Publication of ECGS-Proxinvest 17th report on the "2013 French Proxy season and ECGS-Proxinvest Voting Policy for 2014".

The French proxy advisory firm Proxinvest, member of the ECGS consortium, reported on the content and voting results of 370 General Meetings held in 2013 by 336 French listed companies. While the shareholders of the CAC 40 index companies appeared less critical with an average opposition vote dropping from 5.88% to 4.87% in 2013 and a lower number of rejected or withdrawn resolutions from 50 in 2012 down to 35 in 2013, the French listed companies still have room for improvement in the preparation of their general meetings since 43% of resolutions are still the subject of a negative recommendation by the ECGS-Proxinvest proxy advisors.

The main subject of concern for shareholders remains dilution risk relating mostly to rights issuance without possible subscription by ordinary shareholders. Only one resolution setting up anti-takeover devices, strongly contested by shareholders in recent years, was rejected in 2013. This can be also explained by the decline in the number of proposed anti-takeover devices (poison pill warrants and possible rights issuance during a public offering) as a direct result of the constant opposition by institutional shareholders.

The 2013 French proxy season has been disappointing in terms of shareholders’ participation and engagement: for the first time since 2005, the rate of participation in voting rights at General Meetings fell to 67.33 % for the CAC 40 index companies. Indeed, many practical obstacles to the exercise of voting rights remain. Besides, the right of shareholder proposal provided for ESOP Funds or the works council was of little or no use: the number of external resolutions observed, coming for three - quarters from employees or employee shareholders, dropped from 50 proposals in 2012 to 35 in 2013.

2013 is an euphoric year for the stock market, but the outlook for economic activity in France remains clouded by a tax-only management of public deficits and a worrying lack of expected structural reforms. The French Parliament continues its work of shareholders disenfranchising currently proposing to generalize the double voting rights to all French companies while supporting the purely non-binding and not compulsory “Say on Pay” vote.

However, the double vote provision allows companies to adopt many resolutions that shareholders would have yet democratically rejected by their votes. Besides the provision benefits exclusively to control and national shareholders, and reduces the influence of institutional and foreign investors.  Thus Proxinvest identified nineteen resolutions (including elections of directors, approval of stock option plans or too generous or poorly justified pay items, plus some dilutive or anti-takeover devices) that passed thanks to the double voting right of the main shareholder. This perversion of shareholder democracy was found in 2013 at Accor, Akka Technologies, Arkema, Kering, Gameloft, Ingenico, Ipsos, Sodexo, and Ubisoft.

The recent controversy over the retirement scheme of the Peugeot CEO illustrates well the current practices. Contrary to the assertions of the joint statement of the AFEP-MEDEF, Philippe Varin’s courageous decision to abandon this pension payment cannot be "a demonstration of the effectiveness of self-regulation established by the AFEP MEDEF code."


The review of the Peugeot case record tells us first that the Commercial Code was not strictly adhered to by the company, its Supervisory Board nor by its independent auditors since this generous pension plan had been long hidden from shareholders and was not subject to the procedure of regulated agreements from 2002 to 2005. Despite Proxinvest’s negative advice, investors had been complacent in 2006 (98% approval of the plan) but nearly half of minority shareholders had finally expressed opposition in 2010 when the affiliation of Mr. Varin plan retirement was accepted by 79.9 % of the vote, a score increased by the double voting provision. The Supervisory Board of Peugeot did unfortunately not react. As did the Peugeot workers council which could have easily tabled since 2006 a proposal at the AGM to reduce this criticized pension.


This controversy illustrates the need for a better and stronger regulation of executive compensation by their shareholders. Issuers, following the amendment of the AFEP-MEDEF Code, will now submit the individual remuneration of their executive directors to an advisory vote of the General Meeting.

Proxinvest introduced its new voting policy for the proxy season 2014, especially regarding the new “Say on Pay” vote. In line with the ECGS voting guidelines, Proxinvest will claim for better justifications of the various remuneration components, moderate remuneration practices, balanced remuneration structure and a strong link with the long term performance.


Soon, on 12 December 2013, Parliament's vote will decide for a lax control of related-party agreements and later for a mandatory double voting provision for listed companies. Proxinvest joins and supports the Chairman of the AMF Gerard Rameix when he argues "If the capital of French companies is totally frozen, their shares will be worth less and they will struggle to finance themselves. To protect our businesses, it is preferable to encourage investors to be sustainable shareholders, for example with the individual tax free long term PEA share plans as announced." Only financial markets integrity and fairness will be able to call the French to fund the needed economic growth.


To view the original version of the French Press release click here


Pierre-Henri Leroy,
Loïc Dessaint,

Deborah Slama,

Proxinvest, the French member of ECGS Ltd. is an independent consulting firm for institutional investors specializing in the analysis of the resolutions at General Meetings of listed companies and in matters of governance.

The seventeenth annual report (315 pages) first studied the general behavior of shareholders, market developments and presents the different types of decisions proposed to the shareholders, the challenges for creating long-term value and voting results observed. The report also includes the Principles of Corporate Governance and Voting Policy 2014 prepared by Proxinvest for the new season of general meetings.