STAKEHOLDER THEORY AND CORPORATE GOVERNANCE: THE NATURE OF THE BOARD INFORMATION** Benot Pig* Received: 25. 10.

2001 Accepted: 20. 02. 2002 Original scientific paper UDC: 658

The directors board has a main function of controlling the top executives. When adopting a view of the firm as the shareholders property it seems that the best executives! incentive is to give them stoc" options. #owever when considering the firm as a framewor" of both explicit and implicit contractual relations it appears that the top executives $ob is not only to satisfy the firm shareholders but more generally to maintain the firm coalition alive and even to develop it. %n that case the directors board needs to receive some more detailed information in order to evaluate the top executives. We propose to rely on a reporting based on both an activity analysis and a sta"eholder approach. The balanced scorecard model could even be a main support for the elaboration of the reporting information to the board.

Corporate governance appears to be one of t e !ost i!portant factor of perfor!ance for t e p"blic fir!s. #n $rance% a 1&&& report 'called (ienot Report) fro! a gro"p of p"blic fir!s* C+Os ,as entitled -Report fro! t e co!!ittee on t e corporate governance.. / e !ain s"b0ects of disc"ssion ,ere: / e separation of t e c air!an and c ief e1ec"tive officer f"nctions. / e p"blicit2 of t e top !anagers re!"neration in t e p"blic fir!s. / e p"blicit2 of t e stoc3 option plans in t e p"blic fir!s. / e nat"re of t e infor!ation released abo"t identit2 and t e f"nctions of t e 4oard !e!bers. / e infor!ation on t e 4oard !eetings and on t e Co!!ittees* co!position.
55

/ e a"t or is ver2 gratef"l to t e participants of t e 2001 +#A67 ,or3s op on 8perfor!ance !eas"re!ent and !anage!ent control* in 9ice% for t eir re!ar3s and co!!entaries. 5 4eno:t ;ig<% ; D% ;rofessor of 7anage!ent 6cience at t e $ranc e=Co!t< Universit2% $ac"lt< de 6ciences +cono!i>"es et de ?estion% Universit< de $ranc e=Co!t<% Aven"e de l@Observatoire% 250A0 4esanBon Cede1% $a1: 0A 81 66 6C AC% +=!ail: benoit.pigeD"niv=fco!te.fr

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

/ e aspects of t e corporate governance , ic ,ere disc"ssed ,ere in fact ver2 strongl2 lin3ed to t e enforce!ent of t e s are olders* infor!ation and in so!e ,a2 to t e s are olders* e!po,er!ent. / e foc"s on t ese aspects of corporate governance is not specific to $rance% as ,e observed t e sa!e interest in t e United 6tates% ,it t e i!portance of t e ;ension $"nds% and in ?reat 4ritain. $ro! a t eoretic point of vie,% it see!s t at t e fir! is definitel2 appre ended as t e s are olders propert2 'Alc ian and De!setE 1&C2% $a!a 1&80% Fensen and 7ec3ling 1&C6). Gittle is said abo"t t e ot er fir!*s sta3e olders 0"st as t e e!plo2ees% t e bond olders% or even t e clients and t e s"ppliers. Ho,ever% according to so!e a"t ors% it see!s t at t e fir!% as a ne1"s of contract 'Iillia!son and Iinter 1&&1)% cannot be red"ced to its s are olders b"t s o"ld e!brace all its sta3e olders 'C2ert and 7arc 1&6A% 7intEberg 1&8A% $ree!an 1&8J). One !ain diffic"lt2 of t e sta3e older t eor2 is t at t ere is not a "nified concept of sta3e olders. Ie ,ill rel2 on t e disc"ssion offered b2 Donaldson and ;reston '1&&5). 6o o"r approac ,ill be bot instr"!ental and nor!ative. Ho,ever so!e >"estions re!ain. $or , o! s o"ld t e fir! ,ell perfor! K And does is e1ist so!e perfor!ance opti!"! 0"st as a ;areto opti!"! K 7intEberg '1&8A)% , en identif2ing t e po,er in and aro"nd t e organiEations% too3 a ver2 descriptive vie, and considered t at t e fir! overall perfor!ance res"lted of t e relative po,er of t e gro"ps or individ"als. As ,e ,ill rel2 on a nor!ative approac ,e ,ill s"ppose t at a fir! ,ill ,ell perfor! if all t e sta3e olders are satisfied and gratified for t eir contrib"tion to t e fir! overall perfor!ance. #n t e corporate finance approac % t e board is t e !ain instr"!ent of t e s are olders to incite t e C+O to !a1i!iEe t e s are olders* ret"rn. #n t e sta3e olders* approac % t e role of t e board ,ill be even !ore i!portant% as it ,ill not onl2 control t at t e C+O !ain decisions co!pl2 ,it t e s are olders* interests% b"t also t at all t e ot er sta3e olders are satisfied in order to 3eep t e fir! going on. $ro! so!e point of vie,% t e sta3e olders* approac is a ,a2 to relieve t e C+O fro! an e1cessive attention to t e s ort ter! financial res"lts and to redirect its attention to t e long ter! overall perfor!ance. 6o% , at ,o"ld be t e corporate governance !odifications if% instead of adopting a s are olders vie,point% ,e retain a sta3e older approac . Ie do e1pect t e board to "se !ore diversified !ec anis!s to control and !otivate t e C+O. +ven !ore% ,e do t in3 t at t e !ain point ,ill be t e diversified
2

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

infor!ation t e 4oard ,ill be able to collect to eval"ate t e i!pact of t e C+O decisions and t e effectiveness of t e strateg2 i!ple!entation. Unfort"natel2% !ost infor!ation dedicated to t e 4oard is a financial reporting , ic offer little appreciation over t e C+O real perfor!ance% as t e !ain >"estion abo"t t e perfor!ance observed is , et er or not t e ca"se of t e proble! lies in t e person or t e sit"ation 'Iong and Ieiner 1&81). 6o% t e 4oard s o"ld cond"ct bot !anagerial and environ!ental assess!ents 'Ials and 6e,ard 1&&0). Us"all2% t e 4oard ,ill co!pare t e co!pan2*s stoc3 ret"rns to ot er co!petitors* ret"rn as an alternative to cond"cing a direct investigation of environ!ental constraints. #t see!s t at t is 4oard infor!ation is far fro! s"fficient to ave a real control of t e top !anagers. Ie do propose a si!ple approac of bot t e fir!*s sta3e olders and t e nat"re of t e infor!ation s2ste! , ic s o"ld be i!ple!ented to ens"re a real 4oard infor!ation. / e article ob0ective is t en to propose a !odel , ere t e reporting to t e 4oard ,o"ld rel2 on a good !anage!ent control and ,o"ld i!prove t e corporate governance. Ie define t e corporate governance 'C arrea"1% 1&&C) as: L all the mechanisms which are implemented for delimiting top executives! powers and influencing top executives! decisions M% , et er t ese !ec anis!s are i!ple!ented b2 t e s are olders or b2 t e ot er sta3e olders. &" THE TOP MANAGERS) PERFORMANCE /o define t e top e1ec"tives@ perfor!ance% it is first needed to define t e fra!e in , ic t is perfor!ance ,ill be appraised. / e board of directors as t e first tas3 to control and eval"ate t e top e1ec"tive officers and specificall2 t e C+O '7"t and Donaldson% 1&&8). +ven if t e board is iss"ed fro! t e s are olders% it cannot rel2 onl2 on !eas"res of s are olders@ ,ealt . #t ,ill need to assess t e C+O actions according to t e e1pectations of all t e sta3e olders% in so far as t e 3e2=factor for perfor!ance is t e fir! co esion. 7oreover% in so!e cases% t e directors board !a2 ave to arbitrate bet,een t e de!and of t e diverse sta3e olders 'Coff% 1&&&). &"&" T*e +ta,e* !-e.+ /.ame0 ., / . 1 .' .ate g 2e.nan1e: t*e +ta,e* !-e.+ /! 0e. m -e! #n corporate finance% t e fir! is "s"all2 considered as t e res"lt of N a complex process in which the conflicting ob$ectives of individuals are brought
A

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

into e&uilibrium within a framewor" of contractual relations N 'Fensen and 7ec3ling% 1&C6% p.A11). Ho,ever% t e contract"al relations can be onl2 e1plicit or bot e1plicit and i!plicit. Ie ,ill consider t e fir! as a ne1"s of e1plicit and i!plicit contracts. NThus a firm is not simply the sum of components readily available on the mar"et but rather is a uni&ue combination which can be worth more or less than the sum of its partsN 'Oingales% 2000% p.16AA). Ie can t en consider t at one of t e C+O@s !ain ob0ective is to 3eep alive t e coalition of diverse sta3e olders '7intEberg% 1&82). #f% according to t e finance t eor2% ,e !a2 e1pect t e s are olders to p"rs"e t e fir! !ar3et val"e !a1i!iEation% t e salaries or t e clients co"ld e1pect so!e ot er 3ind of perfor!ance. One good e1a!ple is 7icrosoft , ic benefits of a 3ind of !onopolistic position , ic is ver2 beneficial for its s are olders b"t of a poor interest for t e clients , o ave no c oice b"t to b"2 7icrosoft@s prod"cts. Ie ,ill consider five different categories of sta3e olders '$ig"re 1). / e first one is co!posed of t e e1ec"tive officers , o ave to coordinate all t e ot er categories 'Alc ian and De!setE% 1&C2% $a!a% 1&80). / e ot er sta3e olders considered are:

/ e C"sto!ers: if a flo,er as no roots% it ,on@t last a lot of ti!e. #n t e sa!e sense% t e c"sto!ers are a vital necessit2 for a fir!. / e +!plo2ees: t e2 are t e 3e2 reso"rces of a fir!. F"st as t e plant leaf% t e2 are needed to elp t e fir! gro,. / e 6"ppliers: t e2 do bring so!e ot er reso"rces and% in so!e occasion% a part of internal reso"rces ' "!an reso"rces) can be e1ternaliEed and trans!itted to so!e s"ppliers. 6o t ere e1ists so!e specific relations bet,een t e e!plo2ees and t e s"ppliers. / e 6 are olders: , et er ,e consider t at t e fir! s o"ld be !anaged in t e s are olders@ interest or not% it re!ains evident t at t e flo,er is t e res"ltant of all t e ot er parts of t e plant. #f one part of t e plant as been "rt% t e flo,er ,on@t be so bea"tif"l and in so!e cases it ,on@t even e1ist.

Obvio"sl2% ,e co"ld ave enlarged o"r definition of sta3e olders and ,e co"ld ave defined so!e ot er categories s"c as t e govern!ent% t e political gro"ps% t e co!!"nities and t e trade associations 'Donaldson and ;reston% 1&&5).

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

S*a.e* !-e.+

En25. nment

Em'! 3ee+

E6e14t52e //51e.+

S4''!5e.+

C n14..en1e

C4+t me.+

'igure (. The )ta"eholders! 'lower *odel

&"$" T*e 'e./ .man1e a''.a5+a! According to o"r vie, of t e fir!% t e e1ec"tives@ perfor!ance s o"ld also incl"de so!e social perfor!ance. N +orporate social performance can be analy,ed and evaluated more effectively by using a framewor" based on the management of a corporation!s relationships with the sta"eholders than by using models and methodologies based on concepts concerning corporate social responsibilities and responsivenessN 'Clar3son% 1&&5% p.&2). #n order to appraise t e top !anagers@ perfor!ance% it ,ill be necessar2 to retain so!e different indicators reflecting not onl2 t e perfor!ance for t e s are olders% b"t also t e abilit2 to !aintain t e sta3e olders@ coalition. $or instance% a good C+O% , o ever2 2ear o"tstrips t e !ar3et% !ig t be confronted to ver2 serio"s stri3es if e totall2 neglects t e fir!@s ,or3ing force. As a res"lt% t e fir!@s !ar3et val"e ,ill also go do,n. 6o% ,e !ig t consider t at t e first >"alit2 of a top !anager is to control is fir!. / at !eans% e !"st ave not onl2 to ta3e t e good decisions b"t e !"st also ave t e good infor!ation and is decisions o"g t to be i!ple!ented.

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

Anot er !ain >"estion relating t e top !anagers@ perfor!ance appraisal is to deter!ine , at t e top !anagers s o"ld be old acco"ntable for '4a3er% 2000). #n ot er ,ords% , ic part of t e perfor!ance belongs to t e environ!ent 't e C+O good or bad l"c3) and , ic part belongs to t e C+O. F"st as a plant needs t e s"n to gro, and to ar!onio"sl2 develop '$ig"re 1)% t e fir! develop!ent ,ill depend of its environ!ent. #t is evident t at t e perfor!ance eval"ation s o"ld not be t e sa!e if t e !ar3et is ver2 co!petitive or if t ere is an oligopol2 or even a !onopol2. #n t e sa!e sense% it is "s"all2 !ore eas2 to perfor! correctl2 , en t e econo!2 is boo!ing t an , en it is recessionar2. According to Ials and 6e,ard '1&&0)% t e perfor!ance appraisal s o"ld incl"de: / e !anagerial assess!ent: N the board of directors needs to assess both the ability and efforts of the top managers of their organi,ationN 'p.J2J). / e environ!ental Assess!ent: N administrative scientists have spent years trying to determine the extent to which strategic choice or environmental determinism shape organi,ational performance. -./ This leaves the board with the unenviable tas" of determining such an attribution of responsibility. -./ %n fairness the board should strive not to penali,e managers for outcomes truly outside of their control N 'p.J2J). $" THE REPORTING DESIGN / e board of directors ,ill need so!e specific infor!ation to assess t e top e1ec"tives perfor!ance. #t is a vital necessit2 to design a reporting and a !anage!ent control s2ste! , ic co"ld offer t is infor!ation to t e board ,it a g"arantee of >"alit2 and fairness. $"&" T*e 7a!an1e- +1 .e1a.- ana!3+5+ / e perfor!ance appraisal can onl2 be done t ro"g a !"lti=criteria val"ation. #f t e board of directors relies onl2 on t e financial res"lts% it ,ill react ver2 slo,l2 to an2 diffic"lties arising. 6o% t e board of directors s o"ld as3 for a 3ind of reporting si!ilar to t e one designed for t e top !anagers t ro"g t e balanced scorecard 'Paplan and 9orton% 1&&2% 1&&A% 1&&6). N)everal managers have as"ed whether or not the balanced scorecard is applicable to external reporting. %f the scorecard is indeed a driver of long0 term performance shouldn!t this information be relevant to the investment community1N 'Paplan and 9orton% 1&&A% p.1J1).

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

6 are olders F5nan15a! Pe.+'e1t52e

+nviron!ent

+!plo2ees

+1ec"tive officers

6"ppliers

Inte.na! B4+5ne++ Pe.+'e1t52e

Inn 2at5 n anLea.n5ng Pe.+'e1t52e C4+t me. Pe.+'e1t52e

C"sto!ers

'igure 2. Balanced )corecard and )ta"eholders! 'lower *odel / e board s o"ld receive an infor!ation indicating t e !ain actions "nderta3en and t e !ain actors of t ese actions '$ig"re 2). 6o t e "se of bot a !odel of strategic t in3ing and a sta3e older fra!e,or3 !a2 elp to reveal , et er t e C+O as t e abilit2 to reall2 !anage all is reso"rces and to give a co erence to t e entire fir!. $"$" T*e a1t525t3 an- '. 1e++ ana!3+5+ / e financial acco"nting gives a fair and tr"e vie, of t e fir! activit2 at a date and for a given period% b"t it does not e1plain t e !ain reasons of t e c anges occ"rred% and it as diffic"lties to elp predict t e fir! evol"tion. 42 contrast% t e !anage!ent acco"nting% , en b"ilt over an activit2 anal2sis% allo,s a better anal2sis and an i!prove!ent of t e reactivit2 to t e environ!ental c anges 'Gard2 and ;ig< 2001). Us"all2 t e directors board get t e infor!ation trans!itted b2 t e C+O , o relies on a ierarc ical anal2sis. Ie do e1pect t is infor!ation to be !ore pertinent if% instead to be all e!braced t ro"g a ierarc ical anal2sis% it is presented t ro"g a process reporting based on an activit2 anal2sis '$ig"re A).
C

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

B a.- / D5.e1t .+
to the Board Reporting

CEO
Financial Reporting

;rocess 1 ;rocess 2 ;rocess A ;rocess J

Center 1

Center 2

Center A

Center J

Center 5

+val"ation of t e centers* !anagers +val"ation of t e C+O abilit2 and efforts

'igure 3. The specificity of a reporting system designed for the directors! board

/ e C+O ,ill al,a2s need t e financial reporting to eval"ate is s"bordinates. 4"t t e directors board is not concerned ,it t ese aspects. #t is !ore interested ,it t e infor!ation on t e C+O abilit2 to develop and i!prove t e !ain fir! processes '$ig"re 2). As eac process is co!posed of several activities% ,e !a2 i!agine t at t e board co"ld even get interested b2 a reporting on t e activities. $"8" T*e 1 m75nat5 n / 7 t* a''. a1*e+ / e reporting to t e board ,ill be best designed if it relies on bot a process anal2sis and a balanced scorecard approac ,it references to t e sta3e olders. / e e1ec"tives s o"ld t en provide a reporting !odel , ic ,o"ld !ade appear t e !ain fir! processes ,it t eir ob0ectives and t eir i!pact on t e sta3e olders@ ,elfare '$ig"re J). Ie ,ill tr2 to provide an e1a!ple of t is approac based on t e Orange 'one of t e leader !obile p one co!pan2) anal2sis.

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation
6ta3e olders +1ec"tive Officers C"sto!ers +!plo2ees 6"ppliers 6 are olders ;rocess 1 ;rocess 2 ;rocess A ;rocess J $or eac process% it is necessar2 to deter!ine , at is t e 3e2 f"nction of t e given sta3e older% and to retain a reporting indicator

'igure 4. The combination of the sta"eholders and the process approach

8" REPORTING, MANAGEMENT CONTROL AND CORPORATE GOVERNANCE: THE CASE OF ORANGE Ie rel2 e1cl"sivel2 on t e infor!ation released b2 Orange for its #;O '#nitial ;"blic Offering) in $ebr"ar2 2001 ,it so!e s"bse>"ent infor!ation collected on t e 9et. Orange is t e !obile teleco! s"bsidiar2 of $rance /eleco!% t e $renc leader of teleco!. Ie provide an infor!ation s2ste! designed to red"ce t e resid"al loss d"e to t e infor!ation as2!!etr2. Ie "se an approac relevant to t e !ain sta3e olders% even if ,e e1pect t e directors board to ave t e 3e2 f"nction in controlling t e C+O. 8"&" O.ange)+ ma5n '. 1e++e+ Orange organiEation is based on fo"r b"siness "nits '$ig"re 5). / is organiEation is related to bot a geograp ical and istorical approac 't e distinction bet,een t e United Pingdo! and t e $renc activities) and t e nat"re of t e services provided 't e e1istence of a b"siness "nit for t e diversified activities). / e s"bsidiaries are different for eac co"ntr2 of establis !ent% so t e board co"ld ave infor!ation for ever2 co"ntr2 "nit. 4"t a gro"p is relevant onl2 if t e total is of a greater val"e t an t e s"! of t e parts. Iit t is 3ind of infor!ation% t e board ,ill 3no, t e val"e of t e parts ' o, s"ccessf"l are t e b"siness "nits in eac co"ntr2)% and it ,ill 3no, t e total val"e ', ic is t en t e res"lt of t e s"! of t e parts)% b"t it ,ill not be able to deter!ine t e factors , ic elp generate s2nergies and it ,ill ave diffic"lties to discri!inate a!ong t e environ!ent i!pact and t e top !anage!ent abilit2 to ave a real strateg2.

&

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation
O R A 9 ? + 6 .A .

O r a n g e ; lc ' U n it e d P in g d o ! )

$ r a n c e / e le c o ! 7 o b ile s '$ ra n c e )

6 " b s id ia r ie s ' o t e r c o " n tr ie s ) # ta l2 % 4 e lg ia n % ? e r! a n 2 % e tc .

6 " b s id ia r ie s ' D iv e r s if ie d a c t iv it ie s ) = in t e r n e t Q I A ; = s " p p lie r s o f n e , ! e d ia

'igure 5. 6rgani,ation chart of 6range )7

/ e 3e2 infor!ation abo"t t e s"ccess or t e fail"re of Orange% is t e infor!ation on t e top !anagers abilit2 to develop transversal activities% t at !eans activities , ic can be d"plicated t ro"g all t e co"ntries and , ic allo, c"sto!ers , o travel t ro"g o"t +"rope to ave t e sa!e 3ind of services 'even if so!e differences e1ist). 6o% t e infor!ation addressed to t e board s o"ld be frag!ented t ro"g t e !ain processes% of , ic t e first si1 processes are indicated b2 Orange% , ile ,e added t e last t,o ones '$ig"re 6).

7ar3eting 6ale and distrib"tion ;ROC+66+6 'and activities)

4"siness Units 4"siness Units

After=sales services Credit card pa2!ent #=services #nnovations Client follo,="p /ec nical !aintenance

'igure 8. 6range!s main processes

$ig"re 6 si!plifies t e activit2 anal2sis as ,e !a2 t in3 t at so!e processes s o"ld be divided in activities. $or instance% t e tec nical servicing contains different aspects: t e geograp ical territor2 cover% t e fre>"enc2 of call s "t do,n% etcR
10

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

8"$" O.ange)+ ma5n +ta,e* !-e.+ As !an2 p"blic fir!s% Orange as one !ain s are older. #t is also specificall2 dependent to so!e s"ppliers '$ig"re C). / ere is a strong +"ropean conc"rrence as t e !ar3et is relativel2 ne, and fast gro,ing.

F.an1e Te!e1 m

Ot*e. S*a.e* !-e.+

Ot*e. M 75!e('* ne O'e.at .+

Em'! 3ee+

E6e14t52e //51e.+
C4+t me.+

M 75! '* ne 5n/.a+t.41t4.e +4''!5e.+

'igure 9. The )ta"eholders! 'lower *odel applied to 6range

3.2.(. 'rance Telecom: the ma$ority shareholder After t e #;O% $rance /eleco! detains bet,een C&.JS and 8J.5S of t e capital according to t e bonds , ic are detained b2 t e p"blic and , ic can be converted into Orange s ares. / e c air!an of $rance /eleco! board is also t e c air!an of Orange board. Orange c ief e1ec"tive officer is also !e!ber of $rance /eleco! e1ec"tive co!!ittee. $rance /eleco! infor!ation ,ill t en be ens"red b2 Orange top e1ec"tives. Ho,ever% Orange@s ob0ectives !a2 not al,a2s be t e sa!e as t ose of $rance /eleco!. One sol"tion "s"all2 proposed is to give large a!o"nts of Orange@s stoc3 options to t e top !anagers. Ho,ever% it co"ld res"lt in an arbitrage bet,een $rance /eleco! and Orange and if t e e1ec"tive officer is onl2 interested b2 !one2% e ,ill favor t e fir! , ere is !onetar2 re,ards
11

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

,ill be t e greatest. Anot er sol"tion is to tr2 to red"ce t e infor!ation as2!!etr2 b2 giving relevant infor!ation to Orange board. 3.2.2. The minorities shareholders ;eople , o s"bscribed to Orange #;O are first interested b2 t e s are price. 6o t e board needs to ave a loo3 on it. Ho,ever% t e fir! !ar3et val"e is t e res"lt of t e decisions i!ple!ented b2 t e e1ec"tives% not t e opposite. /o do its 0ob% t e directors board needs to consider so!e indicators related to t e ot er sta3e olders. 7oreover% t ere is a need to so!e specific indicators for !eas"ring t e repartition of t e created ,ealt bet,een t e !inorit2 s are olders and $rance /eleco!. 3.2.3. The employees +!plo2ees ,ill contrib"te strongl2 to Orange develop!ent if t e2 perceive it as being beneficiar2 to t e!. / e fir! develop!ent "s"all2 elps t e e!plo2ees to 3eep t eir 0ob and even to be pro!oted for so!e of t e!. Ie !a2 t en retain so!e indicators , ic s o"ld obvio"sl2 be co!pleted '$ig"re 8).
+!plo2ees e1pectations /o ave a 0ob /o be ,ell paid /o see er perfor!ance recogniEed #ndicator / e evol"tion of t e n"!ber of e!plo2ees / e salar2 e1penses / e pro!otions / e s ares plan

'igure ;. <mployees! expectations and reporting

$or Orange% t ese indicators ta3e t e follo,ing val"es '/able 1). / ese val"es s o"ld be anal2Eed t ro"g t e diverse processes% in order to observe , et er or not t e e!plo2ees are interested in t eir i!prove!ent 't is infor!ation is obvio"sl2 not p"blic% so ,e present onl2 t e consolidated data). 7oreover% t e board of directors decided on is 12T01T2001 !eeting to grant C5 !illion s ares options , ic can be e1ercised bet,een 200J and 2011 at a price of 10.00 +"ros. / ese plans concern aro"nd 1A 000 individ"als.
12

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

Table (. %ndicators on employees expectations

8&9&$9$%%% 8%9%:9$%%% ;: m nt*+< 8&9&$9&=== 8&9&$9&==> 8&9&$9&==#

A2e.age n4m7e. / em'! 3ee+ Sa!a.3 e6'en+e+ ;m5!!5 n+ E4. +< A2e.age +a!a.3 'e. em'! 3ee ;t* 4+anE4. +< ? / em'! 3ee+ 5nte.na!!3 '. m te;*< ? +a!a.5e+ e6'en+e+ a!! 0e- t t*e / .mat5 n ;*< N4m7e. / 0 .,5ng -a3+ ! +t / . +t.5,e ;*< N4m7e. / 0 .,5ng -a3+ ! +t / . @ 7 a115-ent+ ;*<

2J 282 &&& J1.1 J%CS 5%5JS A0 8C1 56 20A

22 252 JJ& J0.J

1C 2A& 666 A8.6 J%5S 6%1AS 1C5 A5A 6A 018

12 A01 JA2 A5.1 5%0S 6%CCS 2A 8J5 52 &10

& JC1 A15 AA.2

-*/ =ata for the 'rance Telecom group -including 6range/

3.2.4. The customers /,o factors see! deter!inant for Orange develop!ent '/able 2):

/ e evol"tion of t e n"!ber of c"sto!ers: ,it an approac t ro"g t e 3ind of services s"bscribed. / e evol"tion of t eir cons"!ption: o, !"c do t e c"sto!ers pa2 for t e different services s"bscribed and o, do t e2 "se t e!. / is infor!ation !"st be relativiEed b2 t e !ar3et evol"tion.

1A

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

Table 2. %ndicators on customers expectations 8&9%89$%%& Ma.,et +*a.e: UK F.an1e Ot*e. E4. 'ean 1 4nt.5e+ O.ange)+ 1 nt. !!e14+t me. 7a+e: '.e'a3 1 nt.a1t n t -eta5!eA2e.age 4+e 'e. 14+t me. ;m5n4te+<: UK F.an1e Ot*e. 25%JS J8%2S 8&9&$9$%%% 2J%5S J8%2S 8&9&$9&=== 20%JS J8%CS 8&9&$9&==> 16%6S J&%6S

1A%C 7 10%J 7 6%J 7 15& 1JC

6%1 7 8%& 7 A%2 7 1C5 160

1%C 7 6%0 7 1%2 7 1CJ 1J5

3.2.5. The suppliers As noted% in t e prospect"s of #;O 'p.12&)% N the group is dependant of a limited number of suppliers for its networ" e&uipment and maintenance. %ts results could be affected in a significant way if these suppliers would not furnish to the group the ade&uate e&uipmentN. 6o% t e indicators "sed s o"ld indicate t e capacit2 of t e net,or3% its average availabilit2 'does t e net,or3 be able to respond to a s"dden increase of t e traffic)% t e n"!ber of 3e2 s"ppliers and t e average t"rnover realiEed ,it eac of t e!. 8"8" T*e .e' .t5ng 5n-51at .+ / . t*e ma.,et5ng '. 1e++ $or a process% t e reporting indicators s o"ld allo, t e directors board% b"t also t e ot er sta3e olders% to get infor!ation on t e perfor!ance. One 3e2 aspect of t is reporting is t e c oice of indicators% , ic are not necessaril2 derived fro! t e financial acco"nting. $or instance% according to Orange% t e !ar3eting activit2 ai!s to let 3no, to t e p"blic t e different offers. #t is >"ite si!ple to collect t e financial data abo"t t e costs inc"rred for t is activit2. 4"t it ,ill be necessar2 to deter!ine so!e cost driver in order to deter!ine , at inc"rs a c ange in t e reso"rces cons"!ed. 7oreover% so!e perfor!ance indicators !"st be defined in order to establis a relation bet,een t e reso"rces cons"!ed b2 t is activit2 and t e res"lt obtained. Ie !a2 i!agine t at t e board co"ld receive a s eet containing
1J

Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

t e reso"rces cons"!ed% t e notoriet2 of t e different offers 'for instance t ro"g t e "se of c"sto!er in>"iries)% t e !ar3et s are% etc. '$ig"re &).
Sta,e* !-e.+ O7@e1t52e C4+t me.+ /o let 3no, to t e p"blic t e different offers Em'! 3ee+ /o en ance t e i!age of t e fir! S4''!5e.+ /o develop a good relations ip ,it t e advertising agencies 5 / e n"!ber of televised spot 5 / e val"e of t e advertising S*a.e* !-e.+ /o i!prove t e profitabilit2 of t e fir! 5 / e ret"rn on invest!ent 5 / e elasticit2 of t e de!and to t e advertise!ent

In-51at .

/ e 3no,ledge / e level of level of t e positive opinion different offers for t e brand or for t e fir! / e !ar3et s are of t e fir!

'igure >. The reporting of the mar"eting process

A" CONCLUSION #n t e t,enties% $ord decided t at e co"ld bot pa2 !ore is e!plo2ees and lo,er t e price of t e cars as e oped to receive an increasing a!o"nt of order. His strateg2 ,as a ,inning=,inning strateg2 , ere bot sta3e olders ,o"ld profit and in ret"rn t e s are olders ,o"ld see a greater invest!ent ret"rn. As t e !ain s are older% $ord ,as t e pri!ar2 beneficiar2 of t is strateg2. /oda2% Orange tr2 to develop a strateg2 si!ilar b2 proposing specific offers to its c"sto!ers in order to increase t e a!o"nt of t e ti!e cons"!ed ,it t eir p one. / e !ain difference is t at t e directors board s o"ld get infor!ation on t e evol"tion of t is ne, ,ealt repartition. /o be able to eval"ate t e top e1ec"tives% t e board ,ill need to get specific infor!ation on t e effectiveness of t e strateg2 i!ple!ented for all t e fir! sta3e olders. Ie do t in3 t at t e best reporting design for t e board s o"ld incl"de an approac based on bot t e sta3e olders and t e processes anal2sis. One 3e2 ele!ent to 0oin bot aspects ,o"ld be to rel2 on a !odel si!ilar to t e balanced scorecard.

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Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

REFERENCES: 1. Alc ian A. A. and De!setE H. '1&C2)% N;rod"ction% #nfor!ation Costs% and +cono!ic OrganisationN% 7merican <conomic ?eview% (ol. 62% 9o. 5% pp. CCC=C&5. 2. C arrea"1 ?. '1&&C)% N(ers "ne t <orie d" go"verne!ent des entreprisesN% pp. J21=J6&% in @e Aouvernement des <ntreprises +orporate Aovernance Thories et 'aits% +cono!ica so"s la direction de ?. C arrea"1% ;aris. A. Clar3son 7. 4. '1&&5)% NA 6ta3e older $ra!e,or3 for Anal2Eing and +val"ating Corporate 6ocial ;erfor!anceN% 7cademy of *anagement ?eview% (ol. 20% 9o. 1% pp.&2=11C. J. Coff R. I. '1&&&)% NI en Co!petitive Advantage Doesn@t Gead to ;erfor!ance: / e Reso"rce=4ased (ie, and 6ta3e older 4argaining ;o,erN% 6rgani,ation )cience% (ol. 10% 9o. 2% 7arc % pp. 11&=1AA. 5. C2ert R. 7. and 7arc F. ?. '1&6A)% 7 Behavioral Theory of the 'irm% +ngle,ood Cliffs% 9. F.: ;rentice Hall. 6. Donaldson /. and ;reston G. +. '1&&5)% N/ e 6ta3e older / eor2 of t e Corporation: Concepts% +vidence% and #!plicationsN% 7cademy of *anagement ?eview% (ol. 20% 9o. 1% pp. 65=&1. C. Donaldson /. and ;reston G. +. '1&&5)% N/ e 6ta3e older / eor2 of t e Corporation: Concepts% +vidence% and #!plicationsN% 7cademy of *anagement ?eview% (ol. 20% 9o. 1% pp. 65=&1. 8. $a!a +. $. '1&80)% NAgenc2 ;roble!s and / e / eor2 of / e $ir!N% Bournal of Political <conomy% (ol. 88% 9o. 2% April% pp. 288=A0C. &. $ree!an R. +. '1&8J)% )trategic *anagement: 7 )ta"eholder approach% 4oston: ;it!an. 10. Fensen 7. C. and 7ec3ling I. H. '1&C6)% N/ eor2 of t e $ir!: 7anagerial 4e avior% Agenc2 Costs and O,ners ip 6tr"ct"reN% Bournal of 'inancial <conomics% (ol. A% October% pp. A05=A60. 11. Paplan R. 6. and 9orton D. ;. '1&&2)% N/ e 4alanced 6corecard U 7eas"res / at Drive ;erfor!anceN% #arvard Business ?eview% Fan"ar2= $ebr"ar2% pp. C1=C&. 12. Paplan R. 6. and 9orton D. ;. '1&&A)% N;"tting t e 4alanced 6corecard to Ior3N% #arvard Business ?eview% 6epte!ber=October% pp. 1AJ=1J2. 1A. Paplan R. 6. and 9orton D. ;. '1&&6)% NUsing t e 4alanced 6corecard as a 6trategic 7anage!ent 62ste!N% #arvard Business ?eview% Fan"ar2= $ebr"ar2% pp.C5=85. 1J. Gard2 ; and ;ig< 4. '2001)% @a gestion stratgi&ue des coCts% Caen: +76. 15. 7intEberg H. '1&82)% )tructure et dynami&ue des organisations % Ges +ditions d@Organisation.

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Management, V !" #, $%%$, &, ''" &(&#" 4. ;ig<: 6ta3e older t eor2 and corporate governance: t e nat"re of t e board infor!ation

16. 7intEberg H. '1&8A)% Power %n and 7round 6rgani,ations% +ngle,ood Cliffs% 9.F.: ;rentice Hall. 1C. 7"t 7. 7. and Donaldson G. '1&&8)% N6te,ards ip / eor2 and 4oard 6tr"ct"re: a contingenc2 approac N% +orporate Aovernance% (ol. 6% 9o. 1% pp. 5=28. 18. Ials F. ;. and 6e,ard F. P. '1&&0): NOn t e +fficienc2 of #nternal and +1ternal Corporate Control 7ec anis!sN% 7cademy of *anagement ?eview% (ol. 15% 9o. A% pp. J21=J58. 1&. Iillia!son O.+. and Iinter 6.?. 'editors) '1&&1)% The nature of the firm: 6rigins evolution and development% 9e, Vor3: O1ford Universit2 ;ress. 20. Iong ;. /. and Ieiner 4. '1&81)% NI en people as3 8, 2* >"estions% and t e e"ristics of attrib"tional searc N% Bournal of Personality and )ocial Psychology% (ol. J0% pp. 650=66A. 21. Oingales G. '2000)% N#n 6earc of 9e, $o"ndationsN% Bournal of 'inance% (ol. 55% 9o. J% pp. 162A=165A.
TEORIBA CAINTERESIRANIH STRANA I KORPORACIBSKO UPRAVLBANBE: PRIRODA INFORMACIBA NAMIBENBENIH NADCORNOM ODBORU SaDeta, /e!el0na f"n3ci0a nadEornog odbora 0e 3ontrola top !anagera. U3oli3o se pri vati ide0a pod"EeWa 3ao vlasniXtva dioniYara% Yini se da 0e na0bol0i naYin !otiviran0a top !anagera dod0ela opci0a Ea 3"povin" dionica. 7eZ"ti!% 3ada se tvrt3a pro!atra 3ao s3"p e3splicitni i i!plicitni "govorni odnosa% proiElaEi 3a3o posao top !anagera ni0e sa!o Eadovol0avan0e dioniYara tvrt3e. ObaveEa top !anage!enta se% " to! sl"Ya0"% !o[e iEraEiti 3ao odr[avan0e i raEvo0 3oalici0e strana Eainteresirani Ea pod"EeWe. /ada nadEorni odbor !ora dobiti opse[ni0e infor!aci0e 3a3o bi !ogao proci0eniti "sp0eXnost top !anage!enta. U ovo! se rad" predla[e iEv0eXtavan0e "te!el0eno na analiEi a3tivnosti i prist"p" Eainteresirani strana. ;rito! bi Ea detal0n" raErad" infor!iran0a nadEornog odbora !ogao posl"[iti !odel Nbalanced scorecardN.

1C

18