Voting Policy

Voting Policy
in the context of the SRI shareholder engagement
1
June 2014
Contents
I. Shareholder engagement 1. Part of Ircantec’s SRI policy
2. Voting policy objectives
3. Implementation of Voting policy
3.1 Voting policy and Operational voting rules
3.2 Delegation to management companies
p.
p.
p.
p.
1
1
2
3
II. Voting policy principles 1. Corporate governance 1.1 Separation of supervision and executive functions
1.2 Composition and organisation of governance bodies
2. Remuneration of directors and corporate officers 2.1 Remuneration of directors and share ownership
2.2 Remuneration of members of the Board of Directors or Supervisory Board
3. Shareholders’ rights 3.1 Exercising shareholders’ rights in general meeting
3.2 New share issues
3.3 Anti-takeover measures
3.4 Financial and extra-financial communication and information
4. Approval of accounts and management 4.1 Approval of accounts and discharge
4.2 Approval of related party agreements
4.3 Auditors
5. Allocation of profit/loss and management of shareholder equity 5.1 Distribution of dividends and allocation of profit/loss
5.2 Special benefits
5.3 Dividend in the event of loss
6. External resolutions p. 5
p. 5
p. 7
p. 12
p. 14
p. 15
p. 16
I. Shareholder engagement
1. Part of Ircantec’s SRI policy
Pursuant to its SRI1 Charter, in which Ircantec expresses
the wish to “have an active voting policy in general meetings and exercise its voting rights to improve the governance of companies of which it is a shareholder”, this
document sets out the Voting policy of the Institution.
This policy pursues the PRI2, fundamental to the scheme‘s
responsible investor policy3. PRI principle no. 2 states:
“We will be active owners and incorporate ESG4 issues
into our ownership policies and practices”.
The commitment applies equally to the scheme’s general
investment policy, whose principal objectives are to act in
the best long-term interests of its beneficiaries and maintain consistency with regard to certain values. In effect,
in exercising its voting rights, Ircantec seeks to encourage companies to improve their governance, which may
contribute to improving their financial results in the long
term and to identifying with society’s aspirations.
Ircantec’s shareholder engagement will take several
forms:
• the exercise of voting rights concerning the delegated
management of Ircantec portfolios;
• inter-shareholder dialogue;
• participation in investors’ groups with regard to collaborative engagemement5 in issues pursuant to the
principles of the SRI Charter and of Ircantec’s Voting
policy.
In its SRI Charter, Ircantec requires companies in which it
invests to comply with basic international standards, and
particularly:
• the Universal Declaration of Human Rights;
• the Conventions adopted by the ILO6;
•
the Rio Declaration on the environment and
development;
• the United Nations Convention against Corruption.
In this Charter the scheme specifies the subjects it considers to be priorities in the extra-financial assessment of
companies, including:
• the independence and skills of directors;
• transparency in the way directors are remunerated;
• prevention of corruption and money-laundering;
• transparency in business and the financial and extrafinancial situation;
• gender equality;
• non-discrimination policies;
• freedom from restriction for trade unions;
• prevention of tax evasion and tax avoidance, which
deprive States and local authorities of financial
resources.
Ircantec intends to incorporate these priorities in its
Voting policy.
1 Socially responsible investment
2 PRI: Principles for Responsible Investment, www.unpri.org
3 cf. Ircantec’s SRI Charter: “Ircantec intends voluntarily to apply the UN’s PRIs”
4 ESG: Environmental, Social, Governance
5 e.g. by the participation of Ircantec in the PRI Clearinghouse
6 And more specifically, Conventions nos. 87 on trade union freedom, 98 on the right to organise and collectively negotiate, 29 and 105 on forced labour, 111
on discrimination in employment, 100 on equal remuneration, 138 and 182 on child labour and 155 on decent working conditions
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2. Voting policy objectives
The principles formulated in Ircantec’s Voting policy are
intended to guide the vote on resolutions proposed to the
shareholders in general meeting or to assist in defining
questions to be asked or resolutions to be submitted.
As an active shareholder, Ircantec wishes to influence
the strategy and governance of companies in which it
invests:
• in the long term, in favour of transparency and respect
for all interested parties;
• in favour of sustainable development.
By its Voting policy, Ircantec wishes to:
• align the principles defined in its SRI Charter with its
position as a shareholder;
• apply the PRIs;
• encourage companies in which it invests to adopt
management policies and rules more advanced than
under international law or the regulations of countries
in which they operate;
•
promote a suitable balance between management
bodies, the rights of shareholders and transparency of
financial and extra-financial information;
• encourage reasonable levels of distribution of dividends and directors’ remuneration. These policies
favour long-term financial and extra-financial performance targets;
•
encourage dialogue between companies and their
stakeholders.
2
Ircantec’s Voting policy aims to represent the values of
the scheme, stable over time and applicable in all geographical areas. It is inspired by existing and proven
French or international guidelines, issued by investors.
It takes account of the practice of professional organisations. It will be reexamined annually by the scheme’s
Board of Directors.
3. Implementation of Voting policy
3.1 Voting policy and Operational voting rules
Ircantec’s Voting policy sets out its voting principles.
For the sake of pragmatism, it is supplemented by
Operational voting rules incorporating changes in regulations, geographical and sectoral specifics and campaigning experience acquired from earlier general meetings.
These Voting rules are reviewed annually. The two documents - “Voting policy” and “Operational voting rules” serve as a guide to investment management companies.
Ircantec cannot therefore stricto sensu legally impose
voting principles on investment management companies. Nonetheless, the FCPs’ management instructions
state: “voting rights attached to the FCP’s financial instruments must from the start be exercised exclusively in
the interests of Ircantec.”
If the subject of any resolution is not covered by the
Voting policy or the Operational voting rules, the management companies are invited to contact Ircantec.
3.2 Delegation to management companies
Ircantec’s share investments are made via FCPs1 which
are managed by investment management companies.
This organisation exercises voting rights pursuant to the
French Monetary and Financial Code2: the investment
management company is obliged to exercise the voting
rights attached to the shares held by the FCP it manages
and must report on its exercise thereof.
1 Investment funds
2 Article L533-22
3
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II. Voting policy principles
1. Corporate governance
With regard to governance, the general principle is to
encourage the separation of powers, diversified membership of the Board of Directors and the independence
and involvement of directors.
1.1 Separation of supervision functions from
executive action
French law, like that of many other countries, does not
restrict the organisation of executive and supervisory
powers. In France, it is, for example, possible for some
organisations to be governed by a Board of Directors and
some by a Board of Directors and Supervisory Board.
Furthermore, companies with a Board of Directors may
choose between separating and uniting the offices of
Chairman and Managing Director.
1.2 Composition and organisation of governance bodies
The Board of Directors is a strategic body: its decisions
bind the company and its members. Ircantec will therefore pay close attention to the balance of its membership, what is required of its members and its operation.
These recommendations apply in the same way to
the permanent representatives of legal entities and to
individuals.
Reasonable number of members
Too many directors might diminish their responsibility
and commitment in office. Ircantec therefore considers
that their number should be limited.
Attendance of directors
Ircantec expects directors to attend Board and various
committee meetings assiduously. The attendance at Board
and various committee meetings will affect the distribution
of directors’ fees and consideration of their re-election.
Independence
Board membership of a significant number of independent directors should improve the objectivity of analyses and therefore the relevance of decisions. Ircantec
therefore favours their membership.
Ircantec defines as independent any person whose past
or present experience enables him to guard against any
potential conflict of interest.
Terms of office
As each member of the Board of Directors is answerable
to all shareholders, his appointment must be regularly
submitted to the vote of the general meeting.
The Board of Directors must regularly renew its membership, to enable it both to examine the company’s
situation objectively and to foster the emergence of new
ideas. Ircantec considers that too long an involvement
in strategy diminishes objectivity and a critical outlook.
For France, Ircantec recommends a maximum term of 4
years and a total maximum duration of 12 years.
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Multiple directorships
A candidate holding too many directorships1 might not be
available for Board meetings.
Ircantec may therefore object to the candidacy of a
director with too many directorships. Ircantec also disapproves of cross-directorships within a Board of Directors,
whether directly or indirectly2, except for intra-group
directorships or those in a known strategic alliance.
Composition and diversity
Diversity of members on the Board of Directors enables
the quality of exchanges to be improved and specific features of the company to be taken into account; it enables
useful skills to be combined in developing the company and in defining and supervising the execution of the
strategy.
Ircantec therefore encourages a diversity of skills,
experience, cultures, ages and sexes on the Board of
Directors.
Feminisation of Boards of Directors
In its SRI Charter, Ircantec favours investment in companies which encourage gender equality. The Institution
therefore encourages companies, in the medium term, to
adopt policies enabling them to have a Board of Directors
with a significant proportion of women.
In anticipation of the dates fixed under European3 and
some national4 regulations, Ircantec desires, as from 2014,
Boards of Directors to have 25% of women members.
Ircantec also objects to any appointment reducing the
Board’s rate of feminisation.
Establishment of specialised committees
Ircantec encourages the establishment of specialised
committees, including, in addition to the audit committee,
ones for remuneration and appointments. These three
committees must not consist of administrators who are
directors of the company, considered to be judge and
jury. They must comprise a majority of independent members, of which a minority of directors are on the Boards of
other companies. The committees may not be chaired by
a director on the Board of another company.
The audit committee must have a Chairman recognised
as independent and members whose accounting and
financial expertise is recognised.
Directors representing employees
To enable broader representation on the Board of
Directors for legitimate stakeholders in the company,
Ircantec favours the appointment of directors representing employees.
1 Directorships in listed groups and major organisations or executive directorships in a listed company with other non-executive directorships outside the
main group
2 For example, via persons with family ties
3 In Europe, except where national regulation has more ambitious objectives, companies are encouraged at least to adopt the objectives fixed by the
European Commission (and by the Commission for Justice, Fundamental Rights and Citizenship, chaired by Viviane Reding): 30% of women by 2015
and 40% by 2020. These objectives are in line with the “30% Coalition» in the US and the «30% Club» in the UK.
4 In France, para. 2 of article L.225-18-1 of the French Commercial Code fixes at 40% the minimum proportion of directors of either sex required on
Boards of listed companies by 1 January 2017. Meanwhile, it is provided that this proportion should not be less than 20% by the first ordinary general
meeting held after 1 January 2014.
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2. Remuneration of directors and corporate officers
2.1 Remuneration of directors and share
ownership
2.1.1 Policy for remuneration of directors
The general principle is that the remuneration of directors
and corporate officers should be:
• transparent;
• structured, so as to encourage directors and company
representatives to pursue a financial and extra-financial
performance objective in the long term.
Ircantec considers that a company’s performance should
be assessed with regard to the consistency of its project
with sustainable and responsible development.
Ircantec therefore intends to promote systems of remuneration encouraging directors to improve the company’s practice in the social and environmental areas of its
business.
2.1.1.1 Transparency of remuneration
Transparency in pay policy is an essential condition enabling a company to have its shareholders’ confidence.
Pay policy must be exhaustively and comprehensibly
described, so that shareholders are informed of all remuneration, can assess the balance between its different
components and any distinction between the general
interest and directors’ performance.
Ircantec therefore encourages companies to have a
transparent pay policy. Pursuant to the “say on pay”
principle1 implemented in various countries and in France
from general meetings in 20142, Ircantec wants full information on the methods of calculation and directors’ and
corporate officers’ pay.
Therefore:
• pay policy, its principles and quantitative and qualitative
criteria and objectives must be explicit;
• the elements of remuneration must be based on transparent, precise and verifiable criteria; they must be
consistent with local financial and sector practices;
• the pay of each director and company representative must, annually and before the general meeting,
be communicated in individual detail, stating all its
constituents: fixed, variable, in cash and kind, and any
shareholding benefit granted3. Changes in each pay
component will be justified by the Board of Directors.
Post-employment benefits, such as additional pension
schemes, must be stated, in the form of their book
value for the financial year.
To encourage directors to take sustainable development
into account in company strategy, Ircantec encourages
the inclusion of environmental, social and governance criteria in the components of variable annual remuneration.
2.1.1.2 Determination of remuneration
Ircantec wishes to contribute to the definition of rules
for directors’ pay in accordance with its objectives and
its long-term socially responsible investor interests.
1 Policy for directors’ remuneration submitted to the votes of shareholders (whether restrictive or consultative)
2 Until 2014, these questions are dealt with in the related party agreements. As from the 2014 general meetings, the Afep/Medef code requires companies
to submit pay policy to the consultative votes of shareholders
3 Stock-options, free shares, pensions, “golden hellos”, retirement compensation, etc.
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Therefore, the directors’ pay and its evolution must be
included in the strategy and financial and extra-financial performance objectives of the company in the long
term.
To ensure strong social cohesion in the company,
Ircantec encourages Boards of Directors to set an
example in defining total pay. So, when annual pay rises
are limited for employees or the company plans substantial redundancies, directors’ pay and any alteration
therein must take these matters into account.
« Maximum socially tolerable »
The French State has decided to impose a ceiling on
directors’ pay in public companies, invoking restraint
in return for stable State shareholding. Inspired by this,
Ircantec wishes to contribute to bring directors’ pay in
major listed companies to a “maximum socially tolerable”
level.
This may be expressed:
- either as a ceiling, with reference to the minimum salary,
where this is defined;
- or as a difference: between the median pay for company employees and that of its directors.
Ircantec considers that, for companies whose registered
office is in a country with a minimum wage1, the “maximum socially tolerable” ceiling for the annual overall pay2
of a director should be 100 times the minimum wage.
For companies whose registered office is in a country
without a minimum wage, there should be a “maximum
socially tolerable” difference between the pay of the top
director and the group’s median pay. So, in a major listed
company, Ircantec considers the difference between the
group’s median pay and the overall pay of the top director2 as excessive if it exceeds 1 to 50.
Ircantec will express its disapproval of prospective pay
policies exceeding this ceiling or difference, which constitutes the “maximum socially tolerable” level.
Fixed remuneration
Ircantec considers that a director’s fixed salary should
not exceed the median of its comparative group.
If the Board of Directors decides to exceed this, it shall
provide the shareholders with a precisely quantified justification of the criteria supporting this increase. The publication of remuneration may therefore have a weighted
effect in wage negotiations, apart from the company’s
situation and the director’s skills. It is therefore for the
shareholder to ensure that the level of remuneration is
fully justified.
Variable remuneration
The variable remuneration includes annual and multiannual variable remuneration or any form thereof tied to
performance. It should principally depend on long-term
performance.
For the avoidance of risk or excessive remuneration,
Ircantec wishes that all variable remuneration3 awarded
in short and long-term accounting periods does not
1 e.g. the SMIC (minimum wage), in France. In January 2014, the monthly SMIC was €1445 gross for 152 hours worked
2 Including everything: salary, benefits, options, free shares, contribution to top-hat pensions.
3 Short and long-term
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exceed three times the fixed remuneration. The annual
variable remuneration should only exceed the fixed remuneration in the event of exceptional performance over an
accounting period.
The procedures for calculating variable remuneration1
must be based on strict and verifiable criteria; they must
be transparent and permanent. Ircantec also encourages
companies to use extra-financial criteria2 for calculating
variable remuneration. Their directors will therefore be
encouraged to attain the company’s strategic objectives
for sustainable development.
« Golden Hello »
Ircantec will only support a “golden hello” if its calculation
is transparent, its level reasonable, and if it is shown to
be required to compensate the director for a loss on his
joining the company.
2.1.2 Post-employment benefits
2.1.2.1 Observations
Ircantec recommends limited use of post-employment
benefits for executive directors, supposedly summarily
removable. These benefits should not be granted to a
non-executive Chairman nor where a director has overall
remuneration in excess of the “maximum socially tolerable” level.
2.1.2.2 Retirement compensation
Executive directors are supposedly summarily removable.
Ircantec does not, therefore, favour retirement compensation similar to “golden parachutes”. Ircantec may, however, support retirement compensation if the retirement is
involuntary (for example, where the director succeeded in
effecting a merger) and if the retirement compensation3
does not exceed one year’s remuneration4, save in the
event of significant seniority5, and provided the director’s
overall remuneration does not exceed the “maximum
socially tolerable” level.
Lastly, Ircantec considers that retirement compensation which would increase his/her pension rights
should not be paid to a director, in default of any prejudice thereto.
2.1.2.3 Non-competition clauses
Ircantec considers that non-competition clauses may
protect companies, but should nonetheless not involve
prohibitive compensation. The total sum paid to compensate departure6 should not exceed the equivalent of a
year’s remuneration7.
2.1.2.4 Supplementary pension scheme: general
These schemes must strictly comply with the principles
and rules fixed by the local corporate governance and
good practice codes8:
• transparency (taken into account in the remuneration
process);
• equity (beneficiaries not limited to company
representatives);
• consistency (seniority in post, calculation method).
1 Including the rate of realisation of each criterion
2 e.g. rate of occupational accidents, number of hours’ training, CO2 emissions, etc.
3 Including non-competition compensation
4 Fixed and variable remuneration
5 Without exceeding two years’ salary for 24 years’ seniority
6 Non-competition and compensation clauses
7 Fixed and variable remuneration
8 e.g. in France: Afep/Medef, Middle Next and AFG codes
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2.1.2.5 “Additional contribution” defined benefit retirement schemes for directors
Ircantec does not support this type of retirement scheme,
the cost of which is borne by the company and its shareholders. Because of their remuneration level, executive
directors can save for their retirement from their own
resources.
2.1.2.6 “Additional contribution” defined contribution
retirement schemes for directors
These schemes are considered acceptable, if the contributions are fairly divided between the beneficiary and the
company.
2.1.3 Remuneration of directors by shares
The practice of combined resolutions is not recommended; it is preferable to treat employees and directors
in separate resolutions for authorisation.
2.1.3.1 Granting stock options to directors
For major listed companies, Ircantec desires that the
granting of stock-options will no longer be authorised.
Experience shows that this device conflicts with the
alignment desired between the remuneration of directors and the interests of long-term socially responsible
investors.
1 Share subscription warrants and Reimbursable share subscription warrants
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2.1.3.2 Grant of BSA or BSARS1
The issue of subscription warrants is similar to that of
options and is not recommended by Ircantec, even if
these warrants are subscribed.
2.1.3.3 Grant of free or performance shares
The grant of free or performance shares is a satisfactory method of rewarding directors for long-term performance. Regard must be paid to their cost; Ircantec
therefore expects that companies authorising the grant
of free shares for executive directors will inform the shareholders of the maximum number of free shares to be
granted to each executive director and the conditions for
the attribution. These conditions must be transparent and
strict; they should take into account criteria measured
over at least three years, to avoid short-term strategies. In
major international capitalisations, each director should
only potentially receive annually a reduced percentage of
the capital.
To encourage social cohesion in the company, Ircantec
would like the distribution of free shares to be extended
to all employees. Ircantec recommends that resolutions
authorising the grant of free or performance shares to
employees be distinct from resolutions making grants
to the executive committee, so as to separate the issue
of share ownership by a large number of executives or
employees from the issue of directors’ remuneration.
2.2 Remuneration of members of the Board
of Directors or Supervisory Board
2.2.2 Remuneration of a non-executive
Chairman of a Board of Directors
2.2.1 Directors’ fees
The remuneration of the Chair of the Board of Directors
may take the form of directors’ fees or of remuneration
for specific tasks. It must not exceed that of other nonexecutive Chairpersons.
Ircantec approves the award of directors’ fees if the
methods and criteria for distribution are specific and
comply with professional standards. The fees awarded
must:
• depend in part on attendance at Board meetings;
• be similar in amount to those awarded in companies of
similar size;
• not be so large as to give the director an economic
interest in retaining office.
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3. Shareholders’ rights
The general principle adopted by Ircantec is “one share,
one vote”. The principle of proportionality of voting rights
is inseparable from the principle of equal treatment of shareholders with regard to risk, information and dividends. It
prevents one group of shareholders being favoured at the
expense of other shareholders; it also does not impede
takeover bids if they are favourable to the shareholders,
independently of their impact on management.
3.1 Exercising shareholders’ rights in general
meetings
One share, one vote
Ircantec, supporting the general principle of one share,
one vote, is against the issue of non-voting shares, shares
with double voting rights and with limited voting rights.
Combined resolutions
Ircantec recommends voting against a resolution if it
combines several decisions, especially where it concerns
proposals for appointment of members of the Board of
Directors or presentation of related party agreements.
Blank proxies
Ircantec disapproves of blank proxies.
Ircantec therefore approves of new share issues while
maintaining shareholders’ preferential rights of subscription; the scheme is equally favourable to the application of
limits according to the nature of the increase.
3.3 Anti-takeover measures
While certain OPAs or OPEs1 may be a direct threat to
employment and the survival of the company, the measures intended to impede significant changes in shareholdings may also affect the valuation of the company
and harm minority shareholders. Ircantec therefore disapproves of anti-takeover measures not enabling minority
shareholders to exercise their freedom of choice.
Outside takeover periods, Ircantec disapproves of any
defensive anti-takeover measure. During takeover periods,
Ircantec will define its position with the discernment required by simultaneously taking account of its interests as
a responsible shareholder and of the bases of its Voting
policy.
3.4 Financial and extra-financial communication and information
The due analysis of resolutions requires detailed informatin transmitted to the shareholders in good time.
3.2 New share issues
Increases in capital may have weakening effects, especially for minority shareholders.
This is particularly true when shareholders are not invited
to subscribe and where new shareholders are offered a
preferential price in comparison with the market price.
1 OPA: takeover bid; OPE: takeover bid (exchange offer)
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Three types of documents should be available and easily
accessible:
• the annual accounts;
• the auditors’ report;
•
the report of the Board of Directors to the general
meeting.
These reference documents must enable the company’s
financial and extra-financial situation to be assessed and
inform the decisions of investors. Furthermore, Ircantec,
by the nature of its affiliated members1, is associated with
public service and its values. The Institution is therefore
preoccupied by the increase in tax evasion and tax avoidance by major companies, which deprive States and
local authorities of part of their income.
Pursuant to changes in French law2 and work undertaken
at European level, Ircantec expects companies to increase
their financial transparency by publishing a financial report
for each country in which they operate. The scheme may
therefore object to any resolution for approval of a company’s accounts if it does not publish a financial report for
each country in which it operates. Depending on its priorities, Ircantec may concentrate its transparency requirements on particular3 business sectors.
Since the transfer of the registered office may be a means
of tax evasion, Ircantec expects that, on each request for
transfer of the registered office, a comparative analysis of
shareholders’ rights or governance practices be carried
out and the question of legal and tax havens should be
taken into consideration.
1 Ircantec manages pensions for non-permanent public sector employees (local authorities, hospitals, etc.)
2 cf. the banking law provisions passed in July 2013 for banks in France as from 2014
3 It will therefore firstly concentrate on companies in the financial sector and those making most of their income via the Internet, where financial transparency is particularly important; the choice of sectors is reviewed in the annual update of Voting rules
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4. Approval of accounts and management
The general principle must be:
• fair, honest and accurate accounting;
• a clear and stable strategy;
• directors’ awareness of responsibility;
• auditors’ independence.
report, the shareholders rule on all the related party agreements, including those already approved and in execution;
if there is a significant objection, the directors must amend
or terminate the agreement. Ircantec can therefore, by its
vote, express its disapproval of the continuance of related
party agreements, previously approved, but which do not
comply with the principles of its Voting policy3.
4.1 Approval of accounts and discharge
4.3 Auditors
Company information must be available in time to enable
all the shareholders to analyse the resolutions1; the information must be honest and consistent and the strategy
clear and stable. Auditors’ observations considered
as significant or controversial changes in accounting
methods may be voted against.
Making directors aware of their responsibility is a major
concern of management and no decision of the general
meeting shall prevent any action against the directors for
faults committed in the execution of their office.
Ircantec therefore recommends that all rights of recourse
for shareholders be maintained and therefore disapproves
of applications for discharge, except in countries where
this is a legal obligation. The scheme is also opposed to
the inclusion of a clause discharging the directors in the
resolution seeking approval of the accounts.
The auditors audit the accounts and the accounting process;
their role is essential and they must be truly independent.
Although the rules of appointment differ in different countries,
it is important to ensure that both firms of auditors are independent of each other, that they alternate regularly and that
consultancy fees received for services provided simultaneously with those of auditors are limited. Ircantec therefore
considers that:
• to remain objective, the auditors must be appointed for a
limited period;
• to preserve their independence, they can only provide advisory services up to a limited value;
• replacement auditors must not be in the same firm as the
standing auditor.
4.2 Approval of related party agreements2
For Ircantec, related party agreements should be dealt
with in separate resolutions; those made with individual
directors should be separated from those concluded with
legal entities or companies. They must be concluded in
the interests of all the shareholders and be detailed and
strategically justified. By voting on the auditors’ special
1 Minimum of 21 days before the general meeting, according to the European shareholder rights directive
2 Related party agreements record contracts signed with associated parties; the parties concerned are not authorised to participate, directly or indirectly, in
the vote
3 Ircantec will be particularly attentive to related party agreements concerning retirement compensation
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5. Allocation of profit/loss and management of shareholder equity
Ircantec, desirous of pursuing the general interest,
intends, by investing in shares, to promote companies
which incorporate the short, medium and long-term economic, social and environmental impact of their business
into their strategies.
Ircantec’s assessment of the performance of a company
does not, therefore, rest solely on analysis of its financial
results; it rather depends on criteria measuring the relationship between the company’s projects and sustainable
and responsible development.
5.1 Distribution of dividends and allocation of
profit/loss
Ircantec intends to promote policies for allocation of
the profit/loss, which maintain an appropriate balance
between investment capacity, employees’ pay and shareholders’ remuneration.
Ircantec thereby promotes the idea of «responsible
dividends».
The policy for distribution of dividends must be consistent
with:
• the company’s financial structure and results;
• company strategy and business sector practice;
• concerns about responsible investment.
It should also take into account:
• comparative changes in the remuneration of employees
and shareholders;
• the impact of the policy for allocation of the profit/loss
on the company’s investment capacity.
Ircantec encourages a policy for distribution of dividends:
•
in line with the company’s strategy and prospects,
including those for internal financing capacity;
• in phase with distribution for its own business sector;
• in relation with changes in the company’s payroll, to
promote an equitable association of employees and
shareholders in the long term.
5.2 Special benefits
Ircantec, as a responsible long-term investor, pays particular attention to the development of shareholder loyalty.
Any proposal to encourage and reward shareholders to
invest long-term is therefore welcomed.
Increased dividends may therefore be used to encourage and reward shareholders holding their shares for
a number of years. Ircantec would, however, limit the
incentive for an influential shareholder to abuse the
practice1. Similarly, the possibility of opting for the dividend in shares may enable the shareholder equity to be
increased and to favour investment over distribution; the
rules for distribution must be particularly transparent and
the shareholder must have the option of payment in cash.
5.3 Dividend in the event of loss
Ircantec accepts non-distribution of dividends in the
event of loss, but disapproves any distribution of dividends in excess of the profit.
1 French law limits the maximum holding eligible for an increased dividend to 0.5% of the capital held by one shareholder
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6. External resolutions
A shareholder or group of shareholders may propose an
external resolution for the agenda of the general meeting,
subject to a certain level of capital investment and respect of certain time-limits; in France, the Works Council
also has this right of initiative1. Ircantec also encourages
management companies to use the rights they have as
shareholders.
External resolutions will be analysed by Ircantec in the
light of the principles defined in its SRI Charter and its
Voting policy.
To recap, in its SRI Charter, Ircantec states the requirement, for companies in which it invests, to comply with
basic international standards, including:
• the Universal Declaration of Human Rights;
• the Conventions adopted by the ILO;
• the Rio Declaration on Environment and Development;
• the United Nations Convention against Corruption.
Ircantec also attaches great importance to the following:
• the independence and skills of directors;
• transparency in the way directors are remunerated;
• prevention of corruption, money-laundering and terrorist
financing;
1 Articles L2323-67 §2 and R2323-14 of the French Employment Code
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• transparency in business and the financial and extrafinancial situation;
• gender equality;
• non-discrimination policies;
• freedom from restriction for trade unions;
•
prevention of tax evasion and tax avoidance, which
deprive States and local authorities of financial resources.
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Ircantec 33 rue Villiers de l’Isle-Adam – 75971 Paris cedex 20 - www.ircantec.retraites.fr