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May expressed discontent with the current model of corporate governance used by FTSE companies and in particular the effectiveness of supposedly independent non-executive directors. ‘In practice, they are often drawn from the same narrow social and professional circles as the executive team and the scrutiny they provide is often limited,’ she said. So, she suggests, workers and even consumers should be given a seat at the table.

May wrote she wants to tackle the ‘unhealthy and growing gap between what these companies pay their workers and what they pay their bosses.’ Specifically she wants to make shareholder votes on corporate pay packages binding instead of advisory and ‘simplify the way bonuses are paid so that the bosses’ incentives are better aligned with the long-term interests of the company.’

Impertinent ? L’article de Kim Elsesser publié sur Forbes et intitulé « The Truth About Women’s Impact On Corporate Boards (It’s Not Good News) » présente une étude (plutôt critique !) sur la féminisation des CA.

Greater profits, greater CEO pay and enhanced problem-solving are just a few of the claimed advantages of increasing the number of women on a company’s board of directors. Could it really be true that merely adding a few women to the board could bring such powerful change? Alice Eagly, professor of psychology and management at Northwestern, and one of the most renowned researchers on female leaders, delved into the academic research on the topic She summarized what social scientists had learned about women’s impact on corporate boards. Let’s just say, it doesn’t look good.

À la prochaine…

Ivan Tchotourian

Excellent Law Working Paper de l’ECGI (No. 316/2016) de John Armour, Dan Awrey, Paul L. Davies, Luca Enriques, Jeffrey N. Gordon, Colin Mayer et Jennifer Payne consacré à la gouvernance d’entreprise des banques : « Bank Governance ».

Voici le résumé :

According to a common narrative, in addition to inadequate capital and liquidity, the failure of banks in the financial crisis also reflected their poor governance. By governance we mean broadly the oversight that comes from banks’ own shareholders and other stakeholders of the way in which they are run.

The problem of bank governance stems from the way in which banks are financed and regulated, from the externalities bank failures produce, and from the nature of their assets. In the period leading up to the financial crisis, it was believed that regulation would cause banks to internalize the costs of their activities, meaning that what maximized bank shareholders’ returns would also be in the interests of society.

Consequently large banks used the same governance tools as non-financial companies to minimize shareholder-management agency costs, namely independent boards, shareholder rights, the shareholder primacy norm, the threat of takeovers, and equity-based executive compensation. Unfortunately, such tools had the adverse effect of encouraging bank managers to take excessive risks: as we describe in this chapter, banks that had the most ‘pro-shareholder’ boards and the closest alignment between executive returns and the stock price were those which took the most risks prior to, and suffered the greatest losses during, the crisis.

Consequently, a significant rethink about the way in which banks are governed is required. The structure and function of bank boards, the compensation of bank executives and the function of risk management within organizations needs careful crafting if governance reforms are to address not exacerbate bank failures.

À la prochaine…

Ivan Tchotourian

Le blog de l’Université d’Oxford publie un très récent billet analysant sur le dilemme et la position délicate dans laquelle peut être placé l’État actionnaire : « Exercise of Shareholder Control Over a State Owned Enterprise – Comments on Comissão de Valores Mobiliários’s decision in the Eletrobras case » (par le professeur Mario Engler Pinto Junior).

The Comissão de Valores Mobiliários (CVM), the Brazilian equivalent of the SEC, has recently imposed sanctions on the Federal Government for actions taken as the controlling shareholder of the public company Eletrobras. More precisely, the sanctions were imposed on the Federal Government for voting in a general meeting to grant approval of an Elecrobras significant transaction. CVM considered that the Federal Government had a conflict of interest and should have abstained from voting in a shareholders’ meeting called to approve the renewal of the concession contract held by Eletrobras and its subsidiaries for electrical power generation.

 In Brazil, the Federal Government is also the public authority responsible for regulating the electrical sector. According to CVM, the renewal of the concession contract for electrical power generation was a related party transaction that could bring indirect economic benefits to the Federal Government.

My paper criticizes CVM’s approach, arguing that the contract renewal was a legitimate public policy decision in the context of the electrical sector as a whole.

À la prochaine…

Ivan Tchotourian

C’est la question à laquelle tente de répondre Marianne Harper Gow de chez Baillie Gifford’s dans un article fort intéressant intitulé : « Has ESG morphed to become just a box-ticking exercise? ».

As more groups move to include ESG factors within their fund strategies, Baillie Gifford’s director of corporate governance Marianne Harper Gow argues analysis in this area is too ‘simplistic’ and many processes are undermining the research effort

Selon l’auteur de l’article, l’approche parfois trop simpliste de l’évaluation environnementale, sociale et de gouvernance (ESG) des portefeuilles va complètement à l’encontre de la philosophie, la rigueur et la robustesse du processus de recherche et d’engagement qui devraient faire partie intégrante des prises de décisions en ce qui concerne les investissements et les placements. De plus, selon Gow, la grande variété d’opinions à l’égard ce qui est, ou n’est pas, sous la bannière ESG est sans doute une des raisons pour laquelle, malgré des décennies de discussion et d’intérêt pour l’ESG et l’investissement responsable, il n’y a toujours pas de classement des performances crédibles et largement utilisées qui a vu le jour. Bref, il serait possible de faire un résumé de cet article, mais puisqu’il est bon dans sa totalité et qu’il est plutôt court, je vous recommande fortement d’y jeter un coup d’œil.

Bonne lecture

Julie Bernard, MAP, Adm.A

Étudiante au doctorat (PhD) en sciences de l’administration (Management)

Faculté des sciences de l’administration

Université Laval