We permit the publication of our auditors’ report, provided the report is published in full only and is accompanied by the full financial statements to which our auditors’ report relates, and is only published on an access-controlled page on your website, to enable users to verify that an auditors’ report by independent accountants has been commissioned by the directors and issued. Such permission to publish is given by us without accepting or assuming any responsibility or liability to any third party users save where we have agreed terms with them in writing.

Our consent is given on condition that before any third party accesses our auditors’ report via the webpage they first document their agreement to the following terms of access to our report via a click-through webpage with an 'I accept' button. The terms to be included on your website are as follows:

I accept and agree for and on behalf of myself and the Trust I represent (each a "recipient") that:

  1. PricewaterhouseCoopers LLP (“PwC”) accepts no liability (including liability for negligence) to each recipient in relation to PwC’s report. The report is provided to each recipient for information purposes only. If a recipient relies on PwC’s report, it does so entirely at its own risk;
  2. No recipient will bring a claim against PwC which relates to the access to the report by a recipient;
  3. Neither PwC’s report, nor information obtained from it, may be made available to anyone else without PwC’s prior written consent, except where required by law or regulation; and
  4. PwC’s report was prepared with Hermes Property Unit Trust's interests in mind. It was not prepared with any recipient's interests in mind or for its use. PwC’s report is not a substitute for any enquiries that a recipient should make. The financial statements are as at 25 March 2017, and thus PwC’s auditors’ report is based on historical information. Any projection of such information or PwC’s opinion thereon to future periods is subject to the risk that changes may occur after the reports are issued and the description of controls may no longer accurately portray the system of internal control. For these reasons, such projection of information to future periods would be inappropriate.
  5. PwC will be entitled to the benefit of and to enforce these terms.
I accept

1. Select your country

  • United Kingdom
  • Austria
  • Australia
  • Belgium
  • Denmark
  • Finland
  • France
  • Germany
  • Iceland
  • Ireland
  • Italy
  • Luxembourg
  • Netherlands
  • Norway
  • Singapore
  • Spain
  • Sweden
  • Switzerland
  • USA
  • Other

2. Select your investor type

  • Financial Advisor
  • Discretionary Investment Manager
  • Wealth Manager
  • Family Office
  • Institutional Investor
  • Investment Consultant
  • Charity, Foundation & Endowment Investor
  • Retail Investor
  • Press
  • None of the above

3. Accept our terms and conditions

By clicking Proceed I confirm I have read the important information and agree to the terms of use.


The Hermes Investment Management website uses cookies to remember your preferences and help us improve the site.
By proceeding, you agree to cookies being placed on your computer.
Read our privacy and cookie notices.

Summertime lawmaking

Binding say-on-pay in France

Home / EOS Blog / Summertime lawmaking – Binding say-on-pay in France

As the UK is debating whether it should shift to a binding say-on-pay vote on an annual basis, France is pulling back from the principle. Following a heated AGM season, where for the first time two advisory votes on remuneration have failed at Renault and Alstom, the French parliament was planning to introduce a binding say-on-pay vote as part of a wider reaching law on economic transparency and modernisation, the so-called Loi Sapin II.

However, in the midst of summer, while everyone is basking in the sun at the country’s Riviera, within a long series of amendments, the high chamber of the French parliament came back with a revised, lighter version of the proposal. The proposals now resemble the existing, much debated UK system, consisting of a binding vote on the underlying pay principles and the structure of the remuneration policy every four years, an additional year on the UK’s three-year cycle.

Under the veil of simplification, another measure could have ramifications for the accountability of companies to their investors. Abstentions at French AGMs currently count as votes against management. However, under the new proposals, an abstention would no longer be considered a legal vote, and as such its removal from the count would lower the aggregated level of dissent. The thinking behind this is that if an investor cannot make up his mind, why take his vote into account? This view, which was previously debated in the industry and ruled out in the past, comes on top of widely implemented and state-sponsored double voting rights. In their combination, these measures may significantly disenfranchise minority shareholders by diluting the potential voice of dissent against a dominant shareholder.

Positive Shifts
At a time when other countries are considering stronger governance practices in an effort to re-build trust in the economic system and investors are increasingly taking into account governance matters to assess risks, say-on-pay presents an opportunity for the company to enhance transparency and improve the dialogue between stakeholders. However, it is a balancing act and one that needs to be seen in context in order to be meaningful.

By encouraging a formal presentation of the rationale behind the remuneration structure and payout, thus providing insights into the decision process, the links between policy and strategy and pay and performance, a vote on the policy would be a significant step forward for the French market. The update of the AFEP-Medef governance code, to be published later this year, is set to bring further transparency and details to the disclosure on remuneration, thus ensuring that France is on par with market leading practices.

The advisory annual vote on payout was only recently introduced and should be allowed time to bed in. Besides the legal consequences of a binding vote, the focus should be on the nature of the expected response from boards to a significant level of dissent, while boards should determine what a significant level is in the context of their share register. A useful benchmark could start at 20% considering the relatively low approval rate received on resolutions by a large number of French companies.

Public concern is real. As inequalities fuel societal debates challenging the resilience of the economic system itself, high pay will remain under close scrutiny, not only in France but all over the world. For companies and investors alike, value creation and, ultimately, the repartition of profits are an essential part of their social responsibility, which is why regulators are increasingly calling for greater accountability, for example through the introduction of a stringent binding say-on-pay vote in Switzerland, pay ratios between CEOs and the median compensation of their employees in the US, as well as gender pay gap reporting in the UK.

When the French regulator decides on the final bill after the summer pause, it will need to keep in mind that beyond legally binding pay structures, fostering trust derives from effective investor stewardship, company transparency and board directors evidently exercising their judgment.

By using the links above, you will be leaving the Hermes website. Hermes has no control over the content on third party websites.


Share this post:
Natacha Dimitrijevic Natacha Dimitrijevic is sector lead for pharmaceuticals and responsible for Hermes EOS’ investment stewardship programme in Europe. She engages with corporate boards and regulators on relevant governance, social and environmental issues to foster long-term value creation. Natacha is a regular speaker on governance matters. She is a member of the Eurosif policy group, the remuneration committee of the International Corporate Governance Network and of the French corporate governance association. She has also sat on the Access to Medicine Index expert review committee. Before joining Hermes EOS in 2007, Natacha worked at L’Oreal’s international audit department and in consulting, advising senior executives. She has degrees from the Institut d’Etudes Politiques de Paris and HEC School of Management and she holds the CFA Institute’s Investment Management Certificate. She has published a number of articles and a book on corporate finance.
Read all articles by Natacha Dimitrijevic

Find posts by author

  • Alex Knox, ACA
  • Andrew Jackson
  • Bill Mackenzie
  • Bruce Duguid
  • Christine Chow
  • Claire Gavini
  • Colin Melvin
  • Darren Brady
  • Dominic Burke
  • Dr Michael Viehs
  • Emeric Chenebaux
  • Emma Hunt
  • Geoffrey Wan, CFA
  • Hans-Christoph Hirt
  • Harriet Steel
  • Ilana Elbim
  • Jaime Gornsztejn
  • Jonathan Pines, CFA
  • Joseph Buckley
  • Justine Lutterodt
  • Leon Kamhi
  • Louise Dudley
  • Mark Sherlock, CFA
  • Maxine Wille
  • Michael Russell, CFA
  • Michael Vaughan
  • Michael Viehs
  • Natacha Dimitrijevic
  • Nick Spooner
  • Nina Röhrbein
  • Peter Hofbauer
  • Philip Nell
  • Rochelle Giugni
  • Roland Bosch
  • Sachi Suzuki
  • Saker Nusseibeh
  • Silvia Dall’Angelo
  • Tatiana Bosteels
  • Tim Goodman
  • Tommaso Mancuso
  • Yasmin Chowdhury

Find posts by category

  • eos
  • governance