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Employee Participation in Corporate Governance and Corporate Social Responsibility : à découvrir !
Ivan Tchotourian 23 août 2016
Nouveau working paper de Martin Gelter pour le compte de l’ECGI intitulé : « Employee Participation in Corporate Governance and Corporate Social Responsibility » (Law Working Paper No. 322/2016, juillet 2016).
The chapter investigates the impact of employee participation on the board of directors or supervisory board (particularly codetermination) on corporate social responsibility (CSR).
Conceptually, it is important to distinguish between “internal” and “external” CSR. Internal CSR relates to practices of the firm regarding groups with which it is in a long-term contractual relationship such as employees. Employee participation systems serve to protect employees from shareholder opportunism and shift the balance in the distribution of corporate rents in favor of employees, which is why they clearly have an impact on internal CSR. The situation is much less clear for external CSR, which is concerned with effects of corporate activities that are externalities, for example pollution.
I argue that there may sometimes be a tradeoff between internal and external CSR: If a firm is more profitable because it scores badly in terms of external CSR (e.g. because it habitually pollutes), employees may benefit similarly as shareholders. In fact, the interests of shareholders and employees may be largely aligned in this respect, with both either benefiting or being harmed concurrently.
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Ivan Tchotourian
autres publications engagement et activisme actionnarial Normes d'encadrement normes de droit normes de marché rémunération
Say on pay obligatoire : l’IGOPP doute
Ivan Tchotourian 18 août 2016
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.
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Ivan Tchotourian
autres publications Gouvernance mission et composition du conseil d'administration normes de droit
Fraude et corruption : synthèse de Deloitte
Ivan Tchotourian 10 août 2016
L’organisation moyenne perd chaque année 5 % de ses revenus en raison de la fraude et de la corruption, selon l’Association of Certified Fraud Examiners. Il n’est pas surprenant que les organismes de réglementation à l’échelle mondiale se concentrent de plus en plus sur la fraude et s’attendent à ce que les organisations mettent en œuvre des programmes efficaces de lutte contre la fraude. En outre, ces organismes accroissent leur coopération pour mettre en œuvre des lois anticorruption grâce auxquelles les coupables sont poursuivis pour leurs actes, y compris les dirigeants et les administrateurs qui sont responsables de l’environnement dans lequel ces crimes se produisent.
En cas de fraude ou de corruption, les administrateurs peuvent être tenus personnellement responsables s’il est démontré qu’ils n’ont pas fait preuve de la diligence voulue dans le cadre de leurs responsabilités visant la mise en œuvre des programmes et des contrôles appropriés de lutte contre la fraude et la corruption.
Votre conseil d’administration a-t-il une bonne compréhension des risques liés à la fraude et à la corruption? Quelles mesures votre organisation devrait-elle prendre pour les atténuer?
Dans son À l’ordre du jour du conseil de juillet 2016, Deloitte propose une revue des « Programmes efficaces de lutte contre la fraude et la corruption ».
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Ivan Tchotourian
autres publications Gouvernance Normes d'encadrement
Comparer la gouvernance d’entreprise : étude de Martin Gelter
Ivan Tchotourian 4 août 2016
Martin Gelter (professeur à Fordham) nous offre un très bel article « Comparative Corporate Governance: Old and New » pour le compte de l’ECGI (Law Working Paper No. 321/2016). Si vous vous intéressez à la comparaison en matière de gouvernance d’entreprise, c’est un incontournable !
The most fundamental comparative corporate governance debates have often focused on two issues.
The first one concerns ownership structure: Why are large corporations in some corporate governance system owned by a multitude of disempowered shareholders, thus effectively giving management free rein? Why are corporations typically governed by a controlling shareholder or a coalition of controlling shareholders in other systems?
The second issue is the role of other ‘constituencies’ of the corporation besides shareholders, of which labor is most central to the debate. Some jurisdictions explicitly give labor an influential voice in corporate affairs, whereas in others its influence is developed through factual power or unintended consequences of legislation.
This chapter explores the interactions between firm ownership and labor, focusing on the United States on the one hand and Continental Europe, particularly Germany, on the other. It distinguishes between ‘old’ and ‘new’ comparative corporate governance, the former referring to the dichotomy studied by scholars of comparative corporate law up to the early 2000s. Recent changes, heralded by intermediated, but widespread share ownership are leading us to a new equilibrium whose contours have only begun to emerge.
Over the past decades, outside investors have gained power both in the United States and in Continental Europe. However, neither in the US nor in Continental Europe has the traditional corporate governance system been completely superseded by a new one. The US remains to a large extent manager-centric. Continental Europe retains powerful large shareholders, and labor as an independent force has remained more important than in the United States. Outside institutional investors – sometimes from the US – have become a player to be reckoned with, thus adding an additional layer of complexity to the system.
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Ivan Tchotourian
autres publications Gouvernance normes de droit Nouvelles diverses
Rapport 2016 de PWC sur le crime économique
Ivan Tchotourian 3 août 2016
Belle étude annuelle de Pwc consacrée à la criminalité économique : « Global Economic Crime Survey 2016 – Adjusting the Lens on Economic Crime: Preparation brings opportunity back into focus ».
Today more than ever before, a passive approach to detecting and preventing economic crime is a recipe for disaster. To underscore this fact, our survey uncovered a widespread lack of confidence in local law enforcement – a phenomenon that is not limited to regions or level of economic development. The message is clear: the burden of preventing, protecting and responding to economic crime rests firmly with organisations themselves. Our survey this year focuses on three key areas – Cybercrime, Ethics and compliance programmes and Anti-Money Laundering – and explores certain common themes, including managing the risks associated with the pervasion of technology; what it means to conduct business responsibly across a widening business landscape; and integrating ethical conduct into decision-making.
In addition to highlighting specific areas of economic crime worth focusing on, we emphasise the things you can do better to tackle them – implementing more sophisticated and effective measures that can not only reduce these risks, but also bring the benefits of a more threat-aware business, confident of its defences in a changing world.
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Ivan Tchotourian
autres publications Gouvernance Normes d'encadrement
Une politique ambitieuse de Vigeo
Ivan Tchotourian 3 août 2016
Alors que le changement climatique est sur le devant de la scène et que les entreprises et les investisseurs ne peuvent l’ignorer, l’agence de notation extra-financière Vigeo a publié le 12 janvier 2016 une politique ambitieuse intitulé « Post COP21: How well companies & investors are positioned to respond to climate change » (Policy Briefing, Climate Change & Transition to a Low Carbon Economy). Ce document rappelle haut et fort que le changement climatique est une affaire d’entreprise et d’investisseur !
Investors have already played a key role in bringing about COP21, and in the post COP21 landscape, investors are vital to ensure meaningful results.
No doubt initiatives such as the Montreal Pledge, the RE100 investor initiative, investor campaigns on stranded assets, and the plethora of events both before and during COP21, demonstrated to governments investor will and thought-leadership here. The growing corporate-investor-government nexus whereby some companies are calling for a credible carbon price/tax is significant.
The importance of incentives for emissions reduction activities are recognised in the Agreement preamble, including domestic policies and carbon pricing.16 These calls to action will drive forward collective performance on climate change, in addition to the ongoing pressure investors can put on companies through the investment process.
Responsible investment plays a leading role in highlighting companies’ exposure to the risks of climate change and evaluating their capacity to mitigate them. Analyses from research intermediaries such as Vigeo Eiris can help investors to understand and better manage these mounting climate change risks.
At present, only a small proportion of companies are found to have an advanced response to climate change and energy transition. To drive forward performance, companies could be encouraged to tie Board-level remuneration to climate change targets. Corporate reporting could be improved, particularly through use of quantitative assessments, and companies should be encouraged to report on the impact of the whole product lifecycle on emissions. There is also room for much greater corporate acknowledgement of the policy context.
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Ivan Tchotourian
autres publications engagement et activisme actionnarial Nouvelles diverses
Exit, Voice and Loyalty from the Perspective of Hedge Funds Activism in Corporate Governance
Ivan Tchotourian 3 août 2016
Bonjour à toutes et à tous, en voilà un bel article ! « Exit, Voice and Loyalty from the Perspective of Hedge Funds Activism in Corporate Governance » d’Alessio Pacces (Law Working Paper No. 320/2016) revient sur les thématiques de l’activisme des hedge funds, du court-termisme et des multiples classes d’actions.
This article discusses the policy response to hedge funds activism in corporate governance based on Hirschman’s classic: Exit, Voice and Loyalty. From that perspective, the article argues that hedge funds do not create the loyalty concerns underlying the usual short-termism critique of hedge funds activism, because the arbiters of such activism are typically indexed funds, which cannot choose short-term exit. Nevertheless, the voice activated by hedge funds can be excessive for a particular company.
Furthermore, this article claims that the short-termism debate cannot shed light on the desirability of hedge funds activism. Neither theory nor empirical evidence can tell whether hedge funds activism systematically leads to short-termism or whether its absence lead management to the opposite bias, namely long-termism. The real issue with activism is a conflict of entrepreneurship, namely a conflict between the opposing views of the activists and the incumbent management regarding in how long an individual company should be profitable. Leaving the choice between these views to institutional investors is not efficient for every company at every point in time.
Consequently, this article argues that regulation should enable individual companies to choose whether to encourage or to curb hedge funds activism depending on the efficient time-horizon given the firm’s lifecycle. The recent European experience reveals that loyalty shares enable such choice, even in the midstream, operating as dual-class shares in disguise. However, loyalty shares can often be introduced without institutional investors’ consent. This outcome could be improved by allowing dual-class recapitalizations, instead of loyalty shares, but only with a majority of minority vote. This solution would screen for the companies for which temporarily curbing activism is efficient, and induce these companies to negotiate sunset clauses with institutional investors.
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Ivan Tchotourian
