Summer always provides the opportunity to reflect upon the months gone
by, particularly the major governance issues arising during 2014-2015, before
getting back to work at the end of the summer break. We would like to mention
some of the key themes which are still of concern today.
- Double voting rights: the French Finance Minister, Emmanuel Macron, was
promoting multiple voting rights at the end of August at the MEDEF business
confederation summer university, in defence of French companies and strategies implemented
by their managers and employees. However, he did not mention the fact that Holcim
took control of Lafarge, without paying a premium, because the company was
almost fully-controlled by two shareholders thanks to their double voting
rights. No one seemed bothered either that Vincent Bolloré, a minority VIVENDI shareholder,
has been able, through owning double voting rights, to take control of the
supervisory board and also of Canal Plus, as a pawn in his global strategy in
France and Africa, thanks to its cash reserves, which were not returned to shareholders,
despite the fact that the group’s main business was sold without shareholders
being consulted...and that he is making further investments in Italian telephone
operators once again...
- Remuneration: The partial sale of Alstom to General Electric occurred at a time when
the company was “faltering” as it was facing a US corruption law suit (leading
to Alstom paying a EUR 700m fine). Alstom’s CEO Patrick Kron is receiving
severance pay although the company is accused of corruption and the strategy he
put in place has failed. Is this justifiable with regard to employees and shareholders?
Similarly, it has come to light that Michel Combes was negotiating his
appointment at Numericable and his exit from Alcatel-Lucent at the same time (which
is normal). However, is it acceptable that the board decided, after he
announced his departure, to shorten the qualifying period for obtaining Alcatel-Lucent
shares to 2 years in the company, whereas the project presented at the
shareholders AGM included a qualifying period of 3 years?
- Environment: The COP 21 convention
is rousing many people and not just the politicians. Many companies are
preparing schemes to demonstrate that they too are aware of the stakes and
their responsibilities. We have seen that the top 100 US companies have
committed to investing USD 1.4 trillion over several years, which is an
enormous sum. However, in terms of the investment each company intends to make during
the next few years, this total amount seems almost ridiculous. This is without
taking into consideration the company managers who have expressed off-the-record
doubts over climate change really existing, or being serious enough to bother
implementing truly innovative policies which would help limit the impact of
their industrial activity or services.
As part of our responsibility as shareholders, we must recognise that
this type of action or reaction is not normal and should lead to any board of
directors which allows such practices being chastised. A board of directors is
elected by shareholders and a Chairman is answerable to shareholders and
employees for the decisions taken by the management. Over-proximity incurs the risk
of a company being governed solely to serve certain interests. It is the board
of directors’ duty to act in the interest of all parties and they should put
their tenure to the vote, if certain of their decisions appear flawed.
Meanwhile, a board of directors cannot act without active shareholders, many
of whom still believe that this is not their role and prefer remaining simply as
financial investors. However, we can achieve nothing alone but together we can
influence management policy and help them take the right decisions. Join us!
Olivier de Guerre
PhiTrust Active Investors
