourront porter leur étendard avant de se voir attribuer l’étiquette des opportunistes.

Philippe Côté

Patricia Gingras

Émilie Le-Huy

Anciens étudiants du cours DRT-6056 Gouvernance de l’entreprise

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[1] Osisko, qui reprochait à Goldcorp d’avoir agi de mauvaise foi dans le cadre de la présentation de son OPA, a finalement retiré sa poursuite. Voir Agence France-Presse, « Osisko retire sa poursuite contre Goldcorp », affaires.lapresse.ca, 3 mars 2014.

[2] Lesaffaires.com, « Osisko trouve son sauveur: Yamana Gold », lesaffaires.com, 2 avril 2014 ; Sylvain Larocque, « La Caisse appuie le chevalier blanc d’Osisko », affaires.lapresse.ca, 2 avril 2014.

[3] En effet, avec l’aide de la Caisse de dépôt et de placement du Québec ainsi que l’Office d’investissement du Régime de pensions du Canada (OIRPC), l’entreprise torontoise Yamana Gold propose d’acheter la moitié de la société aurifère québécoise pour un montant 1,37 milliard, une offre qui vient concurrencer celle de Goldcorp. Voir J.-P. Décarie, « Osisko, un très bon coup de la Caisse », affaires.lapresse.ca, 5 avril 2014.

[4] Lesaffaires.com, « Goldcorp bonifie son offre pour Osisko », lesaffaires.com, 10 avril 2014.

[5] L’AMF propose dans son rapport des modifications radicales de la règlementation concernant le rôle des régulateurs de valeurs mobilières. Selon certains experts, ses propositions se rapprochent de la législation du Delaware, où plus de 60 % des grandes entreprises ont leur siège juridique.Voir le rapport de l’AMF : AUTORITÉ DES MARCHÉS FINANCIERS, Un regard différent sur l’intervention des autorités en valeurs mobilières dans les mesures de défense, Document de consultation, Montréal, 2013. Voir également à ce sujet Y. allaire, « Le Québec : sièges sociaux et prises de contrôle », lesaffaires.com, 24 février 2014. Quant aux recommandations du Groupe de travail, voir Groupe de travail sur la protection des entreprises au Québec, Le maintien et le développement des sièges sociaux au Québec, Québec, Gouvernement du Québec, 2014.

[6] Loi sur les sociétés par actions, L.R.Q. c. S-31.1, art. 119 ; Loi canadienne sur les sociétés par actions, L.R.C. 1985, c. C-44, art. 122.

[7] Magasins à rayons Peoples inc. c. Wise, [2004] 3 R.C.S. 461.

[8] BCE Inc. c. Détenteurs de débentures de 1976, [2008] 3 R.C.S. 560.

[9] Sur la règle de l’appréciation commerciale, voir R. Crête et S. Rousseau, Droit des sociétés par actions, 3^e éd., Montréal, Éditions Thémis, 2011, aux par. 1036-1058.

[10] Règlement 62-104 sur les offres publiques d’achat et de rachat, L.R.Q. c. V-1.1, r. 35 ; Avis 62-202 relatif aux mesures de défense contre une offre publique d’achat, Bulletin hebdomadaire, vol. XXXIV, n^o 28, 18 juillet 2003.

[11] Sur le droit du Delaware, voir S. Rousseau et P. Desalliers, Les devoirs des administrateurs lors d’une prise de contrôle : étude comparative du droit du Delaware et du droit canadien, Montréal, Édtions Themis, 2007.

[12] Pensons notamment aux défis que représente l’harmonisation d’un tel régime avec l’ensemble des législations fédérales et provinciales (autres que québécoises) auxquelles seront confrontées tôt ou tard les entreprises québécoises désirant s’inscrire à la Bourse de Toronto. Voir M. Vallières, « Québec devrait s’aligner avec les provinces et Ottawa », lesaffaires.com, 22 février 2014.

La saga d’American Apparel | Une affreuse gouvernance

Voici un article publié par Gael O’Brien dans Business Ethics sur la saga de la gouvernance à American Apparel. Le fondateur Charney est en guerre contre son conseil d’administration pour une foule de raisons, valables à mon point de vue.

La situation est d’autant plus saugrenue que le président Charney est responsable de la nomination des membres du C.A. !

Je vous invite à une lecture pimentée d’une situation surréelle dont vous trouverez un extrait ci-dessous.

American Apparel: Sex, Power and Terrible Corporate Governance

The American Apparel story gets crazier by the moment.

Actions taken by the company’s board two weeks ago to attempt to remove founder Dov Charney as chairman and CEO have prompted him to launch a counteroffensive to regain control of American Apparel. Working with hedge fund investors, Charney has borrowed money to increase his shares in the company to 43 percent and is threatening a proxy fight. But the hedge fund investors working with Charney are now negotiating with the very board that fired him – and there’s a possibility that a new management team could be appointed that does not include Charney.

Whether Charney is successful or not, the result of his past leadership is an American Apparel characterized by two faces in opposition to each other. When that happens, the worst face eventually outweighs the best. The retail company’s attempts at socially responsible practices — clothes touted as ethically made in the United States – have ended up being plowed under by the repugnant behavior of its leader, who sexualized the workplace as a stalking ground for employee relationships called consensual, disregarding disparity of age and power.

American Apparel’s drama illustrates two key problems: In companies where there is a dominant founder running the company according to the beat of his (or her) own drum, how hands-on can a hand-picked board be when it is necessary to reign in the founder? And, when ethical issues surface in a company with a sexually provocative brand image, how does a hand-picked board ensure a clear stand is taken?

Charney’s hand-picked board supported him for years through several very public sexual harassment lawsuits — not appearing to reign in his philosophy that a sexually-charged workplace fosters creativity; it authorized a quiet, internal investigation this year which uncovered examples where they said Charney misused company funds and didn’t prevent the posting of naked photos of a former employee who had sued him for sexual harassment a few years before.

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Gael O’Brien, a Business Ethics Magazine columnist, is a consultant, executive coach, and presenter focused on building leadership, trust, and reputation. She publishes the The Week in Ethics and is The Ethics Coach columnist for Entrepreneur Magazine.

Une subvention de recherche de l’AMF à Ivan Tchotourian

L’Autorité des marchés financiers (AMF) a octroyé au professeur Ivan Tchotourian, de la Faculté de droit de l’Université Laval, par le biais du Fonds pour l’éducation et la saine gouvernance (FESG), une subvention de 60 000 dollars pour une durée de deux ans, pour financer son projet de recherche intitulé « Le droit de vote des actionnaires en question ».

Le FESG soutient des projets axés sur la protection et l’éducation des investisseurs, la promotion de la gouvernance et l’amélioration des connaissances, dans tous les domaines liés à la mission de l’Autorité. Il favorise, entre autres, le développement et la transmission des connaissances en matière d’éducation financière et de gouvernance.

Ivan Tchotourian enseigne en droit des sociétés et gouvernance des entreprises. Il codirige par ailleurs le Centre d’études en droit économique et anime le blogue Contact : Droit, entreprise et citoyen.

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Séparation des fonctions de président du conseil et de chef de la direction : retour sur un grand classique

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Le bon « comply or explain » selon la Commission européenne

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Bras de fer entre Osisko et Goldcorp : réflexions sur le rôle des administrateurs

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