The Board of Directors of open-ended investment fund Proxy Active Investors, a SICAV, has adopted its new shareholder engagement programme for the 2014-2015 season. Its initiatives will focus in particular on three themes: a defense of the “One share, one vote” principle in France, the reintroduction of the neutrality duty of the Board in period of public offer and the introduction of “claw-back” provision for executive directors of the banks.
As stated recently by the Novethic RI agency , “Phitrust Active Investors,one of the rare European funds focusing in shareholders engagement for better governance , is proposing the introduction of claw-back provisions in all the Bankers contracts. Because of the accumulated fines against bankers these banks last years including a $ 8,9 billion fine for BNP Paribas following the 2013 euro 446 million against Société Générale then the expected fining of Crédit Agricole accused of Eurolibor rate or derivatives manipulation and whom despite July 2013 denials has created a € 1.2 billion provision for these risks.
1. For a long time, the community of French and international investors has applied the principle of proportionality
between capital and voting rights (“one share – one vote” principle) and the principle of Board neutrality for listed
companies during takeover bid periods.
The French law of 29 March 2014 “aimed at recapturing the real economy” (known as the “Florange” law), reverses these principles by allocating double voting rights by default for holders of registered shares only, and authorising the Board to make any decisions to block a takeover in the event of a bid. The law thus undermines the rights of minority shareholders.
At the same time however, the “Florange” law includes provisions whereby the shareholders of listed companies can re-introduce the principles of “one share – one vote” and board neutrality during takeover bids through amendments to the by-laws.
Proxy Active Investors will introduce a number of initiatives aimed at re-establishing these principles which it considers vital to ensure equal treatment for shareholders and freedom for takeover bids to progress.
2. The increase in fines and legal proceedings under way against banks in many countries (see the recent $8.9 billion fine imposed on BNP Paribas) actually punishes their shareholders.
Proxy Active Investors will engage with the Boards of Directors of listed French banks to ensure that shareholders’ annual meetings can resolve to introduce director compensation systems that include claw-back clauses compelling directors to return bonuses for past years, to improve accountability and control of long-term risk.
P.S : Proxinvest is the corporate governance engagement adviser of the fund PhiTrust Active Investors