Normes d’encadrement | Page 21

Dans Les Échos.fr, la journaliste Sophie Rolland fait un suivi intéressant su comportement des entreprises dans le contexte de la COVID-19 : « Coronavirus : les trois quarts des géants du CAC 40 ont annulé ou réduit leurs dividendes » (19 juin 2020).

La puissante Association française des entreprises privées (Afep), qui représente les 113 plus grands groupes français avait demandé à ses membres de se montrer exemplaires s’ils devaient avoir recours au chômage partiel ou aux prêts garantis par l’État. L’effort demandé était à hauteur dune réduction de 20 %.

Appelées à renoncer à leurs dividendes et à modérer les rémunérations en contrepartie du recours aux dispositifs d’aide de l’Etat, les entreprises du CAC 40 ont opté pour des stratégies variables. Les trois quarts ont annulé (35 %) ou diminué (40 %) les dividendes prévus en début d’année et 17 % les ont maintenus. Certaines ont décidé de les réduire alors même qu’elles n’avaient pas besoin du soutien de l’Etat.

Pas un mauvais résultat en termes de RSE !

À la prochain…

Le 2 août 2020, Christiaan de Brauw a publié un intéressant billet sur l’Harvard Law School Forum on Corporate Governance sous le titre « The Dutch Stakeholder Experience ».

Extrait :

Lessons learned

The Dutch experience shows that the following lessons are key to make the stakeholder-oriented governance model work in practice.

Embed a clear stakeholder mission in the fiduciary duties of the board

To have a real stakeholder model, the board must have a duty to act in the interests of the business and all the stakeholders, not only the shareholders. In shareholder models there may be some room to consider stakeholder interests. For example, in Delaware and various other US states, the interests of stakeholders other than shareholders may be considered in the context of achieving overall long-term shareholder value creation. In US states with constituency statutes, the board’s discretion is preserved: the interests of stakeholders other than shareholders can be, but do not have to be, taken into account. A meaningful stakeholder model requires the board to act in the interests of the business and all stakeholders. This is a “shall” duty, in the words of Leo Strine and Robert Eccles (see Purpose With Meaning: A Practical Way Forward, Robert G. Eccles, Leo E. Strine and Timothy Youmans, May 16, 2020). Rather than allowing for the possibility that all stakeholders’ interests will be taken into account; it should create a real duty to do so. Since 1971, boards of Dutch companies have had such a “shall” duty to follow a stakeholder mission, similar to that of a benefit corporation in, for example, Delaware.

The stakeholder duty must be clear and realistic for boards in the economic environment in which they operate. To define the contours of such a mission in a clear and practical way is not easy, as the journey of the Dutch stakeholder model shows. Today, the Netherlands has a meaningful and realistically defined fiduciary duty for boards. The primary duty is to promote the sustainable success of the business, focused on long-term value creation, while taking into account the interests of all stakeholders and ESG and similar sustainability perspectives. These principles are broadly similar to the corporate purpose and mission proposed by Martin Lipton and others (see On the Purpose of the Corporation, Martin Lipton, William Savitt and Karessa L. Cain, posted May 27, 2020).

Critics of the stakeholder model sometimes point to the ambiguity and lack of clarity of such a pluralistic model. The developments of the Dutch stakeholder model since its inception show that a pluralistic model can work in practice. By now, Dutch boards’ overriding task is adequately clear and aligned with what is typically expected of a company’s executives: pursuing the strategic direction that will most likely result in long-term and sustainable business success. The Dutch stakeholder model also has a workable roadmap to deal with stakeholders’ interests, particularly if they diverge or cannot all be protected fully at the same time, which necessarily results in trade-offs between stakeholders. A realistic approach to governance acknowledges that a stakeholder model does not mean that boards can or should seek to maximize value for all the stakeholders equally and at the same time. It is simply unrealistic to simultaneously pay (and progressively increase) dividends, increase wages and improve contract terms, while also promoting the success of the business. The Dutch interpretation of the stakeholder model, as developed through practice over decades, boils down to the focus on the sustainable success of the business and long-term value creation. As said above, stakeholders are protected by the board’s duty to prevent disproportionate or unnecessary harm to any class of stakeholders. Boards should avoid or mitigate such harm, for example, by agreeing “non-financial covenants” in a takeover. This makes sense as a way to protect stakeholder interests in a realistic manner, much more so than merely requiring boards—without any further guidance—to create value for all the stakeholders.

A stakeholder-oriented model should also be modern and flexible enough to address and incorporate important developments. The Dutch model is especially well positioned to embrace ESG and similar sustainability perspectives. For example, the Dutch company DSM has successfully illustrated this, while being profitable and attractive for investors. There is growing appreciation that being a frontrunner in ESG is required for sustainable business success. In addition to the fact that ESG is required for continuity of the business model and can often give a company a competitive edge, stakeholders increasingly require it. Simply “doing the right thing”, as an independent corporate goal, is more and more seen as important by (new millennial) employees, customers, institutional investors and other stakeholders.

There is no standard test to determine whether a business has achieved sustainable success. There will be different ways to achieve and measure success for different companies, depending on the respective circumstances. Therefore, the test will always have to be bespoke, implemented by the board and explained to stakeholders.

The Dutch stakeholder model has proven to work quite well in times of crisis, such as today’s Covid-19 crisis, as it bolsters the board’s focus on the survival and continuity of the business. The board must first assess whether there is a realistic chance of survival and continuity of the business. If not, and if insolvency becomes imminent, the board’s duties transform to focus on creditors’ interests, such as preventing wrongful trading and the winding down or restarting of the business in line with applicable insolvency/restructuring proceedings. Driven by the economic reality and the need to survive, in times of crisis, boards typically have more freedom to do what it takes to survive: from pursuing liquidity enhancing measures, implementing reorganizations, suspending dividends to shareholders and payments to creditors and so on. The success of the business remains the overriding aim, and in some cases harm to one or more classes of stakeholders may need to be accepted. In addition, in a true stakeholder model, in times of crisis there may not be sympathy for corporate raiders or activists (so-called “corona profiteers” in the current case) who want to buy listed companies on the cheap. A just say not now defense in addition to the just say no defense will readily be available for boards who are occupied with dealing with the crisis and revaluating the best strategic direction. This idea that during the Covid-crisis protection against activists and hostile bidders may be needed seems to be understood as well by, for example, ISS and Glass Lewis, evidenced by their willingness to accept new poison pills for a one year duration (see, for example, ISS and Glass Lewis Guidances on Poison Pills during COVID-19 Pandemic, Paul J. Shim, James E. Langston, and Charles W. Allen, posted on April 26, 2020).

Teeth to protect the stakeholder mission and appropriate checks and balances

The Netherlands has adopted a model in which matters of strategy are the prerogative of the executive directors under supervision of the non-executive directors or, in the still widely used two-tier system, of the management board under supervision of the supervisory board. Similar to the discretion afforded to directors under Delaware’s business judgment rule, a Dutch board has a lot of freedom to choose the strategic direction of the company. In a dispute, the amount of care taken by the board in the decision-making process will be scrutinized by courts, but normally objectively reasonable decisions will be respected. In the Dutch model the board is the captain of the ship; it is best equipped to determine the course for the business and take difficult decisions on how to serve the interests of stakeholders. Generally, the board has no obligation to consult with, or get the approval of, the shareholders in advance of a decision.

At the same time, in recognition of the significant power that boards have in the Dutch stakeholder model, there should be checks and balances to ensure the board’s powers are exercised in a careful manner, without conflicts of interest and without entrenchment. Non-executive/supervisory directors will need to exercise critical and hands-on oversight, particularly when there are potential conflicts of interest. Further, shareholders and other stakeholders are entitled to hold boards to account: boards need to be able to explain their strategic decisions. Shareholders can use their shareholder rights to express their opinions and preferences. Shareholders can also pursue the dismissal of failing and entrenched boards. Boards need regular renewed shareholder mandates through reappointments. The courts are the ultimate guardian of the stakeholder model. The Dutch Enterprise Chamber at the Amsterdam Court of Appeals, which operates in a comparable manner to the Delaware Chancery Court, is an efficient and expert referee of last resort.

The stakeholder model should not convert to a shareholder model in takeover scenarios. The board should focus on whether a takeover is the best strategic option and take into account the consequences for all the stakeholders. In most cases, the best strategic direction for the business will create the highest valuation of the business. But, and this is a real difference with shareholder models, it should be acknowledged that the stand-alone (or other best strategic) option can be different from the strategic option favored by a majority of the shareholders and the option that creates the most shareholder value. This principle was confirmed by the Dutch Enterprise Chamber in 2017 in the AkzoNobel case.

A meaningful stakeholder model requires teeth. The right governance structures need to be put in place to create and protect the long-term stakeholder mission in the face of short-term market pressure. The reality—in the Netherlands as well as in the US—is that shareholders are the most powerful constituency in the stakeholder universe, with the authority to replace the board. In Dutch practice, various countervailing measures can be used to protect the stakeholder mission. A commonly used instrument is the independent protection foundation, the Dutch poison pill. The independent foundation can exercise a call option and acquire and vote on preference shares. It can neutralize the newly acquired voting power of hostile bidders or activists and is effective against actions geared at replacing the board, including a proxy fight. Once the threat no longer exists, the preference shares are cancelled. These measures have been effective, for example, against hostile approaches of America Movil for KPN (2013) and Teva for Mylan (2015).

Foster a stakeholder mindset, governance and environment

Perhaps the most important prerequisite for a well-functioning stakeholder model is the actual mindset of executives and directors. This mindset drives how they will use their stakeholder powers. Fiduciary duties—also in a stakeholder model—are “open norms” and leave a lot of freedom to boards to pursue the strategic direction and to use their authority as they deem fit. The prevailing spirit and opinions about governance are important, as they influence how powers are interpreted and exercised. As an example, the Dutch requirement that boards need to act in the interest of the company and its business dates from 1971, but that did not prevent boards in the 2000s from seeing shareholders as the first among equals. Today, the body of ideas about governance in the developed world is tending to converge towards stakeholder-oriented governance. This seems to indicate a fundamental change in mindset, not merely a fashionable trend or lip service. Board members with a stakeholder conviction should not be afraid to follow their mission, even if it runs counter to past experience or faces shareholder opposition. Of course, the future will hold the ultimate test for the stakeholder model. Can it, in practice, deliver on its promise to create sustainable success and long-term value and provide better protection for stakeholders? If so, this will create a positive feedback loop in which more boards embrace it.

Stakeholder-based governance models remain works in progress. In order to succeed in the long term, models that grant boards the authority to determine the strategy need to stay viable and attractive for shareholders. Going forward, boards following a stakeholder-based model will likely need to focus more on accountability, for example by concretely substantiating their strategic plans and goals and, where possible, providing the relevant metrics to measure their achievements. In reality, stakeholder models are already attractive for foreign investors: about 90% of investors in Dutch listed companies are US or UK investors. In addition, developments in the definition of the corporate purpose will further refine the stakeholder model. In the Netherlands, there has been a call to action by 25 corporate law professors who argue that companies should act as responsible corporate citizens and should articulate a clear corporate purpose.

To make stakeholder governance work, ideally, all stakeholders are committed to the same mission. It is encouraging that key institutional investors are embracing long-term value creation and the consideration of other stakeholders’ interests, for instance by supporting the New Paradigm model of corporate governance and stewardship codes to that effect. However, the “proof of the pudding” is whether boards can continue to walk the stakeholder talk and pursue the long-term view in the face of short-term pressure, either through generally accepted goals and behavior or, if necessary, countervailing governance arrangements. Today, it is still far from certain whether institutional investors will reject pursuing a short-term takeover premium, even where they consider the offer to be undervalued or not supportive of long-term value creation. Annual bonuses of the deciding fund manager may depend on accepting that offer. Until the behavior of investors in such scenarios respects the principle of long-term value creation, appropriate governance protection is important to prevent a legal pathway for shareholders to impose their short-term goals. Therefore, even in jurisdictions where stakeholder-based approaches have been embraced, and are actually pursued by boards, governance arrangements might need to be changed to make the stakeholder mission work in practice. Clear guidance for boards is needed on what the stakeholder mission is and how to deal with stakeholders’ interests, as well as catering for adequate powers and protection for boards.

The Dutch model, which requires a company to be business success-driven, have a “shall duty” to stakeholders that applies even in a sale of the company, and that recognizes that corporations are dependent on stakeholders for success and have a corresponding responsibility to stakeholders, has been demonstrated to be consistent with a high-functioning economy. By highlighting the Dutch system, however, I do not mean to claim that it is unique. For policymakers who are considering the merits of a stakeholder-based governance model, the Dutch system should be seen as one example among many corporate governance systems in successful market economies (such as Germany) that embrace this form of stakeholder-based governance. There is likely no one-size-fits-all approach; each jurisdiction should find the tailor-made model that works best for it, like perhaps the introduction of the corporate purpose in the UK and France. In any event, there is a great benefit in exchanging ideas and learning from experiences in different jurisdictions to find common ground and best practices in order to increase the acceptance and appreciation of stakeholder-oriented governance models.

US governance practices have been, and are, influential around the world. In the 2000s the pendulum in developed countries, including to some extent in the Netherlands, clearly swung in the direction of shareholder-centric governance as championed in the US. In the current environment, if the US system’s focus on shareholders is not adjusted to protect stakeholder interests, it may over time perhaps become an outlier among many of the world’s leading market economies that in one way or the other have adopted a stakeholder approach. Adjustment towards stakeholder governance seems certainly possible in the US, for example through the emerging model of corporate governance, the Delaware Public Benefit Corporation. The benefit corporation seems to have many if not all of the key attributes of the Dutch system and could provide a promising path forward if American corporate governance is to change in a way that makes the US model truly focused on the long-term value for all stakeholders. The question for US advocates of stakeholder governance is whether they will embrace it, or adopt another effective governance change, and make their commitment to respect stakeholders rea

À la prochaine…

Bonjour à toutes et à tous, voici une belle information pour celles et ceux intéressés par les problématiques de gouvernance et de droit des marchés. La province de l’Ontario a mis en place un groupe de travail pour envisager des réformes à l’encadrement réglementaire. 70 propositions ont été faites et la consultation sur celles-ci est ouverte jusqu’en septembre 2020 : « Capital Markets Modernisation Taskforce ».

Voici un résumé des principales pistes explorées… vraiment intéressant !

Extrait :

The CMMT was formed in February 2020 and reports directly to the Minister of Finance. It was tasked to develop “bold, innovative recommendations” to improve how capital markets function in Canada. 

Twelve of the drafted proposals specifically target shareholder voting and company transparency, with the taskforce identifying an “imbalance” among Canada’s proxy and shareholder voting systems. Several stakeholders raised concerns to the CMMT about the influence of proxy advisors, errors in their reports and potential conflicts of interests where voting recommendations and consulting services were provided to the same businesses.  

To remedy this, the CMMT proposes establishing a new regulatory framework that would provide companies with the right to ‘rebut’ reports from proxy advisors. In addition, the taskforce also hopes to restrict conflicts of interest by limiting the services proxy advisors can offer. 

Several of the other proposals are aimed at reforming and improving the proxy plumbing. For instance, currently in Canada, the majority of shareholder votes are cast via proxies using either the company’s or dissident’s proxy ballot. Unfortunately, this means such proxy cards can look different and often confuse investors. 

Therefore, the CMMT proposes the use of universal proxy ballots to improve standardisation and mandate voting disclosure for each side when a dispute arises.  

At the same time, the taskforce has also proposed introducing rules to prevent over-voting and the requirement for companies listed on the Toronto Stock Exchange to have an annual shareholder votes on executive compensation. In further efforts to improve corporate governance standards, the taskforce proposes further legislative guidance be made around the role of independent directors in a bid to avoid conflicts of interest from arising, arguing that current laws do not fully address the role such directors play. 

Elsewhere, the taskforce wants to reduce the ownership threshold for early warning reporting disclosure in Canadian companies from 10% to 5%. This would bring Canada in line with other major markets, with the CMMT also acknowledging that a shareholder can currently requisition a meeting with a holding of as little as 5%.  

In a bid to improve transparency, the CMMT is also proposing the adoption of quarterly filing requirements for institutional investors of Canadian companies and – in a very encouraging step – the introduction of enhanced disclosure of material ESG information. 

With stronger ESG reporting, Canada would be following in the footsteps of other jurisdictions and create a level playing field for its companies. In particular the taskforce identified the metrics used by the Sustainability Accounting Standards Board (SASB) and Taskforce on Climate-related Financial Disclosures (TCFD) as potential solutions.  

Other CMMT’s recommendations include giving regulators new and enhanced powers when dealing with listed entities. For instance, the taskforce has proposed empowering the Ontario Securities Commission (OSC) to issue no-action letters. This already happens in the US where a company can seek a no-action letter from the Securities and Exchange Commission when it has the basis to exclude a particular shareholder proposal. 

The CMMT has also proposed the introduction of broader remedies for the OSC when dealing with mergers and acquisitions. The taskforce proposes granting the OSC similar powers to those recently granted to the British Columbia Securities Commission, which can now rescind a transaction, require a person to dispose of securities in connection with a deal or even prohibit them from exercising voting rights.

À la prochaine…

Novethic consacre une intéressante étude sur l’engagement actionnarial intitulée « Engagement actionnarial, les investisseurs responsables face aux dilemmes des AG 2020 », véritable cartographie des acteurs en présence et des enjeux de cette pratique.

Extrait :

L’étude détaille les différents rapports de force entre les acteurs en présence. Avec d’un côté, les investisseurs institutionnels, détenteurs de l’épargne ou des fonds de retraite, qui, pour les plus responsables, veulent s’assurer de la pérennité et de la croissance de leurs actifs sur le long terme. De l’autre, les sociétés de gestion, qui travaillent pour plusieurs investisseurs institutionnels et qui, dans leur stratégie d’engagement actionnarial, doivent faire la synthèse des souhaits de chacun de leurs clients. Enfin, se trouvent les entreprises cotées, pas toutes enclines à écouter les alertes et les revendications de leurs actionnaires de long terme. 

Mais l’urgence climatique, de même que les risques grandissants liés aux inégalités sociales, poussent les acteurs financiers à l’action. La crise du Covid-19, avec son rôle d’amplificateur des risques environnementaux, sociaux et de gouvernance (ESG), s’est également invitée au programme des AG. Et malgré le huis clos des assemblées générales imposé par les mesures sanitaires, des victoires ont été remportées.

(…) La France semble avoir pris le virage, cette année, d’un engagement actionnarial plus actif, alors que les relations entre actionnaires et grandes entreprises cotées y étaient jusqu’alors plutôt feutrées. La réglementation pousse notamment les investisseurs institutionnels à plus de transparence sur leur pratique de l’engagement. Le mouvement mérite toutefois de prendre encore de l’ampleur. Selon l’étude de Novethic, près de la moitié des 100 plus grands investisseurs institutionnels français ne remplissent pas encore leur obligation, prévue dans la loi Pacte, de publier leur politique d’engagement actionnarial et un rapport sur son application.

Reste à transformer l’essai. De grandes sociétés de gestion demeurent encore sur la touche, en n’accordant pas toujours leurs votes lors des assemblées générales, à leurs propres déclarations sur le climat. Plusieurs études l’ont montré, comme celle d’InfluenceMap qui montre que des sociétés de gestion comme BlackRock ou Vanguard ne votent en général pas en faveur des résolutions externes sur le climat. De ce côté-là aussi, cela change : en début d’année, BlackRock a annoncé son adhésion à Climate Action 100+ et son intention d’avoir une politique de vote plus active. La saison des AG 2021 devrait donc s’avérer intéressante.

À la prochaine…

Alors que les entreprises se relancent péniblement, un rappel de ces mots du Forum économique mondial d’avril 2020 paraît adéquat (histoire de ne pas oublier et de ne pas faire primer l’économique et le financier sur toute autre considération).

Déclaration « Stakeholder Principles in the COVID Era »

As business leaders, we are experiencing how profoundly the COVID-19 emergency is affecting the world. Our employees face health risks in their daily lives, and challenges in performing their jobs. Our ecosystem of suppliers and customers is under extreme pressure. By doing all we can to coordinate our work, we can ensure that our society and economy get through this crisis and we can mitigate its negative impact on all of our stakeholders.

We accept our responsibility to address these crises. The first priority is to win the war against coronavirus. We need to do that while doing all we can to help our stakeholders now and, at the same time, to avoid a prolonged economic impact in the future. We will continue to embody “stakeholder capitalism” and do all we can to help those who are affected, and help secure our common prosperity.

To this end, we endorse the following Stakeholder Principles in the COVID Era:

− To employees, our principle is to keep you safe: We will continue do everything we can to protect your workplace, and to help you to adapt to the new working conditions

− To our ecosystem of suppliers and customers, our principle is to secure our shared business continuity: We will continue to work to keep supply chains open and integrate you into our business response

− To our end consumers, our principle is to maintain fair prices and commercial terms for essential supplies

− To governments and society, our principle is to offer our full support: We stand ready and will continue to complement public action with our resources, capabilities and know-how

− To our shareholders, our principle remains the long-term viability of the company and its potential to create sustained value

Finally, we also maintain the principle that we must continue our sustainability efforts unabated, to bring our world closer to achieving shared goals, including the Paris climate agreement and the United Nations Sustainable Development Agenda. We will continue to focus on those long-term goals.

The world has gone through other crises. As a global community, we will prevail this time as well. But, to do so, we must all bond together and coordinate our response. As business leaders, we pledge to stand at society’s service, to help preserve and rebuild a viable society and economy, and to do all we can for our stakeholders.

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En cette période estivale, suivre l’actualité est toujours intéressant. Ma lecture d’un article ce matin « Renewed Interest in IPOs of Public Benefit Corporations » (de Cydney Posner) m’apprenait que l’État américain du Delaware est en train de débattre d’une réforme législative en matière d’entreprise à mission !

Pour accéder à cette réforme : ici

Extrait :

These and other similar risks are some of the reasons that, in adopting laws authorizing PBCs, the Delaware legislature made it particularly difficult to convert a traditional corporation to a PBC. For example, currently, the approval of 2/3 of the outstanding stock is required for a traditional corporation to amend its certificate of incorporation to become a PBC or to merge with another entity if the effect of the merger is to convert the shares into shares of a PBC. (Note that, originally, the vote required for conversion was 90%, which made it well nigh impossible for a traditional public company to convert to a PBC.) Appraisal rights are available to stockholders that did not vote in favor of the conversion or merger. And the same vote is required for conversion from a PBC form of entity into a traditional corporation.

The legislation that was just passed by the House in Delaware would, if ultimately signed into law, eliminate the 2/3 voting requirements, making it easier to convert a traditional corporation to a PBC or a PBC to a traditional corporation. Only the standard stockholder vote provisions would be applicable—generally a vote of a majority of the outstanding shares (or any greater or other vote required under the company’s certificate of incorporation) would be required. The amendments would also eliminate the special appraisal rights provisions, with the result that appraisal rights would not be available for conversions resulting from amendments to the certificate, but standard appraisal rights (§262) would be available in the context of mergers.

In addition, as noted above, the current PBC statute mandates that the board of directors manage the business and affairs of the PBC by balancing “the pecuniary interests of the stockholders, the best interests of those materially affected by the corporation’s conduct, and the specific public benefit or public benefits identified in its certificate of incorporation.” The statute provides that, with respect to a decision implicating the “balance requirement,” directors of PBCs will be deemed to satisfy their fiduciary duties to stockholders and the corporation if their decision “is both informed and disinterested and not such that no person of ordinary, sound judgment would approve.” A PBC is also permitted to include in its certificate, for purposes of its director exculpatory provisions under §102(b)(7) and its indemnification provisions under §145, that any disinterested failure to satisfy the mandate will not be considered to “constitute an act or omission not in good faith, or a breach of the duty of loyalty.”

The new legislation would also amp up the protections for directors of a PBC. The amendments would clarify that a director would not be considered “interested” in connection with a balancing decision solely because of the director’s interest in stock of the corporation, except to the extent that the same ownership would create a conflict of interest if the corporation were not a PBC. The amendments would also provide that, in the absence of a conflict, no failure to satisfy the balancing requirement would, for purposes of §102(b)(7) or §145, be considered “an act or omission not in good faith, or a breach of the duty of loyalty, unless the certificate of incorporation so provides.” That is, the certificate would no longer need to expressly provide for the protection for it to apply. In addition, the amendments would provide that, to bring any lawsuit to enforce the PBC balancing requirement, the plaintiffs must own at least 2% of the corporation’s outstanding shares or, for PBCs listed on a national securities exchange, shares with a market value of at least $2 million, if lower.

À la prochaine…