Significant changes to pension regime of French top managers were introduced by Law No. 2015-990 of 6 August 2015 for growth, activity and equal economic opportunities (« Macron Law » ).
Among these changes, the introduction of performance criteria for determining the increase in pension entitlements due under a year is a major innovation that should help make these additional pensions more acceptable and better controlled. Boards of directors and shareholders must also fulfill their new responsibility by adopting sufficiently demanding performance conditions in order to avoid the grants of huge pension to poorly-performing managers.
The proxy firm Proxinvest is launching new voting criteria for investors willing to amend their voting policy by requiring challenging enough performance conditions. Indeed, Proxinvest’ proxy voting solutions allow investors to control their own voting policy and their final vote decisions while outsourcing the monitoring of their voting policy to Proxinvest.
In the event of defective performance conditions, an investor who decided to activate this criterion in its voting policy will therefore receive a voting alert before the general meeting.
For information on this service, contact Proxinvest using the contact form or call us at +33 (0) 1.45.51.50.43
For the record, the new Article L225-42-1 of the Commercial Code now reads:
« In companies whose securities are admitted to trading on a regulated market (…)
Are prohibited remuneration, allowances, benefits and options rights granted to the chairman, CEO or deputy CEO under pension obligations mentioned in the first paragraph of this Article, if the benefit is not subject to compliance with conditions linked to the beneficiary’s performance assessed in relation to those of the company he chairs the board of directors or exercise the general management or delegate general management. (…)
The submission for approval of the general meeting pursuant to Article L. 225-40 of the subject of a specific resolution of the general meeting for each beneficiary. This approval is required at each renewal of the mandate exercised by the persons mentioned in the first paragraph. (…)
The Board annually checks, prior to the Ordinary General Meeting, compliance with the required performance conditions and determines the increase, under that FY, in rights granted to the chairman, CEO or deputy CEO in respect of defined benefit plans mentioned in Article L. 137-11 of the Code of Social Security.
The conditional rights mentioned in the seventh paragraph of this Article shall not increase annually by an amount greater than 3% of the annual remuneration serving as reference for the calculation of the pension paid under these schemes.
No conditional right under the activity of chairman, CEO or deputy CEO may be granted if it does not fulfill the conditions set in the seventh and penultimate paragraphs. «
