Valeur actionnariale vs. sociétale
Quel rôle pour les entreprises ? Extrait d’une entrevue
Dans Fortune, le président du CA de AT&T revient sur le rôle des grandes entreprises dans nos sociétés contemporaines (Alan Murray et David Meyer, « AT&T chair Bill Kennard: ‘Legacy businesses have to disrupt themselves’ », 23 mars 2021)
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« The board at AT&T, like all boards today, is focused on the role of corporations in society. Increasingly you are seeing corporations step into the vacuum where government leadership has sometimes failed or just can’t get the job done, and you are seeing corporations stepping up…Corporations are increasingly questioning, what is their role in society? How do corporations help solve the challenges of income inequality and racial inequality in the country, and political instability? These are questions that corporations have to address in order to be successful in society.”
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L’actionnariat familial a-t-il un avenir ?
C’est à cette question que répond le professeur Pierre-Yves Gomez dans un billet fort intéressant dont je relaie un extrait ci-dessous (ici).
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Gouvernance : Actionnariat anonyme vs Actionnariat Familial
C’est à partir de ce moment, au tournant des années 1930, que la société anonyme (et plus tard la SAS) s’est aussi imposée comme la forme juridique dominante : ni l’actionnaire, ni le dirigeant ne sont plus responsables sur leurs biens propres. Sans attaches, ils peuvent entrer et sortir de l’entreprise en utilisant les mécanismes du marché des capitaux ou du travail. Le lien substantiel entre le décideur et l’entreprise se distend. Parallèlement, parce que les actionnaires sont devenus anonymes et que leur responsabilité se limite à leurs apports financiers, la demande de responsabilité s’est déplacée vers les entreprises elles-mêmes. D’où l’exigence contemporaine d’une Responsabilité sociale des entreprises (RSE) associée à une mission ou une raison d’être. Ce que la famille propriétaire portait naguère est désormais attendu de l’entreprise prise comme individu doté d’une personnalité morale.
Pour autant, au delà de cette fiction juridique, l’actionnariat reste massivement familial dans les sociétés anonymes et la famille demeure l’institution sociale de référence comme le montrent régulièrement les sondages d’opinion. Ce paradoxe invite à réfléchir sur l’avenir d’un pouvoir actionnarial fondé encore sur l’héritage. Que peut signifier « hériter d’un capital » au 21ème siècle et comment le destin de l’institution » famille » et celui de l’institution « entreprise » pourraient-ils être encore liés ?
Si l’actionnariat familial ne se réduit plus qu’à un simple transfert générationnel de patrimoine en vue d’accumulation de richesses et de rentes, il achèvera certainement de perdre toute légitimité. Dans les années futures, des réformes de gouvernance s’imposeront comme nécessaires pour limiter l’acquisition de parts sociales d’entreprises par le hasard injuste de l’héritage. Mais si un tel héritage est assumé comme une charge engageant à maintenir un projet social, des savoir-faire ou une communauté de travail, l’actionnariat associé au destin d’une famille pourrait apporter aux parties-prenantes une caution bienvenue de continuité dans la durée. Dans une société fractionnée et rongée d’incertitudes, il associerait le pouvoir souverain du capital à une communauté humaine tenue par des liens non-capitalistes. A la croisée des chemins, cette forme de gouvernance ancienne peut s’inventer une nouvelle pertinence ou sombrer avec l’idée même de famille traditionnelle.
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Varieties of Shareholderism: Three Views of the Corporate Purpose Cathedral
À lire cet intéressant article du professeur Licht : Amir Licht, « Varieties of Shareholderism: Three Views of the Corporate Purpose Cathedral », 19 octobre 2020, European Corporate Governance Institute – Law Working Paper No. 547/2020.
Résumé :
This Chapter seeks to make three modest contributions by offering views of the corporate purpose cathedral that bear on the role of law in it. These views underscore the difference and the tension between an individual perspective and a societal/national legal perspective on the purpose of the corporation. First, it reviews a novel dataset on national legal shareholderism – namely, the degree to which national corporate laws endorse shareholder primacy – as an exercise in operationalizing legal constructs. Second, it anchors the two archetypal approaches of shareholderism and takeholderism in personal human values. It is this connection with the fundamental conceptions of the desirable which animates attitudes and choices in this context. The upshot is potentially subversive: Legal injunctions to directors on corporate purpose might be an exercise in futility. Third, this Chapter highlights the importance of acknowledging the tensions between the two levels of analysis by looking at the works of prominent writers. Adolf Berle, Victor Brudney, and Leo Strine have been careful to keep this distinction in mind, which has enabled them to hold multiple views of the cathedral without losing sight of it.
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Entreprises et parties prenantes : focus sur les Pays-Bas
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 ».
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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
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Shareholder Primacy in the Time of Coronavirus
Bel article qui amène à réfléchir : Akshaya Kamalnath, « Shareholder Primacy in the Time of Coronavirus », Oxford Business Law Blog, 7 avril 2020.
Extrait :
It has become fashionable in these troubled times to write about how the coronavirus (or Covid-19) situation shows that the writer’s favourite policies are the best ones. Trite as it may be, I don’t want to miss the opportunity to explain and defend shareholder primacy as a theory / principle followed in corporate law.
Do companies have an ethical obligation to take care of employees during the coronavirus pandemic? If not, why are companies asking employees to work from home and even paying employees when they are not coming in to work? Even companies in the gig economy like Uber are stepping up and offering unexpected support to their drivers whom they have refused to consider as employees. For instance, Uber announced that it would offer 14 days of financial assistance to drivers affected by Covid-19. Similarly, to accommodate the demand from workplaces and educational institutions to switch to working online, tech companies like Google, Microsoft, and Zoom have begun offering some of their products’ features for free. Why are they going well beyond what current laws require them to do?
Have they begun to embrace stakeholderism (the idea that companies should service all stakeholders equally) and, if so, can we expect such continued benefits being offered to employees in need even after the pandemic has passed? I’d answer both parts of this question in the negative. In my view, these companies are guided by shareholder primacy (the idea that shareholder interests have primacy over that of other stakeholders).
The first and most obvious reason is that shareholders would want directors of the company they have invested in to step up to the occasion when a crisis as big as a pandemic is staring us in the face. While it is normally assumed that shareholder interests translate into profit-making or wealth maximization, intelligent directors would understand that a crisis calls for a different understanding of what shareholders want. The second possible reason for companies to act in the interests of stakeholders at this time is to enhance their reputation. A company making accommodations during a time of crisis might forego some profits in the short-term but will have reputational gains in the long term. The consideration of reputational incentives is not to suggest that companies acting altruistically should be seen as cynical. On the contrary, it is laudable that the directors of these companies have acted in the interests of the company by taking care of relevant stakeholders when it was most needed. The fact that company reputation was one of the variables in the calculus should be noted positively because that shows that shareholder primacy ensures companies act in the interests of other stakeholders when it is most essential. A third reason is that by offering benefits to employees (or independent contractors as in the case of Uber’s drivers) or customers as in the case of the tech companies, the companies have ensured that the relevant stakeholders (customers and employees / independent contractors) would want to work or continue to work with these companies.
If shareholder primacy leads to beneficial outcomes, why is it so reviled? Shareholder primacy is often confused with a myopic focus on short-term profits. To be sure, the company law of most countries requires directors to act in the best interests of the company and, in determining which interests within the company are to be prioritised, to give primacy to that of shareholders. The default assumption is that most shareholders would want to maximise the wealth that they have invested in the company. However, it is left to directors to consider other relevant interests where they are in the best interests of the company. As I have argued above, it was clearly in the interests of the company to prioritise various stakeholders’ interests and act accordingly, and in this instance they have acted accordingly. Not every situation has such an easy answer and so it is left to directors to choose the course of action best suited to the company, with the interests of shareholders being ultimately prioritised.
What happens after the pandemic has passed? While the coronavirus situation is a big crisis and companies have been stepping up, decisions prioritising the interests of one stakeholder over those of others are routine, even in calmer situations, or where a company alone is facing a crisis of some sort. Take for example, employees’ complaints about toxic work culture and harassment, which we now know was the case with Uber in the past. Often the response is to keep the issue under wraps or refuse to address the particular stakeholder’s needs. This unsavoury behaviour cannot however be attributed to either shareholder primacy or stakeholderism. We would expect that shareholders would want companies to clean their house as soon as they know there is trouble so that they are not at the receiving end of the law suit at a later date and, more importantly, because shareholders would want talented employees to be retained within the company. Unfortunately, the unsavoury behaviour is simply an expression of human nature in some cases and better incentives to prevent such behaviour need to be devised. Similarly, for concerns of other stakeholders, the environment for instance, environment protection and climate change laws would constrain directors’ actions rather than relying on principles of either shareholder primacy or stakeholderism to do the job.
All this is to say that there are problems with how companies are run and we need innovative solutions to create better incentives rather than falling back on paying lip service to stakeholderism as the Business Roundtable recently did in its 2019 statement.
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Public Benefit Corporation : premières études empiriques
Bonjour à toutes et à tous, on revient toujours aux B Corporation notamment la Public Benefit Corporation du Delaware ! Voici une des premières études empiriques menées sur le sujet : Michael B. Dorff, James Hicks et Steven Solomon Davidoff , « The Future or Fancy? An Empirical Study of Public Benefit Corporations » (4 février 2020).
Une belle question que se posent les auteurs : Using our novel dataset, we can discern whether for-profit investment is occurring in PBCs, and if so, whether it is different in kind from ordinary early stage investment.
Extrait :
The PBC has stirred much debate and speculation about the future of
the corporation. Some have called it the future while others decried the
form as mere public relations or purpose washing. In this article we
have attempted to add data to the debate. Using a hand-collected
sample of all Delaware-registered PBCs that received investment
between 2013 and 2018 we examine whether PBCs are the future or
mere fancy.
We find that neither hypothesis holds. Instead, we find that there are
295 PBCs which have received investment from VC funds amounting
to over $2.5 billion in the aggregate. This investment is significant
because it shows that the PBC form is not a failure and that it is
capable of attracting for-profit investment, a marker of success. This
investment is coming not just from pro-social VCs but from top-tier
firms.
Nonetheless, we also find that PBCs are being funded over a wide
range of mostly consumer-focused industries (banking, food,
education, technology, and more), implying that the form is a
secondary consideration to the for-profit motive. In other words, the
PBC form is most likely to receive VC funding when the PBC’s
business strategy suggests the form will benefit a for-profit mission.
Our evidence also suggests that PBC round sizes are smaller than their
purely profit-seeking peers, implying that VCs are taking less risk with
these forms than with traditional corporations.
Ultimately, we theorize that, based on our findings, the future course
of the PBC is uncertain.
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