Canadian ‘no’ votes grow in popularity

Feb 27, 2013
<p>Shareholders increasingly vote against management but majority still toe the line</p>

A growing number of shareholders in Canadian firms are voting against proposals, with several key issues receiving a ‘no’ vote of 20 percent or more in 2012, according to research from the Shareholder Association for Research and Education (SHARE).

While this shows growing care and attention being given to corporate issues, SHARE says even some scandal-hit firms are still receiving majority support.

Citing a shareholder proposal asking energy firm Enbridge to report on the risks posed by opposition from First Nations, representing a number of indigenous groups, to the Northern Gateway pipeline project, SHARE says almost 30 percent of shareholders voted in favor of the proposal, highlighting the ‘pivotal role’ First Nations’ consent plays in the future of the pipeline.

‘The response on the Enbridge shareholder proposal illustrates that shareholders increasingly recognize the investment risks associated with social and environmental issues when they vote,’ says Peter Chapman, SHARE’s executive director, in a press release. ‘But many institutional investors, including charitable foundations and trusts, are not yet providing guidance to managers and proxy voting service firms to ensure voting is aligned with their interests.’

At construction and engineering firm SNC-Lavalin, only a quarter of shareholders voted against a pay package that included $1.9 mn in salary continuance and other benefits for former CEO Pierre Duhaime in May last year, despite an ongoing criminal investigation into corruption and bribery charges brought in both Canada and Libya during Duhaime’s time at the helm of the company, says SHARE.

‘In the realm of proxy voting, a vote of 25 percent against a severance package is a strong show of shareholder opposition,’ says Laura O’Neill, SHARE’s director of law and policy, in the press release. ‘But one still wonders how 75 percent of shareholders could vote in favor of the former CEO being rewarded so generously despite the significant loss in shareholder value on his watch.’

The 2012 Key Proxy Vote Survey analyzes the voting records of 32 firms with combined Canadian equity holdings topping $58 bn. The annual study is put together by Columbia Institute, the Fonds de solidarité fund and SHARE, which advises firms on the integration of ESG issues in investment decision making.

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