French companies improve board diversity

Companies listed in France are celebrating an improving level of boardroom diversity and culture of careful corporate governance, finds the latest report from the Autorité des Marchés Financiers (AMF).

Listed among a number of positive findings in the 2013 edition of the AMF Report on Corporate Governance and Executive Compensation, the regulator reports that 25 percent of those serving on French boards are women, while a further quarter are from countries outside of France. Both developments confirm trends seen in previous reports, especially in 2012 when there was a sharp increase in the number of women in French board positions.

The French market regulator’s report looks into the disclosure and corporate governance practice of 60 listed companies that adhere to the AFEP-MEDEF Code, including leading Big Oil firm Total. The document also makes note of any changes since improvements were made to the governance and disclosure code – published in 2013 – and possible points for future consideration.

The report further finds there has been a sharp increase in the number of companies that have appointed a lead director: 18.4 percent of French firms now have someone serving in the role, which is responsible for improving board performance by facilitating discussions, helping directors reach consensus and keeping board matters on track.

Executive officers also appear to be taking fewer multiple directorships – 48 percent of those at the firms surveyed only hold one. A larger proportion of audit committees, too, are now chaired by independent directors: in 2013, 93 percent are headed by a director from outside the firm, an increase on the 88 percent recorded in 2011.

Perhaps most encouragingly of all, termination payments made to directors in 2012 by each of the 60 companies complied with the code’s guidelines.

Not all of AMF’s news is good, however, as the regulator still has new recommendations to make, most notably with regard to directors representing employees, measurement of the actual contribution of each director to the work of the board, and the disclosure of service agreements signed between the company and one of its directors.

AMF also outlines plans to set up a Corporate Governance Committee in France, which is intended to prioritize investor representation and contribute to regular updates of the AFEP-MEDEF code.

The report, now in its 10th edition, has been published annually by the AMF since the Financial Security Act 2003 was passed. It highlights further improvements in a number of best practices that are assessed according to 2012’s AFEP-MEDEF code, which was in place for companies ahead of the 2013 report’s publication.