Énoncés de principes de bonne gouvernance 2012 | Business Roundtable *

Voici un document publié par l’organisation américaire Business Roundtable qui est la plus importante association de PCD (CEO) aux É.U. et qui regroupe les plus grandes sociétés avec un total de $6 trillion en revenus annuels et plus de 12 million d’employés. Ce document présente le point de vue des hauts dirigeants de ces sociétés sur les pratiques de bonne gouvernance. Le rapport est représentatif de ce que les membres pensent que devraient être les pratiques exemplaires en matière de gouvernance. C’est une lecture vraiment très pertinente.

Principles of Corporate Governance – 2012

« Business Roundtable supports the following guiding principles:

First, the paramount duty of the board of directors of a public corporation is to select a chief executive officer and to oversee the CEO and senior management in the competent and ethical operation of the corporation on a day-to-day basis.

Second, it is the responsibility of management, under the oversight of the board, to operate the corporation in an effective and ethical manner to produce long-term value for shareholders. The board of directors, the CEO and senior management should set a “tone at the top” that establishes a culture of legal compliance and integrity. Directors and management should never put personal interests ahead of or in conflict with the interests of the corporation.

Third, it is the responsibility of management, under the oversight of the board, to develop and implement the corporation’s strategic plans, and to identify, evaluate and manage the risks inherent in the corporation’s strategy. The board of directors should understand the corporation’s strategic plans, the associated risks, and the steps that management is taking to monitor and manage those risks. The board and senior management should agree on the appropriate risk profile for the corporation, and they should be comfortable that the strategic plans are consistent with that risk profile.

Fourth, it is the responsibility of management, under the oversight of the audit committee and the board, to produce financial statements that fairly present the financial condition and results of operations of the corporation and to make the timely disclosures investors need to assess the financial and business soundness and risks of the corporation.

Fifth, it is the responsibility of the board, through its audit committee, to engage an independent accounting firm to audit the financial statements prepared by management and issue an opinion that those statements are fairly stated in accordance with Generally Accepted Accounting Principles, as well as to oversee the corporation’s relationship with the outside auditor.

Sixth, it is the responsibility of the board, through its corporate governance committee, to play a leadership role in shaping the corporate governance of the corporation and the composition and leadership of the board. The corporate governance committee should regularly assess the backgrounds, skills and experience of the board and its members and engage in succession planning for the board.

Seventh, it is the responsibility of the board, through its compensation committee, to adopt and oversee the implementation of compensation policies, establish goals for performance-based compensation, and determine the compensation of the CEO and senior management. Compensation policies and goals should be aligned with the corporation’s long-term strategy, and they should create incentives to innovate and produce long-term value for shareholders without excessive risk. These policies and the resulting compensation should be communicated clearly to shareholders.

Eighth, it is the responsibility of the corporation to engage with longterm shareholders in a meaningful way on issues and concerns that are of widespread interest to long-term shareholders, with appropriate involvement from the board of directors and management.

Ninth, it is the responsibility of the corporation to deal with its employees, customers, suppliers and other constituencies in a fair and equitable manner and to exemplify the highest standards of corporate citizenship.

These responsibilities and others are critical to the functioning of the modern public corporation and the integrity of the public markets. No law or regulation can be a substitute for the voluntary adherence to these principles by corporate directors and management in a manner that fits the needs of their individual corporations ».

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* En reprise

Articles reliés au sujet :

Histoire récente de l’essor des investisseurs activistes | Conditions favorables et avenir prévisible ? *

Ce matin, je vous convie à une lecture révélatrice des facteurs qui contribuent aux changements de fond observés dans la gouvernance des grandes sociétés cotées, lesquels sont provoqués par les interventions croissantes des grands investisseurs activistes.

Cet article de quatre pages, publié par John J. Madden de la firme Shearman & Sterling, et paru sur le blogue du Harvard Law School Forum on Corporate Governance and Financial Regulation, présente les raisons de l’intensification de l’influence des investisseurs dans la stratégie et la direction des entreprises, donc de la gouvernance, un domaine du ressort du conseil d’administration, représentants des actionnaires … et des parties prenantes.

English: Study on alternative investments by i... — English: Study on alternative investments by institutional investors. (Photo credit: Wikipedia)

Après avoir expliqué l’évolution récente dans le monde de la gouvernance, l’auteur brosse un tableau plutôt convainquant des facteurs d’accélération de l’influence des activistes eu égard aux orientations stratégiques.

Les raisons qui expliquent ces changements peuvent être résumées de la manière suivante :

Un changement d’attitude des grands investisseurs, représentant maintenant 66 % du capital des grandes corporations, qui conduit à des intérêts de plus en plus centrés sur l’accroissement de la valeur ajoutée pour les actionnaires;
Un nombre accru de campagnes (+ de 50 %) initiées par des activistes lesquelles se traduisent par des victoires de plus en plus éclatantes;
Un retour sur l’investissement élevé (13 % entre 2009 et 2012) accompagné par des méthodes analytiques plus sophistiquées et plus crédibles (livres blancs);
Un accroissement du capital disponible notamment par l’apport de plus en plus grand des investisseurs institutionnels (fonds de pension, compagnies d’assurance, fonds commun de placement, caisses de retraite, etc.);
Un affaiblissement dans les moyens de défense des C.A. et une meilleure communication entre les actionnaires;
Un intérêt de plus en plus marqué des C.A. et de la direction par un engagement avec les investisseurs activistes.

À l’avenir, les activistes vont intensifier leurs efforts pour exiger des changements organisationnels significatifs (accroissement des dividendes, réorganisation des unités d’affaires, modification des règles de gouvernance, présence sur les conseils, séparation des rôles de PCD et PCA, alignement de la rémunération des dirigeants avec la performance, etc.).

Ci-dessous, un extrait des passages les plus significatifs. Bonne lecture !

The Evolving Direction and Increasing Influence of Shareholder Activism

One of the signal developments in 2012 was the emerging growth of the form of shareholder activism that is focused on the actual business and operations of public companies. We noted that “one of the most important trendline features of

2012 has been the increasing amount of strategic or operational activism. That is, shareholders pressuring boards not on classic governance subjects but on the actual strategic direction or management of the business of the corporation.”… Several of these reform initiatives of the past decade continue to be actively pursued. More recently, however, the most significant development in the activism sphere has been in strategically-focused or operationally-focused activism led largely by hedge funds.

The 2013 Acceleration of “Operational” Activism

Some of this operational activism in the past few years was largely short-term return focused (for example, pressing to lever up balance sheets to pay extraordinary dividends or repurchase shares), arguably at the potential risk of longer-term corporate prosperity, or simply sought to force corporate dispositions; and certainly there continues to be activism with that focus. But there has also emerged another category of activism, principally led by hedge funds, that brings a sophisticated analytical approach to critically examining corporate strategy and capital management and that has been able to attract the support of mainstream institutional investors, industry analysts and other market participants. And this growing support has now positioned these activists to make substantial investments in even the largest public companies. Notable recent examples include ValueAct’s $2.2 billion investment in Microsoft (0.8%), Third Point’s $1.4 billion investment in Sony (7%), Pershing Square’s $2 billion investment in Procter & Gamble (1%) and its $2.2 billion investment in Air Products & Chemicals (9.8%), Relational Investor’s $600 million investment in PepsiCo (under 1%), and Trian Fund Management’s investments of $1.2 billion in DuPont (2.2%) and of more than $1 billion in each of PepsiCo and Mondelez. Interestingly, these investors often embark on these initiatives to influence corporate direction and decision-making with relatively small stakes when measured against the company’s total outstanding equity—as in Microsoft, P&G, DuPont and PepsiCo, for example; as well as in Greenlight Capital’s 1.3 million share investment in Apple, Carl Icahn’s 5.4% stake in Transocean, and Elliot Management’s 4.5% stake in Hess Corp.

In many cases, these activists target companies with strong underlying businesses that they believe can be restructured or better managed to improve shareholder value. Their focus is generally on companies with underperforming share prices (often over extended periods of time) and on those where business strategies have failed to create value or where boards are seen as poor stewards of capital.

Reasons for the Current Expansion of Operational Activism

Evolving Attitudes of Institutional Investors.

… Taken together, these developments have tended to test the level of confidence institutional investors have in the ability of some boards to act in a timely and decisive fashion to adjust corporate direction, or address challenging issues, when necessary in the highly competitive, complex and global markets in which businesses operate. And they suggest a greater willingness of investors to listen to credible external sources with new ideas that are intelligently and professionally presented.

Tangible evidence of this evolution includes the setting up by several leading institutional investors such as BlackRock, CalSTRS and T. Rowe Price of their own internal teams to assess governance practices and corporate strategies to find ways to improve corporate performance. As the head of BlackRock’s Corporate Governance and Responsible Investor team recently commented, “We can have very productive and credible conversations with managements and boards about a range of issues—governance, performance and strategy.”

Increasing Activist Campaigns Generally; More Challenger Success. The increasing number of activist campaigns challenging incumbent boards—and the increasing success by challengers—creates an encouraging market environment for operational activism. According to ISS, the resurgence of contested board elections, which began in 2012, continued into the 2013 proxy season. Proxy contests to replace some or all incumbent directors went from 9 in the first half of 2009 to 19 in the first half of 2012 and 24 in the first half of 2013. And the dissident win rate has increased significantly, from 43% in 2012 to 70% in 2013. Additionally, in July 2013, Citigroup reported that the number of $1 billion + activist campaigns was expected to reach over 90 for 2013, about 50% more than in 2012.

Attractive Investment Returns; Increasing Sophistication and Credibility. While this form of activism has certainly shown mixed results in recent periods (Pershing Square’s substantial losses in both J.C. Penney and Target have been among the most well-publicized examples of failed initiatives), the overall recent returns have been strong. Accordingly to Hedge Fund Research in Chicago, activist hedge funds were up 9.6% for the first half of 2013, and they returned an average of nearly 13% between 2009 and 2012.

In many instances, these activists develop sophisticated and detailed business and strategic analyses—which are presented in “white papers” that are provided to boards and managements and often broadly disseminated—that enhance their credibility and help secure the support, it not of management, of other institutional shareholders.

Increasing Investment Capital Available; Greater Mainstream Institutional Support. The increasing ability of activist hedge funds to raise new money not only bolsters their firepower, but also operates to further solidify the support they garner from the mainstream institutional investor community (a principal source of their investment base). According to Hedge Fund Research, total assets under management by activist hedge funds has doubled in the past four years to $84 billion today. And through August this year their 2013 inflows reached $4.7 billion, the highest inflows since 2006. Particularly noteworthy in this regard, Pershing Square’s recent $2.2 billion investment in Air Products & Chemicals was funded in part with capital raised for a standalone fund dedicated specifically to Air Products, without disclosing the target’s name to investors.

In addition to making capital available, mainstream institutions are demonstrating greater support for these activists more generally. In a particularly interesting vote earlier this year, at the May annual meeting of Timken Co., 53% of the shareholders voting supported the non-binding shareholder proposal to split the company in two, which had been submitted jointly by Relational Investors (holding a 6.9% stake) and pension fund CalSTRS (holding 0.4%). To build shareholder support for their proposal, Relational and CalSTRS reached out to investors both in person and through the internet. Relational ran a website (unlocktimken . com) including detailed presentations and supportive analyst reports. They also secured the support of ISS and Glass Lewis. Four months after the vote, in September, Timken announced that it had decided to spin off its steel-making business.

The Timken case is but one example of the leading and influential proxy advisory firms to institutional investors increasingly supporting activists. Their activist support has been particularly noticeable in the context of activists seeking board representation in nominating a minority of directors to boards.

These changes suggest a developing blurring of the lines between activists and mainstream institutions. And it may be somewhat reminiscent of the evolution of unsolicited takeovers, which were largely shunned by the established business and financial communities in the early 1980s, although once utilized by a few blue-chip companies they soon became a widely accepted acquisition technique.

Weakened Board-Controlled Defenses; Increasing Communication Among Shareholders. The largely successful efforts over the past decade by certain pension funds and other shareholder-oriented organizations to press for declassifying boards, redeeming poison pills and adopting majority voting in director elections have diminished the defenses available to boards in resisting change of control initiatives and other activist challenges. Annual board elections and the availability of “withhold” voting in the majority voting context increases director vulnerability to investor pressure.

And shareholders, particularly institutional shareholders and their representative organizations, are better organized today for taking action in particular situations. The increasing and more sophisticated forms of communication among shareholders—including through the use of social media—is part of the broader trend towards greater dialogue between mainstream institutions and their activist counterparts. In his recent op-ed article in The Wall Street Journal, Carl Icahn said he would use social media to make more shareholders aware of their rights and how to protect them, writing that he had set up a Twitter account for that purpose (with over 80,000 followers so far) and that he was establishing a forum called the Shareholders Square Table to further these aims.

Corporate Boards and Managements More Inclined to Engage with Activists. The several developments referenced above have together contributed to the greater willingness today of boards and managements to engage in dialogue with activists who take investments in their companies, and to try to avoid actual proxy contests.

One need only look at the recent DuPont and Microsoft situations to have a sense of this evolution toward engagement and dialogue. After Trian surfaced with its investment in DuPont, the company’s spokesperson said in August 2013: “We are aware of Trian’s investment and, as always, we routinely engage with our shareholders and welcome constructive input. We will evaluate any ideas Trian may have in the context of our ongoing initiatives to build a higher value, higher growth company for our shareholders.” Also in August, Microsoft announced its agreement with ValueAct to allow the activist to meet regularly with the company’s management and selected directors and give the activist a board seat next year; thereby avoiding a potential proxy contest for board representation by ValueAct. Soon thereafter, on September 17, Microsoft announced that it would raise its quarterly dividend by 22% and renew its $40 billion share buyback program; with the company’s CFO commenting that this reflected Microsoft’s continued commitment to returning cash to its shareholders.

What to Expect Ahead

The confluence of the factors identified above has accelerated the recent expansion of operational activism, and there is no reason in the current market environment to expect that this form of activism will abate in the near term. In fact, the likelihood is that it will continue to expand… Looking ahead, we fully expect to see continuing efforts to press for the structural governance reforms that have been pursued over the past several years. Campaigns to separate the Chair and CEO roles at selected companies will likely continue to draw attention as they did most prominently this year at JPMorgan Chase. And executive compensation will remain an important subject of investor attention, and of shareholder proposals, at many companies where there is perceived to be a lack of alignment between pay and performance. We can also expect that the further development of operational activism, and seeing how boards respond to it, will be a central feature of the governance landscape in the year ahead.

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* En reprise

Finding Value in Shareholder Activism (clsbluesky.law.columbia.edu)

The Corporate Social Responsibility Report and Effective Stakeholder Engagement (venitism.blogspot.com)

The Evolving Direction and Increasing Influence of Shareholder Activism (blogs.law.harvard.edu)

Shareholder activism on the rise in Canada (business.financialpost.com)

Dealing With Activist Hedge Funds (blogs.law.harvard.edu)

American Activist Investors Get Ready To Invade Europe (forbes.com)

Activist Investors Help Companies, Not Workers – Bloomberg (bloomberg.com)

The Separation of Ownership from Ownership (blogs.law.harvard.edu)

Réflexions capitales pour les Boards en 2014 – The Harvard Law School (jacquesgrisegouvernance.com)

Shareholder Activism as a Corrective Mechanism in Corporate Governance by Paul Rose, Bernard S. Sharfman (togovern.wordpress.com)

Résultats de l’enquête portant sur « La gouvernance à l’ère du numérique » **

Les résultats d’une grande enquête ont été dévoilés en primeur aux 125 participants présents au Séminaire Gouvernance Express 2014 tenu le mercredi 19 mars au Sheraton Montréal sous le thème «La gouvernance de sociétés à l’ère du numérique».

Nature de l’enquête

Devant les enjeux associés à la transformation numérique des organisations, le Collège des administrateurs de sociétés (CAS) a lancé, en février dernier, une enquête afin de recueillir des données sur l’impact du numérique dans la gouvernance des sociétés et les effets sur le rôle et les responsabilités des administrateurs.

Méthodologie

Ce sondage a été administré par la firme BIP de Montréal auprès des diplômés de trois collèges de formation en gouvernance de sociétés soit le Directors College (Ontario), l’Institut Français des administrateurs (France) et le Collège des administrateurs de sociétés (Québec). Au total, 319 personnes ont participé à cette enquête, ce qui correspond à un taux de réponse de 20 %. Le questionnaire Web a été élaboré par un comité de travail dirigé par M. René Leclerc, diplômé du CAS, suite à une analyse des études récentes sur ce sujet et à une série d’entrevues effectuées par Expansion Stratégies auprès de dix leaders d’influence et administrateurs de sociétés*.

Le questionnaire regroupait des questions sur sept volets :

le niveau de participation du répondant à des conseils d’administration,

le profil de l’organisation dans laquelle le répondant est le plus impliqué à titre d’administrateur de sociétés,

le degré d’utilisation des technologies numériques au sein du C.A. de cette organisation,

le pourquoi du numérique dans cette organisation,

l’implication du C.A. dans la prise de décisions en matière de numérique dans cette organisation,

la perception du répondant, à titre d’administrateur, face au numérique et finalement,

le profil technologique du répondant.

Sommaire des résultats de l’enquête

Plusieurs résultats très intéressants émanent de ce sondage. D’entrée de jeu, il est important de mentionner que la taille de l’organisation dans laquelle l’administrateur est le plus impliqué est une variable nettement plus significative que le genre ou le pays d’origine lorsque vient le temps de caractériser les perceptions et les comportements des répondants face au numérique.

The Price Building, in the old city of Quebec City. The building is the head office of the Caisse de dépôt et placement du Québec and the official residence of the Premier of Québec (Photo credit: Wikipedia)

Ainsi, il ressort que, parmi les répondants qui agissent à titre d’administrateur au sein d’un C.A. faisant usage de technologies numériques (ou qui l’ont été récemment), 46 % d’entre eux fonctionnent sans papier. Il va sans dire que le taux d’utilisation des plateformes spécialisées par les conseils d’administration a beaucoup augmenté depuis l’arrivée des tablettes.

D’autres résultats percutants : 72 % des répondants actifs au sein d’un C.A. confirment que leur conseil n’a aucun membre possédant une expertise numérique et 56 % affirment que ce conseil s’implique dans les décisions numériques au moins une fois par année. De plus, 59 % de ces répondants affirment que les technologies numériques sont très importantes afin de permettre à leur organisation d`être plus productive, tandis que seulement 27 % de ceux-ci affirment qu’elles sont très importantes pour se démarquer de la concurrence. On remarque aussi que 88 % des répondants se disent personnellement actifs sur LinkedIn tandis que seulement 8 % affirment initier des discussions sur Facebook. Enfin, seulement 49 % des répondants qui sont actifs sur un C.A. affirment que leur conseil se soucie activement de la réputation de l’organisation sur les médiaux sociaux.

Globalement, le sondage montre très clairement que les administrateurs sont devant un paradoxe des temps modernes : ils manient aisément les outils numériques, mais ne se semblent pas se sentir aussi à l’aise envers les stratégies liées au virage numérique qu’envers celles liées aux enjeux habituels de gouvernance. De ce fait, le leadership du virage numérique et bon nombre de décisions qui s’y rattachent sont pris par la direction générale des organisations. Si on veut que les conseils d’administration augmentent leur pouvoir décisionnel ou s’arriment à cette nouvelle réalité, il y aurait lieu de sensibiliser et de former les administrateurs et d’intégrer de nouveaux administrateurs experts dans le numérique, conscients des enjeux qui y sont justement rattachés.

En accord avec les études récentes, le groupe de travail suggère les pistes d’action suivantes aux membres de conseils d’administration :

Prévoir que la concurrence, pour attirer des membres avec expérience numérique, va s’intensifier rapidement;

Bâtir une équipe numérique au CA qui est diversifiée;

N’attendez pas une crise numérique pour adapter le CA;

Effectuer des revues périodiques des enjeux technologiques;

Implanter des revues du portefeuille TI en appui au modèle d’affaires de l’organisation.

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*Le groupe de travail du CAS était formé des personnes suivantes :

Gilles Bernier, ASC, Directeur des programmes, Collège des administrateurs de sociétés

Alain Bolduc, ASC, administrateur de sociétés

Patrick Courtemanche, Vice-Président-Opérations, BIP

Jacques Grysole, Président, Expansion Stratégies, inc.

Lucie Leclerc, Présidente Directrice Générale, BIP

René Leclerc, ASC, Administrateur de sociétés

Dominique Maheux, Conseillère BIP et propriétaire de DataSapiens

À propos du Collège des administrateurs de sociétés

Créé en 2005 grâce à un partenariat entre l’Autorité des marchés financiers, la Caisse de dépôt et placement du Québec, le ministère du Conseil exécutif du Québec et la Faculté des sciences de l’administration de l’Université Laval, le Collège des administrateurs de sociétés se positionne comme leader de la formation des administrateurs et représente le seul programme de certification universitaire en gouvernance de sociétés au Québec. Il contribue au développement et à la promotion de la bonne gouvernance de sociétés en offrant des formations reconnues et à la fine pointe des meilleures pratiques. À ce jour, le CAS a diplômé 590 ASC. Il est possible de consulter leur profil en visitant le www.BanqueAdministrateurs.com.

À propos de BIP

Le Bureau d’Intervieweurs Professionnels (BIP) figure parmi les plus importantes firmes de sondage au Québec. Fondé en 1976 et acquis en 1988 par la présidente actuelle, BIP et son équipe de 150 employés sondent près de 250 000 personnes et organisations au Québec, au Canada et ailleurs dans le monde. L’entreprise offre un service sur mesure ou complet de collecte (téléphonique, en ligne, via son panel, etc.), de traitement de données et d’analyse de recherche, tant pour la clientèle du secteur public que privé. Reconnu pour son savoir-faire dans les mandats complexes et variés, BIP offre une expertise unique et personnalisée. Sa réputation d’excellence depuis plus de 25 ans est fondée sur le respect, la rigueur et le résultat.

À propos d’Expansion Stratégies

Expansion Stratégies inc. est un bureau-conseil fondé en 1997 par Jacques Grysole, MBA. Sa mission est d’aider au développement à court et long terme de ses clients. Une analyse rigoureuse et précise, des plans stratégiques minutieusement préparés, des indicateurs réalistes de performance et un suivi méthodique sont au cœur de cette approche innovante. Expansion Stratégies inc. contribue au succès d’entreprises privées et publiques au Québec et œuvre dans plus de trente pays auprès d’organismes de développement économique et de grandes organisations de développement international. http://www.expansionstrategies.ca

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** En reprise

Comment échapper aux mythes trompeurs de la rémunération des PCD ?

Voici un texte de Michael Dorff, professeur à Southwestern Law School, qui se questionne sérieusement sur le processus de rémunération des CEO (PCD), plus particulièrement sur les indicateurs utilisés pour en établir la valeur.

Dans son livre à paraître bientôt, « Indispensable and other myths : The empirical truth about CEO pay », il avance qu’il faut échapper à l’envie d’utiliser l’approche de la comparaison (Benchmark) avec les pairs pour fixer les rémunérations des PCD, et à l’idée de relier trop étroitement leurs rémunérations avec la capitalisation boursière de l’entreprise.

Selon lui, il n’y a pas de marché pour les talents des PCD et ceux-ci ont peu de possibilités de trouver un poste similaire dans une autre entreprise. Pourquoi alors entretenir le mythe de leur situation monopolistique, toute puissante ?

L’auteur présente une vision assez révolutionnaire de la manière de concevoir la rétribution des présidents et chefs de direction (PCD).

Je reproduis ci-dessous le billet paru sur son site Indispensable and other myths. Quel est votre point de vue sur le sujet ?

Quels sont les critères les plus raisonnables pour établir la rémunération des hauts dirigeants ? Vos commentaires sont les bienvenus !

Escaping the Conformity Trap

Pearl Meyer & Partners has just released their contribution to the NACD’s new Governance Challenges 2014 and Beyond report, “Escaping the Conformity Trap: Aligning Executive Pay Programs with Business and Leadership Objectives.” I love the overall theme, which is that companies should not default to cookie-cutter measures of executive performance just because their peer companies do. The report also indicates that companies shouldn’t defer to peers on the amount of pay, though this point is less prominent. I make a similar — though more sweeping — argument in my forthcoming book, Indispensable and Other Myths: Why the CEO Pay Experiment Failed, and How to Fix It. (The book should be out around the end of May.)

Office Politics: A Rise to the Top (Photo credit: Alex E. Proimos)

Unfortunately, while there’s a lot in the Pearl Meyer report that is laudable, there’s also a fair amount of rehashing of typical errors. On page 18 (the report starts on p. 17 for some reason), the report describes the growth in CEO pay of 12% from 2009-2012 in Fortune 100 firms as “comparatively conservative.” This is technically true, if by “comparatively conservative” Pearl Meyer means that there have been much steeper rises in executive pay. But the rationale seems to be different. The report points out that the market capitalization of Fortune 100 firms increased by 50% over this same period, and credits external scrutiny of CEO pay and a desire to remain within peers’ norms for restraining CEO pay.

The clear implication here is that CEO pay should rise in proportion to the company’s stock price. (The report says this more explicitly on page 19 when it says total shareholder return is often a good performance metric.) As I point out in Indispensable, this is a dangerous fallacy. CEOs do not control their companies’ stock price. They can influence price (especially in the short term), but careful empirical studies have repeatedly demonstrated that executives’ actions account for only a small percentage of share price movement. The external environment broadly — and in the industry more particularly — drive the bulk of share price movement. So why should companies peg CEO pay to the growth in share price that for the most part is independent of their actions? This sort of rhetorical move is particularly disappointing in a report whose laudable aims seems to be to move companies in precisely the opposite direction, away from easy, off-the-shelf measures like share price that fail to capture what companies should really care about.
The report also backtracks when it comes to using comparable companies to set the amount of CEO pay. Despite having at least hinted that this is a poor strategy elsewhere in the report, it states (on p. 18):

Of course, there is nothing inherently wrong with providing executives with pay opportunities that reflect market norms for comparable positions in similarly sized and oriented companies. With well-designed long-term performance metrics and goals, establishing pay opportunities at market median will help ensure that actual, realizable pay is appropriately positioned based on relative performance outcomes.

But there absolutely is something wrong with this. As Charles Elson and Craig Ferrere have recently demonstrated, there is no market for CEO talent. Since CEOs have little ability to move to another company, why should a company care what its competitors are paying their own CEOs? Why not try to get a bargain by paying less, if the CEO can’t get a comparable job elsewhere? Scholars have advanced plenty of rationales (which I explore in the book but don’t have room to delve into here), but none of them work very well.

Although I’m disappointed that the report does not go nearly far enough, I was heartened that a major compensation consultant is at least beginning to question the conventional wisdom. It’s a small step, but at least it’s in the right direction.

Vent de changement dans les pratiques de vote des actionnaires !

Toute l’attention portée à la propriété et à la gouvernance des entreprises au cours des dernières années a menée à une réaffirmation du pouvoir du vote des actionnaires lors des assemblées annuelles des sociétés. Les actionnaires font entendre leurs voix de multiples manières auprès de la direction des entreprises et des conseils d’administration. La montée de l’actionnariat activiste est sûrement l’une des raisons de cette recrudescence.

La théorie de l’agence – qui veut que les actionnaires choisissent leurs agents/représentants (i.e. les administrateurs) et que ces derniers soient tenus responsables de la direction de l’organisation – semble mise à mal par les nouvelles intrusions des actionnaires dans la gestion de l’entreprise.

Les auteurs Paul H. Edelman et Randall S. Thomas, professeurs à Vanderbilt University, et Robert Thompson, professeur à Georgetown University Law Center, ont publié un document de recherche captivant portant sur le renouvellement des pratiques de votation dans une ère de « capitalisme intermédiaire ».

Quels sont les implications de ces changements pour la gouvernance des entreprises ? Assiste-t-on à un séisme dans le monde de la gouvernance ? Quelle sera la place des administrateurs dans la conduite des organisations si les actionnaires veulent faire la loi et exercer leur volonté en tout temps ?

Voici un résumé du document tel qu’il est présenté sur le site du Harvard Law School Forum. Vos commentaires sont bienvenus. Bonne lecture !

Shareholder Voting in an Age of Intermediary Capitalism

Shareholder voting, once given up for dead as a vestige or ritual of little practical importance, has come roaring back as a key part of American corporate governance. Where once voting was limited to uncontested annual election of directors, it is now common to see short slate proxy contests, board declassification proposals, and “Say on Pay” votes occurring at public companies. The surge in the importance of shareholder voting has caused increased conflict between shareholders and directors, a tension well-illustrated in recent high profile voting fights in takeovers (e.g. Dell) and in the growing role for Say on Pay votes. Yet, despite the obvious importance of shareholder voting, none of the existing corporate law theories coherently justify it.

Vote (Photo credit: Alan Cleaver)

Traditional theory about shareholder voting, rooted in concepts of residual ownership and a principal/agent relationship, does not easily fit with the long-standing legal structure of corporate law that generally cabins the shareholder role in corporate governance. Nor do those theories reflect recent fundamental changes as to who shareholders are and their incentives to vote (or not vote). Most shares today are owned by intermediaries, usually holding other people’s money within retirement plans and following business plans that gives the intermediaries little reason to vote those shares or with conflicts that may distort that vote. Yet three key developments have countered that reality and opened the way for voting’s new prominence. First, government regulations now require many institutions to vote their stock in the best interests of their beneficiaries. Second, subsequent market innovations led to the birth of third party voting advisors, including Institutional Shareholder Services (ISS), which help address the costs of voting and the collective action problems inherent in coordinated institutional shareholder action. And third, building on these developments, hedge funds have aggressively intervened in corporate governance at firms seen as undervalued, making frequent use of the ballot box to pressure targeted firms to create shareholder value, thereby giving institutional shareholders a good reason to care about voting. In a parallel way outside of the hedge fund space, institutional investors have made dramatically greater use of voting in Say on Pay proposals, Rule 14a-8 corporate governance proposals and majority vote requirements for the election of directors.

The newly invigorated shareholder voting is not without its critics though. Corporate management has voiced fears about the increase in shareholders’ voting power, as well as about third party voting advisors’ perceived conflicts of interest. The Securities and Exchange Commission (SEC) has asked for public comments on the possible undue influence of proxy advisors over shareholder voting. Even institutional investors have varying views on the topic. Can we trust the vote to today’s intermediaries and their advisors?

In our article, Shareholder Voting in an Age of Intermediary Capitalism, we first develop our theory of shareholder voting. We argue that shareholders (and only shareholders) have been given the right to vote because they are the only corporate stakeholder whose return on their investment is tied directly to the company’s stock price; if stock price is positively correlated with the residual value of the firm, shareholders will want to maximize the firm’s residual value and vote accordingly. Thus, shareholder voting should lead to value maximizing decisions for the firm as a whole.

But that does not mean that shareholders should vote for everything. Economic theory and accepted principles of corporate law tell us that corporate officers exercise day to day managerial power at the public firm with boards of directors having broad monitoring authority over them. In this framework, shareholder voting is explained by its comparative value as a monitor. We would expect a shareholder vote to play a supplemental monitoring role if the issue being decided affects the company’s stock price, or long term value, and if the shareholder vote is likely to be superior, or complementary, to monitoring by the board or the market. This is particularly likely where the officers or directors of the company suffer from a conflict of interest, or may otherwise be seeking private benefits at the expense of the firm. Thus shareholder voting can play a negative role as a monitoring device by helping stop value-decreasing transactions.

Monitoring is not the only theoretical justification for shareholders voting. We posit two additional theories that provide positive reasons for corporate voting because they enhance decision-making beyond monitoring. Shareholder voting can provide: (1) a superior information aggregation device for private information held by shareholders when there is uncertainty about the correct decision; and (2) an efficient mechanism for aggregating heterogeneous preferences when the decision differentially affects shareholders.

We also explore whether contemporary shareholders have the characteristics that permit them to play the roles our theory contemplates. In particular, we examine the business plan that gives today’s intermediaries reasons not to vote or conflicts that can distort their vote. Similar attention is given to the regulatory and market changes that have grown up in response to this reality: government-required voting by intermediaries; third party proxy advisory firms to let this voting occur more efficiently; and hedge fund strategies to make voting pay, for themselves and for other intermediaries such as mutual funds and pension funds.

Finally, we use our theory to illuminate when shareholder voting is justified. We focus on the role of corporate voting where the issue is a high dollar, “big ticket” decision. We use hedge fund activism as an example of this scenario and show how it fits with each of the prongs of our voting theory. Here we see voting performing the monitoring role anticipated by our theory, but there is also an important role for aggregating heterogeneous preferences among shareholders as mutual funds decide whether to follow hedge fund initiatives. In addition, we make the less obvious case for shareholder voting where hedge funds drop out of the equation–on decisions that have a smaller effect on stock prices, or the company’s long term value, such as Say on Pay, majority voting proposals, and board declassification proposals.

In sum, this article presents a positive theory of corporate voting as it exists today. In doing so, it directly addresses the vast shifts in stock ownership that have created intermediary capitalism and the important role of government regulations and market participants in making corporate voting effective. At the same time, it preserves for corporate management the lion’s share of corporate decision making, subject to active shareholder monitoring using corporate voting in conflict situations that affect stock price.

The full paper is available for download here.

Document de consultation de l’OCDE sur la révision des principes de gouvernance |2014

Voici le document de consultation de l’OCDE sur la révision des principes de gouvernance |2014, présenté à Paris le 17 mars 2014. Ce document est en version anglaise seulement. Après la révision, l’OCDE produira des versions dans toutes les langues !

Celui-ci explicite les objectifs de politiques publiques en gouvernance, explore le nouveau paysage qui commande des changements en gouvernance et suggère sept (7) domaines susceptibles d’engendrer des changements importants au document Principe de gouvernance de 2004 (OECD Principles of Corporate Governance).

Je vous invite à participer à cette consultation si vous croyez utile de le faire. Ci-dessous, une introduction, suivie des 7 développements qui influeront sur la nouvelle version des principes de gouvernance de l’OCDE.

The OECD Principles of Corporate Governance is a public policy instrument intended to assist governments in their efforts to evaluate and improve the legal, regulatory and institutional framework for corporate governance. As formulated in the mandate that was given to the OECD Corporate Governance Committee in 2010, the objective is to contribute to « economic efficiency, sustainable growth and financial stability ». In practice, this objective is achieved by formulating principles for policies that give market participants sound economic incentives to perform their respective roles within a framework of checks and balances where transparency, supervision and effective enforcement provides confidence in market practices and institutions.

English: The logo of the Organisation for Economic Co-operation and Development (OECD). (Photo credit: Wikipedia)

While the Principles may inspire voluntary initiatives and influence practices in individual companies, the Principles do not aspire to include a shopping list of what individual market participants, such as shareholders, boards, managers and other stakeholders, from their unique perspectives, may consider good business judgment or sound commercial practices. What works in one company or for one investor may not necessarily be generally applicable as public policy or of systemic economic importance to society.

In order to be relevant and effective, the legal and regulatory framework must be shaped with respect to the economic reality in which it will be implemented. This is true also for the recommendations made in the Principles. And since they were last revised in 2004, the world has experienced a number of important events and structural developments in both the financial and corporate sectors. This obviously includes the financial crisis. But equally important for the review of the Principles are the far reaching changes in corporate ownership and investment practices. In some respects, these changes have come to challenge conventional wisdom and the relevance of current corporate governance standards. Several of these developments have been documented and analysed by the Corporate Governance Committee and the Regional Corporate Governance Roundtables and some of the background reports that have been written to support the review are annexed to this note for reference.

Seven main events and developments of importance to the review of the Principles can be identified:

The financial crisis.

The financial crisis revealed severe shortcomings in corporate governance. When most needed, existing standards failed to provide the checks and balances that companies need in order to cultivate sound business practices. Corporate governance weaknesses in remuneration, risk management, board practices and the exercise of shareholder rights played an important role in the development of the financial crisis and such weaknesses extended not only to the financial sector, but to companies more generally. The lessons from the financial crisis are discussed in the Committee’s report « Corporate Governance and the Financial Crisis: Conclusions and Emerging Good Practices to Enhance Implementation of the Principles » (2010).

Developments in institutional ownership, investment strategies and trading techniques.

Since the Principles were revised in 2004, assets under management by institutional investors have increased considerably. We have also seen a surge in new types of institutional investors, investment vehicles and trading techniques. Taken together, these developments have affected the character and quality of ownership engagement. Many of the largest institutional investors, such as pension funds, insurance companies and mutual funds use indexing as the prime investment strategy. A special, and increasingly popular, version of indexing is the use of Exchange Traded Funds (ETFs), which increased by more than 1000 percent between 2004 and 2011. A common characteristic of these investment practices is that they motivate investors to pay little or no attention to the fundamentals of individual companies, since the composition of the index is pre-defined and adjustments in the portfolio is not by active choice but rather a result of the index weighting. The same effect results from the surge in so-called high frequency trading where the investment strategy and ultra-short holding periods do not motivate any corporate specific analysis or ownership engagement. A fourth development that has attracted a lot of interest and debate is co-location of brokers, data vendors and other participants’ computer capacity within the stock exchanges’ data centres. This has raised concerns about confidence in a level playing field among different categories of investors with respect to market information. These developments and their implications for the economic incentives for ownership engagement among institutional investors are further discussed in « Institutional Investors as Owners – Who Are They and What Do They Do? » (2013).

Developments in the investment chain and the use of service providers.

The real world of ownership characterised by institutional (or intermediary) investors is a very different reality than the model textbook world of company law and economics, which assumes a strict and uncompromised alignment of interest between the performance of the company and the income of the ultimate shareholder. Instead of a straight line from « from profit to pocket », which is assumed in theory, we have an extended and sometimes very complex investment chain where different actors may have different incentives. The implications for the quality of ownership engagement are discussed in the background report « Institutional Investors as Owners – Who Are They and What Do They Do? » (2013). Among other aspects, the report highlights the possible implications of cross-investments between different institutional investors and the extensive use of proxy advisers, which is sometimes argued to impose a box ticking culture of « one-size-fits-all ». The last couple of decades have also seen an increase in outsourcing of asset management to external asset managers who may also be charged with carrying out the ownership functions. The complexity of the investment chain is also influenced by changes in stock market structures, trading practices and investment strategies. One example is the increased use of dark pools and off-exchange trading platforms that has increased concerns about the quality of the price discovery process and equal access to market information, which is so essential for efficient allocation of capital.

Developments in shareholder rights and participation.

Since the last review of the Principles, shareholder rights in many countries have been strengthened and there is a general trend to empower the shareholder meeting in the corporate decision-making process, particularly with respect to board nomination and remuneration policies. Technological advancements have also contributed to facilitating shareholder participation in the shareholder meetings. As documented in the report « Who Cares? Corporate Governance in Today’s Equity Markets » (2013), several studies illustrate a relatively high level of participation in shareholder meetings in most OECD countries, including the United Kingdom and the United States that have predominantly dispersed ownership at corporate level. Today, the discussion on shareholder participation is mainly focused on the actual quality of shareholder monitoring and engagement, with the exception of issues related to shareholder co-operation. In some countries, particularly in emerging market economies, it is also argued that ownership engagement is impeded by difficulties with respect to placing items on the agenda of the shareholders’ meeting; the rules for convening shareholders’ meetings; limited access to relevant documentation and restrictions on share ownership by institutional investors.

Developments in corporate characteristics and business models.

Investments in fixed assets, such as machinery and buildings, have for decades been seen as the main source of capital formation. A recent OECD study1, however, shows that business investment in intangible assets has been increasing faster than investments in fixed assets for a number of years in many OECD countries and already accounts for more than half of the total business investment in some countries. The result is an increased dependence on human capital and intangible assets for innovation and value creation at firm level. At the same time, there has been significant number of acquisitions by some large established companies in more intangible-asset-intensive industries, partly through their venture units. Together with the decrease in the number of new listings in advanced stock markets, these developments have raised concerns about the ability of growth companies to develop and expand as independent companies. One preliminary indicator is the decrease in the share of young companies as percentage of the total number of companies in the US by 16% over the last decade. Another important development in terms of corporate characteristics and business models is the creation and surge of alternative corporate structures, mainly in the form of partnerships. This includes publicly traded partnerships (PTPs) and master limited partnerships (MSPs) that trade on securities exchanges.

Developments in corporate ownership.

Traditionally, the international corporate governance debate has focused on situations with dispersed ownership where the conflict is a zero sum game between dispersed owners on the one hand and incumbent management on the other hand. This « agency » approach has its merits but it also has important weaknesses. One important weakness is that most listed companies around the world are not characterized by dispersed ownership. Rather, they have a controlling or dominant owner. This is particularly true in emerging markets. But controlling owners are also common in most advanced economies, including the US and continental Europe. It has been argued that the focus on dispersed ownership is of limited help when addressing corporate governance issues in companies that have a controlling owner. The presence of controlling owners is generally assumed to provide strong incentives for informed ownership engagement and to overcome the fundamental agency problem between shareholders and managers. There are also arguments that the incentives for controlling owners to assume the costs for this ownership engagement are weakened by restrictions on the possibilities of controlling owners to exercise their rights and be properly compensated for their efforts to monitor. Some of these are discussed in the background paper « The Law and Economics of Controlling Owners in Corporate Governance » (2013). At the same time, there are concerns that controlling owners in a weak regulatory framework may take advantage of minority shareholders through abusive related party transactions. This is discussed in the report « Related Party Transactions and Minority Shareholder Rights » (2012).

Developments in the functioning of public stock markets.

Corporate governance policies are focused on companies that are traded on the public stock market. To understand the functioning and structure of public stock markets is therefore essential for getting the corporate governance rules right. And today, stock markets look very different from what they did when the OECD Principles were first established. The developments are well documented in the background reports « Who Cares? Corporate Governance in Today’s Equity Markets » (2013) and « Making Stock markets Work to Support Economic Growth » (2013), which address issues such as market fragmentation, increased use of dark pools, changes in « tick-size », high-frequency trading and co-location. The reports also show that during the last decade, some of the leading stock markets in the world have lost as much as half of their listed companies and that the average size of companies that find their way to the stock market has increased. At the same time, stock exchanges in emerging markets, notably in Asia, have increased the number of listed companies significantly. Between 2008 and 2012 a majority of all new listings in the world were in emerging markets. Since the free float (the portion of outstanding shares regularly available for public trading) is relatively small in these markets, one consequence of this development is an increase in the number of publicly traded companies that have a controlling owner. Another important development is the occurrence of cross-listings and secondary listings, which raises issues related to the standards and procedures for recognizing of corporate governance standards in primary listing venues and the allocation of supervisory obligations between listing stock exchanges. We have also seen a development where stock exchanges have demutualised and become listed companies on themselves; so called self-listing. At the same time, there has been a certain degree of consolidation through mergers of regulated exchanges both at national and international level, which was coupled with the emergence of new venues for trading; such as alternative trading venues and dark pools.

2014 Review of the OECD Principles of Corporate Governance

First released in May 1999 and last revised in 2004, the OECD Corporate Governance Committee has launched a further review of the OECD Principles of Corporate Governance. The review process starts in 2014 with the objective of conclusion within one year.

The OECD Principles are one of the 12 key standards for international financial stability of the Financial Stability Board (FSB) and form the basis for the corporate governance component of the Report on the Observance of Standards and Codes of the World Bank Group.

The rationale for the review is to ensure the continuing high quality, relevance and usefulness of the Principles taking into account recent developments in the corporate sector and capital markets. The outcome should provide policy makers, regulators and other rule-making bodies with a sound benchmark for establishing an effective corporate governance framework.

The basis for the review will be the 2004 version of the Principles, which embrace the shared understanding that a high level of transparency, accountability, board oversight, and respect for the rights of shareholders and role of key stakeholders is part of the foundation of a well-functioning corporate governance system. These core values should be maintained and, as appropriate, be strengthened to reflect experiences since 2004.

As the Principles are a global standard also adopted by the FSB, all FSB member jurisdictions are invited to participate in the review as Associates and have the same decision-making rights as OECD members.

The review will benefit from consultations with stakeholders, including the business sector, investors, professional groups at national and international levels, trade unions, civil society organisations and other international standard setting bodies.

Peer reviews – In response to the corporate governance challenges that came into focus in the wake of the financial crisis, the Corporate Governance Committee launched a thematic review process designed to facilitate the effective implementation of the OECD Principles and to assist market participants and policy makers to respond to emerging corporate governance risks. These peer reviews will provide valuable background support to the review.

OECD Forecasts During and After the Financial Crisis: A Post Mortem

Comment se préparer aux agissements plus audacieux des actionnaires activistes ?

Joseph Cyriac, Ruth De Backer, et Justin Sanders de la firme McKinsey Insights ont produit un formidable document de recherche sur la contribution et sur l’impact des activités des actionnaires activistes. Ceux-ci ciblent de plus en plus d’entreprises … et des entreprises de plus en plus grandes.

Une recherche empirique conduite par les auteurs indique :

(1) les types de facteurs susceptibles de les attirer

(2) comment les directions et les conseils d’administration doivent réagir à l’annonce de l’intérêt.

Voici trois constats qui découlent de l’étude :

1. Les campagnes menées par les activistes génèrent, en moyenne, un accroissement de la valeur des actions

2. L’issue d’un arrangement négocié tend à produire un rendement aux actionnaires plus élevé sur une période de trois ans

3. La plupart des campagnes débutent de manière collaborative mais tournent à « l’hostilité ».

Voici un court extrait d’un article que je vous invite à lire au complet pour une meilleure compréhension de ce qu’il faut faire lorsqu’une entreprise est approchée par un investisseur activiste.

Bonne lecture !

Preparing for bigger, bolder shareholder activists !

Activist investors¹ are getting ever more adventurous. Last year, according to our analysis, the US-listed companies that activists targeted had an average market capitalization of $10 billion—up from $8 billion just a year earlier and less than $2 billion at the end of the last decade. They’ve also been busier, launching an average of 240 campaigns in each of the past three years—more than double the number a decade ago. And even though activists are a relatively small group, with only $75 billion in combined assets under management compared with the $2.5 trillion hedge-fund industry overall, they’ve enjoyed a higher rate of asset growth than hedge funds and attracted new partnerships with traditional investors. As a result, they have both the capital and the leverage to continue engaging largecap companies.

Shareholders generally benefit. Our analysis of 400 activist campaigns (out of 1,400 launched against US companies over the past decade) finds that, among large companies for which data are available, the median activist campaign reverses a downward trajectory in target-company performance and generates excess shareholder returns that persist for at least 36 months (Exhibit 1).²

Exhibit 1 : Activist campaigns, on average, generate a sustained increase in shareholder returns

La petite histoire de l’évolution des rémunérations des hauts dirigeants

Voici un article de DEBORAH HARGREAVES sur la petite histoire de l’évolution des rémunérations des hauts dirigeants paru dans la section Opiniator du New York Times. L’expérience européenne est particulièrement instructive à cet égard.

Je vous invite à prendre connaissance de cet historique afin de mieux comprendre les restrictions qui seront éventuellement mises en place pour remédier aux excès en matière de rémunération des dirigeants (en relation avec les salaires moyens payés).

Vos commentaires sont les bienvenus. Bonne lecture !

Can We Close the Pay Gap ?

The issue of pay ratios has become the latest front in a worldwide debate about inequality and the widening gap between the top 1 percent and everyone else. In the United States, the financial reforms of the Dodd-Frank Act contained a provision that would force American companies to disclose the ratio of the compensation of their chief executive officer to the median compensation of their employees. Yet fierce criticism from the business sector has succeeded in delaying this measure for four years — and counting.

Now the European Commission in Brussels has weighed in, with a proposal currently under discussion that the European Union’s 10,000 listed companies reveal their pay ratios and allow shareholders to vote on whether they are appropriate. This has unleashed howls of protest against the European Union’s unpopular, unelected commissioners. Fund managers have called the plan weird, and business leaders have objected that shareholders don’t want such power.

Pay ratio proposals, in fact, have a venerable history. In his 1941 essay “The Lion and the Unicorn: Socialism and the English Genius,” George Orwell advocated a limitation of incomes so that the best-paid would earn no more than 10 times the lowest-paid. But this was controversial territory, even for Orwell. A few paragraphs on, he retreated and wrote: “In practice it is impossible that earnings should be limited quite as rigidly as I have suggested.”

Several decades earlier, that Gilded Age titan John Pierpoint Morgan had endorsed a 20 to 1 ratio between the head of a company and its average worker. That same ratio was recommended in the 1970s by the American management guru Peter F. Drucker.

Yet look where we are now: In 2012, the compensation received by chief executives of companies in the S.&P. 500 index was 354 times that of rank-and-file staff.

Companies are sensitive about revealing the pay differential between the bosses and the work force partly because the gap has become so extreme. Business leaders argue that they have to offer high rewards in order to compete in a global talent pool for well-qualified executives.

After big corporations threatened to quit the country, voters in Switzerland last year rejected a referendum that would have restricted the pay gap to a ratio of 12 to 1. But the proposition still garnered 35 percent support amid a heated campaign.

The idea of a global talent pool for chief executives is, however, largely a myth. Not one of the chief executives heading up the 142 American companies in the Fortune Global 500 at the end of 2012, for example, was an external hire from overseas. There was a little movement within Europe, but over all, poaching of chief executives from abroad accounted for only 0.8 percent of C.E.O. appointments in the Fortune Global 500.

Business leaders also argue that senior managers need incentives to drive the business forward, so their compensation must be linked to the performance of the corporation, usually through the offer of big share awards for meeting certain targets. The argument that chief executive pay must be linked to the performance of the company has driven share awards ever higher — in Britain, as high as 700 percent of salary. But there is scant evidence to show a definite link between executive remuneration and a company’s success.

On the contrary, some economists say that the practice of rewarding chief executives for boosting the share price (and consequently their own compensation) makes them too short-term in their focus. The way they are paid is thus at odds with the long-term success of the company.

Moreover, the manner in which chief executives are rewarded means that it is in their interests to keep work-force wages low, in order to contain costs. This may help to explain why we have seen executive remuneration continue to rise sharply during and after the financial crisis, while work-force wages have stagnated, struggling to keep up with inflation.

Last year, the top 10 most highly paid chief executives in the United States took home more than $100 million each; most of these rewards came from shares or stock options. The survey of 2,259 American chief executives found that, on average, their remuneration had risen by 8.47 percent. At the same time, the average family income was $51,017 — little changed from the year before, and 9 percent less than its inflation-adjusted peak in 1999 of $56,080.

According to a report by the French academic Thomas Piketty and Emmanuel Saez of the University of California, Berkeley, incomes for the top 1 percent in the United States grew by 31.4 percent from 2009 to 2012, but the bottom 99 percent saw their wages go up by only 0.4 percent during the same period. The economists conclude that the top 1 percent captured 95 percent of the income gains in the first two years of the recovery.

Widening pay gaps have added to concerns about inequality and economic instability. This is one reason regulators are struggling to find ways of making remuneration fairer or, failing that, enforcing disclosure that shows how unfair it is.

Brussels has tried to do this by introducing a law that comes into effect next year that will cap bankers’ bonuses. Europe’s highest-paid bankers will have their bonuses restricted to 100 percent of salary, or 200 percent with prior approval of shareholders. This is largely a British issue, since most of Europe’s best-paid bankers reside in Britain.

But the bank bonus rule has seen banks making big efforts to get around it by allocating monthly allowances to their top bankers and executives to make up for lost bonuses. Banks argue that without global action on bonuses, they risk losing their top performers to Wall Street or Hong Kong.

There is probably some truth in this since bankers specifically tend to be more mobile than corporate chief executives. There is, however, a counterargument that bankers will now be more attracted to working in the European Union since their pay will generally be just as high and far more predictable than an annual bonus.

The European Union bonus saga is helpful in illustrating the often perverse consequences of trying to impose laws and regulations to limit top remuneration. In a similar fashion, President Bill Clinton’s campaign pledge in 1991 to restrict top salaries to $1 million is often cited as the point at which chief executive pay started to skyrocket in America — precisely because companies introduced payments of stock options to circumvent the rule.

A regulatory crackdown on high pay ratios can also hurt the very people it is trying to help. The imposition of a maximum pay ratio, for example, might see companies outsourcing the work of their lowest-paid employees, purely to make their figures look better.

But business is not immune to the public debate about inequality and pay distribution. There is evidence that big pay gaps can undermine employee morale, leading to strikes, more sick days and higher staff turnover. And pressure on corporate leaders to address large pay disparities because it would help their business perform more effectively can be persuasive.

There is an outside chance that business will reform itself, as some business leaders bemoan the pay scandals for inflicting damage on their sector’s reputation. But expecting multimillionaires to take a voluntary pay cut is a long shot. It might be more effective to introduce structures that will tackle egregious pay awards before they are made.

In Germany, for example, the unusual system of a two-tier board structure for company governance has helped prevent top pay rising as fast as it has in other developed nations. A supervisory board, consisting half of shareholders and half of employees elected by the work force, has the ultimate power over executives and sets top pay.

In 2012, employee board members at Volkswagen forced through a 20 percent pay cut for the chief executive even though the company was making record profits. They felt the C.E.O.’s pay was too high, his bonus targets too easy and that work-force wages had been held down. This was widely seen in Germany as a response to the controversy over inequality after the financial crisis.

There is a growing chorus of voices in Britain arguing for the election of employees onto company boards or remuneration committees. This could become an important theme in the run-up to the next general election in 2015, given the way public debate has already focused on falling living standards.

Top chief executives worldwide often take home far more in one year than most people will earn in their entire lifetime. Yet the International Monetary Fund has recognized that reducing inequality leads to “faster and more durable growth.” It is important that we put pressure on businesses and policy makers to develop measures to stop pay gaps opening up even further, and to share the rewards of success more fairly — for everyone’s benefit.

__________________________________

*Deborah Hargreaves is the director of the London-based campaign group the High Pay Centre.

Gouvernance : 12 tendances à surveiller

Vous trouverez ci-dessous un article publié dans Lesaffaires.com le 31 mars 2014. Dans cet entrevue, le journaliste me demande de faire une synthèse des tendances les plus significatives en gouvernance de sociétés. Bonne lecture !

Gouvernance : 12 tendances à surveiller

Une entrevue avec M. Jacques Grisé, auteur du blogue jacquesgrisegouvernance.com

Si la gouvernance des entreprises a fait beaucoup de chemin depuis quelques années, son évolution se poursuit. Afin d’imaginer la direction qu’elle prendra au cours des prochaines années, nous avons consulté l’expert Jacques Grisé, ancien directeur des programmes du Collège des administrateurs de sociétés, de l’Université Laval. Toujours affilié au Collège, M. Grisé publie depuis plusieurs années le blogue www.jacquesgrisegouvernance.com, un site incontournable pour rester à l’affût des bonnes pratiques et tendances en gouvernance.

Voici les 12 tendances dont il faut suivre l’évolution, selon Jacques Grisé :

1. Les conseils d’administration réaffirmeront leur autorité.

« Auparavant, la gouvernance était une affaire qui concernait davantage le management », explique M. Grisé. La professionnalisation de la fonction d’administrateur amène une modification et un élargissement du rôle et des responsabilités des conseils. Les CA sont de plus en plus sollicités et questionnés au sujet de leurs décisions et de l’entreprise.

2. La formation des administrateurs prendra de l’importance.

À l’avenir, on exigera toujours plus des administrateurs. C’est pourquoi la formation est essentielle et devient même une exigence pour certains organismes. De plus, la formation continue se généralise ; elle devient plus formelle.

3. L’affirmation du droit des actionnaires et celle du rôle du conseil s’imposeront.

Le débat autour du droit des actionnaires par rapport à celui des conseils d’administration devra mener à une compréhension de ces droits conflictuels. Aujourd’hui, les conseils doivent tenir compte des parties prenantes en tout temps.

4. La montée des investisseurs activistes se poursuivra.

L’arrivée de l’activisme apporte une nouvelle dimension au travail des administrateurs. Les investisseurs activistes s’adressent directement aux actionnaires, ce qui mine l’autorité des conseils d’administration. Est-ce bon ou mauvais ? La vision à court terme des activistes peut être néfaste, mais toutes leurs actions ne sont pas négatives, notamment parce qu’ils s’intéressent souvent à des entreprises qui ont besoin d’un redressement sous une forme ou une autre. Pour bien des gens, les fonds activistes sont une façon d’améliorer la gouvernance. Le débat demeure ouvert.

5. La recherche de compétences clés deviendra la norme.

De plus en plus, les organisations chercheront à augmenter la qualité de leur conseil en recrutant des administrateurs aux expertises précises, qui sont des atouts dans certains domaines ou secteurs névralgiques.

6. Les règles de bonne gouvernance vont s’étendre à plus d’entreprises.

Les grands principes de la gouvernance sont les mêmes, peu importe le type d’organisation, de la PME à la société ouverte (ou cotée), en passant par les sociétés d’État, les organismes à but non lucratif et les entreprises familiales.

7. Le rôle du président du conseil sera davantage valorisé.

La tendance veut que deux personnes distinctes occupent les postes de président du conseil et de PDG, au lieu qu’une seule personne cumule les deux, comme c’est encore trop souvent le cas. Un bon conseil a besoin d’un solide leader, indépendant du PDG.

8. La diversité deviendra incontournable.

Même s’il y a un plus grand nombre de femmes au sein des conseils, le déficit est encore énorme. Pourtant, certaines études montrent que les entreprises qui font une place aux femmes au sein de leur conseil sont plus rentables. Et la diversité doit s’étendre à d’autres origines culturelles, à des gens de tous âges et d’horizons divers.

9. Le rôle stratégique du conseil dans l’entreprise s’imposera.

Le temps où les CA ne faisaient qu’approuver les orientations stratégiques définies par la direction est révolu. Désormais, l’élaboration du plan stratégique de l’entreprise doit se faire en collaboration avec le conseil, en profitant de son expertise.

10. La réglementation continuera de se raffermir.

Le resserrement des règles qui encadrent la gouvernance ne fait que commencer. Selon Jacques Grisé, il faut s’attendre à ce que les autorités réglementaires exercent une surveillance accrue partout dans le monde, y compris au Québec, avec l’Autorité des marchés financiers. En conséquence, les conseils doivent se plier aux règles, notamment en ce qui concerne la rémunération et la divulgation. Les responsabilités des comités au sein du conseil prendront de l’importance. Les conseils doivent mettre en place des politiques claires en ce qui concerne la gouvernance.

11. La composition des conseils d’administration s’adaptera aux nouvelles exigences et se transformera.

Les CA seront plus petits, ce qui réduira le rôle prépondérant du comité exécutif, en donnant plus de pouvoir à tous les administrateurs. Ceux-ci seront mieux choisis et formés, plus indépendants, mieux rémunérés et plus redevables de leur gestion aux diverses parties prenantes. Les administrateurs auront davantage de responsabilités et seront plus engagés dans les comités aux fonctions plus stratégiques. Leur responsabilité légale s’élargira en même temps que leurs tâches gagnent en importance. Il faudra donc des membres plus engagés, un conseil plus diversifié, dirigé par un leader plus fort.

12. L’évaluation de la performance des conseils d’administration deviendra la norme.

La tendance est déjà bien ancrée aux États-Unis, où les entreprises engagent souvent des firmes externes pour mener cette évaluation. Certaines choisissent l’autoévaluation. Dans tous les cas, le processus est ouvert et si les résultats restent confidentiels, ils contribuent à l’amélioration de l’efficacité des conseils d’administration.

Vous désirez en savoir plus sur les bonnes pratiques de gouvernance ? Visitez le site du Collège des administrateurs de sociétés et suivez le blogue de Jacques Grisé.

Un argumentaire en faveur du choix d’administrateurs externes au C.A.*

Formations spécialisées en gouvernance | Collège des administrateurs de sociétés (CAS)

Le Collège des administrateurs de sociétés (CAS) de l’Université Laval offrira, en mai prochain, trois formations spécialisées de haut niveau :

(1) Gouvernance des services financiers

(2) Gouvernance des régimes de retraite

(3) Gouvernance des PME

Sur une formule de deux jours intensifs, chaque formation est animée par des experts chevronnés et est adaptée aux besoins des administrateurs, cadres et dirigeants. Les trois formations se tiendront à Montréal, au Centre de conférences Le 1000.

Gouvernance des services financiers

La formation Gouvernance des services financiers aura lieu les 6 et 7 mai 2014. Elle est destinée aux administrateurs, cadres et hauts dirigeants du secteur des services financiers qui œuvrent dans le domaine bancaire, les assurances, les valeurs mobilières et les organismes d’encadrement légal et corporatif. Cette formation vise à favoriser la mise en place de saines pratiques de gouvernance afin de préserver la confiance du grand public, des consommateurs et des investisseurs. Pour connaître les détails de la formation Gouvernance des services financiers

Gouvernance des régimes de retraite

La formation Gouvernance des régimes de retraite aura lieu les 13 et 14 mai 2014. Elle s’adresse aux membres de comités de retraite, aux administrateurs et gestionnaires de fonds de régime de retraite. Cette formation vise à améliorer les connaissances et compétences en gouvernance, à préciser les rôles et responsabilités qui incombent aux administrateurs et gestionnaires d’un régime de retraite, puis à développer un sens critique pour un meilleur processus décisionnel. Pour connaître les détails de la formation Gouvernance des régimes de retraite

Gouvernance des PME

La formation Gouvernance des PME aura lieu les 27 et 28 mai 2014. Elle est destinée aux chefs d’entreprise, hauts dirigeants, investisseurs et administrateurs appelés à siéger sur les conseils d’administration ou comités consultatifs de PME. Cette formation propose de réfléchir aux pratiques de gouvernance les mieux adaptées et les plus efficaces pour l’entreprise de type PME et permet de revoir les grandes orientations et identifier des moyens concrets pour en optimiser la gouvernance. Pour connaître les détails de la formation Gouvernance des PME

______________________________________________

Ces formations comptent pour un crédit de 15 heures de formation continue requise pour les détenteurs du titre IAS.A. de l’Institut des administrateurs de sociétés ainsi que les ASC du Collège des administrateurs de sociétés. De plus, elles sont reconnues par les ordres et organismes professionnels suivants : Association des MBA du Québec, Barreau du Québec, Chambre de la sécurité financière, Institut québécois des planificateurs financiers, Ordre des ADMA du Québec, Ordre des CPA du Québec, Ordre des CRHA.

__________________________

* À propos du CAS

Créé en 2005 grâce à un partenariat entre l’Autorité des marchés financiers, la Caisse de dépôt et placement du Québec, le ministère du Conseil exécutif du Québec et la Faculté des sciences de l’administration de l’Université Laval, le Collège des administrateurs de sociétés se positionne comme leader de la formation des administrateurs et représente le seul programme de certification universitaire en gouvernance de sociétés au Québec. Il contribue au développement et à la promotion de la bonne gouvernance de sociétés en offrant des formations reconnues et à la fine pointe des meilleures pratiques. À ce jour, le CAS a diplômé 624 ASC. Il est possible de consulter leur profil en visitant le www.BanqueAdministrateurs.com.

La gouvernance dans tous ses états | Huit articles parus dans Lesaffaires.com

Voici une série de huit articles, publiés le 31 mars 2014 par les experts du Collège des administrateurs de sociétés (CAS) dans le volet Dossier de l’édition Les Affaires.com

Découvrez comment les entreprises et les administrateurs doivent s’adapter afin de tirer profit des meilleures pratiques. Vos commentaires sont appréciés. Bonne lecture !

La gouvernance dans tous ses états | Huit articles parus dans Lesaffaires.com

Présenté par

Une bonne gouvernance, c’est aussi pour les PME

Une entrevue avec M. Réjean Dancause, président et directeur général du Groupe Dancause et Associés inc.

Les défis de la gouvernance à l’ère du numérique

Une entrevue avec M. Gilles Bernier, directeur des programmes du Collège des administrateurs de sociétés

La montée de l’activisme des actionnaires en six questions

Une entrevue avec M. Jean Bédard, titulaire de la Chaire de recherche en gouvernance de sociétés, Université Laval

Gouvernance : 12 tendances à surveiller

Une entrevue avec M. Jacques Grisé, auteur du blogue jacquesgrisegouvernance.com

Gouvernance : huit principes à respecter

Une entrevue avec M. Richard Drouin, avocat-conseil, McCarthy Tétrault

Conseils d’administration : la diversité, mode d’emploi

Une entrevue avec Mme Nicolle Forget, administratrice de sociétés

Les administrateurs doivent-ils développer leurs compétences?

Une entrevue avec Mme Louise Champoux-Paillé, administratrice de sociétés et présidente du …

Vous souhaitez occuper un poste sur un conseil d’administration ?

Une entrevue avec M. Richard Joly, président de Leaders et Cie

La culture organisationnelle contribue-t-elle à la valeur des organisations ?

Qu’est-ce que la culture organisationnelle et comment celle-ci est-elle associée à la performance ? L’étude conduite par Luigi Guiso, professeur de finance à Einaudi Institute for Economics and Finance; Paola Sapienza, professeur de finance à Northwestern University; and Luigi Zingales, professeur de finance à University of Chicago, tente de vérifier l’hypothèse selon laquelle la valeur de l’intégrité serait plus élevée dans les entreprises privées que dans les entreprises publiques (cotées).

L’étude tend à démontrer que l’accent mis sur la maximisation de la valeur aux actionnaires peut nuire à l’atteinte d’un haut niveau d’intégrité.

Voici un extrait de cette étude. Quel est votre point de vue sur l’importance d’une culture d’intégrité dans la performance des entreprises ?

The value of Corporate Culture

In our recent NBER working paper, The Value of Corporate Culture, we study which dimensions of corporate culture are related to a firm’s performance and why. Resigning from Goldman Sachs, vice president Greg Smith wrote in a very controversial New York Times op-ed: “Culture was always a vital part of Goldman Sachs’s success. It revolved around teamwork, integrity, a spirit of humility, and always doing right by our clients. The culture was the secret sauce that made this place great and allowed us to earn our clients’ trust for 143 years.” He then adds “I am sad to say that I look around today and see virtually no trace of the culture that made me love working for this firm for many years.” In his follow-up book, Greg Smith seems to blame the demise of Goldman Sachs’s culture to its transformation from a partnership to a publicly traded company.

English: Goldman Sachs Tower, Jersey City, New Jersey (Photo credit: Wikipedia)

While highly disputed by the company, Greg Smith’s remarks raise several important questions. What constitutes a firm’s culture? How can we measure it? Does this culture—however defined and measured—impact a firm’s success? If so, why? And how can different governance structures enable or curtail the formation and preservation of a value-enhancing culture? In this paper we try to answer these questions.

Whether culture was Goldman’s secret sauce or not, Goldman certainly went out of the way to advertise it. The first page of its IPO prospectus was enumerating the “Business Principles,” including “Integrity and honesty are at the heart of our business.” Yet, in this regard Goldman is not unique. When we look at companies’ web pages, we find that 85% of the S&P 500 companies have a section (sometimes even two) dedicated to—what they call—“corporate culture,” i.e. principles and values that should inform the behavior of all firms’ employees.

…

If this is true, it might be value maximizing (at least in the short term) for publicly traded firms to underinvest in integrity capital. To test this hypothesis, we analyze whether ceteris paribus publicly traded firms in the GPTW dataset have a lower value of integrity (as measured by the survey responses) than privately held ones. We find this to be the case, even after controlling for industry, geography, size, and labor force composition. Public firms have an integrity value that is 0.21 standard deviations below similar firms that are private.

Not all firms see their integrity drop when they go public. Venture capital-backed firms do not seem to experience any drop. This different outcome might be the result of a longer horizon generated by the presence of a large shareholder or by a better organizational design made by professional founders.

To disentangle these hypotheses, we test whether the presence of a large shareholder or other corporate governance characteristics affect the level of integrity capital. We find that the only corporate governance characteristic that is statistically significant is the presence of large shareholder (at least 5% ownership share), yet it has a negative correlation with the level of integrity. Thus, it looks like a focus towards shareholders value maximization undermines the ability of a company to sustain a high level of integrity capital.

Vous pouvez télécharger le document complet ici.

Quelle est la valeur ajoutée d’un « conseil aviseur » efficace ?

Ce texte publié par Barry Reiter, et paru dans Ivey Business Journal, explique très bien en quoi consiste un « conseil aviseur » pour une PME en développement. En quoi les entreprises trouvent-elles avantage à se doter d’une telle structure ?

Et, surtout, quelles sont les étapes concrètes de sa création ainsi que les conditions d’un bon fonctionnement.

Cet article couvre vraiment tous les angles de l’établissement d’un « comité aviseur » et il répond aux questions que les entrepreneurs et les dirigeants d’entreprises en développement se posent eu égard à la valeur ajoutée d’un tel comité.

Bonne lecture. Vos commentaires sont appréciés.

THE ROLE AND VALUE OF AN EFFECTIVE ADVISORY BOARD

An effective advisory board, properly composed and structured, can provide non-binding but informed guidance and serve as a tremendous ally in the quest for superior corporate governance. This author, a lawyer with significant experience on boards of directors, offers a helpful blueprint for establishing an effective advisory board.

Nobody can build a great business alone, and whether it’s a start up or an established industry leader, having access to high-quality advice can enhance an organization’s odds of success. Entities seeking advice can obtain it from a board of directors, consultants or networks of one sort or another. Increasingly, attention is being given to advisory boards. This article discusses the role of these boards, how they should be structured and organized, and their value to an enterprise.

Why have an advisory board ?

Enterprises considering setting up an advisory board must answer a key question: “Why are we establishing an advisory board and what do we want out of it?” The enterprise may be seeking assistance with anything from marketing to managing human resources to influencing the direction of regulators. Thinking carefully about an advisory board’s purpose will ensure that it will be structured to maximize its contribution to an organization’s success.

…

Commitment of Management/Leadership

An enterprise that wants to have an effective advisory board must spend time determining the mandate of that board, recruiting members, addressing compensation issues, organizing for and orchestrating effective meetings, paying for the services of advisory board members and dealing with the other matters noted above. The commitment must come from an appropriate point in the enterprise. If the advisory board is set up primarily to advise the CEO, the CEO’s involvement must be obvious and constant. If an advisory board is set up to assist in science or marketing, an appropriate individual, one who is willing to lend his or her name to the recruiting effort and to spend the time required to address the other issues, must be identified from that group. An advisory board that senses that there is an absence of commitment (whether by virtue of poorly organized meetings, frequently cancelled meetings, a leader who cancels his or her own attendance at the last minute, advice that is not transmitted or is ignored) will quickly become ineffective, as members will not prepare for meetings, not attend meetings or will not apply the degree of rigour required to provide their best advice.

Un autre document très intéressant est le suivant : 9 Tips for Creating an Advisory Board

PLANIFICATION D’AUDIT INTERNE BASÉE SUR LES RISQUES

Denis Lefort, CPA, expert-conseil en Gouvernance, audit et contrôle, porte à ma connaissance un document de la firme Thomson Reuters (White paper) qui aborde les écueils que n’ont pas su toujours éviter les responsables d’audit interne lors du déploiement de leur processus de planification annuelle/triennale fondé sur les risques.

Votre planification prend-t-elle vraiment en compte les objectifs stratégiques de votre organisation ainsi que les risques qui pourraient prévenir leur réalisation…
Votre planification prend-t-elle vraiment en compte les travaux réalisés par les autres fonctions d’assurance de votre organisation (Gestion des risques, Conformité, Finance, etc..)…
Votre planification prend-t-elle vraiment en compte les préoccupations des dirigeants….

Voici un aperçu de la table des matières du document. Bonne lecture et bonne réflexion.

PLANIFICATION D’AUDIT INTERNE BASÉE SUR LES RISQUES

A TYPICAL INTERNAL AUDIT SCENARIO

REVIEW STANDARD INTERNAL AUDIT PROCEDURES

LISTEN TO MANAGEMENT: THE REAL OPPORTUNITY

LAY THE FOUNDATIONS: THE IMPORTANCE OF A ROBUST METHODOLOGY

KNOW YOUR COMPANY’S RISK APPETITE

PLAN FOR SUCCESS

UNDERSTAND THE BUSINESS AND ITS CULTURE

As the COSO Internal Control – Integrated Framework (2013) states, « risk assessment involves a dynamic and iterative process for identifying and assessing risks to the achievement of objectives ». Yet many in-house internal audit functions look at the annual internal audit risk assessment process as a check-the-box activity, required mainly to be in compliance with the IIA professional practices framework.

Typically, a three or five-year review cycle for the entire organization is already in place, and the annual internal audit risk assessment barely scratches the surface: It is merely used to justify minor modifications in the risk-based internal audit plan. Yet the internal audit risk assessment presents an often missed opportunity for internal auditors to understand their organization’s evolving objectives and implement a more dynamic risk-based approach to the internal audit process. Let’s take a look at a typical scenario played out every day and see if we, as uninvolved by-standers, can audit the process and see it if falls short in any way.

In advance of this year’s risk assessment, the internal audit department reviewed and revised their risk assessment process and the various preparation materials for management participants. The preparation materials included a list of key management participants with their preferred contact method, a list of internal audit risk assessment questions, an announcement letter explaining the importance of the annual risk assessment process, and a presentation that provided examples of beneficial insight received from the previous year’s risk assessment.

During the risk assessment, the internal audit staff rigorously captures each management remarks in an effort to record each detail, be it quantitative or qualitative. As the « scribe, » the internal audit staff is responsible for note taking, while the internal audit director asks management a series of questions from the annual list of internal audit risk assessment queries. The internal audit director conducts the interview in a way that illustrates both their tremendous understanding of the business and their ability to not get bogged down in the details. The individual representing management, on the other hand, usually provides general responses highlighting a few generic risks inherent in their business, but not enough for one to actually audit. One of those general responses was around an increase in the organization’s credit risk exposure.

Résultats de l’enquête portant sur « La gouvernance à l’ère du numérique »

Nature de l’enquête

Devant les enjeux associés à la transformation numérique des organisations, le Collège des administrateurs de sociétés (CAS) a lancé, en février dernier, une enquête afin de recueillir des données sur l’impact du numérique dans la gouvernance des sociétés et les effets sur le rôle et les responsabilités des administrateurs.

Méthodologie

Ce sondage a été administré par la firme BIP de Montréal auprès des diplômés de trois collèges de formation en gouvernance de sociétés soit le Directors College (Ontario), l’Institut Français des administrateurs (France) et le Collège des administrateurs de sociétés (Québec). Au total, 319 personnes ont participé à cette enquête, ce qui correspond à un taux de réponse de 20 %. Le questionnaire Web a été élaboré par un comité de travail dirigé par M. René Leclerc, diplômé du CAS, suite à une analyse des études récentes sur ce sujet et à une série d’entrevues effectuées par Expansion Stratégies auprès de dix leaders d’influence et administrateurs de sociétés*.

Le questionnaire regroupait des questions sur sept volets :

le niveau de participation du répondant à des conseils d’administration,

le profil de l’organisation dans laquelle le répondant est le plus impliqué à titre d’administrateur de sociétés,

le degré d’utilisation des technologies numériques au sein du C.A. de cette organisation,

le pourquoi du numérique dans cette organisation,

l’implication du C.A. dans la prise de décisions en matière de numérique dans cette organisation,

la perception du répondant, à titre d’administrateur, face au numérique et finalement,

le profil technologique du répondant.

Sommaire des résultats de l’enquête

Plusieurs résultats très intéressants émanent de ce sondage. D’entrée de jeu, il est important de mentionner que la taille de l’organisation dans laquelle l’administrateur est le plus impliqué est une variable nettement plus significative que le genre ou le pays d’origine lorsque vient le temps de caractériser les perceptions et les comportements des répondants face au numérique.

The Price Building, in the old city of Quebec City. The building is the head office of the Caisse de dépôt et placement du Québec and the official residence of the Premier of Québec (Photo credit: Wikipedia)

Ainsi, il ressort que, parmi les répondants qui agissent à titre d’administrateur au sein d’un C.A. faisant usage de technologies numériques (ou qui l’ont été récemment), 46 % d’entre eux fonctionnent sans papier. Il va sans dire que le taux d’utilisation des plateformes spécialisées par les conseils d’administration a beaucoup augmenté depuis l’arrivée des tablettes.

D’autres résultats percutants : 72 % des répondants actifs au sein d’un C.A. confirment que leur conseil n’a aucun membre possédant une expertise numérique et 56 % affirment que ce conseil s’implique dans les décisions numériques au moins une fois par année. De plus, 59 % de ces répondants affirment que les technologies numériques sont très importantes afin de permettre à leur organisation d`être plus productive, tandis que seulement 27 % de ceux-ci affirment qu’elles sont très importantes pour se démarquer de la concurrence. On remarque aussi que 88 % des répondants se disent personnellement actifs sur LinkedIn tandis que seulement 8 % affirment initier des discussions sur Facebook. Enfin, seulement 49 % des répondants qui sont actifs sur un C.A. affirment que leur conseil se soucie activement de la réputation de l’organisation sur les médiaux sociaux.

Globalement, le sondage montre très clairement que les administrateurs sont devant un paradoxe des temps modernes : ils manient aisément les outils numériques, mais ne se semblent pas se sentir aussi à l’aise envers les stratégies liées au virage numérique qu’envers celles liées aux enjeux habituels de gouvernance. De ce fait, le leadership du virage numérique et bon nombre de décisions qui s’y rattachent sont pris par la direction générale des organisations. Si on veut que les conseils d’administration augmentent leur pouvoir décisionnel ou s’arriment à cette nouvelle réalité, il y aurait lieu de sensibiliser et de former les administrateurs et d’intégrer de nouveaux administrateurs experts dans le numérique, conscients des enjeux qui y sont justement rattachés.

En accord avec les études récentes, le groupe de travail suggère les pistes d’action suivantes aux membres de conseils d’administration :

Prévoir que la concurrence, pour attirer des membres avec expérience numérique, va s’intensifier rapidement;

Bâtir une équipe numérique au CA qui est diversifiée;

N’attendez pas une crise numérique pour adapter le CA;

Effectuer des revues périodiques des enjeux technologiques;

Implanter des revues du portefeuille TI en appui au modèle d’affaires de l’organisation.

________________________________________________

*Le groupe de travail du CAS était formé des personnes suivantes :

Gilles Bernier, ASC, Directeur des programmes, Collège des administrateurs de sociétés

Alain Bolduc, ASC, administrateur de sociétés

Patrick Courtemanche, Vice-Président-Opérations, BIP

Jacques Grysole, Président, Expansion Stratégies, inc.

Lucie Leclerc, Présidente Directrice Générale, BIP

René Leclerc, ASC, Administrateur de sociétés

Dominique Maheux, Conseillère BIP et propriétaire de DataSapiens

À propos du Collège des administrateurs de sociétés

À propos de BIP

À propos d’Expansion Stratégies

Une vision constructive des interventions des actionnaires activistes

Cet article, publié par Gerry Hansell, associé de la firme The Boston Consulting Group, est paru sur le site du HLS Forum on Corporate Governance and Financial Regulation le 13 mars 2014.

L’auteur montre clairement que les comportements des grands investisseurs activistes peuvent avoir des effets positifs, à long terme, sur plusieurs organisations qui ne semblent pas profiter de la pleine valeur de leur positionnement stratégique.

Il y a bien sûr des comportements activistes qui détruisent de la valeur : ces interventions de « hit-and-run » doivent être contrées fermement par une direction avisée.

Mais il faut bien reconnaître qu’il existe de plus en plus « d’activisme constructif » qui produit des résultats prodigieux et qui attire la participation des investisseurs institutionnels. L’article donne beaucoup d’exemples d’interventions réussies.

L’auteur met aussi l’accent sur cinq (5) moyens à envisager par la direction pour mieux se préparer à des telles actions. Essentiellement, une veille stratégique plus poussée et une meilleure communication avec les actionnaires devraient permettre l’identification de lacunes organisationnelles et révéler de nouvelles opportunités d’affaires.

Voici un extrait de cet article que je vous invite à lire pour vous faire une idée plus juste de ce nouveau paramètre de la gouvernance.

Do-It-Yourself Activism

Many corporate executives and board members view activist investors as little more than bullies with calculators: they seem to hunt in packs, force disruptive and risky changes, and use simplistic benchmarks as their call to action.

Yet their ranks have grown rapidly, and activist investors now attack even the largest and most successful companies. Worldwide, the assets managed by activist investors have increased sevenfold over the past decade, from $12 billion to $85 billion. Since 2005, the number of activist campaigns in the U.S. has increased 15 percent per year, reaching a total of 144 in 2012. These investors have pushed for the return of excess cash to shareholders at Apple; urged restructuring through spinoffs and divestitures at PepsiCo, Sony, Timken, and McGraw-Hill; and called for the replacement of senior management or board members at Abercrombie & Fitch, Yahoo, and Sotheby’s.

Although some campaigns have backfired, resulting in significant corporate damage (JCPenney is one dramatic example), activists are creating value often enough to continue to attract institutional funds and expand their influence. Indeed, collaboration between activists and traditionally more passive investors is blurring the definition of investor activism. Leading pension funds, such as CalPERS and the Ontario Municipal Employee Retirement System (OMERS), are not only allocating capital to activist hedge funds, they are publicly teaming with activists to campaign for change.

In light of these trends, most large companies can expect to face an activist campaign in the normal course of business. How should they prepare? One common approach is to put an “activist response” team in place, often in collaboration with legal counsel and investment bankers, and to periodically run fire drills with the board in anticipation of future activist interventions. But such reactive procedural moves are like the old “duck and cover” civil-defense drills: They give the illusion of safety without providing it.

There is a more effective response: Senior managers and the board can borrow directly from the activist’s playbook by critically examining their company’s portfolio, balance sheet, and governance in much the same way that an activist investor would, and then preemptively making necessary changes. By engaging in what we call do-it-yourself activism, senior management can make a company less attractive to activists by making it more attractive to long-term shareholders.

La bonne gouvernance selon Munger, vice-président du C.A. de Berkshire

Aujourd’hui, je vous propose une très intéressante lecture publiée par David F. Larcker et Brian Tayan, de la Stanford Graduate School of Business qui porte sur la conception que se fait Charles Munger de la bonne gouvernance des sociétés.

Les auteurs nous proposent de répondre à trois questions relatives à la position de Munger, vice-président du conseil de Berkshire :

1. Le système de gouvernance basé sur la confiance avancé par Munger pourrait-il s’appliquer à différents types d’organisations ?

2. Quelles pratiques de gouvernance sont-elles nécessaires et quelles pratiques sont-elles superflues ?

3. Comment s’assurer que la culture organisationnelle survivra à un processus de succession du PCD ?

À la suite de la lecture de l’article ci-dessous, quelles seraient vos réponses à ces questions.

Voici un résumé de la pensée de Munger, suivi d’un court extrait. Bonne lecture !

Berkshire Hathaway Vice Chairman Charlie Munger is well known as the partner of CEO Warren Buffett and also for his advocacy of “multi-disciplinary thinking” — the application of fundamental concepts from across various academic disciplines to solve complex real-world problems. One problem that Munger has addressed over the years is the optimal system of corporate governance.

Munger advocates that corporate governance systems become more simple, rather than more complex, and rely on trust rather than compliance to instill ethical behavior in employees and executives. He advocates giving more power to a highly capable and ethical CEO, and taking several steps to improve the culture of the organization to reduce the risk of self-interested behavior.

Corporate Governance According to Charles T. Munger

How should an organization be structured to encourage ethical behavior among organizational participants and motivate decision-making in the best interest of shareholders? His solution is unconventional by the standards of governance today and somewhat at odds with regulatory guidelines. However, the insights that Munger provides represent a contrast to current “best practices” and suggest the potential for alternative solutions to improve corporate performance and executive behavior.

Trust-Based Governance

The need for a governance system is based on the premise that individuals working in a firm are selfinterested and therefore willing to take actions to further their own interest at the expense of the organization’s interests. To discourage this tendency, companies implement a series of carrots (incentives) and sticks (controls). The incentives might be monetary, such as performance-based compensation that aligns the financial interest of executives with shareholders. Or they might be or cultural, such as organizational norms that encourage certain behaviors. The controls include policies and procédures to limit malfeasance and oversight mechanisms to review executive decisions.

L’utilisation des huis clos lors des sessions de C.A.

Voici 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.

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 légales, 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.

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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 ?

More companies are encouraging candid exchange among independent directors without management present

As corporate boards face more complex and difficult decisions, they may want to consider increasing the use of in-camera meetings to get more ‘realistic’ opinions from directors before moving forward with corporate strategy.

In-camera meetings, as they are called in Canada – or executive sessions, as they are referred to in the US – are special meetings where independent directors or committees of the board convene separately from management to have candid, off-the-record discussions about matters that are important to the company.

The term ‘In camera’ derives from Latin and refers to ‘in a chamber’ which is a legal term meaning ‘in private.’ During these meetings, independent board members are free to challenge each other and speak their mind freely because minutes are generally not taken. Such meetings could be held to discuss and clarify the board’s position on issues that may produce opposing views between management and the board or to deal with issues that could involve conflicts of interest with management, such as CEO compensation.

‘In-camera meetings allow directors to talk about their view of matters without management present,’ says Jo-Anne Archibald, president of DSA Corporate Services. ‘They can talk about anything related to the company and they don’t have to worry about it being written down anywhere.’

La montée de l’activisme corporatif | Défis à la gouvernance des sociétés ?

Voici un autre excellent article sur l’évolution de la situation de l’activisme. L’article de Laurie Havelock publié dans IR Magazine montre comment les cibles des activistes ont changées au cours des trois dernières années. Par exemple, le secteur financier qui représentait 36 % des cibles des activistes en 2010 ne représente maintenant que 15 %.

Les stratégies d’investissement des activistes se sont raffinées; elles ont muries. Elles mettent davantage l’accent sur la recherche, sur la volonté de collaborer avec les entreprises cibles, ainsi que sur des vues à plus long terme.

La tendance est de cibler des firmes qui ont accumulé de grandes liquidités et de viser des entreprises très diversifiées, dans le but d’explorer la vente de certaines unités d’affaires.

Lorsqu’on évalue quelles réactions produisent les meilleurs résultats financiers, on note que les situations de compromis entre les activistes et les entreprises donnent lieu à des retours de l’ordre de 60 %. Les entreprises sont de plus en plus à l’écoute des points de vue des actionnaires activistes…

Les activistes sont également de plus en plus perçus comme étant ceux qui amènent des idées nouvelles. Les activistes vedettes tel que Icahn n’hésitent pas à faire la promouvoir de leur cause pour les droits des actionnaires et à faire connaître leur position via les médias sociaux.

Les responsables des communications et des relations publiques des entreprises doivent sérieusement prendre note des doléances des actionnaires activistes, lesquels sont de plus en plus de mèches avec les investisseurs institutionnels.

En termes de stratégies utilisées par les activistes pour améliorer le rendement des entreprises, une étude de Linklaters a démontré que la fréquence des activités est la suivante :

Number of times different strategies employed by activists

Bonne lecture ! Vos commentaires sont appréciés.

The changing face of activism

What is the best way to engage with the growing and diversifying ranks of activist investors?

Listed firms are now expected to be prepared to deal with activist investors and the challenges they might bring to a firm and its boardroom. According to a recent study produced by Linklaters, the international law firm, the number of shareholder actions carried out across the globe swelled by 88 percent between January 1, 2010 and September 30, 2013, with the majority of that growth taking place in Europe and the US.
SEC chairman Mary Jo White described the influx as ‘a good thing’ for companies at the 10th annual Transatlantic Corporate Governance Dialogue organized by the European Corporate Governance Institute in December 2013.
‘I think most would agree the advice on how to respond to shareholder engagement today is quite different from the advice companies were getting 30 years ago, or even 10 years ago,’ she said. ‘The process has become less defensive and more proactive. We are seeing a concerted effort to persuade shareholders of the wisdom of management’s choices and practices.’ Reaching out to activists, then, could form an increasingly important part of an IR professional’s role.

Diverse interests

The Linklaters study reveals that the number of shareholders with a stated activist strategy has more than doubled within the last decade, while activism is now spread across a more diversified range of sectors than ever before, including services and technology (see How activist targets have changed below).

David Drake, president of proxy solicitation firm Georgeson, says shareholder activists are most often to be found in business sectors or industries that have recently underperformed.
‘There tends to be a rotation of industries based on relative valuation of companies in that industry,’ he explains. ‘If you find an industry where there are a significant number of underperforming companies or companies that are trading at lower multiples than the market as a whole, and investors see opportunities to close that gap, those industries could represent the next haven for activist input.
Drake, a frequent speaker and writer on proxy fights and investor activism, has spent more than 20 years working in shareholder-facing roles. Prior to joining Georgeson in 1997, he served as a senior analyst and director of US research at ISS, and remains a member of several trade bodies. Targets for activism are not determined by industry alone, he notes.
‘I do tend to look at things a little differently,’ he points out. ‘I usually look at prime targets for activism around different themes that make companies attractive to activist funds or investors.’
In most cases, Drake says, these will be companies with an excess of cash, though firms that are – or appear to be – conglomerates with multiple lines of business are also prime targets. ‘The platform for the dissident investor would perhaps be for the spin-off of a particular part of the business that might add value, or restructuring that may produce at least a short-term benefit, if not a long-term one,’ he explains.

Gouverner et gérer sont-ils deux systèmes de pensée différents ?

Peter Tunjic* avance que les actes de gouvernance, de la part d’un conseil d’administration, et les actes de direction, au sens de management, correspondent à deux systèmes de pensée fondamentalement différents.

Dans son article, l’auteur présente une matrice que vous trouverez peut-être utile de considérer. Je vous invite à lire l’article pour plus de détails.

Governing and Directing : Are They Different ?

A recent survey of CEO attitudes to their boards by respected commentator Jeffrey Sonnenfeld and his colleagues, shouldn’t surprise anyone: ‘CEOs complain that boards often lack the intestinal fortitude for the level of risk taking that healthy growth requires.

“Board members are supposed to bring long-term prudence to a company”, as one CEO says, but this often translates to protecting the status quo and suppressing the bold thinking about reinvention that enterprises need when strategic contexts shift.’ Consensus is emerging that public company boards are too focused on compliance and are ignoring their role as creators of enduring value for the firms they direct. But it’s not for lack of will on their part.

The board’s role in strategy is considered the biggest issue for 67 per cent of respondents to the 2012 Spencer Stuart US Board Index want to spend more time on strategy. Despite this, according to Heidrick & Struggles, 84 per cent of directors of the top 2,000 largest publicly traded companies in the US thought ‘they are now spending more time on monitoring and less on strategy. Consequently, only one-third of respondents to a 2013 McKinsey & Company report say they have a complete understanding of current strategy. If directors have their eyes on value creation why is it that their feet are still pointing in a different direction? It’s because the system is not designed to create value. Best practice in corporate governance produces too many ‘governors’ focused on protecting value and not enough directors focused on creating it.

Public companies have become over governed and under directed because corporate governance regulation and education is designed to ensure the ‘correct’ board structure, process and composition rather than ensure ‘imagination, creativity, or ethical behavior in guiding the destinies of corporate enterprises’

This paper argues that in order to create enduring value, public company directors must go beyond governing and governance and must also embrace ‘directing’ and ‘directorship’. I propose that governance and directorship are two distinct systems of thought and action in the boardroom.

The difference between the two lies primarily in their attitude to value. Governance concerns right structure and process. The focus is on protecting and preserving value through maintaining control and managing risk. In contrast, directorship involves bold choices that necessarily create risk.

Directing involves designing the ways in which value is created, making decision of consequence and inspiring CEO’s to lead their organisations into strength, resilience and endurance. The boundaries between the two might blur in the heat of a board meeting, but the differences in attitude, competencies and outcome are clear. Here are four tests to help you decide whether you stand on the question of value.

Governing for shareholder value versus directing for firm value

Measuring value versus creating value

Governing for transparency versus directing with discretion

Managing risk versus creating risk

…. The DLMA Matrix graphically represents the similarities and differences of each perspective as well as the inherent dilemma required to balance them all.

THE DLMA MATRIX ™

_______________________________

*Peter Tunjic is an independent corporate advocate and commercial lawyer based in Melbourne, Australia. He is the author of ondirectorship.com and has co-authored several learning programmes for the Australian Institute of Company Directors. He consults on creating value in the boardroom and improving board/manager relations.

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THE DLMA MATRIX ™

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