Les critères de benchmarking d’ISS eu égard aux guides de saine gouvernance


Les auteurs* de cet article, paru dans le Forum du Harvard Law School, présentent les résultats d’un survey sur quatre grandes dimensions de la gouvernance des sociétés cotées.

Les sujets touchent :

(1) board composition/accountability, including gender diversity, mitigating factors for zero women on boards and overboarding;

(2) board/capital structure, including sunsets on multi-class shares and the combined CEO/chair role;

(3) compensation ; and

(4) climate change risk oversight and disclosure.

Les points importants à retenir de cet article sont indiqués en bleu dans le sommaire.

Bonne lecture !

ISS 2019 Benchmarking Policy Survey—Key Findings

 

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[On Sept. 11, 2019], Institutional Shareholder Services Inc. (ISS) announced the results of its 2019 Global Policy Survey (a.k.a. ISS 2019 Benchmark Policy Survey) based on respondents including investors, public company executives and company advisors. ISS will use these results to inform its policies for shareholder meetings occurring on or after February 1, 2020. ISS expects to solicit comments in the latter half of October 2019 on its draft policy updates and release its final policies in mid-November 2019.

While the survey included questions targeting both global and designated geographic markets, the key questions affecting the U.S. markets fell into the following categories: (1) board composition/accountability, including gender diversity, mitigating factors for zero women on boards and overboarding; (2) board/capital structure, including sunsets on multi-class shares and the combined CEO/chair role; (3) compensation; and (4) climate change risk oversight and disclosure. We previously provided an overview of the survey questions.

The ISS report distinguishes responses from investors versus non-investors. Investors primarily include asset managers, asset owners, and institutional investor advisors. In contrast, non-investors mainly comprise public company executives, public company board members, and public company advisors.

Key Takeaways

Only 128 investors and 268 non-investors (85% were corporate executives) participated in the survey. While the results overall are not surprising for the survey questions relating to board diversity, overboarding, inclusion of GAAP metrics for comparison in compensation-related reports and climate change matters, the level of support for multi-class structures with sunsets was surprisingly high.

Summary

1. Board Composition/Accountability

a. Board Gender Diversity Including Mitigating Factors for Zero Women on Boards: Both investors (61%) and non-investors (55%) indicated that board gender diversity is an essential attribute of effective board governance regardless of the company or its market. Among respondents who do not believe diversity is essential, investors tended to favor a market-by-market approach and non-investors tended to favor an analysis conducted at the company level.

Another question elicited views on ISS’s diversity policy that will be effective in 2020. Under the new policy, ISS will recommend voting against the nominating committee chair (or other members as appropriate) at Russell 3000 and/or S&P 1500 companies that do not have at least one female director. Before ISS issues a negative recommendation on this basis, ISS intends to consider mitigating factors.

The survey questioned what other mitigating factors a respondent would consider besides a company’s providing a firm commitment to appointing a woman in the near-term and having recently had a female on the board. The survey provided the following three choices and invited respondents to check all that apply: (1) the Rooney Rule, which involves a commitment to including females in the pool of new director candidates; (2) a commitment to actively searching for a female director; and (3) other.

Results show that investors were more likely than non-investors to answer that no other mitigating factors should be considered (46% of the investors compared to 28% of the non-investors) besides a recent former female director or a firm commitment to appoint a woman. With regard to willingness to consider mitigating factors, 57 investors and 141 non-investors checked at least one answer. More non-investors found a company’s observance of the Rooney Rule to be a mitigating factor worth considering (selected by 113 non-investors) than the company’s commitment to conduct an active search (selected by 85 non-investors). These two factors were each selected by 34 investors.

b. Director Overboarding: The survey responses show investors and non-investors appear to hold diverging positions on director overboarding. On a plurality basis, investors (42%) preferred a maximum of four total board seats for non-executive directors while they (45%) preferred a maximum of two board seats (including the “home” board) for CEOs. In comparison, on a plurality basis, about one third of non-investors preferred to leave the determination to the board’s discretion for both non-executive directors and CEOs.

2. Board/Capital Structure

a. Multi-Class Structures and Sunset Provisions: Results reveal that 55% of investors and 47% of non-investors found a seven-year maximum sunset provision appropriate for a multi-class structure. Among respondents who indicated that a maximum seven-year sunset provision was inappropriate, 36% of non-investors replied that a longer sunset (10 years or more) was appropriate and 35% of investors objected to any form of multi-class structure.

b. Independent Chair: Currently, ISS generally supports shareholder proposals that request an independent board chair after taking into consideration a wide variety of factors such as the company’s financial practices, governance structure and governance practices. ISS asked participants to indicate which factors the respondent considers and listed factors for respondents to choose from, such as a weak or poorly defined lead director role, governance practices that weaken or reduce board accountability to shareholders, lack of board refreshment or board diversity, and poor responsiveness to shareholder concerns. Respondents were instructed to check all that applied.

The results unsurprisingly suggest that investors prefer an independent board chair more than non-investors. Investors chose poor responsiveness to shareholder concerns most often whereas non-investors selected the factor relating to a weak or poorly defined lead director role.

Investors’ second highest selection was governance practices that weaken or reduce board accountability to shareholders (such as a classified board, plurality vote standard, lack of ability to call special meetings and lack of a proxy access right). For non-investors, poor responsiveness to shareholder concerns was the second highest selection.

3. Compensation

a. Economic Value Added (EVA) and GAAP Metrics: Beginning in 2019, ISS research reports for the U.S. and Canadian markets started to include additional information on company performance using an EVA-based framework. Survey results showed that a strong majority of respondents still want GAAP metrics to be provided in the research reports as a means of comparison.

4. Climate Change Risk Oversight & Disclosure

a. Disclosures and Actions Relating to Climate Change Risk: The ISS survey asked respondents whether climate change should be given a high priority in companies’ risk assessments. ISS questioned whether all companies should be assessing and disclosing their climate-related risks and taking actions to mitigate them where possible.

Results show that 60% of investors answered that all companies should be assessing and disclosing climate-related risks and taking mitigating actions where possible. Roughly one third of investors indicated that “each company’s appropriate level of disclosure and action will depend on a variety of factors including its own business model, its industry sector, where and how it operates, and other company-specific factors and board members.” In addition, 5% of investors thought the possible risks related to climate change are often too uncertain to incorporate into a company-specific risk assessment model.

b. Shareholder Action in Response to a Company’s Failure to Report or Mitigate Climate Change Risk: Investors and non-investors indicated that the most appropriate actions to consider when a company fails to effectively report or address its climate change risk are (a) engaging with the company, and (b) voting for a shareholder proposal seeking increased climate-related disclosure.

 


*Betty Moy Huber is counsel and Paula H. Simpkins is an associate at Davis Polk & Wardwell LLP.

Changement de perspective en gouvernance de sociétés !


Yvan Allaire*, président exécutif du conseil de l’Institut sur la gouvernance (IGOPP) vient de me faire parvenir un nouvel article intitulé « The Business Roundtable on “The Purpose of a Corporation” Back to the future! ».

Cet article, qui doit bientôt paraître dans le Financial Post, intéressera assurément tous les administrateurs siégeant à des conseils d’administration, et qui sont à l’affût des nouveautés dans le domaine de la gouvernance.

Le document discute des changements de paradigmes proposés par les CEO des grandes corporations américaines. Les administrateurs selon ce groupe de dirigeants doivent tenir compte de l’ensemble des parties prenantes (stakeholders) dans la gouverne des organisations, et non plus accorder la priorité aux actionnaires.

Cet article discute des retombées de cette approche et des difficultés eu égard à la mise en œuvre dans le système corporatif américain.

Le texte est en anglais. Une version française devrait être produite bientôt sur le site de l’IGOPP.

Bonne lecture !

 

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CEOs in Business Roundtable ‘Redefine’ Corporate Purpose To Stretch Beyond Shareholders

The Business Roundtable on “The Purpose of a Corporation” Back to the future!

Yvan Allaire, PhD (MIT), FRSC

 

In September 2019, CEOs of large U.S. corporations have embraced with suspect enthusiasm the notion that a corporation’s purpose is broader than merely“ creating shareholder value”. Why now after 30 years of obedience to the dogma of shareholder primacy and servile (but highly paid) attendance to the whims and wants of investment funds?


Simply put, the answer rests with the recent conversion of these very funds, in particular index funds, to the church of ecological sanctity and social responsibility. This conversion was long acoming but inevitable as the threat to the whole system became more pressing and proximate.

The indictment of the “capitalist” system for the wealth inequality it produced and the environmental havoc it wreaked had to be taken seriously as it crept into the political agenda in the U.S. Fair or not, there is a widespread belief that the root cause of this dystopia lies in the exclusive focus of corporations on maximizing shareholder value. That had to be addressed in the least damaging way to the whole system.

Thus, at the urging of traditional investment funds, CEOs of large corporations, assembled under the banner of the Business Roundtable, signed a ringing statement about sharing “a fundamental commitment to all of our stakeholders”.

That commitment included:

Delivering value to our customers

Investing in our employees

Dealing fairly and ethically with our suppliers.

Supporting the communities in which we work.

Generating long-term value for shareholders, who provide the capital that allows companies to invest, grow and innovate.

It is remarkable (at least for the U.S.) that the commitment to shareholders now ranks in fifth place, a good indication of how much the key economic players have come to fear the goings-on in American politics. That statement of “corporate purpose” was a great public relations coup as it received wide media coverage and provides cover for large corporations and investment funds against attacks on their behavior and on their very existence.


In some way, that statement of corporate purpose merely retrieves what used to be the norm for large corporations. Take, for instance, IBM’s seven management principles which guided this company’s most successful run from the 1960’s to 1992:

Seven Management Principles at IBM 1960-1992

  1. Respect for the individual
  2. Service to the customer
  3. Excellence must be way of life
  4. Managers must lead effectively
  5. Obligation to stockholders
  6. Fair deal for the supplier
  7. IBM should be a good corporate citizen

The similarity with the five “commitments” recently discovered at the Business Roundtable is striking. Of course, in IBM’s heydays, there were no rogue funds, no “activist” hedge funds or private equity funds to pressure corporate management into delivering maximum value creation for shareholders. How will these funds whose very existence depends on their success at fostering shareholder primacy cope with this “heretical nonsense” of equal treatment for all stakeholders?

As this statement of purpose is supported, was even ushered in, by large institutional investors, it may well shield corporations against attacks by hedge funds and other agitators. To be successful, these funds have to rely on the overt or tacit support of large investors. As these investors now endorse a stakeholder view of the corporation, how can they condone and back these financial players whose only goal is to push up the stock price often at the painful expense of other stakeholders?

This re-discovery in the US of a stakeholder model of the corporation should align it with Canada and the UK where a while back the stakeholder concept of the corporation was adopted in their legal framework.

Thus in Canada, two judgments of the Supreme Court are peremptory: the board must not grant any preferential treatment in its decision-making process to the interests of the shareholders or any other stakeholder, but must act exclusively in the interests of the corporation of which they are the directors.

In the UK, Section 172 of the Companies Act of 2006 states: “A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, among which the interests of the company’s employees, the need to foster the company’s business relationships with suppliers, customers and others, the impact of the company’s operations on the community and the environment,…”

So, belatedly, U.S. corporations will, it seems, self-regulate and self-impose a sort of stakeholder model in their decision-making.

Alas, as in Canada and the UK, they will quickly find out that there is little or no guidance on how to manage the difficult trade-offs among the interests of various stakeholders, say between shareholders and workers when considering outsourcing operations to a low-cost country.

But that may be the appeal of this “purpose of the corporation”: it sounds enlightened but does not call for any tangible changes in the way corporations are managed.

 

La gouvernance de sociétés au Canada | Au delà de la théorie de l’agence


Les auteurs Imen Latrousa, Marc-André Morencyb, Salmata Ouedraogoc et Jeanne Simard, professeurs à l’Université du Québec à Chicoutimi, ont réalisé une publication d’une grande valeur pour les théoriciens de la gouvernance.

Vous trouverez, ci-dessous, un résumé de l’article paru dans la Revue Organisations et Territoires

Résumé

De nombreux chercheurs ont mis en évidence les aspects et conséquences discutables de certaines conceptions financières ou théories de l’organisation. C’est le cas de la théorie de l’agence, conception particulièrement influente depuis une quarantaine d’années, qui a pour effet de justifier une gouvernance de l’entreprise vouée à maximiser la valeur aux actionnaires au détriment des autres parties prenantes.

Cette idéologie de gouvernance justifie de rémunérer les managers, présumés négliger ordinairement les détenteurs d’actions, avec des stock-options, des salaires démesurés. Ce primat accordé à la valeur à court terme des actions relève d’une vision dans laquelle les raisons financières se voient attribuer un rôle prééminent dans la détermination des objectifs et des moyens d’action, de régulation et de dérégulation des entreprises. Cet article se propose de rappeler les éléments centraux de ce modèle de gouvernance et de voir quelles critiques lui sont adressées par des disciplines aussi diverses que l’économie, la finance, le droit et la sociologie.

 

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Voir l’article ci-dessous :

La gouvernance d’entreprise au Canada : un domaine en transition

Les grandes firmes d’audit sont plus sélectives dans le choix de leurs mandats


Voici un article publié par GAVIN HINKS pour le compte de Board Agenda qui montre que les grandes firmes d’audit sont de plus en plus susceptibles de démissionner lorsque les risques leur apparaissent trop élevés.

Les recherches indiquent que c’est particulièrement le cas au Royaume-Uni où l’on assiste à des poursuites plus fréquentes des Big Four. Ces firmes d’audit sont maintenant plus sélectives dans le choix de leurs clients.

Compte tenu de la situation oligopolistique des grandes firmes d’audit, devons-nous nous surprendre de ces décisions de retrait dans la nouvelle conjoncture de risque financier des entreprises britanniques ?

The answer is not really. Over recent years auditors, especially the Big Four (PwC, Deloitte, KPMG and EY) have faced consistent criticism for their work—complaints that they control too much of the market for big company audit and that audit quality is not what it should be.

Le comité d’audit des entreprises est interpellé publiquement lorsque l’auditeur soumet sa résignation. L’entreprise doit souvent gérer une crise médiatique afin de sauvegarder sa réputation.

Pour certains experts de la gouvernance, ces situations requirent des exigences de divulgation plus sévères. Les parties prenantes veulent connaître la nature des problèmes et des risques qui y sont associés.

Également, les administrateurs souhaitent connaître le plan d’action des dirigeants eu égard au travail et aux recommandations du comité d’audit

L’auteur donne beaucoup d’exemples sur les nouveaux comportements des Big Four.

Bonne lecture !

 

Auditor resignations indicate new attitude to client selection

 

 

auditor
Image: Shutterstock

 

The audit profession in Britain is at a turning point as Westminster—Brexit permitting—considers new regulation.

It seems firms may be responding by clearing the decks: the press has spotted a spate of high-profile auditor resignations with audit firms bidding farewell to a clutch of major clients. This includes firms outside the Big Four, such as Grant Thornton, which recently said sayonara to Sports Direct, the retail chain, embroiled in running arguments over its governance.

But Grant Thornton is not alone. KPMG has parted ways with Eddie Stobart, a haulage firm, and Lycamobile, a telecommunications company. PwC meanwhile has said goodbye to Staffline, a recruitment business.

Should we be surprised?

The answer is not really. Over recent years auditors, especially the Big Four (PwC, Deloitte, KPMG and EY) have faced consistent criticism for their work—complaints that they control too much of the market for big company audit and that audit quality is not what it should be.

This came to a head in December 2017 with the collapse of construction and contracting giant Carillion, audited by KPMG. The event prompted a parliamentary inquiry followed by government-ordered reviews of the audit market and regulation.

An examination of the watchdog for audit and financial reporting, the Financial Reporting Council, has resulted in the creation of a brand new regulatory body; a look at the audit market resulted in recommendations that firms separate their audit businesses from other services they provide. A current look at the quality and scope of audit, the Brydon review, will doubtless come up with its own recommendations when it reports later this year.

 

Client selection

 

While it is hard to obtain statistics, the press reports, as well as industry talk, indicate that auditors are becoming more picky about who they choose to work for.

According to Jonathan Hayward, a governance and audit expert with the consultancy Independent Audit, the first step in any risk management for an audit firm is client selection. He says the current environment in which auditors have become “tired of being beaten up” has caused a new “sensitivity” in which auditors may be choosing to be more assiduous in applying client filtering policies.

Application of these policies may have been soft in the past, as firms raced for market share, but perhaps also as they applied what Hayward calls the auditor’s “God complex”: the idea that their judgement must be definitive.

Psychological dispositions are arguable. What may be observed for certain is that the potential downsides are becoming clearer to audit chiefs. Fines meted out in recent times by a newly energised regulator facing replacement include the £5m (discounted to £3.5m) for KPMG for the firm’s work with the London branch of BNY Mellon. Deloitte faced a £6.5m fine (discounted to £4.2m) for its audit of Serco Geografix, an outsourcing business. Last year PwC faced a record breaking £10m penalty for its work on the audit of collapsed retailer BHS.

What those fines have brought home is the thin line auditors tread between profit and and huge costs if it goes wrong. That undermines the attractiveness of being in the audit market.

One expert to draw attention to the economics is Jim Peterson, a US lawyer who blogs on corporate law and has represented accountancy firms.

Highlighting Sports Direct’s need to find a replacement audit firm, Peterson notes Grant Thornton’s fee was £1.4m with an estimated profit of £200,000-£250,000.

“A projection from that figure would be hostage, however, to the doubtful assumption of no further developments,” Peterson writes.

“That is, the cost to address even a modest extension of necessary extra audit work, or a lawsuit or investigative inquiry—legal fees and diverted management time alone—would swamp any engagement profit within weeks.”

He adds: “And that’s without thinking of the potential fines or judgements. Could the revenue justify that risk? No fee can be set and charged that would protect an auditor in the fraught context of Sports Direct—simply impossible.”

Media attention

 

Auditor resignations are not without their own risks. Maggie McGhee, executive director, governance at ACCA, a professional body for accountants, points out that parting with a client can bring unpleasant public attention.

“If auditors use resignation more regularly in a bid to extract themselves from high-risk audits,” says McGhee, “then it is probable that there will be some media interest if issues are subsequently identified at the company. Questions arise, such as did the auditor do enough?”

But as, McGhee adds, resignation has to remain part of the auditor’s armoury, not least as part of maintaining their independence.

For non-executives on an audit committee, auditor resignation is a significant moment. With an important role in hiring an audit firm as well as oversight of company directors, their role will be to challenge management.

“The audit committee is critical in these circumstances,” says McGhee, “and it should take action to understand the circumstance and whether action is required.”

ACCA has told the Sir Donald Brydon review [examining audit quality] that greater disclosure is needed of “the communication and judgements” that pass between auditors and audit committees. McGhee says it would be particularly relevant in the case of auditor resignations.

There have been suggestions that Sir Donald is interested in resignations. ShareSoc and UKSA, bodies representing small shareholders, have called on Sir Donald to recommend that an a regulatory news service announcement be triggered by an auditor cutting ties.

A blog on ShareSoc’s website says: “It seems clear that there is a need to tighten the disclosure rules surrounding auditor resignations and dismissals.”

It seems likely Sir Donald will comment on resignations, though what his recommendations will be remains uncertain. What is clear is that recent behaviour has shone a light on auditor departures and questions are being asked. The need for answers is sure to remain.

Gouvernance fiduciaire et rôles des parties prenantes (stakeholders)


Je partage avec vous l’excellente prise de position de Martin Lipton *, Karessa L. Cain et Kathleen C. Iannone, associés de la firme Wachtell, Lipton, Rosen & Katz, spécialisée dans les fusions et acquisitions et dans les questions de gouvernance fiduciaire.

L’article présente un plaidoyer éloquent en faveur d’une gouvernance fiduciaire par un conseil d’administration qui doit non seulement considérer le point de vue des actionnaires, mais aussi des autres parties prenantes,

Depuis quelque temps, on assiste à des changements significatifs dans la compréhension du rôle des CA et dans l’interprétation que les administrateurs se font de la valeur de l’entreprise à long terme.

Récemment, le Business Roundtable a annoncé son engagement envers l’inclusion des parties prenantes dans le cadre de gouvernance fiduciaire des sociétés.

Voici un résumé d’un article paru dans le Los Angeles Times du 19 août 2019 : In shocking reversal, Big Business puts the shareholder value myth in the grave.

Among the developments followers of business ethics may have thought they’d never see, the end of the shareholder value myth has to rank very high.

Yet one of America’s leading business lobbying groups just buried the myth. “We share a fundamental commitment to all of our stakeholders,” reads a statement issued Monday by the Business Roundtable and signed by 181 CEOs. (Emphasis in the original.)

The statement mentions, in order, customers, employees, suppliers, communities and — dead last — shareholders. The corporate commitment to all these stakeholders may be largely rhetorical at the moment, but it’s hard to overstate what a reversal the statement represents from the business community’s preexisting viewpoint.

Stakeholders are pushing companies to wade into sensitive social and political issues — especially as they see governments failing to do so effectively.

Since the 1970s, the prevailing ethos of corporate management has been that a company’s prime responsibility — effectively, its only responsibility — is to serve its shareholders. Benefits for those other stakeholders follow, but they’re not the prime concern.

In the Business Roundtable’s view, the paramount duty of management and of boards of directors is to the corporation’s stockholders; the interests of other stakeholders are relevant as a derivative of the duty to stockholders,” the organization declared in 1997.

Bonne lecture. Vos commentaires sont les bienvenus !

 

Stakeholder Governance and the Fiduciary Duties of Directors

 

Jamie Dimon
JPMorgan Chase Chief Executive Jamie Dimon signed the business statement disavowing the shareholder value myth.(J. Scott Applewhite / Associated Press)

 

There has recently been much debate and some confusion about a bedrock principle of corporate law—namely, the essence of the board’s fiduciary duty, and particularly the extent to which the board can or should or must consider the interests of other stakeholders besides shareholders.

For several decades, there has been a prevailing assumption among many CEOs, directors, scholars, investors, asset managers and others that the sole purpose of corporations is to maximize value for shareholders and, accordingly, that corporate decision-makers should be very closely tethered to the views and preferences of shareholders. This has created an opportunity for corporate raiders, activist hedge funds and others with short-termist agendas, who do not hesitate to assert their preferences and are often the most vocal of shareholder constituents. And, even outside the context of shareholder activism, the relentless pressure to produce shareholder value has all too often tipped the scales in favor of near-term stock price gains at the expense of long-term sustainability.

In recent years, however, there has been a growing sense of urgency around issues such as economic inequality, climate change and socioeconomic upheaval as human capital has been displaced by technological disruption. As long-term investors and the asset managers who represent them have sought to embrace ESG principles and their role as stewards of corporations in pursuit of long-term value, notions of shareholder primacy are being challenged. Thus, earlier this week, the Business Roundtable announced its commitment to stakeholder corporate governance, and outside the U.S., legislative reforms in the U.K. and Europe have expressly incorporated consideration of other stakeholder interests in the fiduciary duty framework. The Council of Institutional Investors and others, however, have challenged the wisdom and legality of stakeholder corporate governance.

To be clear, Delaware law does not enshrine a principle of shareholder primacy or preclude a board of directors from considering the interests of other stakeholders. Nor does the law of any other state. Although much attention has been given to the Revlon doctrine, which suggests that the board must attempt to achieve the highest value reasonably available to shareholders, that doctrine is narrowly limited to situations where the board has determined to sell control of the company and either all or a preponderant percentage of the consideration being paid is cash or the transaction will result in a controlling shareholder. Indeed, theRevlon doctrine has played an outsized role in fiduciary duty jurisprudence not because it articulates the ultimate nature and objective of the board’s fiduciary duty, but rather because most fiduciary duty litigation arises in the context of mergers or other extraordinary transactions where heightened standards of judicial review are applicable. In addition, Revlon’s emphasis on maximizing short-term shareholder value has served as a convenient touchstone for advocates of shareholder primacy and has accordingly been used as a talking point to shape assumptions about fiduciary duties even outside the sale-of-control context, a result that was not intended. Around the same time that Revlon was decided, the Delaware Supreme Court also decided the Unocal and Household cases, which affirmed the board’s ability to consider all stakeholders in using a poison pill to defend against a takeover—clearly confining Revlonto sale-of-control situations.

The fiduciary duty of the board is to promote the value of the corporation. In fulfilling that duty, directors must exercise their business judgment in considering and reconciling the interests of various stakeholders—including shareholders, employees, customers, suppliers, the environment and communities—and the attendant risks and opportunities for the corporation.

Indeed, the board’s ability to consider other stakeholder interests is not only uncontroversial—it is a matter of basic common sense and a fundamental component of both risk management and strategic planning. Corporations today must navigate a host of challenges to compete and succeed in a rapidly changing environment—for example, as climate change increases weather-related risks to production facilities or real property investments, or as employee training becomes critical to navigate rapidly evolving technology platforms. A board and management team that is myopically focused on stock price and other discernible benchmarks of shareholder value, without also taking a broader, more holistic view of the corporation and its longer-term strategy, sustainability and risk profile, is doing a disservice not only to employees, customers and other impacted stakeholders but also to shareholders and the corporation as a whole.

The board’s role in performing this balancing function is a central premise of the corporate structure. The board is empowered to serve as the arbiter of competing considerations, whereas shareholders have relatively limited voting rights and, in many instances, it is up to the board to decide whether a matter should be submitted for shareholder approval (for example, charter amendments and merger agreements). Moreover, in performing this balancing function, the board is protected by the business judgment rule and will not be second-guessed for embracing ESG principles or other stakeholder interests in order to enhance the long-term value of the corporation. Nor is there any debate about whether the board has the legal authority to reject an activist’s demand for short-term financial engineering on the grounds that the board, in its business judgment, has determined to pursue a strategy to create sustainable long-term value.

And yet even if, as a doctrinal matter, shareholder primacy does not define the contours of the board’s fiduciary duties so as to preclude consideration of other stakeholders, the practical reality is that the board’s ability to embrace ESG principles and sustainable investment strategies depends on the support of long-term investors and asset managers. Shareholders are the only corporate stakeholders who have the right to elect directors, and in contrast to courts, they do not decline to second-guess the business judgment of boards. Furthermore, a number of changes over the last several decades—including the remarkable consolidation of economic and voting power among a relatively small number of asset managers, as well as legal and “best practice” reforms—have strengthened the ability of shareholders to influence corporate decision-making.

To this end, we have proposed The New Paradigm, which conceives of corporate governance as a partnership among corporations, shareholders and other stakeholders to resist short-termism and embrace ESG principles in order to create sustainable, long-term value. See our paper, It’s Time to Adopt The New Paradigm.


Martin Lipton * is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy; Karessa L. Cain is a partner; and Kathleen C. Iannone is an associate. This post is based on their Wachtell Lipton publication.

Problématiques de gouvernance communes lors d’interventions-conseils auprès de diverses organisations – Partie I – Relations entre président du CA et DG


Lors de mes consultations en gouvernance des sociétés, je constate que j’interviens souvent sur des problématiques communes à un grand nombre d’organisations et qui sont cruciales pour l’exercice d’une gouvernance exemplaire.

Aujourd’hui, j’aborde l’une des plus grandes difficultés qui confrontent les conseils d’administration : la gestion des relations de pouvoir entre le président du CA (et certains administrateurs) et la direction générale.

 

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Dans des billets ultérieurs, je reviendrai sur plusieurs autres problématiques de gouvernance qui font l’objet de préoccupations par les conseils d’administration :

 

La clarification des rôles et responsabilités des principaux acteurs de la gouvernance : (1) conseil d’administration (2) présidence du conseil d’administration (3) direction générale (4) comités du conseil (5) secrétaire du conseil d’administration.

La composition et les rôles des comités du conseil soutenant la gouvernance : (1) comité de gouvernance et d’éthique (2) comité des ressources humaines et (3) comité d’audit.

La révision de la composition du conseil d’administration : nombre d’administrateurs, profils de compétences, types de représentation, durée et nombre de mandats, indépendance des administrateurs, etc.

La réévaluation du rôle du comité exécutif afin de mieux l’arrimer aux activités des autres comités.

L’importance du rôle du secrétaire du conseil eu égard à son travail, avant, pendant et après les réunions du conseil.

L’évaluation du processus de gestion des réunions du CA qui met l’accent sur l’amélioration de la dynamique d’équipe et la justification d’un huis clos productif et efficace.

La raison d’être d’un processus d’évaluation annuelle de l’efficacité du conseil et la proposition d’instruments d’auto-évaluation des administrateurs.

Les caractéristiques d’une bonne reddition de compte de la part de la direction générale.

L’intégration des nouveaux administrateurs afin de les rendre opérationnels rapidement.

L’adoption d’un code d’éthique des administrateurs exemplaire.

 

Le maintien de relations harmonieuses et continues entre le président du conseil et le directeur général est, selon mon expérience, absolument essentiel à l’exercice d’une saine gouvernance.

Selon de nombreux auteurs sur l’efficacité des conseils d’administration, il est important que le président ait la légitimité et la crédibilité requises pour gérer une saine tension entre les administrateurs et la direction générale de l’organisation.

Il n’y a pas de place pour la complaisance au conseil. Les administrateurs doivent bien comprendre que leur rôle est de veiller aux « intérêts supérieurs » de la société, et non aux intérêts propres à certains groupes de membres. Les administrateurs ont également la responsabilité de tenir compte des parties prenantes lors de leurs délibérations.

Le directeur général (DG) de la société est embauché par le CA pour gérer et exécuter la mission de l’organisation, en réalisant une stratégie liée à son modèle d’affaires. Lui aussi doit travailler en fonction des intérêts de la société, mais c’est la responsabilité fiduciaire du conseil d’administration de s’en assurer en mettant en place les mécanismes de surveillance appropriés.

La théorie dite de « l’agence », sur laquelle reposent les règles de gouvernance, stipule que le conseil d’administration représente l’autorité souveraine de l’organisation (puisqu’il possède la légitimité que lui confèrent les membres en assemblée générale).

Le CA confie à un DG qui, avec son équipe de gestionnaires, a la responsabilité de réaliser les objectifs stratégiques retenus. Les deux parties — le CA et la direction générale — doivent bien comprendre leurs rôles respectifs, et trouver les bons moyens pour gérer la tension inhérente à l’exercice de la gouvernance et de la gestion.

Les administrateurs doivent s’efforcer d’apporter une valeur ajoutée à la gestion en conseillant la direction sur les meilleures orientations à adopter, ainsi qu’en instaurant un climat d’ouverture, de soutien et de transparence propice à la réalisation de performances élevées.

Il est important de noter que l’organisation s’attend à la loyauté des administrateurs ainsi qu’à leur indépendance d’esprit face à la direction. Les administrateurs sont imputables envers la société. C’est la raison pour laquelle le conseil d’administration doit absolument mettre en place un processus d’évaluation de son fonctionnement et divulguer sa méthodologie.

De plus, il est important de noter qu’à l’instar des administrateurs, le président élu doit loyauté envers l’organisation et le conseil d’administration, et non envers les membres ou les actionnaires.

Les experts en gouvernance suggèrent que les rôles et les fonctions de président de l’organisation soient distincts de ceux du DG. Ils affirment que la séparation des fonctions entre la présidence et la direction générale est généralement bénéfique à l’exercice de la responsabilité de fiduciaire des administrateurs, c’est-à-dire que des pouvoirs différents permettent d’éviter les conflits d’intérêts, tout en assurant la légitimité du processus de gouvernance.

L’un des documents fondamentaux pour un président de CA est la publication  » La présidence du conseil d’administration d’une société d’État  » a été rendue possible grâce à l’appui du ministère du Conseil exécutif du Québec et des partenaires fondateurs du Collège des administrateurs de sociétés (CAS).

Dans ce document, très complet, on retrouve toute l’information essentielle concernant les rôles et les responsabilités des présidents de conseil, notamment à l’égard du directeur général. En voici la table des matières :

 

    1. Quel est le rôle du président envers le CA ?
    2. Quel est le rôle du président à l’égard des membres du CA ?
    3. Quel est le rôle du président d’un CA d’une société d’État à l’égard de son président-directeur général ?
    4. Quel est le rôle du président à l’égard du ministre responsable, de son ministère et des parlementaires ?
    5. Quelle est la responsabilité du président quant à la gouvernance du CA ?
    6. Le président a-t-il une responsabilité particulière quant à l’éthique de l’organisation ?
    7. Quelle est la responsabilité du président quant au recrutement, à l’accueil et au perfectionnement des membres du CA ?
    8. Comment le président peut-il planifier le travail du CA ?
    9. Quelle est la responsabilité du président quant à l’information fournie aux membres du CA ?
    10. Quelle est la responsabilité du président quant aux réunions du CA ?
    11. Quelle est la responsabilité du président à l’égard des comités du CA ?
    12. Quelle est la responsabilité du président relativement à la solidarité des membres et aux possibles dissensions au sein du CA ?
    13. Quelle est la responsabilité du président quant à la performance de l’organisation ?
    14. Quelle est la responsabilité du président du CA à l’égard de la représentation externe de l’organisation ?
    15. Le président a-t-il une responsabilité particulière à l’égard des risques et des crises ?
    16. Quelle est la responsabilité du président dans l’évaluation du conseil d’administration et du PDG ?
    17. Quelle responsabilité le président a-t-il dans la reddition de comptes tant externe qu’interne de son organisation ?
    18. Quelle est la responsabilité du président du CA quant à la relève éventuelle du PDG et à sa propre succession ?
    19. Quelles sont les caractéristiques personnelles et administratives d’un président de CA ?

 

Ce document présente toutes les définitions de fonctions de la présidence ainsi que tous les pouvoirs qui lui sont conférés. Il serait, à mon avis, essentiel que celui-ci serve de base à la rédaction du règlement général. Il pourrait en faire partie intégrante puisque ce texte a été conçu pour les présidents de conseil d’administration en général.

Voici, à titre d’exemple, un extrait de la section 3 portant sur le rôle du président d’un CA à l’égard de son directeur général.

En ce qui a trait à la relation entre le président du CA et le DG, le principe fondamental est simple : le président dirige le CA qui, lui-même, a autorité sur le DG.

« Le président s’assure que le conseil joue pleinement son rôle, notamment à l’égard de l’approbation des orientations stratégiques, de la gestion de la performance et des risques ainsi que de la surveillance effective de la direction.

Par sa position, le président est amené à faire en sorte que la responsabilité de supervision du CA ne s’exerce pas au détriment de celles plus opérationnelles de la direction générale. En effet, le DG est le prolongement du CA dans l’organisation et, à ce titre, c’est lui qui a autorité sur la haute direction et l’effectif de l’organisation ; il n’appartient pas aux membres du CA d’intervenir dans la gestion interne, sauf lorsque la loi le prévoit. Le président du CA doit lui-même respecter, et faire respecter par chacun des membres du conseil, cette limitation de leur champ de responsabilité.

Étant plus fréquemment que les autres membres du CA en contact avec le DG, le président est à même d’appuyer l’action de ce dernier. Pour ce faire, il doit s’assurer que les orientations et les décisions du CA lui laissent la marge de manœuvre et l’autorité qu’il lui faut. Il doit aussi, avec la collaboration du comité des ressources humaines, procéder à l’évaluation de la performance du DG selon le processus et les balises déterminés et en fonction des attentes formulées par le CA.

Des rencontres régulières entre le président du CA et le DG sont indispensables au maintien d’une relation empreinte de confiance. Cette relation privilégiée est d’autant plus importante que, généralement et dans tous les organismes et sociétés assujettis à la Loi sur la gouvernance des sociétés d’État, le DG est d’office membre du conseil d’administration. Tous deux ont avantage à avoir la même compréhension de leur rôle respectif, à partager l’information dont ils disposent avec la plus grande transparence, à faire preuve d’une grande franchise dans leurs échanges et à se soutenir mutuellement dans l’accomplissement de leurs tâches respectives.

Cependant, vu la différence des rôles qu’ils ont à jouer, leur relation ne doit laisser place à aucune complaisance. Ainsi conduite, cette relation devient le gage d’une action globale efficace ».

Au cours des prochaines semaines, j’aborderai les autres problématiques vécues lors de mes interventions-conseils.

Bonne lecture. Vos commentaires sont les bienvenus.

Deux développements significatifs en gouvernance des sociétés


Aujourd’hui, je veux porter à l’attention de mes lecteurs un article de Assaf Hamdani* et Sharon Hannes* qui aborde deux développements majeurs qui ont pour effet de bouleverser les marchés des capitaux.

D’une part, les auteurs constatent le rôle de plus en plus fondamental que les investisseurs institutionnels jouent sur le marché des capitaux aux É. U., mais aussi au Canada.

En effet, ceux-ci contrôlent environ les trois quarts du marché, et cette situation continue de progresser. Les auteurs notent qu’un petit nombre de fonds détiennent une partie significative du capital de chaque entreprise.

Les investisseurs individuels sont de moins en moins présents sur l’échiquier de l’actionnariat et leur influence est donc à peu près nulle.

Dans quelle mesure les investisseurs institutionnels exercent-ils leur influence sur la gouvernance des entreprises ? Quels sont les changements qui s’opèrent à cet égard ?

Comment leurs actions sont-elles coordonnées avec les actionnaires activistes (hedge funds) ?

La seconde tendance, qui se dessine depuis plus de 10 ans, concerne l’augmentation considérable de l’influence des actionnaires activistes (hedge funds) qui utilisent des moyens de pression de plus en plus grands pour imposer des changements à la gouvernance des organisations, notamment par la nomination d’administrateurs désignés aux CA des entreprises ciblées.

Quelles sont les nouvelles perspectives pour les activistes et comment les autorités réglementaires doivent-elles réagir face à la croissance des pressions pour modifier les conseils d’administration ?

Je vous invite à lire ce court article pour avoir un aperçu des changements à venir eu égard à la gouvernance des sociétés.

Bonne lecture !

 

 

The Future of Shareholder Activism

 

Résultats de recherche d'images pour « The Future of Shareholder Activism »

 

Two major developments are shaping modern capital markets. The first development is the dramatic increase in the size and influence of institutional investors, mostly mutual funds. Institutional investors today collectively own 70-80% of the entire U.S. capital market, and a small number of fund managers hold significant stakes at each public company. The second development is the rising influence of activist hedge funds, which use proxy fights and other tools to pressure public companies into making business and governance changes.

Our new article, The Future of Shareholder Activism, prepared for Boston University Law Review’s Symposium on Institutional Investor Activism in the 21st Century, focuses on the interaction of these two developments and its implications for the future of shareholder activism. We show that the rise of activist hedge funds and their dramatic impact question the claim that institutional investors have conflicts of interest that are sufficiently pervasive to have a substantial market-wide effect. We further argue that the rise of money managers’ power has already changed and will continue to change the nature of shareholder activism. Specifically, large money managers’ clout means that they can influence companies’ management without resorting to the aggressive tactics used by activist hedge funds. Finally, we argue that some activist interventions—those that require the appointment of activist directors to implement complex business changes—cannot be pursued by money managers without dramatic changes to their respective business models and regulatory landscapes.

We first address the overlooked implications of the rise of activist hedge funds for the debate on institutional investors’ stewardship incentives. The success of activist hedge funds, this Article argues, cannot be reconciled with the claim that institutional investors have conflicts of interest that are sufficiently pervasive to have a substantial market-wide effect. Activist hedge funds do not hold a sufficiently large number of shares to win proxy battles, and their success to drive corporate change therefore relies on the willingness of large fund managers to support their cause. Thus, one cannot celebrate—or express concern over—the achievements of activist hedge funds and at the same time argue that institutional investors systemically desire to appease managers.

But if money managers are the real power brokers, why do institutional investors not play a more proactive role in policing management? One set of answers to this question focuses on the shortcomings of fund managers—their suboptimal incentives to oversee companies in their portfolio and conflicts of interest. Another answer focuses on the regulatory regime that governs institutional investors and the impediments that it creates for shareholder activism.

We offer a more nuanced account of the interaction of activists and institutional investors. We argue that the rising influence of fund managers is shaping and is likely to shape the relationships among corporate insiders, institutional investors, and activist hedge funds. Institutional investors’ increasing clout allows them to influence companies without resorting to the aggressive tactics that are typical of activist hedge funds. With institutional investors holding the key to their continued service at the company, corporate insiders today are likely to be more attentive to the wishes of their institutional investors, especially the largest ones.

In fact, in today’s marketplace, management is encouraged to “think like an activist” and initiate contact with large fund managers to learn about any concerns that could trigger an activist attack. Institutional investors—especially the large ones—can thus affect corporations simply by sharing their views with management. This sheds new light on what is labeled today as “engagement.” Moreover, the line between institutional investors’ engagement and hedge fund activism could increasingly become blurred. To be sure, we do not expect institutional investors to develop deeply researched and detailed plans for companies’ operational improvement. Yet, institutional investors’ engagement is increasingly likely to focus not only on governance, but also on business and strategy issues.

The rising influence of institutional investors, however, is unlikely to displace at least some forms of activism. Specifically, we argue that institutional investors are unlikely to be effective in leading complex business interventions that require director appointments. Activists often appoint directors to target boards. Such appointments may be necessary to implement an activist campaign when the corporate change underlying the intervention does not lend itself to quick fixes, such as selling a subsidiary or buying back shares. In complex cases, activist directors are required not only in order to continuously monitor management, but also to further refine the activist business plan for the company.

This insight, however, only serves to reframe our Article’s basic question. Given the rising power of institutional investors, why can they not appoint such directors to companies’ boards? The answer lies in the need of such directors to share nonpublic information with the fund that appointed them. Sharing such information with institutional investors would create significant insider trading concerns and would critically change the role of institutional investors as relatively passive investors with a limited say over company affairs.

The complete article is available here.

________________________________________________________________

*Assaf Hamdani is Professor of Law and Sharon Hannes is Professor of Law and Dean of the Faculty at Tel Aviv University Buchmann Faculty of Law. This post is based on their recent article, forthcoming in the Boston University Law Review. Related research from the Program on Corporate Governance includes Dancing with Activists by Lucian Bebchuk, Alon Brav, Wei Jiang, and Thomas Keusch (discussed on the Forum here); The Agency Problems of Institutional Investors by Lucian Bebchuk, Alma Cohen, and Scott Hirst (discussed on the Forumhere); and Index Funds and the Future of Corporate Governance: Theory, Evidence, and Policy by Lucian Bebchuk and Scott Hirst (discussed on the forum here).

Comment les firmes de conseil en votation évaluent-elles les efforts des entreprises eu égard à leur gestion environnementale et sociale ?


Les auteurs* de cet article expliquent en des termes très clairs le sens que les firmes de conseil en votation Glass Lewis et ISS donnent aux risques environnementaux et sociaux associés aux pratiques de gouvernance des entreprises publiques (cotées).

Il est vrai que l’on parle de ESG (en anglais) ou de RSE (en français) sans donner de définition explicite de ces concepts.

Ici, on montre comment les firmes spécialisées en conseils aux investisseurs mesurent les dimensions sous-jacentes à ces expressions.

Les administrateurs de sociétés ont tout intérêt à connaître sur quoi ces firmes se basent pour évaluer la qualité des efforts de leur entreprise en matière de gestion environnementale et de considérations sociales.

J’espère que vous apprécierez ce court extrait paru sur le Forum du Harvard Law School.

Bonne lecture !

 

 

Glass Lewis, ISS, and ESG

 

Résultats de recherche d'images pour « esg »

 

With some help from leading investor groups like Black Rock and T. Rowe Price, environmental, social, and governance (“ESG”) issues, once the sole purview of specialist investors and activist groups, are increasingly working their way into the mainstream for corporate America. For some boards, conversations about ESG are nothing new. For many directors, however, the increased emphasis on the subject creates some consternation, in part because it’s not always clear what issues properly fall under the ESG umbrella. E, S, and G can mean different things to different people—not to mention the fact that some subjects span multiple categories. How do boards know what it is that they need to know? Where should boards be directing their attention?

A natural starting place for directors is to examine the guidelines published by the leading proxy advisory firms ISS and Glass Lewis. While not to be held up as a definitive prescription for good governance practices, the stances adopted by both advisors can provide a window into how investors who look to these organizations for guidance are thinking about the subject.

 

Institutional Shareholder Services (ISS)

 

In February of 2018, ISS launched an Environmental & Social Quality Score which they describe as “a data-driven approach to measuring the quality of corporate disclosures on environmental and social issues, including sustainability governance, and to identify key disclosure omissions.”

To date, their coverage focuses on approximately 4,700 companies across 24 industries they view “as being most exposed to E&S risks, including: Energy, Materials, Capital Goods, Transportation, Automobiles & Components, and Consumer Durables & Apparel.” ISS believes that the extent to which companies disclose their practices and policies publicly, as well as the quality of a company’s disclosure on their practices, can be an indicator of ESG performance. This view is not unlike that espoused by Black Rock, who believes that a lack of ESG disclosure beyond what is legally mandated often necessitates further research.

Below is a summary of how ISS breaks down E, S, & G. Clearly the governance category includes topics familiar to any public company board.

 

iss-esg-quality-score-table

 

ISS’ E&S scoring is based on answers to over 380 individual questions which ISS analysts attempt to answer for each covered company based on disclosed data. The majority of the questions in the ISS model are applied to all industry groups, and all of them are derived from third-party lists or initiatives, including the United Nations’ Sustainable Development Goals. The E&S Quality Score measures the company’s level of environmental and social disclosure risk, both overall and specific to the eight broad categories listed in the table above. ISS does not combine ES&G into a single score, but provides a separate E&S score that stands alongside the governance score.

These disclosure risk scores, similar to the governance scores companies have become accustomed to seeing each year, are scaled from 1 to 10 with lower scores indicating a lower level of risk relative to industry peers. For example, a score of 2 indicates that a company has lower risk than 80% of its industry peers.

 

Glass Lewis

 

Glass Lewis uses data and ratings from Sustainalytics, a provider of ESG research, in the ESG Profile section of their standard Proxy Paper reports for large cap companies or “in instances where [they] identify material oversight issues.” Their stated goal is to provide summary data and insights that can be used by Glass Lewis clients as part of their investment decision-making, including aligning proxy voting and engagement practices with ESG risk management considerations.

The Glass Lewis evaluation, using Sustainalytics guidelines, rates companies on a matrix which weighs overall “ESG Performance” against the highest level of “ESG Controversy.” Companies who are leaders in terms of ESG practices (or disclosure) have a higher threshold for triggering risk in this model.

 

glass-lewis-risk-model-chart

 

The evaluation model also notes that some companies involved in particular product areas are naturally deemed higher risk, including adult entertainment, alcoholic beverages, arctic drilling, controversial weapons, gambling, genetically modified plants and seeds, oil sands, pesticides, thermal coal, and tobacco.

Conclusion

 

ISS and Glass Lewis guidelines can help provide a basic structure for starting board conversations about ESG. For most companies, the primary focus is on transparency, in other words how clearly are companies disclosing their practices and philosophies regarding ESG issues in their financial filings and on their corporate websites? When a company has had very public environmental or social controversies—and particularly when those issues have impacted shareholder value—advisory firm evaluations of corporate transparency may also impact voting recommendations on director elections or related shareholder proposals.

Pearl Meyer does not expect the advisory firms’ ESG guidelines to have much, if any, bearing on compensation-related recommendations or scorecards in the near term. In the long term, however, we do think certain hot-button topics will make their way from the ES&G scorecard to the compensation scorecard. This shift will likely happen sooner in areas where ESG issues are more prominent, such as those specifically named by Glass Lewis.

We are recommending that organizations take the time to examine any ESG issues relevant to their business and understand how those issues may be important to stakeholders on a proactive basis, perhaps adding ESG policies to the list of sunny day shareholder outreach topics after this year’s proxy season. This does take time and effort, but better that than to find out about a nagging ESG issue through activist activity or a negative voting recommendation from ISS or Glass Lewis.

 

References

1. https://www.issgovernance.com/iss-announces-launch-of-environmental-social-qualityscore-corporate-profiling-solution/

2. https://www.glasslewis.com/understanding-esg-content/

_________________________________________________________

* David Bixby is managing director and Paul Hudson is principal at Pearl Meyer & Partners, LLC. This post is based on a Pearl Meyer memorandum. Related research from the Program on Corporate Governance includes Social Responsibility Resolutions by Scott Hirst (discussed on the Forum here).

Quelles sont les responsabilités dévolues à un conseil d’administration ?


En gouvernance des sociétés, il existe un certain nombre de responsabilités qui relèvent impérativement d’un conseil d’administration.

À la suite d’une décision rendue par la Cour Suprême du Delaware dans l’interprétation de la doctrine Caremark (voir ici),il est indiqué que pour satisfaire leur devoir de loyauté, les administrateurs de sociétés doivent faire des efforts raisonnables (de bonne foi) pour mettre en œuvre un système de surveillance et en faire le suivi.

Without more, the existence of management-level compliance programs is not enough for the directors to avoid Caremark exposure.

L’article de Martin Lipton *, paru sur le Forum de Harvard Law School on Corporate Governance, fait le point sur ce qui constitue les meilleures pratiques de gouvernance à ce jour.

Bonne lecture !

 

Spotlight on Boards

 

Résultats de recherche d'images pour « Spotlight on Boards »

 

 

  1. Recognize the heightened focus of investors on “purpose” and “culture” and an expanded notion of stakeholder interests that includes employees, customers, communities, the economy and society as a whole and work with management to develop metrics to enable the corporation to demonstrate their value;
  2. Be aware that ESG and sustainability have become major, mainstream governance topics that encompass a wide range of issues, such as climate change and other environmental risks, systemic financial stability, worker wages, training, retraining, healthcare and retirement, supply chain labor standards and consumer and product safety;
  3. Oversee corporate strategy (including purpose and culture) and the communication of that strategy to investors, keeping in mind that investors want to be assured not just about current risks and problems, but threats to long-term strategy from global, political, social, and technological developments;
  4. Work with management to review the corporation’s strategy, and related disclosures, in light of the annual letters to CEOs and directors, or other communications, from BlackRock, State Street, Vanguard, and other investors, describing the investors’ expectations with respect to corporate strategy and how it is communicated;
  5. Set the “tone at the top” to create a corporate culture that gives priority to ethical standards, professionalism, integrity and compliance in setting and implementing both operating and strategic goals;
  6. Oversee and understand the corporation’s risk management, and compliance plans and efforts and how risk is taken into account in the corporation’s business decision-making; monitor risk management ; respond to red flags if and when they arise;
  7. Choose the CEO, monitor the CEO’s and management’s performance and develop and keep current a succession plan;
  8. Have a lead independent director or a non-executive chair of the board who can facilitate the functioning of the board and assist management in engaging with investors;
  9. Together with the lead independent director or the non-executive chair, determine the agendas for board and committee meetings and work with management to ensure that appropriate information and sufficient time are available for full consideration of all matters;
  10. Determine the appropriate level of executive compensation and incentive structures, with awareness of the potential impact of compensation structures on business priorities and risk-taking, as well as investor and proxy advisor views on compensation;
  11. Develop a working partnership with the CEO and management and serve as a resource for management in charting the appropriate course for the corporation;
  12. Monitor and participate, as appropriate, in shareholder engagement efforts, evaluate corporate governance proposals, and work with management to anticipate possible takeover attempts and activist attacks in order to be able to address them more effectively, if they should occur;
  13. Meet at least annually with the team of company executives and outside advisors that will advise the corporation in the event of a takeover proposal or an activist attack;
  14. Be open to management inviting an activist to meet with the board to present the activist’s opinion of the strategy and management of the corporation;
  15. Evaluate the individual director’s, board’s and committees’ performance on a regular basis and consider the optimal board and committee composition and structure, including board refreshment, expertise and skill sets, independence and diversity, as well as the best way to communicate with investors regarding these issues;
  16. Review corporate governance guidelines and committee workloads and charters and tailor them to promote effective board and committee functioning;
  17. Be prepared to deal with crises; and
  18. Be prepared to take an active role in matters where the CEO may have a real or perceived conflict, including takeovers and attacks by activist hedge funds focused on the CEO.

 

Afin de satisfaire ces attentes, les entreprises publiques doivent :

 

  1. Have a sufficient number of directors to staff the requisite standing and special committees and to meet investor expectations for experience, expertise, diversity, and periodic refreshment;
  2. Compensate directors commensurate with the time and effort that they are required to devote and the responsibility that they assume;
  3. Have directors who have knowledge of, and experience with, the corporation’s businesses and with the geopolitical developments that affect it, even if this results in the board having more than one director who is not “independent”;
  4. Have directors who are able to devote sufficient time to preparing for and attending board and committee meetings and engaging with investors;
  5. Provide the directors with the data that is critical to making sound decisions on strategy, compensation and capital allocation;
  6. Provide the directors with regular tutorials by internal and external experts as part of expanded director education and to assure that in complicated, multi-industry and new-technology corporations, the directors have the information and expertise they need to respond to disruption, evaluate current strategy and strategize beyond the horizon; and
  7. Maintain a truly collegial relationship among and between the company’s senior executives and the members of the board that facilitates frank and vigorous discussion and enhances the board’s role as strategic partner, evaluator, and monitor.

_________________________________________________________

Martin Lipton* is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. This post is based on a Wachtell Lipton memorandum by Mr. Lipton and is part of the Delaware law series; links to other posts in the series are available here.

Un document incontournable en gouvernance des entreprises cotées : « OECD Corporate Governance Factbook 2019 »


Voici un rapport de recherche exhaustif publié tous les deux ans par l’OCDE.

Vous y retrouverez une mine de renseignements susceptibles de répondre à toute question relative à la gouvernance des plus importantes autorités des marchés financiers au monde.

C’est un document essentiel qui permet de comparer et d’évaluer les progrès en gouvernance dans les 49 plus importants marchés financiers.

Vous pouvez télécharger le rapport à la fin du sommaire exécutif publié ici. Le document est illustré par une multitude de tableaux et de figures qui font image il va sans dire.

Voici l’introduction au document de recherche. Celui-ci vient d’être publié. La version française devrait suivre bientôt.

Bonne lecture !

 

The 2019 edition of the OECD Corporate Governance Factbook (the “Factbook”) contains comparative data and information across 49 different jurisdictions including all G20, OECD and Financial Stability Board members. The information is presented and commented in 40 tables and 51 figures covering a broad range of institutional, legal and regulatory provisions. The Factbook provides an important and unique tool for monitoring the implementation of the G20/OECD Principles of Corporate Governance. Issued every two years, it is actively used by governments, regulators and others for information about implementation practices and developments that may influence their effectiveness.

It is divided into five chapters addressing: 1) the corporate and market landscape; 2) the corporate governance framework; 3) the rights of shareholders and key ownership functions; 4) the corporate boards of directors; and 5) mechanisms for flexibility and proportionality in corporate governance.

 

OECD (2019), OECD Corporate Governance Factbook 2019

 

 

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The corporate and market landscape

 

Effective design and implementation of corporate governance rules requires a good empirical understanding of the ownership and business landscape to which they will be applied. The first chapter of the Factbook therefore provides an overview of ownership patterns around the world, with respect to both the categories of owners and the degree of concentration of ownership in individual listed companies. Since the G20/OECD Principles also include recommendations with respect to the functioning of stock markets, it also highlights some key structural changes with respect to stock exchanges.

The OECD Equity Market Review of Asia (OECD, 2018a) reported that stock markets have undergone profound changes during the past 20 years. Globally, one of the most important developments has been the rapid growth of Asian stock markets—both in absolute and in relative terms. In 2017, a record number of 1 074 companies listed in Asia, almost twice as many as the annual average for the previous 16 years. Of the five jurisdictions that have had the highest number of non-financial company IPOs in the last decade, three are in Asia. In 2017, Asian non-financial companies accounted for 43% of the global volume of equity raised. The proportion attributable to European and US companies has declined during the same period. In terms of stock exchanges, by total market capitalisation, four Asian exchanges were in the top ten globally (Japan Exchange Group, Shanghai Stock Exchange, Hong Kong Exchanges and Clearing Limited, and Shenzhen Stock Exchange).

With respect to ownership patterns at the company level in the world’s 50 000 listed companies, a recent OECD study (De la Cruz et al., forthcoming) reports a number of features of importance to policymaking and implementation of the G20/OECD Principles. The report, which contains unique information about ownership in companies from 54 jurisdictions that together represent 95% of global market capitalisation, shows that four main categories of investors dominate ownership of today’s publicly listed companies. These are: institutional investors, public sector owners, private corporations, and strategic individual investors. The largest category is institutional investors, holding 41% of global market capitalisation. The second largest category is the public sector, which has significant ownership stakes in 20% of the world’s listed companies and hold shares representing 13% of global market capitalisation. With respect to ownership in individual companies, in half of the world’s publicly listed companies, the three largest shareholders hold more than 50% of the capital, and in three-quarters of the world’s public listed companies, the three largest owners hold more than 30%. This is to a large extent attributable to the growth of stock markets in Asian emerging markets.

Stock exchanges have also undergone important structural changes in recent years, such as mergers and acquisitions and demutualisations. Out of 52 major stock exchanges in 49 jurisdictions, 18 now belong to one of four international groups. Thirty-three (63%) of these exchanges are either self-listed or have an ultimate parent company that is listed on one or more of its own exchanges. More than 62% of market capitalisation is concentrated in the five largest stock exchanges, while more than 95% is concentrated in the largest 25. The top 25 highest valued exchanges include 11 non-OECD jurisdictions.

 

The corporate governance framework

 

An important bedrock for implementing the Principles is the quality of the legal and regulatory framework, which is consistent with the rule of law in supporting effective supervision and enforcement.

Against this background, the Factbook monitors who serves as the lead regulatory institution for corporate governance of listed companies in each jurisdiction, as well as issues related to their independence. Securities regulators, financial regulators or a combination of the two play the key role in 82% of all jurisdictions, while the Central Bank plays the key role in 12%. The issue of the independence of regulators is commonly addressed (among 86% of regulatory institutions) through the creation of a formal governing body such as a board, council or commission, usually appointed to fixed terms ranging from two to eight years. In a majority of cases, independence from the government is also promoted by establishing a separate budget funded by fees assessed on regulated entities or a mix of fees and fines. On the other hand, 25% of the regulatory institutions surveyed are funded by the national budget.

Since 2015 when the G20/OECD Principles were issued, 84% of the 49 surveyed jurisdictions have amended either their company law or securities law, or both. Nearly all jurisdictions also have national codes or principles that complement laws, securities regulation and listing requirements. Nearly half of all jurisdictions have revised their national corporate governance codes in the past two years and 83% of them follow a “comply or explain” compliance practice. A growing percentage of jurisdictions—67%—now issue national reports on company implementation of corporate governance codes, up from 58% in 2015. In 29% of the jurisdictions it is the national authorities that serve as custodians of the national corporate governance code.

 

The rights and equitable treatment of shareholders and key ownership functions

 

The G20/OECD Principles state that the corporate governance framework shall protect and facilitate the exercise of shareholders’ rights and ensure equitable treatment of all shareholders, including minority and foreign shareholders.

Chapter 3 of the Factbook therefore provides detailed information related to rights to obtain information on shareholder meetings, to request meetings and to place items on the agenda, and voting rights. The chapter also provides detailed coverage of frameworks for review of related party transactions, triggers and mechanisms related to corporate takeover bids, and the roles and responsibilities of institutional investors.

All jurisdictions require companies to provide advance notice of general shareholder meetings. A majority establish a minimum notice period of between 15 and 21 days, while another third of the jurisdictions provide for longer notice periods. Nearly two-thirds of jurisdictions require such notices to be sent directly to shareholders, while all but four jurisdictions require multiple methods of notification, which may include use of a stock exchange or regulator’s electronic platform, publication on the company’s web site or in a newspaper.

Approximately 80% of jurisdictions establish deadlines of up to 60 days for convening special meetings at the request of shareholders, subject to specific ownership thresholds. This is an increase from 73% in 2015. Most jurisdictions (61%) set the ownership threshold for requesting a special shareholder meeting at 5%, while another 32% set the threshold at 10%. Compared to the threshold for requesting a shareholder meeting, many jurisdictions set lower thresholds for placing items on the agenda of the general meeting. With respect to the outcome of the shareholder meeting, approximately 80% of jurisdictions require the disclosure of voting decisions on each agenda item, including 59% that require such disclosure immediately or within 5 days.

The G20/OECD Principles state that the optimal capital structure of the company is best decided by the management and the board, subject to approval of the shareholders. This may include the issuing of different classes of shares with different rights attached to them. In practice, all but three of the 49 jurisdictions covered by the Factbook allow listed companies to issue shares with limited voting rights. In many cases, such shares come with a preference with respect to the receipt of the firm’s profits.

Related party transactions are typically addressed through a combination of measures, including board approval, shareholder approval, and mandatory disclosure. Provisions for board approval are common; two-thirds of jurisdictions surveyed require or recommend board approval of certain types of related party transactions. Shareholder approval requirements are applied in 55% of jurisdictions, but are often limited to large transactions and those that are not carried out on market terms. Nearly all jurisdictions require disclosure of related party transactions, with 82% requiring use of International Accounting Standards (IAS24), while an additional 8% allow flexibility to follow IAS 24 or the local standard.

The Factbook provides extensive data on frameworks for corporate takeovers. Among the 46 jurisdictions that have introduced a mandatory bid rule, 80% take an ex-post approach, where a bidder is required to initiate the bid after acquiring shares exceeding the threshold. Nine jurisdictions take an ex-ante approach, where a bidder is required to initiate a takeover bid for acquiring shares which would exceed the threshold. More than 80% of jurisdictions with mandatory takeover bid rules establish a mechanism to determine the minimum bidding price.

Considering the important role played by institutional investors as shareholders of listed companies, nearly all jurisdictions have established provisions for at least one category of institutional investors (such as pension, investment or insurance funds) to address conflicts of interest, either by prohibiting specific acts or requiring them to establish policies to manage conflicts of interest. Three-fourths of all jurisdictions have established requirements or recommendations for institutional investors to disclose their voting policies, while almost half require or recommend disclosure of actual voting records. Some jurisdictions establish regulatory requirements or may rely on voluntary stewardship codes to encourage various forms of ownership engagement, such as monitoring and constructive engagement with investee companies and maintaining the effectiveness of monitoring when outsourcing the exercise of voting rights.

 

The corporate board of directors

 

The G20/OECD Principles require that the corporate governance framework ensures the strategic guidance of the company by the board and its accountability to the company and its shareholders. The most common board format is the one-tier board system, which is favoured in twice as many jurisdictions as those that apply two-tier boards (supervisory and management boards). A growing number of jurisdictions allow both one and two-tier structures.

Almost all jurisdictions require or recommend a minimum number or ratio of independent directors. Definitions of independent directors have also been evolving during this period: 80% of jurisdictions now require directors to be independent of significant shareholders in order to be classified as independent, up from 64% in 2015. The shareholding threshold determining whether a shareholder is significant ranges from 2% to 50%, with 10% to 15% being the most common.

Recommendations or requirements for the separation of the board chair and CEO have doubled in the last four years to 70%, including 30% required. The 2015 edition of the Factbook reported a binding requirement in only 11% of the jurisdictions, with another 25% recommending it in codes.

Nearly all jurisdictions require an independent audit committee. Nomination and remuneration committees are not mandatory in most jurisdictions, although more than 80% of jurisdictions at least recommend these committees to be established and often to be comprised wholly or largely of independent directors.

Requirements or recommendations for companies to assign a risk management role to board level committees have sharply increased since 2015, from 62% to 87% of surveyed jurisdictions. Requirements or recommendations to implement internal control and risk management systems have also increased significantly, from 62% to 90%.

While recruitment and remuneration of management is a key board function, a majority of jurisdictions have a requirement or recommendation for a binding or advisory shareholder vote on remuneration policy for board members and key executives. And nearly all jurisdictions surveyed now require or recommend the disclosure of the remuneration policy and the level/amount of remuneration at least at aggregate levels. Disclosure of individual levels is required or recommended in 76% of jurisdictions.

The 2019 Factbook provides data for the first time on measures to promote gender balance on corporate boards and in senior management, most often via disclosure requirements and measures such as mandated quotas and/or voluntary targets. Nearly half of surveyed jurisdictions (49%) have established requirements to disclose gender composition of boards, compared to 22% with regards to senior management. Nine jurisdictions have mandatory quotas requiring a certain percentage of board seats to be filled by either gender. Eight rely on more flexible mechanisms such as voluntary goals or targets, while three resort to a combination of both. The proportion of senior management positions held by women is reported to be significantly higher than the proportion of board seats held by women.

 

Mechanisms for flexibility and proportionality in corporate governance

 

It has already been pointed out that effective implementation of the G20/OECD Principles requires a good empirical understanding of economic realities and adaption to changes in corporate and market developments over time. The G20/OECD Principles therefore state that policy makers have a responsibility to put in place a framework that is flexible enough to meet the needs of corporations that are operating in widely different circumstances, facilitating their development of new opportunities and the most efficient deployment of resources. The 2019 Factbook provides a special chapter that presents the main findings of a complementary OECD review of how 39 jurisdictions apply the concepts of flexibility and proportionality across seven different corporate governance regulatory areas. The chapter builds on the 2018 OECD report Flexibility and Proportionality in Corporate Governance (OECD, 2018b). The report finds that a vast majority of countries have criteria that allow for flexibility and proportionality at company level in each of the seven areas of regulation that were reviewed: 1) board composition, board committees and board qualifications; 2) remuneration; 3) related party transactions; 4), disclosure of periodic financial information and ad hoc information; 5) disclosure of major shareholdings; 6) takeovers; and 7) pre-emptive rights. The report also contains case studies of six countries, which provide a more detailed picture of how flexibility and proportionality is being used in practice.

The complete publication, including footnotes, is available here.

Le rôle du CA dans le développement durable et la création de valeur pour les actionnaires et les parties prenantes


Aujourd’hui, je présente un article publié par Azeus Convene qui montre l’importance accrue que les entreprises doivent apporter au développement durable.
L’article insiste sur le rôle du conseil d’administration pour faire des principes du développement durable à long terme les principales conditions de succès des organisations.
Les administrateurs doivent concevoir des politiques qui génèrent une valeur ajoutée à long terme pour les actionnaires, mais ils doivent aussi contribuer à améliorer le sort des parties prenantes, telles que les clients, les communautés et la société en général.
Il n’est cependant pas facile d’adopter des politiques qui mettent de l’avant les principes du développement durable et de la gestion des risques liés à l’environnement.Dans ce document, publié sur le site de Board Agenda, on explique l’approche que les conseils d’administration doivent adopter en insistant plus particulièrement sur trois points :

 

  1. Un leadership capable de faire valoir les nombreux avantages stratégiques à tirer de cette approche ;
  2. Des conseils eu égard à l’implantation des changements
  3. Le processus de communication à mettre en œuvre afin de faire valoir les succès des entreprises

 

L’article qui suit donne plus de détails sur les fondements et l’application de l’approche du développement durable.

 

Bonne lecture ! Vos commentaires sont appréciés.

 

Le développement durable, la création de valeur et le rôle du CA

 

 

 

Businesses everywhere are developing sustainability policies. Implementation is never easy, but the right guidance can show the way.

When the experts sat down to write the UK’s new Corporate Governance Code earlier this year, they drafted a critical first principle. The role of the board is to “promote the long-term sustainable success of the company”. Boardroom members should generate value for shareholders, but they should also be “contributing to wider society”.

It is the values inherent in this principle that enshrines sustainability at the heart of running a company today.

Often sustainability is viewed narrowly, relating to policies affecting climate change. But it has long since ceased to be just about the environment. Sustainability has become a multifaceted concern embracing the long-term interests of shareholders, but also responsibilities to society, customers and local communities.

Publications like Harvard Business Review now publish articles such as “Inclusive growth: profitable strategies for tackling poverty and inequality”, or “Competing on social purpose”. Forbes has “How procurement will save the world” and “How companies can increase market rewards for sustainability efforts”. Sustainability is a headline issue for company leaders and here to stay.

But it’s not always easy to see how sustainability is integrated into a company’s existing strategy. So, why should your company engage with sustainability and what steps can it take to ensure it is done well?

…one of the biggest issues at the heart of the drive for sustainability is leadership. Implementing the right policies is undoubtedly a “top-down” process, not least because legal rulings have emphatically cast sustainability as a fiduciary duty.

The reasons for adopting sustainability are as diverse as the people and groups upon which companies have an impact. First, there is the clear environmental argument. Governments alone cannot tackle growing environment risk and will need corporates to play their part through their strategies and business models.

The issues driving political leaders have also filtered down to investment managers who have developed deep concerns that companies should be building strategies that factor in environmental, social and governance (ESG) risk. Companies that ignore the issue risk failing to attract capital. A 2015 study by the global benchmarking organisation PRI (Principles for Responsible Investment), conducted with Deutsche Bank Asset Management, showed that among 2,200 studies undertaken since 1970, 63% found a positive link between a company’s ESG performance and financial performance.

There’s also the risk of being left behind, or self-inflicted damage. In an age of instant digital communication news travels fast and a company that fails on sustainability could quickly see stakeholder trust undermined.

Companies that embrace the topic can also create what might be termed “sustainability contagion”: businesses supplying “sustainable” clients must be sustainable themselves, generating a virtuous cascade of sustainability behaviour throughout the supply chain. That means positive results from implemented sustainability policies at one end of the chain, and pressure to comply at the other.

Leadership

But perhaps one of the biggest issues at the heart of the drive for sustainability is leadership. Implementing the right policies is undoubtedly a “top-down” process, not least because legal rulings have emphatically cast sustainability as a fiduciary duty. That makes executive involvement and leadership an imperative. However, involvement of management at the most senior level will also help instil the kind of culture change needed to make sustainability an ingrained part of an organization, and one that goes beyond mere compliance.

Leaders may feel the need to demonstrate the value of a sustainability step-change. This is needed because a full-blooded approach to sustainability could involve rethinking corporate structures, processes and performance measurement. Experts recognise three ways to demonstrate value: risk, reward and recognition.

“Risk” looks at issues such as potential dangers associated with ignoring sustainability such as loss of trust, reputational damage (as alluded to above), legal or regulatory action and fines.

A “rewards”-centred approach casts sustainability as an opportunity to be pursued, as long as policies boost revenues or cut costs, and stakeholders benefit.

Meanwhile, the “recognition” method argues that sharing credit for spreading sustainability policies promotes long-term engagement and responsibility.

Implementation

Getting sustainability policies off the ground can be tricky, particularly because of their multifaceted nature.

recent study into European boards conducted by Board Agenda & Mazars in association with the INSEAD Corporate Governance Centre showed that while there is growing recognition by boards about the importance of sustainability, there is also evidence that they experience challenges about how to implement effective ESG strategies.

Proponents advise the use of “foundation exercises” for helping form the bedrock of sustainability policies. For example, assessing baseline environmental and social performance; analysing corporate management, accountability structures and IT systems; and an examination of material risk and opportunity.

That should provide the basis for policy development. Then comes implementation. This is not always easy, because being sustainable can never be attributed to a single policy. Future-proofing a company has to be an ongoing process underpinned by structures, measures and monitoring.
Policy delivery can be strengthened by the appointment of a chief sustainability officer (CSO) and establishing structures around the role, such as regular reporting to the chief executive and board, as well as the creation of a working committee to manage implementation of policies across the company.

Proponents advise the use of “foundation exercises” for helping form the bedrock of sustainability policies.

Sustainability values will need to be embedded at the heart of policies directing all business activities. And this can be supported through the use of an organisational chart mapping the key policies and processes to be adopted by each part of the business. The chart then becomes a critical ready reckoner for the boardroom and its assessment of progress.

But you can only manage what you measure, and sustainability policies demand the same treatment as any other business development initiative: key metrics accompanying the plan.

But what to measure? Examples include staff training, supply chain optimisation, energy efficiency, clean energy generation, reduced water waste, and community engagement, among many others.

Measuring then enables the creation of targets and these can be embedded in processes such as audits, supplier contracts and executive remuneration. If they are to have an impact, senior management must ensure the metrics have equal weight alongside more traditional measures.

All of this must be underpinned by effective reporting practices that provide a window on how sustainability practices function. And reporting is best supported by automated, straight-through processing, where possible.

Reliable reporting has the added benefit of allowing comparison and benchmarking with peers, if the data is available. The use of globally accepted standards—such as those provided by bodies like the Global Reporting Initiative—build confidence among stakeholders. And management must stay in touch, regularly consulting with the CSO and other stakeholders—customers, investors, suppliers and local communities—to ensure policies are felt in the right places.

Communication

Stakeholders should also hear about company successes, not just deliver feedback. Communicating a sustainability approach can form part of its longevity, as stakeholders hear the good news and develop an expectation of receiving more.

Companies are not expected to achieve all their sustainability goals tomorrow. Some necessarily take time. What is expected is long-term commitment and conviction, honest reporting and steady progress.

Care should be taken, however. Poor communication can be damaging, and a credible strategy will be required, one that considers how to deliver information frequently, honestly and credibly. It will need to take into account regulatory filings and disclosures, and potentially use social media as a means of reaching the right audience.

And that’s because successful sustainability policies are something to shout about. There is enormous pressure on companies to think differently, to reject a blinkered focus only on the bottom line and develop strategies that enable their companies to provide value, not only for shareholders but other stakeholders—society, customers, and suppliers—alike.

Companies are not expected to achieve all their sustainability goals tomorrow. Some necessarily take time. What is expected is long-term commitment and conviction, honest reporting and steady progress. The landscape on which businesses function is changing. They must change with it.

This article has been produced by Board Agenda in collaboration with Azeus Convene, a supporter of Board Agenda.

Un plan de fusion avorté entre deux OBNL


Voici un cas publié sur le site de Julie McLelland qui aborde un processus de fusion manqué entre deux OBNL dont la mission est de s’occuper de déficience.

C’est un bris de confiance dramatique qui se produit entre les deux organisations, et la plupart des organisations sont dépourvues lorsqu’une telle situation se présente.

Kalinda, la présidente du conseil d’administration, se pose beaucoup de questions sur l’éjection de deux de ses hauts dirigeants qui siégeaient au CA de l’entreprise ciblée.

Elle n’est pas certaine de la meilleure approche à adopter dans une telle situation et c’est la raison pour laquelle elle cherche les meilleures avenues pour l’organisation et pour les cadres déchus.

Le cas présente la situation de manière assez factuelle, puis trois experts se prononcent sur le cas.

Bonne lecture ! Vos commentaires sont toujours les bienvenus.

 

Un plan de fusion avorté entre deux OBNL

 

 

Kalinda chairs a small disability-sector not for profit company. For almost a year the company has been in friendly merger discussions with a similar company operating in an adjacent geographic area.

Kalinda’s CEO and CFO were elected to the board of the neighbouring company in advance of the merger. Everyone expected the merger to proceed. Kalinda’s CEO and CFO reported that the merger was a major topic of that board’s discussions, but they could not give details as it would be a conflict of interest and they were excluded from most of the discussions.

Now Kalinda has received a letter from the chair of the other board saying the merger is not going ahead because due diligence uncovered some ‘worrying information’.

The letter also said the CEO and CFO must resign immediately as it was ‘no longer appropriate’ for them to be directors. Kalinda immediately called the executives who said they had no idea what had happened: They had not been made aware of any issues.

Kalinda’s executives called the CEO of the other company but she refused to talk to them and said the other directors had voted them off in a special meeting three days ago. Kalinda tried calling the other chair but her calls were all declined.

She wants to know what has been found and if there is any possibility of getting the merger discussions back on course. Her company has deferred several strategic projects, incurred legal costs, and refrained from bidding for a government contract so as not to compete against the other company.

What should Kalinda do?

 

Julia’s Answer

Kalinda should identify the actual reasons for the merger failing and analyse whether the show stoppers are on her side, the partner’s side, or connected to a third-party.

What if the problem is in her company and not evident to her? It could possibly be known or even invented (?) by the partner company – but they don’t seem to be open to providing any information. They could even think she is involved herself. It could be fraud, financial problems or any other major issues they consider as deal breaking. Kalinda needs to do her homework in her own company, carefully prioritising, and usually with external support. Her aim is to eliminate any potential time bombs quickly and efficiently.

Step two – analysing third party show stoppers on the partner’s side: The partner has been offered more attractive merger conditions by another company – Kalinda should identify the competitor and consider adapting her conditions, or they decided not to merge anymore, e.g. due to changing market circumstances or new, promising chances for business growth without a partner – Kalinda should find out what these could be and what they mean for her. The partner could also think that his and Kalinda’s executives are not a good match in general. In this case Kalinda needs to evaluate the consequences of a future with a merger but without her CEO and CFO.

Kalinda also needs to consider a completely new strategy starting from scratch – without the original target partner, possibly with a different partner or a business model and growth strategy her executive team drives alone. In each case Kalinda should evaluate whether her executive team is capable of delivering the future target performance and adds value with regards to the option/s she finally chooses and whether alternative executives would add more value.

Julia Zdrahal-Urbanek is Managing Partner of AltoPartners Austria and heads their board practice. She is based in Vienna, Austria.

 

Julie’s Answer

What a mess!

Kalinda is too far removed from the negotiations. She needs to talk with whoever has been handling the merger discussions from her company’s side and find out what are the issues that have led to this decision. If these are a concern to the prospective merger partner they should be a concern to the board.

She then needs to decide how she is going to move forwards when her two most senior executives are on the other party’s board and thus bound to act in the other party’s interests.  Kalinda is in no position to instruct her CEO and/or CFO on whether they should resign; that is a personal decision for them to make. Whilst they are on the other board they cannot act for Kalinda’s board on the merger.

It is the members, rather than the directors, who can vote directors off a board and, until there is a properly constituted members’ meeting they remain on the board unless they resign; they are not off the board simply because the other directors said so!

There should be a draft heads of agreement setting out how the parties will treat each other. Kalinda should reread it and see what it says about the costs of the deal, non-compete on tendering, deferral of projects, and other issues, that have now harmed her company.  She needs to consult her company’s legal adviser and find out if they can recover costs or claim damages.

Most important, she needs to schedule a board meeting and build consensus on a way forward. That is a board decision and not hers, as chair, to make. With any merger, acquisition, or divestment, a good board should always have a contingency plan. It is now time to implement it.

Julie Garland McLellan is a non-executive director and board consultant based in Sydney, Australia.

 

Brendan’s Answer

Kalinda needs to take a hard look at how they approached this potential and so called “friendly” merger.

Conscious Governance uses a six-step model for assessing partnerships, alliances, mergers and acquisitions: you must have the right strategy, information, timing, price, conditions, and integration.

From the information available, Kalinda, her Board and her executives failed significantly in their duty to their own organisation, especially on the first three items.

Firstly, I hear no clear strategic imperative for the merger to be entertained.  It is also puzzling why Kalinda’s CEO and CFO were elected to the other Board.  It is puzzling why Kalinda’s and the organisation’s policies allowed them to join the other board as Directors.  It is also puzzling, if not troubling, that the other Board facilitated their engagement as Directors, especially while merger discussions were underway.

Conscious Governance also encourages Boards to consider 20 tough questions (copies available on request) before embarking on merger discussions, and hopefully before someone wants to merge with you.  One question proposes a $30,000 break fee if the other party pulls out of the merger discussions.  This will test how serious they are.  It would also would have helped Kalinda’s organisation cover some costs but would not recompense lost business opportunities or contracts.

Brendan Walsh is a Senior Associate at Conscious Governance. He is based in Parkville, Victoria, Australia.

 

 

 

 

Composition du conseil d’administration d’OSBL et recrutement d’administrateurs | En rappel


Ayant collaboré à la réalisation du volume « Améliorer la gouvernance de votre OSBL » des auteurs Jean-Paul Gagné et Daniel Lapointe, j’ai obtenu la primeur de la publication d’un chapitre sur mon blogue en gouvernance.

Pour donner un aperçu de cette importante publication sur la gouvernance des organisations sans but lucratif (OSBN), j’ai eu la permission des éditeurs, Éditions Caractère et Éditions Transcontinental, de publier l’intégralité du chapitre 4 qui porte sur la composition du conseil d’administration et le recrutement d’administrateurs d’OSBL.

Je suis donc très fier de vous offrir cette primeur et j’espère que le sujet vous intéressera suffisamment pour vous inciter à vous procurer cette nouvelle publication.

Vous trouverez, ci-dessous, un court extrait de la page d’introduction du chapitre 4. Je vous invite à cliquer sur le lien suivant pour avoir accès à l’intégralité du chapitre.

 

La composition du conseil d’administration et le recrutement d’administrateurs

 

 

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__________________________________

 

Les administrateurs d’un OSBL sont généralement élus dans le cadre d’un processus électoral tenu lors d’une assemblée générale des membres. Ils peuvent aussi faire l’objet d’une cooptation ou être désignés en vertu d’un mécanisme particulier prévu dans une loi (tel le Code des professions).

L’élection des administrateurs par l’assemblée générale emprunte l’un ou l’autre des deux scénarios suivants:

1. Les OSBL ont habituellement des membres qui sont invités à une assemblée générale annuelle et qui élisent des administrateurs aux postes à pourvoir. Le plus souvent, les personnes présentes sont aussi appelées à choisir l’auditeur qui fera la vérification des états financiers de l’organisation pour l’exercice en cours.

ameliorezlagouvernancedevotreosbl

2. Certains OSBL n’ont pas d’autres membres que leurs administrateurs. Dans ce cas, ces derniers se transforment une fois par année en membres de l’assemblée générale, élisent des administrateurs aux postes vacants et choisissent l’auditeur qui fera la vérification des états financiers de l’organisation pour l’exercice en cours.

 

La cooptation autorise le recrutement d’administrateurs en cours d’exercice. Les personnes ainsi choisies entrent au CA lors de la première réunion suivant celle où leur nomination a été approuvée. Ils y siègent de plein droit, en dépit du fait que celle-ci ne sera entérinée qu’à l’assemblée générale annuelle suivante. La cooptation n’est pas seulement utile pour pourvoir rapidement aux postes vacants; elle a aussi comme avantage de permettre au conseil de faciliter la nomination de candidats dont le profil correspond aux compétences recherchées.

Dans les organisations qui élisent leurs administrateurs en assemblée générale, la sélection en fonction des profils déterminés peut présenter une difficulté : en effet, il peut arriver que les membres choisissent des administrateurs selon des critères qui ont peu à voir avec les compétences recherchées, telles leur amabilité, leur popularité, etc. Le comité du conseil responsable du recrutement d’administrateurs peut présenter une liste de candidats (en mentionnant leurs qualifications pour les postes à pourvoir) dans l’espoir que l’assemblée lui fasse confiance et les élise. Certains organismes préfèrent coopter en cours d’exercice, ce qui les assure de recruter un administrateur qui a le profil désiré et qui entrera en fonction dès sa sélection.

Quant à l’élection du président du conseil et, le cas échéant, du vice-président, du secrétaire et du trésorier, elle est généralement faite par les administrateurs. Dans les ordres professionnels, le Code des professions leur permet de déterminer par règlement si le président est élu par le conseil d’administration ou au suffrage universel des membres. Comme on l’a vu, malgré son caractère démocratique, l’élection du président au suffrage universel des membres présente un certain risque, puisqu’un candidat peut réussir à se faire élire à ce poste sans expérience du fonctionnement d’un CA ou en poursuivant un objectif qui tranche avec la mission, la vision ou encore le plan stratégique de l’organisation. Cet enjeu ne doit pas être pris à la légère par le CA. Une façon de minimiser ce risque est de faire connaître aux membres votants le profil recherché pour le président, profil qui aura été préalablement établi par le conseil. On peut notamment y inclure une expérience de conseil d’administration, ce qui aide à réduire la période d’apprentissage du nouveau président et facilite une transition en douceur.

L’âge des administrateurs de sociétés représente-t-il un facteur déterminant dans leur efficacité comme membres indépendants de conseils d’administration ? En reprise


Voici une question que beaucoup de personnes expertes avec les notions de bonne gouvernance se posent : « L’âge des administrateurs de sociétés représente-t-il un facteur déterminant dans leur efficacité comme membres indépendants de conseils d’administration ? »

En d’autres termes, les administrateurs indépendants (AI) de 65 ans et plus sont-ils plus avisés, ou sont-ils carrément trop âgés ?

L’étude menée par Ronald Masulis* de l’Université de New South Wales Australian School of Business et de ses collègues est très originale dans sa conception et elle montre que malgré toutes les réformes réglementaires des dernières années, l’âge des administrateurs indépendants est plus élevé au lieu d’être plus bas, comme on le souhaitait.

L’étude montre que pendant la période allant de 1998 à 2014, l’âge médian des administrateurs indépendants (AI) des grandes entreprises américaines est passé de 60 à 64 ans. De plus, le pourcentage de firmes ayant une majorité de AI de plus de 65 ans est passé de 26 % à 50 % !

L’étude montre que le choix d’administrateurs indépendants de plus de 65 ans se fait au détriment d’une nouvelle classe de jeunes administrateurs dynamiques et compétents. Cela a pour effet de réduire le bassin des nouveaux administrateurs requis pour des postes d’administrateurs de la relève, ainsi que pour les besoins criants d’une plus grande diversité.

In our new study Directors: Older and Wiser, or Too Old to Govern?, we investigate this boardroom aging phenomenon and examine how it affects board effectiveness in terms of firm decision making and shareholder value creation. On the one hand, older independent directors can be valuable resources to firms given their wealth of business experience and professional connections accumulated over the course of their long careers. Moreover, since they are most likely to have retired from their full-time jobs, they should have more time available to devote to their board responsibilities. On the other hand, older independent directors can face declining energy, physical strength, and mental acumen, which can undermine their monitoring and advisory functions. They can also have less incentive to build and maintain their reputation in the director labor market, given their dwindling future directorship opportunities and shorter expected board tenure as they approach normal retirement age.

Dans la foulée des mouvements activistes, plusieurs entreprises semblent faire le choix d’AI plus âgés. Cependant, l’analyse coût/bénéfice de l’efficacité des AI plus âgés montre que leurs rendements est possiblement surfait et que la tendance à éliminer ou à retarder l’âge limite de retraite doit faire l’objet d’une bonne réflexion !

Si le sujet vous intéresse, je vous invite à lire l’article original. Vos commentaires sont les bienvenus.

Bonne lecture !

 

Directors: Older and Wiser, or Too Old to Govern?

 

 

Résultats de recherche d'images pour « age of board member »

 

The past two decades have witnessed dramatic changes to the boards of directors of U.S. public corporations. Several recent governance reforms (the 2002 Sarbanes-Oxley Act, the revised 2003 NYSE/Nasdaq listing rules, and the 2010 Dodd-Frank Act) combined with a rise in shareholder activism have enhanced director qualifications and independence and made boards more accountable. These regulatory changes have significantly increased the responsibilities and liabilities of outside directors. Many firms have also placed limits on how many boards a director can sit on. This changing environment has reduced the ability and incentives of active senior corporate executives to serve on outside boards. Faced with this reduced supply of qualified independent directors and the increased demand for them, firms are increasingly relying on older director candidates. As a result, in recent years the boards of U.S. public corporations have become notably older in age. For example, over the period of 1998 to 2014, the median age of independent directors at large U.S. firms rose from 60 to 64, and the percentage of firms with a majority of independent directors age 65 or above nearly doubled from 26% to 50%.

In our new study Directors: Older and Wiser, or Too Old to Govern?, we investigate this boardroom aging phenomenon and examine how it affects board effectiveness in terms of firm decision making and shareholder value creation. On the one hand, older independent directors can be valuable resources to firms given their wealth of business experience and professional connections accumulated over the course of their long careers. Moreover, since they are most likely to have retired from their full-time jobs, they should have more time available to devote to their board responsibilities. On the other hand, older independent directors can face declining energy, physical strength, and mental acumen, which can undermine their monitoring and advisory functions. They can also have less incentive to build and maintain their reputation in the director labor market, given their dwindling future directorship opportunities and shorter expected board tenure as they approach normal retirement age.

We analyze a sample of S&P 1500 firms over the 1998-2014 period and define an independent director as an “older independent director” (OID) if he or she is at least 65 years old. We begin by evaluating individual director performance by comparing board meeting attendance records and major board committee responsibilities of older versus younger directors. Controlling for a battery of director and firm characteristics as well as director, year, and industry fixed effects, we find that OIDs exhibit poorer board attendance records and are less likely to serve as the chair or a member of an important board committee. These results suggest that OIDs either are less able or have weaker incentives to fulfill their board duties.

We next examine major corporate policies and find a large body of evidence consistently pointing to monitoring deficiencies of OIDs. To measure the extent of boardroom aging, we construct a variable, OID %, as the fraction of all independent directors who are categorized as OIDs. As the percentage of OIDs on corporate boards rises, excess CEO compensation increases. This relationship is mainly driven by the cash component of CEO compensation. A greater OID presence on corporate boards is also associated with firms having lower financial reporting quality, poorer acquisition profitability measured by announcement returns, less generous payout polices, and lower CEO turnover-to-performance sensitivity. Moreover, we find that firm performance, measured either by a firm’s return on assets or its Tobin’s Q, is significantly lower when firms have a greater fraction of OIDs on their boards. These results collectively support the conclusion that OIDs suffer from monitoring deficiencies that impair the board’s effectiveness in providing management oversight.

We employ a number of approaches to address the endogeneity issue. First, we include firm-fixed effects wherever applicable to control for unobservable time-invariant firm-specific factors that may correlate with both the presence of OIDs and the firm outcome variables that we study. Second, we employ an instrumental variable regression approach where we instrument for the presence of OIDs on a firm’s board with a measure capturing the local supply of older director candidates in the firm’s headquarters state. We find that all of our firm-level results continue to hold under a two-stage IV regression framework. Third, we exploit a regulatory shock to firms’ board composition. The NYSE and Nasdaq issued new listing standards in 2003 following the passage of the Sarbanes-Oxley Act (SOX), which required listed firms to have a majority of independent directors on the board. We show that firms non-compliant with the new rule experienced a significantly larger increase in the percentage of OIDs over the 2000-2005 period compared to compliant firms. A major reason for this difference is that noncompliant firms needed to hire more OIDs to comply with the new listing standards. Using a firm’s noncompliance status as an instrument for the change in the board’s OID percentage, we find that firm performance deteriorates as noncompliant firms increase OIDs on their boards. We also conduct two event studies, one on OID appointment announcements and the other on the announcements of firm policy changes that increase the mandatory retirement age of outside directors. We find that shareholders react negatively to both announcements.

In our final set of analysis, we explore cross-sectional variations in the relation between OIDs and firm performance and policies. We find that the negative relation between OIDs and firm performance is more pronounced when OIDs hold multiple outside board seats. This evidence suggests that “busyness” exacerbates the monitoring deficiency of OIDs. We also find that for firms with high advisory needs, the relation between OIDs and firm performance is no longer significantly negative and in some cases, becomes positive. These results are consistent with OIDs using their experience and resources to provide valuable counsel to senior managers in need of board advice. Also consistent with OIDs performing a valuable advisory function, our analysis of acquirer returns shows that the negative relation between OIDs and acquirer returns is limited to OIDs who have neither prior acquisition experience, nor experience in the target industry. For OIDs with either type of experience, their marginal effect on acquirer returns is non-negative, and sometimes significantly positive.

Our research is the first investigation of the pervasive and growing phenomenon of boardroom aging at large U.S. corporations and its impact on board effectiveness and firm performance. As the debate over director age limits continues in the news media and among activist shareholders and regulators, our findings on the costs and benefits associated with OIDs can provide important and timely policy guidance. For companies considering lifting or waiving mandatory director retirement age requirements, so as to lower the burden of recruiting and retaining experienced independent directors, our evidence should give them pause. Similarly, while recent corporate governance reforms and the rise in shareholder activism have made boards, and especially independent directors, more accountable for managerial decisions and firm performance, they may also have created the unintended consequence of shrinking the supply of potential independent directors who are younger active executives. This result has led firms to tap deeper into the pool of older director candidates, which our analysis shows can undermine the very objectives that corporate governance reforms seek to accomplish.

The complete paper is available for download here.

___________________________________________________________________________________

*Ronald Masulis is Scientia Professor of Finance at University of New South Wales Australian School of Business; Cong Wang is Professor of Finance at The Chinese University of Hong Kong, Shenzhen and the associate director of Shenzhen Finance Institute; Fei Xie is Associate Professor of Finance at the University of Delaware; and Shuran Zhang is Associate Professor of Finance at Jinan University. This post is based on their recent paper.

Les actions multivotantes sont populaires aux États-Unis. Les entreprises canadiennes devraient-elles emboîter le pas ?


Je vous recommande la lecture de cet article d’Yvan Allaire*, président exécutif du conseil d’administration de l’IGOPP, paru dans le Financial Post le 6 mars 2019.

Comme je l’indiquais dans un précédent billet, Les avantages d’une structure de capital composée d’actions multivotantes, celles-ci « n’ont pas la cote au Canada ! Bien que certains arguments en faveur de l’exclusion de ce type de structure de capital soient, de prime abord, assez convaincants, il existe plusieurs autres considérations qui doivent être prises en compte avant de les interdire et de les fustiger ».

Cependant, comme l’auteur le mentionne dans son article, cette structure de capital est de plus en plus populaire dans le cas d’entreprises entrepreneuriales américaines.

Il y a de nombreux avantages de se prévaloir de la formule d’actions multivotantes. Selon Allaire, les entreprises canadiennes, plus particulièrement les entreprises québécoises, devraient en profiter pour se joindre au mouvement.

J’ai reproduit, ci-dessous, l’article publié dans le Financial Post. Quelle est votre opinion sur ce sujet controversé ?

Bonne lecture ! Vos commentaires sont les bienvenus.

 

Dual-class shares are hot in the U.S. again. Canada should join in

 

 

Image associée
Some 69 dual-class companies are now listed on the Toronto Stock Exchange, down from 100 in 2005. Peter J. Thompson/National Post 

American fund managers are freaking out about the popularity of multiple voting shares among entrepreneurs going for an initial public offering (IPO). In recent years, some 20 per cent of American IPOs (and up to a third among tech entrepreneurs) have adopted a dual-class structure. Fund managers are working overtime to squelch this trend.

In Canada, this form of capital structure has been the subject of unrelenting attacks by some fund managers, proxy-advisory firms and, to a surprising degree, by academics. Some 69 dual-class companies are now listed on the Toronto Stock Exchange, down from 100 in 2005. Since 2005, only 23 Canadian companies went public with dual-class shares and 16 have since converted to a single-class.

A dual class of shares provides some measure of protection from unwanted takeovers as well as from the bullying that has become a feature of current financial markets. (The benefits of homegrown champions, controlled by citizens of the country and headquartered in that country need no elaboration. Not even the U.S. tolerates a free-for-all takeover regime, but Canada does!)

These 69 dual-class companies have provided 19 of Canada’s industrial champions as well as 12 of the 50 largest Canadian employers. The 54 companies (out of the 69 that were listed on the TSX 10 years ago) provided investors with a mean annual compounded return of 8.98 per cent (median 9.62 per cent) as compared to 5.06 per cent for the S&P/TSX Index and 6.0 per cent for the TSX 60 index (as per calculations by the Institute for Governance of Private and Public Organizations).

As for the quality of their governance, by the standards set by The Globe and Mail for its annual governance scoring of TSX-listed companies, the average governance score of companies without a dual-class of shares is 66.15 while the score of companies with multiple voting shares, once the penalty (up to 10 points) imposed on dual-class companies is removed, is 60.1, a barely significant difference.

 


*Cet article a été et rédigé par Yvan Allaire, Ph. D. (MIT), MSRC, président exécutif du conseil d’administration de l’IGOPP.

Les administrateurs sont de plus en plus surchargés par la documentation pour les réunions du CA


L’article publié par Mazars montre bien les efforts que les conseils d’administration doivent faire afin de bien jouer leur rôle de fiduciaire.

Les activités de gouvernance deviennent si complexes, avec l’addition de comités spéciaux, qu’il devient essentiel que les administrateurs reçoivent une information de qualité, sur une période de temps raisonnable.

L’article présente la problématique liée à une surabondance d’informations qui menace de plus en plus l’efficacité des CA.

Comment s’assurer que les administrateurs reçoivent l’information stratégique pertinente à leur travail de supervision et que la direction ne prend pas l’habitude de les enterrer dans une mer de documents ?

« An increased focus on risk and compliance for financial services firms has led to a rise in committees, reporting and key performance indicators. But boards must ensure that short-term targets do not hamper long-term strategic vision ».

Bonne lecture !

 

How information overload can threaten board effectiveness

 

documents, business papers, board packs, board papers

Photo: Shutterstock

 

The composition of boards, their agenda and processes for decision-making are critical to ensuring boards discharge their responsibilities. But the quality of their decision-making is critically dependent on the quality of the information they receive and process.

In 2017, the US Federal Reserve acknowledged that boards of financial services companies can be “overwhelmed by the quantity and complexity of information they receive”, and published guidance on supervisory expectations for boards of directors.

The fear is that the proliferation of different committees consumes management and board time to such an extent that they are taken away from the running of the business. This situation is only likely to become more intense as the pace of technological change continues and the regulatory environment continues to evolve.

An increased focus on risk and compliance has led to a proliferation of board committees.

The regulatory burden is significant, and the creation of a global systemically important financial institution (G-SIFI) through a nexus of local and global regulations presents a particular management challenge. There is a group-level need to ensure overseas subsidiaries are effectively managed and operating within group control.

This confluence of factors threatens information overload and places great importance on the ability of management teams to optimise their time to streamline board practices and ensure effective decision-making, without diluting central control.

 

Practical steps

 

There are some practical steps that management teams and boards can take to optimise their effectiveness, such as compressing the number of days on which committees meet. It is essential to circulate materials in good time ahead of meetings to ensure effective discussion and decision-making. Digestible and clear information is essential for effective accountability.

Just as financial services firms have cut back the number of people sitting on their boards, thereby improving dialogue and decision-making, so they should be equally rigorous in cutting back on lengthy reporting.

“The information conveyed to the board needs to be focused,” says Michael Tripp, head of financial services at Mazars. “There needs to be a hierarchy of what is important. More than ever there needs to be clarity on where decisions are taken.”

An increased focus on risk and compliance has led to a proliferation of board committees. The main board should ensure a qualitative approach to governance, so there is a strong level of interaction with, and between, the various committees, says Tripp.

Boards and management teams should also be clear about what can be delegated, and boards should avoid practices that just represent box-ticking exercises that are no longer relevant to the way they operate.

They must also contend with changing accounting regimes, from GAAP to Solvency II and now IFRS 17, which is due to come into force in 2021. The implementation of IFRS 17, where relevant, will create disruption in the insurance industry and could prompt a fundamental redesign of the actuarial process.

Such is the breadth of stakeholders in today’s financial services industry that management teams risk being over-burdened with unnecessary targets and key performance indicators.

The new rules will require a step change in the way insurers disclose information to make them more comparable with other industries. This will increase the burden of information for boards and management teams, and has implications for governance processes.

“Boards need to have the right level of expertise and training to understand how IFRS 17 affects their business,” says Tripp.

 

Opportunities

 

The change will also present opportunities. Any redesign of the actuarial process could present an opportunity to introduce or increase automation, thereby increasing the capacity to focus on providing timely business insight. Boards should be aware of the technological opportunities that such changes bring.

Such is the breadth of stakeholders in today’s financial services industry that management teams risk being over-burdened with unnecessary targets and key performance indicators. Tier-one capital targets and leverage ratio targets must be met to satisfy regulators, so it is important that teams are not constrained by too many targets that stifle their ability to grow and run their businesses. Excessive targets put pressure on management teams to deliver quarter-to-quarter, and may may hamper long-term strategic vision and best practice.

“Key performance indicators are an important way to measure performance and strategic progress and inform decision-making,” says Tripp. “But it’s important to narrow the focus to a number of meaningful KPIs that enable 360-degree evaluation, holding the executive team accountable.”

The financial crisis proved that global financial institutions were too big to fail. A decade on, the industry has become safer but more complex, raising the question of whether it is too difficult to manage.

Robust governance and a breadth of board expertise which reflects strong technical expertise, as well as borrowing from the insights and experiences of other industries, will be more important than ever.

_____________________________________________________________

This article is an excerpt from the Special Report – Future-Proofing Financial Services You can read the full report here

ÉTAT DE LA GOUVERNANCE DE SOCIÉTÉS COTÉES DU QUÉBEC EN 2018


Je vous invite à prendre connaissance d’un document incontournable sur l’état de la gouvernance de sociétés cotées du Québec en 2018.

Le rapport publié par la Chaire de recherche en gouvernance de sociétés de l’Université Laval fait suite à l’étude de Jean Bédard, Ph. D., FCPA, professeur et titulaire de la Chaire et de Jérôme Deschênes, Ph. D., MBA, professionnel de recherche.

Le rapport présente « l’état actuel de la gouvernance des sociétés québécoises dont les actions sont inscrites à la Bourse de Toronto (TSX) et à la Bourse de croissance TSX (TSXV) en 2018 et son évolution par rapport à l’année 2013 ».

Vous trouverez ci-dessous le sommaire de l’étude.

Le rapport complet est accessible en cliquant sur ce lien suivant : ÉTAT DE LA GOUVERNANCE DE SOCIÉTÉS COTÉES DU QUÉBEC EN 2018

Bonne lecture !

ÉTAT DE LA GOUVERNANCE DE SOCIÉTÉS COTÉES DU QUÉBEC EN 2018

 

 

chaireGouvernance

 

 

Ce rapport présente notre analyse de l’état actuel de la gouvernance des sociétés québécoises dont les actions sont inscrites à la Bourse de Toronto (TSX) et à la Bourse de croissance TSX (TSXV). Notre intérêt est centré sur la documentation se rapportant au dernier cycle d’assemblée générale des actionnaires (2018). Néanmoins, afin d’obtenir un point de comparaison historique, nous faisons également état de la situation au cours du cycle de 2013. Cet écart de cinq années nous permet un regard plus approfondi sur l’évolution de la situation au cours de cette période.

 

CONSEIL TYPE

 

En 2018, le conseil d’administration typique des 87 sociétés québécoises inscrites à la TSX est composé de neuf administrateurs. De ceux-ci, sept sont indépendants, un est lié et l’autre est PDG de la société. Ce conseil se réunit huit fois par année et a mis en place trois comités : un comité d’audit prescrit par la loi, un comité de gouvernance (82%) et un comité de ressources humaines (62%). Pour les 88 sociétés inscrites à la TSXV, le conseil d’administration typique est composé de six administrateurs, dont quatre indépendants, moins d’un administrateur lié et deux hauts dirigeants de la société. Le conseil se réunit six fois par année et comprend deux comités. En plus du comité d’audit, 43% des sociétés inscrites à la TSXV ont un comité de gouvernance et 34% ont un comité de ressources humaines. Dans plusieurs cas, les fonctions de ces deux comités sont regroupées sous un seul comité. Le conseil d’administration type de 2018 est similaire à celui de 2013, tant pour les sociétés de la TSX que celles de la TSXV.

 

ADMINISTRATEUR TYPE

 

L’administrateur type d’une société de la TSX est un homme résidant au Québec et âgé de 63 ans. Il est en poste depuis huit ans et n’est administrateur d’aucune autre société inscrite en bourse. Il assiste à 97% des réunions du conseil. Malgré le fait que l’administrateur type a peu changé entre 2013 et 2018, on note une plus grande proportion de femmes en 2018 ainsi qu’une plus grande proportion d’administrateurs issus d’autres pays. L’administrateur type reçoit une rémunération totale de 141 000 $, principalement sous forme d’honoraires (58%) et d’actions (32%). Sa rémunération totale a augmenté de 18% depuis 2013. De plus, sa rémunération sous forme d’options a diminué de plus de la moitié par rapport à 2013 et ne représente plus que 5% de la rémunération totale. Bien entendu, plus la société a une grande valeur boursière, plus la rémunération est élevée. L’administrateur type d’une société de la TSXV est aussi un homme résidant au Québec, mais il est plus jeune que celui de la TSX, étant âgé de 59 ans. Il est en poste depuis six ans et n’est administrateur d’aucune autre société inscrite en bourse. Il assiste à 98% des réunions du conseil. Il reçoit une rémunération de 10 000 $ sous forme d’honoraires. Il reçoit une rémunération équivalente ou supérieure sous forme d’options.

 

RENOUVELLEMENT DES CONSEILS

 

En 2018, 11% des administrateurs des sociétés de la TSX et 16% de celles de la TSXV sont de nouveaux membres du conseil. Conséquemment, un conseil type est entièrement renouvelé tous les 8 ou 9 ans. Les nouveaux membres de conseils des sociétés de la TSX (TSXV) sont, comme leurs collègues déjà en poste, à 84% (92%) des hommes résidant au Québec et indépendants. Ils sont en moyenne cinq ans plus jeunes que la population d’administrateurs de ces deux bourses.

 

INFORMATION RELATIVE À LA GOUVERNANCE

 

En vertu de la réglementation de l’Autorité des marchés financiers, les sociétés inscrites en bourse doivent communiquer des informations à propos du conseil et de ses membres pour permettre aux investisseurs et autres parties prenantes d’évaluer la qualité de la gouvernance de la société et leur permettre de prendre une décision éclairée quant à leur vote à l’assemblée annuelle. Notre collecte d’information a mis en lumière divers éléments qui limitent la capacité des parties prenantes à obtenir une bonne compréhension de la gouvernance d’une société. Pour les sociétés de la TSX, il faut consulter deux documents (la circulaire de sollicitation de procurations et la notice annuelle) pour obtenir toutes les informations relatives aux administrateurs et au conseil. De plus, dans la circulaire, la section où se retrouvent certaines informations varie d’une société à l’autre. Finalement, les allègements consentis aux sociétés de la TSXV quant à la communication de certaines informations limitent la capacité à évaluer la gouvernance sur ces dimensions.

Dix erreurs que les conseils peuvent éviter sur les droits de l’homme


Voici un article publié par MAZAR* sur les erreurs les plus fréquentes que commettent les conseils eu égard aux risques associés aux droits de la personne.

Selon les auteurs, la plus grande erreur est de ne pas reconnaître la gravité des risques, mais ce n’est pas le seul danger !

L’article a été publié en anglais. J’ai utilisé le traducteur de Chrome pour produire le texte français ci-dessous. La qualité de la traduction est très bonne et cela facilitera la vie des francophones !

Voici dix erreurs que les conseils peuvent éviter.

Bonne lecture !

Dix erreurs que les conseils peuvent éviter sur les droits de l’homme

 

Résultats de recherche d'images pour « conditions de travail abusives »

 

  1. Identifier et comprendre les risques

Les conseils échouent souvent à identifier et à comprendre les risques graves pour les droits de la personne, tels que les conditions de travail abusives liées aux salaires, aux contrats, à la sécurité, à la santé et au recours au travail des enfants, au travail forcé et à la traite des personnes. Ces pratiques abusives peuvent entraîner des dommages juridiques, financiers et de réputation.

  1. Soyez prêt

Attendre que quelque chose se passe mal avant de s’attaquer aux responsabilités en matière de droits de l’homme sur le lieu de travail et dans les chaînes d’approvisionnement est une voie sûre pour les gros problèmes. Il est essentiel d’établir un plan clair sur la manière de relever les défis et de fournir suffisamment de ressources pour le faire.

  1. Chercher de l’aide par le haut

Essayer de mettre en place de bonnes normes en matière de droits de l’homme dans la culture et la prise de décision de l’entreprise dans toutes les opérations et dans tous les lieux géographiques sans obtenir le soutien des plus grands directeurs échouera.

  1. Réaliser des audits réguliers

Ne présumez pas que les droits de la personne sont respectés dans vos chaînes d’approvisionnement, chez vous ou à l’étranger. Les conseils doivent veiller à ce que des audits et des revues des chaînes soient régulièrement effectués afin de garantir le respect des bonnes pratiques en matière de droits de l’homme. L’exposition tragique des conditions épouvantables des travailleurs de l’industrie textile au Bangladesh et dans d’autres pays a trop souvent fait les gros titres ces dernières années.

  1. Obtenez un expert à bord

Évitez toute attitude arrogante en matière de droits de l’homme et nommez au conseil une personne possédant une solide expertise, notamment en ce qui concerne le respect des exigences réglementaires nationales et internationales, ou formez un membre du conseil à diriger.

  1. Établir des canaux appropriés

Le fait de ne pas mettre en place les canaux adéquats pour permettre aux personnes internes ou externes à l’entreprise de faire part de leurs préoccupations concernant les droits de l’homme et leurs conséquences pour atteindre le conseil d’administration et la haute direction est une erreur courante.

  1. S’attaquer aux fautes professionnelles

Ne soyez pas tenté de nier ou de cacher toute malversation révélée, mais résolvez-le et apportez le changement de manière efficace grâce aux meilleures pratiques.

  1. Assurer l’engagement des parties prenantes

Il faut éviter un faible engagement avec les parties prenantes, car il est important de communiquer clairement sur la manière dont le conseil d’administration traite ses problèmes de droits de l’homme, en particulier si des problèmes se sont posés. Les actionnaires, en particulier, se posent davantage de questions sur les processus de gestion des risques liés aux droits de l’homme et sur la manière dont l’entreprise relève les défis et mesure les progrès.

  1. Ne prenez pas de raccourcis

Il est préférable de ne pas prendre de raccourcis pour remplir les exigences en matière de rapports réglementaires, telles que donner une réponse rapide ou répéter le contenu du rapport de l’année dernière. Les Principes directeurs des Nations Unies indiquent clairement comment rendre compte des questions relatives aux droits de l’homme dans un rapport annuel ou un rapport sur le développement durable.

  1. Évitez la complaisance

Devenir complaisant face au bilan de votre entreprise en matière de droits de l’homme n’est pas une option. De nouveaux systèmes tels que la Workforce Disclosure Initiative dirigée par des investisseurs, qui appelle à davantage de transparence sur la manière dont les entreprises gèrent leurs employés et les employés de la chaîne d’approvisionnement, se développent et mettent les entreprises à la loupe.


*Cet article a été produit par Board Agenda en collaboration avec Mazars, un partenaire de Board Agenda.

Vague de déréglementation des sociétés américaines sous l’administration Trump | Est-ce judicieux ?


Aujourd’hui, un article publié par Mark Lebovitch et Jacob Spaid de la firme Bernstein Litowitz Berger & Grossmann, paru dans HLS Forum, a attiré mon attention.

En effet, l’article décrit les gestes posés par l’administration Trump qui sont susceptibles d’avoir un impact significatif sur les marchés financiers en réduisant la transparence et la reddition de compte des grandes entreprises publiques soumises à la réglementation de la SEC.

Les auteurs brossent un portrait plutôt sombre des attaques portées à la SEC par l’administration en place.

« Several administration priorities are endangering financial markets by reducing corporate accountability and transparency.

Nearly two years into the Trump presidency, extensive deregulation is raising risks for investors. Several of the administration’s priorities are endangering financial markets by reducing corporate accountability and transparency. SEC enforcement actions under the Administration continue to lag previous years. The Trump administration has also instructed the SEC to study reducing companies’ reporting obligations to investors, including by abandoning a hallmark of corporate disclosure: the quarterly earnings report. Meanwhile, President Trump and Congress have passed new legislation loosening regulations on the same banks that played a central role in the Great Recession. It is important for institutional investors to stay abreast of these emerging developments as they contemplate the risk of their investments amid stark changes in the regulatory landscape ».

L’article s’intitule « In Corporations We Trust : Ongoing Deregulation and Government Protections ». Les auteurs mettent en lumière les actions menées par les autorités réglementaires américaines pour réaffirmer les prérogatives des entreprises.

La SEC fait-elle fausse route en amoindrissant la réglementation des entreprises ? Quel est votre point de vue ?

 

In Corporations We Trust: Ongoing Deregulation and Government Protections

 

 

Résultats de recherche d'images pour « SEC »

 

The number of SEC actions against public companies is plummeting

 

The number of SEC actions enforcing the federal securities laws is now lower than in previous administrations. In 2016, before President Trump took office, the SEC filed 868 enforcement actions and recovered $4.08 billion in settlements. These figures declined to 754 enforcement actions and $3.78 billion in settlements in 2017. Enforcement actions against public companies in particular dropped by a third, from 92 actions in 2016 to just 62 in 2017. The first half of 2018 witnessed an even more precipitous decline in SEC enforcement actions. Compared to the same six-month period in 2017, enforcement actions against public companies have dropped by 66 percent, from 45 such actions to just 15. More importantly, recoveries against public companies over the same time period were down a stunning 93.5 percent.

The most recently released data confirms the SEC’s retreat from enforcement. On November 2, 2018, the SEC released its fiscal year 2018 Annual Report: Division of Enforcement, which shows that the SEC’s enforcement efforts and results during the first 20 months under the Trump administration pale in comparison to those of the same period under the Obama administration, with the SEC (1) charging far fewer high-profile defendants, including less than half as many banks and approximately 40 percent fewer public companies; (2) shifting its focus from complex, market-manipulation cases involving large numbers of investors, to simpler, less time-intensive cases involving fewer investors, such as actions against investment advisors accused of lying and stealing; (3) recovering nearly $1 billion less; and (4) returning approximately 62 percent less to investors ($1.7 billion compared to $5 billion).

The enforcement numbers with regard to public companies are consistent with Chairman Jay Clayton’s stated intention to change the SEC’s focus away from enforcement actions against large companies that commit fraud. During his first speech as SEC Chairman, Clayton expressly rejected the enforcement philosophy of former SEC Chair Mary Jo White, who had pushed the SEC to be “aggressive and creative” in pursuing penalties against all wrongdoers to ensure that the SEC would “have a presence everywhere and be perceived to be everywhere.” Clayton stated that “the SEC cannot be everywhere” and that “increased disclosure and other burdens” on public companies “are, in two words, not good.” Rather than utilizing SEC enforcement powers to protect investors and deter fraud, Clayton’s priority is to provide information to investors so they can protect themselves. As Clayton explained, his “short but important message” for investors is that “the best way to protect yourself is to check out who you are dealing with, and the SEC wants to make that easier.” This comment comes dangerously close to “caveat emptor.”

A recent appointee to the SEC under President Trump, Commissioner Hester M. Peirce, is also an advocate for limiting enforcement. Peirce views civil penalties against corporations not as an effective regulatory tool, but rather as an “area of concern” that justifies her vetoing enforcement actions. Commissioner Peirce has also publicly admitted (perhaps touted) that the current SEC is not inclined to bring any cases that involve novel issues that might “push the bounds of authority,” such as those involving “overly broad interpretations of ‘security’ or extraterritorial impositions of the law.” Far from focusing on the interests of investors whose capital literally keeps our markets at the forefront of the global economy, Peirce has expressed concern for the “psychological toll” that an SEC investigation can take on suspected perpetrators of fraud.

Given the SEC’s stark departure from its previous stance in favor of pursuing enforcement actions to protect investors, investors should take extra measures to stay informed about the companies in which they are invested. Investors should also demand increased transparency in corporate reporting, and evaluate their rights in the face of suspected fraud.

 

President Trump directs the SEC to consider eliminating quarterly reporting requirements

 

For generations, investors in the US stock markets have relied on quarterly reports to apprise them of companies’ financial condition, recent developments, and business prospects. Such quarterly reports have been required by the SEC since 1970, and are now widely considered part of the bedrock of corporate transparency to investors. Even before 1970, more than half of the companies listed on the New York Stock Exchange voluntarily issued quarterly reports.

Consistent with a focus on protecting companies, some of whom may well violate SEC rules and regulations, at the expense of the investing public, in August 2018, President Trump instructed the SEC to study whether eliminating quarterly reporting requirements will “allow greater flexibility and save money” and “make business (jobs) even better.” President Trump stated that he based his instruction on advice from “some of the world’s top business leaders,” but provided no evidence of that assertion.

While eliminating quarterly reporting would certainly “allow greater flexibility” for corporations doing the reporting, investors would suffer from the resulting lack of transparency. Unsurprisingly, some of the world’s most prominent financial leaders, including Warren Buffett and Jamie Dimon, have criticized the suggested elimination of quarterly reporting. Buffett and Dimon have explained that such reporting is necessary for corporate transparency and “an essential aspect of US public markets.” This makes sense for numerous reasons, including that without quarterly reports, significant corporate events that took place in between reporting periods could go unreported. Notably, Buffett and Dimon acknowledge that quarterly earnings guidance can over-emphasize short-term profits at the expense of long-term focus and growth. Yet they still favor the transparency and accountability offered by quarterly reporting over a world in which companies can effectively “go dark” for extended periods of time.

It is unclear how quickly the SEC may move to review President Trump’s suggested elimination of quarterly reporting. In October 2018, SEC Chairman Clayton explained that quarterly reporting will remain in effect. But days later, the SEC announced that it may, in fact, draft a notice for public feedback on the proposed change.

Meanwhile, Congress is moving forward with legislation that could lead to the elimination of quarterly reporting. In July 2018, the House of Representatives passed the JOBS and Investor Confidence Act of 2018 (aka “JOBS Act 3.0”). If enacted into law, the Act would require that the SEC provide to Congress a cost-benefit analysis of quarterly reporting requirements, as well as recommendations of ways to decrease corporate reporting costs. The harm to investors from decreased reporting is not necessarily a focus of Congress’s request. The Senate is expected to consider the JOBS 3.0 in the near term.

Congress and regulators weaken banking regulations

 

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) is the landmark legislation passed in response to the high-risk, predatory and fraudulent banking practices that led to the Great Recession, and which has as a primary focus on increasing regulation of the financial services industry. President Trump, however, has referred to Dodd-Frank as a “disaster” that has prevented many “friends of [his], with nice businesses” from borrowing money. President Trump made promises on the campaign trail that he would “kill” Dodd-Frank and repeated the same vow early in his presidency, stating that he would “do a big number on” Dodd-Frank.

Making good on his promises, on May 24, 2018, President Trump signed into law Senator Mike Crapo’s Economic Growth, Regulatory Relief and Consumer Protection Act (the Crapo Bill). The Crapo Bill removes many mandatory oversight measures put in place to ensure that banks engage in transparent and safe lending, investing, and leverage activities, striking a significant blow to Dodd-Frank protections and placing investors’ assets at risk. As Senator Elizabeth Warren stated, despite the Crapo Bill being sold as one that will relieve “small” banks from “big” bank regulation, it puts “American consumers at greater risk.” The Crapo Bill rolled back certain regulations for banks with less than $250 billion in assets under management and rolled back additional regulations for banks with less than $10 billion in assets under management.

For example, the Crapo Bill raises from $50 to $250 billion the threshold at which a bank is considered a systemically important financial institution (SIFI)—the point at which the Federal Reserve’s heightened prudential standards become mandatory (e.g., mandatory stress tests that measure a bank’s ability to withstand a financial downturn). At the time Dodd-Frank was enacted, approximately 40 banks were considered SIFIs. Only 12 banks would now meet that standard. Moreover, proponents of the bill refer to the $250 billion threshold as an “arbitrary” benchmark to assess a bank’s systemic risk, arguing that over sight should be lessened even for banks with more than $250 billion. In short, the Crapo Bill essentially opens the door for the same type of high-risk, predatory and fraudulent banking practices that led to the financial crisis and threatens the stability and prominence of the United States’ financial markets.

A new direction at the Office of the Comptroller of the Currency (OCC) similarly invites banks to increase their leverage and thus threatens the stability of the financial system. OCC head Joseph Otting, a former CEO of OneWest Bank, recently instructed financial institutions that they should not feel bound by OCC leverage regulations, encouraging them to “do what you want as long as it does not impair safety and soundness. It’s not our position to challenge that.” Far from “challenging” the financial entities that the OCC is tasked with regulating, Otting instead has told bankers that they are the OCC’s “customers” and the Trump administration is “very banker-supportive.”

 

Institutional investors are the last line of defense

 

Congress and federal regulators have taken significant steps to change the regulatory landscape, and new efforts are underway to weaken well-established norms from SEC enforcement to quarterly reporting requirements. The core philosophy of those running the SEC and other critical regulators seems to abandon historic concern for investors in favor of a view that government should exist to protect and benefit corporations (whether or not they comply with the law). The institutional investor community should continue to speak out in favor of corporate transparency and help ensure the continued health and prominence of the United States’ financial

Les avantages d’une structure de capital composée d’actions multivotantes


C’est avec ravissement que je vous recommande la lecture de cette onzième prise de position d’Yvan Allaire* au nom de l’IGOPP.

Au Canada, mais aussi dans plusieurs pays, les actions multivotantes n’ont pas la cote ! Bien que certains arguments en faveur de l’exclusion de ce type de structure de capital soient de prime abord assez convaincantes, il existe plusieurs autres considérations qui doivent être prises en compte avant de les interdire et de les fustiger.

Comme l’auteur le mentionne dans ses recommandations, l’analyse attentive de ce type d’action montre les nombreux avantages à se doter de cet instrument.

J’ai reproduit, ci-dessous, le sommaire exécutif du document ainsi que les recommandations. Pour plus de détails, je vous invite à lire le texte au complet.

Bonne lecture ! Vos commentaires sont les bienvenus. Ils orienteront les nouvelles exigences en matière de gouvernance.

 

Prise de position en faveur des actions multivotantes

 

 

Résultats de recherche d'images pour « action multivotantes »

 

Sommaire exécutif

 

En 2018, 69 sociétés ayant des actions à droit de vote supérieur (ADVS) étaient inscrites à la bourse de Toronto alors qu’elles étaient 100 en 2005. De 2005 à 2018, 38 n’avaient plus d’ADVS suite à des fusions, acquisitions, faillites et autres, 16 sociétés avaient converti leurs ADVS en actions à droit de vote unique et 23 nouvelles sociétés ayant des ADVS s’étaient inscrites à la bourse de Toronto
en émettant des ADVS.

Les arguments pour ou contre ce type de structure de capital-actions sont nombreux et, à certains égards, persuasifs. D’une part, certains fonds « proactifs » (notamment les fonds de couverture « activistes ») insistent auprès de conseils et des directions de sociétés publiques ciblées pour que soient prises des mesures et des décisions, qui selon eux feraient accroître le prix de l’action, quand ce n’est pas carrément de chercher à imposer la vente prématurée de l’entreprise au plus offrant. Évidemment, ce phénomène a renforcé la détermination des entrepreneurs à se protéger contre de telles pressions en adoptant lors de leur premier appel public à l’épargne des actions ayant différents droits de vote (davantage aux USA qu’au Canada).

D’autre part, les fonds indiciels et les fonds négociés en bourse (FNB ou ETF en anglais), désormais des investisseurs importants et en croissance, mais obligés de refléter soigneusement dans leurs placements la composition et la valeur des titres des indices boursiers, ne peuvent donc pas simplement manifester leurs insatisfactions en vendant leurs actions. Ils doivent exercer leur influence sur la direction d’une société par l’exercice de leur droit de vote (lequel est restreint dans les sociétés ayant des ADVS) et en exprimant haut et fort leur frustration et leurs désaccords. C’est sans surprise que ces fonds sont farouchement opposés aux actions à droit de vote supérieur, exhortant avec succès les fournisseurs d’indices (ex. : Dow-Jones, et autres) à exclure toutes nouvelles sociétés ayant des actions à droit de vote supérieur.

Ils font aussi campagne, avec moins de succès à ce jour, auprès de la Securities and Exchange Commission des États-Unis (SEC) afin qu’elle interdise cette structure de capital-actions. Leur dernier stratagème en date, promu par le Council of Institutional Investors (CII), serait d’imposer une clause crépusculaire temporelle obligatoire rentrant en vigueur 7 ans après un PAPE3. Bien entendu, ce terme pourrait être renouvelé par un vote majoritaire de  l’ensemble des actionnaires (quels que soient leurs droits de vote).

La question des « clauses crépusculaires » est ainsi devenue un enjeu névralgique. Certains investisseurs institutionnels, les agences de conseils en vote et autres gendarmes de la gouvernance ainsi qu’un certain nombre de chercheurs académiques proposent de restreindre, de contrôler et d’imposer un temps limite à la liberté relative que procurent aux entrepreneurs et aux entreprises familiales les actions à droits de vote supérieurs.

Au cours des dernières années, un vif débat s’est engagé, particulièrement aux États-Unis, entre les apôtres du dogme « une action, un vote » et les hérétiques qui estiment bénéfiques les actions ayant des droits de vote inégaux.

 

Recommandations

 

Les sociétés ayant des ADVS et les entreprises familiales comportent de grands avantages à la condition que soient bien protégés les porteurs d’actions ayant des droits de vote inférieurs.

La clause d’égalité de traitement (« coattail ») imposée depuis 1987 par la Bourse de Toronto, une caractéristique uniquement canadienne, doit être conservée pour les sociétés qui ont émis ou voudraient émettre des actions ayant différents droits de vote.

Comme l’IGOPP l’a fait en 2006, il recommande à nouveau en 2018 que le ratio des droits de vote des ADVS soit plafonné à 4:1, ce qui signifie qu’il est nécessaire de détenir 20 % de la valeur des capitaux propres de la société pour en détenir le contrôle absolu (50 % des votes et plus).

La bourse TSX de Toronto devrait plafonner le ratio des droits de vote des ADVS à 10:1.

Les actions sans droit de vote devraient être interdites ; en effet, il est impossible d’accorder le droit d’élire un tiers des membres du conseil à des actionnaires qui n’ont aucun droit de vote ; ou encore d’assurer un décompte distinct des votes sur les propositions des actionnaires et pour l’élection des membres du conseil à une classe d’actionnaires sans droit de vote !

Nous recommandons fortement un décompte distinct des voix pour chaque classe d’actions et de rendre les résultats publics, tant pour l’élection des membres du conseil d’administration que pour toute autre proposition soumise au vote des actionnaires.

Les actionnaires disposant de droits de vote inférieurs devraient avoir le droit d’élire un tiers des membres du conseil d’administration, dont les candidatures seraient proposées par le conseil. Jumelée au décompte distinct des voix pour chaque classe d’actions, cette mesure inciterait le conseil et les gestionnaires à sélectionner des candidats susceptibles de s’attirer les faveurs des actionnaires « minoritaires ». Évidemment, tous les membres du conseil d’administration ne doivent agir que dans l’intérêt de la société.

Pour les raisons citées précédemment et expliquées par la suite dans la position, l’IGOPP s’oppose résolument à l’imposition de clauses crépusculaires temporelles pour les sociétés ayant des ADVS. Nous sommes aussi contre les clauses crépusculaires déclenchées par un événement précis ainsi que par celles déclenchées en fonction de l’âge du fondateur, de l’entrepreneur ou de l’actionnaire de contrôle.

Toutefois, l’IGOPP recommande qu’à l’avenir une clause crépusculaire basée sur un seuil de propriété (dilution sunset) soit incluse lors du PAPE d’une société faisant usage d’ADVS.

Dans la suite logique de notre démonstration de la valeur économique et sociale des entreprises familiales, l’IGOPP est favorable à une grande latitude de transférabilité du contrôle aux membres de la famille du fondateur.

Également dans la suite de notre appui aux ADVS comme rempart contre les visées à court terme et l’influence indue de certains types de spéculateurs, nous recommandons que le contrôle de ces sociétés puisse aussi être transmis à une fiducie dirigée par une majorité de fiduciaires indépendants au bénéfice des héritiers du fondateur.

Lorsqu’un parent ou un descendant de l’actionnaire de contrôle est candidat pour le poste de PDG, les administrateurs indépendants, conseillés adéquatement, devraient discuter des mérites des divers candidats avec l’actionnaire de contrôle et faire rapport de la démarche adoptée par le conseil pour arrêter son choix à l’assemblée annuelle des actionnaires suivant l’entrée en fonction d’un nouveau chef de la direction.

L’IGOPP est favorable à l’adoption d’une forme d’ADVS comportant des droits de vote supérieurs que pour l’élection de la majorité (ou la totalité) des membres du conseil.

« L’examen approfondi des arguments et des controverses à propos d’actions multivotantes nous mène à la conclusion que les avantages de cette structure l’emportent haut la main sur ses inconvénients.

Non seulement de plus en plus d’études confortent leur performance économique, mais le fait de combiner la propriété familiale et les actions à droit de vote supérieur résulte en une plus grande longévité de l’entreprise, en une meilleure intégration dans les collectivités hôtes, à moins de vulnérabilité aux pressions des actionnaires de court terme et à moins de susceptibilité aux « modes » stratégiques et financières.

Cette précieuse forme de propriété doit être assortie de mesures assurant le respect et la protection des droits des actionnaires minoritaires. Nous avons formulé un certain nombre de recommandations à cette fin. Nous encourageons les sociétés ayant présentement des ADVS et les entrepreneurs qui souhaiteront demain inscrire une société en bourse et émettre des ADVS à adopter nos recommandations ».

 


*Ce document a été préparé et rédigé par Yvan Allaire, Ph. D. (MIT), MSRC, président exécutif du conseil d’administration de l’IGOPP.