The premiumless acquisition of Lafarge by Holcim shows the perverse impact of the double voting right provision

At Lafarge, the “merger of equals” has demonstrated both the betrayal of French individual shareholders by the management and its absence of corresponding self-vision:  the search of size at any price with the encouragement of large banks  has produced the merger plan with Holcim, but the  transaction is only based  on modest volume synergies and  on the sharing of markets  instead of  growth based on internally generated efficiency, quality and technological research.

This  mega deal  somehow covered-up the cost and the current risk of an unfortunate management decision by Bruno Lafont, the acquisition of Orascom Cement, announced in December 2007,  was to be balanced the now happy over-exposure of Holcim in India … This Lafarge-Holcim merger turns now into a  takeover without premium for the Lafarge shareholders …

Another engagement milestone at Vivendi to maintain “One Share, One Vote”

Phitrust, advised and supported by Proxinvest, writes another milestone on institutional investors engagement in a prestigious group of ten truly engaged institutions  RailPen, Aviva Investors (UK), PGGM   (NL), CalPERS (US),  AMUNDI, CPR AM, DNCA Finance, Edmond de Rothschild AM, OFI, Phitrust (France).

This resolution is part of the debate opened by the so-called French “Florange law” of 29 March 2014 which made the double voting right the common legal system for registered shares of listed companies. However, this law does allow company by-laws to depart from these provisions by voting on a specific resolution during a 2015 shareholders’ meeting enabling the provisions relating to single voting rights to be maintained, restoring the “one share-one vote” principle.

The double voting rights does not meet the exact proportionality between capital invested by a shareholder and the voting rights available to him; in addition, obtaining double voting rights requires registration of shares, which involves an administrative burden that is too high or impossible to manage for a foreign investor or UCITS mutual fund, and consequently leads to an imbalance in shareholder rights. Contrary to the intention of the law – that PhiTrust Active Investors and many shareholders share – that would encourage long-term investment, one can only note that the rights as provided by “Florange law”, does not facilitate a longer detention of the shares. The recent history of several major public companies in France means recognizing that double voting rights are only of interest to investors attempting to exercise control over a company.

Jerónimo Martins considers 100% cash short-term bonus aligns the executives' interests with those of the shareholders in the long term

The remuneration policy of Jerónimo  Martins is defined by the Remuneration Committee, the members of which are not Directors and are elected by the Shareholders' Meeting for a period of 3 years.  All current members are independent from the Company and its major shareholders.

ECGS discovers that the variable component is defined by the Remuneration Committee each year, upon proposals of the Chairman of the Board, who is also the CEO. The executive variable remuneration is exclusively made of a short-term incentive, fully paid in cash and linked to the annual results in terms of: EVA, share market price and implementation of the Group's Strategic Plan.

The executive remuneration does not include any long-term incentives, deferred variable components, malus clauses or claw-back mechanisms. The Remuneration Committee also decided not to set any limits to the maximum bonus payable to the executive Directors.

Even more surprisingly, the Remuneration Committee, based on a study conducted in 2011, considers that the current remuneration structure is adequate to align the executives' interests with those of the Company in the long term.

Ethos welcomes the proposals by the Swiss Federal Council concerning the revision of Swiss company law

 The Ethos Foundation, the Swiss partner of ECGS, is generally satisfied with the preliminary draft put into consultation by the Swiss Federal Council. The proposed revision of the Code of Obligations as well as of several other laws significantly improves corporate governance at Swiss companies. Despite this, Ethos regrets that a number of topics are not covered. In particular, the Foundation calls for introducing an obligation to publish extra-financial information by companies, the extension of the board's due diligence to cover fundamental human rights and the environment as well as a limitation of the scope of the opting out in the Stock Exchange Act.

Sika: Ethos, the Swiss partner of ECGS, publishes its voting recommendations for the AGM of 14.4.2015

At the AGM of Sika that will take place on 14 April 2015, Ethos will oppose the reelection to the board of the three representatives of the Burkard family (Urs Burkard, Willi Leimer, Jürgen Tinggren) as well as the election of a new nominee (Max Roesle) proposed as chairman by the Burkard family. The Ethos Foundation also recommends approving the three shareholder resolutions that request the removal of the opting out clause, the conduct of a special audit and the nomination of independent experts.

The detailed analysis of the different items on the agenda of the annual general meeting of Sika with Ethos' voting recommendations is publicly available. Ethos urges all the shareholders to exercise their voting rights at this important meeting. It is crucial that minority shareholders massively vote to defend the long term interests of Sika. In this context, Ethos is satisfied with the recent decision of the Court of Canton Zug that confirmed the 5% voting limit on the registered shares that applies to the registered shares of the Schenker-Winkler Holding held by the Burkard family.

ECGS recommends shareholders of TNT Express do not re-elect the Chairman, Antony Burgmans

In December 2014, Dutch media reported that a number of shareholders (Franklin Templeton, Mackenzie, Tweedy Brown, Investec and Artisan Investments) would oppose the reappointment of Mr. Burgmans. TNT Express responded that it has not received such signal from these shareholders.

The Finish State opposes the proposal of its own representatives to increase director fees at Fortum

The shareholders of Fortum are surprised to discover that the Finnish State, “in deviation from the proposal made by the Shareholders' Nomination Board, will propose to the AGM that the yearly fees to be paid to the members of the Board of Directors remain at the current level for the following term of office”. A remarkable initiative supported by ECGS but which could however be seen as paradoxical considering the Finnish governance framework.

Elliott demands Kabel for special audit of Vodafone deal

On the 20th of March 2015, at the request of Cornwall 2 GmbH & Co. KG which acts as the representative of the American hedgefund Elliott, the Holiday Inn in Munich will be hosting an Extraordinary General Meeting for Kabel Deutschland and its shareholders.

The circumstances surrounding this legitimate request are unusual. Back in October 2013 a special audit report had been ordered to evaluate the measures taken prior to the 31st of March 2013 by the Management and Supervisory Boards regarding a possible acquisition by Vodafone and eventually to assess the effects of those measures on the actual deal.

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