Normes d’encadrement | Page 16

Me Ravipal S Bains propose une belle synthèse des conséquences de la COVID-19 sur la gouvernance d’entreprise : « Emerging Corporate Governance Considerations for the Post-COVID-19 World » (Oxford Business Law Blog, 12 mai 2020). Une belle synthèse des questionnements qui agitent la gouvernance d’entreprise actuellement !

Extrait :

Board Oversight

Board charters, if they don’t already, will need to cover global pandemics, including COVID-19, as one of the risks that directors should oversee. Given the on-going impact, companies will want to consider the timing of updated duties and responsibilities. While risk governance frameworks are generally updated annually, some may not want to wait and revise as soon as practicable. For instance, earlier this month The Home Depot Inc. added COVID-19 pandemic and related risks to the areas of the board’s risk oversight. Boards are also likely to weigh-up obtaining coverage for pandemic risk insurance, perhaps like the prescient Wimbledon managers.

Executive Compensation

Compensation committees will have to consider whether metrics used in executive compensation plans should take into account material drops in share prices and earnings in 2020. Although these decisions will be reviewed in the 2021 proxy season, boards may provide advance disclosure of such changes. Proxy advisory firm Institutional Shareholder Services Inc., has already indicated that while it generally does not support midstream changes, it will assess amendments if an adequate explanation is provided. Alternatively, if metrics are adjusted less aggressively and the share price recovers, directors will have to evaluate if the executives stand to receive a windfall gain.

Earnings Guidance

Many management teams are facing an uphill task of providing guidance regarding the impact of COVID-19 on operations, revenues, and risks. The challenge is that even the best forward-looking disclosure may need to be revised due to pandemic-related factors outside of their control. Not surprisingly, many public companies have withdrawn or revised their previous earnings guidance. To quell this uncertainty in the US, the Securities and Exchange Commission (SEC) issued a statement urging companies to provide fulsome forward-looking information, including expectations regarding operating conditions and resource needs. The SEC also asked companies to avail safe harbours and noted it would not second-guess good faith attempts at providing forward-looking information.

Succession Planning

After the crisis, expect more focus on comprehensive succession planning policies that contemplate different scenarios, beyond a mere CEO transition, and changeover in non C-suite positions. These could include more defined temporary incapacity assessments and consequences of prophylactic requirements. Boards will need to ensure that the policies provide for multiple candidates for key roles. While many public companies have robust emergency CEO succession plans, few contemplate situations where key executives are affected simultaneously. Last month, when Altria Group Inc.’s CEO tested positive for coronavirus, his successor and other members of the leadership team had to quarantine as they had contact with him.

Opportunistic Investors

With record low share prices and a dismal earnings season on the horizon, a number of once formidable companies could be vulnerable to unsolicited acquisition proposals or takeover attempts. If directors and executives expect their company to be susceptible to strategic and financial threats, they should implement appropriate responses. This may include (a) strengthening relationships with principal shareholders, (b) profiling possible strategic partners and alternative transactions, (c) observing market activity in options, derivatives, and corporate debt to promptly detect stealth accumulations, and (d) adopting defensive strategies. The spectrum of possible defensive actions depends on the jurisdiction. At least in the US and Canada, a shareholder rights plan will be a crucial device to help a target’s board discharge its fiduciary duties, deter opportunistic control block acquisitions, and maximize negotiating leverage.

Environmental and Social Governance (ESG)

Many severely impacted companies will be focused on ensuring financial survival. Many more boards will have to be cognizant that the post-pandemic environment will provide fertile grounds for ESG-focused investors to press on preparedness for, and disclosure of, non-financial risks. As the former Governor of the Bank of England Mark Carney recently noted, ‘when it’s over, companies will be judged by ‘what they did during the war,’ how they treated their employees, suppliers and customers, by who shared and who hoarded’. Management may want to convey that while pandemic has shifted short-term priorities, ESG efforts are ongoing, and highlight progress where possible. They should consider approaches for issues that will be areas of sharpened interest such as dividend payments, stock buybacks, and employee treatment.

Supply Chains

Companies, investors, and stakeholders are likely to emerge from this crisis chastened by the just-in-time, multi-step, and globally dispersed supply chains that dominate production today. Board-level oversight for supply chains, increased management engagement with critical suppliers, and nimble contingency plans for future disruptions will likely become market standard. Executives will also be encouraged to demonstrate knowledge about suppliers—not just tier 1, but also tiers 2 and 3—and to be prepared to trade elements of cost-efficiency for redundancy. Diligence reviews will be expected to cover resiliency across the board and stress-test scenarios that may have been considered too remote in the past.

Government Ownership

Directors and executives of companies who seek government support will have to carefully manage competing public and private interests. Once the state wears the dual hats of a shareholder and an investor, conflicts of interest often arise. COVID-19 interventions are unlike previous crises where government investments were ad-hoc measures targeted at specific industries, like banking and finance. Current measures offer broad-based long-term financial support with limited prospects for near-term divestitures. Governments could re-interpret the definition of ‘strategic assets’ to add new industries (eg agri-business) and act proactively to prevent foreign takeovers. Enhanced government influence could also lead to growth in cross-border competition amongst state-supported firms that will increase trade and political frictions.

Infrastructure Investments

Governments across the globe are sketching plans to fund ‘shovel-ready’ infrastructure projects to rebuild economies. This desire to kick-start projects immediately will need to be weighed against long-term viability. Staffing numerous projects concurrently with boards sufficiently knowledgeable, diverse, and experienced to oversee project delivery through to completion will be challenging. Mechanisms for periodic governance reviews will have to be built in. Investments in digital infrastructure that will likely involve private sector partners will need to include clear governance standards for data collection, use, and storage.

À la prochaine…

Me Jessica Zhang propose un billet de blogue sur l’impact de la COVID-19 sur l’activisme actionnarial au Canada : « Impact of COVID-19 on Shareholder Activism » (7 avril 2020). Comme elle le rappelle aux CA, « Sharp declines in stock prices due to COVID-19 are making companies more vulnerable to shareholder activism and hostile attacks ».

Extrait :

Shareholder Activism in Canada

While shareholder activism is traditionally less prevalent in Canada than in the United States, Canada can be an attractive jurisdiction for shareholder activism due to its shareholder-friendly regulatory framework that includes:

• rights of shareholder to requisition meetings with a 5% ownership interest;
• ability of shareholders to communicate with up to 15 shareholders without the requirement to file and mail proxy solicitation materials or publicly disclose their solicitation intentions;
• ability of shareholders to accumulate 10% of a company’s shares before disclosing their interest;
• ability of shareholders to include proposals on the election of directors in management proxy circulars;
• entitlement to shareholder lists and ability to be reimbursed for costs associated with proxy contests; and
• fewer structural defences in Canada than in the United States.

Preparing for Shareholder Activism

While the primary focus of many companies in the current environment is on their employee health and safety, business continuity and financial stability, boards of directors and management should not lose sight of the potential increases in shareholder activism and be prepared to defend against any hostile attacks.

1. Shareholder Communication and Engagement. Shareholder communication and engagement is crucial to maintaining shareholder confidence. It is important for companies to be able to respond to shareholders in a meaningful manner, address concerns and misinformation and ensure open and transparent communication with their shareholders. A corporation’s board and management should prepare key messages with respect to the impacts of COVID-19 on the company, what steps the company is taking to mitigate the impacts and risks, and address its liquidity needs, the overall health of its business, and the company’s ability to rebound from the crisis. Companies should utilize public disclosure as an opportunity to engage with shareholders and communicate results, strategy, objectives and opportunities in a clear manner to enhance shareholder confidence. It is also important to ensure that the messages delivered provide a transparent assessment of the current and anticipated future impacts of COVID-19 on the company and not to create unrealistic and unreasonable expectations for shareholders.
2. Activist Response Team. Companies should consider establishing an internal team dedicated to dealing with activist shareholders and developing immediate and comprehensive responses to potential shareholder activism. This team should be composed of the most knowledgeable internal resources, including the chief financial officer, general counsel, and additional senior personnel from the finance, investor relations, and corporate communications departments. It should also leverage external resources, including external counsel, proxy solicitation firms, and public relations firms to assist in defending the corporate strategy and objectives, and to co-ordinate coherent and timely responses to shareholders.
3. Monitor and Assess. Management should regularly monitor and review the company’s shareholder base, objectives and investment strategies of the shareholders as well as changes in trading patterns in the company’s stock (e.g. stock surveillance), in order to stay alert to early signs of an opportunistic acquiror. Additionally, management should conduct a comprehensive assessment of the company’s vulnerabilities to shareholder activism and identify any activists that could be potentially interested in targeting the company.
4. Shareholder Rights Plan. A shareholder rights plan, also known as a poison pill, is a defensive measure used by public companies to defend against hostile takeover attempts by third parties. Shareholder rights plans in Canada have not historically been effective in stopping hostile bids but have been effective in providing boards with more time to consider strategic alternatives. In preparation for shareholder activism or takeover threats, companies that do not already have a shareholder rights plan may consider preparing one and keeping it “on the shelf” (fully drafted and ready for adoption). TSX requires the adoption of a shareholder rights plan to be ratified by shareholders within six months of adoption. Institutional Shareholder Services (“ISS”) will generally support a shareholder-approved rights plan that conforms to its “new generation” rights plan best practice guidelines. Similarly, Glass Lewis will generally support shareholder rights plans adopted in response to COVID-19 and the related economic crisis if the plans have a duration limited to one year or less and the company discloses a sound rationale for adoption of the plan as a result of COVID-19.
5. Advance Notice Requirements. An advance notice provision affords protection against a “surprise attack” at or shortly before a shareholders’ meeting as it requires shareholders to provide advance notice to the company if they wish to propose nominees to the board of directors. In preparation for shareholder activism or takeover threats, companies may consider adopting an advance notice board policy or provisions in the articles or bylaws that require advance notice of any intention to propose nominees for directors. ISS and Glass Lewis will generally support advance notice provisions that meet their guidelines.
6. Corporate Governance. Corporate governance weaknesses is one of the attributes that tend to attract activist shareholders. Companies should ensure corporate governance standards are frequently evaluated and strictly followed to prevent activists from exploiting weaknesses or inconsistencies. Management should stay up-to-date on the evolving legal and regulatory developments as well as voting recommendations by proxy advisory firms, such as ISS and Glass Lewis, and consider how to best comply with best practices guidelines.
7. Employee Investment. Employees are generally among the company’s most loyal investors. The decline in stock prices can be an opportunity for companies to revise existing or implement new incentive programs to encourage employee investment in the company by enhancing stock purchase plan provisions and amending long-term incentive compensation plans.

À la prochaine…

Intéressante tribune dans La presse de mes amies Emmanuelle Létourneau et Rosalie Vendette touchant la RSE et la finance sociale : « L’épinglette d’Horacio Arruda, une source d’inspiration pour les entreprises et les financiers » (La presse, 3 mai 2020).

Extrait :

(…) Cela se matérialise par exemple, de la part des investisseurs, par un bilan carbone des entreprises (facteur E) ou un bilan social (facteur S) ou encore une évaluation de la gouvernance (facteur G) mise en place par l’entreprise, ou encore, de sa capacité de la mettre en place.

L’effort qui est fait pour tenir compte de critères ESG, souvent effectué pour une meilleure gestion des risques auxquels ces investissements peuvent être exposés, démontre qu’il est possible de le bonifier en y ajoutant les ODD, vus comme périphériques et faisant partie du même écosystème. En effet, les ODD nous proposent d’unir nos forces en visant des buts communs.

(…)

Responsabilité sociale des entreprises

Que ce soit à travers la prise en compte des facteurs ESG pour une gestion des risques ou une création de valeur ou que ce soit l’adoption de nouvelles orientations en lien avec un ou plusieurs ODD, il est toujours question de responsabilité sociale des entreprises.

Celle-ci appelle à modifier la façon dont les entreprises sont gouvernées et à donner un sens particulier à leurs actions. Tant les facteurs ESG que les ODD devront être pris en compte dans le processus décisionnel des directions d’entreprise et de leur conseil d’administration, qui agira comme gouvernail.

Dans un monde post-COVID-19, où la responsabilité sociale des entreprises est mise sous les projecteurs, il y a fort à espérer que ces exigences des investisseurs et des créanciers soient plus encore orientées vers le développement durable et ses objectifs.

Alors, entreprises, tenez-vous-le pour dit : votre contribution aux ODD et les impacts positifs et négatifs que vous avez sur eux seront de plus en plus scrutés à l’avenir !

À la prochaine…

M. Christophe Roux-Duffort propose un billet relayé par le CAS de l’Université Laval sur les « Quatre scénarios pour l’après-COVID-19: les administrateurs à la manœuvre ». Attention : CA, vous avez intérêt à connaître votre direction et à la questionner sur son envie et sa capacité de changer.

Extrait :

1. Le scénario de la crise-plafond

Le scénario de la crise-plafond illustre bien celui dans lequel la direction se heurte au plafond de verre de la crise sans en apercevoir les sources de renouvellement, et sans envisager de changer quoi que ce soit à ce qui jusqu’avant la crise fonctionnait très bien. Dans ce scénario, la crise confirme l’ordre des choses et il s’agit d’en sortir en rattrapant rapidement le temps perdu pour revenir au statu quo. Ne mésestimez pas cette possibilité. Plus les changements requis par la crise sont importants, plus l’inertie individuelle risque d’être prégnante. C’est le scénario de l’ignorance.

2. Le scénario de la crise-prétexte

Le scénario de la crise-prétexte correspond à celui dans lequel les membres de la direction perçoivent de réels changements à entreprendre en faveur de la transformation de l’organisation sans incarner eux-mêmes les changements nécessaires à ces transformations. Ils se retrouvent en situation de revendiquer le changement de la part de ceux qui pourraient le faire advenir comme le gouvernement, ou même les administrateurs, sans avoir à s’engager eux-mêmes dans une quelconque remise en question. C’est le scénario de l’hypocrisie.

3. Le scénario de la crise-miroir

À la faveur du confinement et des conditions d’introspection qu’il offre, les dirigeants utilisent ce scénario de crise comme un miroir pour identifier leurs limites et les moyens de les dépasser. Ce faisant, ils font des événements un moteur de remise en question et de transformation personnelle. Dans ce scénario cependant, ce renouveau se cantonne à une démarche individuelle qui ne bénéficie pas au reste de l’organisation, parfois par crainte des bouleversements que cela pourrait occasionner. Le changement reste bloqué en quelque sorte à l’échelle de la personne. C’est le scénario du renoncement.

4. Le scénario de la crise-vérité

Ce scénario est identique à celui de la crise-miroir à la différence près que dans ce cas-ci, les dirigeants incarnent en pratique les changements dont ils sont porteurs au sein même de leurs organisations. Ils personnifient le changement qu’ils aimeraient voir se développer. C’est le scénario de la sagesse.

Même si le quatrième scénario apparaît idéal, chacun d’eux contient ses avantages et ses inconvénients et implique de la part des administrateurs un certain doigté pour les accompagner ingénieusement. D’autant qu’à l’intérieur d’un même comité de direction, les personnes pourraient se répartir dans des cas de figure différents les uns des autres.

À la prochaine…

UCLA School of Law vient de publier un rapport d’une dizainede pages sur la gestion du capital humain et son intégration dans la gouvernance des entreprises : « Corporate Governance : The growing Importance of Human Capital Management » (avril 2020).

Extrait :

1. Over the last several years, investors and proxy advisory firms have increasingly focused their attention on environmental, sustainability and governance (ESG) and human capital management (HCM) issues. While there is no one definition of HCM, the term is widely used to cover a very broad range of workforce matters that are of concern to investors and the public as they focus on building long-term value and reducing business and reputational risks. These concerns have resulted in calls for enhanced company disclosures about their HCM practices and processes.

2. Under Delaware and federal law, directors have no duties that are specifically focused on HCM. However, under Delaware law and that of many other states, directors have duties of care, loyalty and oversight that can under certain circumstances apply to HCM matters and can result in director liability.

3. While federal securities laws and rules contain several corporate disclosure requirements that apply to employees and touch on HCM issues, current laws and rules are not as robust or focused as many investors would like and have proposed. In response to rulemaking and other investor requests, the U.S. Securities and Exchange Commission has proposed amendments to its disclosure rules that would expressly require companies to describe their human capital resources to the extent that they are material to an understanding of a company’s business as a whole.

4. Some public companies have already articulated board responsibilities for oversight of HCM matters; some have renamed and expanded the responsibilities of their compensation committees to reflect their expanded focus; and some have disclosed their HCM polices and efforts in their securities law filings and other publications.

5. Separate and apart from the legal requirements that apply to corporate board duties and corporate disclosure requirements, there are important business, governance and reputational reasons for boards and companies to care about and address HCM matters. 6. While there is no one-size-fits-all approach to board oversight of HCM matters, areas for possible board attention are (i) diversity and inclusion, (ii) employee satisfaction and engagement, (iii) succession and talent management, (iv) attrition and retention, and (v) ethics, workforce culture and risk.

À la prochaine…

Bonjour à toutes et à tous, je signale cette intéressante étude : Zetzsche, Dirk Andreas and Anker-Sørensen, Linn and Consiglio, Roberta and Yeboah-Smith, Miko, « The COVID-19-Crisis and Company Law – Towards Virtual Shareholder Meetings », 15 avril 2020, University of Luxembourg Faculty of Law, Economics & Finance, WPS 2020-007.

Extrait :

Regulators and Parliaments around the world have responded to the COVID-19 epidemic by amending company law. This crisis legislation allows us to examine how, and to what effect, the corporate governance framework can be amended in times of crisis. In fact, almost all leading industrialized nations have already enacted crisis legislation in the field of company law. 

In our recent working paper, ‘The COVID-19-Crisis and Company Law – Towards Virtual Shareholder Meetings’,  we have sought to (1) document the respective crisis legislation; (2) assist countries looking for solutions to respond rapidly and efficiently to the crisis; (3) exchange experiences of crisis measures; and (4) spur academic discussion on the extent to which the crisis legislation can function as a blueprint for general corporate governance reform.

Countries considered in full or in part include Australia, Austria, Belgium, Canada, China, France, Germany, Hong Kong, Italy, Luxembourg, the Netherlands, Norway, Portugal, Singapore, South Korea, Spain, Switzerland, Thailand, the United Kingdom, and the United States. Readers are encouraged to highlight any inaccuracies in our presentation of the respective laws, and to bring further crisis-related legislation not considered in this working draft to the attention of the authors. Moreover, readers are invited to indicate where there is room for improvement therein, and/or to signal the need for policy reform.

Drawing on the analysis of these more than twenty countries, we note five fields in which legislators have been particularly active. First, the extension of filing periods for annual and quarterly reports to reflect the practical difficulties regarding the collection of numbers and the auditing of financial statements. Second, company law requires shareholders to take decisions in meetings—and these meetings were for the most part in-person gatherings. However, since the gathering of individuals in one location is now at odds with the measures being implemented to contain the virus, legislators have generally allowed for virtual-only meetings, online-only proxy voting and voting-by-mail, and granted relief to various formalities aimed at protecting shareholders (including fixed meeting and notice periods). Third, provisions requiring physical attendance of board members, including provisions on signing corporate documents, have been temporarily lifted for board matters. Fourth, parliaments have enacted changes to allow for more flexible and speedy capital measures, including the disbursement of dividends and the recapitalization of firms, having accepted that the crisis impairs a company’s equity. Fifth and finally, some countries have implemented temporary changes to insolvency law to delay companies’ petitioning for insolvency as a result of the liquidity shock prompted by the imposition of overnight lockdowns.

The legislation passed in response to the COVID-19 crisis provides for an interesting case study through which to examine what can be done to modernize the corporate governance framework with a view to furthering digitalization. Given the difficulties or indeed the impossibility of conducting in-person meetings currently, the overall trajectory of company law reforms has been to allow for digitalization of corporate governance, and ensuring the permissibility of virtual shareholder meetings (VSM), in particular. 

In this respect, it is safe to assume that the rules on VSM will have model character. While the details of the modus operandi of VSM will require careful adjustment, to ensure that shareholders will be afforded the same rights and opportunities to participate as they would at an in-person meeting (including Q&A), the experimental phase during the crisis will feed into the policy discussion, with some more successful and some less successful examples providing food for thought. Yet, it is safe to say that the COVID-19 pandemic has unveiled the need for virtual-only shareholder meetings, and that some types of VSM will stay for good long after the current crisis has subsided. 

À la prochaine…