Ten more agree
to 'say on pay'
Meritas' CEO and activist shareholder Gary Hawton says
he's not finished yet
Janet McFarland
From Thursday's Globe and Mail
Published on Thursday, Mar. 25, 2010 12:00AM EDT
Last updated on Thursday, Mar. 25, 2010 6:25AM EDT |
Gary Hawton says he's just
getting started.
The chief executive officer of
Meritas Mutual Funds has led a shareholder campaign to urge companies to
give investors a "say-on-pay" vote on executive compensation practices,
firing off more than two dozen shareholder proxy resolutions to large
companies over the past three years.
Meritas said yesterday that 10 such
companies it targeted have agreed to begin holding say-on-pay votes starting
next year, marking the biggest success so far in Mr. Hawton's campaign to
win shareholders a say on compensation at public companies.
So far, 25 Canadian companies have
adopted the practice, which gives shareholders a non-binding vote each year
on a firm's approach to executive compensation.
The latest companies to offer
say-on-pay votes include Enbridge Inc., EnCana Corp., Suncor Energy Inc.,
TransAlta Corp., Biovail Corp., Canadian Pacific Railway Ltd., Agrium Inc.,
Russel Metals Inc., Barrick Gold Corp. and Major Drilling Group
International Inc.
While he has won over many of
Canada's biggest corporate players, including all of the largest financial
services companies, Mr. Hawton says his work is far from finished. There are
still hundreds more companies he believes should give shareholders a voice
to express their views on compensation.
"We're going to send it to more
companies at this point," he said yesterday. "I think it's good governance,
so every company that we own should be providing it to us."
Two weeks ago, the Montreal-based
Institute for Governance of Private and Public Organizations - a joint
initiative of Concordia University and HEC Montreal - issued a policy paper
arguing against widespread adoption of say on pay except in egregious cases
where companies ignore shareholder concerns.
Meritas said two companies it sent
proxy resolutions this year - Gennum Corp. and Methanex Corp. - did not
agree to adopt say on pay, so the resolutions will go to a vote at their
annual meetings this spring.
Gennum has urged shareholders to
vote against the resolution, saying only a small number of very large
companies have embraced the practice so far and that Gennum would be the
smallest public company in Canada to offer a pay vote.
Methanex general counsel Randy
Milner said the company believes a vote on compensation isn't "a very robust
form of shareholder engagement." Instead, he said Methanex has created a new
feature on its website that will allow shareholders to comment on the
company's compensation practices. The feedback will be compiled and given to
the board's compensation committee for review.
"To us, it's a much better form of
engagement with the shareholders than Yes or No," he said.
Mr. Hawton said that while he has
not seen many companies voluntarily adopt say on pay without first being
pressured by shareholders, he believes Canada "is at a critical mass" and
more companies will adopt the practice without the spur of a shareholder
proxy resolution.
"I think what will soon happen is that the companies
that have not adopted this yet will be seen as laggards in good governance,"
he predicted.
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