French public pension fund Erafp has voted against 83.1% of executives’ remuneration resolutions in French companies’ general meetings over 2016, it reported in a detailed review of its last year exercise of voting rights.
The calculation has been done on a sample of 40 French companies’ general meetings in which some 810 resolutions were monitored by Erafp.
The French public pension fund has rejected executives’ remuneration resolutions for the following reasons :
- Excessive remuneration (>100 x minimum wage);
- lack of transparency, in particular concerning performance goals (type of criteria, no targets, minimum and
- excessive variable remuneration;
- lack of ESG criteria:
- defined benefit supplementary pension schemes
Erafp added that only four of the 40 French companies monitored in the sample complied with its policy regarding the amount of remuneration for executives (total remuneration < 100 x the minimum wage).
As for resolutions approving dividend distributions, Erafp voted against 48.6% of them because of large distribution, poor financial results or changes to the balance between employees’ and shareholders’ comparative income, job situation, indebtedness or investment capacity compromised.
Erafp also voted against 32.4% of resolutions to appoint or reappoint directors. It observed an increase in the feminisation of the boards of the 40 French companies monitored in the sample (41% against 36% in 2015 and 31% in 2014).
Higher rate of rejection in foreign companies’ meetings
The French pension fund reported that on a sample of 20 foreign companies, it has rejected 57.32% of resolutions regarding the appointment or reappointment of directors in 2016.
In addition Erafp voted against 57.14% of resolutions to approve dividend distributions.
“The most common reasons for voting against a dividend distribution were: the amount to be distributed was not consistent with the company’s financial situation, an unacceptable increase in shareholders’ income compared to employees’ average income, the distribution rate was excessive compared to average rates in the sector and the distribution would not be in the interests of the company and its minority shareholders.”
Erafp only voted in favour of 6 dividend distributions during the general meetings of the 20 foreign companies sampled.
All resolutions to approve executives’ remuneration were rejected by Erafp, primarily because executives’ receive more remuneration in the countries where the companies were based.