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	<title>IGOPPChef de la direction &#8211; IGOPP</title>
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		<title>Gildan says allegations by key shareholder Browning West violated U.S. securities law</title>
		<link>https://igopp.org/en/gildan-says-allegations-by-key-shareholder-browning-west-violated-u-s-securities-law/</link>
		<comments>https://igopp.org/en/gildan-says-allegations-by-key-shareholder-browning-west-violated-u-s-securities-law/#respond</comments>
		<pubDate>Fri, 15 Mar 2024 02:13:24 +0000</pubDate>
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				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[Activism]]></category>
		<category><![CDATA[Activisme]]></category>
		<category><![CDATA[Chef de la direction]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Relève]]></category>
		<category><![CDATA[Succession]]></category>

		<guid isPermaLink="false">https://igopp.org/gildan-says-allegations-by-key-shareholder-browning-west-violated-u-s-securities-law/</guid>
		<description><![CDATA[Gildan Activewear is accusing one of its largest shareholders of violating American securities law and has asked the regulator to investigate allegations that the investor has been spreading falsehoods about the Montreal-based clothing maker’s new chief executive, Vince Tyra. In a letter sent to the U.S. Securities and Exchange Commission late Thursday, Gildan alleged that U.S. [&#8230;]]]></description>
		<content><![CDATA[Gildan Activewear is accusing one of its largest shareholders of violating American securities law and has asked the regulator to investigate allegations that the investor has been spreading falsehoods about the Montreal-based clothing maker’s new chief executive, Vince Tyra.
In a letter sent to the U.S. Securities and Exchange Commission late Thursday, Gildan alleged that U.S. investment fund Browning West made “false and highly prejudicial personal attacks against Mr. Tyra and the board” as part of its campaign to take control of Gildan’s board of directors and remove Mr. Tyra as CEO. Browning West wants Glenn Chamandy reinstalled as chief executive.
The move is an escalation of an increasingly vicious battle between Gildan and Browning West, which this week saw each side issue public statements condemning the other.




Specifically, Gildan has accused Browning West of mischaracterizing the nature of a relationship Mr. Tyra had with a female executive at Gildan, which occurred 20 years ago and at a different company.




On Wednesday, Browning West issued a statement raising questions about whether Gildan’s board had properly considered whether “Mr. Tyra’s seemingly inappropriate relationship with a subordinate” would create “undue conflicts and risk for Gildan shareholders and employees.”
Gildan alleged in its letter to the regulator that Browning West has violated a section of the securities act that bans individuals from making untrue or misleading statements in connection with the purchase or sale of a security.
Gildan pointed to a recent story published in the New York Post – which recounted information contained in a report from management-analysis company Paragon Intel – that alleged Mr. Tyra had an affair with the female subordinate. Browning West said it had no involvement in the Paragon Intel report.
However, Mr. Tyra and the female executive – Patti Lambert Simetz, who is Gildan’s vice-president, distributor sales – told The Globe and Mail that the Post story was a mischaracterization of the relationship.
Both Mr. Tyra and Ms. Simetz said they dated briefly in 2002 during a period when they were both single. The three-month relationship was not an office secret and there were no rules about interoffice romances. After splitting, the pair remained friends, although as their careers took them in different directions, they did not stay in regular touch.
On Wednesday, Gildan accused Browning West of planting the Post article.
[...]
François Dauphin, chief executive of Montreal’s Institute for Governance of Private and Public Organizations, said this week marked the beginning of an acrimonious phase of a proxy fight.
“Digging into the past of targeted individuals is a tactic frequently used by shareholder activists, whose objective is to keep the debate present in the media and in the public eye, and in this case to discredit the current CEO and those who named him,” he said.
However, Mr. Dauphin noted that investors seemed unfazed by the Tyra relationship narrative, with Gildan’s stock up about 2 per cent on both the New York and Toronto stock exchanges since the Post article went online Tuesday night.
The fight will come to a head in May when shareholders will be asked to vote on the future of the company.
Read more [1]

[1] https://igopp.org/wp-content/uploads/2024/03/Gildan-says-allegations-by-key-shareholder-Browning-West-violated-U.S.-securities-law-The-Globe-and-Mail_March-2024.pdf]]></content>
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		<title>Shopify Shareholders ‘Approve’ Controversial “Founder Share” – With the Help of the Existing DCS</title>
		<link>https://igopp.org/en/shopify-shareholders-approve-controversial-founder-share-with-the-help-of-the-existing-multiple-voting-shares/</link>
		<comments>https://igopp.org/en/shopify-shareholders-approve-controversial-founder-share-with-the-help-of-the-existing-multiple-voting-shares/#respond</comments>
		<pubDate>Thu, 09 Jun 2022 17:22:59 +0000</pubDate>
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				<category><![CDATA[IGOPP in the Medias]]></category>
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		<category><![CDATA[Actions multivotantes]]></category>
		<category><![CDATA[Chef de la direction]]></category>
		<category><![CDATA[Dual-class shares]]></category>

		<guid isPermaLink="false">https://igopp.org/shopify-shareholders-approve-controversial-founder-share-with-the-help-of-the-existing-multiple-voting-shares/</guid>
		<description><![CDATA[The 2022 Shopify AGM put the spotlight on two controversial theories for driving corporate success: the founder-CEO and multi-class share structures. When it went public in 2015, Shopify’s multi-class structure was fairly standard for an aspirational tech unicorn, if still unusual relative to capital markets as a whole. In recent years an increasing proportion of [&#8230;]]]></description>
		<content><![CDATA[The 2022 Shopify AGM put the spotlight on two controversial theories for driving corporate success: the founder-CEO and multi-class share structures.

When it went public in 2015, Shopify’s multi-class structure was fairly standard for an aspirational tech unicorn, if still unusual relative to capital markets as a whole. In recent years an increasing proportion of companies going public in the United States and Canada have opted for multi-class (also known as “dual-class”) share structures that provide superior voting rights to a designated share class over “subordinate” shareholders who buy in at or after the IPO. The designated superior shareholders are typically the founder(s) and early investors.

How did that work in practice? Prior to the 2022 AGM, Shopify’s founder and CEO, Tobi Lütke, together with fellow board member John Phillips, effectively dictated the outcome of all shareholder voting resolutions through their ownership of Class B Multiple Voting shares, which carry 10 votes each. Class B shares are 9.5% of outstanding equity but 51% of voting rights, with Lütke alone worth 34% of voting power. Both hold minimal Class A Subordinate voting shares. Class B shares can be converted on a 1:1 basis into Class A (but lose their multiple votes) for the purpose of being sold by the holder.

In most cases, the multi-class share structures are intended to be temporary, allowing the founders and early investors to maintain their influence over the company as it transitions into publicly listed status. In Shopify’s case, the company has become Canada’s greatest stock market success story of the high-tech era since Blackberry. And despite (or perhaps because of?) the successful transition, the board and management didn’t want to rock the boat quite yet.

Under Shopify’s former covenants, the multi-class structure would automatically collapse when Class B shares represent less than 5% of all outstanding equity (the “Dilution Sunset”). This event was deemed likely to occur in the coming months or years (we believe it was more likely to be sooner than later).

Why was the Dilution Sunset approaching? Because of the ballooning of the Class A share count since Shopify’s 2015 IPO, primarily through Class B shareholders converting to Class A and substantial equity-based employee compensation, all of which have reduced the Class B share capital proportionate to the aggregate outstanding equity, thereby making the collapse of the structure more likely as the 5% threshold nears.

At its June 7, 2022 annual shareholder meeting, Shopify proposed a drastic and novel rearrangement of its capital structure to pre-empt the Dilution Sunset and preserve the disproportionate voting power of the CEO.

The board, after negotiating with the CEO, recommended an arrangement under which Shopify would issue to the CEO a “Founder share” cementing disproportionate voting rights of 40% for life, provided that Mr. Lütke serves as at least one of: (i) board member, (ii) executive officer or (iii) consultant whose “primary engagement” is with Shopify.

Not only that, but Mr. Lütke would be permitted to reduce his economic stake by up to 70% of his current holdings, which currently equate to 6.3% of all outstanding equity, without giving up a single percentage point of his total voting power.

What was the board thinking?

It doesn’t take an expert in hostage negotiations to see that the independent board members were dealing from a position of relative weakness, or at the very least deference, compared to the already-powerful CEO.

For starters, as a matter of basic arithmetic, all Shopify board members owe their presence on the board to the support, or at least acquiescence, of the Class B multiple voting shareholders.

The special committee of independent directors also signposted early on that Mr. Lütke’s position as the individual “guiding the ship” was paramount. During negotiations lasting over the course of a year, the committee generally did not initiate any proposals to the CEO; rather, it waited for Lütke to propose terms. His first offer was to set and preserve the multiple voting power at 49.99%. Aside from one counter-proposal for 34% alongside a tighter service-based sunset and stricter divestment restrictions than those desired by Mr. Lütke, the committee did not push back. The final terms are as described above.

Clear from this is that the board places enormous faith in Mr. Lütke.

The history of corporate (North) America is replete with examples of one-company CEOs. The mythology of the self-made founder-CEO speaks to what for many are the most persuasive qualities of capitalism America-style. Shopify’s rise has seen it and Mr. Lütke compared to similar modern software and internet success stories with long-serving founder-CEOs, notably Microsoft (Bill Gates), Apple (Steve Jobs), Facebook (Mark Zuckerberg) and Amazon (Jeff Bezos). Of the aforementioned, all but Facebook have simple, equitable single class share structures, and an examination of their long-term record suggests that they were able to execute a vision that delivered enormous value to shareholders despite having one vote for each share.

Mr. Bezos maintained a substantial stake – enough to exercise effective control through an equitable structure – over many years; Mr. Bezos held approximately 25% in 2007, 19% in 2013 and today still holds approximately 13% despite having stepped down as CEO in 2021. Even Zuckerberg owns around 13% of all outstanding Meta Platforms (fka Facebook) stock, even though he’d need less than that to still guarantee effective control.

Shopify’s proposal to Mr. Lütke allows him to maintain effective control even while selling down up to 70% of his current 6% stake.

The Theory

The debate over whether multi-class structures should be permitted is contested. Proponents of either side can point to individual companies that have performed especially well or poorly, or indeed to singular events like the Succession-style blow-up in 2021 at Rogers Communication; in any case, performance assessments are relative, with some such companies, particularly in Canada, using a dual class structure to embed a founding family’s control of the business for multiple decades.

Like fractal geometry, the debate doesn’t end at the largest scale of the topic – i.e. should multi-class structures be permitted or not – but diverges into sub-debates around areas of best practice for application of the structure: what should be the ratio of voting superiority between the special class and the subordinate class? What form of sunset (expiry date) should be adopted – should it be service-based (e.g. the founder-CEO leaves their role), time-based (such as the seventh anniversary of the IPO) or dilution-based (where the multiple-voting shares automatically dissolve into the common stock class when they represent less than, for instance, 5% of all shares outstanding)? Should the sunset be a mix of all these?

While Glass Lewis in 2022 adopted a voting policy against multi-class structures without a reasonable time-based sunset (in our opinion, seven years or less from IPO), we are sympathetic to criticism of time-based sunsets as overly arbitrary.

In Canada, among the most thoughtful arguments against a blanket negative approach to dual class companies are those made by the Institute for Governance of Private and Public Organizations (“IGOPP”). The IGOPP has argued that companies with dual class structures are just as likely, if not more so, to deliver long-term growth as one-share-one-vote companies (see “Policy Paper No. 11: The Case for Dual-Class of Shares” [1], 2019.)

IGOPP believes there is “much merit to dual-class companies and family firms, provided holders of shares with inferior voting rights are well protected. [IGOPP’s emphasis].” IGOPP’s recommendations for ensuring the protection of subordinate shareholder rights include:

 	That voting strength of superior shares be capped at a ratio of 4:1, such that 20% of the equity would be required for absolute control (50%+ of votes). IGOPP implies that a ratio of greater than 10:1 is unacceptable and states that classes of shares with no voting rights should be prohibited.
 	Public disclosure of separate vote tallies for each class of shares.
 	That subordinate shareholders be entitled to elect one-third of board members.
 	Dilution sunset that would be triggered by the controlling shareholder’s voting power dropping below a percentage generally considered as a “blocking minority” – 33% (which would be 11.1% with a 4:1 ratio).

Shopify’s proposed Founder share and accompanying “governance update” does not include any of the above safeguards.

Glass Lewis View

In reviewing the proposed Founder share arrangement, we were struck by the degree to which the original dual-class structure (i.e. the Class A 1 vote / Class B 10 votes) appears to have aligned with its intended aims, with shareholder expectations and with those of other best practice standard-setters.

Shopify’s performance since listing publicly has been remarkable. So, to the extent that its dual-class structure insulated its early investors and leadership from short-term pressures, it fulfilled its purpose. Shareholders of Class A subordinate shares have been taken along for a glorious ride as Shopify became one of the main success stories in an extended bull market in which software and e-commerce companies outperformed. The company benefitted from a favourable consumer perception, peaking during pandemic-induced lockdowns, as the ‘anti-Amazon’ since its platform enables small businesses to sell to their customers directly, rather than having to compete in a single online marketplace and outsource order fulfilment.

As is often the way in the early years of a public company, particularly for a tech concern with a seemingly rocket-fuelled stock, common shareholders probably didn’t mind that their votes at general meetings were effectively meaningless.

Glass Lewis believes in the principle of one share, one vote, but our policy guidelines clearly earmark the period in each public corporation’s lifecycle in which an inequitable voting structure might be desirable: the early years. We agree that freeing up the founding leadership to concentrate on growing the business and trying to realize its vision is a strategy that works for some companies.

While in 2022 we settled on a seven-year time-based sunset as a general policy for newly public dual-class companies, sunset mechanisms may achieve a similar result via a different route.

If Shopify’s original dilution sunset is indeed close to triggering – and the board’s clamouring to propose the Founder share at this AGM suggests that it is – then it is doing so uncannily close to the seven-year anniversary of Shopify as a public company.

One of our main concerns with multi-class structures is that they may foster misaligned incentives between the superior voters and dispersed common shareholders, and that these can be exacerbated over the long-term. This is especially true of companies where the subordinate class has zero votes per share or where the gulf in votes per share is especially large (as noted above, best practice proponents recommend not exceeding 4 votes per share in order to preserve a semblance of economic alignment between superior and subordinate shareholders).

As such, a well-crafted dilution sunset makes sense: the superior shareholders may decide to use their disproportionate control of the company to, for example, issue a deluge of stock options to employees as the company grows and competes for talent. They may be totally justified in doing so (we’ve heard that software engineers can be expensive and that they tend to expect equity compensation). But a dilution sunset at least keeps the experience of the superior shareholders tethered to that of ordinary shareholders, who have good reason to be concerned both about excessive dilution and about the spectre of a shareholder with a small economic stake exercising effective control.

Read more [2]

&#160;

[1] https://igopp.org/wp-content/uploads/2019/09/IGOPP_PP_CaseDualShareClass_PP11_EN_v13_WEB.pdf
[2] https://www.glasslewis.com/shopify-shareholders-approve-controversial-founder-share-with-the-help-of-the-existing-multiple-voting-shares/]]></content>
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		<title>Myth of ‘superstar CEO&#8217; driving excessive pay: Report</title>
		<link>https://igopp.org/en/myth-of-superstar-ceo-driving-excessive-pay-report/</link>
		<comments>https://igopp.org/en/myth-of-superstar-ceo-driving-excessive-pay-report/#respond</comments>
		<pubDate>Wed, 23 Jan 2019 15:21:48 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
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		<category><![CDATA[Executive compensation]]></category>

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		<description><![CDATA[When it comes to compensation, the myth of the “superstar CEO” continues to drive excessive pay, as companies are desperate to attract and retain top talent — even if it doesn’t always lead to improved corporate perform23ance and they have other options. That’s according to a report out of the United Kingdom that delved into [&#8230;]]]></description>
		<content><![CDATA[When it comes to compensation, the myth of the “superstar CEO” continues to drive excessive pay, as companies are desperate to attract and retain top talent — even if it doesn’t always lead to improved corporate perform23ance and they have other options.

That’s according to a report out of the United Kingdom that delved into the weak spots of compensation committees and executive pay, along with making recommendations for improvement.

“There’s some kind of belief that if you are paying your chief executive top dollar, they must be the best. And, therefore, it sends a message out to investors that you’ve got right person for the job — even if that person doesn’t necessarily deliver,” said Charles Cotton, senior adviser for performance and reward at the Chartered Institute of Personnel and Development (CIPD) in London, U.K.

“The success of the organization seems to be attributed to achievements to one or two individuals at the top of the organization, and what we believe is that increasingly success is linked to… individuals in the whole organization — it’s a collective endeavour.”

“If you just focus all your rewards on a few people at the top, then the people in the rest of the organization after a while see this as unfair because they’re working very hard and they’re getting very moderate pay rises and bonuses whilst those at the top are getting significant pay rises and bonuses.”

There’s no doubt there’s been an inflation of compensation, especially since details of remuneration for top executives has been published annually, said Yvan Allaire, executive president of the board of the Institute for Governance of Private and Public Organizations (IGOPP) in Montreal.

“They thought it would shame people into not being so greedy — it did exactly the contrary. It gave a basis for comparison: ‘If so and so was paid so much, and that company is smaller than our company, why is he paid more than I am paid?’’’ he said.

“Of course, it’s been used by consultants as the basis to set remuneration… that’s the weak link but (companies) can’t
can get out of it because they’re afraid they will lose key people.”

[ ... ]

Most compensation committees are highly dependant on external consultants, said Allaire.

“They’re the ones running the numbers, doing the simulation, suggesting names of comparable companies. They come to the board with the thick document which has all of that… and there you are, you’re supposed to be informed enough, knowledgeable enough, experienced enough to start challenging,” he said. “People will question this and that but, in general, the dependence is pretty high.”

Read more [1]

[1] https://igopp.org/wp-content/uploads/2019/02/Canadian-HR-Reporter-Myth-of-‘superstar-CEO-driving-excessive-pay_-Report.pdf]]></content>
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		<title>Canada’s ‘questionable’ CEO pay system needs overhaul: Think tank</title>
		<link>https://igopp.org/en/canadas-questionable-ceo-pay-system-needs-overhaul-think-tank/</link>
		<comments>https://igopp.org/en/canadas-questionable-ceo-pay-system-needs-overhaul-think-tank/#respond</comments>
		<pubDate>Tue, 21 Nov 2017 17:45:00 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
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		<guid isPermaLink="false">https://igopp.org/canadas-questionable-ceo-pay-system-needs-overhaul-think-tank/</guid>
		<description><![CDATA[Current executive compensation practices are making Canadian CEOs rich, but at the expense of a strong corporate culture and the long-term interests of shareholders, according to a new report from the Institute for Governance of Private and Public Organizations (IGOPP). “Mutual trust, loyalty, the sharing of objectives and pride in the organization, the sense of [&#8230;]]]></description>
		<content><![CDATA[Current executive compensation practices are making Canadian CEOs rich, but at the expense of a strong corporate culture and the long-term interests of shareholders, according to a new report from the Institute for Governance of Private and Public Organizations (IGOPP).

“Mutual trust, loyalty, the sharing of objectives and pride in the organization, the sense of ‘being all in the same boat’, were slowly but surely eroded, replaced by a calculative greed at the top and cynical disaffection at the bottom,” the report said.

In 2016, a typical Canadian CEO earned about $8 million in total annual compensation — with bank CEOs raking in more than $10.5 million. That’s about 140 times more than the average Canadian worker, up from about 61 times in 1998, according to the Montreal-based think tank.

The skyrocketing pay has come from a “questionable” compensation system conceived by consultants that may satisfy critical observers but does little to align the goals of the company with the interests of long-term shareholders, said Yvan Allaire, executive chair of IGOPP.

“Investors and shareholders were initially enthusiastic about forms of compensation likely to transform senior executives into fanatics of ‘shareholder value-creation,’” the report reads. “However, soon enough, the link between this ‘extravagant’ compensation and the company’s economic performance seemed very tenuous.”

Benchmarking CEO pay to a self-selected group of peer companies was supposed to make compensation practices more fair and open, but in reality it has distorted the system and led to pay packages constantly moving higher, said Allaire.

Read more [1]

[1] http://www.bnn.ca/canada-s-questionable-ceo-pay-system-needs-overhaul-argues-think-tank-1.921736?utm_medium=email&#38;utm_content=YabO8FmQ7fe0T8HauuPw4C-ff0AMFh5Kc7H34DFKcjx_kgBQAXJ4YcHx49k9syZy]]></content>
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		<title>Companies urged to rethink executive pay practices</title>
		<link>https://igopp.org/en/companies-urged-to-rethink-executive-pay-practices/</link>
		<comments>https://igopp.org/en/companies-urged-to-rethink-executive-pay-practices/#respond</comments>
		<pubDate>Tue, 21 Nov 2017 11:55:03 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
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		<category><![CDATA[Executive compensation]]></category>
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		<guid isPermaLink="false">https://igopp.org/companies-urged-to-rethink-executive-pay-practices/</guid>
		<description><![CDATA[Companies should give CEOs share units less often and stop paying them with stock options to motivate better long-term performance and minimize the role of luck in compensation payouts, a new report argues. The Quebec-based Institute for Governance of Private and Public Organizations has proposed revamping the model for executive pay in Canada, saying companies [&#8230;]]]></description>
		<content><![CDATA[Companies should give CEOs share units less often and stop paying them with stock options to motivate better long-term performance and minimize the role of luck in compensation payouts, a new report argues.
The Quebec-based Institute for Governance of Private and Public Organizations has proposed revamping the model for executive pay in Canada, saying companies have to move away from a standardized approach that sees most CEOs paid with virtually identical compensation structures. Instead, it says pay structures need to be tailored for the unique business model or each company and the time horizons of its strategies.
As a first step, the institute's new report says companies should abandon the idea of setting CEO pay based on comparisons to a peer group of companies, saying it is the main factor driving pay higher.





"Each company is somewhat different in its particular issues and challenges, and industries are different, and we should not have this standardized process," Institute executive chair Yvan Allaire said in an interview. "Boards should design the compensation for their own particular needs and requirements."
Read more [1]






[1] https://www.theglobeandmail.com/report-on-business/report-urges-companies-to-rethink-executive-pay-practices/article37033163/]]></content>
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		<item>
		<title>Here are the pay perks you’d enjoy if you were a CEO in Canada</title>
		<link>https://igopp.org/en/the-perks-if-you-were-a-ceo-in-canada/</link>
		<comments>https://igopp.org/en/the-perks-if-you-were-a-ceo-in-canada/#respond</comments>
		<pubDate>Tue, 21 Nov 2017 11:10:28 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
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		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Stakeholders]]></category>

		<guid isPermaLink="false">https://igopp.org/the-perks-if-you-were-a-ceo-in-canada/</guid>
		<description><![CDATA[The typical Canadian CEO makes $8 million a year, 140 times the average private-sector salary, according to new research by the Montreal-based Institute for Governance of Private and Public Organizations (IGOPP). In the banking sector, that ratio is even higher, with the median CEO compensation at $10.5 million. Things, though, weren’t always so. In 1998, [&#8230;]]]></description>
		<content><![CDATA[The typical Canadian CEO makes $8 million a year, 140 times the average private-sector salary, according to new research by the Montreal-based Institute for Governance of Private and Public Organizations (IGOPP). In the banking sector, that ratio is even higher, with the median CEO compensation at $10.5 million.

Things, though, weren’t always so. In 1998, Canada’s CEOs were making 62 times the average Canadian salary — still a big gap, but one less than half the size what it is today.

The trend toward higher and higher CEO compensation has drawn sharp criticism over the past 20 years, and much of it justified, according to Yvan Allaire, executive chair of IGOPP and author of the report.

But the public outcry seems to have done little to curb exorbitant executive pay. Instead, it has largely led companies to adopt a highly complex system for justifying such compensation levels, the research suggests.

That system, designed by compensation consultants, “has now become the standard and the norm” across very different businesses and industries, according to the report.

In 2000, companies would take six pages on average to describe their CEO’s compensation. Today, that number has ballooned to 34 pages.

But all the additional ink has hardly translated into a better pay model, Allaire told Global News.

Read more [1]

[1] https://globalnews.ca/news/3870082/huge-gains-few-risks-report-slams-canadas-ceo-pay-model/]]></content>
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		<title>How Pershing Square found success at Canadian Pacific Railway</title>
		<link>https://igopp.org/en/comment-expliquer-les-succes-de-pershing-square-au-cp/</link>
		<comments>https://igopp.org/en/comment-expliquer-les-succes-de-pershing-square-au-cp/#respond</comments>
		<pubDate>Tue, 03 Feb 2015 16:08:21 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[Activism]]></category>
		<category><![CDATA[Activisme]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Chef de la direction]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Gouvernance américaine]]></category>
		<category><![CDATA[Hedge funds]]></category>

		<guid isPermaLink="false">http://igopp.org/comment-expliquer-les-succes-de-pershing-square-au-cp-2/</guid>
		<description><![CDATA[In 2011, Pershing Square Capital Management, an activist hedge fund founded by William (Bill) Ackman, acquired some 14.2% of Canadian Pacific Railway’s outstanding shares and proceeded to require several changes in the management and governance of the company. The CP board resisted fiercely his entreaties. A memorable proxy fight ensued, which was won by Pershing [&#8230;]]]></description>
		<content><![CDATA[In 2011, Pershing Square Capital Management, an activist hedge fund founded by William (Bill) Ackman, acquired some 14.2% of Canadian Pacific Railway’s outstanding shares and proceeded to require several changes in the management and governance of the company. The CP board resisted fiercely his entreaties.

A memorable proxy fight ensued, which was won by Pershing and resulted in a new CEO, new board members and a new strategy for CP.

Results of this palace revolution were, in share price terms at least, remarkable — astounding, actually. From September 2011 to Dec. 31, 2014, CP’s stock jumped from less than $49 to north of $220, a compounded annual rate of return of 62% (including dividends).

Why was the CP intervention such an apparent success, when, in several other instances, Pershing’s brand of activism was far less successful? Mr. Ackman’s forays into J.C. Penney, Target, and Borders gave results ranging from mediocre to abysmal.

A close examination of the CP saga reveals a number of differentiating features absent from other less successful interventions:

First, this was a rare case of perfectly transferable managerial talent. The recently retired CEO of Canadian National Railways (CN), the best performing railroad company in North America, was soon to be freed from the legal (if not the ethical) constraints on his joining a direct competitor. This man, Hunter Harrison, is acknowledged as a highly skilled and innovative railroader and he was ready and willing to take over as CEO of CP.

In the Canadian context, such behaviour is not quite gentlemanly. Imagine the high performing CEO of Royal Bank Canada who, soon after retirement, would join the Bank of Montreal as CEO. But both Ackman and Harrison are Americans who could not care less about the mores and values of the Canadian business world.
In several other instances, Pershing’s brand of activism was far less successful
So, an “activist” hedge fund unhappy with the performance of the current CEO of a targeted company calls on the recently retired CEO of its best-performing, direct competitor who happens to be ready to jump ship and hit the ground running. How rare is that?

Second, the North American Railroad Industry is extremely well defined. The same companies have been serving this market for decades; their networks are well-established. Performance measures are standard across the industry, which makes for easy comparability across firms. Thus, it is a simple task for management, the board of directors and investors to benchmark any company against its peers.

Read more [1]

[1] http://business.financialpost.com/opinion/how-pershing-square-found-success-at-canadian-pacific-railway/wcm/b22d0e11-b7e8-48f4-8326-0cf80d7eb740]]></content>
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		<title>The last temptation of Mr. Harrison</title>
		<link>https://igopp.org/en/la-derniere-tentation-de-hunter-harrison/</link>
		<comments>https://igopp.org/en/la-derniere-tentation-de-hunter-harrison/#respond</comments>
		<pubDate>Mon, 16 Jan 2012 22:51:35 +0000</pubDate>
		<dc:creator><![CDATA[mlamnini]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[Chef de la direction]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Ethics]]></category>
		<category><![CDATA[Éthique]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Hedge funds]]></category>
		<category><![CDATA[Rémunération des dirigeants]]></category>

		<guid isPermaLink="false">https://igopp.org/la-derniere-tentation-de-hunter-harrison/</guid>
		<description><![CDATA[E. Hunter Harrison retired as CEO of the Canadian National Railways Corporation on December 31st 2009. His was a good, lucrative run at CN. On his leaving CN, he held $ 77 million in unexercised options with a further $18 million in restricted shares to vest in the future. He is receiving a pension of [&#8230;]]]></description>
		<content><![CDATA[E. Hunter Harrison retired as CEO of the Canadian National Railways Corporation on December 31st 2009. His was a good, lucrative run at CN.

On his leaving CN, he held $ 77 million in unexercised options with a further $18 million in restricted shares to vest in the future. He is receiving a pension of $1,590,000 a year.

In 2008 and 2009, he earned cash compensation of some $10 million and in 2009 exercised stock options that brought him some $31 million.

He was paid, upon retirement, a sum of US$350,000 for two years for compliance with non-compete restrictions in his contract. Technically, that agreement ended on December 31st 2011.

So, the man now raising horses in Florida is certainly one of the roughly 2000 people in the USA worth more than $100 million. But he is reportedly restless, looking for ways to use his boundless energy and vast experience. That is all very understandable, very human.

However, the opportunity comes from an activist hedge fund intent on bringing changes to Canadian Pacific. The fund wants Mr. Harrison to take over as CEO of CP and thus, unfortunately, to become the leader of a prime competitor of CN. That a hedge fund would make such an offer does not surprise. It is shocking, however, that Mr. Harrison would consider seriously going to work against all his former colleagues at CN and try hard to destroy the value of the company that made him wealthy.

CN is claiming that there are legal restrictions on Mr. Harrison going to work for a direct competitor. Whether there are such restrictions may be largely irrelevant in the contemporary world of finance.

But, in the world of normal people, in the realm of industry and commerce, there are moral and ethical restrictions on such behavior. Have we come to the point where one who has been highly paid to run a company may then jump without reprobation to run its direct competitor?

If Mr. Harrison really wants to use his experience, talent and energy for good, why does he not offer his services, pro bono, to help the numerous railway companies in the developing world that would surely greatly benefit from his talent and experience.
]]></content>
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