The debacles of Enron, Worldcom and others in 2001-2002 were imputed in good part to the “flexibility” of accounting norms and the artistry in their interpretation. As a result, regulators, governmental and professional, greatly tightened the Generally Accepted Accounting Principles (GAAP) to which all publicly traded companies must rigorously adhere. Any breach of the GAAP […]

In the wake of several high-profile takeovers of Quebec companies, such as Rona Inc. and Cirque du Soleil, the provincial government is implementing new measures aimed at promoting the growth of local businesses while maintaining corporate head offices in the province. Premier Philippe Couillard’s government said Tuesday it would set up a watchdog group to […]

There is a Chinese proverb that says He who knows he has enough is rich; but the modern Western version of the saying seems to be: One never has enough; I deserve more; or There is always someone who has more. Over the last years, we have built a system of incentives and motives so […]

As the New Year rolls along, so does commentary on executive compensation. According to the Canadian Centre for Policy Alternatives, by 11:47 am on the first working day of 2017 (January 3rd) Canada’s 100 highest paid CEOs on the TSX index had earned the equivalent of the average annual Canadian wage. Shareholder votes on the […]

In an unexpected turn of events, the Canadian Pacific Railway announced the early retirement of its CEO Hunter Harrison a few minutes before the conference call planned for the analysts on January 18. Harrison thus forfeited all benefits and perquisites he was entitled to receive from CP, including his pension, and has agreed to surrender […]

[ … ] a growing body of academic research has confirmed that short-term financial activists are a major contributor to systemic short-termism in managing businesses and investments. The notion that activist attacks increase, rather than undermine, long-term value creation has been resoundingly discredited. Economists Yvan Allaire and François Dauphin, for example, demonstrated in a series […]

Pershing Square, an activist hedge fund owned and managed by William Ackman, began hostile maneuvers against the board of CP Rail in September 2011 and ended its association with CP in August 2016, having netted a profit of $2.6 billion for his fund. This Canadian saga, in many ways, an archetype of what hedge fund […]

Pershing Square Capital Management, an activist hedge fund owned and managed by William Ackman, began hostile maneuvers against the board of CP Rail in September 2011 and ended its association with CP in August 2016, having netted a profit of $2.6 billion for his fund. This Canadian saga, in many ways, an archetype of what […]

Once upon a time, the governance of publicly listed corporations was a friendly, fraternal affair with few requirements and little risk. Then, during the 1980s, a group of funds (leveraged buyout funds) sprouted up claiming that this sort of governance deprived shareholders of the full economic value of the business they had invested in. Cozy […]

“WILMINGTON, Del.—Ron Ozer was thrilled to get a job with DuPont, the two-centuries-old chemical company, when he finished his Ph.D. from Cornell in 1990. It was the place to go for young, ambitious chemists; it offered salary and benefits so generous that some people called it “Uncle Dupey.” For 26 years, he invented things for […]

One such fee is the landing and parking fee charged to airlines – a fee often passed down to consumers. And flights landing in Canada pay some of the highest fees in the world, according to a 2014 report from the Institute for Governance of Private and Public Organizations entitled The Governance of Canadian Airports. […]

More than six months after the fact, the sale of Rona to Lowe’s, a U.S. corporation, continues to generate political controversy. Lowe’s’ first attempt to acquire Rona in 2012 turned more or less hostile in nature, sparking a strong reaction from the Quebec government at the time. The government ordered the financial institutions under its […]

The practice of a non-binding say-on-pay vote by shareholders spread quickly and broadly. It seemed that, finally, shareholders would be given the opportunity to express their dissatisfaction with outrageous or ill-conceived compensation packages. The practice, at first, was voluntary with companies agreeing to submit their compensation policies to a vote. Then, as the number of […]

Board members with extensive experience readily observe, and often comment, that the quality of governance and a board’s effectiveness result as much from subtle, dynamic, intangible factors as from strict observance of the fiduciary and formal aspects of governance. These factors take shape in social interaction among members, in the style of the Chair’s leadership, […]

It is a common lamentation (and a media favourite) to bemoan the passing of large Canadian companies into the hands of foreign owners. Quebec society, for a host of reasons, has been and remains particularly sensitive and reactive to these occurrences. Yet, no sovereign country can be indifferent to the fact that important economic decisions […]

With the Bombardier saga and the Couche-Tard warning bell, the usual litany of arguments against dual class of shares was again dusted off. Commentators opposed to this capital structure seem to forget or overlook the inconvenient truth that many of Canada’s industrial champions are controlled corporations often through a dual class of shares. That is […]