AFEP-MEDEF has released their second annual report on the application of the French Corporate Governance Code (AFEP-MEDEF Code) by companies in the SBF 120 index. The report highlights an increase from 34% to 40% in the percentage of companies in the CAC 40 where the roles of Chairman and CEO are combined. Across the broader SBF 120 index, almost half of Boards include a combined Chair CEO (46.6%, down from 49.5%). 17% of CAC 40 companies operate a dual board structure with 6% the partnership limited by shares structure.
The report also notes an increase in independent directors at companies without a controlling shareholder from 77% to 80% in the CAC 40 and from 56% to 58% across the SBF 120. The French Code recommendation on board balance provides for a lower threshold of independent directors for controlled companies (33.3%) than for non-controlled companies (50%). Overall 71% of CAC 40 companies comply with this provision (up from 63%) and 63% of SBF 120 companies (up from 63%).
The increase in independent directors has helped record a corresponding increase in the number of independent directors sitting on the audit and remuneration committees. Other highlights from the report include an increase in female directors and an increase in the number of companies providing disclosures in relation to board performance evaluations.
The evidence suggests a somewhat mixed report card for French companies with the increase in independent directors being most welcome, although many investors will have concerns regarding the lack of progress on the separation of the roles of chairman and ceo – the separation of these roles not explicitly recommended in the French Code.