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Investors slate SCOR’s ‘anti-takeover’ remuneration policy

27th September 2018 - Author: Matt Sheehan

Catherine Berjal, President of French activist investment fund CIAM, has penned a second letter to SCOR’s management following the rejection of a €8.2 billion (US $9.6 billion) acquisition offer by Covéa, accusing the company of using its remuneration as an ‘anti-takeover policy.’

SCOR logoThe letter, this time addressed to Augustin de Romanet, Senior Board Member and President of the Remuneration and Nominations Committee at SCOR, concerned the claim that SCOR’s Board of Directors had unanimously committed to resign in the event of a successful takeover bid from Covéa.

In a recent response, SCOR’s Chief Executive Officer (CEO) Denis Kessler dismissed Berjal’s claims as “baseless, false and misleading,” and said that the idea that the company’s Board had committed to resign was “based on unauthenticated information.”

However, Berjal noted that the rumour had been widely reported by the press, and suggested that Board Members had the incentive of €42.4 million in remuneration to resign without considering the details of Covéa’s planned offer.

“Scor’s very generous remuneration policy would, in this scenario, thus be misused as an anti-takeover measure for a chairman who seems to have forgotten that Scor is the property of its shareholders and must be managed in their interest,” Berjal said in the letter to de Romanet.

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“I therefore ask you to take a public stand on what would constitute, at the minimum, a blatant violation of the principles of good shareholder governance, and possibly a misuse of corporate assets,” she added.

Berjal suggested that de Romanet, who is in charge of remuneration for the Executive Committee at SCOR, had granted members a “golden parachute” of two years remuneration, in addition to compensation for their free share awards and stock options, following a dismissal or resignation.

Over the last two years, Berjal claimed that remuneration paid to Executive Committee members had amounted to €25 million, with the amount of share-based payments valued at €17.4 million in 2017 (€42.4 million in total).

SCOR rejected Covéa’s takeover bid, which represented a share price of €43 per share, on the grounds that the deal was “fundamentally incompatible with SCOR’s strategy of independence” and reflected “neither the intrinsic value nor the strategic value of SCOR.”

Following the bid, SCOR also reiterated its commitment to continue creating value for its long-term shareholders, with CEO Kessler noting that SCOR’s dividend had increased constantly since 2006, rising from €0.80 to €1.65 in 2017, with total dividends paid standing at €2.6 billion and representing a return of 266% for investors.

In response to investors’ call for proposals to increase SCOR’s share price to the value offered by Covéa, Kessler added: “We are confident that the market will reflect, over the long term, both the intrinsic and the strategic value of the Group.”

Sources at Reuters recently reported that Covéa is currently exploring new options to convince SCOR’s Board to accept an acquisition deal, which may include a higher bid and an offer to keep the firm listed.

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