Multiple voting rights - illusion of reward of long-term shareholders

European overview

Italy and France has recently changed their legal framework to introduce or to automatically offer double voting rights to shareholders. The highly contested French law (known as the “Florange Act”) automatically offers double voting rights from 2016 onwards to shareholders of listed companies who hold shares in registered form for at least two years, unless a company opts-out and modifies its articles of association stipulating otherwise.

Thanks to the Florange Act, the France has become a European champion of non-compliance with the equal treatment of investments in shares and the voting rights.

France has become a champion of shareholder unequal treatment

Source: Expert Corporate Governance Service, Stoxx®Europe 600 Universe


Proxinvest, the French partner of ECGS, publishes his seventeenth report on the remuneration of the SBF 120 index executives

After two years of decline, the average total compensation of the Chief Executive Officers of the CAC 40 index reaches € 4.21 million in 2014 (+ 6%). In contrast, the average total remuneration of the SBF 80 index (next 80 companies after the CAC 40) falls by 3% down to €2.36 million after two consecutive years of increases.

The remuneration structure stays faulty as 40% of the Chief Executive Officers have no long-term remuneration of any sort. Indeed, the remuneration structure is focused on short-term: the average fixed remuneration (€ 1.042 million) and bonus (€ 1.308 million) remain stable in the CAC 40 index. The 6% increase in total remuneration is mainly due to exceptional elements (severance payments) and the increased use of performance shares, which now account for 29.1% of the remuneration of the CAC 40 index CEOs. Stock options have almost disappeared in France as they now account for only 4.1% of total remuneration. In the coming years, changes in legislation (“Loi Macron”) aiming to promote free share plans will further fuel the performance shares boom and the stock-options decline.

Ethos Study on the 2015 Swiss Proxy Season: Mixed picture in terms of implementation of Minder Initiative

At the end of the 2015 Swiss proxy season Ethos, ECGS partner, publishes a study on the different aspects tied to the implementation of the Minder Initiative and the corporate governance of the companies comprised in the Swiss Performance Index (SPI). Ethos has found that the spirit of the Minder Initiative is often circumvented regarding the vote on the remunerations of the board and executive management. In addition, several principles of good governance are often not respected such as the independence of the board or the equal treatment of shareholders.

The Golden Goodbye of the Alcatel-Lucent CEO … Proxinvest write to the company and to the AMF

Proxinvest seized the French market Authority AMF on September 1st on the question of the integrity of the conditions of Nokia’s exchange offer for Alcatel-Lucent shares as a result of various subsequent decisions by the Board of Directors of Alcatel modifying generously the remuneration terms for the departing CEO Michel Combes (exceptional allocation of performance shares, payment of a non-compete three years rent and exceptional payment of a supplementary pension after two years of activity). The AMF on the wake of the press scandal opened an instruction of the case.

This year’s general meetings have made the 2015 season a banner year for shareholder activism!

The resistance campaign against the Florange law (which reintroduces automatically double voting rights and the possibility to block public offerings) has, essentially, brought the largest investors together against this deterioration of minority shareholders’ rights. Bolloré’s rise in Vivendi’s capital against the backdrop of contested communication, the unexpected rise of the State stake in order to impose the double voting rights at Renault and several rejected items at Orange have been the hottest cases of the 2015 proxy season.

Altice : nine reasons to oppose the cross-border merger proposal

Altice SA intends to effect a cross-border merger between a newly formed Dutch entity, Altice N.V., as the acquiring company, and Altice SA, as the company ceasing to exist.

Prior to this merger, Altice will transfer substantially all of its assets and liabilities to a newly incorporated subsidiary Altice Luxembourg SA. The result of the transfer, followed by the merger, will be to list the shares of a Dutch law governed public company on Euronext Amsterdam instead of the shares of a Luxembourg law governed public limited liability company.

Extraordinary general meeting of Sika: Ethos supports the independent members of the board

Ethos, the Swiss partner of ECGS, maintains its support for the independent members on the board at the extraordinary general meeting of Sika, which will take place on 24.07.2015 called by the Burkard Family. Ethos recommends the refusal of all the propositions of the Burkard Family. In particular, Ethos refuses the dismissal of the Chairman of the board and two board members who have demonstrated their loyalty and commitment to Sika's independence. They have acted in the interest of the company, its shareholders other than the Burkard Family, which hold 84% of the share capital, as well as of its employees and other stakeholders.

Analysis of the EGM of Sika on 24.7.2015 with the voting recommendations of Ethos

43 million reasons to oppose ! At WPP Standard Life points to the double risk of self-dealing and complacency

At the WPP’s annual meeting in London the highest European 2014 package for a CEO, some 43 million for Sir Martin Sorrell was finally voted with only 22% of No votes, comparing with no less than 60% last year…Unpredictable investors !

WPP scandals market with a “jackpot-paying” to Sir Sorrell, of £ 36 million received from highly contested LEAP co-investment plan, bringing the total reported remuneration up to £ 43 million, or 37 times his salary. In 2015, the LEAP scheme participants have earned a share match of five times the number of shares they pledged in 2010. According to the press release published in March 2015, the maximum performance outcome results in the vesting of 2,326,945 shares for Sir Martin Sorrell, CEO, which would have been worth £ 16.86 million at the grant price in 2010 of £ 7.25 per share and which have more than doubled in value to £ 36.04 million at the vesting price of £ 15.49 per share on 13 March 2015.

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