董事会男女比例和成员报酬是2018年股东大会的重点议题

2019年1月16日

Once again, Georgeson and Cuatrecasas have analyzed the behavior of foreign institutional investors and their proxy advisors in the IBEX-35 companies and the top 40 companies on the Spanish continuous market during the proxy season, to help these companies to prepare for their next shareholders meeting and anticipate the investors’ demands.

The report, “El Gobierno Corporativo y los inversores institucionales – Preparando la Temporada de Juntas 2019,” was presented this morning at the Cuatrecasas Madrid headquarters.

Importance of engagement with foreign institutional investors and their proxy advisors

The 2018 proxy season has been characterized by the growing effort of Spanish listed companies to to engage in dialog with the institutional investors active in the field of corporate governance and with the proxy advisors that have most influence over these shareholders. These engagement activities should be a priority for companies, and it is recommended that they are carried out outside the proxy season, i.e., between November and February.

Carlos Sáez, director of Georgeson in Spain, highlighted that “we have seen how some investors refused to carry out engagement during the proxy season, and we understand that they consider it a bad practice and a way to influence voting intentions in the weeks before meetings.”

In the words of Claudia Morante, corporate governance director of Georgeson in Spain, “as foreign investors active in corporate governance are increasingly participative in the share capital of Ibex-35 companies, these companies must adopt a more active role in their dialog with the main foreign shareholders of reference, and align their corporate governance, operational, and information-disclosure structures with the investors’ growing demands.”

More diversity on boards

Institutional investors demand more diversity on boards of directors, in the broad sense of the word, including knowledge, skills, experience and geographic origin.

They als have an increasing interest in gender diversity. The number of female directors at IBEX-35 companies has increased by 3.6% in the last three years, although many companies do not follow the recommendation in the Spanish Corporate Governance Code for 30% of board members to be women. Some investors, including Hermes, Allianz and Ostrum (previously Natixis) announced that, in the next proxy season, they will vote against the re-election of non-independent male directors in companies if the number of female directors does not reach at least 30%.

Like gender diversity, another matter of great importance is board refreshment, a measure aimed at ensuring that board members have the skills, experience and knowledge required. The appointments commission will have a crucial role in the coming years to ensure the succession of directors and senior managers, the capturing and retaining of talent, and executives’ remuneration structure.

The presence of independent directors, and the separation of the positions of board chair and managing director have again been key in 2018, and are expected to continue being so in 2019.

Juan Aguayo, partner at Cuatrecasas, said “investors’ growing demand for compliance with the highest international corporate governance standards will continue to be seen in 2019. The Shareholder Rights Directive is another step in that direction.”

Remuneration of directors and senior managers

One of the most controversial issues in the 2018 proxy season is, once again, the remuneration of directors and senior managers. The report stresses that Spanish listed companies must continue to strive to improve their transparency and align with corporate governance best practices.

Growing importance of social and environmental matters

The report also indicates the growing interest of Institutional investors in social and environmental matters. Based on this, in the next proxy season, companies must adopt a proactive role in explaining these matters to investors. The report reiterates how important it is for boards of directors to correctly supervise the social, environmental and ethical risks to which companies are exposed.

According to Pere Kirchner, partner at Cuatrecasas, “after a few years with the focus on remuneration and board composition, it seems that the focus has shifted to matters relating to directors’ capabilities and matters relating to corporate social responsibility.”

Stefano Marini, Georgeson’s managing director for Southern Spain and Latin America, highlighted that “corporate governance matters are necessary but not enough. Social and environmental matters are gaining increasing importance and are here to stay.”

Shareholder activism

The report includes an analysis of the phenomenon of shareholder activism, a high-profile matter in recent years given (i) the generalization of and growing demand worldwide for corporate governance standards, and (ii) the wide range of strategies used by certain institutional investors.

In this section of the report, there is a brief reference to the different types of “activist” shareholders and a description of their main strategies and objectives.

Jose Luis Rodríguez, partner at Cuatrecasas, states that “the growing demands for corporate governance together with the phenomenon of shareholder activism show the need for communication policies to be implemented with shareholders and investors, to ensure ongoing and smooth communication between the management team and the investors, enabling them to compare perspectives on strategy and the company’s management.”

Recommendations for next proxy season

The report concludes with a series of recommendations for listed companies to help them to successfully approach the 2019 proxy season. The report summarizes the main issues to consider when tackling matters such as professionalizing boards of directors, board refreshment, remuneration and capital increases. Some of the recommendations are as follows:

  • Prepare a matrix of the board’s skills.
  • Design an effective performance evaluation process that enables identification of strengths and improvement areas and, later, establish a plan of action.
  • Establish a training and knowledge-updating program, and a welcome program for new directors.
  • Design a detailed succession plan for the board chair and managing director.
  • Improve the level of transparency regarding directors’ remuneration. To do this, companies must evaluate peer companies’ practices, the percentage of remuneration subject to risk, the metrics (financial and nonfinancial) of existing performance and their weighting, as well as the degree of compliance.
  • Be aware of the growing importance of social and environmental aspects. Companies must adopt a proactive role in explaining these matters to investors. Aspects relating to the appropriate supervision of cybernetic risks and risks arising from the use of new technologies will continue to be a concern for investors.
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