The Globe and Mail's Board Games 2009 evaluates and ranks corporate governance practices in Canada. The overall score offers a view of performance in the major categories, including Board Composition (BC*), Shareholding and Compensation (SC*), Shareholder Rights (SR*) and Disclosure (D*), as well as the aggregate score and the 5-year percentage return for investors in a company.
For a closer look at the leaders in each of the major categories, click on the tabs above.
We've only hightlighted the leading companies here - if you want to delve into the data, you can download the complete result set, including our data on income trusts, in Microsoft Excel format or as a comma separated values (.csv) files for: corporations, as well as income trusts with internal management structures and income trusts with external management structures.
|
Rank
|
Company
|
BC *
|
SC *
|
SR *
|
D *
|
Total/100
|
5-yr % rtn
|
|
1
|
SNC-Lavalin Group
|
30
|
22
|
30
|
12
|
94
|
202
|
|
1
|
Toronto-Dominion Bank
|
28
|
23
|
32
|
11
|
94
|
70.2
|
|
3
|
Bank of Montreal
|
29
|
22
|
32
|
9
|
92
|
20.2
|
|
4
|
Bank of Nova Scotia
|
26
|
21
|
32
|
12
|
91
|
50.5
|
|
4
|
Manulife Financial Corp.
|
28
|
18
|
33
|
12
|
91
|
-2.7
|
|
4
|
Royal Bank of Canada
|
25
|
23
|
32
|
11
|
91
|
118
|
|
7
|
CIBC
|
25
|
22
|
32
|
11
|
90
|
18.8
|
|
8
|
Cdn National Railway
|
28
|
22
|
28
|
11
|
89
|
88.5
|
|
8
|
Gildan Activewear Inc.
|
27
|
23
|
28
|
11
|
89
|
150
|
|
8
|
Potash Corp. of Sask.
|
26
|
22
|
30
|
11
|
89
|
304
|
|
8
|
Sun Life Financial Inc.
|
25
|
22
|
32
|
10
|
89
|
5.9
|
Read more about our methodology by clicking here.
Board Composition is worth 31 marks out of the 100 that comprise the Board Games survey. Scores for each of the sub-categories that make up the Board Games survey are derived from a series of questions - the numbers on the columns below represent the scored responses to questions that you can read by clicking on the numbers at the top of each column. (Note: Rank reflects a company's overall rank in the 2009 Board Games survey.) Read more about our methodology by clicking here.
Question 1:
What percentage of the company’s directors are fully independent?
Definition:
That means directors who are not management, relatives of management, former members of management within the previous five years, or people whose firms do business with the company – including, for example, lawyers, accountants, suppliers, consultants or investment bankers. Board Games also marks as related those directors who are controlling shareholders of the company or who work for a parent company that controls the public subsidiary.
How is it calculated?:
Four marks for boards with at least two-thirds independents. Two marks if more than 50 per cent of directors are independent. Zero marks if there is a majority of related directors.
Question 2:
What percentage of the audit committee is fully independent?
How is it calculated?:
Four marks if the committee is fully independent. Two marks if there are one or more related directors who are not management. Zero marks if a member of management is on the committee.
Question 3:
What percentage of the compensation committee – the committee that determines executive pay – is fully independent?
How is it calculated?:
Two marks if the committee is fully independent. One mark if there are one or more related directors who are not management. Zero marks if a member of management is on the committee or if there is no committee.
Question 4:
What percentage of the nominating committee – the committee responsible for recommending new directors to join the board – is fully independent?
How is it calculated?:
Two marks if the committee is fully independent. One mark if there are one or more related directors who are not management. Zero marks if a member of management is on the committee or if there is no committee.
Question 5:
Is the role of chairperson and CEO split?
How is it calculated?:
Four marks if the roles are split and there is a fully independent chairperson. Two marks if they are split, but the chairperson is a related director. One mark if they are split, but the chairperson is a member of management. Zero marks if the roles are not split. (Note: There is no longer credit for not splitting the roles but having a lead director.)
Question 6a:
Do two or more directors sit together on two or more other boards of publicly traded companies, creating the potential for a close-knit bloc of directors? Or, do three or more directors sit on any other corporate board?
How is it calculated?:
Two marks if no, zero if yes.
Question 6b:
Do any directors sit on five or more S&P/TSX company boards?
How is it calculated?:
Two marks if no, zero if yes.
Question 7:
Are there any women on the board?
How is it calculated?:
Two marks if one-third of the board or more are women. One mark if there is at least one woman on the board. Zero marks if there are no women.
Question 8:
Does the board have a system to evaluate its performance?
How is it calculated?:
Three marks if there is a formal board evaluation and a formal individual director evaluation including peer review, with detailed disclosure of what sort of process is used for both. Two marks if there is a formal board evaluation and director evaluation, but no peer review. Also two marks if the company has a formal peer review process but does not mention or describe any board or committee review process. One mark if there is a formal board assessment, but not an assessment of individual directors, or if there is reference to a director assessment but not board or committee review. Zero marks if there is no evaluation or there is only vague description of how the assessment is done with no details of the process used.
Question 9:
Do independent directors meet without management?
How is it calculated?:
Two marks if they meet without management at regular board meetings, but not all board meetings. One mark if they meet sometimes, but not every regular board meeting. Zero marks if there is no mention or if there are no meetings without management. Also zero marks if the company uses vague wording – for example, that “time is available for in-camera meetings” – that do not specify whether the meetings are actually held.
Question 10:
Does the company disclose the process the board uses to manage succession planning for the CEO’s job?
How is it calculated?:
Disclosure must go beyond simply noting that the board or one of its committees is responsible for managing succession planning. There must be evidence a formal process is in place, and some detail of how the board approaches the task must be given. Two marks if yes, zero if no.
Question 11:
Does the company provide information about its director education processes for the year, and is there evidence that a formal process is in place?
How is it calculated?:
This could include information about educational events offered to the entire board during the year, site visits to company facilities by directors, or specifics about special briefings, courses or training offered to some or all directors. The company does not have to specify which directors received which training, but must give details about the types of educational opportunities offered or taken. One mark if yes, zero if no.
|
Rank
|
Company
|
1
|
2
|
3
|
4
|
5
|
6a
|
6b
|
7
|
8
|
9
|
10
|
11
|
BC
|
|
1
|
SNC-Lavalin
|
4
|
4
|
2
|
2
|
4
|
2
|
2
|
1
|
3
|
3
|
2
|
1
|
30
|
|
3
|
Bk Montreal
|
4
|
4
|
2
|
2
|
4
|
2
|
2
|
1
|
3
|
2
|
2
|
1
|
29
|
|
1
|
TD
|
4
|
4
|
2
|
2
|
4
|
0
|
2
|
1
|
3
|
3
|
2
|
1
|
28
|
|
4
|
Manulife
|
4
|
4
|
2
|
2
|
4
|
2
|
2
|
1
|
3
|
3
|
0
|
1
|
28
|
|
8
|
Cdn National Railway
|
4
|
4
|
2
|
2
|
4
|
2
|
0
|
1
|
3
|
3
|
2
|
1
|
28
|
|
12
|
TransAlta
|
4
|
4
|
2
|
2
|
4
|
2
|
0
|
1
|
3
|
3
|
2
|
1
|
28
|
|
8
|
Gildan
|
4
|
4
|
2
|
2
|
4
|
2
|
2
|
1
|
3
|
2
|
0
|
1
|
27
|
|
16
|
TMX Group
|
4
|
4
|
2
|
2
|
4
|
2
|
2
|
1
|
3
|
3
|
0
|
0
|
27
|
|
20
|
Encana
|
4
|
4
|
2
|
2
|
4
|
2
|
2
|
1
|
3
|
2
|
0
|
1
|
27
|
|
29
|
RONA Inc.
|
4
|
4
|
2
|
2
|
4
|
2
|
2
|
1
|
3
|
3
|
0
|
0
|
27
|
|
56
|
Agnico-Eagle Mines
|
4
|
4
|
2
|
2
|
4
|
2
|
2
|
1
|
3
|
3
|
0
|
0
|
27
|
|
59
|
Viterra Inc.
|
4
|
4
|
2
|
2
|
4
|
2
|
2
|
1
|
3
|
3
|
0
|
0
|
27
|
Download the complete result set, including our data on income trusts, in Microsoft Excel format or as a comma separated values (.csv) files for: corporations, as well as income trusts with internal management structures and income trusts with external management structures.
Shareholding and compensation is worth 24 marks out of the 100 that comprise the Board Games survey. Scores for each of the sub-categories that make up the Board Games survey are derived from a series of questions - the numbers on the columns below represent the scored responses to questions that you can read by clicking on the numbers at the top of each column. (Note: Rank reflects a company's overall rank in the 2009 Board Games survey.) Read more about our methodology by clicking here.
Question 12a:
Are directors required to own shares or share units? (Stock options don’t count.)
How is it calculated?:
Four marks if the requirement is equal to at least three times the retainer paid to directors – including the value of grants of shares or share units. Two marks if there is a requirement, but it is lower than three times the value of the retainer and share units. Zero marks if there is no requirement.
Question 12b:
How many shares do directors own?
How is it calculated?:
Four marks maximum, but minus one mark for each director who owns less than three times the annual retainer plus the value of grants of shares, share units or options. If a director has been on the board less than one year, the ownership requirement does not apply. If a director has been on the board one to two years, the required ownership level is reduced to one times the retainer and share units.
Question 12c:
Are all directors increasing their share ownership over time? Does the board strive for new investment by directors?
How is it calculated?:
This generally means there is a mandatory director share unit program, but could mean there is any other method that leads to an increase in share ownership by directors. One mark if all directors increased their number of shares or units owned compared to the prior year. Zero if not.
Question 13a:
Is the CEO required to own shares? (Stock options don’t count.)
How is it calculated?:
Two marks if there is a requirement to own at least three times the base salary, or if the CEO is the company’s controlling shareholder. One mark if there is a requirement to own one to two times the base salary. Zero marks if there is no requirement or if the requirement is less than one times the base salary.
Question 13b:
Does the CEO own shares?
How is it calculated?:
Three marks if the CEO owns shares worth at least triple his or her base salary. Two marks if the CEO owns shares worth at least double his or her base salary. One mark if the CEO owns one to two times his base salary. Zero marks if the CEO owns shares worth less than one time his or her base salary. No ownership rule for CEOs on the job for less than one year.
Question 14a:
How well does the company disclose the compensation policies it applies when deciding CEO bonuses? Does it provide a percentage weighting of the factors that are considered in determining the CEO’s bonus?
How is it calculated?:
One mark if yes, zero if no.
Question 14b:
Does the company provide details of the specific target amounts that have to be achieved in each area?
How is it calculated?:
Two marks if all target specifics are given, one mark if targets are given but all specifics are not provided. Zero if no target details are provided.
Question 14c:
Does the company explain the outcome of what actually happened with the performance goals and how the outcome affected the CEO’s bonus?
How is it calculated?:
One mark if yes, zero if no.
Question 15:
Is the CEO’s bonus affected by performance relative to a peer group of similar companies?
How is it calculated?:
That means the bonus is affected by the company’s comparative performance and not just on improvements in absolute terms. Two marks if yes, zero if no.
Question 16:
Are there performance hurdles for stock options or share units, beyond simply requiring the share price to rise over time?
How is it calculated?:
One mark if yes, zero if no.
Question 17:
Does the company disclose the total value of the CEO’s accumulated shares, DSUs or other equity holdings? (The company must provide the value, and not just number of units held.)
How is it calculated?:
Two marks if yes, zero if no.
Question 18:
Does the company disclose the total cost of compensation to the top executive team as a percentage of the total profit or total shareholder return for the year?
How is it calculated?:
One mark if yes, zero if no
|
Rank
|
Company
|
12a
|
12b
|
12c
|
13a
|
13b
|
14a
|
14b
|
14c
|
15
|
16
|
17
|
18
|
SC
|
|
1
|
TD
|
4
|
4
|
1
|
2
|
3
|
1
|
1
|
1
|
2
|
1
|
2
|
1
|
23
|
|
4
|
Royal Bk
|
4
|
4
|
1
|
2
|
3
|
0
|
2
|
1
|
2
|
1
|
2
|
1
|
23
|
|
8
|
Gildan
|
4
|
4
|
1
|
2
|
3
|
0
|
2
|
1
|
2
|
1
|
2
|
1
|
23
|
|
1
|
SNC-Lavalin
|
4
|
3
|
1
|
2
|
3
|
1
|
1
|
1
|
2
|
1
|
2
|
1
|
22
|
|
3
|
Bk Montreal
|
4
|
4
|
1
|
2
|
3
|
1
|
1
|
0
|
2
|
1
|
2
|
1
|
22
|
|
7
|
CIBC
|
4
|
4
|
1
|
2
|
3
|
1
|
2
|
1
|
2
|
1
|
0
|
1
|
22
|
|
8
|
Cdn National Railway
|
4
|
4
|
1
|
2
|
3
|
1
|
2
|
1
|
0
|
1
|
2
|
1
|
22
|
|
8
|
Potash Corp.
|
4
|
4
|
1
|
2
|
3
|
1
|
2
|
1
|
0
|
1
|
2
|
1
|
22
|
|
8
|
Sun Life
|
4 |
2
|
1
|
2
|
3
|
1
|
2
|
1
|
2
|
1
|
2
|
1
|
22
|
|
13
|
CP Rail
|
4
|
4
|
1
|
2
|
3
|
1
|
2
|
1
|
2
|
0
|
2
|
1
|
22
|
|
14
|
Nexen Inc.
|
4
|
4
|
0
|
2
|
3
|
1
|
2
|
1
|
2
|
1
|
2
|
0
|
22
|
|
44
|
Celestica Inc.
|
4
|
3
|
1
|
2
|
3
|
1
|
2
|
1
|
2
|
1
|
2
|
0
|
22
|
Download the complete result set, including our data on income trusts, in Microsoft Excel format or as a comma separated values (.csv) files for: corporations, as well as income trusts with internal management structures and income trusts with external management structures.
Shareholder rights is worth 33 marks out of the 100 that comprise the Board Games survey. Scores for each of the sub-categories that make up the Board Games survey are derived from a series of questions - the numbers on the columns below represent the scored responses to questions that you can read by clicking on the numbers at the top of each column. (Note: Rank reflects a company's overall rank in the 2009 Board Games survey.) Read more about our methodology by clicking here.
Question 19a:
Does the company allow shareholders to vote for individual directors, or only the entire slate of nominees?
How is it calculated?:
Four marks if there is voting for individual directors with clear options beside each director’s name. Two marks if investors must cross out or write in the names of directors for which they are not voting. Zero marks if there is only slate voting.
Question 19b:
Does the company have a majority voting policy, asking directors to resign if they do not receive a majority of votes in support?
How is it calculated?:
Three marks if yes, zero if no.
Question 19c:
Does the company give shareholders an advisory vote on executive compensation (known as say-on-pay)?
How is it calculated?:
Two marks if yes, zero if no.
Question 20:
Does the company disclose it has a provision to “claw back” bonus payments to the CEO if wrongdoing is discovered late?
How is it calculated?:
One mark if yes, zero if no.
Question 21:
Does the company have a holding period for shares after a CEO leaves the company to ensure there is a performance “tail” to the CEO’s work? This is an incentive to make good long-term decisions prior to departure.
How is it calculated?:
One mark if yes, zero if no.
Question 22a:
Are stock options excessively dilutive? For 2009, Board Games once again assessed the dilution based on the number of options outstanding at the company’s fiscal year-end as well as the number of options approved for future issuance, expressed as a percentage of all shares outstanding. Where the company has more than one class of shares, dilution is measured for whichever class of shares is diluted by the outstanding options.
How is it calculated?:
Three marks if the dilution is less than 5 per cent of outstanding shares, or if the company has no option plan. Two marks if the dilution is between 5 per cent and 8 per cent of outstanding shares. Zero marks if the dilution is over 8 per cent. Zero marks if the company has adopted an evergreen option plan that automatically “reloads” the number of options available for issuance – even if the option dilution level falls within the guidelines listed above. And zero marks if the company has re-priced any of its options within the prior year.
Question 22b:
Is the annual stock option grant rate excessive?
How is it calculated?:
Two marks if the number of options granted in the prior fiscal year was less than 1 per cent of all shares outstanding. One mark if the grant rate was between 1 per cent to 1.49 per cent. Zero marks if the grant rate exceeded 1.5 per cent annually.
Question 22c:
Is there a vesting period before options can be exercised?
How is it calculated?:
Three marks if yes. Zero marks if some options vest in less than 12 months after issuance, including director options.
Question 23a:
Does the company calculate and display the year-end dilution level of stock options as a percentage of shares outstanding?
How is it calculated?:
One mark if yes, zero if no.
Question 23b:
Does the company calculate and display the prior year’s grant rate for option grants as a percentage of shares outstanding?
How is it calculated?:
One mark if yes, zero if no.
Question 24:
Does the company award stock options to directors?
How is it calculated?:
Two marks if yes, zero if no.
Question 25:
Are there non-voting or subordinate voting shares?
How is it calculated?:
Ten marks if there are no dual-class shares. ROB gave reduced marks depending on the gap between the percentage of votes controlled by the superior voting shares and the percentage of the company’s equity they represent, using the following guidelines: Four marks if the ratio is less than 3:1. Three marks if the ratio is between 3:1 and 4:1. Two marks if the ratio is between 4:1 and 5:1. Zero marks if the ratio is 5:1 or worse.
|
Rank
|
Company
|
19a
|
19b
|
19c
|
20
|
21
|
22a
|
22b
|
22c
|
23a
|
23b
|
24
|
25
|
SR
|
|
4
|
Manulife
|
4
|
3
|
2
|
1
|
1
|
3
|
2
|
3
|
1
|
1
|
2
|
10
|
33
|
|
1
|
TD
|
4
|
3
|
2
|
0
|
1
|
3
|
2
|
3
|
1
|
1
|
2
|
10
|
32
|
|
3
|
Bk Montreal
|
4
|
3
|
2
|
0
|
1
|
3
|
2
|
3
|
1
|
1
|
2
|
10
|
32
|
|
4
|
Bk Nova Scotia
|
4
|
3
|
2
|
0
|
1
|
3
|
2
|
3
|
1
|
1
|
2
|
10
|
32
|
|
4
|
Royal Bk
|
4
|
3
|
2
|
0
|
1
|
3
|
2
|
3
|
1
|
1
|
2
|
10
|
32
|
|
7
|
CIBC
|
4
|
3
|
2
|
0
|
1
|
3
|
2
|
3
|
1
|
1
|
2
|
10
|
32
|
|
8
|
Sun Life
|
4
|
3
|
2
|
1
|
0
|
3
|
2
|
3
|
1
|
1
|
2
|
10
|
32
|
|
1
|
SNC-Lavalin
|
4
|
3
|
0
|
0
|
1
|
3
|
2
|
3
|
1
|
1
|
2
|
10
|
30
|
|
8
|
Potash Corp.
|
4
|
3
|
2
|
1
|
0
|
3
|
2
|
3
|
0
|
0
|
2
|
10
|
30
|
|
8
|
Cameco Corp.
|
4
|
3
|
0
|
1
|
0
|
3
|
2
|
3
|
1
|
1
|
2
|
10
|
30
|
Download the complete result set, including our data on income trusts, in Microsoft Excel format or as a comma separated values (.csv) files for: corporations, as well as income trusts with internal management structures and income trusts with external management structures.
Disclosure is worth 12 marks out of the 100 that comprise the Board Games survey. Scores for each of the sub-categories that make up the Board Games survey are derived from a series of questions - the numbers on the columns below represent the scored responses to questions that you can read by clicking on the numbers at the top of each column. (Note: Rank reflects a company's overall rank in the 2009 Board Games survey.) Read more about our methodology by clicking here.
Question 26:
Does the company provide a full explanation of which directors are related and unrelated and why?
How is it calculated?:
One mark if full disclosure, and if the disclosure is included in the part of the proxy circular where companies disclose which directors on the board are related or unrelated. Zero marks if company does not disclose a director’s relationship in the proxy circular.
Question 27a:
Does the company disclose detailed biographies to explain directors’ qualifications to represent shareholders? Does the biography demonstrate why this director is a good candidate for election? Relevant information might include educational background, non-profit affiliations, industry experience, career highlights or special achievements.
How is it calculated?:
One mark if yes, zero marks if not.
Question 27b:
Does the proxy circular specify the skills or areas of expertise of each director in the form of a “skills matrix” or in another format? The details must be explicitly laid out – it is not adequate to assume they can be inferred by reading a basic biography.
How is it calculated?:
One mark if yes, zero if no.
Question 28:
Did directors attend all meetings, and does the company remove directors with poor attendance? Two marks if all board and committee meeting attendance is disclosed and board members attended at least three-quarters of board and committee meetings.
How is it calculated?:
One mark if any board member has missed more than one-quarter of meetings and is not put up for re-election. Zero marks if committee attendance is not disclosed, or if a board member or a committee member missed more than one-quarter of meetings and is put up for re-election.
Question 29a:
Does the company disclose the total accumulated value (a dollar amount, not just number of units held) of directors’ equity holdings, including shares and share units?
How is it calculated?:
Two marks if yes, zero if no.
Question 29b:
Does the company explain how each director’s share ownership meets (or fails to meet) the required share ownership guideline? For example, does the equity ownership chart include a column showing how the ownership compares to the requirement as a percentage, multiple or dollar value compared to the requirement?
How is it calculated?:
One mark if yes, zero if no. Zero if there is no ownership requirement.
Question 30a:
Does the company disclose the dollar value of fees paid to an outside compensation consultant?
How is it calculated?:
One mark if yes or if no consultant was used, zero if no.
Question 30b:
Does the company disclose whether the compensation consultant provided any other services in the prior year, and, if so, how much money was paid for the other services?
How is it calculated?:
One mark if yes or if no consultant was used, zero marks if no.
Question 31a:
Does the company disclose directors’ ages?
How is it calculated?:
One mark if yes, zero marks if no.
Question 31b:
Does the company disclose whether or not it has a retirement policy for directors, and what the details of the policy are?
How is it calculated?:
One mark if yes, or if company states it has no retirement policy for its directors. Zero marks if no disclosure.
|
Rank
|
Company
|
26
|
27a
|
27b
|
28
|
29a
|
29b
|
30a
|
30b
|
31a
|
31b
|
D
|
|
1
|
SNC-Lavalin
|
1
|
1
|
1
|
2
|
2
|
1
|
1
|
1
|
1
|
1
|
12
|
|
4
|
Bk Nova Scotia
|
1
|
1
|
1
|
2
|
2
|
1
|
1
|
1
|
1
|
1
|
12
|
|
4
|
Manulife
|
1
|
1
|
1
|
2
|
2
|
1
|
1
|
1
|
1
|
1
|
12
|
|
13
|
CP Rail
|
1
|
1
|
1
|
2
|
2
|
1
|
1
|
1
|
1
|
1
|
12
|
|
20
|
Enbridge Inc.
|
1
|
1
|
1
|
2
|
2
|
1
|
1
|
1
|
1
|
1
|
12
|
|
27
|
Groupe Aeroplan
|
1
|
1
|
1
|
2
|
2
|
1
|
1
|
1
|
1
|
1
|
12
|
|
32
|
Brookfield Asset Mgmt.
|
1
|
1
|
1
|
2
|
2
|
1
|
1
|
1
|
1
|
1
|
12
|
Download the complete result set, including our data on income trusts, in Microsoft Excel format or as a comma separated values (.csv) files for: corporations, as well as income trusts with internal management structures and income trusts with external management structures.
Join the Discussion: