Is the financing of dividends through debt responsible? EDF case

At the announcement of EDF's results, the new Chairman-CEO, Jean-Bernard Lévy, seems to be discovering or at least worries about financing the dividend through debt (see Les Echos and Agefi). The same day, ERAFP, a civil servants' pension fund, announces its voting policy and commitment for 2015 focusing on "the implementation of responsible policies regarding the distribution of dividends".

At EDF, the issue of reasonable dividend levels had already been discussed during the 2014 General Meeting: facing the proposal of the Board of Directors of a dividend of €1.25 per share, the employee share ownership fund “Actions EDF” for its part suggested €0.80 per share. In the end, the resolution of the Board offering € 1.25 per share was adopted at 98.4% of the votes against only 2.1% in favor of the second proposal of € 0.80. The state, in desperate need of this dividend because of short-term budgetary constraints, weighed 93% of the votes of the GA, but one wonders why so few of EDF’s minority shareholders questioned this policy of funding dividend through debt.

New report of the French Financial Authority (AMF) on shareholder general meetings

The just released AMF implementation report on general meetings, is a welcome revision of the working report chaired by Olivier Poupart Lafarge commented several times on this site.

This “implementation” has receives little critique from Proxinvest because the French market regulator has consulted and ultimately took into account many amending suggestions from the investor side. These debates have demonstrated the power of the business lobby braced on all possible comfort arrangements for issuers at the expense of the interests and equality of shareholders as of corporate integrity.

Independent directors and institutional investors persuaded the Italian Government not to extend the facilitated approval of multiple voting rights

An unprecedented initiative was launched last month by a group of independent directors, aimed at blocking any attempts to extend the temporary exemption to the supermajority vote, required to approve the introduction of multiple voting rights. In few days, 140 individuals (academics, journalists, professionals and independent NEDs of more than 30 listed companies), 20 institutional investors (representing more than US$ 7.5 trillion of assets under management), and 9 advisers, including ECGS’s partners Frontis Governance and Manifest, signed an open letter to the Italian Government, the Parliament and market authorities. Many other investors expressed their intention to subscribe the letter, but they could not make the strict deadline. ICGN and the association of Italian asset managers (Assogestioni) also supported the initiative, sending a separate letter to the Government.

On February 5, only 3 days after the letter was sent, the Minister of Economy Carlo Padoan formally replied that the exemption period expired, and that the Government will not propose any extensions. A great result that proves that committed investors and (really) independent directors can work together to make changes happen.

Frontis Governance published the third study on Directors’ remuneration in Italy

The Italian partner of ECGS has published the third Frontis Governance’s report which aims at identifying factors influencing the executive remuneration at Italian listed companies, as well as at verifying the eventual alignment with the corporate strategies and the shareholders’ interests in the long term.

The analysis covers 100 Italian listed companies’ remuneration policies approved in 2014, as well as all the remuneration components vested in the three-year period 2011-2013. Each component has been analyzed in comparison with relevant key parameters:

  • The base salary has been compared with size parameters (such as the market capitalization, total revenues and average workforce), average wages and share ownership structure;
  • The variable components have been compared with sector specific performance indicators (EBITDA, Tier 1 Capital Ratio and Solvency Margin) and common criteria (EBIT and Total Shareholder Return), both in the short and in the long term (3 and 5 years).

Together with the remuneration of the CEOs, the study analyses at the same level of detail the compensations of all other members of the Board, differentiating between Chairpersons and other members, executives and non-executives.

ICGN, following two ECGS partners, Proxinvest and Frontis, strongly opposes the European proposals for the revised Directive, the Italian Growth Decree and the French Florange Act on differential voting rights

 

On 29 January 2015, the International Corporate Governance Network (ICGN) has issued a strong message to the European Parliament, the Italian Government and the French authorities on the issue of differential voting rights.

ICGN is now also publicly challenging amendments proposed in the European Shareholder Rights Directive which introduces mechanisms such as differential voting rights, loyalty shares and tax incentives. A similar letter has been submitted to the Italian Government against provisions outlined in the Growth Decree.

SIKA shareholders : join Ethos’ support group

Posted on Proxinvest

As Managing Partner of the proxy firm Expert Corporate Governance Service Ltd (« ECGS »), Proxinvest is proud to invite investors to join a support group created by our swiss partner ETHOS to defend the minority shareholder rights in the SIKA case (CH0000587979).

Indeed, Ethos and 11 shareholders filed a shareholder resolution at Sika to demand the removal of the opting out clause. The resolution will be voted on at the extraordinary general meeting of Sika which was announced and will take place in the first quarter of 2015.

In order to mobilize a maximum number of minority shareholders in favor of the resolution, Ethos has created a support group for this resolution. Ethos invites all shareholders, be they institutional or private, to join the support group. By joining the group, the shareholder demonstrates his/her support for a resolution that aims to remove an unjustified clause that serves only to favor in a financial manner the controlling shareholder to the detriment of the minority shareholders. Such unequal treatment of shareholders is unacceptable and the same offer should be made to every shareholder of SIKA.

Ethos launches a support group for the resolution to remove the opting out at Sika

 

Ethos Foundation, Swiss partner of ECGS, launches a support group for the shareholder resolution which demands the removal of the opting out at Sika. The resolution was filed by Ethos and 11 shareholders on 23 December 2014. The resolution will be voted on at the extraordinary general meeting of Sika, which has been announced and which will take place in the first quarter of 2015. The support group allows a large number of shareholders to join and commit to voting for the resolution. The aim is to mobilise the majority of Sika minority shareholders in favour of removing the opting out clause.

Ethos invites all shareholders, whether institutional or private, to join the support group. By joining the group, each shareholder demonstrates his/her support for a resolution that aims to remove an unjustified clause that serves only to favour in a financial manner the controlling shareholder to the detriment of the minority shareholders. Such unequal treatment of shareholders is unacceptable.

The list of members is updated daily and published on the website www.ethosfund.ch.

Ethos and 11 shareholders submit a resolution to the extraordinary general Meeting of Sika to remove the opting out clause

The Ethos Foundation, Swiss partner of ECGS, and 11 shareholders (representing 1.7% of the capital, see list below) today filed a shareholder resolution to the agenda of the extraordinary general meeting of Sika, the convocation of which was announced on December 10. The resolution requests the removal of the opting out clause from the articles of association. This provision allows the competitor Saint Gobain to buy from the Burkard Family the company Schenker Winkler Holding, which holds 52% of the voting rights with only 16% of the capital, without making an offer to the rest of the capital. This is very detrimental to minority shareholders and endangers one of the flagships of Swiss industry despite the company currently being well positioned in its market with very good growth perspectives.

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