Catégorie : Indépendance des administrateurs

L’évolution du statut d’administrateur indépendant en 2017 | EY


Comment a évolué la situation du statut d’indépendance des administrateurs en 2017 ?

La publication d’EY est très intéressante à cet égard ; elle tente de répondre à cette question et elle brosse un tableau de la composition des conseils d’administration en 2017.

L’étude effectuée par l’équipe de Steve W. Klemash* auprès des entreprises du Fortune 100 montre clairement l’importance accrue accordée au critère d’administrateur indépendant au fil des ans.

Ainsi, au cours des deux dernières années, 80 % des administrateurs nommés par les actionnaires avaient la qualité d’administrateurs indépendants.

La plupart des nouveaux administrateurs avaient une expertise en finance et comptabilité et 44 % de ceux-ci ont été nommés sur le comité d’audit.

Cette année, 54 % des nouveaux arrivants étaient des personnes qui n’étaient pas CEO, comparativement à 51 % l’année précédente.

On compte 40 % de femmes parmi les nouveaux administrateurs en 2017.

Également, les nouveaux administrateurs sont plus jeunes : 15 % ont moins de 50 ans comparativement à 9 % l’année précédente. De plus, 85 % des nouveaux administrateurs avaient entre 50 ans et 67 ans.

Les entreprises recherchent une plus grande diversité de profils d’origine, d’expertises, d’habiletés et d’expériences.

J’ai tenté de résumer les principales conclusions de cette étude. Je vous renvoie à l’étude originale afin d’en connaître les détails.

Bonne lecture ! Vos commentaires sont les bienvenus.

 

 

Independent Directors: New Class of 2017

 

 

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Companies are continuing to bring fresh and diverse perspectives into the boardroom and to enhance alignment of board composition with their forward-looking strategies.

In our second annual report, we share the results of our analysis of independent directors who were elected by shareholders to the board of a Fortune 100 company for the first time in 2017—what we refer to as the “new class of 2017.”

We looked at corporate disclosures to see what qualifications and characteristics were specifically highlighted, showcasing what this new class of directors brings to the boardroom. Our research was based on a review of proxy statements filed by companies on the 2017 Fortune 100 list. We also reviewed the same 83 companies’ class of 2016 directors to provide consistency in year-on-year comparisons.

 

Our perspective

 

What we’re hearing in the market is that boards are seeking slates of candidates who bring a diverse perspective and a range of functional expertise, including on complex, evolving areas such as digital transformation, e-commerce, public policy, regulation and talent management. As a result, boards are increasingly considering highly qualified, nontraditional candidates, such as non-CEOs, as well as individuals from a wider range of backgrounds. These developments are expanding the short lists of potential director candidates.

At the same time, companies are expanding voluntary disclosures around board composition. Our review of Fortune 100 disclosures around board composition found that:

While diverse director candidates are in high demand and related shifts in board composition are underway, these developments may be slow to manifest. For example, consider that the average Fortune 100 board has 10 seats. In this context, the addition of a single new director is unlikely to dramatically shift averages in terms of gender diversity, age, tenure or other considerations.

That said, whether a board’s pace of change is sufficient depends on a company’s specific circumstances and evolving board oversight needs. Boards should challenge their approach to refreshment, asking whether they are meeting the company’s diversity, strategy and risk oversight needs. Waiting for an open seat to nominate a diverse candidate may mean waiting for the value that diversity could bring.

In 2018, we anticipate that companies will continue to offer more voluntary disclosure on board composition, showing how their directors represent the best mix of individuals for the company—across multiple dimensions, including a diversity of backgrounds, expertise, skill sets and experiences.

 

Key findings

1. Most Fortune 100 companies welcomed a new independent director in 2017

 

This past year, over half of the Fortune 100 companies we reviewed added at least one independent director. This figure is a little lower than the prior year; but overall, during the two-year period from 2016 to 2017, over 80% of the companies added at least one independent director. Taking into account director exits—whether due to retirement, corporate restructuring, pursuit of new opportunities or other reasons—we found that nearly all of the companies experienced some type of change in board composition during this period.

2. The class of 2017 brings greater finance and accounting, public policy and regulatory, and operational skills to the table.

 

Corporate finance and accounting were the most common director qualifications cited by companies in 2017, up from fifth in 2016. A couple areas saw notable increases: government and public policy, operations and manufacturing, and transactional finance. This year, some areas tied in ranking, and in a twist, corporate references to expertise in strategy fell from third in 2016 to below the top 10 categories of expertise. Companies also made fewer references to board service or governance expertise compared to the prior year.

3. Most of the 2017 entering class was assigned to audit committees.

 

The strength of corporate finance and accounting expertise of the entering class is seen, too, with regards to key committee designations. Of the three “key committees” of audit, compensation, and nominating and governance, the 2017 entering class was primarily assigned to serve on audit committees. A closer look at the disclosures shows that 63% of the new directors that were assigned to the audit committee were formally designated as audit committee financial experts. In comparison, the corresponding figure in the prior year was 59%.

 

4. The Fortune 100 class of 2017 includes more non-CEOs.

 

While experience as a CEO is often cited as a traditional first cut for search firms, 54% of the entering class served in other roles, with non-CEO backgrounds including other executive roles or non-corporate backgrounds (academia, scientific organizations, nonprofits, government, military, etc.). This represents a slight increase from 2016 with most of the shift stemming from individuals holding or having held other senior executive positions. Approximately 30% appear to be joining a Fortune 100 public company board, having never previously served on a public company board—similar to 2016.

5. The class of 2017 is 40% female

 

As in the prior year, 40% of the entering class were women, but overall percentages were largely unchanged, with women directors averaging 28% board representation compared to 27% in 2016. Also, there was minimal age difference, with the women directors averaging 57 compared to 58 for male counterparts. Among the directors bringing the top categories of expertise, women directors accounted for over one-third of the disclosed director qualifications. In some cases, they represented over half of the disclosed category of expertise.

6. The class of 2017 tends to be younger

 

There appears to be an ongoing shift toward younger directors. For the class of 2017 entering directors, the average age of these individuals was 57, compared to 63 for incumbents and 68 for exiting directors. Of the entering class, 15% were under 50, an increase from 9% in the prior year. And, for the second consecutive year, we observe that over half of the entering class was under the age of 60. Exiting directors largely continue to be age 68 or older.

Questions for the board to consider

 

– How is the company aligning the skills of its directors—and that of the full board—to the company’s long-term strategy through board refreshment and succession planning efforts? How is the company providing voluntary disclosures around its approach in these areas?

– Does the company’s pool of director candidates challenge traditional search norms such as title, age, industry and geography?

– How is the company addressing growing investor and stakeholder attention to board diversity, and is the company providing disclosure around the diversity of the board—defined as including considerations such as age, gender, race, ethnicity, nationality—in addition to skills and expertise?

______________________________________________________________________________________

*Steve W. Klemash is Americas Leader, Kellie C. Huennekens is Associate Director, and Jamie Smith is Associate Director, at the EY Center for Board Matters. This post is based on their EY publication.

Top 10 de Harvard Law School Forum on Corporate Governance au 10 mai 2018


Voici le compte rendu hebdomadaire du forum de la Harvard Law School sur la gouvernance corporative au 10 mai 2018.

Comme à l’habitude, j’ai relevé les dix principaux billets.

Bonne lecture !

 

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  1. Corporate Purpose: ESG, CSR, PRI and Sustainable Long-Term Investment
  2. Do Women CEOs Earn More and Have More Diverse Boards?
  3. The Business Case for Clawbacks
  4. Integrated Alpha: The Future of ESG Investing
  5. CEO Attributes, Compensation, and Firm Value: Evidence from a Structural Estimation
  6. The Future of Merger Litigation in Federal Courts?
  7. The Impact of DOL Guidance on ESG-Focused Plans
  8. The Uncertain Role of IPOs in Future Securities Class Actions
  9. An Investor Consensus on U.S. Corporate Governance & Stewardship Practices
  10. Netflix Approach to Governance: Genuine Transparency with the Board

     

Le cycle de vie des sociétés régies par des classes d’actions diverses


Les études montrent que ces types d’arrangements ne sont pas immanquablement dommageables pour les actionnaires, comme nous laissent croire plusieurs groupes d’intérêt tels que le Conseil des investisseurs institutionnels et la firme de conseil Institutional Shareholder Services (« ISS »). Plusieurs militent en faveur d’une durée limitée pour de telles émissions d’actions.

Les récentes émissions d’actions à classes multiples des entreprises de haute technologie ne nous permettent pas, à ce stade-ci, de statuer sur les avantages à long terme pour les actionnaires.

Les auteurs, Martijn Cremers et coll., concluent qu’il est trop tôt pour se prononcer définitivement sur la question, et pour réglementer cette structure de capital. Voir à cet égard l’article suivant : Are Dual-Class Companies Harmful to Stockholders? A Preliminary Review of the Evidence.

Bonne lecture !

 

The Life-Cycle of Dual Class Firms

 

 

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In our paper, The Life-Cycle of Dual Class Firms, we consider the market valuation of dual class firms over their life cycle. Dual class financing is on the rise in recent years, particularly among high-tech firms, following Google’s seminal 2004 dual-class IPO structure. This financing choice leaves control of the firms in the hands of entrepreneurs, giving outside investors with inferior-vote shares no direct mechanism to influence the board or management. Rather, public investors buying inferior vote shares at the IPO are betting that granting the entrepreneurs such control allows them to better implement their unique vision.

However, as dual class firms mature and their vision is largely accomplished, entrepreneurs’ leadership may no longer be needed, and entrepreneurs may start self-serving behavior. Public investors’ resentment may then develop, accusing dual class firms’ controlling shareholders for wanting their money without any accountability. Such public pressure arguably recently led MSCI to issue a proposal to reduce the weight of inferior-vote shares in MSCI indices by multiplying the regular weight by the shares fractional voting power. Notably, the same MSCI also issued a report a few months ago stating that “[o]ur research shows that unequal voting stocks in aggregate outperformed the market over the period from November 2007 to August 2017, and that excluding them from market indexes would have reduced the indexes’ total returns by approximately 30 basis points per year over our sample period.” Obviously, confusion reigns over the merits of dual class financing.

Bebchuk and Kastiel (2017) (The Untenable Case for Perpetual Dual-Class Stock, Virginia Law Review) argue that any initial benefits of dual class structures decay with firm age, while the potential agency costs associated with dual class structures increase with time. Thus, Professors Bebchuk and Kastiel advocate sunset clauses to dual class financing. The sunset clauses would require the “non-interested” public shareholders of the firm to vote on whether or not to extend the dual class structure, some pre-determined number of years after the IPO. If the extension proposal is declined, firms would unify the low- and high-vote shares, i.e., convert all shares into a single class of shares with “one share one vote”.

In our paper, we empirically investigate the desirability of sunset provisions by examining the life-cycle of dual class firms. Using an extensive sample of all single-and dual-class firm IPOs in the U.S. during 1980-2015, and relying on comparing dual class firms to similar single class firms, we document several novel phenomena in the life cycle of dual class firms.

First, the difference in firm valuation between dual and single class firms strongly varies over the corporate life cycle. At the IPO, dual class firms tend to have higher valuations, as at the IPO year-end the market valuation of dual class firms is, on average, 11% higher than that of matched single class firms. This initial valuation premium of dual class firms dissipates in the years after the IPO, and on average it becomes insignificantly negative about six to nine years after the IPO. We also find that the difference between the voting and equity stakes of the controlling shareholders of dual class firms (the “wedge”) tends to increase as the firm ages. According to one of our estimates, the mean wedge increases from 16% one year after the IPO to 22% five years after the IPO, and to 26% nine years after the IPO. The widening of the wedge is typically associated with more severe valuation reducing agency problems—see Masulis et al. (2009) (Agency Costs and Dual-Class Companies, Journal of Finance). Bebchuk and Kastiel (2018) (The Perils of Small-Minority Controllers, forthcoming Georgetown Law Review) analyze the perils of the widening wedges and advocate informing the public and capping it.

Second, we document interesting differences between dual class firms with a valuation premium (relative to their matched single class firms) at the IPO and dual class firms with a valuation discount at the IPO. Dual class firms with a valuation premium at the end of their IPO year gradually tend to lose this premium, until their valuations become very similar to those of their single class counterparts about six to nine years after the IPO. In contrast, we find no evidence for a life cycle in the relative valuation of initially discounted dual class firms, as their valuation discount persists from the time of their IPO to when they are mature dual class firms as well. The behavior of the subsample of dual class firms with a valuation premium at the IPO suggests that for some firms the dual class structure does not harm valuations, at least in the first decade after the IPO. On the other hand, the behavior of the subsample of dual class firms with an initial valuation discount, which we find is highly persistent, suggests that a mandatory sunset provision may be useful for these firms.

Third, a natural solution to possible dual class inefficiency is a voluntary firm-initiated dual class share unification, in which all share classes are transformed into “one share one vote”. We find that only about 20% of dual class firms unify their shares within 9 years after the IPO. Furthermore, voluntary unifications become rare after six years following the IPO. Most of the mature dual class firms elect to retain a dual class structure, perhaps because unification is against the interests of their controlling shareholders. This implies that some inefficient dual class structures may persist.

Our findings suggest that some sort of a sunset provision might be useful, especially for firms that trade at a valuation discount. Further, regarding the set-in time of any sunset provision, our study suggests to wait at least six years after the IPO. Regulators should also be worried about some potential negative consequences of any sunset regulation. First, some founders may be more reluctant to issue publicly traded shares if their reign over the firm is likely to be more limited in time. Public may lose the opportunity to invest in some breakthrough firms. Second, controlling shareholders may intensify their private benefits extraction in the period before their extra power expires. Third, it is possible that shareholders may elect to abolish dual class structures even when they are (still) beneficial.

Finally, our paper also documents several other interesting life cycle phenomena of dual class firms such as their higher survival rates, similar stock returns and lower likelihoods of being taken over, compared to matched single class firms. We conclude that unequal vote structures are viable financing tools.

The complete paper is available for download here.

________________________________________

*Martijn Cremers* is Bernard J. Hank Professor of Finance at University of Notre Dame Mendoza College of Business, and an ECGI research member; Beni Lauterbach is a Professor of Finance and the Raymond Ackerman Family Chair in Corporate Governance at Bar Ilan University Graduate School of Business Administration, and an ECGI research member; Anete Pajuste is an Associate Professor of Finance and Head of Accounting and Finance Department at the Stockholm School of Economics, and an ECGI research member. This post is based on their recent paper.

Related research from the Program on Corporate Governance includes The Untenable Case for Perpetual Dual-Class Stock (discussed on the Forum here) and The Perils of Small-Minority Controllers (discussed on the Forum here), both by Lucian Bebchuk and Kobi Kastiel.

Les six principes qui gouvernent la conduite des investisseurs — ISG


Aujourd’hui, je vous présente le point de vue de l’association Investor Stewardship Group (the “ISG”) Governance Principles, eu égard aux principes de gouvernance que celle-ci entend promouvoir.

Je reproduis ici les principaux éléments de l’article publié par Anne Meyer* et paru sur le forum du Harvard Law School, notamment les six principes qui gouvernent leur conduite.

1 — Les CA sont redevables envers les actionnaires ;

2 — Les actionnaires doivent avoir des droits de vote qui sont proportionnels à leurs intérêts économiques ;

3 — Les CA doivent être à l’écoute des actionnaires et être proactifs dans la compréhension de leurs perspectives ;

4 — Les CA doivent avoir une solide structure de leadership indépendante ;

5 — Les CA doivent adopter des structures de gouvernance qui mènent à des pratiques efficaces ;

6 — Les CA doivent adopter des structures de rémunération des dirigeants qui sont alignées sur la stratégie à long terme de l’entreprise.

Bonne lecture ! Vos commentaires sont les bienvenus.

 

The Investor Stewardship Group’s Governance Principles

 

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In this post, we provide an overview of the Investor Stewardship Group (the “ISG”) Governance Principles and steps for public companies to consider when evaluating how the principles may be incorporated into their own disclosure and engagement priorities. The ISG’s website, including a link to the ISG Governance Principles, is available here. In January 2017, the Investor Stewardship Group (the “ISG”), a collective of large U.S.-based and international institutional investors and asset managers, announced the launch of its Framework for U.S. Stewardship and Governance (the “Framework”). The measure is an unprecedented attempt to establish a set of elementary corporate governance principles for U.S. listed companies (the “ISG Governance Principles”) as well as parallel stewardship principles for U.S. institutional investors. The Framework’s effective date was January 1, 2018, in order to provide U.S. listed companies with time to adjust to the corporate governance principles prior to the 2018 proxy season.

As the 2018 proxy season gets into full swing, there is evidence that ISG members will be utilizing the Framework as a tool for evaluating the governance regimes at their portfolio companies, informing their engagement priorities, and potentially factoring compliance with the ISG Governance Principles into selected voting policies and decisions. In December, the ISG issued a press release “encouraging companies to articulate how their governance structures and practices align with the ISG’s Corporate Governance Principles and where and why they differ in approach”, leaving it to companies to determine how and where to disclose such alignment. And at least one large investor, State Street Global Advisors, has specifically highlighted that it will screen portfolio companies for compliance with the principles.

As a result, companies and their boards should continue to benchmark and understand how their specific governance practices relate to ISG Governance Principles and remain cognizant of this new regime as they prepare for engagement with investors and draft public disclosures.

 

Background

 

The ISG’s global reach and financial influence is significant; currently consisting of 50 investors representing over $22 trillion invested in the U.S. equity markets. The ISG’s signatories includes some of the largest and most influential institutional investors, including BlackRock, CalSTRS, State Street Global Advisors, TIAA Investments, T. Rowe Price, ValueAct Capital and Vanguard, among others. The Framework’s stewardship principles emphasize that these institutional investors have a vested interest and responsibility for the long-term economic success of their portfolio companies.

The ISG’s roll-out of the Framework characterized it as a “sustained initiative” and emphasized an evolutionary view of the ability of U.S. companies and investors to work together under the Framework.

Corporate governance practices at U.S. listed companies have historically been informed by multiple regulatory and rules-based regimes. Rules and regulations of the Securities and Exchange Commission, stock exchange listing requirements, state corporate codes, case law and federal legislation adopted in the wake of past financial market crises, have been the primary dictating standards. More recently, shareholders and other stakeholders have played a larger role in influencing corporate governance norms at U.S. listed companies through engagement and various forms of shareholder activism. In contrast, the ISG Governance Principles are based substantially on U.K., Continental European and other non-U.S. frameworks that establish principles-based corporate governance standards and tend to rely on “comply-or-explain” accountability. [1] Advocates for this type of principles-based approach stress the flexibility that it gives for companies to adopt a tailored response to important tenets such as boardroom transparency, as opposed to responding more narrowly to prescriptive rules. As institutional investors continue to focus more attention on environmental and social matters, including related governance concerns, the Framework’s principles-based approach will be a tool, for both institutions and companies, to promote mutually agreeable objectives, particularly given the lack of rulemaking or legislation mandating more specific disclosure on trending topics such as board diversity and environmental concerns.

 

The ISG Governance Principles

 

The six ISG Governance Principles are broad principles that will not look new to those who have been following key issues in corporate governance over the past several years. Indeed, they were designed to reflect the common corporate governance principles that are already embedded in member institutions’ proxy voting and engagement guidelines. The principles emphasize the importance of boardroom effectiveness and oversight, alignment of executive compensation with long-term financial results, and board accountability demonstrated in part through the adoption of governance best practices, including a one-share one-vote capital structure and independent board leadership.

Principle 1: Boards are accountable to shareholders

This principle encompasses the annual election of directors, majority voting, proxy access and more robust disclosure surrounding board practices and corporate governance. Companies are also asked to explain how any anti-takeover measures are in the best long-term interest of the company.

Interestingly, BlackRock’s CEO Larry Fink recently published a letter to the CEOs at the world’s largest public companies in which he argued explicitly that boards are accountable to other stakeholders, such as employees and customers, in addition to shareholders.

Principle 2: Shareholders should be entitled to voting rights in proportion to their economic interest

This principle sets a base line of one-share one-vote and encourages companies with existing multi-class share structures to review and consider phasing out control shares.

In 2017, this issue became national news when Snap Inc. filed for an IPO of non-voting shares. Many large investors were vehemently opposed and at the urging of the Council for Institutional Investors and other investor advocates, the stock index provider FTSE Russell refused to include these shares in its indices.

Principle 3: Boards should be responsive to shareholders and be proactive in order to understand their perspectives

Under this principle, companies are expected to implement shareholder proposals that receive “significant” support or explain why they have not done so. Independent directors are encouraged to participate in engagement on matters that are meaningful to investors, and directors may be held accountable with “against” votes in instances where investors do not feel that their concerns have been adequately addressed.

Principle 4: Boards should have a strong, independent leadership structure

There are two common independent leadership structures at U.S. companies—an independent chairperson and an independent lead director (where the role of Chairman and CEO are combined)—and the principles acknowledge that signatory investors have differing opinions on whether they provide adequate independent oversight.

The overarching position under the principles is that the role of the independent board leader should be “clearly defined and sufficiently robust to ensure effective and constructive leadership.”

Principle 5: Boards should adopt structures and practices that enhance their effectiveness

This principle encompasses an array of board structure and effectiveness issues, including: strong board composition and board diversity; board and committee responsibilities; director attentiveness, preparedness and time commitments; and board refreshment.

Board diversity, in particular gender diversity, has emerged as a high priority for most of the largest institutional investors. There has also been a focus on screening for long-tenured directors and directors that are over-boarded or have poor attendance records as a proxy for identifying directors that may not be adequately engaged or independent.

Principle 6: Boards should develop management incentive structures that are aligned with the long-term strategy of the company

This principle emphasizes that the board, in particular the compensation committee, is responsible for ensuring that drivers and performance goals that underpin the company’s long-term strategy are adequately reflected in a company’s management incentive structure.

Steps to Consider

As noted, the ISG Governance Principles are intended to provide a framework of broad, high-level principles. The individual investors that comprise the ISG have their own voting guidelines and engagement priorities that are tailored to their own investment philosophy and strategy. Even on current hot button issues, such as board diversity, investors have differing views and companies should consider the practices they adopt depending upon their specific facts and circumstances. There are, however, general steps that we recommend companies take to address the growing influence of the Framework.

These include:

Understand how the company’s corporate governance structure and practices relate to the six ISG Governance Principles.

Review the company’s public disclosure regarding corporate governance structure and practices; consider enhancements to be responsive to the ISG’s request that companies disclose how their governance aligns or differs from the ISG Governance Principles.

As with other corporate governance benchmarking exercises, companies should be particularly cognizant of how and why their practices may differ from the ISG Governance Principles and whether these differences are adequately explained in public disclosures. As investors screen their portfolio companies’ governance practices, they will often consider valid explanations, but in the absence of effective disclosure the company may be unnecessarily penalized.

Management and the board should be informed and prepared to respond to questions about the company’s alignment with the ISG Governance Principles during shareholder engagements. Companies can also consider proactively addressing the issue in written materials or prepared remarks during investor presentations.

In preparing for shareholder engagements with ISG signatories, understand how and if they are explicitly incorporating the ISG Governance Principles into engagement and voting priorities and continue to screen their individual voting and engagement policies.

Companies should determine whether, and how, they wish to address and incorporate the ISG Governance Principles based upon their own specific governance profile, disclosure regime and approach to shareholder engagement.

Endnotes

1 See in particular the UK Investor Stewardship Code, on which the US ISG Principles are largely based. The UK Code “sets out a number of areas of good practice to which … institutional investors should aspire.” Available here.

*Anne Meyer is Senior Managing Director, Don Cassidy is Executive Vice President, and Rajeev Kumar is Senior Managing Director at Georgeson LLC. This post is based their recent Georgeson publication. Related research from the Program on Corporate Governance includes The Agency Problems of Institutional Investors by Lucian Bebchuk, Alma Cohen, and Scott Hirst.

L’application concrète d’un huis clos – en rappel


Nous avons déjà abordé l’importance d’inscrire un item « huis clos » à l’ordre du jour des réunions du conseil d’administration. Celui-ci doit normalement être à la fin de la réunion et comporter une limite de temps afin d’éviter que la réunion ne s’éternise… et que les membres de la direction (qui souvent attendent la fin de la rencontre) soient mieux informés.

Ensuite, le président du conseil d’administration (PCA) devrait rencontrer le président et chef de la direction (PCD) en privé, et dans les meilleurs délais, afin de rendre compte des résultats et de la portée du huis clos. Cette responsabilité du PCA est déterminante, car les dirigeants ont de grandes attentes et un souci eu égard aux discussions du huis clos.

Plusieurs dirigeants et membres de conseil m’ont fait part de leurs préoccupations concernant la tenue des huis clos. Il y a des malaises dissimulés en ce qui a trait à cette activité ; il faut donc s’assurer de bien gérer la situation, car les huis clos peuvent souvent avoir des conséquences inattendues, voire contre-productives !

Ainsi, le huis clos :

(1) ne doit pas être une activité imprévue et occasionnelle inscrite à l’ordre du jour

(2) doit comporter une limite de temps

(3) doit être piloté par le président du conseil

(4) doit comporter un suivi systématique, et

(5) doit se dérouler dans un lieu qui permet de préserver la confidentialité absolue des discussions.

J’insiste sur cette dernière condition parce que l’on a trop souvent tendance à la négliger ou à l’oublier, carrément. Dans de nombreux cas, la rencontre du conseil a lieu dans un local inapproprié, et les dirigeants peuvent entendre les conversations, surtout lorsqu’elles sont très animées…

Au début de la séance, les membres sont souvent insoucieux ; avec le temps, certains peuvent s’exprimer très (trop) directement, impulsivement et de manière inconvenante. Si, par mégarde, les membres de la direction entendent les propos énoncés, l’exercice peut prendre l’allure d’une véritable calamité et avoir des conséquences non anticipées sur le plan des relations interpersonnelles entre les membres de la direction et avec les membres du conseil.

 

registre-conseils-d-administration

 

L’ajout d’un huis clos à l’ordre du jour témoigne d’une volonté de saine gouvernance, mais, on le comprend, il y a un certain nombre de règles à respecter si on ne veut pas provoquer la discorde. Les OBNL, qui ont généralement peu de moyens, sont particulièrement vulnérables aux manquements à la confidentialité ! Je crois que dans les OBNL, les dommages collatéraux peuvent avoir des incidences graves sur les relations entre employés, et même sur la pérennité de l’organisation.

J’ai à l’esprit plusieurs cas de mauvaise gestion des facteurs susmentionnés et je crois qu’il vaut mieux ne pas tenir le bien-fondé du huis clos pour acquis.

Ayant déjà traité des bienfaits des huis clos lors d’un billet antérieur, je profite de l’occasion pour vous souligner, à nouveau, un article intéressant de Matthew Scott sur le site de Corporate Secretary qui aborde un sujet qui préoccupe beaucoup de hauts dirigeants : le huis clos lors des sessions du conseil d’administration ou de certains comités.

L’auteur explique très bien la nature et la nécessité de cette activité à inscrire à l’ordre du jour du conseil. Voici les commentaires que j’exprimais à cette occasion.

« Compte tenu de la “réticence” de plusieurs hauts dirigeants à la tenue de cette activité, il est généralement reconnu que cet item devrait toujours être présent à l’ordre du jour afin d’éliminer certaines susceptibilités.

Le huis clos est un temps privilégié que les administrateurs indépendants se donnent pour se questionner sur l’efficacité du conseil et la possibilité d’améliorer la dynamique interne ; mais c’est surtout une occasion pour les membres de discuter librement, sans la présence des gestionnaires, de sujets délicats tels que la planification de la relève, la performance des dirigeants, la rémunération globale de la direction, les poursuites judiciaires, les situations de conflits d’intérêts, les arrangements confidentiels, etc. On ne rédige généralement pas de procès-verbal à la suite de cette activité, sauf lorsque les membres croient qu’une résolution doit absolument apparaître au P.V.

La mise en place d’une période de huis clos est une pratique relativement récente, depuis que les conseils d’administration ont réaffirmé leur souveraineté sur la gouvernance des entreprises. Cette activité est maintenant considérée comme une pratique exemplaire de gouvernance et presque toutes les sociétés l’ont adoptée.

Notons que le rôle du président du conseil, en tant que premier responsable de l’établissement de l’agenda, est primordial à cet égard. C’est lui qui doit informer le PCD de la position des membres indépendants à la suite du huis clos, un exercice qui demande du tact !

Je vous invite à lire l’article ci-dessous. Vos commentaires sont les bienvenus ».

Are you using in-camera meetings ?

Top 10 de Harvard Law School Forum on Corporate Governance au 3 mai 2018


Voici le compte rendu hebdomadaire du forum de la Harvard Law School sur la gouvernance corporative au 3 mai 2018.

Comme à l’habitude, j’ai relevé les dix principaux billets.

Bonne lecture !

 

Résultats de recherche d'images pour « top 10 »

 

 

 

  1. The Middle-Market IPO Tax
  2. Which Antitakover Provisions Matter?
  3. Indications of Corporate Control
  4. Removing Directors in Private Companies by Written Consent?
  5. Cybersecurity Risk Management Oversight
  6. The Life-Cycle of Dual Class Firms
  7. Missing Pieces Report: The 2016 Board Diversity Census of Women and Minorities on Fortune 500 Boards
  8. Busy Directors and Firm Performance: Evidence from Mergers
  9. SEC’s Proposed Standard of Conduct for Investment Advisors
  10. Open Letter Regarding Consultation on the Treatment of Unequal Voting Structures in the MSCI Equity Indexes

 

 

La bonne gouvernance est associée au rendement selon une étude | Le Temps.ch


Aujourd’hui, je partage avec vous un article publié dans le magazine suisse Le Temps.ch qui présente les résultats d’une recherche sur la bonne gouvernance des caisses de retraite en lien avec les recommandations des fonds de placement tels que BlackRock.

L’auteur, Emmanuel Garessus, montre que même si le lien entre la performance des sociétés et la bonne gouvernance semble bien établi, les caisses de retraite faisant l’objet de la recherche ont des indices de gouvernance assez dissemblables. L’étude montre que les caisses ayant des indices de gouvernance faibles ont des rendements plus modestes en comparaison avec les indices de référence retenus.

Également, il ressort de cette étude que c’était surtout la prédominance de la gestion des risques qui était associée à la performance des caisses de retraite.

Comme le dit Christian Ehmann, spécialisé dans la sélection de fonds de placement auprès de Safra Sarasin, « la gouvernance n’est pas une cause de surperformance, mais il existe un lien direct entre les deux ».

Encore une fois, il appert que BlackRock défend les petits épargnants-investisseurs en proposant des normes de gouvernance uniformisées s’appliquant au monde des entreprises cotées en bourses.

J’ai reproduit l’article en français ci-dessous afin que vous puissiez bien saisir l’objet de l’étude et ses conclusions.

Bonne lecture ! Vos commentaires sont les bienvenus.

 

BlackRock contre Facebook, un combat de géants

 

 

Résultats de recherche d'images pour « le temps »

 

 

Résultats de recherche d'images pour « gouvernance »

 

 

Le principe de gouvernance selon lequel une action donne droit à une voix en assemblée générale est bafoué par de très nombreuses sociétés, surtout technologiques, au premier rang desquelles on trouve Facebook, Snap, Dropbox et Google. BlackRock, le plus grand groupe de fonds de placement du monde, demande aux autorités d’intervenir et de présenter des standards minimaux, indique le Financial Times.

Le groupe dont Philipp Hildebrand est vice-président préfère un appel à l’Etat plutôt que de laisser les fournisseurs d’indices (MSCI, Dow Jones, etc.) modifier la composition des indices en y intégrant divers critères d’exclusion. Barbara Novick, vice-présidente de BlackRock, a envoyé une lettre à Baer Pettit, président de MSCI, afin de l’informer de son désir de mettre de l’ordre dans les structures de capital des sociétés cotées.

 

Mark Zuckerberg détient 60% des droits de vote

 

De nombreuses sociétés ont deux catégories d’actions donnant droit à un nombre distinct de droits de vote. Les titres Facebook de la classe B ont par exemple dix fois plus de droits de vote que ceux de la classe A. Mark Zuckerberg, grâce à ses actions de classe B (dont il détient 75% du total), est assuré d’avoir 60% des droits de vote du groupe. A la suite du dernier scandale lié à Cambridge Analytica, le fondateur du réseau social ne court donc aucun risque d’être mis à la porte, explique Business Insider. L’intervention de BlackRock n’empêche pas l’un de ses fonds (Global Allocation Fund) d’avoir probablement accumulé des titres Facebook après sa correction de mars, selon Reuters, pour l’intégrer dans ses dix principales positions.

Cette structure du capital répartie en plusieurs catégories d’actions permet à un groupe d’actionnaires, généralement les fondateurs, de contrôler la société avec un minimum d’actions. Les titres ayant moins ou pas de droit de vote augmentent de valeur si la société se développe bien, mais leurs détenteurs ont moins de poids en assemblée générale. Les sociétés qui disposent d’une double catégorie de titres la justifient par le besoin de se soustraire aux réactions à court terme du marché boursier et de rester ainsi concentrés sur les objectifs à long terme. Ce sont souvent des sociétés technologiques.

Facebook respecte très imparfaitement les principes de bonne conduite en matière de gouvernance. Mark Zuckerberg, 33 ans, est en effet à la fois président du conseil d’administration et président de la direction générale. Ce n’est pas optimal puisque, en tant que président, il se contrôle lui-même. Sa rémunération est également inhabituelle. Sur les 8,9 millions de dollars de rémunération, 83% sont liés à ses frais de sécurité et le reste presque entièrement à l’utilisation d’un avion privé (son salaire est de 1 dollar et son bonus nul).

 

Quand BlackRock défend le petit épargnant

 

Le site de prévoyance IPE indique que le fonds de pension suédois AP7, l’un des plus grands actionnaires du réseau social, est parvenu l’an dernier à empêcher l’émission d’une troisième catégorie de titres Facebook. Cette dernière classe d’actions n’aurait offert aucun droit de vote. Une telle décision, si elle avait été menée à bien, aurait coûté 10 milliards de dollars à AP7. Finalement Facebook a renoncé.

BlackRock prend la défense du petit investisseur. Il est leader de la gestion indicielle et des ETF et ses produits restent investis à long terme dans tous les titres composant un indice. Il préfère influer sur la gouvernance par ses prises de position que de vendre le titre. Le plus grand groupe de fonds de placement du monde demande aux autorités de réglementation d’établir des standards de gouvernance en collaboration avec les sociétés de bourse plutôt que de s’en remettre aux fournisseurs d’indices comme MSCI.

La création de plusieurs classes d’actions peut être justifiée par des start-up en forte croissance dont les fondateurs ne veulent pas diluer leur pouvoir. BlackRock reconnaît ce besoin spécifique aux start-up en forte croissance, mais le gérant estime que «ce n’est acceptable que durant une phase transitoire. Ce n’est pas une situation durable.»

Le géant des fonds de placement aimerait que les producteurs d’indices soutiennent sa démarche et créent des «indices alternatifs» afin d’accroître la transparence et de réduire l’exposition aux sociétés avec plusieurs catégories de titres. L’initiative de BlackRock est également appuyée par George Dallas, responsable auprès du puissant International Corporate Governance Network (ICGN).

La gouvernance des «bonnes caisses de pension»

 

La recherche économique a largement démontré l’impact positif d’une bonne gouvernance sur la performance d’une entreprise. Mais presque tout reste à faire en matière de fonds de placement et de caisses de pension.

«La gouvernance n’est pas une cause de surperformance, mais il existe un lien direct entre les deux. Les caisses de pension qui appartiennent au meilleur quart en termes de bonne gouvernance présentent une surperformance de 1% par année par rapport au moins bon quart», explique Christian Ehmann, spécialisé dans la sélection de fonds de placement auprès de Safra Sarasin, lors d’une présentation organisée par la CFA Society Switzerland, à Zurich.

Ce dernier est avec le professeur Manuel Ammann coauteur d’une étude sur la gouvernance et la performance au sein des caisses de pension suisses (Is Governance Related to Investment Performance and Asset Allocation?, Université de Saint-Gall, 2016). «Le travail sur cette étude m’a amené à porter une attention particulière à la gouvernance des fonds de placement dans mon travail quotidien», déclare Christian Ehmann. Son regard porte notamment sur la structure de l’équipe de gestion, son organisation et son système de gestion des risques. «Je m’intéresse par exemple à la politique de l’équipe de gérants en cas de catastrophe», indique-t-il.

Claire surperformance

 

L’étude réalisée sur 139 caisses de pension suisses, représentant 43% des actifs gérés, consiste à noter objectivement la qualité de la gouvernance et à définir le lien avec la performance de gestion. L’analyse détaille les questions de gouvernance en fonction de six catégories, de la gestion du risque à la transparence des informations en passant par le système d’incitations, l’objectif et la stratégie d’investissement ainsi que les processus de placement. Sur un maximum de 60 points, la moyenne a été de 21 (plus bas de 10 et plus haut de 50). La dispersion est donc très forte entre les caisses de pension. Certaines institutions de prévoyance ne disposent par exemple d’aucun système de gestion du risque.

Les auteurs ont mesuré la performance sur trois ans (2010 à 2012), le rendement relatif par rapport à l’indice de référence et l’écart de rendement par rapport au rendement sans risque (ratio de Sharpe). Toutes ces mesures confirment le lien positif entre la gouvernance et la performance (gain de 2,7 points de base par point de gouvernance). Les moteurs de surperformance proviennent clairement de la gestion du risque et du critère portant sur les objectifs et la stratégie d’investissement. Les auteurs constatent aussi que même les meilleurs, en termes de gouvernance, sous-performent leur indice de référence.

La deuxième étape de la recherche portait sur l’existence ou non d’une relation entre le degré de gouvernance et l’allocation des actifs. Ce lien n’a pas pu être établi.

Top 10 de Harvard Law School Forum on Corporate Governance au 26 avril 2018


Voici le compte rendu hebdomadaire du forum de la Harvard Law School sur la gouvernance corporative au 26 avril 2018.

Comme à l’habitude, j’ai relevé les dix principaux billets.

Bonne lecture !

 

Résultats de recherche d'images pour « top 10 »



  1. Corporate Culture Risk and the Board
  2. Lazard’s 1Q 2018 Activism Review
  3. Is There a Gender Gap in CEO Compensation?
  4. Corporate Governance Deviance
  5. Elon Musk and the Control of Tesla
  6. How to Be a Good Board Chair
  7. Board Classification and Diversity in Recent IPOs
  8. Recent Trends in Securities Class Action Litigation: 2017 Full-Year Review
  9. A Second Bite at the Apple? Shareholder Activists and Tardy Director Nominations
  10. Controlling Shareholder Transactions

Huit (8) principes de base à respecter pour devenir un président de conseil d’administration exemplaire


Voici un article très intéressant publié dans l’édition d’avril 2018 de la Harvard Business Review qui porte sur l’identification des grands principes qui guident les comportements des présidents de conseil d’administration.

L’auteur, Stanislav Shekshnia*, est professeur à l’Institut européen d’administration des affaires (INSEAD) et chercheur émérite dans le domaine de la gouvernance. Son article est basé sur une enquête auprès de 200 présidents de conseils.

Que doit-on retenir de cette recherche eu égard aux rôles distinctifs des présidents de conseils d’administration et aux caractéristiques qui les distinguent des CEO ?

Huit principes ressortent de ces analyses :

(1) Be the guide on the side; show restraint and leave room for others

(2) Practice teaming—not team building

(3) Own the prep work; a big part of the job is preparing the board’s agenda and briefings

(4) Take committees seriously; most of the board’s work is done in them

(5) Remain impartial

(6) Measure the board’s effectiveness by its inputs, not its outputs

(7) Don’t be the CEO’s boss

(8) Be a representative with shareholders, not a player.

Je vous invite à lire l’article au complet puisqu’il regorge d’exemples très efficaces.

Bonne lecture !

 

How to Be a Good Board Chair

 

Résultats de recherche d'images pour « qualities board chairman »

*Stanislav Shekshnia is a professor at INSEAD. He is also a senior partner at Ward Howell, a global human capital consultancy firm, and a board member at a number of public and private companies in Central and Eastern Europe.

Top 10 de Harvard Law School Forum on Corporate Governance au 19 avril 2018


Voici le compte rendu hebdomadaire du forum de la Harvard Law School sur la gouvernance corporative au 19 avril 2018.

Comme à l’habitude, j’ai relevé les dix principaux billets.

Bonne lecture !

 

 

Résultats de recherche d'images pour « top 10 »



  1. 2018 Proposed Amendments to the Delaware General Corporation Law
  2. Dodd-Frank is a Pigouvian Regulation
  3. Portfolio Manager Compensation in the U.S. Mutual Fund Industry
  4. Are Dual-Class Companies Harmful to Stockholders? A Preliminary Review of the Evidence
  5. Activists are Hereby on Notice: Board Authority to Reject Deficient Director Nominations
  6. Median Employee Pay Not Quite the Spectacle Anticipated
  7. The Investor View on Executive Compensation in 2018
  8. Ten Crypto-Financing Caveats
  9. HLS Program Seeks Academic Fellows
  10. How Should Financial Regulators Handle the Bitcoin Era?

 

Les actions multivotantes sont-elles préjudiciables pour les actionnaires ?


Nous avons souvent publié des billets qui abordent diverses conséquences liées à l’émission d’actions à votes multiples. L’article intitulé, « ACTIONS MULTIVOTANTES : LE MODÈLE DE BOMBARDIER SOULÈVE DES VAGUES », publié dans La Presse le 21 juillet 2015 avait d’ailleurs fait couler beaucoup d’encre.

Ces émissions d’actions sont-elles fondées, justifiées, légitimes et équitables dans le contexte de la gouvernance des sociétés cotées en bourse ? Voici ce que pense Yvan Allaire, président de l’Institut sur la gouvernance d’organisations privées et publiques, dans un article paru dans Les Affaires le 9 mai 2016 : Pourquoi le Canada a besoin des actions multivotantes ?

Vous trouverez, ci-dessous, un article publié par David J. Berger de la firme Wilson Sonsini Goodrich & Rosati, et par Laurie Simon Hodrick de la Stanford Law School, paru sur le site du Harvard Law School Forum on Corporate Governance, qui fait le point sur cette épineuse question.

Les études montrent que ces types d’arrangements ne sont pas immanquablement dommageables pour les actionnaires, comme nous laissent croire plusieurs groupes d’intérêt tels que le Conseil des investisseurs institutionnels et la firme de conseil Institutional Shareholder Services (« ISS »). Plusieurs militent en faveur d’une durée limitée pour de telles émissions d’actions.

Les récentes émissions d’actions à classes multiples des entreprises de haute technologie ne nous permettent pas, à ce stade-ci, de statuer sur les avantages à long terme pour les actionnaires.

Les auteurs concluent qu’il est trop hâtif pour se prononcer définitivement sur la question, et pour réglementer cette structure de capital.

Bonne lecture !

 

Are Dual-Class Companies Harmful to Stockholders? A Preliminary Review of the Evidence

 

 

Résultats de recherche d'images pour « actions multivotantes »

 

Clarion calls for regulating dual-class stock have become a common occurrence. For example, the Council of Institutional Investors (“CII”) has called upon the NYSE and Nasdaq to adopt a rule requiring all companies going public with dual-class shares to include a so-called “sunset provision” in their charter, which would convert the company to a single class of stock after a set period of years. CII has also urged index providers to discourage the inclusion of firms with dual-class structures (and both the S&P Dow Jones and FTSE Russell indices have already done so). Many individual CII members, along with some of the world’s largest mutual funds and other investors, have joined together in the “Framework for U.S. Stewardship and Governance” to take a strong stance against dual class structures.

Proxy advisory services have also announced their opposition to dual-class companies. For example, Institutional Shareholder Services (“ISS”) has announced a plan to recommend against directors at companies with differential voting rights if there are no “reasonable sunset” provisions. Even the SEC’s Investor Advisory Committee has raised its own concerns about dual-class stock companies, calling on the SEC to “devote more resources” to “identify risks” arising out of governance disputes from dual-class structures. [1]

Yet what is the empirical evidence supporting these calls for regulation of dual-class companies? Dual-class companies have existed for nearly a century, going back to the Dodge Brothers’ IPO in 1925 and Ford’s IPO in 1956. Historically, technology companies did not adopt a dual-class capital structure. Rather, until Google’s (now Alphabet) 2004 IPO, most dual-class companies were family businesses, media companies seeking to ensure their publications could maintain journalistic editorial independence, or other companies led by a strong group of insiders. These companies often adopted their dual-class structures to avoid the pressures of having to focus primarily on short-term variations in stock price.

Many of these older dual-class companies were the focus of a seminal 2010 paper that found that dual class firms tend to be more levered and to underperform their single class counterparts, with increased insider cash flow rights increasing firm value and increased insider voting rights reducing firm value. [2]

Since 2010, there have been an increasing number of technology companies going public with dual-class (or multi-class) share structures. Anecdotal evidence is mixed, but the early empirical evidence on the performance of these newer dual-class companies as a group is quite interesting. In particular, though many of these companies have not been public for very long, the limited available data suggests that these newer dual-class companies might even be out-performing single-class structured companies.

For example, MSCI, one of the largest global index providers, recently released a study showing that companies with “unequal voting stocks in aggregate outperformed the market over the period from November 2007 to August 2017.” [3] The study further concluded that excluding these companies “from market indexes would have reduced the indexes’ total returns by approximately 30 basis points per year over [the] sample period.” The differential was even greater in North America, where stocks with unequal voting rights outperformed stocks with the more traditional one-share/one-vote structure by 4.5% annually.

Recent academic research corroborates the outperformance of the newly public companies with dual-class stock. For example, one study concludes that dual-class companies, avoiding short-term market pressures, have more growth opportunities and obtain higher market valuations than matched single-class firms [4] Even with respect to perpetual dual-class stock companies, research shows that these companies, when controlled by a founding family, “significantly and economically” outperform nonfamily firms. [5] Another study maintains that it might be more efficient to give more voting power to shareholders who are better informed, thereby allowing them more influence, and correspondingly less voting power to those who are less informed, including passive index funds. Passive investors would pay a discounted price in exchange for waiving their voting rights. [6]

We have begun our own preliminary research on these issues, with considerations including corporate control, liquidity, capital allocation, “next generation” issues, and using stock as currency for acquisitions and to reward employees. While still in its initial stage, our analysis also raises fundamental questions about how much value shareholders perceive in having voting stock versus non-voting stock in these relatively new to market technology companies. For example, consider Classes A and C of Alphabet, issued through a stock dividend four years ago, which are different only in specific ways, most notably that A has one vote per share and C has none. [7] Atypically, for each of the last three trading days in February, Alphabet’s non-voting class C share, GOOG, had a higher closing market price than its voting class A share, GOOGL. [8] More broadly, since GOOG was introduced on April 3, 2014, the correlation between the two classes’ stock prices is 99.9%, and they have similar stock price standard deviations, betas, trading volume, and short interest. [9]

We believe that it is too early to make a definitive determination from an economic standpoint as to whether having dual-class stock is better or worse for investors in the current market environment, especially for younger companies. Any consideration to limit dual-class stock, including adoption of mandatory sunset provisions, must be based on analysis not anecdotes. It should also recognize the changing nature of public markets, including the following:

  1. The dominance of shareholder primacy has led boards of single-class companies to feel short-term pressure from shareholders. As no less an authority than Delaware Chief Justice Strine has frequently recognized, boards respond to those who elect them. In today’s world, for most public companies that is a handful of institutional investors, as by 2016 institutional investors owned 70% of all public shares, while just three money managers held the largest stock position in 88% of the companies in the S&P 500. [10] While many of these institutions emphasize that they are long-term holders, directors of companies with high institutional investor ownership continue to feel the pressure to take actions to achieve short-term stock increases. For example, a recent survey of over 1000 directors and C-level executives by McKinsey and the Canadian Pension Plan Investment Board (“CPPIB”) found that nearly 80% of these executives felt “especially pressured” to demonstrate strong financial results in two years or less. [11]
  2. The changing nature of the public and private capital markets. The increased use by technology companies of dual-class capital structures when entering the public markets must be viewed within the changing nature of both the public and private markets for technology companies. According to the Wall Street Journal, more money was raised in private markets than in public markets in 2017, while the number of public companies continues to decline—the number of public companies has fallen by about half since 1996. [12] SEC Commissioner Clayton (among others) has spoken repeatedly about the problems arising out of the decline in the number of public companies. Limiting the ability of public companies to have different capital structures will certainly impact the decision by some companies about whether or not to go public.
  3. Dual-class stock and alternative capital structures across the world. Regulators considering how to respond to the growth of dual-class stock should consider the growing acceptance of dual-class stock in markets globally. For example, in recent months both Hong Kong and Singapore have opened their markets to dual-class listings. Many European markets already have rules allowing for dual-class companies or other similar structures that allow companies to focus on longer-term principles as well as non-shareholder constituencies. Even in the U.S., newer markets, such as the Long-Term Stock Exchange, are working to list companies with alternative capital structures, so that companies can focus on building a business, in apparent recognition that surrendering to the current dominance of shareholder primacy may not be the best governance structure for all companies.

For these reasons, we believe that the current effort to mandate some form of one-share one-vote for all public companies in the U.S. is premature. The limited empirical evidence on the technology and emerging growth companies that are the target of these regulations is insufficient to support the adoption of new regulations, as the evidence that is available indicates that the most recent group of dual-class companies may have performed as well, if not better, than those with a single class of stock.

______________________________________

Notes

1 See “Recommendation of the Investor As Owner Subcommittee: Dual-Class and Other Entrenching Governance Structures in Public Companies,” February 27, 2018, available at https://www.sec.gov/spotlight/investor-advisory-committee-2012/iac030818-investor-as-owner-subcommittee-recommendation.pdf.(go back)

2 Paul Gompers, Joy Ishii, and Andrew Metrick, “Extreme Governance: An Analysis of Dual-Class Shares in the United States,” Review of Financial Studies 23, 1051-1087 (2010). See also Ronald Masulis, Cong Wang, and Fei Xie, “Agency Problems at Dual-Class Companies” Journal of Finance64, 1697-1727 (2009).(go back)

3 Dmitris Melas, “Putting the Spotlight on Spotify: Why have Stocks with Unequal Voting Right Outperformed?” MSCI Research, April 3, 2018. The study’s findings are robust to controlling for common factors including country, sector, and style factor exposures.(go back)

4 Bradford Jordan, Soohyung Kim, Nad Mark Liu, “Growth Opportunities, Short-Term Market Pressure, and Dual-Class Share Structure,” Journal of Corporate Finance 41, 304-328 (2016).(go back)

5 See Ronald Anderson, Ezgi Ottolenghi, and David Reeb, “The Dual Class Premium: A Family Affair,” August 2017.(go back)

6 Dorothy Shapiro Lund, “Nonvoting Shares and Efficient Corporate Governance,” Stanford Law Review 71 (forthcoming 2019).(go back)

7 There are also class B shares with 10 votes per share, 92.7% of which are owned by executives Eric Schmidt, Sergey Brin, and Larry Page as of December 31, 2017, representing 56.7% of the total voting power (source: Alphabet 10K).(go back)

8 GOOG also closed higher than GOOGL on March 14, March 16, and March 20, 2018. This is not the first such finding: In 1994, Comcast’s nonvoting shares often sold for more than its voting shares. See Paul Schultz and Sophie Shive, “Mispricing of Dual-Class Shares: Profit Opportunities, Arbitrage, and Trading,” Journal of Financial Economics 98, 524-549 (2010).(go back)

9 For the past four years, GOOG and GOOGL have standard deviations (betas) of 176.6 (1.24) and 177.8 (1.23), respectively.  GOOGL is slightly more liquid than GOOG, as GOOGL daily share volume averages 2.3 million shares, while GOOG averages 1.97 million shares.  GOOGL and GOOG have short interest of 3.4 million and 3.6 million shares, respectively.(go back)

10 See The Hon. Kara M. Stein, Commissioner, Securities and Exchange Commission, The Markets in 2017: What’s at Stake, February 24, 2017.(go back)

11 See Dominic Barton and Mark Wiseman, Investing for the Long-Term, Harvard Business Review, 2014.(go back)

12 Jean Eaglesham and Coulter Jones, “The Fuel Powering Corporate America: $2.4 Trillion in Private Fundraising,” Wall Street Journal, April 3, 2018.(go back)

______________________________

*David J. Berger is a partner at Wilson Sonsini Goodrich & Rosati; and Laurie Simon Hodrick is Visiting Professor of Law and Rock Center for Corporate Governance Fellow at Stanford Law School, Visiting Fellow at the Hoover Institution, and A. Barton Hepburn Professor Emerita of Economics in the Faculty of Business at Columbia Business School. Related research from the Program on Corporate Governance includes The Untenable Case for Perpetual Dual-Class Stock (discussed on the Forum here) and The Perils of Small-Minority Controllers (discussed on the Forum here), both by Lucian Bebchuk and Kobi Kastiel.

Top 10 de Harvard Law School Forum on Corporate Governance au 12 avril 2018


Voici le compte rendu hebdomadaire du forum de la Harvard Law School sur la gouvernance corporative au 12 avril 2018.

Comme à l’habitude, j’ai relevé les dix principaux billets.

Bonne lecture !

 

Résultats de recherche d'images pour « top ten »

 

 

 

 

 

 

 

 

 

  1. Activist Arbitrage in M&A Acquirers
  2. In the Spirit of Full Cybersecurity Disclosure
  3. Unequal Voting and the Business Judgment Rule
  4. Agency Conflicts Around the World
  5. Real Talk on Executive Compensation
  6. The Cost of Political Connections
  7. Review and Analysis of 2017 U.S. Shareholder Activism
  8. 10 Tips for Upcoming Annual Shareholder Meetings
  9. The Information Value of Corporate Social Responsibility
  10. The Purpose of the Corporation

Top 10 de Harvard Law School Forum on Corporate Governance au 5 avril 2018


Voici le compte rendu hebdomadaire du forum de la Harvard Law School sur la gouvernance corporative au 5 avril 2018.

Comme à l’habitude, j’ai relevé les dix principaux billets.

Bonne lecture !

 

Résultats de recherche d'images pour « top 10 »



  1. What is the Impact of Successful Cyberattacks on Target Firms?
  2. An Early Look at the State of U.S. CEO Pay
  3. Replacing Executive Equity Compensation: The Case for Cash for Long-Term Performance
  4. Cybersecurity: The SEC’s Wake-up Call to Corporate Directors
  5. Do Director Networks Improve Managerial Learning from Stock Prices?
  6. How a CEO’s Cultural Background Impacts Firm Performance
  7. Broadcom’s Blocked Acquisition of Qualcomm
  8. Why Do Investors Hold Socially Responsible Mutual Funds?
  9. 2018 Proxy Season: Early Trends in Pay Ratio Disclosure
  10. How Board Skills Vary by Director Age Groups

Top 10 de Harvard Law School Forum on Corporate Governance au 29 mars 2018


Voici le compte rendu hebdomadaire du forum de la Harvard Law School sur la gouvernance corporative au 29 mars 2018.

Comme à l’habitude, j’ai relevé les dix principaux billets.

Joyeuses Pâques à tous mes abonnés.

Bonne lecture !

 

 

Résultats de recherche d'images pour « top 10 »

 


  1. Traceable Shares and Corporate Law

  2. Corporations and the Culture Wars

  3. Toward a Horizontal Fiduciary Duty in Corporate Law

  4. The SEC and Virtual Currency Markets

  5. Senate Rollback of Dodd-Frank

  6. The First Wave of Pay Ratio Disclosures

  7. Blockchain Technology for Corporate Governance and Shareholder Activism

  8. BlackRock Investment Stewardship’s Approach to Engagement on Human Capital Management

  9. Preparing for the Year of the “S”

  10. Emerging Trends in S&P 500 Pay Ratio Disclosures

Top 10 de Harvard Law School Forum on Corporate Governance au 22 mars 2018


Voici le compte rendu hebdomadaire du forum de la Harvard Law School sur la gouvernance corporative au 22 mars 2018.

Comme à l’habitude, j’ai relevé les dix principaux billets.

Bonne lecture !

 

 

Résultats de recherche d'images pour « top 10 »

 



  1. Do CEO Paycuts Really Work?
  2. Are Buybacks Really Shortchanging Investment?
  3. Risk Management and the Board of Directors
  4. Corporate Governance: On the Front Line of America’s Cyber War
  5. Director Abstention as Material Information
  6. Collateral Damage
  7. Bringing the #MeToo Movement into the Boardroom
  8. Exclusion of Conflicting Shareholder Proposals
  9. Substantive Gender Diversity in Boardrooms
  10. Updated Guidance (and Ground Rules) for Controlling Stockholder Deals

Rôle du conseil d’administration en cas de gestion de crises | Les défis de Facebook


Voici un article qui met en garde les structures de gouvernance telles que Facebook.

L’article publié sur le site de Directors&Boards par Eve Tahmincioglu soulève plusieurs questions fondamentales :

(1) L’actionnariat à vote multiple conduit-il à une structure de gouvernance convenable et acceptable ?

(2) Pourquoi le principe de gouvernance stipulant une action, un vote, est-il bafoué dans le cas de plusieurs entreprises de la Silicone Valley ?

(3) Quel est le véritable pouvoir d’un conseil d’administration où les fondateurs sont majoritaires par le jeu des actions à classe multiple ?

(4) Doit-on réglementer pour rétablir la position de suprématie du conseil d’administration dirigé par des administrateurs indépendants ?

(5) Dans une situation de gestion de crise comme celle qui confronte Facebook, quel est le rôle d’un administrateur indépendant, président de conseil ?

(6) Les médias cherchent à connaître la position du PDG sans se questionner sur les responsabilités des administrateurs. Est-ce normal en gestion de crise ?

Je vous invite à lire l’article ci-dessous et à exprimer vos idées sur les principes de bonne gouvernance appliqués aux entreprises publiques contrôlées par les fondateurs.

Bonne lecture !

 

Facebook Confronts Its Biggest Challenge: But where’s the “high-powered” board?

 

 

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Facebook is arguably facing one of the toughest challenges the company has ever faced. But the slow and tepid response from leadership, including the boards of directors, concerns governance experts.

The scandal involving data-mining firm Cambridge Analytica allegedly led to 50 million Facebook users’ private information being compromised but a public accounting from Facebook’s CEO and chairman Mark Zuckerberg has been slow coming.

Could this be a governance breakdown?

“This high-powered board needs to engage more strongly,” says Steve Odland, CEO of the Committee for Economic Development and a board member for General Mills, Inc. and Analogic Corporation. Facebook’s board includes Netflix’s CEO Reed Hastings; Susan D. Desmond-Hellmann, CEO of The Gates Foundation; the former chairman of American Express Kenneth I. Chenault; and PayPal cofounder Peter A. Thiel, among others.

Odland points out that Facebook has two powerful and well-known executives, Zuckerberg and Facebook COO Sheryl Sandberg, who have been publicly out there on every subject, but largely absent on this one.

While Zuckerberg released a written statement late today on his Facebook page, he didn’t talk directly to the public, or take media questions. He is reportedly planning to appear on CNN tonight.

It was a long time coming for many.

“They need to get out and publicly talk about this quickly,” Odland maintains. “They didn’t have to have all the answers. But this vacuum of communications gets filled by others, and that’s not good for the company.”

Indeed, politicians, the Federal Trade Commission and European politicians are stepping in, he says, “and that could threaten the whole platform.”

Typically, he adds, it comes back to management to engage and use the board, but “I don’t think Zuckerberg is all that experienced in that regard. This is where the board needs to help him.”

But how much power does the board have?

Charles Elson, director of the University of Delaware’s Weinberg Center for Corporate Governance, sees the dual-class ownership structure of Facebook that gives the majority of voting power to Zuckerberg and thus undermines shareholders and the board’s power.

“It’s his board because of the dual-class stock. There is nothing [directors] can do; neither can the shareholders and a lawsuit would yield really nothing,” he explains.

Elson has been warning against such structures for some time, including in a piece for this publication on Snap’s dual-class IPO.

He and his coauthor Craig K. Ferrere wrote:

Increasingly, company founders have been opting to shore up control by creating stock ownership structures that undercut shareholder voting power, where only a decade ago almost all chose the standard and accepted one-share, one-vote model.

Now the Snap Inc. initial public offering (IPO) takes it even further with the first-ever solely non-voting stock model. It’s a stock ownership structure that further undercuts shareholder influence, undermines corporate governance and will likely shift the burden of investment grievances to the courts.

By offering stock in the company with no shareholder vote at all, Snap — the company behind the popular mobile-messaging app Snapchat that’s all about giving a voice to the many — has acknowledged that public voting power at companies with a hierarchy of stock ownership classes is only a fiction. And it begs the question: Why does Snap even need a board?

But some critics have waved Elson’s assertions away because so many tech companies, including Facebook, have been doing well by investors.

Alas, Facebook’s shares have tanked as a result of the Cambridge Analytica revelations, and it’s unclear what’s happening among the leaders at Facebook to deal with the crisis.

Facebook’s board, advises Odland, needs to get involved and help create privacy policies and if those are violated, they need to follow up.

“This is a relatively young company in a relatively young industry that has grown to be a powerhouse and incredibly important,” he explains.  Given that, he says, there are “new forms of risk management this board needs to tackle.”

Douze questions qu’un administrateur doit se poser afin de cerner l’efficacité de son CA


J’ai trouvé très intéressantes les questions qu’un nouvel administrateur pourrait se poser afin de mieux cerner les principaux facteurs liés à la bonne gouvernance d’un conseil d’administration.

Bien sûr, ce petit questionnaire peut également être utilisé par un membre de CA qui veut évaluer la qualité de la gouvernance de son propre conseil d’administration.

Les administrateurs peuvent interroger le président du conseil, les autres membres du conseil et le secrétaire corporatif.

Les douze questions énumérées ci-dessous ont fait l’objet d’une discussion lors d’une table ronde organisée par INSEAD Directors Forum du campus asiatique de Singapore.

Cet article a été publié par Noelle Ahlberg Kleiterp* sur le site de la Harvard Law School Forum on Corporate Governance.

Chaque question est accompagnée de quelques réflexions utiles pour permettre le passage à l’acte.

Bonne lecture ! Vos commentaires sont les bienvenus.

 

Twelve questions to determine board effectiveness

 

 

In many countries, boards of directors (particularly those of large organisations) have functioned too long as black boxes. Directors’ focus has often—and understandably so—been monopolised by a laundry list of issues to be discussed and typically approved at quarterly meetings.

The board’s own performance, effectiveness, processes and habits receive scant reflection. Many directors are happy to leave the corporate secretary with the task of keeping sight of governance best practices; certainly they do not regard it as their own responsibility.

It occurred to me later that these questions could be of broader use to directors as a framework for beginning a reassessment of their board role.

Résultats de recherche d'images pour « questions de gouvernance »

However, increased regulatory pressures are now pushing boards toward greater responsibility, transparency and self-awareness. In some countries, annual board reviews have become compulsory. In addition, mounting concerns about board diversity provide greater scope for questioning the status quo.

Achieving a more heterogeneous mix of specialisations, cultures and professional experiences entails a willingness to revise some unwritten rules that, in many instances, have governed board functions. And that is not without risk.

At the same time, the “diversity recruits” wooed for board positions may not know the explicit, let alone the implicit, rules. Some doubtless never anticipated they would be asked to join a board. Such invitations often come out of the blue, with little motivation or clarity about what is expected from the new recruit. No universal guidelines are available to aid candidates as they decide whether to accept their invitation.

Long-standing directors and outliers alike could benefit from a crash course in the fundamentals of well-run boards. This was the subject of a roundtable discussion held in February 2017 as part of the INSEAD Directors Forum on the Asia campus.

As discussion leader, I gave the participants, most of whom were recent recipients of INSEAD’s Certificate in Corporate Governance, a basic quiz designed to prompt reflection about how their board applies basic governance principles. It occurred to me later that these questions could be of broader use to directors as a framework for beginning a reassessment of their board role.

 

Questions and reflections

 

Q1) True/False: My board maintains a proper ratio of governing vs. executing.

Reflection: Recall basic principles of governance. If you are executing, who is maintaining oversight over you? Why aren’t the executive team executing and the board governing?

 

Q2) True/False: My board possesses the required competencies to fulfil its duties.

Reflection: Competencies can be industry-specific or universal (such as being an effective director). Many boards are reluctant to replace members, yet the needs of the organisation shift and demand new competencies, particularly in the digital age. Does your board have a director trained in corporate governance who could take the lead? Or does it adopt the outdated view of governance as a matter for the corporate secretary, perhaps in consultation with owners?

 

Q3) True/False: The frequency and duration of my board meetings are sufficient.

Reflection: Do you cover what you must cover and have ample time for strategy discussions? Are discussions taking place at the table that should be conducted prior to meetings?

 

Q4) How frequently does your chairperson meet with management: weekly, fortnightly, monthly, or otherwise?

Reflection: Meetings can be face-to-face or virtual. An alternative question is: Consider email traffic between the chair/board and management—is correspondence at set times (e.g. prior to scheduled meetings/calls) or random in terms of topic and frequency?

 

Q5) Is this frequency excessive, adequate or insufficient?

Reflection: Consider what is driving the frequency of the meetings (or email traffic). Is there a pressing topic that justifies more frequent interactions? Is there a lack of trust or lack of interest driving the frequency?

 

Q6) True/False: My board possesses the ideal mix of competencies to handle the most pressing issue on the agenda.

Reflection: If one issue continually appears on the agenda (e.g. marketing-related), there could be reason to review the board’s effectiveness with regards to this issue, and probably the mix of skills within the current board. If the necessary expertise were present at the table, could the board have resolved the issue?

 

Q7) True/False: The executive team is competent/capable. If “false”, is your board acting on this?

Reflection: At this point in the quiz, you should be considering whether incompetency is the issue. If so, is it being addressed? How comfortable are you, for example, that your executive team is capable of addressing digitisation?

 

Q8) True/False: My chairperson is effective.

Reflection: Perhaps incompetency rests with the chairperson or with a few board members. Are elements within control of the chairperson well managed? Does your board function professionally? If not, does the chair intervene and improve matters? Are you alone in your views regarding board effectiveness? A “false” answer here should lead you to take an activist role at the table to guide the chair and the board to effectiveness.

 

Q9) Yes/No: Does your board effectively make use of committees? If “yes”, how many and for which topics? If “no”, why not?

Reflection: Well-defined committees (e.g. audit, nomination, risk) improve the efficiency of board meetings and are a vital component of governance. In the non-profit arena, use of board committees is less common. However, non-profit boards can equally benefit from this basic guiding principle of good governance.

 

Q10) True/False: Recruitment/nomination of new board members adheres to a robust process.

Reflection: When are openings posted? Who reviews/targets potential candidates? How are candidate criteria determined?  And is there a clear “on-boarding” process that is regularly revisited?

 

Q11) True/False: My board performs a board review annually.

Reflection: A board review will touch on many elements mentioned in previous questions. Obtaining buy-in for the first review might prove painful. Thereafter knowledge of an annual review will undoubtedly lead to more conscious governance and opportunities to introduce improvements (including replacement of board members). Procedurally, the review of the board as a whole should precede the review of individuals.

 

Q12) Think of a tough decision your board has made. Recall how the decision was reached and results were monitored. Was “fair process leadership” (FPL) at play?

Reflection: Put yourself in the shoes of a fellow board member, perhaps the one most dissatisfied with the outcome of a particular decision. Would that person agree that fair process was adhered to, despite his or her own feelings? Boards that apply fair process move on—as a team—from what is perceived to be a negative outcome for an individual board member. If decisions are made rashly and lack follow-up, FPL is not applied. Energies will quickly leave the room.

 

From reflection to action

 

Roundtable participants agreed that these questions should be applied in light of the longevity of the organisation concerned. Compared with most mature organisations, a start-up will need many more board meetings and more interactions between the board and the management team. The “exit” phase of an organisation (or a sub-part of the organisation) is another time in the lifecycle that requires intensified board involvement.

Particularly in the non-profit sector, where directors commonly work pro bono, passion for the organisational mission should be a prerequisite for all prospective board members. However, passion—in the form of a determination to see the organisation’s strategy succeed—should be a consideration for all board members and nominees, regardless of the sector.

Directors who apply the above framework and are dissatisfied with what they discover could seek solutions in their professional networks, corporate governance textbooks or a course such as INSEAD’s International Directors Programme.

If you are considering a board role, you could use the 12 questions, tweak them for your needs and evaluate your answers. Speak not only with the chair, but also with as many board members and relevant executive team members as you can. Understand your comfort level with how the board operates and applies governance principles before accepting a mandate.

Noelle Ahlberg Kleiterp, MBA, IDP-C, has worked for 25 years across three continents with companies including GE, KPMG, Andersen Consulting and Atradius. Noelle owns a sole proprietorship in Singapore and serves as a board member on a non-profit organisation in Singapore.

Top 10 de Harvard Law School Forum on Corporate Governance au 15 mars 2018


Voici le compte rendu hebdomadaire du forum de la Harvard Law School sur la gouvernance corporative au 15 mars 2018.

Comme à l’habitude, j’ai relevé les dix principaux billets.

Bonne lecture !

 

 

Résultats de recherche d'images pour « top 10 »

 



  1. The Rise of Blockchains and Regulatory Scrutiny
  2. The Narrowing Scope of Whistleblower Anti-Retaliation Protections
  3. Taxation and Executive Compensation: Evidence from Stock Options
  4. An Identity Theory of the Short- and Long-Term Investor Debate
  5. What a Difference a (Birth) Month Makes: The Relative Age Effect and Fund Manager Performance
  6. The Hidden Power of Compliance
  7. SEC Guidance on Public Company Cybersecurity Disclosures
  8. Investor Ideology
  9. Remarks to the SEC Investor Advisory Committee
  10. Overview of Proposed Revisions to the UK Corporate Governance Code

 

Jacques Grisé, Ph.D., F.Adm.A.

Enjeux clés concernant les membres des comités d’audit | KPMG


Le récent rapport de KPMG sur les grandes tendances en audit présente sept défis que les membres des CA, notamment les membres des comités d’audit, doivent considérer afin de bien s’acquitter de leurs responsabilités dans la gouvernance des sociétés.

Le rapport a été rédigé par des professionnels en audit de la firme KPMG ainsi que par le Conference Board du Canada.

Les sept défis abordés dans le rapport sont les suivants :

– talent et capital humain ;

– technologie et cybersécurité ;

– perturbation des modèles d’affaires ;

– paysage réglementaire en évolution ;

– incertitude politique et économique ;

– évolution des attentes en matière de présentation de l’information ;

– environnement et changements climatiques.

Je vous invite à consulter le rapport complet ci-dessous pour de plus amples informations sur chaque enjeu.

Bonne lecture !

 

Tendances en audit

 

 

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Alors que l’innovation technologique et la cybersécurité continuent d’avoir un impact croissant sur le monde des finances et des affaires à l’échelle mondiale, tant les comités d’audit que les chefs des finances reconnaissent le besoin de compter sur des talents de haut calibre pour contribuer à affronter ces défis et à en tirer parti.

Le rôle du comité d’audit est de s’assurer que l’organisation dispose des bonnes personnes possédant l’expérience et les connaissances requises, tant au niveau de la gestion et des opérations qu’au sein même de sa constitution. Il ne s’agit que de l’un des nombreux défis à avoir fait surface dans le cadre de ce troisième numéro du rapport Tendances en audit.

Les comités d’audit d’aujourd’hui ont la responsabilité d’aider les organisations à s’orienter parmi les nombreux enjeux et défis plus complexes que jamais auxquels ils font face, tout en remplissant leur mandat traditionnel de conformité et de présentation de l’information. Alors que les comités d’audit sont pleinement conscients de cette nécessité, notre rapport indique que les comités d’audit et les chefs des finances se demandent dans quelle mesure leur organisation est bien positionnée pour faire face à la gamme complète des tendances actuelles et émergentes.

Pour mettre en lumière cette préoccupation et d’autres enjeux clés, le rapport Tendances en audit se penche sur les sept défis qui suivent :

  1. talent et capital humain;
  2. technologie et cybersécurité;
  3. perturbation des modèles d’affaires;
  4. paysage réglementaire en évolution;
  5. incertitude politique et économique;
  6. évolution des attentes en matière de présentation de l’information;
  7. environnement et changements climatiques.

Au fil de l’évolution des mandats et des responsabilités, ce rapport se révélera être une ressource précieuse pour l’ensemble des parties prenantes en audit.

Top 10 de Harvard Law School Forum on Corporate Governance au 9 mars 2018


Voici le compte rendu hebdomadaire du forum de la Harvard Law School sur la gouvernance corporative au 9 mars 2018.

Comme à l’habitude, j’ai relevé les dix principaux billets.

Bonne lecture !

 

 

Résultats de recherche d'images pour « Top 10 »

 


 

 

  1. Limited Liability and the Known Unknown
  2. UN Investor Summit Highlights
  3. Key Governance Issues—Ways for the Future
  4. Rethinking Corporate Law During a Financial Crisis
  5. Firm Level Decisions in Response to the Crisis: Shareholders vs. Other Stakeholders
  6. Sexual Harassment in Today’s Workplace
  7. The Cost of Turning a Blind Eye
  8. Tax Cuts and Shareholder Activism
  9. So Long, Stockholder
  10. Investor Letter to CEOs: The Strategic Investor Initiative