are improving executive compensation practices and disclosure-
Toronto, January 7, 2008 -- The Canadian Coalition for Good
Governance (CCGG) will not support any regulatory changes or recommend
universal backing for resolutions that will introduce mandatory advisory
shareholder votes on executive compensation this year. In its position
paper on the issue of "Say on Pay", the Coalition stated that Canadian
companies are already making strides to improve executive compensation
practices, address disclosure issues and improve shareholder
involvement, and that regulations of this kind are not the answer at
"It is the role of the board, and in particular the compensation
committee, to establish appropriate executive compensation plans that
clearly align the interests of shareholders and management," said David
Beatty, Managing Director, Canadian Coalition for Good Governance. "By
working constructively with corporate Canada, organizations like ours
can provide perspective on the difficult balance between market forces
and shareholder interests in the arena of executive pay but it is not
our role to find that balance."
"Say on Pay" resolutions refer to an advisory (non-binding)
shareholder vote to allow shareholders to comment on executive
compensation. In their paper, the CCGG outlined their reasons not to
support these types of resolutions at this time, including:
The continued adoption of majority voting for director elections,
allowing shareholders to express their concerns over issues such as
executive compensation by withholding votes;
The introduction of new CSA requirements for compensation disclosure
that will have an impact on linking pay to performance;
An overall improvement in compensation disclosure practices since
last proxy season, and;
The increasing role of independent executive compensation advisors in
the compensation process.
"We will look to corporate Canada to continue to improve the
executive compensation process. Moving forward, if we feel progress on
this issue has stalled, we may support resolutions such as "Say on Pay"
to ensure the voice of the shareholder is heard," said Beatty.
The Coalition also released a list of requirements representing the
areas where Canadian companies should focus their efforts to improve
their compensation and disclosure programs in the future. Requirements
Clear explanations of overall compensation programs and the link
between pay and performance;
Executive compensation packages that are less complex and show a
direct alignment with the interests of shareholders;
Better disclosure and justification of post-retirement benefits and
change of control provisions for executives.
In addition, the Coalition is promoting the abandonment by
corporations of the practice of slate voting and the adoption of
majority voting for each director.
"The Coalition has provided a framework to help Canadian companies
set executive compensation levels and provide clear and concise
disclosure. We will continue to actively work with boards and
compensation committees to provide the shareholders' view on
compensation practices and disclosure," said Beatty.
For more information on CCGG's "Say on Pay" paper, go to www.ccgg.ca
The Canadian Coalition for Good Governance is made up of 49 of
Canada's leading institutional investors with over $1 trillion of
combined assets under management. The mission of the Coalition is to
represent Canadian institutional shareholders through the promotion of
best corporate governance practices and to align the interests of boards
and management with those of the shareholder.
For more information:
David Beatty, Managing Director, Canadian Coalition for Good