Gouvernance | Page 118

Un groupe de travail du Financial Reporting Council (FRC) a publié fin avril 2016 un bilan de la 1e phase de son travail : « Phase 1 Report of the Task Force on Climate-Related Financial Disclosures (TCFD) ». Qu’en retenir ?

Objectifs

We support the objectives of the TCFD and welcome that it is focussing on financial risks and in particular those that could have a potential impact on future cash flows. We believe that this is important in identifying the boundary of information that would be relevant to investors’ decision-making. As with any project with multiple objectives there will be instances where a trade-off is necessary. Consistent principles are important, but absolute uniformity in disclosures detracts from careful consideration and communication of information that is relevant for its users. Whilst climate related risks will be important to many companies any recommendations must be proportionate and balanced, to avoid excessive focus on one set of risks to the detriment of disclosures of the other principal risks and uncertainties a company faces. Boards must retain responsibility for determining what disclosures, if any, on climate related risks are relevant and material. This requires an understanding of the potential impacts of climate change and legislative responses, and the application of judgement. Identification of factors to be considered by management when making such an assessment will be helpful.

Portée

The recommendation should provide preparers and their boards an understanding of the factors to consider when assessing, mitigating and, where necessary, reporting the climate change risks they might face. Factors to consider might include the sensitivity of its business model to climate related legislation (for example, the existence of low carbon substitute products or processes); the energy use and carbon emissions of the company, its products and suppliers; the company’s investment planning periods; and the geographical location of operations and its distribution channels. High risk sectors could then be used to illuminate those factors.

Utilisateurs

We note from the Phase 1 Report that the intended users for the information goes beyond those making direct investments in companies to those further back in the capital supply chain. We welcome this to ensure more informed capital allocation decisions. However the disclosure recommendations will need to take into consideration the needs of the intended audience and be dependent on the type of preparer as different considerations will apply for climate related risks arising from companies reporting on their own operational activities in their annual report and those investing in a portfolio of assets or advising on investment activities. We also encourage the TCFD to consider the placement of information outside the annual report when recommending disclosures that might go beyond the needs of the annual report’s intended audience. We encourage reporting of more detailed voluntary information for investors or other users outside the annual report so that it does not detract from the key messages.

À la prochaine…

Ivan Tchotourian

Bonsoir à toutes et à tous, voici un billet amusant de Julien Brault sur Les affaires.com : « Voulez-vous vraiment devenir pdg? ». Un texte bien loin de l’image traditionnellement véhiculée des P-DG star aux revenus extraordinaire…

Car la définition de tâches d’un pdg de start-up change de semaine en semaine, au fil de sa croissance. Ça implique donc d’avoir une bonne capacité à prendre des décisions pas trop éclairées (lorsqu’on n’a pas le temps de demander à quelqu’un qui est passé par là), beaucoup d’humilité et une capacité d’apprendre très rapidement.

À la prochaine…

Ivan Tchotourian

Excellent texte auquel je viens d’accéder rédigé par Yvon Allaire et François Dauphin daté du 11 août 2016 et intitulé : “Making Say-on-Pay Vote Binding: a Good Idea?” (IGOPP).

Petit extrait :

The challenge of reading and understanding the particulars of executive compensation has become far more daunting. Indeed, for the 50 largest (by market cap) companies on the TSX in 2015 that were also listed back in 2000, the median number of pages to describe their compensation went from 6 in 2000 to 34 pages in 2015, ranging all the way up to 66 pages. Investors with holdings in dozens or hundreds of stocks face a formidable task. The simplest way out is either to vote per the stock’s performance or, more likely, rely on the recommendation of proxy advisory firms (which also base their “advice” on relative stock market performance. (…)

Boards of directors, compensation committees and their consultants have come to realize that it is wiser and safer to toe the line and put forth pay packages that will pass muster with proxy advisory firms. The result has been a remarkable standardization of compensation, a sort of “copy and paste” across publicly listed companies. Thus, most CEO pay packages are linked to the same metrics, whether they operate in manufacturing, retailing, banking, mining, energy, pharmaceuticals or services. For the companies on the S&P/TSX 60 index, the so-called long term compensation for their CEO in 2015 was based on total shareholder return (TSR) or the earnings per share growth (EPS) in 85% of cases. The proxy advisory firm ISS has been promoting these measures as the best way to connect compensation to performance. (…)

At a more fundamental level, the setting of pay policies should be the preserve of the board, as Canadian corporate law clearly states. When egregious pay packages are given to executives, a say-on-pay vote, compulsory or not, binding or not, will always be much less effective than a majority of votes against the election of members of the compensation committee. But that calls upon large investment funds to show fortitude and cohesiveness in the few instances of unwarranted compensation which occur every year.

À la prochaine…

Ivan Tchotourian

Le High Pay Centre du Royaume-Uni a récemment publié sa réponse à la consultation de l’Investment Association « Executive Remuneration Working Group ». Au travers de cette réponse, le High Pay Center demande une remise en question fondamentale des principes d’attribution de la rémunération des hauts-dirigeants.

Voici une synthèse des propositions faites :

• Fix the flaws in the 2013 UK pay regulations
• Return to the principle that reward follows performance
• Realign the governance of remuneration with the legal financial governance framework.
• Stop accepting discounting as an appropriate basis for pay negotiations
• Remove all formal obstacles to the use of retrospective discretion by remuneration committees
• Require the involvement of representatives of the genuine long term economic interest in a company in the process for determining executive pay

The Executive Remuneration Working Group was set up by the Investment Association in late 2015 and is currently consulting on its interim report looking at the problems with executive pay in the UK.

The High Pay centre’s response to the Working Group’s interim report is available here in its entirety and represents a fundamental rethink of some of the principles which underpin the current system.

Our submission takes as its starting point the statement by Nigel Wilson, Chairman of the working group that « the current approach to executive pay in UK listed companies is not fit for purpose ».

À la prochaine…

Ivan Tchotourian

La professeure Dionysia Katelouzou publie une très belle étude sur SSRN : « Reflections on the Nature of the Public Corporation in an Era of Shareholder Activism and Shareholder Stewardship ». L’auteure y revient sur le mythe que les actionnaires seraient passifs et que la lecture contractualiste de l’entreprise serait pertinente. Comme elle le souligne, il y a eu un changement de paradigme depuis l’émergence des investisseurs institutionnels consacrant un « investor paradigm for corporate law ».

For the greater part of the twentieth century the role of shareholders within the public corporation has been conceptualized within the contractarian framework influenced by the neo-liberal emphasis on market efficiency. For the supporters of the contractual nature of the corporation, shareholders have in general been viewed as the main beneficiaries of corporate activity. Contractarianism goes further, dispelling the notion of shareholder ‘ownership’, and thereby relying on the efficacy of individual contracting and the constraining forces of various markets to control managerial discretion and reduce monitoring costs. Within this contractarian framework shareholders do not wish to be involved in the corporation’s management, nor do they gain any benefits from an active engagement, mainly because of the market efficacy to control managerial discretion and a series of legal and extra-legal obstacles to shareholders’ active involvement. There is, therefore, no a priori reason why shareholders should exercise control over managerial decision-making and any legally imposed reform to empower the monitoring role of shareholders is viewed as unnecessary and counterproductive. Through most of the twentieth century, this contractarian orthodoxy of the rather passive role of shareholders also coincided with practice.

My paper argues that these contractarian assertions in relation to the role of shareholders within the internal functioning of the public corporation do not hold anymore in the face of the rise in the holdings and influence of institutional investors in recent years.

À la prochaine…

Ivan Tchotourian