The aim of the Florange Law, in generalising
double voting rights for all listed French companies, was to encourage long-term
shareholding, which is a principle to which we are attached, as are most institutional
investors. The state has adopted this law without concealing its plans to reduce
its capital stake in certain companies whilst at the same time maintaining its
say at AGM. Although this proposition would appear to be a « good »
idea at first glance, it is actually a « bad » one, as it is being applied
to all listed companies.
The example of Lafarge highlights
how this proposition (the generalisation of double voting rights) is an ill-adapted
solution to satisfy shareholder « short-termism ». The two main shareholders
hold 47% of the company’s voting rights thanks to their double voting rights and,
by agreeing to tender their shares to Holcim, they have effectively obliged the
Lafarge management to accept Holcim taking control of the company following negotiations
held in 2014 and 2015. It is highly likely that the deal would not have been
agreed under the terms proposed in 2015 by Holcim (no longer a « merger of
equals » and Bruno Lafont not being appointed CEO) if these two shareholders
did not have double voting rights.
The double voting right is
primarily a means of control which enables a small group of shareholders to
possess sufficient votes to form a majority at the AGM or to wield sufficient
weight to derail any resolutions which are not to their liking.
In this respect, the rapid empowerment
of Vivendi’s president Vincent Bolloré, who currently owns 12% of the capital, will
provide him with almost one third of votes, in view of the usual quorum at
Vivendi AGMs, following the rejection by 49% of shareholders of the resolution that
we proposed to re-establish single voting rights (as the legislation allows). He
will gain de facto control of Vivendi without having to launch a takeover bid and
without paying the price by becoming at least a majority holder.
We and other investors have been
astonished, in our private or public contacts with Vivendi, by the management’s
apparent willingness to dissuade shareholders from filing resolutions or vote
against any external resolutions which the Board has not approved. This is the case
with Vivendi on the question of double voting rights and also concerning the size
of the dividend that the company pays shareholders. The Board is nevertheless
meant to represent ALL shareholders rather than just some of them.
We already encountered this type
of reaction with Vivendi ten years ago (when we filed a resolution to scrap
voting right limitations – which gained the support of 66%) and more recently
with TOTAL when the company refused to file our resolution regarding risks incurred
by tar-sands in Canada. It is astonishing that some companies which call on the
market for their financing prevent their shareholders from filing resolutions to
be put to the vote, as they consider that only the Board can file AGM resolutions.
It should be highlighted that a 0.5% capital stake is required to file a resolution
in France, which limits multiple resolutions given the financial stakes in play.
The legislator and the regulator
must urgently remind companies listed in France that the principle of
shareholder democracy requires that everyone can voice their opinions at AGM in
the form of written or spoken questions, or resolutions so as to inform all shareholders
of the issues being debated and that, when necessary, in the event of a resolution,
can vote on the proposition. The vitality of shareholder democracy depends on
it.
Olivier de Guerre
PhiTrust Active Investors
