Eight more Canadian companies have scheduled annual advisory votes on executive compensation (“Say on Pay” votes) after being approached by institutional investors working together to promote the practice.
SHARE, alongside a group of large Canadian pension funds and institutional investors, have been asking companies in their portfolios to provide shareholders with an opportunity to vote annually on the board’s approach to compensating top executives. Where necessary, they have filed shareholder proposals to back up the request, all of which were withdrawn after successful negotiations.
“Say on Pay” votes create a critical accountability mechanism for shareholders, providing them with an opportunity to voice concerns with executive compensation practices in a focused, effective and appropriate manner. Adopting Say on Pay has been a way for boards to demonstrate their willingness to communicate and discuss their approach to compensation in open dialogue with shareholders, both before and after the annual vote. It provides the right balance between accountability to a company’s owners and the board’s discretion to oversee the company’s overall health and success.
The practice has been adopted voluntarily by more than 180 companies in Canada as a result of shareholder pressure.
This year B2Gold, Choice Properties, George Weston Limited, Loblaw Companies Ltd., Northland Power, Onex Corporation, ShawCor, and Sleep Country Canada have all responded positively to requests from the investor group, committing to adopting the practice at their annual meetings.
The group, working together with other large Canadian institutional investors, has also asked securities regulators to make Say on Pay a requirement for all issuers. Regulators in other jurisdictions, notably the United States, United Kingdom, Australia and Switzerland, already require Say-on-Pay votes for publicly-traded companies. To date, Canadian regulators have been slow to act, but the group’s continued and persistent interest in promoting Say on Pay practices should be a clear signal that the issue is not going away.