Spencer Stuart Board Index | 2019.


Julie Hembrock Daum , Laurel McCarthy et Ann Yerger, associés de la firme  Spencer Stuart présentent les grandes lignes du rapport annuel Spencer Stuart Board Index | 2019.

Comme vous le noterez, les changements observés sont cohérents avec les changements de fonds en gouvernance.

Cependant, puisque les CA ont tendance à être de plus petites tailles et que la rotation des administrateurs sur les conseils est plutôt faible, les changements se font à un rythme trop lent pour observer une modernisation significative

The 2019 U.S. Spencer Stuart Board Index finds that boards are heeding the growing calls from shareholders and other stakeholders and adding new directors with diversity of gender, age, race/ethnicity and professional backgrounds. However, because boardroom turnover remains low, with the new directors representing only 8% of all S&P 500 directors, changes to overall numbers continue at a slow pace.

Voici les points saillants de l’étude.

Bonne lecture !

2019 U.S. Spencer Stuart Board Index

 

A summary of the most notable findings in the 2019 U.S. Spencer Stuart Board Index.

Key Takeaways—2019 Spencer Stuart Board Index

Diversity is a priority

Of the 432 independent directors added to S&P 500 boards over the past year, a record-breaking 59% are diverse (defined as women and minority men), up from half last year. Women comprise 46% of the incoming class. Minority women (defined as African-American/Black, Asian and Hispanic/Latino) comprise 10% of new S&P 500 directors, and minority men 13%.

The professional experiences of S&P 500 directors are changing

Two thirds (65%) of the 2019 incoming class come from outside the ranks of CEO, chair/vice chair, president and COO. Financial talent is a focus area; 27% of the new directors have financial backgrounds. Other corporate leadership skills are valued, with 23% bringing experiences as division/subsidiary heads or as EVPs, SVPs or functional unit leaders.

Diverse directors are driving the changing profile of new S&P 500 directors

Only 19% of the diverse directors are current or former CEOs, compared to 44% of non-diverse men. Meanwhile 34% of the diverse directors are first-time corporate directors, nearly double the 18% of the non-diverse directors. Diverse directors bring other types of corporate leadership experience to the boardroom, with 31% of the diverse directors offering experiences as current or former line or functional leaders, compared to just 11% of the non-diverse men.

Sitting CEOs are increasingly not sitting on outside boards

This year’s survey found that on average, independent directors of S&P 500 companies serve on 2.1 boards, unchanged over the past five years. Meanwhile 59% of S&P 500 CEOs serve on no outside boards, up from 55% last year. Only 23 S&P 500 CEOs (5%) serve on two or more outside boards, and 79 independent directors (2%) serve on more than four public company boards.

Boards are adding younger directors, but the average age of S&P 500 directors is unchanged

Once again, one out of six directors added to S&P 500 boards are 50 or younger. Over half (59%) bring experiences from the private equity/investment management, consumer and information technology sectors. These younger directors are more diverse than the rest of the incoming class, with 69% either women (57% of “next gen” group) or minority men (12% of “next gen” group). They are also more likely to be serving on their first corporate board; 54% are first-time directors.

However, an overwhelming number of new directors are older. More than 40% of the incoming class is 60 or older; the average age of a new S&P 500 independent director is 57.5 years. Of the universe of S&P 500 independent directors, 20% are 70 or older, while only 6% are 50 or younger. The average age of an S&P 500 independent director is 63, largely unchanged since 2009.

Low turnover in the boardroom persists

Consistent with past years, 56% of S&P 500 boards added at least one independent director over the past year. More than one quarter (29%) made no changes to their roster of independent directors—neither adding nor losing independent directors—and 15% reduced the number of independent directors without adding any new independent directors.

The end result: in spite of the record number of female directors, representation of women on S&P 500 boards increased incrementally to 26% of all directors, up from 24% in 2018 and 16% in 2009. Today, 19% of all directors of the top 200 companies are male or female minorities, up from 17% last year and 15% in 2009.

Individual director assessments are gaining traction, but mandatory retirement policies continue to proliferate

This year 44% of S&P 500 companies disclosed some form of individual director assessment (up from 38% last year and 22% 10 years ago). However, 71% of S&P 500 boards (largely unchanged over the past five years) disclosed a mandatory retirement age for directors, and retirement ages continue to rise, with 46% of boards with caps setting the age at 75 or older, compared to just 15% in 2009.

Age caps influenced the majority of director departures from boards with retirement policies, with 41% either exceeding or reaching the age cap and another 14% leaving within three years of the retirement age.

Demographically, only 15% of the independent directors on boards with age caps are within three years of mandatory retirement. As a result, most S&P 500 directors have a long runway before reaching mandatory retirement.

Independent board chairs continue to grow in numbers and pay

Today more than half of S&P 500 boards (53%) split the chair and CEO roles, up from 37% a decade ago. One-third (34%) are chaired by an independent director, up from 31% last year and 16% in 2009.

Although the roles and responsibilities of an independent board chair and a lead director are frequently similar, the difference in compensation is wide and growing. Independent chairs receive, on average, an additional $172,000 in annual compensation, compared to an annual average supplement of $41,000 for independent lead directors.

For the first time, total director pay at S&P 500 boards averages more than $300,000

The average total compensation for S&P 500 non-employee directors, excluding independent chairs, is around $303,000, a 2% year-over-year increase. Director pay varies widely by sector, with a $100,000 difference between the average total pay of the highest and lowest paying sectors.

Key Takeaways—Survey of S&P 500 Nominating and Governance Committee Members

Our survey of more than 110 nominating and governance committee members of S&P 500 companies portends a continuation of trends identified in 2019 U.S. Spencer Stuart Board Index.

Turnover in the boardroom will remain low

On average, the surveyed nominating and governance committee members anticipate appointing/replacing one director each year over the next three years.

Boards will increase their focus on racial/ethnic diversity and continue to focus on gender diversity

Diversity considerations are two of the top five issues for the next three years. While 75% of the surveyed committee members reported that gender diversity was addressed in the past year, 66% said it would continue to be a priority over the next three years. Only 38% reported that racial/ethnic diversity was addressed in the past year, but 65% said it was a top priority for the next three years.

Industry experience will be a key recruiting consideration

The top priority for the next three years—cited by 82% of the surveyed committee members—is expanding director sector/industry experience.

Evaluations of boards and directors will be examined

Enhancing board and individual director evaluations is another top priority for the next three years, identified by 61% of the respondents. While more than three quarters of respondents ranked their full board and committee assessments as very or extremely effective, only 62% gave similar marks to peer evaluations and a just over a majority (53%) gave similar rankings to self-assessments.

Boards will have to cast a wide net to identify director talent

The top five recruiting priorities for the next three years are: female directors (40%); technology experience (38%); active CEO/COO (35%); digital/social media experience (29%); and minorities (27%). Finding a single director who meets all of these criteria is difficult at best, and given supply/demand pressures, boards will have to dig deeper to identify qualified director candidates.

Together the 2019 U.S. Spencer Stuart Board Index and Spencer Stuart’s Survey of S&P 500 Nominating and Governance Committee Members indicate that the profile of S&P 500 directors will continue to change and board composition will continue to evolve. But the pace of change will remain measured.

Actionnaires de contrôle des entreprises | cibles des activistes


Voici un article très intéressant de Amy Freedman, Michael Fein et Ian Robertson de la firme Kingsdale Advisors, publié sur le Forum de Harvard Law School aujourd’hui.

Les auteurs expliquent très bien les situations de contrôle et de quasi-contrôle des entreprises. Ils montrent pourquoi ces entreprises sont vulnérables et comment elles constituent une cible de choix pour les activistes, qui n’hésitent pas à utiliser différents moyens pour arriver à leurs fins.

Les actionnaires minoritaires activistes cherchent à bouleverser les structures de contrôle existantes afin de diminuer le pouvoir des principaux propriétaires. Ultimement, on cherche à modifier la composition du conseil d’administration.

L’article expose différents stratagèmes pour ébranler le pouvoir des actionnaires de contrôle.

      • « Undermine the image of the current board and controlling shareholder as competent business managers
      • Identify and exploit divides between independent directors and the controlling shareholder’s representatives
      • Where familial relationships exist, seek to divide the family members or position them against other directors
      • Demonstrate unfair and abusive treatment of minority shareholders
      • Shine a spotlight on what is seen as “self-dealing” in exposing related-party transactions
      • Demonstrate a divide between top management and the average worker on pay issues
      • Illustrate divides where board and management are out of touch with other stakeholder groups beyond shareholders such as employees, unions, and the communities in which they operate
      • Inflict brand damage that will impact business relations with customers, consumers, and the general public ».

Bonne lecture !

Fall of the Ivory Tower: Controlled Companies and Shareholder Activism

 

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Despite longstanding complaints about governance and the tyranny of a few who may or may not hold a meaningful economic interest in the company they founded and/or now control, investors have continued to allocate to controlled or quasi-controlled companies. What has changed is that minority shareholders are no longer content to sit quietly and go along for the ride, increasingly demonstrating they are willing to pull on the few levers of activism and change available at these companies.

Companies that were set up to inoculate themselves from the whims of shareholders have now become targets. Even if directors aren’t at risk of losing their seats in a vote, they are at risk of losing their reputations and being embarrassed into change.

While governance concerns usually provide the thin edge of the wedge to begin the advancement of change, the underlying driver for a minority shareholder is usually a dissatisfaction with the way the controlling entity is running the business—not just in terms of current performance, but also in a lack of willingness to explore other accretive opportunities that may impact the controller’s vision for the company and status quo.

Many of today’s controlled and quasi-controlled companies found their genesis in family enterprises that grew beyond the bounds of private ownership to embrace the opportunities of external capital and diversified ownership, for better or worse.

Given strong, centralized leadership from proven entrepreneur-managers, senior management, and closely aligned directors, the boards of these companies have traditionally seen themselves as only marginally accountable to minority shareholders that held slivers of “their company.” But all of this is starting to transform as shareholders have begun testing the waters for change. The fact is, controlled companies are no longer impenetrable. But will they realize this? And if not, at what cost?

A general awareness of the tools of shareholder activism, the advent of advocacy and advisory groups who target ESG issues at public companies (especially those who are seen as governance laggards), and advancing regulations related to disclosure and transparency have created an environment where controlled companies are exposed, at least from a reputational perspective.

Activists have developed an appetite and motivation for chasing difficult targets Notably, Third Point ran a highly publicized proxy contest to replace the entire twelve-person board at Campbell Soup Company, despite the fact that heirs of the company’s founder held 41% of the shares. Third Point ultimately settled for two seats on an expanded fourteen-person board, indicating that some degree of change is possible despite daunting odds.

While it is unlikely a shareholder proposal related to something like executive pay disclosure would pass, it could serve to embarrass the company and educate the broader shareholder base and market about the actions of the current management.

So far, 2019 has seen the greatest frequency of say-on-pay proposals received by controlled issuers. Furthermore, 2019 has seen an unprecedented level of shareholder support, with an average of 24.95%, compared to 20.65% in 2017 and 17.68% in 2015, years that had comparable volumes of proposals.

How We Define Control

A controlled company is commonly defined as a corporation where more than 50% of voting power is held by a single person, entity, or group. This may be facilitated through a dual-class share structure or outright ownership of the majority of an issuer’s common shares outstanding.

A wider concept of control may also include quasi-controlled companies, wherein a stake of 20% or greater is held by a single person, entity, or group.

Both types of controlled groups are largely comprised of enterprises that were once family-operated or those that have a strategic partner with a large ownership stake. Despite partially divesting their significant ownership stakes, these families and stakeholders still maintain extraordinary influence over operating facets of these companies, from day-to-day strategy to overarching governance, largely influencing how the board is constituted, and the respective board and committee mandates.

Why Controlled Companies Are Vulnerable to Change: The Adapted Activist Playbook

Pursuing an activist course of action at controlled companies presents a unique set of challenges that often require some creativity on the part of the minority shareholder. Given the significant obstacles to immediate and meaningful change, these challenges result in what are often seen as “against all odds” campaigns.

Shareholders who target controlled companies modulate their campaigns with the understanding that it will often require a long, multi-staged process to advance change. Given that influencing meaningful change in a single instance of activism is likely impossible, from a pragmatic standpoint, controlled company activist tactics and goals differ from those of traditional activists. Tactically, activists will rely on informal avenues for change while aiming for more incremental objectives.

Absent conventional proxy fight and bargaining mechanisms—such as the threat of nominating and electing an activist director or calling a special meeting to force change—reputational damage and exposure are the primary forces that an activist at a controlled company can use to influence change. A single campaign tied to a shareholder proposal or a withhold campaign targeted at a specific director may not result in immediate substantive change, but can act as a disciplinary mechanism by publicly shaming the board, serve as a lightning rod to attract and expose broader shareholder opposition that would be useful in a future campaign, or be used as a bargaining chip or lever to obtain smaller, more gradual, changes, such as adding new, independent members to the board or adjusting executive pay to reflect market realities. Through this lens, a successful campaign may not be one that passes, just one that exposes a controlled company’s entrenchment and opens the eyes of the controlling entity.

As such, when private pressure fails, an activist’s strategy at a controlled company usually centers on exacting maximum reputational damage to force change. Such campaigns can become a significant distraction and headache for the board and management. At Kingsdale, we have observed that campaigns against controlled companies generally retain a number of common features, with the activist seeking to:

  • Undermine the image of the current board and controlling shareholder as competent business managers

  • Identify and exploit divides between independent directors and the controlling shareholder’s representatives

  • Where familial relationships exist, seek to divide the family members or position them against other directors

  • Demonstrate unfair and abusive treatment of minority shareholders

  • Shine a spotlight on what is seen as “self-dealing” in exposing related-party transactions

  • Demonstrate a divide between top management and the average worker on pay issues

  • Illustrate divides where board and management are out of touch with other stakeholder groups beyond shareholders such as employees, unions, and the communities in which they operate

  • Inflict brand damage that will impact business relations with customers, consumers, and the general public

L’activisme actionnarial | la situation en France


Voici un texte publié par le Club des juristes français portant sur l’activiste actionnarial.

Cette organisation vient de publier son rapport sur l’état des lieux de l’activisme en France. Le document est en français, ce qui améliore sensiblement la compréhension de la situation.

Après un bref historique du phénomène, les auteurs ont :

identifié les progrès souhaitables (première partie) et ils proposent plusieurs pistes d’amélioration de l’encadrement juridique ou des bonnes pratiques qui régissent l’exercice de l’engagement actionnarial des activistes (deuxième partie).

Vous trouverez ci-dessous le sommaire du rapport, suivi de la table des matières qui fait état des principales recommandations.

Bonne lecture !

ACTIVISME ACTIONNARIAL | Club des juristes français

 

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Sommaire du rapport

 

▶ L’engagement des actionnaires dans la vie de l’émetteur étant
généralement considéré par tous les acteurs du marché comme une
condition de son bon fonctionnement et encouragé comme tel par les
autorités de marché, comment pourrait-on s’étonner qu’un actionnaire
soit particulièrement actif ?

▶ L’activisme actionnarial apparaît aux États-Unis dans les années
1930. Après s’y être épanoui à partir des années 70 et 80, il s’observe
désormais partout où les actionnaires connaissent un renforcement
de leurs droits : en Italie, en Allemagne, aux Pays-Bas, au Royaume-Uni,
etc. L’intérêt pour le sujet a ainsi pris de l’ampleur en Europe, à partir des
campagnes activistes menées dans les années 2000. Davantage qu’un
mimétisme spontané des actionnaires européens, c’est une exportation
des activistes américains à laquelle on assiste. Près de la moitié des
sociétés visées en 2018 ne sont pas américaines. Il semble que
l’activisme se soit développé en cadence de, et parfois en relation avec,
la généralisation de la gestion passive de titres pour compte de tiers.
En contrepoint d’une gestion indicielle qui ne permet pas d’intervenir
de manière ciblée sur une société déterminée, l’actionnaire activiste
intervient ponctuellement et revendique une fonction d’optimisation du
fonctionnement du marché.

▶ Les fonds activistes ont connu une croissance significative, gagnant
par la même occasion en crédibilité et en force. Par exemple, les
activistes américains ont atteint 250,3 milliards de dollars d’actifs
sous gestion au deuxième trimestre de 2018 quand ils n’en avaient que
94,7 milliards au quatrième trimestre de 2010. L’activisme représente
désormais une puissance colossale avec 65 milliards de capital déployé
dans des campagnes en 2018. Les campagnes en Europe ne sont plus
occasionnelles. Avec 58 campagnes européennes en 2018, les fonds
activistes ont indéniablement intégré le paysage boursier.

▶ Désormais, l’activisme actionnarial présente une telle diversité que sa
délimitation, et par conséquent son encadrement, sont des plus ardus.
Ainsi, aucune réglementation spécifique n’est applicable aux seuls
activistes. Seul le droit commun applicable à tout investisseur permet
d’appréhender l’activiste qui se prévaut précisément des prérogatives
ordinaires de l’actionnaire. Qu’il s’agisse des questions écrites posées
en assemblée générale, de la présentation de résolutions alternatives,
de la demande d’une expertise de gestion, ou, enfin, de l’information
périodique ou permanente, l’activiste invoque ses droits de minoritaire.
Il fait toutefois un exercice de ces droits qui peut apparaître
particulièrement radical voire, selon certains, déloyal, et faire peser un
risque d’atteinte à l’intérêt social. Il peut ainsi sortir du cadre que lui
réservait le législateur en mettant parfois en difficulté la société.

▶ Logiquement, le droit commun fournit des outils pour réagir :
identification des actionnaires, déclaration de franchissement de
seuils, déclaration d’intention, déclaration d’un projet d’opération,
déclaration des transferts temporaires de titres, déclaration des
positions nettes courtes en cas de ventes à découvert, déclaration à
la Banque de France, déclaration de clauses des pactes d’actionnaires,
encadrement de la sollicitation active de mandats et transparence sur
la politique de vote des fonds d’investissement. Ce droit commun
apparaît néanmoins insuffisant au regard de la diversité des outils dont
disposent les activistes et de leur sophistication juridique.

▶ La perspective d’une régulation adaptée ou d’une amélioration des
pratiques impose de cerner au préalable ce que recouvre l’activisme
actionnarial.

▶ Une campagne activiste peut être définie comme le comportement
d’un investisseur usant des prérogatives accordées aux minoritaires
afin d’influencer la stratégie, la situation financière ou la gouvernance
de l’émetteur, par le moyen initial d’une prise de position publique.
L’activiste a un objectif déterminé qui peut varier selon les activistes
et les circonstances propres à chaque campagne. L’activisme peut
être short ou long, avec le cas échéant des objectifs strictement
économiques ou alors environnementaux et sociétaux (ESG), chaque
activiste développant des modalités d’action qui lui sont propres.
Malgré ces différences indéniables entre les types d’activisme, les
difficultés soulevées par l’activisme sont communes et justifient de
traiter de l’activisme dans son ensemble.

▶ L’activisme ne doit pas être confondu avec la prise de position ponctuelle
par un actionnaire sur un sujet particulier, lorsque son investissement
n’est pas motivé par cette seule critique. Un investisseur peut ainsi être
hostile aux droits de vote double et le faire savoir, y compris en recourant
à une sollicitation active de mandats, sans être qualifié d’activiste car la création de valeur recherchée ne repose pas exclusivement sur cette
critique. Dans le cas où le retour sur investissement attendu ne repose
que sur une stratégie de contestation, l’investisseur adopte alors une
forme d’activisme économique.

▶ D’un point de vue prospectif, la question de l’activisme actionnarial a
parfois été abordée à l’occasion de travaux portant sur d’autres sujets
de droit des sociétés ou de droit boursier. Outre les rapports élaborés
par le Club des juristes, dans le cadre de la Commission Europe et
de la Commission Dialogue administrateurs-actionnaires, l’AMF,
tout comme les législateurs français et européen ont identifié la
problématique, sans toutefois proposer, à ce jour, un régime juridique
spécifique.

▶ Alors que l’année 2018 a été qualifiée d’année record de l’activisme,
la question de la montée en puissance des activistes, en Europe et en
France, est devenue un enjeu de Place dont se sont notamment saisis
les pouvoirs publics, comme l’illustrent le lancement par l’Assemblée
nationale d’une Mission d’information sur l’activisme actionnarial et
les déclarations récentes du ministre de l’Économie et des Finances.
Les entreprises y voient un sujet sensible et se sont déjà organisées
individuellement en conséquence. L’Association française des
entreprises privées (AFEP) et Paris Europlace ont également initié des
réflexions à ce sujet.

▶ En parallèle, l’activisme actionnarial a depuis plusieurs années donné
lieu à un vif débat académique sur ses effets économiques et sociaux
sur le long terme, tant aux États-Unis qu’en France. Pour ses
partisans, l’activisme actionnarial permet à la société de créer de la
valeur actionnariale et économique sur le long terme. Pour d’autres, les éventuels effets bénéfiques sont identifiés sur le seul court-terme et les
émetteurs doivent au contraire se focaliser sur la création de valeur à
long terme en intégrant plus vigoureusement les questions sociales et
environnementales comme cela a été acté en France par la loi PACTE
à la suite du Rapport NOTAT SÉNARD et aux États-Unis par la position
récente du Business Roundtable.

▶ C’est dans ce contexte que le Club des juristes a décidé la création d’une
commission multidisciplinaire chargée de faire le point des questions
posées par l’activisme actionnarial et de proposer éventuellement
des améliorations à l’environnement juridique et aux pratiques qui le
concernent.

▶ L’objectif de la Commission n’est pas de prendre parti dans le débat
économique, politique et parfois philosophique qui oppose les partisans
et les détracteurs de l’activisme actionnarial, ni de prendre position sur
telle ou telle campagne activiste actuelle ou passée. Il s’agit plutôt
d’identifier les comportements susceptibles d’être préjudiciables à
la transparence, la loyauté et le bon fonctionnement du marché et
d’examiner, au plan juridique, l’encadrement et les bonnes pratiques qui
pourraient être appliqués aux campagnes activistes.

▶ Les travaux de la Commission du Club des juristes ont consisté à
auditionner une trentaine de parties prenantes à la problématique
de l’activisme actionnarial, représentants des émetteurs et des
investisseurs, intermédiaires de marché et des personnalités
qualifiées, afin de bénéficier de leur expérience et de recueillir leur
avis sur les pistes de droit prospectif. Les autorités compétentes ont participé aux travaux de la Commission en qualité d’observateurs et
ne sont en rien engagées par les conclusions de la Commission. Pour
compléter son analyse, une enquête a été effectuée auprès d’environ
deux cents directeurs financiers et responsables des relations avec les
investisseurs de sociétés cotées.

 

Table des matières du rapport 

PREMIÈRE PARTIE – ÉTAT DES LIEUX 

I. LA DÉFINITION DE L’ACTIVISME FACE A LA DIVERSITÉ DES ACTIVISTES

1. L’absence de définition juridique de l’activisme actionnarial
2. L’irréductible hétérogénéité de l’activisme actionnarial

II. DES COMPORTEMENTS PARFOIS DISCUTABLES

1. La construction de la position
2. Le dialogue actionnarial
3. La campagne publique
4. Le vote en assemblée générale

DEUXIÈME PARTIE – PISTES DE RÉFLEXION 

1. De nouvelles règles de transparence
2. L’encadrement du short selling
3. L’encadrement du prêt-emprunt de titres en période
d’assemblée générale
4. L’extension de la réglementation sur la sollicitation
active de mandats à la campagne activiste

II. L’AMÉLIORATION DU DIALOGUE ENTRE éMETTEURS ET INVESTISSEURS 

1. Dialogue collectif : la création d’une plateforme de dialogue
actionnarial
2. Le renforcement du dialogue actionnarial en amont
de la campagne
3. La méthode d’élaboration du code de gouvernement
d’entreprise

III. RÉFLEXIONS SUR LE RÔLE DE L’AMF ET SUR L’ESMA

1. L’intervention de l’AMF
2. Les incertitudes de la notion d’action de concert

Conclusions

Guide pratique à l’intention des administrateurs qui cible les situations problématiques


Voici un guide pratique à l’intention des administrateurs de sociétés qui aborde les principales questions de gouvernance auxquelles ils sont confrontés.

Ce guide publié par Katherine Henderson et Amy Simmerman, associés de la firme Wilson Sonsini Goodrich & Rosati, est un outil indispensable pour les administrateurs, mais surtout pour les présidents de conseil.

Les principaux thèmes abordés dans ce document sont les suivants :

    • Le but de l’entreprise et le rôle des parties prenantes ;
    • Le processus de délibération du conseil et la gestion des informations de nature corporative ;
    • L’indépendance des administrateurs et les conflits d’intérêts ;
    • Les conflits d’intérêt des actionnaires de contrôle ;
    • La formation des comités du conseil lors de situations délicates ;
    • Les procès-verbaux ;
    • La découverte de dossiers et de communications électroniques du CA par des actionnaires ;
    • Les obligations de surveillance des administrateurs et des dirigeants ;
    • Les informations relatives à la concurrence et aux occasions d’affaires de l’entreprise ;
    • La rémunération des administrateurs et l’approbation des actionnaires ;
    • La planification de la relève des administrateurs et des dirigeants.

Chaque point ci-dessus fait l’objet de conseils pratiques à l’intention du conseil d’administration. Voici un bref extrait du guide.

Vous pouvez télécharger le document complet en cliquant sur le lien ci-dessous.

Bonne lecture !

A Guidebook to Boardroom Governance Issues

 

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In recent years, we have seen boards and management increasingly grapple with a recurring set of governance issues in the boardroom. This publication is intended to distill the most prevalent issues in one place and provide our clients with a useful and practical overview of the state of the law and appropriate ways to address complex governance problems. This publication is designed to be valuable both to public and private companies, and various governance issues overlap across those spaces, although certainly some of these issues will take on greater prominence depending on whether a company is public or private. There are other important adjacent topics not covered in this publication—for example, the influence of stockholder activism or the role of proxy advisory firms. Our focus here is on the most sensitive issues that arise internally within the boardroom, to help directors and management run the affairs of the corporation responsibly and limit their own exposure in the process.

Constats sur la perte de contrôle des sociétés québécoises | Le cas de RONA


C’est avec plaisir que je partage l’opinion de Yvan Allaire, président exécutif du CA de l’IGOPP, publié ce jour même dans La Presse.

Ce troisième acte de la saga RONA constitue, en quelque sorte, une constatation de la dure réalité des affaires corporatives d’une société multinationale, vécue dans le contexte du marché financier québécois.

Yvan Allaire présente certains moyens à prendre afin d’éviter la perte de contrôle des fleurons québécois.

Selon l’auteur, « Il serait approprié que toutes les institutions financières canadiennes appuient ces formes de capital, en particulier les actions multivotantes, pourvu qu’elles soient bien encadrées. C’est ce que font la Caisse de dépôt, le Fonds de solidarité et les grands fonds institutionnels canadiens regroupés dans la Coalition canadienne pour la bonne gouvernance ».

Cette opinion d’Yvan Allaire est un rappel aux moyens de défense efficaces face à des possibilités de prises de contrôle hostiles.

Dans le contexte juridique et réglementaire canadien, le seul obstacle aux prises de contrôle non souhaitées provient d’une structure de capital à double classe d’actions ou toute forme de propriété (actionnaires de contrôle, protection législative) qui met la société à l’abri des pressions à court terme des actionnaires de tout acabit. Faut-il rappeler que les grandes sociétés québécoises (et canadiennes) doivent leur pérennité à des formes de capital de cette nature, tout particulièrement les actions à vote multiple ?

Bonne lecture !

RONA, LE TROISIÈME ACTE

 

Résultats de recherche d'images pour « RONA »

 

Acte I : La velléité de la société américaine Lowe’s d’acquérir RONA survenant à la veille d’une campagne électorale au Québec suscite un vif émoi et un consensus politique : il faut se donner les moyens de bloquer de telles manœuvres « hostiles ». Inquiet de cette agitation politique et sociale, Lowe’s ne dépose pas d’offre.

Acte II : Lowe’s fait une offre « généreuse » qui reçoit l’appui enthousiaste des dirigeants, membres du conseil et actionnaires de RONA, tous fortement enrichis par cette transaction. Lowe’s devient propriétaire de la société québécoise.

Acte III : Devant un aréopage politique et médiatique québécois, s’est déroulé la semaine dernière un troisième acte grinçant, bien que sans suspense, puisque prévisible dès le deuxième acte.

En effet, qui pouvait croire aux engagements solennels, voire éternels, de permanence des emplois, etc. pris par l’acquéreur Lowe’s en fin du deuxième acte ?

Cette société cotée en Bourse américaine ne peut se soustraire au seul engagement qui compte : tout faire pour maintenir et propulser le prix de son action. Il y va de la permanence des dirigeants et du quantum de leur rémunération. Toute hésitation, toute tergiversation à prendre les mesures nécessaires pour répondre aux attentes des actionnaires sera sévèrement punie.

C’est la loi implacable des marchés financiers. Quiconque est surpris des mesures prises par Lowe’s chez RONA n’a pas compris les règles de l’économie mondialisée et financiarisée. Ces règles s’appliquent également aux entreprises canadiennes lors d’acquisitions de sociétés étrangères.

On peut évidemment regretter cette tournure, pourtant prévisible, chez RONA, mais il ne sert à rien ni à personne d’invoquer de possibles représailles en catimini contre RONA.

QUE FAIRE, ALORS ?

Ce n’est pas en aval, mais en amont que l’on doit agir. Dans le contexte juridique et réglementaire canadien, le seul obstacle aux prises de contrôle non souhaitées provient d’une structure de capital à double classe d’actions ou toute forme de propriété (actionnaires de contrôle, protection législative) qui met la société à l’abri des pressions à court terme des actionnaires de tout acabit. Faut-il rappeler que les grandes sociétés québécoises (et canadiennes) doivent leur pérennité à des formes de capital de cette nature, tout particulièrement les actions à vote multiple ?

Il serait approprié que toutes les institutions financières canadiennes appuient ces formes de capital, en particulier les actions multivotantes, pourvu qu’elles soient bien encadrées. C’est ce que font la Caisse de dépôt, le Fonds de solidarité et les grands fonds institutionnels canadiens regroupés dans la Coalition canadienne pour la bonne gouvernance.

(Il est étonnant que Desjardins, quintessentielle institution québécoise, se soit dotée d’une politique selon laquelle cette institution « ne privilégie pas les actions multivotantes, qu’il s’agit d’une orientation globale qui a été mûrement réfléchie et qui s’appuie sur les travaux et analyses de différents spécialistes » ; cette politique donne à Desjardins, paraît-il, toute la souplesse requise pour évaluer les situations au cas par cas ! On est loin du soutien aux entrepreneurs auquel on se serait attendu de Desjardins.)

Mais que fait-on lorsque, comme ce fut le cas au deuxième acte de RONA, les administrateurs et les dirigeants appuient avec enthousiasme la prise de contrôle de leur société ? Alors restent les actionnaires pourtant grands gagnants en vertu des primes payées par l’acquéreur. Certains actionnaires institutionnels à mission publique, réunis en consortium, pourraient détenir suffisamment d’actions (33,3 %) pour bloquer une transaction.

Ce type de consortium informel devrait toutefois être constitué bien avant toute offre d’achat et ne porter que sur quelques sociétés d’une importance stratégique évidente pour le Québec.

Sans actionnaire de contrôle, sans protection juridique contre les prises de contrôle étrangères (comme c’est le cas pour les banques et compagnies d’assurances, les sociétés de télécommunications, de transport aérien), sans mesures pour protéger des entreprises stratégiques, il faut alors se soumettre hélas aux impératifs des marchés financiers.

La responsabilité des administrateurs eu égard aux risques climatiques


Les responsabilités des conseils d’administration ne cessent de s’accroître. La gestion du risque est une activité essentielle qui relève des fonctions de surveillance dévolues aux administrateurs de sociétés.
L’article ci-dessous, publié par Richard Howitt dans Board Agenda, présente clairement les devoirs et les responsabilités des administrateurs eu égard aux changements climatiques.
Pour la plupart des entreprises, il s’agit du risque le plus déterminant quoique souvent le plus sous-estimé. L’auteur montre toute l’ampleur du problème et suggère plusieurs manières d’exercer un leadership éclairé dans la considération des risques de cette nature.
À mon avis, chaque administrateur devrait être bien au fait de la situation et réfléchir aux mesures à prendre. L’auteur note que les entreprises qui divulguent leurs plans concernant les risques climatiques sont perçues de façon positive par les investisseurs.

The necessity for “climate competence” to be a core skill for corporate boards had already been underlined through the publication of guidance for Effective Climate Governance on Corporate Boards at the World Economic Forum in January.

Bonne lecture !

TCFD summit confirms climate risk should be your board’s priority

 

The Task Force on Climate-related Financial Disclosure (TCFD) has set a pathway for climate risk to become an integral part of corporate governance.

climate, climate change, ice melting

Image: Bernhard Staehli/Shutterstock

The recent global summit of the Task Force on Climate-related Financial Disclosure (TCFD) made it clear that companies will increasingly be subject to challenge on management of climate risk by regulators, investors and wider stakeholders.

The necessity for “climate competence” to be a core skill for corporate boards had already been underlined through the publication of guidance for Effective Climate Governance on Corporate Boards at the World Economic Forum in January.

There was a call for increased quality and quality of TCFD reporting, now standing at 800, in the Task Force’s last Status Report in June.

But as climate protests fill news bulletins around the world, this month’s summit in Tokyo is potentially far more significant, in setting a pathway for climate risk to become integral and unavoidable for mainstream corporate governance in all economic sectors.

A major push

If the original TCFD recommendations were a call to action, the summit charted an action plan through which they will be implemented.

Bank of England Governor Mark Carney used the summit to warn that regulation requiring TCFD reporting is probably two years away, appealing to businesses present to develop their own reporting in the meanwhile, to ensure mandatory measures are shaped to be most effective for business itself.

The veiled threat is that companies who delay on climate disclosure will find themselves subject to costly burden.

Full integration of TCFD recommendations in the EU’s Non-Financial Reporting Directive guidelines is a further sign that Europe may lead mandatory reporting requirements as part of its major push towards sustainable finance, also in the next two years.

Investors are themselves now rewarding and penalising companies on how far they are genuinely integrating climate risk

The UK’s own Green Finance Strategy is hardly less ambitious, setting a target for all listed companies and large asset owners to disclose their climate-related risks and opportunities by 2022 at the latest. And the capital markets regulator in Australia has issued guidance to company directors on addressing climate risk.

But the global summit was notable for its recognition that investors, not simply regulators, are themselves now rewarding and penalising companies on how far they are genuinely integrating climate risk.

One tangible initiative from the summit was new green investment guidance published by Japan’s own TCFD consortium. The effect will be a significant increase in investor engagement with companies on climate issues.

Companies present at the summit reporting anecdotal evidence of increased investor engagement on the issue included Shell, Total and Sumitomo Chemical.

A PwC report cited in Tokyo shows positive correlation between stock or share price and the quantity of TCFD disclosures made by the company, with research from the Commonwealth Climate and Law Initiative quantifying that that the risk of non-disclosure is a bigger liability for the company than of disclosure itself.

Meanwhile, during the 2019 proxy season shareholder activists pressed disclosure resolutions including climate risk at no fewer than 64 company AGMs in the US alone.

An opportunity for leadership

The summit heard TCFD reporting is being adopted by companies valued at a combined market capitalisation of $118trn—an important challenge to organisations that have not yet made the shift.

Already we know that climate-related financial risk should be treated by directors as a core part of their duty to promote the success of the company. Failure to do so could expose directors to legal challenge.

But the action required is now clear. The board should ensure that material climate-related risks and opportunities are not simply reported, but fully integrated in to the company’s strategy, risk-management process and investment decisions.

Climate-related financial risk should be treated by directors as a core part of their duty to promote the success of the company

Among the actions required are ensuring board and committee structures incorporate climate risk and opportunity; recruitment of new directors with the requisite knowledge and skills; incorporating management of climate risk into executive remuneration; and fully integrating it in the company’s own risk management.

Board members must provide the leadership for the company to engage with relevant experts and stakeholders to tackle the challenge, and should ensure they are sufficiently informed themselves to maintain adequate oversight.

Lastly, boards should recognise that climate risk may involve addressing timescales beyond conventional board terms, but are within mainstream investment and planning horizons accorded to every other financial risk and opportunity.

A board responsibility

The summit underlined how existing TCFD reporting is still falling short of being decision-useful, in demonstrating strategic resilience of the company and in incorporating targets for transition to net zero.

It also enabled further discussion of the measurements required for reporting, including clarifying what is green revenue, and the definition of terms such as “environmentally sustainable”.

But as work from the Corporate Reporting Dialogue shows, almost all of the necessary indicators are already available in existing frameworks. It is not whether they are available, but how they are used.

Ultimately this is a responsibility that must reside in the boardroom itself

Plentiful assistance for board members is on hand through online resources like the TCFD Knowledge Hub organised by the Climate Disclosure Standards Board, training offered by organisations such as Competent Boards, or detailed guidance for specific sectors through specific TCFD preparer forums.

But ultimately this is a responsibility that must reside in the boardroom itself. Every company board has its own responsibility to consider where its own business model stands in relation to that transition.

And with finance ministries, central banks and regulators in the top 20 economies of the world concluding that climate change is a risk to the stability of the entire global financial system, no company can ignore this task.

______________________________

Richard Howitt is a strategic adviser on corporate responsibility and sustainability, and former CEO at the International Integrated Reporting Council.

Un nouveau paradigme consensuel en gouvernance


 

Voici un article de Martin Lipton et de William Savitt, associés de la firme Wachtell, Lipton, Rosen & Katz, qui se spécialise dans les questions se rapportant à la gouvernance des organisations.

Les auteurs  montrent clairement la grande convergence  des principes de gouvernance eu égard à la considération des parties prenantes dans l’exercice du leadership et de la mission des entreprises publiques.

L’article montre clairement qu’il est maintenant temps d’officialiser un nouveau paradigme en gouvernance, à la suite de l’adoption de mesures concrètes de la part :

    • The UK Stewardship Code 2020,
    • The UK Financial Reporting Council
    • The World Economic Forum
    • The Statement of the Purpose of a Corporation adopted by the Business Roundtable

Le Code de la Grande-Bretagne stipule que les entreprises publiques doivent s’assurer de considérer le point de vue de toutes les parties prenantes, notamment des employés. Notons cependant que ces mesures sont sujettes au fameux Comply and Explain si familier à l’approche britannique ! On propose de suivre l’une des voies suivantes afin d’actualiser cette règle de gouvernance :

    1. Un administrateur nommé par les employés ;
    2. La mise sur pied d’un groupe de travail formel ;
    3. La nomination d’un membre de la direction au conseil d’administration qui représente le point de vue des employés.

Je vous invite à lire ce bref article et à consulter le texte It’s Time to Adopt The New Paradigm.

Bonne lecture !

The New Paradigm

 

Résultats de recherche d'images pour « The New Paradigm in governance »

 

With the adoption this week of The UK Stewardship Code 2020, to accompany The UK Corporate Governance Code 2018, the UK Financial Reporting Council has promulgated corporate governance, stewardship and engagement principles closely paralleling The New Paradigm issued by the World Economic Forum in 2016.

While the FRC codes are “comply and explain,” they fundamentally commit companies and asset managers and asset owners to sustainable long-term investment. As stated by the FRC:

The new Code sets high expectations of those investing money on behalf of UK savers and pensioners. In particular, the new Code establishes a clear benchmark for stewardship as the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society (emphasis added).

There is a strong focus on the activities and outcomes of stewardship, not just policy statements. There are new expectations about how investment and stewardship is integrated, including environmental, social and governance (ESG) issues ….

The FRC Corporate Governance Code builds on the stakeholder governance provisions of Sec. 172 of the UK Company Law 2006 by requiring a company’s annual report to describe how the interest of all stakeholders have been considered. Of special interest is the Code’s provision with respect to employees:

For engagement with the workforce, one or a combination of the following methods should be used:

  • a director appointed from the workforce;
  • a formal workforce advisory panel;
  • a designated non-executive director.

If the board has not chosen one or more of these methods, it should explain what alternative arrangements are in place and why it considers that they are effective.

In broad outline, the FRC codes would fit very well in implementation of the World Economic Forum’s The New Paradigm: A Roadmap for an Implicit Corporate Governance Partnership Between Corporations and Investors to Achieve Sustainable Long-Term Investment and Growth.

The Statement of the Purpose of a Corporation adopted by the Business Roundtable in August of this year is likewise consistent with the FRC codes and The New Paradigm. Each of these initiatives recognizes that private-sector action is necessary to create a corporate governance regime suited to the challenges of the twenty-first century. And each recognizes that such action is possible within the structure of prevailing corporate law. The convergence of the FRC codes, the BRT statement of purpose, the 2016 BRT Principles of Corporate Governance, and the New Paradigm strongly suggest that the time is right for the BRT and the Investor Stewardship Group (which has similar principles) to create a joint version of The New Paradigm that could be adopted universally. See, It’s Time to Adopt The New Paradigm (discussed on the Forum here).

Êtes-vous moniste, pluraliste ou de l’approche impartiale, eu égard aux objectifs de l’organisation ?


Voici un article très éclairant sur la compréhension des modèles qui expliquent la recherche des objectifs de l’entreprise par les administrateurs de sociétés.

L’article de Amir Licht, professeur de droit à Interdisciplinary Center Herzliya, et publié sur le site du Harvard Law School Forum on Corporate Governance, présente une nouvelle façon de concevoir la gouvernance des organisations.

Êtes-vous moniste, pluraliste ou de l’approche impartiale, eu égard à la détermination des objectifs de l’organisation  ?

Dans le domaine de la gouvernance des entreprises, l’approche de la priorité accordée aux actionnaires domine depuis le début des lois sur la gouvernance des sociétés. C’est l’approche moniste qui considère que les organisations ont comme principal objectif de maximiser les bénéfices des actionnaires.

Récemment, une nouvelle approche émerge avec vigueur. C’est la conception selon laquelle l’entreprise doit prioritairement viser à atteindre les objectifs de l’ensemble des parties prenantes. On parle alors d’une approche pluraliste, c’est-à-dire d’un modèle de gouvernance qui vise à rencontrer les objectifs de plusieurs parties prenantes, d’une manière satisfaisante et optimale.

L’auteur constate que ces deux approches ont plusieurs failles et qu’un modèle mettant principalement l’accent sur l’impartialité de tous les administrateurs est la clé pour l’atteinte des objectifs de l’organisation.

The monistic position endorses a single maximand (that which is to be maximized)—invariably, shareholder interest—while the pluralistic position supports a multiple-objective duty that would balance the interests of several stakeholder constituencies, shareholders included.

Je vous invite à lire ce court article afin de vous former une opinion sur le modèle de gestion privilégiée par votre organisation.

Vos commentaires sont les bienvenus.

Bonne lecture !

 

Stakeholder Impartiality: A New Classic Approach for the Objectives of the Corporation

 

Modèles de gouvernance
Ivan Tchotourian, revue Contact – Université Laval

 

 

 

 

 

 

 

 

The stockholder/stakeholder dilemma has occupied corporate leaders and corporate lawyers for over a century. Most recently, the Business Roundtable, in a complete turnaround of its prior position, stated that “the paramount duty of management and of boards of directors is to the corporation’s stockholders.” The signatories of this statement failed, however, to specify how they would carry out these newly stated ideals. Directors of large U.K. companies don’t enjoy this luxury anymore. Under section 172 of the Companies Act 2006, directors are required to have regard to the interests of the company’s employees, business partners, the community, and the environment, when they endeavor to promote the success of the company for the benefit of its members (shareholders). Government regulations promulgated in 2018 require large companies to include in their strategic reports a new statement on how the directors have considered stakeholders’ interest in discharging this duty.

These developments are recent twists in a plot that has been unfolding—in circles, in must be said—in the debate over the objectives of the corporation. This debate oscillates between two polar positions, dubbed “monistic” and “pluralistic” in the business management parlance. The monistic position endorses a single maximand (that which is to be maximized)—invariably, shareholder interest—while the pluralistic position supports a multiple-objective duty that would balance the interests of several stakeholder constituencies, shareholders included. How to perform this balancing act is a question that has virtually never been addressed until now. When the Supreme Court of Canada in 2008 discussed it in BCE Inc. v. 1976 Debentureholders, it explicitly eschewed giving it an answer. Lawyers are similarly at sea with regard to a multiple-stakeholder-objective provision in India’s Companies Act, 2013.

This article advances a new, yet classical, approach for the task of considering the interests of various stakeholders by directors and other corporate fiduciaries. I argue that for lawfully accomplishing this task, while also complying with their standard duties of loyalty and care, directors should exercise their discretion impartially. Respectively, judicial review of directors’ conduct in terms of treating different stakeholders should implement the concomitant doctrine of impartiality. This approach is new, as it has not yet been implemented in this context. At the same time, this approach is also classical, even orthodox. The duty of impartiality (or even-handedness, or fairness; courts use these terms interchangeably) has evolved in traditional trust law mostly during the nineteenth century. In recent years, it has been applied in trust cases in several common law jurisdictions. More importantly, this duty has been applied during the latter part of the twentieth century in modern, complex settings of pension funds, where fund trustees face inescapable conflicts between subgroups of savers. These conflicts resemble the tensions between different stakeholders in business corporations—a feature that renders this doctrine a suitable source of inspiration for the task at hand.

In a nutshell, the duty of impartiality accepts that there could be irreconcilable tensions and conflicts among several trust beneficiaries who in all other respects stand on equal footing vis-à-vis the trustee. Applying the rule against duty-duty conflict (dual fiduciary) in this setting would be ineffective, as it would disable the trustee—and consequently, the trust—without providing a solution to the conundrum. The duty of impartiality calls on the trustee to consider the different interests of the beneficiaries impartially, even-handedly, fairly, etc.; it does not impose any heavier burden on the good-faith exercise of the trustee’s discretion. Crucially, the duty of impartiality does not imply equality. All that it requires is that the different interests be considered within very broad margins.

This article thus proposes an analogous process-oriented impartiality duty for directors—to consider the interests of relevant stakeholders. Stakeholder impartiality, too, is a lean duty whose main advantage lies in its being workable. It is particularly suitable for legal systems that hold a pluralistic stance on the objectives of the corporation, such as Canada’s and India’s open-ended stakeholderist approaches. Such a doctrinal framework might also prove useful for systems and individuals that endorse a monistic, shareholder-focused approach. That could be the case in the United Kingdom and Australia, for instance, where directors could face liability if they did not consider creditors’ interest in a timely fashion even before the company reaches insolvency. Moreover, this approach could be helpful where the most extreme versions of doctrinal shareholderism arguably rein, such as Delaware law post-NACEPF v. Gheewalla—in particular, with regard to tensions between common and preferred stockholders post-Trados.

A normatively appealing legal regime is unlikely to satisfy even its proponents if it does not lend itself to practical implementation; a fortiori for its opponents. For legal systems and for individual lawyers that champion a pluralistic stakeholder-oriented approach for the objective of the corporation, having a workable doctrine for implementing that approach is crucial—an absolute necessity. This is precisely where impartiality holds a promise for advancing the discourse and actual legal regulation of shareholder-stakeholder relations through fiduciary duties.

The complete article is available for download here.

Prix Fidéide | Saine gouvernance


Je me fais le porte-parole du Collège des administrateurs de sociétés (CAS) pour vous sensibiliser au lancement d’un Prix Fidéide visant à reconnaître et encourager les meilleures pratiques en gouvernance : le Fidéide Saine gouvernance.

Le CAS s’associe à nouveau à la Chambre de commerce et d’industrie de Québec (CCIQ) pour la sélection des candidats à ce prix Fidéide.

J’ai donc décidé, à la suite d’une demande de Chantale Coulombe, présidente du Collège des administrateurs de sociétés, d’aider à susciter des candidatures pour ce prestigieux prix en gouvernance. Le prix sera présenté en collaboration avec le cabinet d’avocats Jolicoeur Lacasse.

Voici donc le communiqué que la direction du Collège souhaite partager avec les abonnés de mon blogue.

 

 

Fidéide Saine gouvernance

 

Les critères

Au nombre des critères pour se mériter ce prix, l’entreprise doit avoir en place un comité consultatif ou un conseil d’administration et elle doit s’être distinguée en ayant adopté une ou des pratiques de gouvernance reconnue(s) au cours des trois dernières années que ce soit en lien notamment avec :

(i) la gestion de risque

(ii) les mesures de la performance financière et non financière

(iii) l’implantation de sous-comités

(iv) la parité

(v) les dossiers de ressources humaines

(vi) la relève au sein du CA et\ou au sein de la direction de l’organisation

(vii) le développement durable

(viii) les technologies ou

(iv) la responsabilité sociale.

 

Retour sur le Fidéide Saine Gouvernance 2019

Connus et reconnus dans la grande région de la Capitale-Nationale et de Chaudière-Appalaches, les Fidéides visent à récompenser des entreprises qui se sont démarquées pour des performances exceptionnelles. L’an dernier, pour la toute première fois, la Chambre ajoutait la catégorie Saine gouvernance et c’est la Coopérative des consommateurs de Lorette – Convivio IGA qui a eu l’honneur de décrocher ce premier Fidéide. Deux autres finalistes prestigieux avaient retenu l’attention du jury en 2019, soit : l’Administration portuaire de Québec et le Réseau de transport de la capitale (RTC).

 

Une occasion de reconnaître et d’encourager la saine gouvernance

À titre d’administrateur de sociétés, vous connaissez sans aucun doute des organisations qui mériteraient une telle distinction. Aussi, je vous invite fortement à les inciter à poser leur candidature au plus tard le 5 novembre.

En mettant les projecteurs sur les meilleures pratiques adoptées par ces entreprises, c’est toute la gouvernance des sociétés qui en profitera.

 

Informations et dépôt des candidatures

 

Pour plus de détails, visitez la page Fidéide Saine gouvernance 2020 sur le site du Collège ou encore, rendez-vous sur la page désignée sur le site de la Chambre.

 

Gouvernance des TI | une formation essentielle pour outiller les administrateurs de sociétés


Le Collège des administrateurs de sociétés (CAS) offre des formations spécialisées en gouvernance. C’est le cas pour la formation en gouvernance des technologies de l’information (TI) qui sera offerte à Québec le 22 octobre 2019.

Il est bien connu que les administrateurs doivent être mieux outillés pour prendre des décisions dans ce domaine en pleine révolution.

En tant que membre d’un CA, c’est votre devoir de vous assurer d’avoir un minimum de connaissances en TI.

La présentation ci-dessous vous donne tous les détails pertinents pour vous inscrire ; ou pour réfléchir à l’idée d’améliorer vos connaissances en gouvernance des TI.

Formation Gouvernance des TI

Obtenez des assises solides pour gouverner les TI

Serait-il acceptable que des administrateurs ne s’intéressent pas aux éléments financiers sous prétexte qu’ils ne sont pas des comptables professionnels agréés ? Il en va de même pour les TI. Les administrateurs doivent s’intéresser à la question et prendre part aux débats.

Cette formation de haut niveau vise à réhabiliter les administrateurs, les chefs d’entreprise, les hauts dirigeants et les investisseurs en leur donnant des assises solides pour bien gouverner les technologies de l’information et contribuer ainsi au processus de création de valeur.

Consultez le dépliant de la formation Gouvernance des TI

 

Formatrice

Mme Paule-Anne Morin, ASC, C. Dir., Adm.A., CMC
Consultante et administratrice de sociétés

Biographie [+]

 

Clientèle cible

 

Membres de conseils d’administration

Hauts dirigeants

Gestionnaires

Investisseurs

 

Admissibilité

 

Correspondre à la clientèle cible.

Aucun préalable universitaire n’est requis.

Prochaines sessions de formation

 

22 octobre 2019, à QuébecInscription en ligne

24 mars 2020, à Montréal
Inscription en ligne

 

Objectifs

 

        1. Comprendre les quatre rôles des administrateurs en regard de la gouvernance des TI
        2. Connaître les informations requises pour pouvoir s’acquitter de ces rôles
        3. Outiller les administrateurs afin qu’ils soient des acteurs engagés dans la gouvernance des TI
        4. Réfléchir et échanger entre administrateurs et hauts dirigeants sur les sujets reliés aux technologies de l’information

Thèmes abordés

 

        1. La gouvernance des TI par les conseils d’administration : devoirs et obligations
        2. Stratégie et alignement des TI
        3. Surveillance de la performance des TI
        4. Gestion des risques en TI
        5. Modalités de gouvernance des TI par les conseils d’administration

Conversation avec une administratrice – la gouvernance des TI dans l’action

 

La journée de formation se termine sur un échange avec une administratrice pour aborder son point de vue sur les particularités de la gouvernance des TI, les défis rencontrés et les éléments à prendre en considération. Elle abordera entre autres les particularités de la gouvernance des TI, les défis rencontrés et les éléments à prendre en considération pour assurer une meilleure gouvernance des TI.

Session de Québec – Administratrice invitée

Lyne Bouchard, professeure agrégée
Directrice de l’Observatoire de gouvernance des technologies de l’information
Vice-rectrice aux ressources humaines de l’Université Laval

Mme Lyne Bouchard compte plus de vingt années d’expérience dans le monde des affaires et des technologies de l’information, ainsi qu’en recherche et en enseignement universitaires. Elle a notamment été directrice pour l’est du Canada des programmes pour dirigeants chez Gartner, présidente directrice générale de TechnoMontréal et chef de la stratégie chez Fujitsu Canada/DMR. Madame Bouchard a siégé à plusieurs conseils et siège actuellement au conseil de la SAQ et au comité de la gestion des risques du Fonds de solidarité FTQ.

 

Anne-Marie Croteau, ASC

Session de Montréal – Administratrice invitée

Anne-Marie Croteau, ASC
Doyenne de l’École de gestion John-Molson (JMSB), Université Concordia

En plus d’être doyenne de l’École de gestion John Molson de l’Université de Concordia, Mme Anne-Marie Croteau siège à de nombreux conseils d’administration dont celui d’Hydro-Québec où elle est vice-présidente du Comité des affaires financières, projets et technologies. Elle siège aussi au conseil d’administration de la Société de l’assurance automobile du Québec où elle préside le Comité des technologies de l’information.

Environnement numérique et matériel en ligne

Cette formation spécialisée est réalisée en collaboration avec l’Observatoire en gouvernance des technologies de l’information (OGTI) de la Faculté des sciences de l’administration de l’Université Laval.

Reconnaissance professionnelle

 

Cette formation, d’une durée de 7,5 heures, est reconnue aux fins des règlements ou des politiques de formation continue obligatoire des ordres et organismes professionnels suivants : Barreau du Québec, Ordre des ADMA du Québec, Ordre des CPA du Québec, Ordre des CRHA et Association des MBA du Québec.

Frais d’inscription, modalités de paiement, annulation

La rémunération en lien avec la performance | Qu’en est-il ?


Aujourd’hui, je vous propose la lecture d’un article publié par Cydney S. Posner, conseiller spécial de la firme Cooley, paru sur le site de Harvard Law School Forum on Corporate Governance.

La nouvelle politique du Council of Institutional Investors (CII) concernant les rémunérations vient de paraître.

La nouvelle politique aborde plusieurs sujets :

    • Des plans de compensation moins complexes ;
    • De plus longues périodes de performance pour fixer les rémunérations liées à des incitatifs de rendement ;
    • Retarder le paiement des actions possédées par la direction après le départ afin de s’assurer de la correspondance avec les exigences du plan de compensation ;
    • Plus de latitude dans les décisions de rappels (clawbacks) ;
    • Utilisation de la référence au salaire moyen des employés afin de fixer les rémunérations de la direction ;
    • Supervision plus étroite des plans de rémunération en fonction des performances ;
    • Une plus grande importance accordée à la portion fixe de la rémunération.

Le CII propose donc des balises beaucoup plus claires et resserrées eu égard aux rémunérations de la direction des entreprises publiques. Il s’agit d’une petite révolution dans le monde des rémunérations de tout acabit.

Je vous invite à lire le résumé ci-dessous pour avoir plus d’informations sur le sujet.

Pay for Performance—A Mirage?

 

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Yes, it can be, according to the Executive Director of the Council of Institutional Investors, in announcing CII’s new policy on executive comp. Among other ideas, the new policy calls for plans with less complexity (who can’t get behind that?), longer performance periods for incentive pay, hold-beyond-departure requirements for shares held by executives, more discretion to invoke clawbacks, rank-and-file pay as a valid reference marker for executive pay, heightened scrutiny of pay-for-performance plans and perhaps greater reliance on—of all things—fixed pay. It’s back to the future for compensation!

Simplified and tailored plans

CII recommends that comp plans and practices be tailored for each company’s circumstances and that they be comprehensible: compensation practices that comp committees “would find difficult to explain to investors in reasonable detail are prime candidates for simplification or elimination.” In addition, performance periods for long-term compensation should be long term—at least five years, not the typical three-year time horizon for restricted stock.

Reference points and peers

To address the widening gap in compensation between workers and executives, CII recommends that the Comp Committee take into consideration employee compensation throughout the company as a reference point for setting executive pay, consistent with the company’s strategic objectives. In addition, CII cautions against overreliance on benchmarking to peer practices, which can lead to escalating executive comp. Understanding what peers are doing is one thing, but copying their pay practices is quite another, especially if performance of those peers is markedly different. CII also warns comp committees to “guard against opportunistic peer group selection. Compensation committees should disclose to investors the basis for the particular peers selected, and should aim for consistency over time with the peer companies they select. If companies use multiple peer groups, the reasons for such an approach should be made clear to investors.”

Elements of comp

With regard to elements of comp, the message again is simplification. While most U.S. companies pay programs consist of three elements—salary, annual bonus and a long-term incentive—it may make sense in some cases to focus only on salary and a single long-term incentive plan, reserving short-term incentives for special circumstances such as turnarounds.

Time-based restricted stock

CII seems to have a soft spot for time-based restricted stock with extended vesting periods (we’re talking here about beginning to vest after five years and fully vesting over 10 (including post-employment). CII believes that this type of award provides

“an appropriate balance of risk and reward, while providing particularly strong alignment between shareholders and executives. Extended vesting periods reduce attention to short-term distractions and outcomes. As full-value awards, restricted stock ensures that executives feel positive and negative long-term performance equally, just as shareholders do. Restricted stock is more comprehensible and easier to value than performance-based equity, providing clarity not only to award recipients, but also to compensation committee members and shareholders trying to evaluate appropriateness and rigor of pay plans.”

Performance-based pay

CII’s sharpest dagger seems to be out for performance-based comp, which has long been the sine qua non of executive compensation to many comp consultants and other comp professionals. According to ISS, “equity-based compensation became increasingly performance-based in the past decade. As a percentage of total equity compensation, performance-based equity almost doubled between 2009 and 2018. Cash performance-based compensation has remained relatively unchanged. Overall, cash and equity performance-based compensation now make up approximately 58 percent of total pay, compared to 34 percent in 2019.” CII cautions that comp committees need to “apply rigorous oversight and care” to this type of compensation. Although cash incentive plans or performance stock units may be appropriate to incentivize “near-term outcomes that generate progress toward the achievement of longer-term performance,” performance-based plans can be problematic for a number of reasons: they can be too complex and confusing, difficult to value, “more vulnerable to obfuscation” and often based on non-GAAP “adjusted” measures that are not reconciled to GAAP. What’s more, CII believes that performance-based plans are

“susceptible to manipulation. Executives may use their influence and information advantage to advocate for the selection of metrics and targets that will deliver substantial rewards even without superior performance (e.g., target awards earned for median performance versus peers). Except in extraordinary situations, the compensation committee should not ‘lower the bar’ by changing performance targets in the middle of performance cycles. If the committee decides that changes in performance targets are warranted in the middle of a performance cycle, it should disclose the reasons for the change and details of the initial targets and adjusted targets.”

In CII’s view, comp committees need to ensure that these plans are not so complex that they cannot be

“well understood by both participants and shareholders, that the underlying performance metrics support the company’s business strategy, and that potential payouts are aligned with the performance levels that will generate them. In addition, the proxy statement should clearly explain such plans, including their purpose in context of the business strategy and how the award and performance targets, and the resulting payouts, are determined. Finally, the committee should consider whether long-vesting restricted shares or share units would better achieve the company’s long-term compensation and performance objectives, versus routinely awarding a majority of executives’ pay in the form of performance shares.”

SideBar

As discussed in this article in the WSJ, executive compensation has been “increasingly linked to performance,” but investors have recently been asking whether the bar for performance targets is set too low to be effective. Has the prevalence of performance metrics had the effect (whether or not intended) of lifting executive compensation? According to the article, based on ISS data, for about two-thirds of CEOs of companies in the S&P 500, overall pay “over the past three years proved higher than initial targets….That is typically because performance triggers raised the number of shares CEOs received, or stock gains lifted the value of the original grant. On average, compensation was 16% higher than the target.” In addition, for 2016, about half of the CEOs of the S&P 500 received cash incentives above the performance target payout levels, averaging 46% higher, while only 150 of these companies were paid bonuses below target.

And sometimes, the WSJ contends, pay may be exceeding performance targets because those targets are set at levels that are, shall we say, not exactly challenging. According to the head of analytics at ISS, in some cases, “’the company is setting goals they think the CEO is going to clear….It’s a tip-off to investors.’” The article reports that, based on a 2016 analysis, ISS concluded that about 186 of the Fortune 500 expected that the equity awards granted to their CEOs would pay out above target, 122 at target and 150 below target. The head of corporate governance for a major institutional investor expressed his concern that, sometimes, the bar is set “too low, allowing CEOs to earn ‘premium payouts in the absence of compelling performance relative to the market.’’’ In selecting metrics and setting targets, comp committees “must juggle a range of factors,” taking into account the preferences of investors and proxy advisers, as well as the recommendations of consultants.’’ However, he said, “‘[i]t has to be the right measure and the right achievement level.”’ (See this PubCo post.)

Fixed pay

And speaking of simplicity, if CII had its way, fixed pay would be making a comeback. CII’s new policy characterizes fixed pay as

“a legitimate element of senior executive compensation. Compensation committees should carefully consider and determine the right risk balance for the particular company and executive. It can be appropriate to emphasize fixed pay (which essentially has no risk for the employee) as a significant pay element, particularly where it makes sense to disincentivize ‘bet the company’ risk taking and promote stability. Fixed pay also has the advantage of being easy to understand and value, for the company, the executive and shareholders. That said, compensation committees should set pay considering risk-adjusted value, and so, to the extent that fixed pay is a relatively large element, compensation committees need to moderate pay levels in comparison with what would be awarded with contingent, variable pay.”

SideBar

The global economic crisis of 2008 led many to question whether large bonuses and stock options were motivations behind the overly risky behavior and short-term strategies that many argue had triggered that crisis. But the answer that most often resulted was to structure the compensation “differently so that the variable component motivates the right behaviors.” However, in a 2016 essay in the Harvard Business Review, two academics made a case for fixed pay, contending that performance-based pay for CEOs makes absolutely no sense: research on incentives and motivation suggests that the nature of a CEO’s work is unsuited to performance-based pay. Moreover, “performance-based pay can actually have dangerous outcomes for companies that implement it.” According to the academics, research has shown that, while performance-based pay works well for routine tasks, the types of work performed by CEOs are typically not routine; performance-related incentives, the authors argue, are actually “detrimental when the [task] is not standard and requires creativity.” Where innovative, non-standard solutions were needed or learning was required, research “results showed that a large percentage of variable pay hurt performance.” Why not, they propose, pay top executives a fixed salary only? (See this PubCo post.)

Similarly, as discussed in this PubCo post, a New Yorker columnist concurs with the contention that performance pay does not really work for CEOs because the types of tasks that a CEO performs, such as deep analysis or creative problem solving, are typically not susceptible to performance incentives: “paying someone ten million dollars isn’t going to make that person more creative or smarter.’” In addition, the argument goes, performance is often tied to goals that CEOs don’t really control, like stock price (see this PubCo post and this news brief).

Stock ownership guidelines

CII also encourages companies to maintain stock ownership guidelines that apply for at least one year post termination; executives “not in compliance should be barred from liquidating stock-based awards (beyond tax obligations) until satisfaction of the guideline.” For some companies it may even be appropriate to apply “a hold-to-departure requirement or hold-beyond-departure requirement for all stock-based awards held by the highest-level executives is an appropriate and workable commitment to long-termism. Other boards may consider such restrictions unnecessary to the extent that awards include extended vesting periods.”

Clawbacks

Finally, CII advocates that boards have more discretion to invoke clawback policies. According to CII, clawbacks should apply, not only in the event of acts or omissions resulting in fraud or financial restatement, but also in the context of “some other cause the board believes warrants recovery, which may include personal misconduct or ethical lapses that cause, or could cause, material reputational harm to the company and its shareholders. Companies should disclose such policies and decisions to invoke their application.”

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.

 

Résultats de recherche d'images pour « collège des administrateurs de sociétés »

 

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

 

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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/

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* 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

 

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  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.

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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.