Proxinvest publishes its 15th survey on French 2011 AGMs

Proxinvest’s annual study on general meetings finds a decrease of shareholders involvement with less protest on resolutions. Nevertheless, French shareholders are still some of the most challenging towards resolutions compared with their European counterpart with the level of opposition averaging 5.9% at companies within the main index, CAC 40 (6.3% in 2010). The level of opposition is of 4.79% at companies of the SBF 250, the index for smaller capitalisations, compared with 5% in 2010, 4.6% in 2009 and 4.1% in 2008.
The number of resolutions rejected against the advice of the Boards which had reached a record of 64 in 2010, falls to 44 rejected proposals in 2011, less than in 2007.
Shareholders primarily criticise anti-takeover measures with a level of opposition on average reaching 35.3%. During the year, there were 2 notable rejections at Essilor International and Publicis Groupe.
Shareholders also managed to reject resolution where they are deprived from pre-emptive rights at 21 companies including Air France-KLM, GFI Informatique, Publicis Groupe, Rubis, Saft Groupe, and SOI TEC. Shareholders now hesitate less in voting against Directors with 7 rejected elections in 2011, for instance at Altran Technologies or Gascogne. We also note a serious control over incentive schemes including share or option plans with 7 rejected resolutions including Saft Groupe, Seb, Rubis and Ubisoft Entertainment. Shareholders have also reflected their concerns within regulated related-party agreements reported in the special auditors report especially when they comprised a differed element of remuneration for Executives (Alten, César, Delachaux, Groupe Gorgé, Risc Group, Theolia).
The number of shareholders proposals such as the external resolutions proposed at GDF Suez, Safran or Total, which already fell from 62 to 24 in 2010, decreases further in 2011 to 12 initiatives only. The level of external proposals in France is going back towards the shy year of 2005 that saw 11 filed resolutions only. The very first environmental resolution in France was not inserted on the meeting agenda by the Board of Total. The proposal led by Phitrust Active Investors required more information on the exploitation of oil sands in Alberta, Canada.
Proxinvest regrets the need for legal procedures in order to force the filing of external resolutions at general meetings as seen at Total, Lagardère or Société Générale over the last two years.
Voting advisory services are more and more crucial to serve a responsible ownership. Proxinvest, Managing Partner of Expert Corporate Governance Service (ECGS), is welcoming Frontis Governance, the reference point for institutional investors in Italy, among partnership of local independent experts focusing the biggest European capitalisations.
Following the recommendations from the financial authority (AMF) on proxy voting agencies, Proxinvest has created a steering committee comprising fourteen members with extensive experience headed by Dominique Biedermann, Executive Director of Ethos Services. Proxinvest has submitted its 2012 voting policy to the committee for consultation. The new policy will particularly be stringent on the separation of the roles of Chairman and CEO, the control over regulated related-party agreements as well as executive remuneration.
A working group on general meetings has been created at l’AMF and is chaired by Mr Olivier Poupart-Lafarge. The group is examining related-party agreements, electronic voting and the conduct of general meetings. Shareholders should ensure that their rights are respected as a source of value for issuers.
Most issuers are better prepared to listen to their stakeholders today and show a better communication facing shareholders’ eyes that are becoming sharper and sharper and Proxinvest notes some substantial improvements in governance. It should not be forgotten that the local governance code (AFEP-MEDEF code) is written by employers’ bodies only. Therefore, improvements in French governance might be linked to auto-regulation. Views still diverge, for example regarding the combination of the Chairman and CEO which management favours. In addition, French management are opposed to a ‘Say on Pay’ contrary to what is now a norm in Europe and the U.S.. Executive remuneration in French banks is published late and extremely difficult to assess due to the lack of transparency as seen in Société Générale report as well as with BNP Paribas.
Proxinvest is deeply preoccupied by the decrease in investors’ appetite for shares and wishes to mobilise all for a return of investors towards this asset class.
Members of the Steering Committee
November 2011
Mr Dominique Biedermann, Executive Director, Ethos Services, Geneva
Chairman of the Steering Committee
Mrs Valérie Bardou, Head of SRI development, AMUNDI
Mrs Sophie Boegner, Urbanist, Ministry of Defence
Dr Jean-Luc Chenaux, Lawyer and Professor specialised in business law at Neuchâtel University
Mr Jean de Demandolx-Dedons, CEO of SGP  de Demandolx,  member of AMF College
Mr Olivier de Guerre, Executive Director  Phitrust Active Investors
Mr Olivier Gindre, Founder and Chairman of EPF Partners
Mr Pascal Girardot, Executive Director of Féderactive
Mrs Colette Neuville, Chair of l’ADAM 
Mr Guillaume Prache, President of EuroInvestors 
Mr. Gérard Rameix, Médiateur National, former AMF General Secretary
Dr Dominique Schmidt, Lawyer and Professor at Strasbourg University
Mrs Pascale Sagnier, Head of SRI research, Axa Investment Managers
Mr Bruno de la Villarmois, Finance executive,  Air Liquide