(Boursier.com) — Orpea rises by almost 5% this Tuesday morning to 33.60 euros, while the investment fund Mirova, one of the group’s shareholders explained in an open letter that he intended to remain in the capital of Orpea, “while by asking for profound changes in the company”. The management company holds 3.90% of the round table and calls in particular for the transformation of the dependency group into a “mission company”.
Mirova, which is a subsidiary of Ostrum Asset Management, proposes among several other avenues that Orpea establishes the notion of “good treatment”, as well as social objectives in terms of the management of the group’s human resources…
Here is the full OPEN LETTER ADDRESSED TO ORPEA MANAGEMENT BY MIROVA:
“As you know, Mirova is a committed shareholder of sustainable finance, present in the capital of your company since our creation and up to 3.90% as of 12/31/2021. Our raison d’être is to finance companies that provide solutions to sustainable development issues. End-of-life care, particularly in a situation of dependency, is a major social issue where the private sector must complement public action. Indeed, we recognize the social interest of your support activities for the elderly in a context of aging populations and increasing recourse to extra-family solutions.We are also aware of the difficulties inherent in your sector of activity, linked to the fragility of the residents as well as to the hardship of the work, but we believe that guaranteeing the quality of reception and care must go hand in hand with the search for an appropriate economic model.
As a committed and long-term shareholder, we are used to talking individually with the companies in which we are invested, in order to support them constructively in their transformation. But given the extent of the scandal that questions the information you have provided us in recent years, we have decided to make public our questions and our desire for change concerning you. In fact, following the many exchanges we have had with the ORPEA teams over several years, we were convinced that your group wanted to structure its CSR approach and was gradually implementing the appropriate means to strengthen and report on the quality of services provided to residents while offering healthy working conditions to employees. We particularly appreciated the creation of a position of CSR manager, the creation of a board committee in charge of CSR and more generally the planning of crisis management linked to Covid-19, which focused our attention on these two last years.
The publication of the book Les Fossoyeurs gave rise to a massive speech by families and workers denouncing facts which, if proven, are unacceptable. The points of our discussions that have remained pending – namely the effective implementation of measures aimed at guaranteeing the protection of the physical and mental health of residents as well as the quality of life at work of employees – must now be the subject of firm and rapid commitments on your part. It is in this respect that we hereby address our requests to you regarding the overhaul of ORPEA’s governance with, in the foreground, the adoption of the status of company with a mission.
You will also find in the appendix the actions that we consider likely to strengthen and significantly improve the operational management of well-treatment and HR. These requests for action take up and reinforce the points already mentioned during our previous discussions with the IR/CSR teams. We will also send them to them and hope that you will be able to communicate them to the members of the CSR committee of your Board.
Transformation into a Company with Mission
ORPEA plays a key role in our Western societies, especially since the public service is not currently able to meet the needs in terms of support for old age. Because of its social utility, ORPEA is particularly suited to transformation into a company with a mission. The adoption of a raison d’être including the notion of “well-being” and social objectives covering responsible HR management would make it possible to definitively anchor this notion of public interest. The establishment of a mission committee including both externals and employees, concrete objectives associated with performance criteria, and the publication of a mission report subject to audit by a third-party organization independent, would make it possible to guarantee the implementation of the means necessary to achieve these objectives.
Also, we encourage you to submit to the vote of your shareholders the modification of your statutes as a company with a mission at your next annual general meeting or at an exceptional general meeting as soon as possible.
Other actions to strengthen CSR governance Transparency. Restoring trust between ORPEA and its stakeholders now seems necessary. To do this, we invite the Board to communicate transparently on the upstream management of the crisis. In particular, we would like to know the date on which the Board was informed that an investigation book was in progress, the reasons explaining the decision not to inform the shareholders of this, and the reasons why the Board did not ask its members informed to suspend their operations on the title.
Representativeness of the Board. We note the presence of two directors representing the employees, appointed by the CSE of UES ORPEA. In order to guarantee the representativeness of the board, we invite you to encourage the presence of representatives of field employees, elected by bodies covering all of the group’s activities and sites.
Role and composition of the CSR committee. We invite ORPEA to integrate employee representatives into the CSR committee, in order to make use of their feedback. Monitoring the implementation of the strategy aimed at guaranteeing the quality of services and therefore the well-treatment of residents also seems to us to be an essential addition to the missions of this committee. Although this point still seemed to be little followed in recent years, we are counting on the existence of this committee, created recently, to support the Board in its monitoring mission for accelerated implementation of ORPEA’s (CSR) strategy.
Balance of powers. To compensate for the association of the functions of Chief Executive Officer and Chairman of the Board, we call on the Board to appoint an independent Vice-Chairman with ad hoc powers and in particular the possibility of bringing together the independent directors separately. In the longer term, we are in favor of separating these functions.
It should be noted that the directors representing shareholders cannot, in our view, be qualified as independent.
CSR and remuneration of management teams. We have had many opportunities to discuss with your teams the presence of environmental and social criteria in executive compensation. We appreciate their recent integration but have some suggestions on the matter. Considering the need to accelerate ORPEA’s transition to a robust social risk management model, we recommend that the Compensation Committee maintain the weighting of ESG criteria present in the short and long-term variable elements, and to refocus these criteria on the implementation of the mechanisms proposed below.
Remuneration of Mr. Le Masne. We appreciate the decision to suspend any allocation pending the results of the assessment conducted by the Board. In view of the number of complaints and the consequences of this controversy on the company, we invite the Board to consider Mr. Le Masne’s inability to deploy a robust CSR strategy during his mandate as a fault justifying the non-attribution of his severance pay, the maintenance of the presence condition attached to performance shares not yet vested and the significant reduction of his annual variable compensation for 2021″.
Maintained pressure
The atmosphere around the sector remains tense on the Paris stock exchange since the outcry caused by the release of the investigative book by journalist Victor Castanet accusing Orpea of acts of negligence and restrictions on the residents of its establishments.
On Korian’s side, it is the announcement of an ongoing investigation by the France 2 magazine “Cash Investigation” into practices within private nursing homes, which has added ambient sectoral pressure…
The company headed by Sophie Boissard formally challenged two articles from ‘Parisien’ on Monday: “The Korian group disputes with the greatest vigor the acts of abuse or food rationing referred to in these articles. Moreover, such remarks – relayed by lawyers whose ethics nevertheless require them to be moderate – are defamatory in nature for which the Korian group reserves the right to seek redress before the competent courts.The Korian group also indicates that it has not been notified of any collective complaints from families. If this were to be the case, Korian will take note of the details of each of the grievances that would be formulated and will treat them with the greatest consideration.We understand the emotion that families can feel in such end-of-life situations and make sure to bring always the greatest attention and transparency in these painful cases”.
In an interview with ‘Echos’, the general manager of Korian also ensures that the facts denounced in Victor Castanet’s book do not concern his company: “I do not recognize myself in any way in the practices alleged therein”. The latter must explain herself on BFM TV on Bruce Toussaint’s show at 11 a.m. this morning…