Proposition 52K2336

Projet de loi visant à renforcer le gouvernement d'entreprise dans les sociétés cotées et les entreprises publiques autonomes et visant à modifier le régime des interdictions professionnelles dans le secteur bancaire et financier.

General information ¶

Submitted by

CD&V Leterme Ⅱ

Submission date

Dec. 22, 2009

Official page

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Status

Adopted

Requirement

Simple

Subjects

EC Directive remuneration of work bank investment company exclusion from public-sector employment financial institution firm governed by commercial law credit institution corporate governance managing director severance pay public sector board of directors insurance company

Voting ¶

Voted to adopt

CD&V LE PS | SP Open Vld MR

Voted to reject

Vooruit

Abstained from voting

Groen Ecolo N-VA LDD FN VB

Party dissidents ¶

• Peter Luykx (CD&V) abstained from voting.

Contact form ¶

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Discussion ¶

Feb. 11, 2010 | Plenary session (Chamber of representatives)

Full source

Mr. Speaker, Mr. Hamal and I have jointly decided to refer to our written report.

We have discussed this issue repeatedly over several weeks and months. In fact, we have been working on a large part of this bill and of the bills already since 2003. So it has been going along for a while.

I would like to join my colleague Mr. Van Biesen and I also refer to the written report ⁇ complete for what is the interventions of each. I would also point out that we have devoted many meetings of our Committee on Commercial Law and Corporate Law to this project in 2008, 2009 and this year again to consider the proposals submitted by colleagues to which you referred, Mr. Speaker, as well as the project submitted by the Government. I have no doubt that everyone will have the opportunity in the general discussion and, if necessary, in the discussion of articles to expose their views on the bill and the proposals they have submitted.

Congratulations to you, Mr. Speaker.

Mr. Speaker, colleagues, Mr. Minister, I would like to thank the rapporteurs for the excellent report. Today we are discussing an important and very large draft law that, in my opinion, provides an adequate answer to a number of justifiable questions that have grown heavily in the aftermath of the financial crisis. These questions were eventually translated into a number of recommendations from the Special Committee charged with investigating the financial and banking crisis.

The purpose of the draft law is the further development and expansion of good governance, both in listed companies and in public companies. The draft law thus integrates fully into the European framework applicable to listed companies and goes even further in the case of public companies. CD&V is therefore pleased that this bill is put to the vote here today.

Before discussing the substance of this bill, I would like to point out the circumstances, the context, the creation of this law. The draft law responds to the recommendations of Europe to the Member States. I would like to point out that already on 14 December 2004 the European Commission made recommendations for greater transparency and a better frameworking of the re-numbering policy in listed companies. I remember that in the previous legislature there was a lot of talk and discussion about whether or not legally anchoring that transparency of remuneration. I also know that there was never an agreement at that time. That political agreement exists today.

Mr. Minister, the recent financial and economic crisis has, in my opinion, painfully exposed that several European recommendations, which already existed in 2004, were not or not sufficiently followed. I have two of those scratches. The first is the departure fees of failing drivers who swinged the pan out. A second disruption was the fact that shareholders were insufficiently involved in the renumeration policy. These are two examples of extraction, which did not comply with the European Recommendation of 2004, but which we are addressing today.

The draft law not only adopts the European Recommendation of 2004, but also responds to the recommendations of the European Commission of 30 April 2009 and transposes a European directive. In this way, we are actually one of the first European countries to translate the recommendations of April 2009 into binding legislation. In the meantime, I would like to point out that the State Council opinion has confused our timing in the first place, since the first draft that was submitted was too extensive, according to the State Council.

I come to the content of the bill. Generally speaking, I am convinced that this bill will address some legitimate questions about the variable wage, gold parachutes and bonuses. It can no longer be that the proper management of a company is compromised by the very short-term thinking of some managers. This bill provides a balanced answer to these questions.

For our group, there are five eye-catching measures currently being taken that will actually contribute to better governance. I would like to discuss it for you.

First, the declaration on good governance. From now on, all listed companies will have to explicitly include in their annual report to be communicated to shareholders a statement explaining the Corporate Governance Code they apply. We have heard from the Minister that the Royal Decree designating the Belgian Corporate Governance Code of 2009 as a reference point is ready. This means that all listed companies will be able to operate within the same common reference framework, of course with the freedom provided by the code. It is also true that companies must comply with these obligations. Otherwise, the responsibility of drivers will be compromised.

In addition to the reference code, which allows a good entrepreneurial climate that we all want to create, however, this design goes further. This is the first time that a part of the code is legally anchored. We are talking about the second measure, namely the transparency of remuneration.

From now on, the annual report of a listed undertaking will have to include a remuneration report containing the necessary transparency regarding the remuneration and remuneration policy of the undertaking. That remuneration report should be submitted to the shareholders for approval, with the shareholders expressing their appreciation. This is an important responsibility for shareholders. Either they adopt a policy and they cannot return to it. Either they reject a policy and the Board of Directors must resume its work.

I think this is a very important step towards more responsible business. I think that in this way all stakeholders can gain insight into the remuneration policy used. Transparency is a powerful weapon. It allows for a genuine social debate and, according to some studies, could even have a mitigating effect on the level of remuneration.

I therefore fully support the choice to announce the salary of the Chairman of the Management Committee and the Chairman of the Daily Board individually. The CEO is the ultimate responsible for the management and the face of the company. It is therefore socially responsible that his or her individual remuneration in all its facets is made public.

For the other members of the Executive Committee and the daily board, a global announcement is sufficient. In this way, shareholders gain insight into the total cost of the management and the total cost of the management without resulting in individual comparison and possibly an offer in the respective remuneration.

In this context, it is also important to emphasize the role of the remuneration committee. From now on, the establishment of a remuneration committee consisting of a majority of independent directors will be mandatory. They are responsible for determining the remuneration and the remuneration policy. The role of independent drivers is crucial. They should monitor the balanced nature of the remuneration and monitor the neutrality and the absence of potential conflicts of interest.

A second mandatory measure taken with this bill is the regulation of the variable remuneration. The legal system creates a link between variable remuneration and long-term thinking. Short-term thinking, as everyone knows, has also played an undeniable role in the financial crisis and is now legally restricted for the first time. The variable remuneration or bonus, often granted in the form of stock options, may only be granted on the basis of pre-defined performance criteria. Furthermore, the variable remuneration should encourage the top manager to focus on the long-term. For example, at least 50 % should be assessed on the basis of performance criteria from the past two years. Thanks to the bill, stock options will be able to be exercised at the earliest after three years.

We also in the committee, together with the majority, submitted an amendment to allow the new bonus scheme to enter into force immediately. That amendment was adopted and that was a significant improvement.

A third measure we will vote on today relates to the golden parachutes. With the crisis, the public outrage also focused, and above all, on the high departure compensation of some drivers. Rightly by the way. The initial proposal to introduce the linear limitation of the gold parachutes was legally underestimated by the Council of State. We have found a solution and that puts a major brake on the tower-high departure fee. Thanks to this bill, a departure fee is limited to twelve or eighteen months. If one wishes to deviate from this departure fee, then the shareholders must knowingly and willingly approve this. The Board of Directors will also have a vote in the chapter. In addition, a divided opinion of the Board of Directors communicates and makes public both the position of the employee representatives and the position of the employers.It is also important that if a director or member of the management concerned does not meet the performance criteria that the company must establish, the departure compensation should under no circumstances take into account the variable wage. This applies to both existing and new contracts. I think therefore I can say that we brake the exuberant golden parachutes that strike many people at the chest.

The last point I would like to point out here concerns the remuneration of the independent drivers.

With an amendment we have submitted and approved together with the majority parties, we want to address the possible suspicion that independent directors would no longer be independent when part of their remuneration consists of shares or stock options. From now on, the fixed fee becomes the rule and the variable fee becomes the exception. An independent director will only be able to receive a part of his remuneration in a variable form if the general assembly has approved this in advance and there has been participation of the business board.

Mr. Speaker, I am going around.

Our group will support the draft, because of the legal anchoring of transparency in the remuneration and remuneration policy, because of the role of the remuneration committee, because of the linking of the variable remuneration and the long-term performance criteria, because of the binding of the golden parachutes and because of the system of remuneration of independent directors, where the fixed remuneration becomes the rule. It is the first time that a part of the corporate governance code is legally anchored, and that in order to strengthen good governance.

Those who speak of an empty box or of corporate governance light have either misunderstood it, which is regrettable, or are of bad will and play political games, which I personally find even more disappointing.

Mr. Speaker, colleagues, the present bill came, as mentioned in the introduction, following the financial and banking crisis. Remember the discussion about the renumeration of the bankers. This was linked to the megalomane growth, and to the short-sightedness with which quarterly figures were determined with re-numbering, as also the short-sightedness of the strategic insights of the managers was linked to growing as quickly as possible.

That has ensured that we have ended up in a street where we, as a government, were actually obliged to limit the renumerations. This is something we do not like to do from the free market perspective, but what we must do now, and for which the sector itself is responsible.

In October 2008, then for the first time Prime Minister Leterme made even tougher statements after it became known that the former Fortistop with many million euros of departure premiums left. Unfortunately, the announced harsh approach has not been achieved.

The draft law on good governance is ⁇ a step in the right direction. However, just as the recommendations on corporate governance in the report of the special committee on the banking crisis did not go far enough, this draft also does not go far enough.

Specifically, it limits the dismissal fees for new contracts to 12 months, although it can be derogated from them, again with the approval of the general assembly. The bill also requires bonuses to be distributed over time. In order to promote a long-term vision, only half should be paid out after 1 year, while the rest should be distributed over at least the next 2 years.

Initially, the government decided to introduce the new rules for bonuses in 2012. Suddenly, however, it was agreed to apply that arrangement a year earlier, starting from the financial year 2011. This is another step in the right direction, but also unlimited. The limitation of gold parachutes to 12 months only applies to new contracts, not to existing contracts, and is only mandatory if more than a quarter of the salary is variable.

In addition, there are many escape routes. To take one example of the new techniques already developed to avoid discussions about golden parachutes, golden handprints and bonuses: the cash is simply credited in advance to an account. For example, I was able to hear from the British newspaper The Guardian last week that the new boss of Marks and Spencer will receive a welcome payment of up to 7.5 million British pounds on his first working day, May 1 next.

The gold parachutes are not limited yet, but the alternative in the form of the golden salutations is already there.

There has been a lot of discussion in the committee about the independent directors. The independent directors in the Board of Directors are responsible for the long-term interests of the companies. That these independent drivers can still receive a variable salary today is also not logical. The question then arises to what extent an independent manager is truly independent if he is also remunerated for a part of the variable, especially when part of it consists of stock options.

We are convinced that the Board of Directors is beneficial to independent directors, but only on the condition that they can be truly independent and their remuneration is not related to stock prices, let alone products that can generate even greater personal profits through leverage.

To ensure their autonomy, independent drivers are usually not paid with options, but unfortunately today there are some painful exceptions. The most discussed exception is the company with social difficulties, AB InBev, where Dexiabeleider Dehaene, as an independent manager, is entitled to another significant bonus in the form of stock options in addition to his regular remuneration. It is at least embarrassing for its fellow ACVs who outside the gates demonstrate their solidarity with the employees of AB InBev and rightly fight for and I quote a spokesman of the Christian trade union from The Standard of January 21: “the preservation of jobs that only need to be sacrificed to calm the profit and bonus hunger of shareholders and top management.”

Indeed, independent persons must sit in the board of directors to protect the public interest. If the salary of that independent driver depends on the stock exchange rate, that is all but obvious. Unfortunately, a total ban on remuneration for non-executive directors based on performance was not implemented. After the medialization of Dehaene’s financial situation, a so-called tightening of the arrangement was introduced. With an amendment, which was approved, the present draft now stipulates that independent board members can only receive fixed bonuses and therefore no bonuses that vary depending on the performance of the company.

Unfortunately, with the fiat of the general assembly, one can still deviate from that. In practice, there will therefore be no change in the InBev-De Haenegevallen.

The design is, above all, a missed opportunity. Instead of permanently putting a stake on these unlimited bonuses, the general meetings continue to provide for exceptions to the variable remuneration of the independent directors. Also regarding the limitation of the gold parachutes, an exception may be made through the general meeting.

The bill is a missed opportunity to address the politicization of the boards of government. Party political equilibrium is and remains decisive. This has once again been shown from the distribution of administrative mandates as a result of government injections in the various financial institutions.

It is also a missed opportunity to give the good example of transparency. The biggest concern in the discussion of the entire banking crisis was the restoration of consumer confidence. Transparency would ensure that. The draft law on good governance is a good initiative for this. The aim is to make the decision-making structures and remuneration of publicly-listed companies and publicly-owned companies more transparent. It is hoped that the transparency obligations can lead to a mental change. All companies concerned will now be required to publish a separate renumeration report in the annual report. It should explain the remuneration policy and provide specific information on the remuneration of directors and directors. The individual salary of the CEO is announced. For the other toplui of the company, a collective announcement is sufficient.

The publication of such remuneration and all benefits directly and indirectly linked to it shall be subject to the principle of transparency. Nevertheless, the design is a missed opportunity to give itself the good example of that transparency. During the discussions in the committee, the Flemish Belang has pledged to also impose transparency rules on the organizations paid and subsidized by the government. First of all, we aim for actual associations. Those organisations have no legal personality and are therefore difficult to identify. Moreover, civil society itself is the requesting party when it comes to the publicity of salaries of directors of private enterprises. Therefore, it seems to us logical that these organizations look in their own hands and apply the same transparency scheme.

For the health funds and political parties, there is already a clearly defined legislation.

However, we would have liked to see that from now on this would be the case for the many civil society associations, the so-called representative organisations, the social partners, who participate in the social and paritary consultation in our country. Then I’m talking about VBO, Unizo, Boerenbond, ACV, ABVV and ACLVB. Also let their drivers in the future disclose their salaries and the associated benefits. From organizations that operate with public funds, society can expect that there is openness and transparency in the way that public funds are spent by those organizations.

We deeply regret that our amendments were rejected in this sense and that the scope of the bill is so strictly limited to listed companies and public companies. However, we realize that we are not alone with this demand for transparency. Even Open Vld submitted similar amendments a few years ago. We would therefore like to give you a review to support our amendments to give the lean beast of a bill a little more weight.

Mr. Speaker, dear colleagues, we have been discussing a substantial improvement in corporate governance within the Parliament, through the Commercial Law Committee, for several years.

Why talk about it so much? Especially because we realize that the companies listed on the stock market are ⁇ fragile in the face of the scourge of profit, the desire for speculation on the part of shareholders, the part of funds that invest in these companies and which require too high and too fast returns, sometimes at the expense of the development of the company on our territory and sometimes at the expense of employment: the value of the shares can increase by the simple announcement of a decrease in the frame of its staff.

The steps are slow and short; it is really step by step that we move forward.

Of course, it can be said that between the Lippens Code and the bill discussed today, improvements are noticeable. However, we can only regret – just like the regrets expressed during all the work by Ecolo-Groen! – have not taken advantage of the current economic crisis and the problem faced by banks, themselves sometimes victims of speculation, have not taken advantage of the opportunity when companies that, like InBev, receive significant profits and enjoy notional interests, decide to relocate activities and significantly reduce their staff.

Whenever such an event occurs, many of us in this assembly are indignant and questioning the Prime Minister or the Minister of Economy. It is surprising that they accept the relocation of this company and that it licenses, while it has made profits and that its shareholders are filling their pockets through speculation.

When, in Parliament, we have the opportunity to fully regulate these activities and make the procedures completely transparent, we realize that it is impossible for us to take all the necessary steps. In order to make these activities transparent, the rules must be known to all, and in order to be known to all, they must be included in the law. The document presented to us today takes into account legislative provisions that are an improvement, an additional step, but it is unfortunately insufficient.

I will not develop here, for hours, the amendments we have submitted here even in the plenary session. I just use it to remind us in what we feel that this bill is not going enough and in what we will need to continue the work.

If the members of this parliament resume or reassemble on the occasion of this plenary assembly, we will obviously be ⁇ pleased. This would ⁇ address the concerns of workers who are victims of poor governance of their company. We regret in particular the non-generalization, to all directors and executives, of the individual publication of remuneration. Today we have found a maximum compromise and some bosses also feel that we are already going too far. This is actually a question of political will and culture that needs to be developed in other European countries. In the Nordic countries, for example, at the end of each annual report, the names of the directors and the remuneration to which they are entitled appear.

Everyone thinks this is normal. There is no more competition between these business leaders to justify obtaining higher wages. It is notorious that negotiations are held here in order to obtain remuneration in cash, interest in profits, and benefits in kind ranging from corporate car to gsm and telephone subscription. Making all this transparent will allow you to know what is the remuneration for such a position and according to what criteria.

In a committee, we addressed the important issue of independent administrators – and we submitted an amendment to that. If we have so insisted on the need to define the criteria for their independence, it is not for the pleasure to hinder companies and individuals who volunteer to exercise this function, because it is obviously a heavy task. It is necessary to verify that these managers are truly independent. Otherwise, it will be useless, and we will add a layer to the conflict of interest.

How many independent directors are in the boards of directors of major Belgian companies? Not very much! When managers in five or six companies meet others who are in the same situation, how can it be considered that they have a freedom of positioning against each other? How will they be able to contradict each other in one board of directors when they find themselves in another where certain roles have been reversed?

Therefore, in order to play their role, they must come from different horizons and the law must determine the criteria for considering them as independent.

We propose to supplement the criteria and discuss them. We obviously admit a sufficiently long time interval between occupied mandates, in connection with the company, and the fact of sitting and being recognized as an independent administrator. We want an abolition of the remuneration and benefits granted to representatives through an executive mandate of a corporate management body, an abolition of interest through shares or options on shares. We also wish that the administrator could not have previously been an auditor or auditor of the company or an executive member of an organ of a competing company.

These criteria are not too restrictive. They would simply allow administrators to emanate from different horizons and not be connected to the company. The same applies to the members of the board of directors, with whom it is important to take care of ethics and behavior.

Another important dimension is not sufficiently met in the bill: how to assess the variable remuneration of both directors and management committees. Many criteria are set out in the bill. Nevertheless, they are only related to the operation of the company seen as closed on itself. We have surpassed this stage. Currently, a company produces goods or services taking into account human, social and environmental parameters, for which it has a responsibility. Also, if we grant a variable remuneration related to a company’s performance, it is important that the evaluation of that performance takes into account corporate responsibilities, which involves all dimensions of the company.

The bill is too restrictive. We would have really desired an extension to the criteria I just mentioned, in particular to social and environmental responsibility.

Similarly, if the variable part of the remuneration related to the value of the shares is linked to the actual performance of the company, it is important that the profitability is assessed and that the value of the shares is taken into account over a sufficiently long period. The project talks about a three-year period, but we estimate that it takes at least five years to be able to say that management has been carried out with a long-term vision.

In determining these performance assessment criteria and therefore the related remuneration, we hoped that an effort would have been made to introduce public companies into the law. An autonomous public enterprise has service tasks and obligations towards citizens and the State. It is obvious that taking into account the general context that makes it possible to evaluate the performance of this company is ⁇ important.

That is why we want to add, through an amendment, companies that are not included in this project but that have a form of management and administration similar to that of an autonomous public enterprise.

We think of the National Lottery, the Federal Society of Participation and Investment, the National Office of the Ducroire and the public law company of the Ducroire. We believe that these public-controlled companies have a role of example and must respect the rules of good governance. Therefore, the rules contained in this bill must also apply to them. Some of these rules are positive and represent a progression from our good governance requirements.

You will have understood, Mr. Minister, dear colleagues, we will abstain from this project because we considered that this project contains advances but that we cannot fully approve it given the absence of a maximum will to introduce the criteria I just talked about. We will abstain because we want to be able to regularly monitor the implementation of these measures and question you about them. We know that the strength ratio is difficult between politics and the world of the economy and we know that in the face of powerful economic actors, we are often impoverished because they decide to dismiss staff or threaten to do so if we don’t help them, if we don’t give them benefits.

In this project, you don’t protect yourself enough and you don’t give yourself the means to be strong in front of them. We will continue to follow this record and we will ⁇ need to write new documents that will allow us to have a more socially responsible view of the management of companies, their responsibilities and the role of policies towards the economic actor.

The next speaker is Mr Bruno Tuybens. You are served on your tips, Mr. Tuybens. The Government is represented by the delegation you requested, namely the Minister of Justice and the Minister of Public Enterprises.

The [...]

This is why I would like to point out, colleague Verherstraeten.

Mr. Speaker, Mrs. and Mr. Minister, colleagues, companies have acquired an ever-increasing social impact over the last two decades. Through a successful political project of conflict management and the pursuit of freedom, business has been given huge opportunities in a larger, global sales market, at lower production costs, through outsourcing, and so on.

Globalization makes companies powerful players, and not only in the economic field. That’s not bad news for governments, one might think, because strong companies bring money into the state treasury, put people in work and thus provide more prosperity. Political governments want to attract companies at all costs. All this, of course, further strengthens the dominant position of the companies, resulting in the abolition of sound political policy. Therefore, the alarm clock is being pulled around the world.

Whoever objectively sees the difference in speed between the evolution of the public budgets of the industrialized countries, on the one hand, and the annual growth of large enterprises, on the other, can no longer accept that the costs of social problems are disproportionately rolled over on the families and the government. Companies have been given a globalization of opportunities. Now is the time for politics to confront business with a globalization of responsibilities.

Many business executives believe that maximum short-term profit creation for the shareholder is the only legitimate goal of a company. Fortunately, this group of entrepreneurs has slowly become a minority and there are ⁇ many good examples of entrepreneurs who claim the opposite.

In this vision of short-term goals, the evolution of the price of the share, the quarterly results and the annual dividend are the only criteria on which the performance of the company should be counted. Long-term thinking has too often resolutely shifted to the background.

Traditionally, the business community advocates that it may decide itself to the extent to which it will fulfill its social responsibilities. However, the call for self-regulation ensures that voluntariness prevails, the choice remains limited, or only seeks lucrative aspects. Too often, colleagues, this voluntarism leads to non-binding. Companies are often already satisfied with a declaration of intent and commitments of effort. Where the business world remains in failure, the government must play its role. It can act as a guiding and regulatory agency where necessary to assist, encourage and, if necessary, even force companies to take on those responsibilities and to link the appropriate actions.

Last month, colleagues from the Open Vld, I read a very interesting piece of opinion from a good old acquaintance of you, namely Professor Paul De Grauwe. He said in an article in The Standard from the end of January of this year: “The biggest enemies of capitalism today are not the unions, but CEOs like Carlos Brito of AB InBev. It is time for governments to limit the all-power of shareholders. An economic system can only survive if there is a broad social consensus that the system is good for the vast majority of the population. More and more grew the idea that the market system was better placed than the government to create sustainable jobs and at the same time make material progress possible for everyone. Deregulation and privatization were carried out all over the world.” Professor De Grauwe thus thinks that the time is now ripe to put an end to this. The slinger hit too far, he writes. Too many people began to believe that all social problems could be solved by the free market, and that the role of government should be reduced everywhere.

An even more fundamental discouragement arose when the idea came into being that control over the companies should be carried out by the stock markets. Professor De Grauwe says that in the stock markets, psychological factors, such as euphoria and depression, optimism and pessimism, play an equally important role as fundamental economic factors. If then the remuneration systems of the top management are more and more linked to the evolution of the stock price, the fence is the dam.

I find this a very interesting explanation by Professor De Grauwe. He also calls on business leaders to recognize the seriousness of this problem in time and to draw the necessary conclusions from it. Finally, he explicitly writes that the government must act in this system, including as before, by taxing fees based on options contracts as a wage.

We gave this. We have given the self-regulation of companies. Since 2003 there has been a committee of entrepreneurs, formerly led by Maurice Lippens. In the corporate governance committee, a number of interesting individuals sit, among others Luc Vansteenkiste, Pierre-Olivier Beckers, Didier Bellens, Karel Boone, Daniel Janssen, Hugo Vandamme and Lutgart Van den Berghe.

Mr. Minister, I would like to clarify one aspect. It is very explicitly stated in the Corporate Governance Code that in relation to renumeration, the committee believes that the payment of non-executive directors for performance-related renumeration, such as shares, stock options or tantièmes, does not represent the best practices and as such should not be encouraged. That is very clear.

I would also very explicitly quote Fred Chaffart in Knack in October 2008. Responding to the question of whether the remuneration of managers does not look too much at their short-term performance, he said: “Yes indeed, and thus you create a bad and immoral system in which people create as much money as possible as soon as possible and then make them go away. Then you get greed. I think managers should be well paid,” I also think, “but that must be linked to the good long-term performance of the company. The fact that people who led their company to the destruction were also paid very well for it, I find it absolutely shocking. It can’t be that managers who help their business in the destruction fluctuate with a golden parachute, a rushing farewell fee, and yet it happens.”

Our Prime Minister, in his first government statement, for as you know he has already had two, made a call with insistence for more ethical awareness among certain bankers, directors and managers. Urgent measures are needed to restore confidence in the system and to better regulate.” During that period, colleagues, he said, “We need to put a stake and a stake on rough dismissal fees for top managers.” I found that a very interesting statement and especially a statement of the Prime Minister in which a certain hope was cherished and grown, that there was finally something to happen.

That is why we will vote against this bill. We are, of course, ⁇ disappointed by the empty box that this bill is.

We have known the special follow-up committee of the financial and banking crisis. The chairman of that committee, Mr. George, is also present. In that committee it was discussed, inter alia, that the suitability of the independent directors within financial institutions should be specifically assessed by supervisory authorities, with the participation of financial specialists, and then I am not talking about all the recommendations of the Lamfalussy committee relating to the re-numbering schemes, the gold parachutes that should remain strictly restricted, the bonuses and the like.

I have to conclude that that follow-up committee is also an empty box. It is noted that the meeting has been held five times. Four times out of five, the question of when to meet was discussed. After all the hearings that have already taken place on this subject and the study that has been conducted on the financial crisis and the banking crisis, the committee will now begin hearings. In other words, this is also an empty box. Mr. George, you are the chairman of an empty box. I am very sorry. I cannot do anything about it, but that is the reality. It is especially important to point out that the government thus indicates that it actually does not want to do anything with force, does not want to do anything about that problem.

Then I come to the draft law that is presented.

Ladies and gentlemen, I will start with some positive points.

The gold parachute is limited in this bill to twelve, possibly eighteen months. If it is higher, then the file must be sent to the general meeting of shareholders and to the company council. The latter, fortunately, thanks to an amendment by the members of the majority. That is a good point.

There is still some legal debate over the 18 months. I have another question I would like to ask the Minister of Justice. What happens if a company decides to be 18 months old and the remuneration committee does not give an explanation? Then one could read the text in such a way that the decision at that moment also escapes the general meeting of shareholders. That is a small aspect. But well, I suspect that can be resolved quickly.

A second positive point of the bill is the spread of acquisition of share-related variable remuneration over time to thus acquire a longer focus on the business. Thanks to a majority amendment – I suspect after my criticism in the press – it has been introduced faster. This is a positive point.

Third, the departure premium does not come in case of poor results. This is a positive point. In the committee, I also said that the fact that the remuneration report is incorporated in the annual report generally serves as an example. I find that very positive. Until then the positive points.

Mr. Minister, we will not approve the text because of six fundamental points of criticism. I will try to present them as soon as possible.

A first fundamental criticism is that today’s generous bonuses and gold parachute schemes are essentially untouched. The new rules apply to new contracts. Warren Buffet once said that a dismissed CEO earned more on the day his office was empty than a worker for his entire life.

This will remain the same in Belgium for existing contracts. I recall that the Prime Minister found the rushing upward prize of Gilbert Mittler, the former Fortis chief, unimaginable – as it was stated at least in Het Laatste Nieuws – and a jaw blow for all employees, customers and small shareholders: “I find it purely scandalous. I don’t know if someone at Fortis understands what they’re doing. You really don’t understand that it should be different.”

“Premier Leterme didn’t put his outrage over Mittler’s gold parachute under chairs or benches. Even the government partner, Open Vld, considers the million premium unacceptable. However, the spokesman said yesterday that the government will examine whether and how it can do something about the excessive start-up premiums.” It is, of course, about the existing excessive start-up premiums. In the present draft law, there is nothing about this.

The PS demanded in that period a limitation of the dismissal compensation to one year salary. Open Vld wanted to pay up to 18 months. A compromise was reached, as we read in November 2008. “As a rule, the dismissal compensation is limited to a maximum of one year’s salary. Anyone who has a long state of service can get more. After 20 years it is 15 months. After 25 years, it is 18 months. In the end, there is nothing left of it. The remuneration shall be calculated only on the basis of the fixed part of the salary.” This too is all past time.

Therefore, nothing changes to the existing excessive uplifting premiums, the golden parachutes. The government has chosen not to change this.

Therefore, we have submitted Amendment No. 31, which we would like to repeat here. In this context, we ask that the measure should already be implemented.

A second point of criticism is that independent directors can still be compensated with share-related elements.

I cannot argue that the government has waited fifteen months to submit the present bill to Parliament. However, it was presented just at the time of the social crisis at AB InBev. The link was not made by me.

In any case, the corporate governance code states very explicitly that it is not possible for non-executive executives to receive a variable salary that is share-related.

On 30 April 2009, the European Commission issued Recommendation C(2009) 3177. In point 4.4 of the aforementioned Recommendation, no ambiguity is possible: “The remuneration of non-executive directors or commissioners should not include stock options.”

In other words, it is the desire and decision of the current government to contradict the corporate governance code of Belgium, also in contradiction with a recommendation of the European Commission that leaves nothing to be unclear, despite the practice in the Netherlands since 1996 – that is, for more than 14 years – and because there are certain interests to be represented, that the remuneration is not changed. In no way do I mean that in practice, however, there is a struggle, in particular through the board of directors and the general meeting of shareholders. I would like to invite Mr. De Potter to review the composition of the Board of Directors. Where appropriate, he shall note that the general meeting of shareholders and the board of directors of the company have the same composition. It actually comes down to that.

Colleagues, there is thus a situation in which the present draft law is made on a single person’s scale. After all, there is only one company in Belgium that belongs to the top 50 companies in our country and listed companies in terms of size, which has such a system of share-related remuneration for non-executive directors.

We all know the names of the – this is even worse – Belgian, independent drivers. The law in question is tailored to a former prime minister, namely former prime minister Dehaene, who, as a non-executive, independent director at AB InBev, must still have the chance to be able to realize his acquired stock options at a given moment.

As you know, it is – the figures have been confirmed to me by AB InBev – about a sluggish 1.5 million euro, which is likely to be realised and whose surplus values are, in the meantime, tax-free.

I really think I cannot. So you don’t have to be scared that there are people who say that shame rules. The shame reigns! When a law can be made at the head of the client, on the scale of one eminent person of a government party, then so is it. Then the shame reigns. I cannot describe it otherwise.

What is even worse is that it is an independent driver. There is a regulation for non-executive directors. Non-executive drivers may benefit from an increase in the rate at some point. This is an independent driver. The Act of 2 August 2002 states very explicitly that the presence of independent directors can contribute to the fact that the results of the company can also be used in the interests of the employees. It is actually hilarious. At the time of the social conflict at AB InBev we must read that indeed the independent directors have the task of defending the interests of the employees.

These independent managers are compensated with stock options. They receive a variable wage. The stock options offered to them were rejected by some of them, except by a certain Flemish independent executive...

I am going to read a text that Mr. Dehaene said in so many words in 1999. Very very interesting! “A completely different new reality, but much less visible, is the rise of global money flow. Billions of speculative capital flows uncontrollably from screen to screen, from stock to stock, and can destabilize large economies in a single blow. On a global scale, we threaten to fall back into a wild capitalism, a market economy driven by profit maximization, without ethical, social or ecological rules.”

These are the words of Jean-Luc Dehaene. Yes, my colleagues, in 1999. In the meantime, he has apparently discovered the power of money.

Colleague Van Biesen, you apparently said at the end of January in the newspaper De Standaard: “Independent managers should serve the public interest. Dehaene does not do this here. Therefore, we are taking measures to encourage him to act.”I have heard nothing from you. You are made mouth-dead by the big CD&V in your majority.

I read it again: “Independent managers should serve the public interest. Dehaene does not do this here. So we take measures to encourage him to act.”I can only read it. By the way, you are so kind to say that only after my intervention came a shot in the case. Thank you for that.

“Circles of the Christian workers’ movement perceive Dehaene’s position as quite embarrassing. The ACW. AB InBev does not appear to represent an orderly social consultation. Neither CD&V nor ACW nor Dehaene themselves comment on this.”

I read what is stated in the Standard of 21 January 2010.

I have understood from colleague De Potter that a fixed fee becomes the rule, and a variable fee becomes the exception. Independent managers should be able to maintain their objectivity and be able to criticize the policy. They can no longer do that. With the stock options, they receive a variable salary of 1.5 million euros, versus a fixed fee of 70 000 euros, to perform their work as managers. It is no longer in balance.

Mr Tuybens, I do not know what training you have ⁇ , but you should explain to me how a new law, which we will approve today, can interfere with contracts and options granted in the past and even the European Recommendation of 30 April 2009 that you cite dates from after the conclusion of the contract in which the options were granted. Explain how you deal with this legally. We offered a solution by saying that independent drivers no longer receive variable remuneration. If that happens, then an agreement of the general meeting and an opinion of the business council is needed. I don’t see how you would solve that. (Applause on the banks of CD&V)

You do not need to applaud. It is very simple. You voted against an amendment by me and my colleagues; that is no longer in the papers, but it comes from Mrs. Gerkens and the gentlemen Tobback and Van Hecke.

Now, that amendment states that stock options acquired by non-executive directors of companies can no longer be exercised. The legislator can therefore today perfectly decide not to allow the offered stock options, which were once again succeeded by the Corporate Governance Committee of the European Commission, to be exercised. This is absolutely possible. We have submitted this amendment.

Mr Tuybens, the State Council said in its opinion on the first draft that it cannot legally interfere in ongoing contracts. We hear from time to time the State Council listening. On the example you give now, again the criticism of the State Council applies: legally one cannot intervene in current contracts.

Mr. De Potter, the State Council was primarily based on the fact that there would be discrimination. By the way, it was only about the gold parachutes, not about stock options. There would be discrimination among the various potential executive directors, CEOs and members of executive committees and the like. There is no discrimination, on the contrary. The legislator can perfectly determine that stock options granted to non-executive directors cannot be exercised. That can be perfect, one can perfectly inscribe it in a law, just as one can inscribe it tomorrow in a law that there must be left or right driving on the track. That can be done by the legislator. He may determine that persons with a driving license must drive from the left and the other right for a given date. But it is not the matter. Read the amendment: you will see how we want to organize it.

The third important point of criticism is that, on the one hand, the majority parties judge correctly that an annual report of a company contains elements that go beyond the mere financial. Previously, a company’s annual report was a financial year report. Nowadays, generally non-financial criteria are also included in an annual report for promotion and publicity considerations. In itself, this is ⁇ not a problem, on the contrary. I think it is good for a company to recognize its importance in society in this way. In this way, there is reporting on personnel aspects, environmental impact and so on. That is a good thing. With the present bill, the remuneration report is also incorporated in the annual report, which is also positive.

But when it comes to the company’s highlight, the one-time general meeting of shareholders, it is, on the other hand, suddenly far too much for representatives of the relevant stakeholders to have only five or ten minutes to speak. I cannot say otherwise: that is an anomaly. Ultimately, in this way, the many incidents, including peace movements entering Barco and having to buy a share in order to enter, would be avoided by simply recognizing the relevant stakeholders as they are. That doesn’t have to be twenty-five, a piece or five or six is already more than enough. I would like to note that already many people who are not shareholders, including members of the board of directors and holders of bonds, can attend a general meeting of shareholders of a company. They do not have the right to vote, but the right to speak. The relevant stakeholders would be treated correctly if they were also given the opportunity to speak in both private and public enterprises.

It was an amendment submitted by sp.a, Ecolo-Groen! and the PS. I must have concluded that the majority party PS voted against its own amendment last Tuesday.

Fourth, despite all the explanations...

Mr. Tuybens, Mr. De Potter wishes to interrupt you.

Mr. Tuybens, we have already held this discussion extensively in the committee. I am not in favour of interest groups having the right to speak in the General Assembly. The general assembly is the glory of the people who have invested, the shareholders. As you say yourself, it is enough to buy one share to have the right to speak. Furthermore, the stakeholders can express their views and views in sufficiently different ways, through the media and the press. I think we should not mix things together. That is not necessary. This would undermine the proper functioning of the General Assembly.

Mr. De Potter, apologize for saying this, but I find this a weak intervention. I will use the same line as you just used. What you say is that the company’s annual report should only be distributed among the shareholders. That is what you say. The annual report may only be distributed among shareholders. If the company has the maturity – fortunately there are so many – to say that it actually wants to take the middle-class test, it should get that chance. They then open their annual shareholder meeting to those people who effectively have an opinion on it. It is not that they should come to dominate the whole thing, they should absolutely not do that, on the contrary. Otherwise, however, you get situations such as those that took place at Barco, that peace movements begin to shoot. To avoid that, I think it is right to witness maturity if this would happen. In the same line as you say, the annual report should therefore only be distributed among the shareholders. That is exactly the same reasoning that I use. That was the third aspect of the criticism.

A fourth aspect is related to the widely promoted idea by government members to leave one-third of the members of the board of directors of private enterprises of the opposite sex within three or four years. This means that at least one-third of the members of the board of directors within three or four years would be people of the opposite sex versus the majority of the directors. I could say that it is the amendment-Joëlle Milquet, to make the CDH a pleasure. I could also say that it is the amendment-Sabine de Bethune. On November 10, 2009, she was announced that she thought it was a very good idea. This is the Milquet-de-Bethune amendment. I have submitted this amendment and what does it show? I received the answer from the Minister of Justice that it actually has nothing to do with the bill. However, the draft law concerns good governance of private enterprises. I think it would be very useful for companies if there was a greater diversity in the composition of the board of directors, both different genders and real independent directors. These are elements that would benefit the decision-making process in the company, but apparently it should not.

Mr. Tuybens, Mr. Van Biesen wishes to interrupt you.

Mr. Tuybens, of course we heard you in the committee and we hear you here today. Apparently, you are not really prepared to engage in the discussion with us on this subject. We and the Minister of Public Enterprises have clearly and unequivocally stated that we will conduct the discussion about the quota, about the number of directors of one or another gender, in the various committees that are already working on it. You are now trying to add something to it so that you can tell the outside world that the others are voting away and that they don’t mean what they say. We do not play that perverse game today. This is the position of the majority in this regard.

Mr. Tuybens, we also want to make it clear that on that level self-regulation – the evolution in a certain direction – is actually taking place today. You should know the public companies, Mr. Tuybens, because you have been responsible for them for several years. I don’t know if you remember that, but you have been Secretary of State for Public Companies. Well, you should know that 26% of drivers today are of the opposite sex. Four out of six state-owned companies no longer have a quota problem.

There are two other public companies where an effort needs to be made. The Minister has said in the committee, and in her policy note, that she will take responsibility in this area. We are conducting this debate on the quota at the right place. It is a conversation that is carried out between all responsible persons dealing with gender issues in the Senate and in the Chamber, but that really did not fit in the Committee for Commercial Law. Let’s be honest, that is really wanting to add something because one must find something that one can be against. I am sorry, Mr Tuybens. The balloon will not go up today.

Mr. Van Biesen, I find it quite populist to say that I didn’t think of anything else. I think that the opposition parties have jointly submitted about forty amendments, with various criticisms on this faint bill.

When it comes to good corporate governance, the element of diversity in the composition of the board of directors has absolutely everything to do with it. It is only a pity that it takes so long in the government. The announcements, both from Mrs. Milquet and Mrs. de Bethune, were made in October or November last year. I feel that again we will have to wait fifteen months before the government comes up with something. It is always announced. In October 2008, Leterme announced that this bill would be presented a few weeks later. We had to wait 15 months.

The [...]

As for this aspect, Mr. Van Biesen, it is very clear. I think your figure of 26% was even valid at the end of the government of which both of our parties were part.

I even think it could be a little higher, but I am not going to discuss that. At least at the end of 2007 this figure was already at that level. I am pleased that the policy that the sp.a has pursued in relation to public companies, both Mr Vande Lanotte and myself, receives your appreciation, for which I thank you.

The fifth point is the content of the bonus. We have submitted an amendment aiming to make the bonus received by the members of the board of directors of private companies subject to criteria other than just financial criteria. Financial criteria are sufficient: the growth figures, the stock price evolution, and so on. This is of course easy. Other aspects such as the evolution of employee satisfaction and customer satisfaction and the reduction of the environmental impact of enterprises, today, apparently, cannot be included in this bill.

We have submitted an amendment, which we will not submit again today, to introduce an element of assessment for private enterprises. Today, however, we re-introduce the amendment aiming to include at least half of the criteria for state-owned companies.

That was the question I wanted to ask the Minister. Mrs. Vervotte, what is your personal vision or the government’s vision on this matter? You know that we have started with this in recent years. The bonus of various CEOs is already calculated on the basis of non-financial criteria. What is the current state of affairs? Has anything changed in 2009 compared to the situation in 2006 and 2007, at the time of the previous government?

What is your vision in this area? I would like to know this from you so that we can make a good assessment about it.

Mr Thubbens, I wanted to interrupt you for a moment. When a company imposes goals on managerial or executive members, this is usually in line with the company’s strategy. I now hear you say that objectives should be imposed by law on companies. That means so much as by law imposing a strategy on companies. What kind of business nonsense. It is true that entrepreneurs, managers and executives should be given other objectives than pure profit objectives. That is correct. It is not up to the legislator to impose this.

A company that looks carefully at its strategy adjusts its goals to its strategy. If you are now going to impose certain criteria that should at least be in the goals, you are going to impose a strategy on companies as a legislator. I think you are really seriously going out of the curve now.

Thank you Mr. Jambon, I think this is an interesting question. I would almost say that this is the first interesting question. My apologies for that. It is a discussion that you are opening up, and I find it very right.

I think we are very different in this, you may not have heard the introduction of my argument. There has been a substantial shift occurred over the last two decades. Since the fall of the Berlin Wall, we have given companies the opportunity to cover a much larger sales market and to make significant cost savings through outsourcing. All this was possible on the basis of a political project.

That political project has succeeded, fortunately. In addition, there are many opportunities for companies. In itself, this is not bad because it creates wealth, employment and so on. However, companies and ⁇ also have responsibilities. They are in the middle of a society, of a social order. It would be good if they continue to assess and map the long-term outlook.

It is not so wrong to ask a company to take into account, in addition to its regular business activity, at least those things that we are awake of. We are awake to the fact that there is unemployment, we are awake to the fact that there are various things going wrong in the field of environment and global warming, we are awake to the large migratory flows that are coming, also in the direction of our contractions, we are awake to the fact that, for example, in the OECD countries the aging is striking so that around 2020 70% of our population will be either 65 or older, or 16 or younger. Therefore, the dependence ratio is beginning to get seriously out of balance. The balance is out there. These are the elements of which we are awake. I think we make the mistake of assuming as political responsible that we will be able to continue to handle this all by ourselves, by ourselves, that we will be able to handle it all by ourselves. Nothing is less true. You know that the budget space is very limited. We cannot do this alone. If, in the meantime, there are corporate mastodonts – Nokia has a turnover that is greater than the gross domestic product of countries such as Romania or Hungary – then I think we should also point them to those responsibilities.

We must almost force it, as it were, that they would effectively take on the socially relevant aspects as well. We have found that self-regulation has not worked in this area. Self-regulation has not produced satisfactory results. This means that we must push them in the right direction.

My proposal concerning private enterprises was purely and solely aimed at making them elements of the bonus benefit. If the company says that it weighs 0,01 to those elements, it says more about the company than about the legislator. We agree on that, I think. However, they must fill it. They must tell us what they want to do with it.

Public companies are a very different story. They are paid by public funds. This means that we are all true shareholders of the public company. Well, if we give public funding to the state-owned company, we can expect that the company is not only concerned with the financial evolution of the company, but that it is also concerned with the accuracy of service, with the customer satisfaction, which they now, by the way, already measure, with the satisfaction of staff, with the success of social dialogue and more.

Those non-financial but quantifiable elements should in a significant degree determine the bonus of the gentlemen Thijs, Descheemaecker, Haek, Lallemand and so on. That is the position we defend. In fact, we appeal to important institutions, which are companies, to take on this challenge. That is why the discussion is so important. The discussion is also lively. We don’t want to bother, we want to bring companies in the direction that they take their responsibilities seriously.

I would like to continue the interesting discussion.

Mr. Tuybens, you are actually opposing yourself. For you argue that we should impose these praiseworthy and worthy matters by law. While developing your thesis, mention that the quota already exists in four of the six state-owned companies. I am talking about, among other things, the criteria of customer satisfaction. You also say that most companies also apply those quotas.

That is precisely the antithesis of the argument you are developing here. If we again impose the quotas mentioned by you on the companies, we will go back down. You started your introduction with the fall of the Berlin Wall, which was indeed a breakthrough in history. If we again take the path of imposing all sorts of such quotas on our companies and we put them again in carcasses from which they can no longer get out, we will rebuild the wall.

You are exaggerating strongly.

The first aspect, the quota, has to do with the number of women in the board of directors of companies, which in itself has nothing to do with carcans.

What I’ve pointed out is that companies that take themselves seriously now already measure staff and customer satisfaction. They are already doing it. That is right.

[...] to impose matters. This is pulled out of the pot.

I do not claim that either. You did not listen well. What I intend to impose by law is that those elements, in particular the evolution of the numbers, are taken into account in the manner in which the bonus of the CEO is determined.

We do not want to impose a certain percentage on private companies. So they do what they want. In the case of state-owned companies, on the other hand, and as I know since 2006, it is already the practice that the bonus for at least half is calculated in the aforementioned manner.

The case has now become clearer.

The case has not become clearer. I would have understood it well. However, it is definitely a model that we do not adhere to. We differ in opinions.

You claim that we intend to impose by law that those companies must measure employee satisfaction. However, this is not so.

No, we argue that you want staff satisfaction to be included in the managers’ goals for a very low point. Therefore, it is actually just a arrangement for the gallery, since it can be 0,0001%. So what are we doing in that case? They must measure employee satisfaction and other criteria. We will then discuss here, instead of the companies, what criteria should be imposed.

Mr. Tuybens, I thought that time was over.

I will not repeat my position. I have clearly shown this. For me, it is important to ⁇ a change in mentality, Mr. Jambon. This has been asked since the end of the last century. Self-regulation has not succeeded. We must create that mentality change in some way. This has not been achieved so far. We must admit that. In this regard, little to nothing has been achieved. That is the challenge of all of us. Maybe in ten years we will beg for such regulation, even if it was only because I think there are some social tendencies that we will not master.

Our large companies provide a lot of employment and compete with China, Brazil and China. How many criteria are imposed on those companies there to do such things and reduce their competitive position?

I have heard this in the past when it was about the banking crisis, Mr. Jambon. The CBFA did not want to intervene with the Belgian banks if certain questionable things happened. Because, o wee, it could affect the competitive position of our financial institutions against the European peers. We know how far it has come. Belgium is one of the countries that had to come across the bridge with the most money to save our banks.

There needs to be a mental change. We must start somewhere. Fortunately, there are several initiatives at European level. We need to progress slowly in that direction. Institutions that ⁇ a turnover rate greater than some countries must take on their responsibilities.

The annual reports of these companies contain various issues related to the environment, staff and customer satisfaction. On the one hand, they would like to come out, if it suits them. On the other hand, they do not want to consider incorporating this into their variable remuneration definition. This is not in balance.

My sixth point of criticism is, finally, the update of the renumeration in social negotiations. Suppose that at the moment there are social problems in a particular company. We want to know what is happening on both sides of the negotiating table. There is social uncertainty, there are guaranteed redundancies and so on. It is still to be discussed in the business council how many dismissals will be made. The social negotiations are about to begin, one is sitting on the eve of it. Well, the trade unions and the employee representatives explicitly ask how the summit will be awarded. At that time, those people can only read the 2008 renumeration report, because that of 2009 is not yet out. It will not come out until April.

Well, there is an amendment prepared by us to effectively play open cards on the eve of such social negotiations and ensure that there is full transparency about an updated renumeration report. This is amendment No. 29 of 29. We have submitted it. We think it is very important that this should be given a chance.

Finally, I asked the Minister of Public Companies what her view was about the 1/3 male-female ratio in the composition of the board of directors. I asked about the state of affairs with regard to the variable salary in state-owned companies, specifically for CEOs today. I think this is very important to know. I tried to ask those questions in the committee on Tuesday. I did not have an answer at the time. Therefore, I am pleased that the Minister is now present to pick up the thread again and respond to it.

These, colleagues, are the six reasons – unfortunately – why we find that we are making too little progress. We consider this a missed opportunity. We consider this to be a light version of a bill on good governance. We would all have been very happy with him today. It is a pity that it is not so.

The [...]

Mr. Speaker, please keep Ms. Nyssens quiet because she prevents me from speaking!

Mr. Speaker, Mrs. and Mr. Ministers, dear colleagues, I will begin this speech by mentioning that the MR group is fully satisfied with the adoption of the bill by the commission responsible for issues of Commercial and Economic Law, which we are discussing today.

I will examine my intervention from the perspective of listed companies. With regard to public enterprises, it seems to me that the role of ethical laboratory that could be assigned to them would deserve a full-fledged debate and the MR would be pleased to participate in it at the right time.

We must emphasize, once it is not customary, that we have taken the time to refine this text. After a first version more interventionist and a first bill that has not been “recalled” but has nevertheless been the subject of a number of comments of the State Council, it is with more consideration that you have handed over, Mr. Minister, the work on the profession and we would like to thank you for it.

This delay in programming has made it possible to highlight what the role of the legislator in matters relating to corporate law really consists in being, by essence, flexible and adaptable and integrated into the international socio-economic context.

Many legislative proposals have also come to enrich the debate and open spaces for reflection and discussion. I would like to thank the Ecolo-Groen colleagues in particular! and sp.a. for their contribution to these discussions.

A hot reaction point, a policy point that merely reacts but a proactive policy! A quick and disproportionate response but a refined response to the situation! We can only rejoice.

In the particular matter of corporate governance that actually affects the obligations of the companies, in this case listed, as regards their internal functioning and therefore the contractual freedom, the MR considers that the legislator has a subsidiary role, that is, that he should only intervene if and only if his intervention is likely to provide a better solution to the problem considered. We have always thought that self-regulation should be preferred to legislative intervention.

Since the emergence of the Belgian Code of Corporate Governance in 2005, a significant number of listed Belgian companies have spontaneously followed the principles and recommendations of this Code, well aware of the usefulness of such a tool.

Certain abuses in starting compensation in the current economic and financial context – and we could talk here long about the financial and banking crisis of late 2008 – should not blind us. More than ever, we need dynamic and supported business leaders in their entrepreneurial spirit so that they can do what they do best, offer products and services that bring added value to society and deploy entrepreneurial spirit and creativity generating wealth and employment. It is therefore important to offer them a quality legislative framework that provides them with the necessary support at every stage of their activity and helps to strengthen the attractiveness of our country.

This means that the legislative approach is only necessary if the sector in question is unable to manage itself properly. This legislative approach must therefore remain targeted. After intervening where its action proved necessary, the legislature must continue to trust companies and keep room for flexibility and self-regulation in areas where its intervention is not required.

The bill that we are dealing with today is part of the right thread of this philosophy. In this case, the legislative response it brings is aimed at areas where, for the MR, the abusive behavior of certain actors sufficiently justified that the legislator intervened and wants to see a number of good practices implemented as well as a restoration of trust.

Three points will ⁇ draw our attention. The first is the framework for the granting of departure allowances to business executives. If the policy should not interfere with the determination of the basic wages of the big bosses, which are the reflection of the performance of the companies, it is up to it to look at certain abuses that the media, which the news has long denounced as those start compensations unrelated to the performance that could jeopardize the interests of other stakeholders and first of all those of the company, its shareholders and its workers.

This goal makes even more sense given the particular context that is our own. The financial crisis of late 2008 and the delicate situation of some listed companies have rightly shocked the public. The MR considers that the granting of starting compensation without proportion to performance was not acceptable. It is then up to the law to regulate the matter. However, this framework must remain in the good practices of the Belgian Code of Corporate Governance. We believe that the main recommendations of this Code constitute models to be inspired, in particular for the creation of the remuneration committee, the adoption of a corporate governance statement and the drafting of the annual remuneration report.

The bill that the MR had submitted to solve this problem stipulated that the determination of the starting compensation was linked to the achievement by the manager of a specified objective at the time of his engagement. The proposal also considered that these compensations could only be granted in a manner proportionate to the duration of the benefits of the administrators. The amount of these compensations should therefore be proportionate to the actual duration of the benefits of the manager concerned and to the performance achieved, all these decisions being taken by the remuneration committee with the approval of the general assembly.

The government’s bill goes in this direction. However, this project is marked with some flexibility; like our bill, it largely reflects the recommendations of the Belgian Code of Corporate Governance.

The project thus provides for starting compensations of between 12 and 18 months of fixed and variable remuneration, except for the general meeting of shareholders to give its prior approval; if an agreement deviates from these rules, it is void of full right.

In the initial bill, starting compensation was determined by reference to the Code of Good Practice to which companies must refer. In practice, these were always the rules of the Belgian Code of Governance. This method actually endorsed the goals that companies set themselves. However, with an amendment aimed at greater clarity and legal certainty, the reference to the code chosen by the company was replaced by the direct mention in the law of the fixed amounts of starting compensation.

Obviously, the enunciation of these maxima in the text of the law clarifies the situation, but one can ask whether this does not risk to conflict with the opinions of the State Council on the bills aimed at regulating this matter, in particular that of 3 November 2009.

The bill, on the other hand, has the merit of providing for realistic transitional measures to enable companies to comply. They therefore apply to new contracts and renewal of executive contracts concluded after its entry into force.

The second important point relates to the other area that, rightly, had hit the public in recent years, is the granting of bonuses to corporate executives themselves in a delicate situation; every day again, the media refers to it. The bill has the merit of defining and clarifying this notion. These are now premiums awarded based on performance criteria, such as a stock-based remuneration: stock options. A remuneration not related to benefits criteria should be considered as a fixed remuneration.

The bill intends to impose that the assignment of a variable remuneration is in all cases linked to clearly defined criteria in advance, from the conclusion of the contract with the manager. Those criteria must therefore be expressly included in contractual clauses or other applicable documents, such as documents relating to the general remuneration policy.

If this obligation is not complied with, variable remuneration shall not be taken into account in the calculation of the starting compensation when it is not included in the contractual or other clauses governing the legal relationship in question.

It therefore seems perfectly logical and appropriate for us that the award of bonuses is closely linked to criteria that will take into account the particularity of the company and the expected performance of the manager. We also welcome the fact that non-executive directors will not be entitled to variable remuneration, a factor that would compromise their independence – unless the general meeting of shareholders decided so.

It should be noted that, in fact, there are still few companies that give variable remuneration to non-executive directors and, in particular, to independent directors, who receive mainly presence tokens.

In accordance with the recommendation of the European Union, the bill provides that the payment of the variable remuneration will be scaled over time. It can only be granted if the criteria for the benefit defined with objectives to be achieved are met during the specified period. This is part of a long-term perspective, which is desirable at the level of management, management of our companies, and value creation.

A maximum of 50 % of the variable component of the remuneration may be linked to benefits of the relevant year, while the other part must be assessed on the basis of benefits criteria covering a period of two to three years.

This legislation thus fundamentally transforms the working relationships of business executives and their society. Therefore, the transitional measures had to be ⁇ adapted to enable the effective application of the new provisions. The concrete implementation of this measure will require renegotiation of contracts relating to variable remuneration, which currently accounts for 60 % of the remuneration of executives.

We know well that the draft stipulates that the provisions will apply to the social years starting on 31 December 2010.

The third important point to be emphasized is the need to ensure transparency and publicity of remuneration. The debate had already begun, some time ago, during the previous legislature. A compromise, until the last moment, seemed possible. It is real today! We are ⁇ happy about this! The bill thus takes back the position that the MR has always held, the one that seemed to best meet the objective of informing shareholders while carrying only a limited infringement on privacy: individual advertising for the chief executive, the CEO, and global for the other executive managers.

I highlight here the active collaboration of my colleagues David Clarinval and Carine Lecomte. We will further highlight the importance of the progress made, as the employees of the company, through the possible corporate board or through any other representative, must be informed of the remuneration policy through the communication of the remuneration report. They are also informed of requests for maximum derogation from starting allowances or requests for variable remuneration to non-executive directors.

In conclusion, if the text that we are called to vote today is important, it is also a thoughtful text that provides an adequate response to the problems denounced. It is also adapted to the situation of our economic market. It should not be forgotten that these rules affect practices whose international character is not or more to be demonstrated in listed companies. Many shareholders are foreign investors. It is not appropriate to discourage them, tomorrow, in their investments by too intrusive rules, but rather to leave them their decision-making power.

We need to be able to remain competitive and place quality managers at the head of our companies, who must be remunerated in proportion to the quality of the work they will perform in a long-term perspective. Going further than this bill is probably taking the risk of breaking the balance we have reached between encouraging business and regulating abusive practices.

To this extent, we will, of course, vote with full satisfaction on the text that is proposed to us.

Corporate governance is the organization of power within a society with a view to a better balance between management bodies, control bodies and shareholders. In each company, there are a large number of stakeholders: workers, executives, large and small shareholders, creditors and institutional. Corporate governance enables mechanisms of control and balance to ensure that decisions made by the company respect the interests of each of the stakeholders.

It is about putting in place counter powers, guards to prevent certain groups of individuals from serving their particular interests at the expense of the interests of society, of the company.

The financial crisis has brought back the question of self-regulation and its corollary, corporate governance. Is it useful? What form should it take? What rules should it contain?

It has been seen, in recent events, companies not only have a responsibility towards their shareholders, they also have a responsibility towards other stakeholders such as workers, suppliers, creditors, local authorities. In short, any actor directly involved in the decisions of the company.

Corporate governance was to enable the establishment of counter powers, guards to prevent certain groups of individuals from serving their particular interests at the expense of the interests of the company. I say “should allow” because the crisis has shown cruel shortcomings. Indeed, these mechanisms have clearly not been applied by the companies concerned.

Since the beginning of the debates, my group repeats that it is satisfied with the existence of this bill which, at first, is a transposition of a directive, but which also goes beyond the prescribed of the latter. He is satisfied with this first step in the right direction, but that does not mean that we are 100% satisfied. We welcome some advances and especially appreciate that the problem of golden parachutes, whose amounts are indecent and exorbitant, has been attached to the project.

Let us not hide our faces: there is still a lot of work to be done to address all the problems highlighted by the crisis. Yes, this project must be completed. This project is not satisfactory. Yes, we will have to bring the work back to the profession. That is why we have requested that our bill, which is more comprehensive and more ambitious in this area, be disjoined from this project. However, this project has some advances that need to be made quickly.

It is therefore a first step that should neither close nor postpone indefinitely other debates such as the limitation of fixed or variable remuneration of corporate executives or the extension of the responsibility of directors.

Nevertheless, despite some criticism of the project, it should not be hidden or minimized its advances and the main advance of this project, namely the control of golden parachutes and their limitation to 12 months as a general rule. Through this project, the board of directors will be required to justify before the shareholders the starting compensation granted and they will have to mark their agreement with the decisions of the board of directors. The shareholders are therefore obliged to approve in advance and by a majority of votes any derogation from the Code in matters of starting compensation, otherwise the clause that determines this compensation is void of full right. Furthermore, since this approval is the subject of a separate item on the agenda of the General Assembly, the overall approval of the remuneration report by the Assembly is not sufficient in terms of departure compensation and gold parachutes.

The information about these golden parachutes, provided individually this time, is very important for shareholders to correctly assess the motivations of the people concerned. Specifically, in the case of a company that applies the Belgian Code of Corporate Governance as a reference code, the CA will not be able to grant a departure allowance of more than 12 months and maximum 18 months without the express and prior consent of the shareholders. In addition, beyond 18 months, the opinion of the business board, i.e. the social partners, will be requested.

This opinion of the Board of Directors is only an opinion. We regret that it is not binding but as I said before, we can keep this goal in mind for the next step and recognize while waiting for regulatory values to transparency and debate.

It is for all these measures that we can talk about concretization and pertinence. We can say that this is an interesting step in the control of golden parachutes.

We are also the first European country to impose as a general rule a maximum of 12 months and I think it is important to emphasize this.

Another goal of this project is to get the remuneration out of opacity and it is achieved. Transparency has virtues that cannot be denied. Debating the amounts and modalities of remuneration at the general meeting of shareholders is a first step in the right direction.

We therefore welcome the measure consisting in presenting a report on remuneration to the General Assembly. This is also stated in our bill. This obligation will enable full information and total transparency, especially with respect to minority shareholders.

Furthermore, always in terms of transparency and remuneration control, the amendments submitted by the majority correct some gaps in the project. I think of the question of independent administrators, as other speakers have pointed out. Initially, the text left the variable remuneration of independent managers out of control. Through the amendments, shareholders will now have the responsibility of granting or not granting bonuses or a share-based remuneration or stock options to independent managers. Without the agreement of the shareholders, they will only receive a fixed salary. This is also an advance.

We are satisfied, but not 100%. In fact, we consider that the bill could have been more comprehensive on some points, in particular with regard to the complain or explain principle or even the women’s quotas, as it was mentioned recently.

The principle of complaining or explaining refers to...

by Mr. Tobias wants to take the word.

Dear colleague, I would like to ask you a question.

You are talking about the comply or explain measure, which means that if a company does not wish to implement a certain good practice, it is sufficient that that entrepreneur explains why it is not done. The Government has chosen, Mrs. Déom, to specify some elements of the Corporate Governance Code for which the compliance or explanation scheme does not apply. This applies, for example, to the renumeration report, which previously could also undergo a comply or explaintoet. Now that report must be done legally.

My question to you is from next. Bent u het met me eens dat de regering hier schromelijk tekort schiet, doordat het alleen gaat over transparantieverhoging in dat daar de comply or explainregeling wordt verwijderd? While er clearheid is over de wens van het corporate governancecomité, while het duidelijk is dat in het merendeel van eleven neighborlanden die praktijk gehanteerd wordt, while in Belgium only one company out of top fifty van de beursgenoteerde bedrijven dat hanteert, while, erger nog, of European Commission of overduidelijke aanbeveling has geformuleerd dat niet-uitvoerende bestuurders geen aandelenvergoeding kunnen krijgen, kiest de regering ervoor om dat niet te onttrekken aan de comply or explainregeling. Naar de redenen van dat besluit, we can all raden. There remains the principle of comply or explain existence. This is really an anomaly! Thereover must u het toch met me eens be?

That is exactly what I say! The project is a necessary advance that had to be implemented quickly. However, we are not fully satisfied, since this rule is in fact the consecration of self-regulation.

In the bill we have disjoined from the bill, we propose to create an independent commission that will monitor the application of this rule so that there is a better motivation, especially when it comes to explaining how to deviate from the code of good governance. In addition, we also demand that there be a responsibility of the administrators. From the moment they themselves adopt a code, they must be held responsible for the provisions of that code. This is not yet included in the bill, but it is indicated in the bill that we have disjoined who is on the table.

We truly hope that this bill will be supported and can continue to fuel the debate. It is in this context that we support this project and we will vote in favour.

This means that you will soon support the opposition amendment, which states that non-executive directors cannot get stock-related options. I understand that from your answer.

Do not confuse everything: we can have a debate about whether it is appropriate for independent administrators to have or not have actions, as we have. The project is there in the state and we must vote for it in the state because it is an advance. The set of things, which you have emphasized and which we also emphasize in our intervention, will allow to improve the project and can be put back on the table. I believe that all these provisions deserve more than a discussion on a single amendment.

We will reintroduce all these topics of discussion. Trust us, Mr Tuybens!

Furthermore, the adoption of a code by the executives of a company should engage the collective and solidary responsibility of the directors. We believe that board members should know that at any time they can be asked to report on the compliance of their decisions with the code they have themselves chosen.

In this context, the Socialist Party wishes to work on the collective and solidary liability of administrators in case of non-compliance with the code, as we mention in our bill. The responsibility of an administrator should be engaged for all measures related to the code and contained in the code of good governance, and not only when it comes to remuneration or starting compensation. Again, in this regard, we believe that the project is a first step forward.

With regard to the issue of women’s quotas, my party and myself consider that the topic is very important. I mean as proof the bill we submitted in the previous legislature and that we re-submitted in this legislature.

However, this debate is important and cannot take place at the time of submitting an amendment. For us too, the debate must focus on public companies but also on publicly listed companies, quotas in the board of directors but also the board of directors and the board of companies. A consistent and relevant percentage and implementation time for that percentage must also be determined so that these quotas are a success.

In short, this is an extensive debate that we need to start as soon as possible, but not on an amendment that seemed too restrictive to us, since it targeted only public enterprises.

Finally, Mr. Minister, I have to ask you a precise question that has not been addressed in the committee: in the event of a derogation from the rules on departure allowances (more than 18 months), what fiscal or parafiscal treatment do you intend to apply? Are you planning to set up a working group? If yes, in what timeframe?

In conclusion, as we have repeated since the beginning of the analysis of this bill, it represents a satisfactory first step in terms of good governance. The relevance of the amendments submitted by the majority allows us to see the possibility of going further.

Therefore, for the above reasons, my group and myself feel that we need to continue to move forward in this area as soon as possible. Our bill goes further, and we want it to be considered as soon as possible.

In this context, the PS Group will vote in favour of this project, which, I repeat, is a first step in the right direction. And we will remain attentive to further urgent progress being made in this fundamental matter.

The question of the remuneration of financial actors is fundamental, since it determines their individual behavior. The remuneration policies practiced in most financial institutions could seem, until recently, to be contrary to the stability of the financial markets. They are materialized through decision-making based on a short-term vision as well as through asymmetries. This was one of the conclusions of the Financial Crisis Committee report of which one of my colleagues had obviously forgotten the content...

It is clear that a short-term remuneration, based on variable factors and with immediate profits, leads to decisions that prove ineffective in the long run. We know it.

There is also often a significant asymmetry between the remuneration policy and the risks taken. It was normal for the government, not only in the financial and banking sectors but in all sectors, to take the initiative of a bill. The project that is submitted to us, starting from the principle that self-regulation is not enough, that let-do does not lead to balances, that it is appropriate to frame things, in fact aims to restore confidence in large companies. To make trust, it is based on transparency and accountability.

Transparency, because listed companies will have to make a statement on the corporate governance practices they will apply, because these large listed companies will also have to draw up – through a dedicated remuneration committee organized within the board of directors but composed of independent persons – a report on the remuneration of their own executives that will be submitted to the general assemblies. Everyone has to take responsibilities, regardless of the level at which they perform functions in the company. This information will be transmitted to the General Assembly.

Beyond these two major principles, the project addresses the problem of stock options and variable remuneration. To respond to the findings, it is to prevent short-term remuneration from resulting in decision-making that goes against the interests of society and of all economic actors. This is why, in the project submitted to us, the variable remuneration of managers is regulated so that it is focused on the long term.

This is also the reason why the remuneration report should provide greater clarity on departure allowances for senior executives.

In the past, we were talking about “black hole” or “empty box.” Evidently, some have lost some memory. The Special Joint Monitoring Commission to examine the financial and banking crisis has worked – I have chaired it and I have just been taken part and I will say a few words about it – optimally. But Mr. Tuybens may have been little aware of what was happening there, as its first president, one of its political friends, shone by his absence at virtually all of our meetings. This is also a reality!

For the future, this committee will continue its work; I can count on the support of many parliamentarians from the House and the Senate to follow the mission that has been entrusted to us by the House and the Senate.

Mr. George, did I hear correctly that you said that I was not present at the meetings of the Chamber Committee on Commercial Law? Did I understand this correctly?

The Vice-President of the Commission. Do you know?

and yes!

I no longer remember his name.

I did not understand that well!

As for the surplus, I would like to say that I also took note of the suggestion of one and the other. A project is never perfect. You can always look at things and improve them. This is the work of Parliament. This is what produces the many pages of the Monitor that only blow up from year to year. It has, at least, the merit of existing and taking the files hand-to-hand in terms of transparency and accountability. That is why my group will vote for this project.

Of course, not everything is settled. There may still be points of imbalance: listed companies, large public companies weigh on our companies or take on significant responsibilities. We will know the remuneration of the highest leaders and we will actually know in what sense this remuneration has been fixed. This seems to me primary at a time when, within some intercommunal, even the members of the administrative committee did not have the opportunity to know the remuneration of some senior executives of these intercommunal.

The Commission on Trade and Economic Law is also not the center of the planet. If she examined this project, she did not examine the tax issues, the problem of male/gender representation in the board of directors. Other committees, other parliamentarians will take initiatives to discuss this. But, obviously, we had to focus on the essence of our mission, that is, to strengthen corporate governance but also to change the regime of professional prohibitions in the banking and financial sector.

I will say a word in this regard. In fact, there has been quite a little question: it is less people than the rest! Notwithstanding that, in the project, for the banking and financial sector, a special prohibition regime has been well provided, since it is appropriate that this sector, in the service of the rest of the economy, be managed by persons whose integrity appears intact and that those who, in the past, would have committed acts that were not correct be prohibited from access to the highest positions.

Here, dear colleagues, is what I had to say to you.

The last speaker in the debate is Mr Luk Van Biesen. The last will be the first.

Mr. Speaker, Mrs. Minister, Mr. Minister, Dear colleagues, let us be honest, when I heard from a colleague that we approve an empty box here, I am somewhat surprised. I think that the draft legislation contains several elements that are more than worth it, which fundamentally interfere with our business life, which provide more transparency and make a big step towards good governance.

In fact, one can ask why this could not have happened in certain areas earlier. Today we make the legal anchoring of the Belgian Corporate Governance Code, the so-called Code Lippens.

In the spring of 2007, we did not find a majority in the Commercial Law committee to legally anchor it. That was an amendment by Mr. Daems and myself, but then suddenly no majority could be found in the trade law committee. Today, three years later, I hope for a majority across the House to do so. However, it is ⁇ important that this happens and that the good governance of listed companies in our country remains primarily a matter of self-regulation.

In our opinion, this must remain the case, Mr. Tuybens, because ultimately this is a matter of private companies. Therefore, the government must demonstrate a certain restraint before interfering in the administrative structures.

Given the late hour, I will not repeat all that many colleagues have stated here, but in addition to the legal anchoring of the so-called Code Lippens, today we also introduce the remuneration report.

It is not only the legal anchor, but also a whole series of European directives from 2004, 2005 and 2009 that are now incorporated into the law. One of the important decisions, for you apparently an empty box, is that a remuneration report should be included in the annual report. A remuneration committee should also be established. Apparently an empty box, but for us especially important so that everyone knows transparently what exactly happens in the various companies.

The issue of dismissal compensation needs to be discussed for a while. The State Council was very clear in the first opinion submitted to this government. The State Council was relentless: we could not implement the limitation of the golden parachutes at the beginning of this legislature. This has been thought about in the committee and the government and eventually a good text has been compiled which limits the dismissal compensation, the golden parachute. A departure allowance of more than 12 months or up to 18 months may only be granted if previously approved by the general assembly. In addition, it must be communicated by the business council, which can further advise the general meeting. If I am not deceived, in the corporate board are not only the shareholders, but everyone who is genuinely involved in the actual operation of a company. There will also be a legal arrangement for the bonuses.

At some point, another amendment was intended to be added in the bonus assessment committee. As liberals, followed by the majority, we have stretched out our hand to tax this problem of bonus excesses more heavily in the future. We are prepared to engage this debate in the Finance Committee where it rightly belongs, not in this global bill. We are willing to reflect on this with you, with all the factions, on what we do with the remuneration, with the assessment, or the imposition of a special tax on bonus excesses. We stretched out the hand. The majority has therefore also clearly asked a number of people who have submitted amendments to withdraw them. It is important that this is said. It gives the impression that it is an empty box, but it is a first element in a whole series of other conversations that will be conducted in other committees, where this belongs.

Mr. Van Biesen, I hear you launching and re-launching an interesting track, namely that certain excessive bonuses, which cannot, then must be taxed. You announce to take an initiative in this regard, or you at least give an opening to do so.

I remember that less than a month ago you stated to the press that you felt put in the shirt in connection with Dehaene’s case. That was the title of the interview you gave to The Standard: “We feel put in our shirt.”

Does that mean that you are also willing to submit a bill setting a valuation on the profits generated by the surplus value of equity ownership for non-executive directors of companies?

Mr. Tuybens, every track can be examined. However, one must be clear. We are talking here about the extra spectacular bonuses, which today re-entry worldwide and to which the special financial committee wishes to point out.

We will discuss this. I am not discussing an individual case of one person in a listed company. Let us discuss the issue together in the appropriate committee. However, this is not on the agenda today, Mr. Tuybens. Now be a little reasonable.

Mr. Van Biesen, I can only state that you do not find the potential one-and-a-half million euro added value for an independent executive of one of the top 50 listed companies in Belgium - only one company in that top 50 has that system - excessive. I understand that from your communication.

Mr Tuybens, you can understand what you want, I am not a voyeur.

Mr. Van Biesen, that is why the government is only committed to transparency.

A third part of the bill we discuss here today also ends a number of professional prohibitions in the financial sector. The rules in this regard will be stricter for managers of bankrupt companies who have committed crimes and more flexible for those who have not committed a crime.

Let us be honest, to that important part, which was added to the bill, none of the previous speakers paid sufficient attention.

Therefore, it is ⁇ easy for us, as liberals, to press the green button for this bill. It increases transparency, strengthens the power and supervision of the general assembly and the role of independent directors and limits the potentially destructive effects of excessively variable rewards and bonuses.

I challenge the socialist group, sp.a., not to follow its spokesman Tuybens, but to follow its common sense. Approve the bill.

I would like to thank everyone for the debate. On 22 December 2009 we submitted the draft. It was discussed in all its components in very extensive discussions in the committee and in the plenary session. It means a breakthrough in corporate law, a matter that had to be regulated for a long time. This is primarily a transposition of a European directive, which had to be done urgently. I would like to thank the reporters and all staff for the firm handling of the present important draft.