VANCOUVER, BC – Leading Canadian private sector pension managers are growing impatient with boards that fail to align executive pay with shareholders’ interests according to a survey released today. The twelfth annual Canadian Key Proxy Vote survey examines the voting records of 32 investment managers and proxy voting services who reported combined Canadian equity holdings in excess of $130 billion in 2011.
Most participants in the survey took a tough stance on poor pay plans. This year, more than one third of the issues surveyed were votes on executive compensation. As a group, participating firms said that on these pay proposals, they voted against company management more often than they voted in favour.
A proposal from an investor that challenged companies directly on the large and growing gap between executive pay and average salaries did not fare well, receiving support from only 1 in every 3 surveyed firms that voted on it. The proposal asked for disclosure of the ratio of executive pay to the earnings of the average employee, and for “justifications” of the gap reported. “This muted response to the pay disparity proposal indicates that few firms answering the survey have an appetite for calling market norms into question,” said Laura O’Neill, SHARE’s Director of Law and Policy.
Each year, the survey examines asset manager voting decisions on approximately two dozen issues that attracted relatively strong opposition from shareholders generally. The point is to develop a profile of managers as either willing to object to poor corporate practice or as complacent supporters of management.
“The survey sends a positive message to those concerned about the protection of Canadian’s retirement savings”, says Bill Mackenzie, Senior Advisor at Hermes Equity Ownership Services “but we still have a long way to go before all institutional investors use their voting power to insist on high standards of corporate governance and accountability, including in the area of executive compensation.”
The publication also includes key data on how firms make their voting decisions. “Responses to the survey provide evidence that Canadian pension fund asset managers are devoting more attention to proxy voting and disclosing their decisions,” according to Charley Beresford, Executive Director of the Columbia Institute, a survey sponsor. “Over the past three years, for example, an increasing percentage of firms report that they have proxy guidelines, that they review them every year and that they make them available to the public.”
The Canadian Key Proxy Vote Survey is a project of the Columbia Institute, Fonds de solidarité (FTQ) and the Shareholder Association for Research and Education (SHARE).
About the Columbia Institute: The Columbia Institute is a national charitable organization whose goal is to foster inclusive, sustainable communities. They believe that communities that value social justice and the environment, as well as the local economy, are healthier, happier places to live. Fostering individual and organizational leadership is essential for achieving strong communities.
About the Fonds de solidarité: The Fonds de solidarité (FTQ) is a development capital fund that calls upon the solidarity and savings of Quebecers to help fulfill its mission to create and save jobs in Québec by investing in small and medium‐sized businesses in all spheres of activity. The Fonds also seeks to encourage Quebecers to save for retirement and to offer its over half a million owner‐shareholders a reasonable return over and above the outstanding tax benefits they receive by purchasing Fonds shares.
About SHARE: The Shareholder Association for Research and Education (SHARE) is a leading advisor to institutional investors on the integration of environmental, social and governance considerations in investment decision-making.
The 2011 Key Proxy Vote Survey is available for download at: http://www.share.ca/files/SHARE_2011_Key_Proxy_Vote_Survey_1.pdf