Proposition 53K0619

Projet de loi modifiant le Code des sociétés en ce qui concerne la rémunération liée aux actions des administrateurs non exécutifs d'entreprises cotées en bourse.

General information ¶

Author

Vooruit Bruno Tuybens

Submission date

Nov. 18, 2010

Official page

Visit

Status

Adopted

Requirement

Simple

Subjects

share board of management fringe benefit firm governed by commercial law pay board of directors organisation

Voting ¶

Voted to adopt

Groen CD&V Vooruit Ecolo LE PS | SP ∉ Open Vld N-VA MR VB

Abstained from voting

LDD

Contact form ¶

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Discussion ¶

July 14, 2011 | Plenary session (Chamber of representatives)

Full source

by Mr. Coëme, the rapporteur, refers to his written report.

Mr. Speaker, Ladies and Gentlemen, Ladies and Gentlemen, Ladies and Gentlemen, Corporate Governance is essential to the proper functioning of the economy. In each company, there is a large number of stakeholders, whether it is workers, executives, institutional shareholders, small shareholders, creditors, etc.

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 setting up counter-power mechanisms to prevent certain groups of individuals from serving their particular interests at the expense of the interests of society.

Obviously, the financial crisis has not failed to highlight elements of corporate governance. It must enable the establishment of counter-power mechanisms and the crisis has demonstrated that these mechanisms did not or did not work perfectly. I think of Fortis.

Last year, even as this assembly voted a law improving corporate governance, my group argued that we need to go further, that the law was only a first step in the right direction. Today, thanks to the proposal submitted to us, we continue to move forward. We are part of the extension of two objectives, namely transparency and smart governance.

We are in favour of tightening the remuneration policy in companies. The way to govern a business cannot be guided by the mere desire to receive more benefits, especially not for independent or non-executive administrators. That is why this proposal is important!

For my group, the only way to move forward is to legislate. We do not believe, as the representative of the liberal trade union in commission said recently, that the code of good governance is sufficient. He called it a marketing tool. Let us legislate! Let us continue to put objectivity and decency in the remuneration of some leaders!

Another debate is currently taking place in the commission responsible for Trade and Economic Law Problems. It applies to all directors of both public companies and public companies. I will not reopen the discussion here. We believe that there are limits to remuneration, especially when it affects non-institutional managers. These limits in terms of business must remain "decent".

This is a step in the right direction. We will continue to advocate for big bosses to regain some decency towards their workers and society.

Mrs. Vienne, the text that was submitted to us was unanimously approved in the committee?

The text was unanimously voted in the committee.

and yes.

I just wanted to hear you say that!

I said it was a step in the right direction. We agree with you, we voted for it, but we want to go further. In addition, we have submitted texts that go much further. This will be the next step.

We must go step by step!

Mr. Speaker, dear colleagues, in the debates we conducted within the Committee responsible for Trade and Economic Law Problems on the best way to ensure a behavior of listed companies in accordance with a certain ethics, the central focus of the discussion remained the effective role of the legislature in this matter and the degree of confidence that MEPs give to companies.

The issue on the agenda has no considerable scope. It should be put in its context: it is about whether, yes or not, non-executive directors of a listed company can receive variable remuneration, i.e. linked to a performance criterion. To put it more simply, one could say: can administrators who are not active in the management of a company receive a bonus?

According to a CBFA survey conducted in December 2010, only eleven companies out of one hundred and twenty-two surveyed pay remuneration to their non-executive directors, or 9%. The majority of these eleven companies justify, in accordance with the well-known principle of the Belgian Code of Corporate Governance, the comply or explain, the granting of such advantages by the specificity of the sector that involves attracting, retaining and motivating experienced managers. These are often young, newly listed companies that are very dynamic.

Although this measure does not have a large quantitative scope, it still contributes to the mechanism of erosion of the attractiveness and competitiveness of Bel20 companies by the inappropriate weight of the regulations applicable to companies in Belgium.

This more or less significant weighing according to the texts is a process that must be studied carefully because there is, in our opinion, a risk of losing some of our industrial flowers if we weigh too much this legislation. The proposal initially proposed by Mr. Tuybens was unacceptable to us because it purely and simply aimed at prohibiting by law the granting of variable share-related remuneration to non-executive directors in disregard of the rights of shareholders of the companies concerned.

An amendment submitted by the CD&V colleagues came, rightly, to replace this measure with a provision of less scope. This amendment stipulates that the regime of independent directors, provided for by the law of 6 April 2010 on corporate governance, would also apply to non-executive directors of which independent employees are also part. This regime provides that variable remuneration is allowed with the authorization of the general meeting of shareholders.

While it is true that I prefer regulation by and for the sector than a law imposed from the outside, the evolution of behaviors by example rather than coercion, I have, however, supported this amendment of the CD&V. First of all, the amended bill respects the prerogative of shareholders and the general assembly to authorise or not to authorise the payment of such variable remuneration and, above all, it falls within the framework of the law of 6 April 2010 recognising, among other things, the recommendations of the Belgian Code of corporate governance.

The hearings demonstrated that the measures contained in the Code and in the law were much more appropriate and effective than the simple prohibition initially envisaged. Then, the amended text concerns only non-executive directors, that is, according to this Code "any member of the board of directors who does not exercise executive responsibility in the company". They do not have a management mission but they discuss, critically and constructively, the strategy and key policies proposed by the executive management and contribute to their development. Non-executive directors carry out a rigorous assessment of the performance of the executive management in achieving the agreed objectives.

However, variable remuneration is essentially performance-related remuneration and therefore is more naturally associated with the role of executive directors and less with that of non-executive directors.

Finally, following the adoption of this amendment, the measure applies only to new contracts or renewal of contracts occurring after the entry into force of the law.

Therefore, for all of these reasons, our group will support the text adopted in the commission responsible for Trade and Economic Law Problems.

I thank you for your attention.

Mr. Speaker, colleagues, the original bill was part of a flood of proposals to regulate and restrict the variable remuneration of managers and directors. In principle, we agree that non-executive directors cannot receive remuneration that depends on business results. This is also included in the Code of Corporate Governance, which became mandatory by the law of April 2010 and which, in our opinion, provides sufficient guarantees.

What does Article 7 to 7 of this Code say? “Non-executive directors receive neither performance-related renumeration such as bonuses or long-term equity-related incentive programs, nor benefits in kind or benefits associated with retirement plans.”

Article 7 eight states: “The renumeration report shall indicate on an individual basis the amount of the renumeration and other benefits granted directly or indirectly by the company or its subsidiaries to non-executive directors”.

What is it specifically about now? In the report of the former CBFA, now the FSMA, which oversees this, it states that only 11 listed companies provide this form of compensation. These are usually small biotechnology companies or technology companies with family shareholders. Of these 11 companies, 8 apply the Code of Corporate Governance and explain why performance-based remuneration is given, including to avoid taxing the cash balance.

Of those 11 companies, there are 3 that do not, or still do not, meet the obligation to explain why they provide such fees. The law dates from 10 April 2010 and is only applicable from 2011. Only three companies are in a transitional phase. There is a gun shot at a mosquito. We consider it a form of excessive regulatory neglect.

The original bill has been substantially amended. Based on an amendment of CD&V, we believe that the decision-making power lies with the shareholders and the general assembly. The bill can therefore, after amendment, withdraw our approval. In fact, the amendment provides that variable fees for independent directors and non-executive directors are possible, subject to approval by the general assembly.

This is in line with our previously adopted position, namely that in such a situation, the shareholders have the final word.

Mr. Speaker, I will speak especially briefly in the general discussion and I would like to discuss the amendments in the article-by-article discussion in detail.

In general, our group cannot object to the extension of the law of 6 April 2010 in a very mild way, so that the general assembly would decide not only on the shares and other share-related remuneration of the independent directors, but also on those for all non-executive directors. We do not have any problem with this, of course. On the contrary, it is an additional guarantee, insofar as there can be a guarantee, that the general assembly will judge the situation in wisdom.

Of course, the present bill, even though it bears my name, is, in the meantime, heavily disguised by the amendment, logically. After all, we intended to no longer allow the share-related fees, especially for stock options, through the law. However, this was not accepted in the committee. A substituting amendment was adopted, which we cannot, of course, oppose.

Therefore, the bill has obtained a unanimous majority in the committee, but it speaks for itself that for us it is more than a snack on the drink. The amendment we submitted under no. 619.007, we are of course very happy to be included in the text. In this regard, I would like to make a brief plea, Mr. Speaker, during the discussion of the articles.

Mr. Speaker, the bill that is subject to our vote and which has been adopted in a committee is only a step towards a more transparent corporate governance and focused on the long-term interest of an activity and its development and on taking into account the social interest of an economic activity. This is only a first step.

Furthermore, as a committee responsible for Trade and Economic Law Problems, we are currently focused on the examination of several bills that play on the refusal of certain types of remuneration based exclusively on return and short-term interest such as that on shares or turnover resulting from speculative actions. We are considering proposals that aim to keep the amounts of remuneration within socially acceptable limits. We are also considering proposals aiming at using the tax tool to introduce equality between remuneration that has nothing to do with common sense or social interest and confiscation of wealth that could return to solidarity. All these proposals are being discussed in the committee while there is a real urgency to intervene.

The first proposal by Mr. Tuybens is the result of our work during the previous legislature, when we tried to develop and improve more than was the Code of Good Governance. It allows us to introduce a first corner in the use of this share remuneration, to use a general term, for non-executive directors, waiting for its removal. by Mr. Tuybens will present her amendment, which I have co-signed, as well as Mrs Vienne.

Indeed, every day, yesterday and today, reading the newspapers, observing certain salaries of administrators, sometimes even representing a government in companies with public order missions, one finds that one cannot be content with a code of governance based on good will. Legal and legislative rules are needed. If they have an interest, if they make sense for the development of society and for citizens in general, they will not be tools that disturb entrepreneurs but tools that frame and avoid unfair competition between certain companies.

In conclusion, I would like to address those who claim that if you regulate too much, you will discourage entrepreneurship, or that if you regulate the remuneration of directors too much, they will go elsewhere and will refuse to get involved in the boards of directors and in the companies. I would like to tell them that Belgium includes many talents, entrepreneurs and corporate managers who do a remarkable job for decent remuneration, up to their responsibilities and skills, but without receiving income resulting from speculation. I would still like to tell them to go away, to go see elsewhere and thus leave room for those who will dare to invest in the development of the business for which they work rather than for personal enrichment purposes.

After listening to the interventions of both sides, I would like to reconsider the debate. In fact, we are currently dealing only with part of the Company Code. This is article 554 as amended by the law of 6 April 2010. We are already changing it.

The question here is whether, in the text of this law, the terms "independent administrator" should not be changed to "non-executive administrator". This is the result of our debates, the amendments submitted and the vote held in the committee.

That said, Madame Vienne, like you, I think we should try to moralize the business world. But it should not only be a matter of private affairs, but also of public affairs. Alongside private companies, there are autonomous public companies, intercommunal companies. And if we start talking about salaries, I hope that we also talk about those that run in this sector. Indeed, it does not pass a month, not a week, without a question of problems that arise in this or that par-communal, supra-communal, par-state, etc. structure.

In addition, as many have pointed out, the Commission responsible for Trade and Economic Law Problems has addressed other issues. I think of the problem of variable salaries. Maybe tomorrow we will be talking about stock options. Why not ?

Work is still ongoing and we should not confuse today’s debate with a future debate on variable pay.

On the issue that concerns us, the committee has taken time for reflection. In fact, we have conducted hearings, confrontations, exchanges of views and voting on an amendment.

What is the scope of this amendment?

As has just been repeated, for non-executive directors, it is provided that only remuneration could be granted to them under the conditions of article 554, that is, after a vote by the general assembly, which remains sovereign. However, the general assembly constitutes the parliament of a company: all shareholders meet there and exercise political control of the company, both in the political and economic sense. At this point, intervening in this way seemed relevant and sufficient to improve the text voted less than a year ago.

This is the scope of the amendment.

However, we do not refuse the discussion on other elements. In addition, the CDH submitted several bills on other problematic aspects. It is necessary to sort and know what we are talking about today, without anathema or abbreviation and without mixing genres.

This is the scope of the bill that is submitted to you and that we will vote on.

Mr. Speaker, colleagues, we have our mouths full of law diarree, regulatory neglect and stunting drive. I consider that this legislation, in particular due to the amputation of this amendment, is an absolute example of bribing and regulatory neglect.

The problem in the bonus structure is not with the non-executive directors, behind a few companies. I hear Ms. Gerkens say companies like InBev should then leave. Madame, if you dare to repeat tomorrow to the workers in Leuven that InBev must leave there, I would bring a few bodyguards. I heard that in your speech.

Colleagues, the problem of the bonuses belongs to the gray culture of CEOs. Another question was asked about what is happening at the airport with former politicians and the bonus culture. It is not for drivers, on the contrary. With that law, we make additional burden and create an overarching, double law in relation to corporate governance that clearly and clearly states what should be done.

This is about – say and write – 11 companies. I just heard from a colleague in the speech desk that eight of them are already in order. On the other hand, it creates a number of additional problems. What about family ⁇ ? What about companies that lack the financial resources to attract talented managers? What about active board of directors?

I think this is unnecessary legislation. I like this shooting with a cannon on a mosquito. I will abstain from voting.

Mr. Speaker, my colleagues, I think everyone approximately agrees that exuberant bonuses should be addressed. This will be concrete if the multiple bills, which are currently being discussed and for which hearings are being held, are completed.

In this context, we can perfectly find ourselves in the bill that is presented today. It can take away our full support.

As for the original text of the bill, we may agree with the principle, but we are not hoping to re-introduce a new rule. The number of companies that do not comply – as the previous speaker said – is, after all, very limited. There are 11 companies that apply a variable fee, three of which do not yet apply the comply-or-explain rule.

If we compare the regulation with that in other European countries, we see that in most other European countries the same regulation applies and that performance-based remuneration and payouts in shares are not possible. At the same time, however, we also see, as is currently in this country, that deviation from those basic regulations is possible in almost all of those countries, provided that accountability is given, according to the well-known comply-or-explain principle, which is used by eight of the 11 companies that apply a variable fee. These are not really all league statements, as I must have heard in the committee.

In all cases, in absolute terms, prohibiting any form of share-related remuneration does not seem appropriate to me. We can find ourselves in the European approach that regulation does not really have to be absolute and that companies can deviate from it, provided that that accountability.

As already stated by some previous speakers, we are also convinced that the law of 6 April 2010, the corporate governance code, is sufficiently equipped to prevent possible depreciation of remuneration for non-executive directors. No one can deny that evolution is beneficial. The figures show that the application of the code in business, good governance is increasingly followed.

I am therefore convinced that we should trust companies and give them more time to further adapt, rather than imposing a legal ban on the award of share-related remuneration. This seems to us to be an unnecessary tightening of wage policy, which makes us less favourable compared to other European countries.

Mr. Tuybens, it can always be that you later persuade people, but if your amendment later does not get a majority then it is logical that our amendment is supported. It is a technical amendment. Since the content of the original bill has changed entirely, by changing the title of the bill, we intend at least to bring the title into line with its content. To avoid any confusion, it is useful to have a title that covers at least the load. I expect your support for our amendment.

Mr. Speaker, if today only eleven companies do not apply the rule as agreed in the Belgian Code of Corporate Governance and three not only do not apply it but do not explain it, the absence of binding elements in the law does not ensure that tomorrow the number will not be greater.

Just recently, I actually used a somewhat rough formula but InBev workers would agree with me to say that they have no interest in retaining directors, who are so-called independent or non-executive, attracted by variable pay, interested in short-term profit and not in the long-term development of the business and therefore employment and the quality of benefits of InBev workers.

The proposal says yes to managers, but to those who are interested in the future of the company, its long-term development and not short-term profits related to speculation.

I ask for a little more attention for the speakers, because there is too much noise in the hallway.

Many members have already spoken in front of me. Meanwhile, it is therefore clear to everyone that the present bill is not the text of Mr Tuybens but of CD&V.

With this amended proposal, we ensure that, where an agreement with a non-executive director provides for a variable remuneration, that remuneration must first be approved by the meeting of shareholders of the listed company.

CD&V has always advocated a realistic, flexible and transparent remuneration policy. During the previous legislature, first Jo Vandeurzen and then Stefaan De Clerck have committed to stricter regulation of the bonus policy.

This is regulated by the Good Governance Act of 6 April 2010. It was then consciously chosen not to force the remuneration policy of the publicly listed companies and the state-owned companies into a slide. The bonus and remuneration policy in the listed companies is primarily the responsibility of the company and its shareholders.

The Good Governance Act is one of the strictest laws in Europe. The law has been in force since 2011. We must now first give the companies time to adapt, to evaluate the law afterwards.

The Good Governance Act introduces a procedure for the approval by the shareholders of the variable remuneration for the independent directors. The present amended bill now extends the scope of the aforementioned measure, in particular from the independent directors to all, non-executive directors.

The purpose of the original proposal was to ban any share-related remuneration of non-executive directors, which went far too far for us.

Indeed, the study of the CBFA, also cited by other members, on the follow-up of the code of corporate governance shows that only eleven listed companies pay their non-executive directors performance-based remuneration. Of the eleven companies mentioned, eight explain why they differ from the code. Of the eight companies in question, four are biotech companies.

So 89 % of the listed companies in our country do not pay share-related remuneration to their non-executive directors.

Colleagues, companies work in a global context. They must, of course, also take into account the reality of the market. Therefore, it is useful to examine what the remuneration legislation in other countries entails.

Towers Watson’s opinion shows that in a number of countries, share-related remuneration of directors is the common norm. In other countries, the “comply or explain” principle applies. In America, share-related remuneration is the rule.

In addition, the system in Belgium is the same as in most other countries in Europe. Therefore, the imposition of a legal ban did not seem necessary to us. Moreover, this would be detrimental to small start-ups. We must not disadvantage our companies in relation to foreign companies in attracting good managers.

CD&V could therefore not approve the original proposal. In response to this, we have submitted an amendment that completely replaces the text of the original bill. Our amendment was unanimously approved in the committee. This amendment refines the Good Governance Act, demonstrates our confidence in shareholders and listed companies and strengthens shareholders’ responsibility for the wage and remuneration policies of listed companies.