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For the fifteenth edition of its report, the AMF has chosen a new approach to the assessment of corporate governance practices and executive compensation at listed companies. As it does every year, the report details regulatory changes and areas of focus. However, this year's report highlights two specific areas of interest in 2018: changes in top management and say on pay. This report represented a great opportunity to provide an overview of practices on these two hot topics.
Ever since the French Financial Security Act was passed on 1 August 2003, the Autorité des marchés financiers has conducted an annual review of the disclosure of listed companies in the areas of corporate governance and executive compensation.
The key points studied in this report are the implementation of succession plans, potential changes in the functioning of the board and governance, and decisions on compensation and financial conditions when both appointing executives and when executives leave.
> The report shows that the level of detail provided by companies on the process used to draw up succession plans varies widely. Fewer than half of the sampled companies that have implemented a succession plan explain the process or the time line for the succession plan to their shareholders.
> Regarding new appointments, the AMF found that 11% of new corporate officers who had previously held a position in a company continued to hold an employment contract, showing a fairly significant level of non-compliance with the code.
> As for departures, the AMF found that information is often sparse, and has reminded companies that they must publish a summary of all financial conditions of the departure.
> 2018 was the second year following the implementation of say on pay on an ex ante basis, but was also the year in which ex post say on pay was introduced by the Sapin II law. Overall, the AMF found that resolutions on executive compensation were widely approved at the general meetings of shareholders of the companies studied in the report.
> Amongst other findings, the AMF noted that the presentation of the compensation policy did not always provide an accurate view over the long term. Compensation awarded before the end of the previous financial year was not always disclosed because it derived from resolutions passed in previous years.
As it does every year, the AMF issues recommendations and areas for discussion for companies and relevant organisations (AFEP, MEDEF and the High Committee on Corporate Governance) so that they may take an active role in continuing to improve practices.
About the AMF
The AMF is an independent public authority responsible for ensuring that savings invested in financial products are protected and that investors are provided with adequate information. The AMF also supervises the orderly operations of markets. Visit our website https://www.amf-france.org