reforme des retraites et privatisation l’expérience d’une proxy firm ocde paris sept 22. 1999
TRANSCRIPT
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REFORME DES RETRAITES ET PRIVATISATIONL’expérience d’une Proxy Firm
OCDE Paris Sept 22. 1999
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PROXINVEST, the first continental proxy firm focuses on
independence
expertise : in depth legal and financial research,
technology : First Web Full Proxy Station (88 resolutions, 60 criteria)
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A very favorable regulatory framework
for a self-correcting democratic proxy practice
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Full shareholder legal power «L’assemblée générale est
souveraine»
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Full shareholder legal power AGM approval of accounts, dividends, related
party transactions, mergers ... No change in the by-laws or in the capital
structure without a 2/3 approval of the extraordinary meeting
Disclosure : BALO meeting agendas, COB tested Reference Document
No underwater rights issuances without PR
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...offering rather time to management than obstacles to the shareholders 6 years maximum terms for Directors and
Auditors Possible Poison pills subject to the approval of
the Shareholders Possible Double Voting Right provision Possible vote limitations / unlimited
partnerships ...but no more than a third of Executive
Directors at the Board
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Insist on a difference between the company’s interest and the shareholers interests
Defense of the PDG structure
Defines independence of directors
Ban cross-shareholding and cross-directorship
Limits external directorships to five for ED
Three commitees (independent for audit and remunerations)
The 1995 Viénot Code
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June 30. 1998
A new set of Guidelines from the French Asset Management
Association following the 1995 Viénot Code
the
AFG-ASFFI Code
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the AFG-ASFFI Code requests more (I)
board to serve the interest of all shareholders
diligent proxy voting ban on underwater options compensations and fees adjusted to
performance
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the AFG-ASFFI Code requests more (II)
limit number of directors to 16 independent directors clearly defined three independent committees more dedicated directors: limits multi-
directorships to 3 mandates for non-independent directors
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Shortening of the Directors mandates to 4 years
Yearly monitoring of the Board’s work
The Board and the committees should be
made of a third of independent directors
The 1999 Viénot II Code
July .1999
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Proxy voting in France
Block your shares days before the meeting– The 5 days legal blockage allows to sell– Put a general request to your custodian
Obtain documents or use local service Execute and Send by yourself the proxy cards
or your delegation of vote to reach the company or its bank 3 days before latest
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Modernizing French Practice, increasing taste for equity...
Withdrawal of the State: Eramet, CNP, Crédit Lyonnais, GAN...
Reduction of Cross-Shareholdings Still Endogenous and Cross Directorships Still many Double Voting Right provisions : 56% of the
250 French listed companies, 67% of CAC 40 Still almighty PDGs... But only 15 big listed companies are really locked (SCA, 10
years double voting rights, vote limitations, golden shares)
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The BNP Soc Gen Paribas open battle
could not have occurred in Germany Netherlands or Sweden or Swizerland
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Looking at the French Privatized Companies Corporate Governance :
not yet superior
16 out of the CAC 40 Companies are privatized
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Comparing their Corporate Governance Features (I)
Number of Directors : 16 comparing to 14.5 (CAC 40)
Number of non independent directors: 12.2 (76%) comparing to 10.7 (74%)
Number of women : 0.5833 comparing to 0.5853
Number of shareholders : 552000 comparing to 337 000
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Comparing their Corporate Governance Features (II)
Double voting right : 8/24 (33%) comparing to 29/ 40 (72%)
Vote limitations (Ceiling or SCA) : 5/24 (21%) comparing to 10/40 (25%)
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Comparing their Corporate Governance Features (III)
Split Chairman CEO : 3/24 (12%) instead of 11/40 (27%)
Specialized committees : 1.9583 v.1.9512 Audit committees : 22/24 (91.7%) comparing to
34/40 (85%) Remuneration Commitees : 21/24 (87.4%)
comparing to 35/40 (87.5%) Nomination Committee : 6/24 (25%) comparing to
8/40 (20%)
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Privatized companies are targets
8 out of 24 have been acquired or merged in the last years : UAP, AGF, Suez, Eramet, Paribas, Pechiney, Rhône Poulenc, Elf...
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Why privatized companies are targets ?
Some lack of clear entrepreneurial objectives : Suez, AGF, Saint Gobain, CNP...
Lack of private markets culture at the top: Only 2 CEO out of the 24 companies have never been associated with the public service or governement, 20 have made most of their carreer in poublic service
General lack of equity culture : subsidized shareholding (rebates, low IPO)
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Why privatized companies are targets ?
LOW INTERNATIONAL COMPARATIVE VALUATION :
WEAK FRENCH EQUITY MARKET FOR LACK OF EQUITY INVESTED SAVINGS
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French shareholders become vote selective : examples
keep active the capital increase authorizations in time of public offer: 97% before 1996, 96% in 1996, 94% in 1997, 91% in 1998
global capital increase authorizations without preemptive right : 99% before 1996, 98% in 1996, 97% in 1997, 96 % in 1998
approve dividend reinvestment plan: 99.7% before 1997, 99.6% in 1997, 99.1% in 1998
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but still approve shareholder unfriendly proposals : examples
election or reappointment of controversial directors (99.50% in 1998...99.?% in 1999)
mergers and financial operations : Kingfisher-Castorama Dubois merger, or Lagardère 1999 doubling of the unlimited partner fee : 97%
vote limitations and poison pills : Rhône Poulenc 1999 failed on its poison pill but passed its vote limitation
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A need for ACTIVE COMMITTED
SHAREHOLDING PENSION FUNDS ARE NEEDED TO FUND
FRENCH PENSIONS THE ONLY OPPORTUNITY FOR
PARTICIPATION IS TO VOTE PROXIES NEW PENSION FUNDS AND EMPLOYEE
OWNERSHIP SYSTEMS SHOULD LEARN TO VOTE
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www. proxinvest .fr the French Link
PROXINVEST