Understand employee shareholding

Being a shareholder of a company confers rights, from the ownership of a single share:

• the right to dividend,
• the right to information,
• the right to participate in the company’s General Meetings.

For an Employee, being a shareholder in his company therefore allows him to receive a share of the profits that he has contributed to making, to receive economic and strategic information about his Company, and to participate in the General Meeting to ask questions to the Board of Directors.

But being a Shareholder also confers duties, in particular that of voting on the resolutions presented at the General Meeting, or being represented for this vote, and for this, keeping informed of the life of the Company.

A Reference Shareholder is a shareholder who, without necessarily holding a majority share in a company, has a sufficiently large stake to influence its decisions.

For Renault Group, the French State is the Reference Shareholder. Nissan was not a major shareholder, because even if Nissan held the same number of shares as the French State, they were deprived of voting rights until 2023.

Each year, a report is published under the aegis of Martin Vial, commissioner of State holdings (and director of the group), which takes stock of the companies in which the French State is a Reference Shareholder.

In this graph, which is extracted, the diameter of the circles is proportional to the valuation of the shares held by the State. We can see, compared to other listed companies with comparable turnover, with similar State participation (Orange, Airbus, Engie), how Renault Group is undervalued compared to these companies.

The market capitalization of a company is the result of a calculation: it is the multiplication of the number of shares in circulation by their stock price. It therefore does not represent a concrete reality, nor any “value” of the company. When an investor wants to buy a large number of shares of a company, the increase in demand will lead to an increase in the price, and therefore in the capitalization. Conversely, if a large number of stock holders want to sell at the same time, the price will collapse, as will the capitalization.

Capitalization only represents the confidence that investors place in a company. Comparing the market capitalizations of companies in the same sector makes it easy to identify which ones are overvalued or undervalued.

Currently, a large number of citizens hold company shares indirectly via investment funds, such as those we find in our Group Savings Plan (PEG): the various FCPEs more or less invested in shares depending on their risk level. But these investments through mutual funds have the corollary of delegating the voting rights linked to these shares to the asset manager.

In 2021, globally, 41% of stocks were owned by institutional investors, with a few giant asset managers forming an oligopoly. So today, alternately Blackrock, Vanguard or State Street are the largest shareholders of 495 of the 500 largest companies (S&P 500) and between them control on average 20% of the shares of these companies*. Shareholder power now resides with these asset managers and does not necessarily reflect the choices and beliefs of those who have entrusted them with their funds.

When we make our choice of support for our incentive bonuses, we must keep this point in mind: investing in the various FCPEs Multipar, Perspective or others means delegating the power that our investment gives us to the investment manager. active. The only FCPE which allows us to truly exercise shareholder democracy is the FCPE Actions RENAULT France, for which the right to vote in General Meetings remains allocated to employees.

* source: Financial Times article dated 13/1/2022 by Merryn Somerset Webb, author of the book: "Sharing power: how ordinary people can change the way capitalism works - and make money also" (Share Power: How ordinary people can change the way capitalism works - and make money too).

After a period of disaffection between 2017 and 201, we can see a return of foreign investors, even more marked in 2022 than in 2021, to the detriment of the share held by the public. The share of employee shareholding is increasing thanks to successive plans, but still remains limited.

Data as of 12/31 of each year, without taking into account the Renaulution 2022 plan, data from the DEU.

Since 2018, the dynamic of employee share ownership has been reversed compared to the previous decade. The voting rate increases even further, due to the double vote obtained after two years of detention.