Canada’s largest financial institutions have agreed a voluntary approach to “say-on-pay” which will see a standardised, non-binding shareholder vote proposed during the 2010 season. In a sharp contrast to the US’ legislative battle to give shareholders a voice on executive pay, Canadian shareholder groups and companies have worked together to create a common format which they hope will trickle down to smaller companies before next spring.
The effort to standardize the proxy resolutions is being championed by the Canadian Coalition for Good Governance, a shareholder group representing most of Canada’s largest institutional investors. CCGG executive director Stephen Griggs says the coalition wants to influence companies as they are considering the wider issues about say on pay.
Laura O’Neill, director of law and policy at Vancouver-based shareholder rights group SHARE, said her group has been contacting the 60 largest public companies in Canada to urge them to also adopt say-on-pay votes next year. SHARE is still looking for a mandatory approach to say on pay but said it is gratifying that some companies appear willing to move voluntarily.
“As shareholders, we have an obligation to give boards some guidance about what we think they should be doing, rather than just being complainers,” Stephen Griggs
According to SHARE, the following is a list of companies who have signed up to the new resolution:
- Bank of Montreal
- Bank of Nova Scotia
- BCE Inc
- Canadian Imperial Bank of Commerce
- Industrial Alliance Insurance
- Laurentian Bank of Canada
- Manulife Financial Corp
- National Bank of Canada
- Potash Corp
- Royal Bank of Canada
- Sun Life Financial
- Toronto Dominion Bank
SRI fund manager Meritas Mutual Funds predicted that more companies would probably sign up to the standard as the practice goes mainstream. Speaking to Reuters Canada, Meritas Chief Executive Gary Hawton said he expected directors to take the votes seriously, even if they are only advisory: “If they walk away from (a ‘no’ vote) and say ‘well, this is nonbinding,’ they risk wrath of shareholders on reelection, and worse.”