ERAFP takes major French step with shareholder voting and engagement policy

Move comes as AMF regulator consults on AGM process.

ERAFP, the €12bn Paris-based 100% SRI pension fund, is taking a major step for a French asset owner by implementing a detailed voting and engagement strategy to cover its relationship at annual general meetings (AGMs) with investee companies. The move is rare in France where shareholder activism is not common. The fund has laid out a series of recommendations on board competency and remuneration that it said it would consider when voting shares. And it said that in the coming months it will discuss with other French pension funds and long-term investors the implementation of a “demanding and pragmatic” mutual engagement policy, signalling a serious ratcheting up of shareholder stewardship in the market. The move by the fund comes as French regulator, the Autorité des Marchés Financiers (AMF) carries out a consultation on the process of French annual general meetings between companies and shareholders. This week the AMF published an English language version of its Consultation on Annual General Meetings at French listed companies. The consultation closes on March 31st: Link to consultation its list of shareholder expectations, ERAFP said that corporate boards should be made up of at least half independents and that a split between the company Chairman and CEO should be “systematic”. The fund said that any director’s total remuneration should not exceed 100 times the minimum salary in the firm. Companies should also stop issuing stock options to directors, it said, because they do not align with the long-term interests of socially responsible investors. It also laid down conditions on ending top-up defined benefit pension plans and golden parachutes for executives.
ERAFP said it was also keen to weigh into the AMF consultation to change current French rules for lodging shareholder resolutions at AGMs.
French companies are able to dismiss the discussion of certain contentious investor resolutions at the AGM if they deem them to be unimportant.
ERAFP said it wanted to promote a discussion with French and foreign long-term investors to persuade the AMF that this rule should be altered.