WOW ! Solide prise de position de Warren Buffet en faveur du maintien de Jamie Dimon comme PCA et PCD de JPMorgan Chase, la plus grande banque américaine. L’article publié dans Bloomberg cette semaine, faisant état de la position de Buffet, montre que le fait de jouer les deux rôles, du moins aux É.U., n’est pas encore accepté comme une pratique exemplaire.
Qu’en pensez-vous ? Buffet peut certainement faire pencher la balance lors de l’assemblée des actionnaires du 21 mai…
Warren Buffett, who has said he personally owns shares of JPMorgan Chase & Co. (JPM), is backing the bank’s Chairman and Chief Executive Officer Jamie Dimon as shareholders vote this month on whether to split his roles.
Warren Buffett and Jamie Dimon | Donald Bowers/Getty Images for Fortune
Warren Buffett, chairman of Berkshire Hathaway Inc., said in November that Jamie Dimon, chief executive officer of JPMorgan Chase & Co., would be the best candidate to lead the U.S. Treasury Department in a financial crisis.
“I’m 100 percent for Jamie,” Buffett told Bloomberg Television’s Betty Liu yesterday in Omaha, Nebraska. “I couldn’t think of a better chairman.”
Calls for Dimon, 57, to relinquish the chairmanship have mounted since New York-based JPMorgan disclosed risk-control lapses on derivatives bets last year that fueled more than $6.2 billion of losses. In March, the company’s board urged investors to vote against naming a separate chairman at the May 21 meeting, saying that Dimon’s dual role remains the “most effective leadership model.”
Voici le compte rendu d’une conférence donnée par Luis A. Aguilar, commissaire de la SEC (Securities and Exchange Commission) qui décrit le rôle des investisseurs institutionnels et leur influence sur le contrôle des grandes sociétés publiques.
L’article est intéressant parce qu’il énonce deux problématiques cruciales eu regard à la règlementation visant les investisseurs institutionnels. (1) l’importance de la divulgation d’informations fiables aux investisseurs, (2) le besoin des investisseurs d’être entendus sur les considérations de gouvernance, notamment sur la rémunération de la haute direction.
L’article reflète la réalité américaine mais je crois que les avis de M. Aguilar sont aussi valables pour les grandes corporations canadiennes. Voici un extrait du compte rendu qui brosse un tableau éloquent des changements majeurs du rôle et de l’influence des investisseurs institutionnels survenus au cours des 60 dernières années : de 7 % de la capitalisation boursière en 1950 à 67 % en 2010 !
The topic of your conference recognizes the important role played by institutional investors and the great influence they exert in our capital markets. The role and influence of institutional investors has grown over time. For example, the proportion of U.S. public equities managed by institutions has risen steadily over the past six decades, from about 7 or 8% of market capitalization in 1950, to about 67 % in 2010. The shift has come as more American families participate in the capital markets through pooled-investment vehicles, such as mutual funds and exchange traded funds (ETFs).
Institutional investor ownership is an even more significant factor in the largest corporations: In 2009, institutional investors owned in the aggregate 73% of the outstanding equity in the 1,000 largest U.S. corporations.
The New York Stock Exchange, the world’s largest stock exchange by market capitalization (Photo credit: Wikipedia)
The growth in the proportion of assets managed by institutional investors has been accompanied by a dramatic growth in the market capitalization of U.S. listed companies. For example, in 1950, the combined market value of all stocks listed on the New York Stock Exchange (NYSE) was about $94 billion. By 2012, however, the domestic market capitalization of the NYSE was more than $14 trillion, an increase of nearly1,500%. This growth is even more impressive if you add the $4.5 trillion in market capitalization on the NASDAQ market, which did not exist until 1971. The bottom line is, that as a whole, institutional investors own a larger share of a larger market.Of course, institutional investors are not all the same. They come in many different forms and with many different characteristics. Among other things, institutional investors have different organizational and governance structures, and are subject to different regulatory requirements. The universe of institutional investors includes mutual funds and ETFs regulated by the SEC, as well as pension funds, insurance companies, and a wide variety of hedge funds and managed accounts, many of which are unregulated.
And, of course, institutional investors don’t all buy or sell the same asset classes at the same time. To the contrary, they have a wide variety of distinct goals, strategies, and timeframes for their investments. As a result, their interaction with, and impact on, the market occurs in many different ways.
The growth in assets managed by institutions has also affected, and been affected by, the significant changes in market structure and trading technologies over the past few decades, including the development of the national market system, the proliferation of trading venues – including both dark pools and electronic trading platforms – and the advent of algorithmic and high-speed trading. These changes – largely driven by the trading of institutional investors – have resulted in huge increases in trading volumes. For example, in 1990, the average daily volume on the NYSE was 162 million shares. Today, just 23 years later, that average daily volume is approximately 2.6 billion shares – an increase of about 1,600%.
Simply stated, institutional investors are dominant market players, but it is difficult to fit them into any particular category. This poses a challenge for regulators, who must take into account all the many different ways institutional investors operate, and interact, with the capital markets.
It is clear, however, that professionally-managed institutions can help ensure that our capital markets function as engines for economic growth. Institutional investors are known to improve price discovery, increase allocative efficiency, and promote management accountability. They aggregate the capital that businesses need to grow, and provide trading markets with liquidity – the lifeblood of our capital markets.
In doing all this, institutional investors – like all investors – depend on the assurance of a level playing field, access to complete and reliable information, and the ability to exercise their rights as shareowners. That is why fair and intelligent regulation is necessary for the proper functioning of our capital markets.
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Récemment Pierre CABANE* me faisait part de la publication de son dernier ouvrage sur la gouvernance des sociétés. Je sais que plusieurs personnes souhaitent consulter un livre en français qui fait le tour de la question sur la gouvernance. Alors, dès l’annonce de cette publication, j’ai demandé à l’auteur de me décrire succinctement les différents thèmes abordés. Ce billet consiste donc à vous faire connaître (1) les objectifs poursuivis par la publication de cet ouvrage, (2) la clientèle visée et (3) les thèmes abordés. Vous pouvez vous procurer ce livre sur le site d’Amazone.ca
Le texte qui suit présente les points saillants de l’ouvrage de Pierre Cabane, à la suite d’une demande de ma part.
À l’heure où les crises financières secouent à intervalles de plus en plus souvent répétés le système économique, le modèle même de l’entreprise est mis en cause. La mondialisation et l’intermédiation croissante de l’économie, la nécessaire prise en compte de l’ensemble des parties prenantes (actionnaires mais aussi salariés, clients, fournisseurs, État…) les exigences des actionnaires vis-à-vis du management des sociétés, l’arrivée de nouveaux enjeux comme la responsabilité sociétale des entreprises (RSE), rendent aujourd’hui le pilotage de celles-ci à la fois plus complexe et plus responsable. Les relations entre les dirigeants, les actionnaires et les autres parties prenantes doivent être organisées pour permettre à l’entreprise de fonctionner avec efficacité dans une conviction partagée par tous que la gouvernance d’entreprise renforcera sa pérennité et sa compétitivité.
Pourquoi ce livre ?
Ce livre a pour objectif d’expliquer ce qu’est la gouvernance d’entreprise, de présenter de manière détaillée ses missions et de dresser un panorama complet de ses meilleures bonnes pratiques.
Cité-débat: Genève et la Gouvernance mondiale (Photo credit: Sandrine Salerno)
Véritable guide opérationnel sur lagouvernance, à la fois exhaustif et pratique, cet ouvrage permet aux entreprises de toutes tailles et aux membres de conseil d’administration ou de surveillance de répondre aux questions essentielles sur la gouvernance d’entreprise :
Comment est-elle née ? Quels sont ses fondements ?
Quelle est sa définition ? À quoi sert-elle ? Quelles sont ses missions ? Quels en sont les acteurs ?
Comment la mettre en place ? Quelles sont les obligations légales ?
Comment la pratiquer ? Quelle est l’information nécessaire ? Que signifie comply or explain ?
Quelles différences y a-t-il entre un conseil d’administration et un conseil de surveillance ?
Comment composer un conseil d’administration ? Quel est le rôle de l’administrateur ? Quelle est sa responsabilité ? Quels sont ses droits et ses obligations ? Quelles sont les qualités requises pour être administrateur ? Qu’est-ce qu’un administrateur indépendant ? Quel est le mode de rémunération des administrateurs ?
À quoi servent les « comités » spécialisés ?
Pourquoi la gouvernance de l’entreprise familiale est-elle particulière ?Qu’est-ce qu’une « bonne » gouvernance ?
À qui ce livre est-il destiné ?
Ce livre est destiné aux entreprises soucieuses de disposer des meilleurs systèmes de gouvernance, à celles qui envisagent d’instaurer une vraie gouvernance, aux dirigeants qui cherchent à mieux tirer parti du travail de son conseil, aux administrateurs en poste qui cherchent améliorer leur pratique de la gouvernance, aux administrateurs potentiels souhaitant se former à cette nouvelle fonction ; tous les acteurs de l’entreprise qui veulent trouver en un seul ouvrage l’ensemble des connaissances et des pratiques concernant la gouvernance, trouveront un intérêt à ce manuel. Ainsi, celui-ci pourra-t-il, par exemple, être utile :
à toute personne désireuse d’occuper un mandat d’administrateur ;
à un membre du conseil voulant rafraîchir ses connaissances ;
au président ayant la volonté de donner un nouveau dynamisme à son conseil ;
à une entreprise familiale envisageant d’intégrer des administrateurs indépendants ;
à un dirigeant se posant des questions sur l’apport réel de son conseil ;
à un fonds d’investissement souhaitant systématiser la gouvernance dans ses participations ;
à un opérationnel réfléchissant au rôle d’un administrateur ;
aux professionnels travaillant sur les concepts de gouvernance ;
aux particuliers voulant s’informer sur un sujet dont on parle beaucoup.
Comment cet ouvrage est-il construit ?
La méthode utilisée se veut pédagogique et pratique : les concepts nécessaires à la compréhension des mécanismes essentiels sont expliqués en termes simples et sont illustrés de nombreux exemples appliqués à l’entreprise. Le livre comprend plus de cent cinquante recommandations pratiques. L’appropriation par le lecteur des connaissances et des meilleures pratiques est ainsi systématiquement recherchée. Un processus itératif d’accumulation des connaissances rend préférable une lecture chronologique des différents chapitres, mais le lecteur averti peut parfaitement lire directement le chapitre qui l’intéresse.
La première partie permet de répondre à la question : qu’est-ce que la gouvernance ?
– le chapitre 1 présente l’origine, l’histoire et les conditions de mise en oeuvre de la gouvernance ;
– le chapitre 2 propose différentes définitions de la gouvernance, décrit le système de gouvernance et les principaux textes fondateurs ;
– le chapitre 3 analyse les facteurs structurants de la gouvernance et en dresse les caractéristiques principales par type d’organisation.
La deuxième partie présente les missions de la gouvernance : à quoi sert la gouvernance ?
– le chapitre 4 décrit les missions prioritaires de la gouvernance en présentant, pour chacune d’entre elles, objectifs, points clés, signaux d’alerte et recommandations pratiques ;
– le chapitre 5 s’intéresse aux missions classiques de la gouvernance suivant le même schéma ;
– le chapitre 6 dresse un panorama de situations particulières où la gouvernance va jouer un rôle important.
La troisième partie complète la formation du lecteur : comment exercer la gouvernance ?
– le chapitre 7 recense les informations juridiques essentielles, statut de l’administrateur, mandats, droits et obligations, conventions, responsabilité…
– le chapitre 8 présente toutes les pratiques de bonne gouvernance à chaque étape du mandat (avant, pendant, après), décrit le fonctionnement du conseil, les qualités et comportements des administrateurs et expose les principes d’une gouvernance « idéale » ;
– le chapitre 9 permet de disposer d’une vision synthétique de quelques questions clés de la gouvernance d’entreprise.
CONCLUSION
La décennie qui s’ouvre sera celle de la gouvernance d’entreprise. Agissant pour l’intérêt social et favorisant l’implication à long terme des actionnaires, la gouvernance permettra de soutenir, d’encadrer et d’accompagner les dirigeants. Elle contribuera au développement d’entreprises durables, maîtrisant leurs risques et orientées uniquement sur la création de valeur, même si aujourd’hui peu d’études ont été conduites pour évaluer l’impact de la mise en pratique d’une bonne gouvernance sur la stratégie et la création de valeur de l’entreprise.
Bousculant l’approche traditionnelle d’une gouvernance répressive et disciplinaire, uniquement centrée sur la gestion des conflits d’intérêts entre actionnaires et dirigeants, nous pensons que s’ouvre aujourd’hui l’ère d’une gouvernance différente ; ayant gagné en maturité, elle trouvera également un meilleur équilibre entre contrôle et création de valeur. Pour cela, il est indispensable que soient poursuivies les réflexions suivantes :
accepter une gouvernance adaptée selon les entreprises ;
privilégier le fond sur la forme ;
être vigilant quant au box-ticketing ;
imposer le comply or explain avec des explications argumentées ;
avoir un conseil véritablement actif ;
disposer d’administrateurs « libres ».
Alors, la gouvernance ne se contentera plus de courir derrière les nouvelles réglementations pour s’y adapter mais anticipera les évolutions futures de l’entreprise. Choisie et non pas uniquement imposée par la réglementation, la gouvernance d’entreprise jouera un rôle dans la performance économique et sociétale de l’entreprise, et à ce titre contribuera également à la sauvegarde non seulement des intérêts des actionnaires mais aussi de ceux de l’ensemble des parties prenantes.
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Pierre Cabane* est diplômé de l’EM Lyon et titulaire d’un master finance de l’université Dauphine. Ancien directeur financier chez L’Oréal, chef d’entreprise, il se consacre aujourd’hui à la mise en place de systèmes de gouvernance. Président de la commission Formation de l’Institut Français des Administrateurs (IFA), il est aussi administrateur indépendant de plusieurs sociétés et associations. Il a construit, en partenariat avec Sciences Po, le module de formation « Comment pratiquer la gouvernance en ETI ? », enseigne à l’université Paris Dauphine, et intervient comme conseil en stratégie dans les secteurs des biens de consommation, du luxe et de la pharmacie.
Voici un document phare sur l’étude des rémunérations jugées excessives dans les grandes sociétés publiques. Cette recherche, dirigée par Charles M. Elson et Craig K. Ferrere de l’Université du Delaware*, a été acceptée pour publication dans le Journal of Corporation Law.
Les auteurs présentent plusieurs arguments qui remettent en cause l’étalonnage compétitif (competitive benchmarking), une méthode d’établissement de la rémunération jugée inflationniste. Les auteurs font la démonstration que cette façon de faire n’est pas justifiée et que ses effets ont des répercussions pernicieuses sur toute la structure de rémunération. En fait, l’hypothèse selon laquelle il faut rémunérer « grassement » les hauts dirigeants afin de les retenir ne tient pas la route.
L’article recommande aux comités de rémunération de s’éloigner des méthodes traditionnelles de « benchmarking » et de développer des standards internes de rémunération basés sur les spécificités de l’entreprise, notamment son environnement compétitif unique. Les comités de rémunération aurait avantage à prendre connaissance de cette étude. Vous trouverez, ci-dessous, un résumé de l’article.
In setting the pay of their CEOs, boards invariably reference the pay of the executives at other enterprises in similar industries and of similar size and complexity. In what is described as « competitive benchmarking », compensation levels are generally targeted to either the 50th, 75th, or 90th percentile. This process is alleged to provide an effective gauge of « market wages » which are necessary for executive retention. As we will describe, this conception of such a market was created purely by happenstance and based upon flawed assumptions, particularly the easy transferability of executive talent. Because of its uniform application across companies, the effects of structural flaws in its design significantly affect the level of executive compensation.
President Barack Obama delivering remarks on new executive compensation restrictions. (Photo credit: Wikipedia)
It has been observed in both the academic and professional communities that the practice of targeting the pay of executives to median or higher levels of the competitive benchmark will naturally create an upward bias and movement in total compensation amounts. Whether this escalation has been dramatic or merely incremental, the compounded effect has been to create a significant disparity between the pay of CEOs and what is appropriate to the companies they run. This is not surprising. By basing pay on primarily external comparisons, a separate regime which was untethered from the actual wage structures of the rest of the organization was established. Over time, these disconnected systems were bound to diverge.
The pay of a chief executive officer, however, has a profound effect on the incentive structure throughout the corporate hierarchy. Rising pay thus has costs far greater than the amount actually transferred to the CEOs themselves. To mitigate this, boards must set pay in a manner in which is more consistent with the internal corporate wage structures. An important step in that direction is to diminish the focus on external benchmarking.
We argue that: (I) theories of optimal market-based contracting are misguided in that they are predicated upon the chimerical notion of vigorous and competitive markets for transferable executive talent; (II) that even boards comprised of only the most faithful fiduciaries of shareholder interests will fail to reach an agreeable resolution to the compensation conundrum because of the unfounded reliance on the structurally malignant and unnecessary process of peer benchmarking; and, (III) that the solution lies in avoiding the mechanistic and arbitrary application of peer group data in arriving at executive compensation levels. Instead, independent and shareholder-conscious compensation committees must develop internally created standards of pay based on the individual nature of the organization concerned, its particular competitive environment and its internal dynamics.
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*Cette recherche a été financée par (1) The Weinberg Center for Corporate Governance, (2) The Investor Responsibility Research Center Institute et (3) The Social Science Research Network.
Quel est le rôle du conseil d’administration en matière d’intégrité ? Un récent document du Centre de la gouvernance d’entreprise de Deloitte montre comment l’intégrité constitue l’une des grandes responsabilités du C.A., comment on peut l’évaluer au niveau de l’organisation et, surtout, quel modèle les administrateurs peuvent adopter afin d’assumer leur fonction de surveillance de l’intégrité.
Ce court article sera sûrement d’une grande utilité aux membres des conseils. Vos commentaires sont toujours les bienvenus !
« Un conseil d’administration efficace se soucie de l’intégrité tant au sein du conseil qu’à l’extérieur de celui-ci. Il donne l’exemple. Le conseil aide le chef de la direction à donner le ton en matière d’éthique au sein de l’organisation. De plus, il favorise et surveille le respect des lois, des règlements et des politiques propres à l’organisation. L’intégrité au sein du conseil d’administration est fondée sur des facteurs comme les valeurs organisationnelles, le besoin de respecter les responsabilités fiduciaires du conseil ainsi qu’une volonté de rendre des comptes.
English: The Deloitte Centre in Auckland City, New Zealand. (Photo credit: Wikipedia)
L’engagement envers une performance empreinte d’intégrité est largement reconnu comme étant un attribut indispensable d’une organisation. Toutefois, bon nombre de personnes et d’organisations éprouvent des difficultés à mettre cet idéal en pratique. Les structures et les pratiques de gouvernance des conseils doivent favoriser une culture d’intégrité dans l’entreprise en plus de promouvoir la responsabilité d’entreprise ainsi que les responsabilités environnementales et sociales. Le conseil d’administration doit aider à forger des relations de confiance à long terme avec les actionnaires, les clients, les autorités de réglementation et les employés.
Le rôle du conseil dans le maintien de l’intégrité consiste à travailler avec le chef de la direction pour donner le ton, comprendre les exigences en matière de conformité et fixer les attentes à l’égard de la haute direction qui sont ensuite transmises à l’ensemble de l’organisation. De plus, le conseil demande aux membres de la haute direction de rendre des comptes sur les résultats par rapport aux attentes fixées ».
Voici un article publié par Nicola F. Sharpe dans la série Illinois Public Law Research Paperqui aborde un sujet de la plus haute importance pour les experts en gouvernance de sociétés : la question de savoir comment un C.A. peut effectivement exercer son rôle « d’autorité » s’il ne contrôle pas le processus de décision managérial ?
L’article fait le constat qu’il y a une telle asymétrie de l’information entre le management et les administrateurs que ceux-ci ne sont pratiquement pas en mesure de jouer le rôle qui leur est dévolu par la loi et par les théories sur les règles de gouvernance. Ils n’ont pas les moyens, ni de leurs ambitions, ni des pouvoirs qui leur sont conférés … L’auteur se questionne sur les véritables détenteurs d’influence et d’autorité au sein des grandes sociétés publiques : (1) le conseil d’administration, (2) les actionnaires et (3) le management.
Il s’agit d’un article de fond qui pose les vraies questions mais qui n’apporte pas toutes les réponses ! En s’inspirant de l’approche des comportements organisationnels, l’auteur présente un modèle de prise de décision en cinq (5) étapes, dans lequel les conseils d’administration sont très peu présents. Son analyse l’amène à proposer un modèle plus « satisfaisant » d’exercice du pouvoir du C.A. Il identifie quatre (4) éléments, relatifs à la gestion du processus de prise de décision des conseils d’administration, qui permettraient de réduire le gap évoqué.
Je vous invite donc à une bonne réflexion sur cette problématique de gouvernance. Que pensez-vous des assertions de l’auteur ? … des arguments présentés ? … des implications et des recommandations pour les conseils d’administration ?
Voici un court résumé de l’article. Pour pouvez télécharger le document au complet (44 pages).
Writer’s Digest Book Shipment (Photo credit: AngelaShupe.com)
« Few Chief Executive Officers (CEOs) believe their boards of directors understand the strategic factors that determine their corporation’s success. In fact, some long-term directors “confess that they don’t really understand how their companies make money.” Yet broadly accepted theories of corporate governance, such as Stephen Bainbridge’s Director Primacy, are founded on the faulty premise that boards of directors have the actual authority to stop managers from behaving badly. These theories, as well as corporate law, wrongly assume that boards have practical authority over managers. This article directly challenges that assumption and argues that managers, not boards, control corporate decision-making processes.
The problem is that legal scholars and policymakers have ignored the connection between decision-making processes and practical authority. This article is the first to identify and examine this relationship, which is essential to helping boards live up to their legislative mandates.
This article argues that an effective decision-making process is essential to securing a corporate board’s actual authority. Unless boards engage in such a process, regulators will continue to expect boards to perform tasks that exceed their capabilities. Organizational behavior theory, which can be found in business literature, but is frequently ignored in law, provides the attributes of an effective decision-making process. Analyzing the components of an effective process, and identifying which components are truly controlled by boards as opposed to managers, supplies a roadmap for what boards need in order to have both de facto and de jure authority in their corporations. This article provides that original analysis ».
Voici un très court article publié par le Schreiber Bart Group sur l’importance, pour le C.A., de s’assurer de la bonne exécution des stratégies car c’est à ce niveau que la partie se joue. L’article met de l’avant certains moyens pour y arriver, notamment en s’assurant d’avoir les bonnes personnes sur le conseil, celles qui posent des questions sur les étapes d’implantation des stratégies.
English: Board of Directors (Photo credit: Wikipedia)
As we have said on many occasions before. Ninety percent of all organizational failures are due primarily to problems in executing an otherwise good-to-great strategy. Only 10% are due to having a “bad strategy”. Accordingly, we believe that it is not the strategy, but rather the strategy execution plan that the board should be focused on, approve and monitor.
After all, to simply approve something that has a 90% chance of being ineffective is just not good governance. Strategyexecution therefore is where the board’s guidance and advice can pay dividends. In fact, we think that a board’s oversight of strategy execution will become the next wave in governance.
Ci-dessous un rapport paru dans HLS Forum et publié par Jeremy L. Goldstein de la firme Wachtell, Lipton, Rosen & KatzWith sur les résultats des recommandations de ISS pour le premier trimestre 2013.
Results. According to Institutional Shareholder Services’ (ISS) 2013 Say on Pay Snapshot released April 8, 2013, ISS has recommended against 10 percent of issuers so far this proxy season. While ISS’s study represents a relatively small sample size (473 companies), a “no” recommendation from ISS against 10 percent of companies represents a decrease in “no” recommendations of over 20 percent from last year (12.2 percent).
NYC: American Intl Building and Manhattan Company Building (Photo credit: wallyg)
Reasons for Failure. The single largest reason that companies have received “no” recommendations from ISS continues to be a so-called pay-for-performance disconnect. In addition, ISS has recommended against an increased number of companies on the basis of a so-called lack of compensation committee communications and effectiveness. A lack of effectiveness often arises where ISS has determined that the company has not provided disclosure about actions it has taken in light of a low say on pay vote for the previous year.
Veuillez lire l’article pour d’autres informations :
Voici un article récemment publié par l’organisation britannique Competition Commission (CC) qui conclue que les firmes d’audit internationales ne servent pas adéquatement les actionnaires des grandes sociétés. Les résultats de cette étude montrent que l’accent est davantage mis sur la satisfaction du management que sur les besoins des actionnaires. C’est un article qui soulèvera une certaines controverse. Qu’en pensez-vous ? Avons-nous besoin d’une règlementation additionnelle afin d’assurer une plus grande compétition entre les Big 4 ?
« Competition in the audit market is restricted by factors which inhibit companies from switching auditors and by the tendency for auditors to focus on satisfying management rather than shareholder needs. This is the Competition Commission’s (CC) provisional conclusion in its market investigation into the supply of statutory audit services to large companies in the UK ».
« In a summary of its provisional findings published today, the CC states that because companies find it difficult to compare alternatives with their existing auditor, prefer continuity and face significant costs in switching, they are reluctant to change auditor and so lack bargaining power. Audit firms outside the ‘Big 4’, which dominate the market, find it difficult to show that they have sufficient experience and reputation to win the audit engagements of FTSE 350 companies.
Additionally, although auditors are appointed to protect the interests of shareholders, who are therefore the primary customers, too often auditors’ focus is on meeting the needs of senior management who are key decision takers on whether to retain their services. This means that competition focuses on factors that are not aligned with shareholder demand.
The CC found that 31 per cent of FTSE 100 companies and 20 per cent of FTSE 250 companies have had the same auditor for more than 20 years, and 67 per cent of FTSE 100 companies and 52 per cent of FTSE 250 companies for more than ten years. The CC adds that the lack of competition is likely to lead to higher prices, lower quality and less innovation for companies and a failure to meet the demands of shareholders and investors.
The CC is now looking at possible ways to encourage greater competition through mandatory tendering and rotation; increasing information and transparency with more frequent reviews and extended reporting requirements; and strengthening accountability and independence by giving audit committees and shareholders greater control of external audit….
Companies face significant hurdles in comparing the offerings of an incumbent auditor with those of alternative suppliers other than through a tender process.
It is difficult for companies to judge audit quality in advance due to the nature of audit.
Companies and firms invest in a relationship of mutual trust and confidence from which neither will lightly walk away as this means the loss of the benefits of continuity stemming from the relationship.
Company management face significant opportunity costs in the management time involved in the selection and education of a new auditor.
Mid Tier firms face experience and reputational barriers to expansion and selection in the FTSE 350 audit market.
Auditors have misaligned incentives, as between shareholders and company management, and so compete to satisfy management rather than shareholder demand, where the demands of executive management and shareholders differ.
Auditors face barriers to the provision of information that shareholders demand (in particular, from the reluctance of company management to permit further disclosure).
The CC also considered whether the market conditions are conducive to coordination or that Big 4 firms engage in tacit collusion; that they bundle audit and non-audit services together in order to raise barriers to expansion to other firms; that they target the customers of Mid Tier firms with particularly low prices; or that they are able to exercise undue influence over the formation of regulation or on regulatory bodies through their extensive alumni networks. To date, the CC has not identified sufficient evidence to support these other theories of harm.
In its Notice of possible remedies, the CC is exploring the following possible combination of remedies:
mandatory tendering;
mandatory rotation of audit firm;
expanded remit and/or frequency of Audit Quality Review team (under auspices of Financial Reporting Council (FRC)) reviews;
prohibition of ‘Big-4-only’ clauses in loan documentation;
strengthened accountability of the External Auditor to the Audit Committee;
Solide prise de position sur le comportement des fonds activistes (« hedge funds ») rédigée par Martin Lipton, partenaire fondateur de la firme Wachtell, Lipton, Rosen & Katz, et publiée dans Harvard Law School Forum on Corporate Governance. L’auteur montre comment les fonds activistes peuvent souvent agir en fonction d’intérêts contraires aux actionnaires.
L’auteur soulève une multitude de questions qui doivent trouver des réponses adéquates. Je vous invite à lire ce court article afin de vous sensibiliser à l’ampleur du travail à faire dans le domaine de la gouvernance.
« In what can only be considered a form of extortion, activist hedge funds are preying on American corporations to create short-term increases in the market price of their stock at the expense of long-term value…. It requires new thinking to address the new threat. Among the questions that must be addressed are :
1. Purpose of the American Business Corporation. Is the fundamental purpose of the American business corporation, and the proper goal of sound corporate governance, optimal long-term value creation? Or is the purpose to maximize short-term stockholder value at any time any particular stockholder—with its own goals and agenda, which are unlikely to be congruent with the interests of other stockholders—happens to demand it?
Hedge Fund Managers – Lynching Party Needed (Photo credit: smallislander)
2. How Are “Excess” Returns Actually Obtained? Activist hedge funds are reportedly outperforming many other asset classes as their raids seem to “unlock” value through pressured transactions. Is this value actually created, or merely appropriated from fellow stockholders with longer-term investment horizons, and from other stakeholders such as employees, including by sacrificing capital spending and investment in long-term research and development?
3. Are There Really Best Practices? Is there sufficient (or any genuine) evidence that “best practices” corporate governance of the type promoted by the academics and advisory services results in enhanced long-term performance of the corporation — especially given the fact that American corporations have historically enjoyed the best long-run performance in the world? Is “best practices” corporate governance a major factor in short-termism?
4. Structural Conflict. Is there a structural conflict in a system in which stockholders exercising power over a corporation owe no legal duty to anyone and are an ever-changing group that is free to enter a stock in size without advance disclosure and exit at any time of their choosing, act in concert, or even mask their interests using derivatives and engage in empty voting? And in which the decision-makers at these stockholder bodies are themselves agents, compensated, in many cases, on the basis of the short-term performance of the investment portfolios they supervise on behalf of savers and investors?
5. The “Principal/Agent” Premise. Is the essential premise of the stockholder-centric proponents – the principal-owner/agent view of the corporate firm – accurate or reasonable, given that the legal system gives legal immunity to the “owners” (stockholders) and imposes fiduciary duties and liabilities on the “agents” (directors)?
6. The Missing Principal. Is the principal/agent structure of institutional investors imposing an unacceptable cost on corporations when the underlying beneficial holders of the managed portfolios– retirees, long-term investors and savers – play little if any role in checking the power of those running the investment intermediaries? Regulation, litigation, and public scrutiny perform powerful roles in addressing agency costs that may exist at the corporate board and management level. But given the massive intermediated ownership of public corporations today by a variety of different types of institutional investors with varied compensation and governance arrangements of their own, do we fully understand the agency costs of these investment intermediaries, who is bearing those costs and whether they are being sufficiently monitored and mitigated? And why has the academy not fixed its gaze on these powerful actors, including advisors such as ISS and Glass Lewis?
7. Trust the Directors. Is the assumption by academics that directors on corporate boards cannot be trusted based on any actual evidence, on observed anecdotal information, or just the skepticism of a group that has never (or rarely) been in the boardroom or been charged with overseeing a for-profit enterprise? And does the constant assumption and allegation of untrustworthiness in fact create both a disincentive to serve and a disinclination to act, all to the detriment of the corporate enterprise and its beneficiaries?
8. Directors’ and CEOs’ Time. Is it desirable that directors and CEOs spend a third of their time on governance? Has the governance-rather-than-performance-centric debate resulted in a new breed of lawyer-type-CEOs and box-checking “monitoring” boards rather than sophisticated and experienced “advising” boards?
9. Escaping Governance. What part of the private equity activity wave is fairly attributable to increased costs imposed by corporate governance in the public markets that makes management for long-term value appreciation difficult or impossible in those public markets? Is that good or bad?
10. Why Do Venture Capitalists and Entrepreneurs NOT Choose the Academics’ Governance Model? Why do highly successful technology corporations go public with capital structures that preserve management control? To avoid the pressure for short-term performance? To avoid shareholder pressure on management? Do these companies underperform or are they our most innovative companies?
11. Economic and Business Theory. Is there any evidence that the ideas and suggestions of short-term money managers, who oversee diverse portfolios, promote long-term (or even medium-term) value creation? What happens to investment, strategic thinking and risk management in a world in which the ideas have time horizons measured in months or quarters? How do the advocates of stockholder-centric governance take account of the fact that stockholders do not have information and expertise about the corporation on a par with its directors and officers? Similarly are long-term stockholder interests and wealth creation served by intermediaries in the proxy advisory services, operating without regulation or fiduciary duty, either to the corporation or its stockholders or to investors and beneficiaries? And what to make of the elephant-in-the-room fact that activist hedge funds don’t have to eat what they cook?
12. Political Theory. At bottom, doesn’t the stockholder-centric theory hark back to the crudest 19th century aspects of laissez-faire capitalism—pressing for the legal system to recognize a single social good (maximizing rentiers’ portfolio returns) while ignoring or slighting the interests of employees, communities and societal welfare? Is stockholder-centric governance as currently promoted and practiced by the academic and governance communities, and the short-termism it imposes, responsible for a very significant part of American unemployment and a failure to achieve a GDP growth rate sufficient to pay for reasonable entitlements without a significant increase in taxes ? »
Voici un article scientifique publié dans Social Science Research Network (SSRN)par Bill Francis (1), Iftekhar Hasan (2) et Qiang Wu (3) sur un sujet très pertinent pour la gouvernance des sociétés : L’utilité de la présence de professeurs d’université sur les C.A. des entreprises publiques.
L’article montre que la présence de professeurs sur les conseils d’administration est positivement associée à une meilleure performance des entreprises. Les professeurs-administrateurs, plus particulièrement ceux qui ont une formation en administration, jouent un rôle très important de conseillers auprès de l’entreprise. Leur influence sur la performance des entreprises semble déterminante dans plusieurs domaines relatifs à la bonne gouvernance.
« Directors from academia served on the boards of more than one third of S&P 1,500 firms over the 1998-2006 period. This paper investigates the effects of academic directors on corporate governance and firm performance. We find that companies with directors from academia are associated with higher performance. In addition, we find that professors without administrative jobs drive the positive relation between academic directors and firm performance. We also show that professors’ educational backgrounds affect the identified relationship. For example, academic directors with business-related degrees have the most positive impacts on firm performance among all the academic fields considered in our regressions.
Furthermore, we show that academic directors play an important governance role through their monitoring and advising functions. Specifically, we find that the presence of academic directors is associated with higher acquisition performance, higher number of patents, higher stock price informativeness, lower discretionary accruals, lower CEO compensation, and higher CEO turnover-performance sensitivity. Overall, our results provide supportive evidence that academic directors are effective monitors and valuable advisors, and that firms benefit from academic directors ».
Si vous souhaitez avoir plus d’information sur les objectifs, la méthodologie ou les résultats de l’étude, je vous invite à lire l’article au complet.
Peter F. Drucker and Masatoshi Ito Graduate School of Management (Photo credit: Wikipedia)
« This paper empirically investigates whether the presence of academic directors affects firm performance and corporate governance. Based on the independence theory, expertise theory, and diversity theory, we hypothesize that academic directors can improve board efficacy and subsequent firm performance because of their monitoring abilities and advising abilities. The key result is in line with our hypothesis. We find that the presence of directors from academia in the boardroom is associated with higher firm performance. The positive association holds after controlling for firm- and other governance-specific characteristics, and considering endogeneity issues, such as omitted variable bias, self-selection bias and causality issue. By comparing the differences in the attendance behavior and committee assignments of academic directors and other outside directors, we find that academic directors perform better than other outside directors in the boardroom.
We further examine the monitoring and advising roles of academic directors in details. We find that firms with academic directors have higher CEO turnover-performance sensitivity, lower cash-based CEO compensation, more patent numbers, higher acquisition performance, higher stock price informativeness, and are less likely to manage their earnings. The results provide several channels through which academic directors affect firm value positively.
We also find evidence that academic directors with administrative jobs do not improve firm performance as much as academic directors without administrative jobs. Additional analysis finds that academic directors with administrative jobs have more severe board-meeting attendance problems. Furthermore, we find that academic directors’ areas of study have different impacts on firm performance ».
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(1) Lally School of Management and Technology, Rensselaer Polytechnic Institute
Stephen Miles, fondateur et PCD de The Miles Group, une entreprise qui se spécialise dans le conseil en gestion des talents, met l’accent sur un véritable problème de plusieurs C.A. : leurs relatives faiblesses en gouvernance ! Après avoir fait ressortir les exigences accrues des investisseurs institutionnels pour une plus grande performance des membres de C.A., l’auteur présente cinq lacunes majeures de plusieurs conseils d’administration : (1) connaissances déficientes, (2) manque d’auto-évaluation, (3) sentiment de supériorité, (4) manque d’expérience de plusieurs membres dans certains comités et processus de recrutement déficient, (5) problème de leadership.
À mon avis, les membres de conseils d’administration devraient examiner leur efficacité à la lumière des constats évoqués par l’auteur. On voit que la composition d’un C.A. performant repose beaucoup sur le recrutement des membres, sur le leadership du président du conseil et sur le renforcement du comité de gouvernance, parent pauvre des comités statutaires selon Stephen Miles.
L’article est-il biaisé en faveur de la gestion des talents ? Vos commentaires sont les bienvenus. Bonne lecture.
No board member sets out to be mediocre. And yet as institutional shareholders and activists are “grading” board performance on a steeper curve than ever before, their view is that many boards are coming up short.
RDECOM Board of Directors holds meeting (Photo credit: RDECOM)
ISS, government regulators, the press, and others are exercising much greater scrutiny over whether boards are executing their fiduciary responsibilities and really acting in the best interests of shareholders. While activist shareholders traditionally were able to hold sway and demand board seats in smaller companies outside the Fortune 500, today we are seeing this happen with venerable names such as Procter & Gamble, Yahoo!, BMC Software, and JC Penney.
In this climate of stakeholders’ taking a much tougher stance on what they deem to be “underperforming directors,” it’s worth it to examine the causes of mediocre performance on boards today. Why are many boards missing the mark?
Voici un excellent article, paru dans The Economist, qui présente un plaidoyer convaincant en faveur de l’adoption d’une perspective à long terme dans la conduite des entreprises. L’auteur montre que la théorie de la maximisation du rendement des actionnaires (souvent à court terme) passe par l’implantation de stratégies alignées sur l’accroissement de la valeur des sociétés à long terme. Il donne plusieurs exemples d’entreprises qui ont optées, avec succès, pour une vision et un management à long terme, seule approche susceptible d’assurer la pérennité des entreprises. Le conseil d’administration qui doit avoir une orientation claire à cet égard.
Je vous invite donc à prendre connaissance de ce court extrait et à lire l’article au complet si cette perspective vous allume. Qu’en pensez-vous ?
Peut-on, comme Peter Drucker, concevoir une théorie du management qui prône une vue à long terme, tout en assurant la satisfaction des actionnaires … et des autres parties prenantes ?
« HE IS the chief executive of a multinational corporation, but Paul Polman sometimes sounds more like a spokesman for Occupy Wall Street. The boss of Unilever (an Anglo-Dutch consumer-goods firm with brands ranging from Timotei shampoo to Ben & Jerry’s ice cream) agonises about unemployment, global warming and baby-boomer greed. He puts some of the blame for these ills on the most influential management theory of the past three decades: the idea that companies should aim above all else to maximise returns to shareholders.
Paul Polman – World Economic Forum on East Asia 2011 (Photo credit: World Economic Forum)
He appears to mean it. Since taking charge in 2009, Mr Polman has stopped Unilever from publishing full financial results every quarter. He refuses to offer earnings guidance to equity analysts. He has introduced a lengthy “sustainable living plan” and attracted a new cadre of long-term investors, particularly in emerging markets. He even told an audience in Davos that hedge-fund managers would sell their own grandmothers to make a profit.
Mr Polman was one of several titans to decry the cult of shareholder value at the Peter Drucker Forum (an annual gathering of admirers of the late Austrian-born management guru) in Vienna on November 15th and 16th. Roger Martin, the dean of the Rotman School of Management at the University of Toronto, called it a “crummy principle that is undermining American capitalism”. Georg Kapsch of the Federation of Austrian Industries urged the world to abandon it. Rick Wartzman, the director of the Drucker Institute, said its critics were gaining momentum.
The cult has certainly yielded perverse results. The fashion for linking pay to share prices has spurred some bosses to manipulate those prices. For example, a manager with share options gets nothing if the share price misses its target, so he may take unwise risks to hit it. Short-termism is rife on Wall Street: the average time that people hold a stock on the New York Stock Exchange has tumbled from eight years in 1960 to four months in 2010. The emphasis on short-term results has tempted some firms to skimp on research and innovation, robbing the future to flatter this year’s profits. “Long-term results cannot be achieved by piling short-term results on short-term results,” Drucker once remarked ».
Ce billet, paru dans le HLS Forum, présente le sommaire exécutif d’un rapport produit par la firme Equilar sur les perspectives relatives à la gouvernance et à la rémunération en 2013. La firme Equilar est l’une des plus importantes entreprises de recherche et de publication dans le domaine de la gouvernance. Le rapport complet que vous pourriez vous procurer en vous adressant directement à l’entreprise Equilar se décline en trois catégories : (1) Conseil d’administration, (2) Rémunération de la direction et (3) Divulgation et gouvernance.
Vous trouverez, ci-dessous les principaux résultats de cette enquête (Key Findings). Bonne lecture.
« Each year, Equilar looks to highlight critical areas that can potentially affect those dealing with compensation and governance issues in the upcoming year. The 2013 Compensation & Governance Outlook Report aims to cover a variety of emerging trends in the fields of executive and director pay, equity trends, and corporate governance, while also providing an array of disclosure examples to illustrate unique approaches to strategic matters. The majority of firms will not encounter all, or even most, of the trends in this report in the New Year; it is primarily intended as a starting point for discussions that will take place over the course of 2013.
… Discussions between companies and shareholders will continue to drive changes as firms ensure the story they want told is communicated through a variety of mediums and methods. Concerns surrounding fairness in a number of areas including stock structure and pay will cause struggles between conflicting parties as focus continues to shift towards the decisions in the boardroom. Topics including shareholder engagement, board dynamics, Say on Pay, and pay for performance dominate this year’s report.
As with other Equilar publications, this report relies on a variety of actual disclosure examples, chosen to highlight current trends. We organized each issue into one of three broader categories: Board of Directors, Executive Pay, and Disclosure & Governance. We organized the issues into sections to help the reader navigate the report. To avoid emphasizing any single issue, the issues in each category are organized in alphabetical order under each category ».
Key Findings
« Most companies no longer award meeting fees to directors: The prevalence of S&P 1550 companies that provide director’s regular board meeting fees decreased from 59.8 percent to 44.3 percent between 2007 and 2011. Fixed annual retainers increased from 94.6 percent to 99.7 percent over the same period.
Female representation on boards increasing: In 2011, 76 percent of companies in the S&P 1500 had one or more female board member. The percentage of boards with no female directors fell from 29 percent to 24 percent between 2009 and 2011.
Boards continue move toward single classes: 59 percent of S&P 1500 companies had declassified boards in 2011, up from 49 percent in 2007.
Equity vehicle mix shifts to include performance shares: The number of companies providing performance-based equity to chief executives increased from 42.2 percent to 54.5 percent between 2007 and 2011.
Future of multi-class share structures remains unclear: Several high-profile public offerings in 2012 brought renewed attention to multi-class share structures increased the number of companies in the S&P 1500 with multiple classes of stock to 82.
Alternative pay tables becoming more common: While not widespread, in order to better illustrate pay stories, a number of companies are providing alternative pay tables and graphs, including pay-for-performance alignment and target versus realized pay.
Compensation Discussion & Analysis length trending upward: The average CD&A word count for S&P 1500 companies increased nearly 14 percent to 7,340 words between 2009 and 2011. CD&A word length ranged from 519 (Berkshire Hathaway) to 20,022 words (Telephone & Data Systems).
Internal pay equity closer for small and mid-cap companies: CEOs make 2 times more than the next ranked NEO in small and mid-cap companies, and 2.3 times more in large cap companies.
Increase in disclosures of realized and realizable pay: Although methods of calculating realized and realizable pay are not yet consistent among public companies, many companies are employing the use of realized or realizable pay in order to better explain compensation figures.
Proxy advisors using new methods for peer group selection: Proxy advisors Institutional Shareholder Services and Glass Lewis will both use new methods for peer groupselection in 2013. While it is unclear how this will affect advisory votes on pay, it is still important for companies themselves to give clear disclosure surrounding the peer groups created.
Earnings and revenue continue to be most commonly used performance metrics: In 2011, earnings were used as a metric in 49.8 percent of all awards, while 36.5 percent of all awards used revenue.
Initially exempt companies to have first Say on Pay vote in 2013: Firms with public floats of less than $75 million will hold their first votes for Say on Pay in 2013. It remains to be seen whether the trends for larger firms, which included less than 2 percent of firms failing a Say on Pay vote, will extend down to the smaller firms.
Shareholder outreach and engagement growing: The number of companies within the S&P 500 filing amended proxies in response to negative recommendations increased from 29 in 2011 to 42 in 2012".
J’ai récemment pris connaissance d’une entrevue conduite par C-Suite Insight avec Douglas K. Chia*, secrétaire corporatif de la firme Johnson & Johnson. Cette entrevue aborde essentiellement quatre sujets très importants pour les parties prenantes de l’entreprise : (1) les pratiques de planification de la relève de la direction, surtout du PCD (2) les pratiques de rémunération et la préparation du document CD&A (Compensation Discussion and Analysis), (3) les relations et les discussions avec les investisseurs institutionnels et (4) les communications avec les actionnaires, notamment les aspects concernant le Say on Pay et la création de valeur à long terme.
Voici un compte rendu de cette entrevue. Vos commentaires sont appréciés. Bonne lecture.
C-Suite Insight: What are the big issues that you’re considering as Johnson & Johnson prepares for proxy season?
Doug: Like many other high-profile companies, executive compensation is a critical item for us during proxy season, and we are looking at the continuum of the story that we’ve been telling for the last few years in our proxy statements. As you may have seen, there have been some major changes in our executive suite from last year to this year, specifically a succession from a long-tenured CEO, who is retiring after a remarkable 41-year career at J&J, to a new CEO. So, obviously this recent leadership succession will be a big focus area. We’ll also continue to emphasize the changes in the design of our compensation programs that have been made over the past few years, which we put a lot of effort into describing in last year’s proxy statement.
Headquarters of the Johnson & Johnson Company, One Johnson & Johnson Plaza, New Brunswick, New Jersey, USA. Architect: Henry N. Cobb of the I. M. Pei Company, built 1983. (Photo credit: Wikipedia)
CSI: Succession planning is a weakness in a lot of companies. So could you take us through succession planning at Johnson & Johnson, when it started, and how you worked your way through it?
Doug: For us, succession planning has always been something which has gone smoothly because it’s been thought out in advance. J&J has had only seven CEOs since becoming a public company in the early 1940s, and each one has come from the internal ranks. In the current case, we have an outgoing CEO who had served in the position for the past decade. The process of identifying potential successors for him started a number of years ago, in the 2010-2011 timeframe, and the lead candidates became apparent to the public. Our major investors were familiar and quite comfortable with the individuals who were being considered.
CSI: In succession planning and other major processes at J&J, how do you view long-term sustainable value and how do you view your engagement with shareholders?
Doug: We’ve always managed our business for the long-term, which is reflected in our culture by the fact that people tend to have very long careers at Johnson & Johnson. So, we have the benefit of being able to train up-and-coming leaders in a variety of business situations and give our Board exposure to them along the way. In terms of shareholder engagement, our major investors get exposed to many of our senior business leaders through investor conferences and meetings where they can talk in-depth about the businesses they are running. Over time, investors get familiar with a small cadre of J&J senior business leaders.
CSI: We have to mention Say on Pay. How did this issue affect you initially, and how do you address it when you’re writing a CD&A?
Doug: You cannot write the CD&A only thinking about the Say on Pay vote. This reminds me of what my teachers in school used to say: You shouldn’t “study to the test.” Instead, study the subject, master the subject, and then you will do fine on the test. So for us, writing the CD&A each year is about making sure we tell the story that reflects what’s taking place at the company, our compensation philosophy, the values we are trying to instill through our compensation plans, how our executives are paid, and what performance is being rewarded. We try to illustrate that we manage our business for the long-term and thus place a lot of focus on aligning executive compensation with our long-term investors. That being said, you do want to consider the vote outcome, keeping in mind the “advisory” nature of the vote. Suffice it to say that ours have not been where we want them to be, although we did gain support from over a majority of the votes cast in each of the last two years.
CSI: What have you done about this?
Doug: Over the past summer and fall, we had some of our Board members and senior management sit down with a diverse mix of investors, in one-on-one settings, specifically to talk about executive compensation. Through those discussions, we have been able to better understand the parts of our executive compensation program and our disclosure that could be enhanced. One point the investor discussions drove home that is important for all of us to remember when writing the CD&A is that for investors, the proxy statement is really all they have to rely on for information; they likely know very little else about the company’s pay programs.
So, we have to take a critical eye to what we’ve presented in the past and ask ourselves, “How can we tell our story better in order to make people understand the important context and rationale underlying these compensation decisions?” I think it’s fair to say that this process has helped us identify specific areas where we could have done a more effective job of telling our story. That’s something we’ll continue to work on this year and every year.
CSI: We’ve talked to major institutional investors such as TIAA-CREF and CalPERS, and also companies like BlackRock. They’ve stressed to us the importance of private engagement. In many cases, they think it’s more effective if they engage you privately. Is that your experience and what’s your view, how much do you welcome that sort of private engagement?
Doug: I think that’s right. One-on-one engagement is a very effective method of communication between companies and investors. The advantage of this direct engagement is the candid nature of the discussion that ensues when there is not an “audience” of outsiders. Over time, you can build strong relationships this way. In particular, “real-time” engagement, either by phone or in-person, provides the opportunity for the kind of constructive back-and-forth discussion that helps tease out critical issues. It helps both sides more precisely identify areas that need to be clarified. In the one-on-one meetings we had over the summer and fall, the investors we met with were able to get a real sense of just how much time and thought our Board members put into the decisions around executive compensation and how many factors come into play. Those are hard things to effectively illustrate to investors through a written document like a proxy statement.
CSI: Have these private dialogues increased in the last few years, in the era of Dodd-Frank?
Doug: Yes, I can say they have for us. We are more proactive than we had been in the past, and many of our investors have also become more proactive. Some who were not inclined to talk to us in the past are now more receptive to having a conversation.
CSI: How do you balance the tension between short-term results and a long-term commitment to spending money on R&D and creating long-term value?
Doug: It’s a tricky balance, but J&J has a long-term philosophy. It’s no secret to the investment community as we constantly emphasize that we manage the business for the long-term. So, to a certain extent, we’re expecting investors who have made significant investments in our company to have that same mindset. Most are investing in the company as a long-term play. However, when you have so many shareholders, they are not all going to agree with you on everything, so naturally there are going to be some shareholders who have a shorter-term outlook for a variety of reasons.
CSI: What sort of big picture advice would you give public companies, and in particular corporate secretaries, as they prepare for proxy season?
Doug: As far as corporate secretaries go, we exchange know-how quite a bit. One of the most rewarding parts of my job is establishing the kinds of relationships with my counterparts where we can help each other be better at what we do. On the subject of engagement, the basic message I like to convey to my peers is that they should be open to engagement with those investors who want to have real constructive dialogue. It’s a dynamic environment out there right now and you have to be thinking about how to make strategic adjustments.
Also, don’t be afraid to make a break with your past practices on what your disclosure looks like, or how much disclosure you want to give. We should all take a fresh look every year and ask ourselves, “What are people asking for and what makes sense to give to them?” These days, you can’t approach every disclosure requirement as something for which you’re only going to provide what a rule demands. If you do, your company will be missing a huge opportunity to tell its story.
Finally, for all of us, and corporate secretaries in particular, the key to the debate around executive compensation is creating an environment where your board members have everything they need to make well thought-out decisions. That’s what I think of when I hear people refer to “good governance.” We need to keep the focus on the integrity of the decisions, the underlying decision-making process, and the people who have the duty to make those decisions.
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*Douglas K. Chia is Assistant General Counsel & Corporate Secretary at Johnson & Johnson, the world’s most comprehensive and broadly-based manufacturer of health care products, headquartered in New Brunswick, New Jersey. His responsibilities include providing legal counsel to the corporation on matters of corporate governance, securities regulation, public company disclosure, and Sarbanes-Oxley Act compliance. Prior to joining Johnson & Johnson, Mr. Chia was Assistant General Counsel, Corporate at Tyco International. In private practice, Mr. Chia was an associate at the law firms of Simpson Thacher & Bartlett and Clifford Chance, practicing in the New York and Hong Kong offices of each firm. While in private practice, Mr. Chia provided legal counsel to issuers and underwriters on securities offerings and cross-border transactions. Mr. Chia is a member of the Board of Directors, Executive Steering Committee, Corporate Practices Committee, and Policy Advisory Committee of the Society of Corporate Secretaries & Governance Professionals, and is Chairman of the Society’s Membership Committee. Mr. Chia is also a member of the Corporate & Securities Law Committee of the Association of Corporate Counsel, as well as a member of the National Asian Pacific American Bar Association (NAPABA).
Vous trouverez ci-dessous un document publié par l’ICSA Software, une société de l’Institute of Chartered Secretaries & Administrators (ICSA) de Londres qui produit des logiciels à l’intention des entités de gestion globale et de gouvernance corporative, notamment pour les besoins des secrétaires corporatifs.
Ce document est très intéressant parce qu’il présente la position des plus gros investisseurs institutionnels britanniques, tels Hermes, NAPF, BT Pension Scheme, Railpen et USS en matière de rémunération. Le rapport élabore quatre principes qui devraient gouverner les décisions des comités de RH (et rémunération). Pour cette coalition d’investisseurs institutionnels, il s’agit d’une nouvelle façon de concevoir la rémunération, et donc un aperçu des changements à survenir.
English: shows the steps taken in determining bae remuneration (Photo credit: Wikipedia)
Les membres de la direction devrait détenir des actions à long terme dans leur entreprise;
La rémunération devrait être alignée sur les stratégies à long terme et sur la culture organisationnelle
Les systèmes de rémunération devraient être simples et faciles à comprendre;
Les comités de RH et de rémunération devraient expliquer et justifier comment leurs décisions sont basées sur la réussite à long terme.
« Criticism of perceived inappropriate and excessive remuneration at board level has been widespread in the UK, EU and elsewhere in the last few years. In the UK a new right for shareholders to approve future pay policy and new ways of reporting on pay are being introduced from October this year. This paper is therefore timely as it will be a useful contribution to the debate »
Voici un article très intéressant publié le 25 février 2013 par D. F. Larcker, A. L. McCall, et B. Tayan dans Stanford Closer Look Series. Les auteurs expliquent très clairement (1) la raison d’être des firmes qui procurent des conseils aux organisations qui détiennent des procurations (Proxy Advisory Firms), (2) le mode de fonctionnement d’entreprises telles que Institutional Shareholder Services (ISS) et Glass Lewis & Co) et (3) certaines lacunes de leur processus d’analyse.
Que vous soyez d’accord ou non avec les conclusions de l’article, celui-ci vous aidera sûrement à mieux comprendre le modèle d’affaires des firmes qui font des recommandations de vote, notamment aux investisseurs institutionnels. Les auteurs expliquent aussi la méthodologie utilisée par ces firmes pour arriver aux recommandations de vote. On donne également des exemples précis de questions posées aux répondants et on montre comment certaines d’entre elles ont des problèmes de design (biais, généralisation, ambiguïtés, imprécisions, etc.).
Cet article nous aide à mieux saisir la complexité de ces firmes, et leur influence grandissante dans le monde de la gouvernance ! Voici un extrait de l’introduction de l’article. Vos commentaires sont appréciés.
« The Role of Proxy Advisory Firms Proxy advisory firms are independent, for-profit consulting companies that provide research and voting recommendations on corporate governance matters brought before investors at shareholder meetings. These matters include the election of the board of directors, approval of equity-based compensation programs, advisory approval of management compensation, and other management- and shareholder-sponsored initiatives regarding board structure, compensation design, and other governance policies and procedures.
There are many reasons why investors might choose to consult with third-party advisors when voting their position on these matters. Institutional investors are generally required by the Securities and Exchange Commission to vote all matters on the corporate proxy and disclose their votes to beneficial owners of their funds. Given the size and diversity of their holdings, it might be impractical for professional investors to have a thorough understanding of all items brought before them. Small investors, in particular, might not employ sufficient analytical staff to review all proposals in detail. For these reasons, reliable and valid third-party recommendations can contribute to a well-functioning market by improving information flow between issuers and investors leading to better decisions on compensation and corporate governance ».
Voici le condensé d’un rapport sur les rémunérations des administrateurs de sociétés et sur les pratiques de gouvernance (aux É.U.), publié conjointement par le Conference Board, le NASDAQ OMX et le NYSE Euronext. Ce résumé a été transmis par Matteo Tonello du Conference Board et publié sur le blogue du Harvard Law School Forum on Corporate Governance and Financial Regulation.
This is « a benchmarking study with more than 150 corporate governance data points searchable by company size (measurable by revenue and asset value) and 20 industrial sectors. The report is based on a survey of public companies registered with the U.S. Securities and Exchange Commission. The Harvard Law School Forum on Corporate Governance and Financial Regulation, Stanford University’s Rock Center for Corporate Governance, the National Investor Relations Institute (NIRI), the Shareholder Forum and Compliance Week also endorsed the survey by distributing it to their members and readers ».
Voici un extrait des points se rapportant à la rémunération des administrateurs. Pour de plus amples informations, je vous invite à lire l’article du HB Law School Forum ou à communiquer avec M. Tonello du Conference Board pour le rapport intégral de 2013.
Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)
Directors are best compensated in the energy industry, but company size can make a huge difference. Computer services companies are the most generous with full value share awards, but equity-based compensation is widely used across industries and irrespective of company size.
Stock options are not as favored as they used to be, except by the smallest companies increasing skepticism on the effectiveness of stock options and stock appreciation rights as long-term incentives has led to their decline, especially in the last few years.
Additional cash retainer for board chairmen is seldom offered by larger companies, which are more likely to reward lead directors.
A corporate program financing the matching of personal charitable contributions is the most common among the director perquisites reported by companies.
While many nonexecutive directors have C-suite experience, former or current CFOs are less represented than expected in the board of financial services companies.
Voici un article d’actualité qui présente la problématique des rémunérations excessives des dirigeants en France (et en Suisse). L’année 2013 s’annonce assez importante pour la mise en oeuvre de moyens destinés à mettre un frein aux rémunérations jugées abusives par les actionnaires. Cet article partagé par Patrice Camus, directeur de projet en développement durable au Groupe Desjardins (Canada), a été publié sur la page de Novethic, une filiale de la Caisse des Dépôts française qui diffuse des communiqués sur le développement durable ainsi qu’un centre de recherche sur l’investissement socialement responsable (ISR) et sur la responsabilité sociale des entreprises (RSE).
Le « Say on Pay » et les indemnités de départ et de non concurrence devraient être au menu des AG du CAC 40 ce printemps. Le rapport sur la gouvernance, publié le 20 février, laisse augurer d’un futur projet de loi limitant fortement les possibilités de rémunération « excessives». En attendant, la question du lien entre ces rémunérations et la performance des entreprises est posée plus systématiquement par les actionnaires.
photograph of Novartis human resources building designed by Frank Gehry as part of the new campus built to replace the former Ciba-Geigy buildings in Basel, Switzerland (Photo credit: Wikipedia)
Le patron de Novartis capitule
« … le cas le plus emblématique est celui de Daniel Vasella, le patron du groupe pharmaceutique Novartis, qui a soulevé un tollé en Suisse début février. Une émission de télévision a révélé le 5 février qu’il allait partir avec 72 millions de francs suisses (plus de 58 millions d’euros). La Fondation Ethos, qui défend le droit des actionnaires et qui a progressivement imposé un « Say on Pay » dans le pays, a aussitôt lancé une campagne pour demander l’annulation du contrat, en annonçant que dans le cas contraire elle poursuivait juridiquement le conseil d’administration de Novartis pour avoir manqué à sa mission de diligence en acceptant un tel système. Juste avant l’AG, qui se tient ce 22 février, Daniel Vasella et son conseil ont capitulé; le contrat a été annulé. Cette capitulation aurait été arrachée de haute lutte même si l’intéressé a déclaré dans un communiqué : « j’ai compris que nombreux sont ceux, en Suisse, qui jugent ce montant exagéré en dépit du fait que j’avais annoncé mon intention de le verser à des œuvres caritatives ». Le bénéfice de Novartis avait lui reculé de 7% en 2012… »
Voici un article publié par Robert C. Pozen*, paru HBR et reproduit dans LeadingCompany le 20 février 2013. L’article aborde un sujet d’actualité : le recrutement d’administrateurs professionnels (et indépendants). Pozen propose un modèle de conseil d’administration ayant une taille réduite et s’appuyant sur un engagement beaucoup plus important des membres.
Bien sûr, les recommandations sont valables pour les entreprises publiques cotées, mais elles peuvent aussi s’appliquer à plusieurs autres types d’organisations privées ou publiques de différentes tailles. Vous trouverez, ci-dessous un extrait de cet article. Celui-ci décrit le modèle proposé et présente plusieurs arguments qui militent en faveur d’un net changement dans la composition des C.A., répondant par la même occasion à certaines objections souvent évoquées.
« Boards are often too large to operate effectively as decision-making groups, with members relying on others to take the lead. Many of the financial institutions that had to be rescued from insolvency in 2008 had very large boards, and all had a substantial majority of independent directors. Citigroup, for example, had 18 directors, of whom 16 were independent. In groups this large, members engage in what psychologists call “social loafing”. They cease to take personal responsibility for the group’s actions and rely on others to take the lead. Large groups also inhibit consensus building, which is the way boards typically operate: the more members there are, the harder it is to reach agreement.
English: 500 Boylston St., Boston, MA 02116 (Photo credit: Wikipedia)
I’ve been the president or chairman of two global financial firms, an independent director of several large industrial companies and a long-time scholar of corporate governance. During my career, I’ve seen several chronic deficiencies in corporate boards: boards are often too large to operate effectively as decision-making groups. Members frequently lack sufficient expertise in the relevant industry. And, most important, few members devote the time needed to fully understand the complexities of the company’s global operations.
I propose a model of professional directorship that directly responds to the three main factors behind ineffective decision-making. All boards would be limited to seven people. Management would be represented by the CEO – the other six directors would be independent. Most of the independent directors would be required to have extensive expertise in the company’s lines of business and they would spend at least two days a month on company business beyond the regular board meetings.
Groups of six or seven are the most effective at decision-making. They’re small enough for all members to take personal responsibility for the group’s actions and they can usually reach a consensus in a reasonably short time. The six independent directors called for in the new model are sufficient to populate the three key committees: audit, compensation and nominating. Three different directors would serve solely as chairs of each of those committees, and the other three directors would each serve on two of them ».
*Robert C Pozen is a senior lecturer of business administration at Harvard Business School and the chairman emeritus of MFS Investment Management, an investment company in Boston.
Warren Buffett, chairman of Berkshire Hathaway Inc., said in November that Jamie Dimon, chief executive officer of JPMorgan Chase & Co., would be the best candidate to lead the U.S. Treasury Department in a financial crisis.
Gouvernance | Jacques Grisé 