The new Afep-Medef Code is too vague and not sufficiently committed

The Afep-Medef Code has just been updated, drawn up collectively by the 100 largest listed companies in France. Since its creation in 2009, the Code has enabled companies to develop common rules of self-discipline in matters of governance and the remuneration of their managers – the two subjects on which they are awaited by public opinion. At the start of 2020, the Code chooses two topical subjects: the proportion of women at the head of companies, and the wage gap between the manager and the employees. The professional trajectories of women are one of the workhorses of Minister Marlène Schiappa, and the “equity ratio” follows the Pacte law and was already on the program for Emmanuel Macron in the presidential elections. Regrettable peculiarity of this 2020 vintage: the Code stops along the way and gives no instructions on what would be “good” ratios. A choice that may well prove to be counterproductive.

The Afep-Medef Code therefore recommends that each company define its own quota of women in senior management. The goal is to avoid that a law imposes, from above, an identical figure for all, such as for example the 40% of women on the boards of directors, imposed by the Copé-Zimmerman law of 2011, a real revolution at that time when the proportion was still 15%. Many companies were reluctant, claiming that it was impossible to find candidates of the same level as their male peers. However, they ended up finding, and often even exceeded the strict requirements of the law.

The Afep-Medef Code comes up against the feminization quota

For this second step, on the executive committees, the Code is committed alongside the government but kicks in touch when it comes to clearly defining the “good” quota of feminization. He only gives one clue: the two “bosses” at the maneuver communicated, at the end of January, about their own choice. Plastic Omnium, the company of the president of Afep, Laurent Burelle, has 27% women on its management committee. Geoffroy Roux de Bézieux, President of Medef, is pleased to reach 25% of women on its executive council of the employers' organization. A quarter of women in the “comex”, that seems very little, when strict parity is required everywhere, even in the composition of the government.

On the equity ratio, the Afep-Medef Code proposes a method of calculation, where the order of November 2019 had left a vagueness. The drafters of the Code wish to avoid the same iterations as for the subject of employee directors. The Code had then given no instructions, leading to cascading laws from the Sapin law to the Pact law via the Rebsamen law, each removing in turn cases where companies could be “exempted” from directors employee. However, employees now sit on almost all the boards, and the companies that have dragged on are identified, which does not help social dialogue or the image of the Paris market. Wanting to avoid the same tactical error on the equity ratio, Afep-Medef pre-empted the subject and clarified the rule: listed holding companies will have to calculate the employee / manager ratio over a wider scope – while they would have could, while remaining in compliance with the ordinance of last November, communicate on a smaller perimeter and thus distort the comparison.

Lack of clarification on the equity ratio

As with the quota for women, the Afep-Medef Code has brought order but does not go to the end, refraining from qualifying what it calls a “good” equity ratio. Is it 100 maximum, as advocated by Proxinvest? Or 145, like the FTSE 100 average? Or 361, like the S&P 500 average? Unless this is a figure by sector, consistent with the average level of training required? Or 20, as in the law of 2012 on the maximum remuneration of directors of public enterprises?

Today, companies can only position themselves freely and compare themselves. It is a safe bet that the “bosses” of the companies with the lowest ratios will react by increasing, from 2021, their remuneration; apart from Emmanuel Faber (Danone) or Louis Gallois (PSA), none of them has so far offered to be paid less than the others. Like the vote on executive compensation in 2017, the equity ratio may well become inflationary. In fact, by not giving any target ratio, the Code betrays confidence in self-discipline by not translating the spirit of the Covenant Law for more social justice. The drafters of the Code announced a new update before the general meetings of 2021. The occasion, perhaps, to set target values ​​after a year 2020 of observation.


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