Topic: Corporate Governance

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How independent are independent directors?

Board independence is a pillar of good corporate governance. It ensures that a corporation’s management is properly monitored and that the corporation’s decisions effectively balance the various stakeholders’ interests. Over the past decades, Canadian regulators (with support from investors) have required companies to increase the number of independent directors on their boards and have created … Continue reading

The CCGG’s Stewardship Principles

Last month, the Canadian Coalition for Good Governance (CCGG) published its new Stewardship Principles paper designed to assist institutional investors fulfil their responsibilities to their beneficiaries or clients and enhance the value of their investments. The principles reflect what the CCGG believes are appropriate stewardship responsibilities for institutions investing in Canadian public equities and are … Continue reading

Making your vote count II: CSA finalizes proxy voting protocols

The Canadian Securities Administrators (CSA) have recently released finalized guidance and protocols for meeting vote reconciliation under CSA Staff-Notice 54-305 Meeting Vote Reconciliation Protocols (the Protocols) which are implemented on a voluntary basis. The Protocols mark the latest step in a systemic review that began in 2013 to bring greater transparency and simplicity in vote … Continue reading

Glass Lewis’ 2017 Canada Policy Guidelines

Towards the end of last year, Glass, Lewis & Co., LLC (Glass Lewis), a leading governance and proxy voting firm, released its 2017 Proxy Paper Guidelines for Canada (the Guidelines) for the upcoming 2017 proxy season.  Although the Guidelines contain changes compared to the guidelines released by Glass Lewis in 2016, most were foreshadowed in … Continue reading

Board Watch: More Complexity, More Committees

As a result of the increasing and ever-evolving responsibilities falling on the shoulders of boards of directors, the traditional three key committee model (covering audit and financial reporting, executive compensation, and director nominations and board succession planning) can be inadequate. The creation of additional committees has been one way to manage the burden.  According to … Continue reading

Institutional investors managing US $17 trillion announce new corporate governance framework

In a move likely to have significant impacts on corporate governance, a group of institutional investors managing upwards of US $17 trillion has announced the formation of the Investor Stewardship Group (the Group). The Group has adopted a framework of certain non-binding investor-friendly principles, many of which are either common or already legally recognized in … Continue reading

An age of shareholder empowerment

In a corporate directors survey (the Survey) entitled “The swinging pendulum: Board governance in the age of shareholder empowerment”, PricewaterhouseCoopers LLP (PwC) presents current trends in investor influence and their impact on governance practices of boards and management teams. Conducted amongst 884 company directors in the summer of 2016 with respondents representing over 24 industries, … Continue reading

Corporate Governance, in Silicon Valley and Beyond

The best practices and processes through which companies manage their corporate affairs have long been analyzed and discussed under the “corporate governance” umbrella.  Corporate governance practices and trends among large public companies are often presented as a benchmark for all companies.  Less often discussed are the industry-specific practices tailored by companies to fit their businesses. … Continue reading

Federal government proposes changes to corporate law: What it means for corporate governance and shareholder activism

On September 28, 2016, Canada’s federal government introduced a bill proposing amendments (the Amendments) to the Canada Business Corporations Act (the CBCA), among other acts. The Amendments include new requirements for electing directors, mandatory diversity disclosure, and changes to shareholder communications. These proposed changes, if enacted, will have significant effects on corporate governance and shareholder … Continue reading

Corporate governance principles: The start of a new conversation?

On July 21 2016, the CEOs of thirteen high-profile public companies, asset managers and pension and mutual funds released the Commonsense Principles of Corporate Governance. The signatories include some of the most respected names in American business and were headlined by Warren Buffett of Berkshire Hathaway Inc., Mary Barra of General Motors, Larry Fink of … Continue reading

Board diversity: the latest metrics and government measures

The diversity of boards has become a target of greater scrutiny. This scrutiny has come not only from activist investors seeking higher returns and better governance, but from governments and various interest groups outside the corporation. It has homed in on a variety of director characteristics, including length of tenure, age, gender, and visible minority … Continue reading

Majority voting and board diversity trends

As recently highlighted in the Harvard Law School Forum on Corporate Governance and Financial Regulation, a report (the Report) by Institutional Shareholder Services (ISS) found that majority voting practices and annual board elections, along with increases in board diversity, are the new norm. The Report examined the public filings of Standard & Poor’s U.S. “Super … Continue reading

Updates to ISS proxy voting guidelines

Institutional Shareholder Services (ISS) is one of the leading proxy advisory firms that makes voting recommendations on public companies’ proxy resolutions. In Canada, ISS’ recommendations on transactions and governance issues can have a significant impact on many shareholders’ opinions, and particularly the opinions of institutional shareholders. ISS publishes its proxy voting guidelines which explain the … Continue reading

The State of Proxy Access Reforms

With the rise of shareholder activism led by what some refer to as “constructivists”, “reluctavists” or “suggestivists” (and, yet others, those who commit “extortion”), shareholders have become increasingly distrustful of leaving matters of corporate governance to management and boards. One tool that investors can rely on is exercising rights pursuant to a proxy access by-law, … Continue reading

Corporate governance at top of mind for investors

A recent article from IR Magazine, “Governance crucial factor for nine in ten Canadian investors” (the Article), highlights just how much emphasis Canadian investors place on good corporate governance. Canadian companies would be smart to take heed and ensure their corporate governance is in line with accepted good practices. The Article reports that, of the … Continue reading

How corporate governance reforms spread

Recent research on the adoption of majority voting rules provides some insight on how corporate governance reforms are adopted and change company behaviour, and suggests that reforms may have the greatest impact on firms that are late to adopt them. The push for majority voting, which requires that directors receive a majority (rather than a … Continue reading

Top board priorities for 2016

With 2016 upon us, boards are likely to reflect on the organizational challenges they expect to face in the coming year, and to develop effective strategies to tackle these challenges. A recent EY publication anticipates that in developing these strategies, boards will focus their energies on addressing the following five critical challenges: 1. Board effectiveness, … Continue reading

Glass Lewis’ 2016 Canada Policy Guidelines

Last week, Glass Lewis & Co. (Glass Lewis), a top governance analysis and proxy voting firm, released its 2016 proxy season guidelines for Canada and the United States, as well as its guidelines for evaluating shareholder initiatives. Here, we summarize what’s new in Glass Lewis’ 2016 Canada Policy Guidelines (the Guidelines) for the upcoming 2016 … Continue reading

ISS proposed proxy voting policy changes for 2016

Institutional Shareholder Services (ISS), one of the world’s most influential proxy advisory firms, recently released its draft proposed voting policies for 2016.  ISS is currently requesting feedback on new or potential changes to three voting policies in Canada covering the following areas: director overboarding, compensation-related votes at externally-managed issuers and the introduction of an equity … Continue reading

Emerging trends: Activist shareholder bans

As a result of the rising tide of shareholder activism in Canada, a number of defensive tactics have been developed by corporate management. The newest innovation in management’s arsenal is the activist investor ban—an agreement between an issuer and a purchaser that restricts the purchaser from transferring its shares to activist investors. Activist investor bans … Continue reading

Management diversity: Do women in management lower a firm’s risk profile?

In an earlier post, we commented on the formal amendments to National Instrument 58-101 – Disclosure of Corporate Governance Practices and Form 58-101F1- Corporate Governance Disclosure imposing enhanced disclosure requirements with respect to female representation on the boards and in executive officer positions of TSX-listed issuers.  As we discussed earlier this year, the correlation between … Continue reading

The Dissatisfied Institutional Investor: Intervene or Exit?

Considering the role of institutional investors in influencing corporate governance is critical to effective corporate decision making. Broadly, dissatisfied institutional investors choosing to act can do one of the following: (a) intervene with management, either cooperatively or uncooperatively as dissident shareholders, or (b) exit by selling their shares. Many theories have been put forward to … Continue reading
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