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	<title>IGOPPPolicy Papers &#8211; IGOPP</title>
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	<link>https://igopp.org/en</link>
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		<title>Executive Compensation in the Age of Diverse Performance Perspectives</title>
		<link>https://igopp.org/en/executive-compensation-in-the-age-of-diverse-performance-perspectives/</link>
		<comments>https://igopp.org/en/executive-compensation-in-the-age-of-diverse-performance-perspectives/#respond</comments>
		<pubDate>Fri, 16 May 2025 14:38:54 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Executive compensation]]></category>

		<guid isPermaLink="false">https://igopp.org/la-remuneration-des-dirigeants-a-lere-dune-conception-plurielle-de-la-performance/</guid>
		<description><![CDATA[When compared to middle-class salaries, the amounts awarded to the highest-ranking executives at Canada’s largest firms increasingly stir a sense of unfairness. Each year, public discontent rises while pamphlets circulate highlighting and denouncing the extravagance of these compensation packages. They speak of the stark injustice of such opulence for Canadian workers, highlighting the fact that, [&#8230;]]]></description>
		<content><![CDATA[When compared to middle-class salaries, the amounts awarded to the highest-ranking executives at Canada’s largest firms increasingly stir a sense of unfairness. Each year, public discontent rises while pamphlets circulate highlighting and denouncing the extravagance of these compensation packages. They speak of the stark injustice of such opulence for Canadian workers, highlighting the fact that, on average, senior executives can earn a Canadian worker’s annual salary in a matter of hours.

To what extent has senior executive compensation inflated to become such a focal point of disapproval and a symbol of the wealth gap in society? Have we lost sight of the core purpose of compensation: to attract, retain, and motivate talent?

These questions are of utmost importance. On two prior occasions in 2012  [1]and 2017 [2], the IGOPP issued policy papers addressing executive compensation. These papers identified several factors and influences that have led to the escalation of senior executive compensation, a trend we have been documenting since 1998. This policy paper [3] continues the analysis.

[1] https://igopp.org/en/pay-for-value/
[2] https://igopp.org/en/executive-compensation-cutting-the-gordian-knot/
[3] https://igopp.org/wp-content/uploads/2025/05/IGOPP_PP_RemunerationDirigeants_PP13_EN_v5.pdf]]></content>
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		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Parity and Diversity on Boards of Directors</title>
		<link>https://igopp.org/en/parity-and-diversity-on-boards-of-directors/</link>
		<comments>https://igopp.org/en/parity-and-diversity-on-boards-of-directors/#respond</comments>
		<pubDate>Wed, 19 Oct 2022 13:32:47 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[Diversity]]></category>
		<category><![CDATA[Succession]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=14898/</guid>
		<description><![CDATA[Diversity and inclusion notions have come to the forefront in recent years, and the issues of board representation have extended well beyond gender. Pressures on boards to display diversity are multiple. Some classes of institutional investors are outspoken in this regard, using their shareholder clout to demand change. It is primarily on the premise that [&#8230;]]]></description>
		<content><![CDATA[Diversity and inclusion notions have come to the forefront in recent years, and the issues of board representation have extended well beyond gender.

Pressures on boards to display diversity are multiple. Some classes of institutional investors are outspoken in this regard, using their shareholder clout to demand change.

It is primarily on the premise that diversity avoids therisk of a decision-making process that is vitiated by too much homogeneity and complacency, that diversity is considered an essential feature of board composition.

The selection of new directors is predicated on the evaluation of multivariate criteria, and each nomination must be thought through by weighing its effects on the various dimensions of the board’s diversity, without neglecting the usual considerations.

This policy paper, which you can download from this link [1], considers various aspects of the concept of “diversity” and makes recommendations that we hope will make a useful contribution to the debate on this issue.

[1] https://igopp.org/wp-content/uploads/2022/10/IGOPP_PP_PariteDiversiteCA_PP12_EN_v4_WEB.pdf]]></content>
		<wfw:commentRss>https://igopp.org/en/parity-and-diversity-on-boards-of-directors/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>The Case for Dual-Class of Shares</title>
		<link>https://igopp.org/en/the-case-for-dual-class-of-shares-2/</link>
		<comments>https://igopp.org/en/the-case-for-dual-class-of-shares-2/#respond</comments>
		<pubDate>Wed, 19 Dec 2018 16:05:26 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[Activism]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Dual-class shares]]></category>
		<category><![CDATA[Institutional investors]]></category>
		<category><![CDATA[Shareholders]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=10579/</guid>
		<description><![CDATA[There are now 69 dual-class companies listed on the Toronto Stock Exchange, down from 100 in 2005. Only 23 Canadian companies went public since 2005 with a dual-class of shares while 16 of the 100 have since converted to a single-class and another 38 have disappeared since 2006 for other reasons (acquisitions, mergers, bankruptcies and [&#8230;]]]></description>
		<content><![CDATA[There are now 69 dual-class companies listed on the Toronto Stock Exchange, down from 100 in 2005. Only 23 Canadian companies went public since 2005 with a dual-class of shares while 16 of the 100 have since converted to a single-class and another 38 have disappeared since 2006 for other reasons (acquisitions, mergers, bankruptcies and so on).

The arguments pro and con these types of capital structures are numerous and in some ways compelling. Thus, on the one hand, the increased activism of funds (including the so-called “activist” hedge funds) pushing and shoving boards and management of companies to boost share price and/or sell prematurely the business has reinforced the determination of entrepreneurs to insulate themselves against such pressures by adopting a dual-class of shares at IPO time (more so in the USA than in Canada).

On the other hand, index funds and ETFs, now large and growing «investors»2 which are obliged to closely track the market value composition of a particular stock index, thus may not manifest their discontent about a corporation by simply selling its shares. They must wield influence on corporate management through their voting power (which is restricted in dual-class companies) and by loudly voicing their frustration and disagreement. Not surprisingly, these latter investors are ferociously hostile to dual-class of shares and have been strident lately in their opposition, urging, successfully, the index providers (i.e., Dow-Jones, etc.) to exclude from their indices in the future any company with unequal voting rights.

They are also lobbying, not yet successfully, the SEC to prohibit this type of capital structure. Their latest gambit, promoted by The Council of Institutional Investors, would impose a mandatory timebased sunset clause of seven years. Of course this term could be renewed by a majority vote of all classes of shareholders!

The issue of “sunset clauses” has thus gained salience as institutional shareholders and various agencies try to curtail, rein in, and put a time limit on the relative freedom that a dual-class of shares provides to entrepreneurs and family corporations.

As a consequence, in recent times, the simmering feud between the church of the “one share-onevote” and the heretic believers in shares with unequal voting rights has boiled over particularly in the USA.
]]></content>
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		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Board members are independent but are they legitimate and credible?</title>
		<link>https://igopp.org/en/from-independent-to-legitimate-and-credible-the-challenge-facing-boards-of-directors/</link>
		<comments>https://igopp.org/en/from-independent-to-legitimate-and-credible-the-challenge-facing-boards-of-directors/#respond</comments>
		<pubDate>Thu, 07 Jun 2018 16:00:42 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[Chairman of the Board]]></category>
		<category><![CDATA[Independence of Board members]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=9825/</guid>
		<description><![CDATA[That boards should be made up of a majority of independent members, that goal has been achieved in almost every type of organization. While this achievement did undoubtedly raise the quality of governance, it turned out that «independent boards» were not the cure-all medicine that some anticipated. Already in 2008 in a policy paper on [&#8230;]]]></description>
		<content><![CDATA[That boards should be made up of a majority of independent members, that goal has been achieved in almost every type of organization. While this achievement did undoubtedly raise the quality of governance, it turned out that «independent boards» were not the cure-all medicine that some anticipated.

Already in 2008 in a policy paper on that topic, IGOPP predicted that the concept of directors’ independence would not yield the expected results and would prove disappointing in many respects. That policy paper suggested that the concepts of legitimacy and credibility were far superior to the concept of independence in driving the performance of organizations. For IGOPP, independence – a director’s lack of any personal interests contrary to those of the company – was but a necessary condition for legitimacy.

Events since, in particular the financial crisis of 2008, have backed up the position taken by IGOPP at the time and have generated new legitimacy issues such as the diversity of boards, the representation on boards of stakeholders other than shareholders, the right, contingent upon a minimum holding period, to nominate candidates for the board, age and tenure limits for board membership.

As for board’s credibility, the 2008 policy paper proposed that it hinged on “its experience and expertise relevant to the specific issues and challenges of the organization”, on its in-depth knowledge “of the company’s business model and its drivers of economic and social value” (Allaire, 2008). For IGOPP, credibility also entails integrity and mutual trust between management and board members. Therefore, this credibility was so important that it would be acceptable, and even necessary, to trade-off some independence if this was the price to pay for raising the board’s credibility.

IGOPP’s position in 2018 offers some clarification and tackles some of the new issues which have arisen since 2008.

Thus this policy paper proposes a fundamental change in governance with respect to board evaluation, member selection and profile of expertise sought for the board.
]]></content>
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		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Executive compensation</title>
		<link>https://igopp.org/en/executive-compensation-cutting-the-gordian-knot/</link>
		<comments>https://igopp.org/en/executive-compensation-cutting-the-gordian-knot/#respond</comments>
		<pubDate>Tue, 21 Nov 2017 12:00:05 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Stakeholders]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=9298/</guid>
		<description><![CDATA[The median total CEO compensation has more than doubled between 1998 and 2007, followed by a 17.7% correction in 2008 and an uptick afterwards. Since 2010 however, CEO compensation has stabilized at about $8 million. The chief executive officers of the big six Canadian banks are obviously better paid with a total compensation of $10.5 [&#8230;]]]></description>
		<content><![CDATA[The median total CEO compensation has more than doubled between 1998 and 2007, followed by a 17.7% correction in 2008 and an uptick afterwards. Since 2010 however, CEO compensation has stabilized at about $8 million.

The chief executive officers of the big six Canadian banks are obviously better paid with a total compensation of $10.5 million, a significant decrease from the $11.8 million they were paid (at the median) in 2010.

The ratio between the median compensation of Canadian CEOs and the average salary of workers in the Canadian private sector increased from 62:1 in 1998 to an apex of 159:1 in 2013, and now stands at 140:1 in 2016.

The ratio between the compensation of the bank CEOs and the average salary of Canadians is also appreciably higher at 184 in 2016.

Over the past twenty years, executive compensation has drawn sharp and unrelenting criticism, much of it justified.

To cope with the dissatisfactions voiced about the way compensation was set, most boards of directors have opted for a prudent approach by adopting the compensation system which has now become the standard and the norm, designed in large part by a small number of compensation consultants.

As a result, the description and disclosure of compensation systems have become longer, more detailed, and indeed labyrinthine. The average number of pages (34) required to describe executive compensation in the management proxy circular has quintupled in barely 15 years.

This “prudent approach” makes sense in the circumstances where boards of directors are targeted individually, have to respond on a case-by-case basis, and have no collective forum in which they can take positions, and when appropriate, to collectively resist the pressures from investors and other stakeholders. In short, boards of directors have no forum, no association and no “coalition” to bring them together, as the Canadian Coalition for Good Governance does for large institutional investors.

This policy paper makes the case that the current, standardized processes for setting executive compensation in publicly listed corporations are deeply flawed.
]]></content>
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		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Who should pick board members?</title>
		<link>https://igopp.org/en/who-should-pick-board-members/</link>
		<comments>https://igopp.org/en/who-should-pick-board-members/#respond</comments>
		<pubDate>Wed, 21 Oct 2015 14:40:04 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[Independence of Board members]]></category>
		<category><![CDATA[Institutional investors]]></category>
		<category><![CDATA[Shareholders]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=5639</guid>
		<description><![CDATA[Proxy access by shareholders raises numerous issues and potential adverse effects on governance The traditional view of corporate governance, anchored in law and customs, grants to the board of directors, once elected by shareholders, the responsibility of making all decisions in the interest of the corporation. That responsibility and accountability include, inter alia, appointing senior [&#8230;]]]></description>
		<content><![CDATA[Proxy access by shareholders raises numerous issues and potential adverse effects on governance

The traditional view of corporate governance, anchored in law and customs, grants to the board of directors, once elected by shareholders, the responsibility of making all decisions in the interest of the corporation. That responsibility and accountability include, inter alia, appointing senior management and setting their compensation, declaring dividends, nominating board members for election, approving strategic orientations and budgets.

Recently, the prerogative to nominate the members of corporate boards, which has historically been the sole responsibility of incumbent directors, is now challenged by institutional investors determined to acquire the right, under certain conditions, to nominate their own candidates. The challenge to this board prerogative is called proxy access by shareholders to the director nomination process.

The SEC introduced new regulations in August 2010 which allowed shareholders holding at least 3 per cent of a public corporation’s shares, and having held these shares for at least 3 years, to propose nominees to the board (for up to a maximum of 25 per cent of the members of the existing board).

This new regulation was immediately challenged in the courts and had to be withdrawn when struck down. However, an amendment to the general regulation of shareholder proposals allowed shareholders to submit proposals on proxy access rules, which, if adopted by a majority of shareholders, were to be made part of the corporation’s by-laws.

This change provoked a tsunami of proposals from U.S. institutional investors calling for the right to put forth their own nominees for the board.

This access to voting proxies by shareholders is fast becoming a part of the governance landscape in the United States; it is very unlikely that major corporations will try to oppose the movement as institutional investors are fiercely supportive of this new “right.” However, the eventual impact of these initiatives on corporate governance remains to be assessed.
Corporations will try to preventively replace directors to avoid conflicts with large shareholders
In Canada, this issue has recently taken on a higher profile in the context of a consultation conducted by Industry Canada on the Canada Business Corporations Act (CBCA), one purpose of which was precisely to consider this issue of proxy access. All the institutional investors who expressed views came out in favour of greater access to the nominating process by shareholders, while the law firms and organizations representing the business community advocated against this initiative.

The Canadian Coalition for Good Governance (CCGG) recently issued a policy paper in favour of proxy access, taking a rather striking position as it shuns any minimum period of shareholding to obtain access to the nominating process. Thus, the CCGG policy position should provoke a vigorous debate on this issue in Canada.

Whatever the substance and merit of the arguments in favour of proxy access by shareholders, this initiative brings forth a host of issues related to the logistics of its application and the potential adverse effects on governance and board dynamics.

Among the arguments supposedly supportive of shareholder access to the nominating process, one is particularly noxious: the notion that “fear” among board members of being singled out for replacement would lead to higher level of board performance.

Indeed, the consequences for an individual director of being voted out of a board would be very significant and painful, both in economic and reputational terms; this is true for both incumbent nominees and the new nominees proposed by the shareholders.

Faced with the risk and arbitrary nature of a contested election, the directors would try to promote their personal contributions with institutional investors, thus generating an unhealthy competition among colleagues. In any event, how would the shareholders, called upon to choose between several nominees, decide for which nominee to vote, which nominee to dismiss when the voting proxy contains more nominees than available seats?

Will smaller institutional funds rely on proxy voting consultants (such as ISS or Glass Lewis), again increasing by tenfold their influence on the governance of public corporations? These proxy voting consultants will propose, as per their usual practice, some obvious, measurable criteria to make this choice: age of the directors, number of years as a member of the board, etc., which are, in fact, arbitrary criteria, uncorrelated with actual performance.

Once these criteria are well understood, it is likely that corporations will try to preventively replace directors to avoid conflicts with large shareholders and make rooms for their nominees. Therefore, directors would be shown the way out because they no longer satisfy the arbitrary criteria selected by proxy voting advisors without taking into account their actual contribution.

Even more likely, boards of directors will initiate discussions and negotiations with institutional investors who have indicated their intention to propose their own nominees in an effort to reach common ground; the result of such secret negotiations will often be that some of the nominees proposed by institutional investors will become the nominees of management, thus resulting in the forcible retirement of directors presumably viewed, more or less deservedly, as being weaker.

Moreover, the process may be hijacked. Groups of shareholders who champion specific causes (e.g., social, environmental or religious) may use this new “right” to nominate board candidates who espouse their priorities, to the possible detriment of other stakeholders of the corporation.
Obviously, if, as suggested by the CCGG, no minimum holding period were required for shareholders to be given access to the nomination process, that would open the door wide to “activist” hedge funds – or any other form of short-term investors. These funds could then play their usual games with great ease and at much lower costs than under their current business model. That would not benefit the long-term interests of Canadian corporations but may well benefit investors in the short term.

For such reasons, we contend that shareholder proxy access is ill-advised and may result in negative effects on governance practices.

We recommend that nomination committees of boards of directors implement a robust consultation process with the corporation’s significant shareholders and report in the annual Management Information Circular on the process and criteria adopted for nominating any new director.
]]></content>
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		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>The Troubling Case of Proxy Advisors</title>
		<link>https://igopp.org/en/the-troubling-case-of-proxy-advisors/</link>
		<comments>https://igopp.org/en/the-troubling-case-of-proxy-advisors/#respond</comments>
		<pubDate>Mon, 25 Feb 2013 18:43:39 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[Ethics]]></category>
		<category><![CDATA[Institutional investors]]></category>
		<category><![CDATA[Proxy Advisors]]></category>

		<guid isPermaLink="false">http://aimta712.org/?p=1594</guid>
		<description><![CDATA[This policy paper makes recommendations to institutional investors as the prime clients of proxy advisors and to securities commissions as the protectors of the integrity of financial markets. For a variety of reasons, proxy advisors have come to exert undue influence on the governance of companies listed on the stock markets and to play a [&#8230;]]]></description>
		<content><![CDATA[This policy paper makes recommendations to institutional investors as the prime clients of proxy advisors and to securities commissions as the protectors of the integrity of financial markets.

For a variety of reasons, proxy advisors have come to exert undue influence on the governance of companies listed on the stock markets and to play a troubling role in all contentious situations in which certain shareholders are opposed to the positions of boards of directors. Understandably, these proxy advisors are already subject to close scrutiny by Canadian securities regulatory authorities. The latter should propose an appropriate supervisory framework regarding the issues raised as a result of this relatively recent phenomenon.

Institutional investors, who are these proxy advisors’ principal clients, should also be concerned about the quality and reliability of the information provided to them by these advisors. Moreover, when applicable, institutional investors should publicly state their disagreement with certain rules and guidelines on which the proxy advisors’ recommendations are based.

These recommendations have been put forward by the Institute for Governance of Private and Public Organizations (IGOPP), in a Policy Paper prepared by its Executive Chair of the Board, Dr. Yvan Allaire, as part of a new study on The Troubling Case of Proxy Advisors.

This IGOPP paper raises several thorny issues concerning:

 	The business models used by these advisors so as to be able to produce thousands of reports and recommendations in just a few weeks, in the spring of each year;
 	The ownership structures of these advisory firms, in particular of ISS, the largest of these firms, which combines, in one company, a proxy advisory service and a governance advisory service offered to companies that are themselves the subject of annual reports to investors concerning their governance;
 	The roles of these advisors in merger/acquisition transactions and in proxy contests by activist funds.

]]></content>
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		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Executive compensation</title>
		<link>https://igopp.org/en/pay-for-value/</link>
		<comments>https://igopp.org/en/pay-for-value/#respond</comments>
		<pubDate>Tue, 22 May 2012 19:05:18 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Executive compensation]]></category>

		<guid isPermaLink="false">http://aimta712.org/?p=1597</guid>
		<description><![CDATA[The policy paper, entitled &#8220;Pay for Value: Cutting the Gordian Knot of Executive Compensation&#8220;.  prepared by Professor Yvan Allaire for the working group on compensation of IGOPP, noted that, &#8220;We are making a series of recommendations about the complex and emotionally charged issue of executive compensation. We hope that our analysis and recommendations will prove a valuable [&#8230;]]]></description>
		<content><![CDATA[The policy paper, entitled "Pay for Value: Cutting the Gordian Knot of Executive Compensation".  prepared by Professor Yvan Allaire for the working group on compensation of IGOPP, noted that, "We are making a series of recommendations about the complex and emotionally charged issue of executive compensation. We hope that our analysis and recommendations will prove a valuable contribution to what has become the most salient and vexing governance issue."

Included in the study are five strategic policy recommendations for boards of directors. The policy paper recommends the gradual elimination of stock options, questions the standard practice of setting executive compensation on the basis of what "comparable" companies pay their executives, and calls on boards of directors to maintain executive compensation within a reasonable range of what is paid to other employees in the company.

The policy paper examines the evolution of Canadian executive compensation since 1998. It notes that the compensation of Canadian CEOs has now reached parity with their American counterparts. The policy paper provides the historical context of compensation and describes the divergent perspectives of the key stakeholders: investors, executives, boards, governments and society at large. It flags the risks created by some forms of compensation and stresses the need for fundamental changes in current compensation practices.

The working group of IGOPP was created in September 2011 to formulate recommendations on executive compensation. The group was chaired by Yvan Allaire and included IGOPP board members: Paule Doré, Stephen Jarislowksy, Michel Magnan, Robert Parizeau, Gulyaine Saucier, and Sebastian Van Berkom. The policy position was approved by the IGOPP board in March 2012.
]]></content>
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		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Giving Shareholders a Say on Pay</title>
		<link>https://igopp.org/en/giving-shareholders-a-say-on-pay/</link>
		<comments>https://igopp.org/en/giving-shareholders-a-say-on-pay/#respond</comments>
		<pubDate>Mon, 30 Mar 2009 19:30:15 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Say on Pay]]></category>
		<category><![CDATA[Shareholders]]></category>
		<category><![CDATA[Stakeholders]]></category>

		<guid isPermaLink="false">http://aimta712.org/?p=1601</guid>
		<description><![CDATA[At a time when several Canadian financial institutions are about to hold a non-binding shareholder vote on executive compensation, the Institute for Governance of Private and Public Organizations (IGPPO) states in a position paper made public  that this process should not be imposed on all publicly traded companies. “The arguments pros and cons a non-binding [&#8230;]]]></description>
		<content><![CDATA[At a time when several Canadian financial institutions are about to hold a non-binding shareholder vote on executive compensation, the Institute for Governance of Private and Public Organizations (IGPPO) states in a position paper made public  that this process should not be imposed on all publicly traded companies.

“The arguments pros and cons a non-binding vote by shareholders on executive compensation do not readily tip the balance in one direction or the other. The sense of unfairness and the frustration with some patent cases of excessive compensation have generated a good deal of sympathy for more direct and vigorous measures to curb extravagant compensation practices. Nevertheless, boards of directors fully responsible and accountable for the governance of publicly traded corporations do form the cornerstone of our system of corporate governance.” says Yvan Allaire, the IGPPO’s chairman.

“Say-on-pay voting by shareholders may indeed persuade more companies to hold consultations with important shareholders on executive compensation prior to annual meetings. Of course, such consultations are already possible and have been held for a good while with many companies. However, it is claimed that without the threat of a formal (and possibly negative) vote by shareholders, consultations are less effective” adds Allaire

However, “the call for a non-binding, shareholder vote on executive compensation is a small but significant shift in responsibility for corporate governance away from boards of directors towards shareholder. If corporate boards cannot be trusted to make the right decision on executive compensation, how can shareholders rely on their judgment for other equally important decisions?” says Allaire.

For their next annual meeting of shareholders, several financial institutions have submitted to a vote by shareholders the approach that the compensation committee took to set executive compensation. This process was preceded, presumably, by consultations between large shareholders and members of the boards of directors of these companies.

“Yet, should the approach result in large, indefensible compensation some years hence, no one could complain as shareholders formally approved the process leading to these compensations” adds the IGPPO’s general manager Michel Nadeau

“In the specific cases of unsatisfactory compensation practices, institutional investors should propose a say-on-pay vote by shareholders in the future as a deterrent and a form of punishment for delinquent boards. Ultimately, investors should be prepared to use their right to vote (or “withhold” their votes) against specific directors in the few cases where board members have clearly failed to act in a responsible manner. “ says Allaire.

“A shareholder non-binding vote on compensations would foster a tighter link between executive performance and their compensation, it is claimed; and this link should be expressed in quantified, measurable terms to demonstrate to shareholders that executives do deserve their compensation. However the performance of effective, high level executives may not be fully captured by quantitative measures. Boards of directors need to show judgment when evaluating an executive’s performance” adds Nadeau.
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		<title>The Status of Women Corporate Directors in Canada</title>
		<link>https://igopp.org/en/the-status-of-women-corporate-directors-in-canada/</link>
		<comments>https://igopp.org/en/the-status-of-women-corporate-directors-in-canada/#respond</comments>
		<pubDate>Mon, 30 Mar 2009 19:11:12 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[Diversity]]></category>
		<category><![CDATA[Succession]]></category>

		<guid isPermaLink="false">http://aimta712.org/?p=1599</guid>
		<description><![CDATA[Corporate boards of directors are not taking full advantage of the benefits that including qualified, competent women can bring. Representation by both genders on corporate boards should thus be increased to a minimum of 40%. These are the key recommendations included in an IGPPO policy paper. The report also recommends that the gender balancing process [&#8230;]]]></description>
		<content><![CDATA[Corporate boards of directors are not taking full advantage of the benefits that including qualified, competent women can bring. Representation by both genders on corporate boards should thus be increased to a minimum of 40%. These are the key recommendations included in an IGPPO policy paper.

The report also recommends that the gender balancing process should take place gradually, with target dates set based on the pace at which organizations appoint new directors, and must not be done at the expense of board quality. Companies should also integrate diversity and gender equality into their corporate policies and report regularly on their progress.

Since 1990, the percentage of women directors on boards of North American publicly- traded corporations had stalled at 15%.

According to Dr. Yvan Allaire, Chair of the Board of Directors of the Institute for Governance of Private and Public Organizations (IGPPO), "The proportion of women directors remains low despite the fact that the reasons invoked to explain this situation – perhaps plausible in years past- have since become largely excuses or equivocations ."

The policy paper was prepared by a working group made up of IGPPO board members. The group was chaired by Monique Lefebvre Ph.D., a well-known psychologist who specializes in executive coaching. The report was later approved by the full IGOPP board (with one dissenting vote).

"After two decades of minimal progress, it is time to increase gender balance on corporate boards in Quebec and the rest of Canada,” said Lefebvre. “The governance of companies benefits from the balanced perspectives of men and women oin their board.

The Report makes the obvious point that competence remains an essential quality for all board members, whether male or female.

The IGOPP policy paper makes five major recommendations to help increase the number of qualified women directors on corporate boards in Quebec and Canada:

1. A 40% gender equality target for corporate boards

The IGOPP policy paper recommends that Canadian companies strive for a minimum of 40% representation of both genders on their boards. Achieving this target should be calibrated to the pace of change in board membership for each particular company.

2. Integration of gender diversity into corporate strategies

Companies should systematically seek out and compile a list of potential women candidates to replace outgoing board members. The nomination committee and the board of directors should thus establish competency profiles for potential new members in order for the board to add value to the organization.

3. Use of professional recruitment firms

Identifying and recruiting qualified women candidates as potential replacements for outgoing directors may require the use of outside recruitment firms. To increase the pool of potential candidates, recruitment efforts should extend beyond individuals who are already directors or chief executive officers of other major corporations.

4. Disclosure

The Working Group recommends that companies evaluate their progress with respect to women representation on their board and make this information public and easily accessible. Boards should adopt a long-term succession plan for board membership, which would include measures and timelines to raise the representation of women. The company's annual report should describe these measures and report on progress achieved over the years.

5. Coaching

The report’s final recommendation is that the board chair or a senior director should work closely with incoming board members to ensure their integration and to familiarize them with the dynamics and culture of that particular board.

The Group advocates a gradual voluntary approach rooted in a clear commitment to increasing the proportion of women on corporate boards at an accelerated rate. "The recommendations do not involve legal mandates forcing companies to increase the number of their women directors. The goal is to help companies recognize the benefits that greater diversity can bring," concludes Dr. Lefebvre.
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