Tag archives: independence

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 stricter requirements for what qualifies as ‘independent’. But are independent directors now truly independent?

In a US paper published by Kastiel and Nili, the authors argued that independent directors today, while technically independent, are functionally still very dependent on management. This is because of the … Continue Reading

ISS Updates its Proxy Voting Guidelines for the 2015 Season

On November 6, 2014, Institutional Shareholder Services (ISS) released updates to its Canadian proxy voting guidelines for the 2015 proxy season.  The voting guidelines are effective for meetings held on or after February 1, 2015.  The following is a summary of the most significant changes.

Director Elections

  • Director Independence: ISS has made several changes to their definition of “independence” including:
    • that former CEOs will now be subject to a five year “cooling off” period, after which ISS will classify him/her, on a case-by-case basis, to be independent unless other relationships exist with the issuer or executive officer. Factors taken
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Golden Leashes: Is Regulatory Intervention Warranted?

In the most recent volume of the Canadian Business Law Journal, Edward M. Iacobucci, Professor with the Faculty of Law at the University of Toronto, addresses certain arguments against dissident shareholders providing their director nominees with a future incentive if the target company’s share price increases following such nominee’s election to the board.1  These special compensation arrangements (or “golden leashes” as they are sometimes called) are hereafter referred to as “arrangements” and first emerged in Canada during the 2013 Agrium/Jana proxy fight, which was recently discussed by my colleague, Saeed Teebi, here.

Iacobucci explores some of the arguments … Continue Reading

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