Proxinvest, the French partner of ECGS presents its new Governance rating!

The French partner of ECGS released today in Paris, its new product called Proxinvest Governance Metrics © which proposes to assess and attribute a governance rating to each company constituting the French CAC 40 Index. Within this new product, each company’s corporate governance rating is assessed on 42 common risk metrics over three main categories: shareholder democracy, board composition and level of independence and remuneration. This rating is based on Proxinvest Corporate Governance guidelines.

This new corporate governance rating enables homogeneity, transparency and integrity and allows putting forward the best companies in terms of governance, in order to help responsible investors in their stock selection and the definition of their investment universe when it has been now unanimously recognized that risks associated to a poor governance can affect the companies’ financial performance.

The Proxinvest Governance Metrics ©’s methodology provides investors with a tool facilitating the integration of the risks associated to a poor governance. This tool, complementary with proxy reports and voting recommendations already delivered by Proxinvest and ECGS, can also facilitate the engagement process of investors towards investees companies identifying burning issues to be further discussed.

During the conference where investors, issuers and journalists were gathered, Proxinvest disclosed a brief summary of its 2013 rating report with the best in class reaching an average Total Shareholder Return (TSR) of 3.23 % over the period 2008-2012 while the companies marked with a grade lower than the average show an average TSR of -1.03 % over the same period.

On top of this ranking, Unibail-Rodamco (Real Estate) occupies the first place with a grade of A+ (256/300), rewarding its important efforts to implement and maintain good corporate governance standards for many years now.

Proxinvest Governance Metrics ©’s finds its originality in its approach exclusively focused on investors’ side as unfortunately, the existing codes of governance and especially the French AFEP-MEDEF code mostly set up by the companies’ managements do not address certain issues and investors’ expectations in terms of corporate governance and/or shareholder rights can sensibly differ from those of management.

For instance, Proxinvest reported three major concerns:

  • First, 32.5% of the CAC 40 components opted for a dissociation of the roles of chairman and CEO.
  • Second, 32.5% only of those companies have a Board made of a majority of independent members.
  • Third, the managements of 5 companies out of the 40 constituting the Index are protected by anti-takeover devices (“Bons Breton”, Dutch Stichting, special French legal status of “Société en Commandite par Actions” corresponding to a partnership limited by shares), raising in the meantime the issue of registered headquarters in the Netherlands or Luxembourg as anti-takeover devices where lower shareholder rights are then observed.

                                                                                                                                                                                                                                                         London, September 17th, 2013

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