The role of independent directors is essential

The determination of remuneration and other benefits to the leaders of society is first head to the boards of Directors, councils whose decisions should be motivated by a concern of balance, reward the effort and performance and social justice within the company. It is clear that, in this area, the boards of Directors, the first in which Valeo or Société Générale, have failed. The report just published the firm Heidrick & Struggles on governance in Europe confirms the analysis made by our movement, occasionally including the change of November 2008 workshops, on the reasons for this failure.

First finding from the study Heidrick & Struggles: the independence of the members of the Council is inadequate. Indeed, its authors note that the Presidency of the Council is provided by the Director-General or the former Director-General of the society in 72 of the cases in France, compared to 35 on average in Europe. Moreover, the proportion of independent directors has decreased significantly in France in 2009, as they represent more than 42 of the members of the Councils, to 51 in 2007. And these figures mask a disparate reality between "virtuous" companies and those who are reluctant to enter the independent members on their Board.

It will be struck by the contrast between this reality and the recommendations of the Medef, which, in 1999, invited advice to allow within at least one third of members independent and even, in 2002, for companies with a dispersed capital, which is the case of number of companies listed, to be composed more than 50 by independent directors. The role of independent directors is essential. Their independence gives them back to preserve the interests of all the components of the company, employees as shareholders, and avoid the mistakes or excesses.

Still necessary that these independent members are truly independent. And on this point, everyone knows that the independence, concept which also has no legal or regulatory definition is often that of facade in the Councils of the French companies, where overlapping of mandates and relationships of connivance are not real independence. This cumulation of mandates is a French particularity, which, according to the study of Heidrick & Struggles, limit attendance and the effectiveness of the control carried out by these administrators.

Based on this observation, I have tabled a proposal for legislation that will strengthen the place of the independent members of the Board of Directors and ensure effective independence, independence which will be a review of the Banking Commission in the case of banks and the authority of the financial markets for other listed companies. These authorities will stop including the list of persons that may exercise a warrant to independent Director. Moreover, the number of mandates that can be combined by a single person will be limited to three.

Another deficiency pointed to by the Heidrick & Struggles study: the place that is reserved for the representatives of the employees. In France, they represent only 6 of the members of the Board of Directors, 11 on average in Europe. But their place is essential in the social balance that must exist in the enterprise and in the decisions taken by its social organs. It is not trivial to note that only the representative of the Council of the Société Générale employees had objected to the decision to grant stock options to the leaders of this institution. Proposal for an act referred to above will allow more broadly associate employees to decision-making by making compulsory the presence on the boards of at least two directors elected by the employees.

Finally, and this point is essential, the proposal provides that each company will have a remuneration committee composed exclusively of independent directors. It is this Committee that will be the responsibility of establishing executive compensation rules, consistent with the overall policy of remuneration and engagement of the other employees of the company. It will evaluate annually the performance of leaders, popular with those of society and companies belonging to the same sector of activity. Thus suggesting that their pay will be measured and fair consideration to the eye including the remuneration of the employees of the company, the success of these leaders, effort, and skills.

Rethinking corporate governance has become necessary. That governance is a prerequisite, even if it is insufficient, the equitable sharing of resources in the enterprise, topic on which the UMP will be soon proposals.