CP Rail Supports an ESG-Related Shareholder Proposal Which Includes Annual Advisory Vote by Shareholders on a Climate Action Plan

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TCI Fund Management Limited (TCI) recently successfully submitted a climate change-related shareholder proposal (the Proposal) to Canadian Pacific Railway Limited (CP) to be voted on at CP’s upcoming 2021 annual general meeting of shareholders.  As stated in its circular for the meeting, CP supports TCI’s Proposal and recommends shareholders vote in favour of it.  Of particular note is that the Proposal, if passed, requires CP to hold a non-binding shareholder advisory vote on an annual basis regarding its climate action plan.

Takeaway

The Proposal, which is the latest in a growing trend of shareholder proposals … Continue Reading

A Dive into the Surge of Cannabis-Related Securities Class Actions

Indoor growing room of cannabis plantsAfter nearly two years since the recreational cannabis industry has been in operation, we are seeing a rise in securities class actions and regulatory activity relating to cannabis companies. Since legalization, the growth of the sector has been fast and furious. The initial excitement and high investor interest has been recently overshadowed by compliance breaches at Canadian cannabis issuers coupled with market volatility fueling event-based securities litigation.

A surge of securities class actions were filed on behalf of disgruntled investors in 2019 against a number of Canadian cannabis issuers for prospectus and secondary market misrepresentation. NERA Economic Consulting released a … Continue Reading

A Review of 2020: A Catalyst for Corporate Governance Change

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The COVID-19 pandemic coupled with the fight against anti-Black systemic racism has had a significant and potentially long-lasting impact on corporate governance.

In its report entitled “The New Abnormal: How 2020 Has Changed the Future of Corporate Governance” (the Report), Kingsdale Advisors (Kingsdale) notes that directors have faced a string of challenges in 2020 that have required innovative and agile leadership. The Report analyzes some key corporate governance trends, including the following:

  • Investors have higher expectations regarding Environmental, Social & Governance (ESG) disclosure. Institutional investors in particular are pushing for enhanced ESG-related disclosure and expect issuers
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Dialing In: Adapting to Virtual Shareholder Meetings

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The Shift to a Virtual World

The COVID-19 pandemic has altered and changed many familiar corporate operational and governance practices and norms, including how issuers host their annual general meetings (AGMs). Broadridge Financial Solutions reported hosting 300 virtual meetings in 2019 and approximately 1500 virtual meetings this year thus far.

In place of in-person only AGMs, issuers have two options: (1) hybrid AGMs that provide both virtual and physical meeting platform options and (2) virtual-only AGMs implemented through electronic means such as the use of live webcasts and teleconference lines. Virtual-only AGMs have proven to be the most … Continue Reading

Global Trends in Shareholder Activism Amidst COVID-19

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According to a review of shareholder activism by Lazard (the Lazard Review) that examined global activism trends in the first half of 2020 (H1 2020), economic uncertainty brought on by the COVID-19 pandemic, coupled with heightened awareness of widening socioeconomic inequalities around the world, has altered shareholder activism activity globally. We highlight some important trends to watch as companies and shareholders continue into the second half of 2020.

Resurgence of Poison Pills

As stock prices plummeted in March, many U.S. companies moved quickly to adopt poison pills (also known as shareholder rights plans). A recent study found … Continue Reading

ISS includes Economic Value Added in its Compensation Reports

Institutional Shareholder Services (ISS) announced earlier this year that, in its 2019 proxy research reports, it will be displaying financial ratios derived from a base measure called Economic Value Added (EVA). The EVA ratios will initially be used for informational purposes only, meaning they will not factor in to say-on-pay voting recommendations or evaluations of compensation policies. Nevertheless, boards should understand EVA’s value as a means of assessing management performance, and how ISS intends to use the measure in its reports.

EVA is an estimate of a firm’s true economic profit, that is, its after-tax operating … Continue Reading

A UK dispute sheds light on the duties of a dissident director

A recent decision of the UK’s High Court — Stobart v Tinkler [2019] EWHC 258 (Comm) — has been released following a dispute between directors of a large infrastructure company (the “Company”). The decision, and the circumstances preceding it, serve as a cautionary tale about the duties of a dissident director and of board members in the context of proxy contests.

The board dispute was initiated by a founder and significant shareholder of the company (the “Dissident Director”). After his resignation from the office of CEO in 2017, the Dissident Director remained with the Company as … Continue Reading

Shareholder Activism Reaches Record Levels

Activist Insight recently published the sixth edition of its annual report, entitled “The Activist Investing Annual Review 2019” (the “Review”). The Review analyzes recent global shareholder activism trends, forecasts expected developments in 2019, and highlights and compares jurisdictional data.

Oh, Canada: Increased Canadian Activism

As the Review outlines, 2018 was a notable year in Canada for shareholder activism. Not only did one of the biggest proxy fights of the year stem from Canada, but 75 Canadian companies received public demands from activist investors. The number of public demands received last year is significant considering there were 56 Canadian … Continue Reading

Share Buybacks & Executive Compensation: Aligning Management’s Incentives

As we previously discussed, the use of share buybacks has accelerated in recent years, both in Canada and the United States. This has sparked anxious debate over the extent to which buybacks can form part of an effective long-term growth strategy. Particularly in the United States—where buybacks hit a record of more than $1 trillion USD in 2018 following tax reforms—commentators have blamed buybacks for various ills, including wage stagnation, income inequality, and underinvestment in R&D. In response, some U.S. legislators have sought to curb their use, such as by tying buybacks to conditions including paying employees a certain … Continue Reading

When defamation in hostile proceedings leads to serious consequences

It will come as no surprise to those who have participated in a proxy fight to learn that these disputes can be heated affairs.   Parties to a fight will routinely seek to discredit the other side to bolster their own narrative or otherwise gain a strategic advantage.  In such an atmosphere, it can be difficult to draw the line between behaviour that’s merely aggressive and behaviour that crosses into unethical or illegal territory.  A recent U.S. District Court case, Eshelman v. Auerbach et al, ­provides an example of the serious consequences that can ensue for those who cross this … Continue Reading

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