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Activist shareholders who want to target Canadian companies with all-male boards have no more companies left to pursue in the S&P/TSX Composite Index.

Kingsdale Advisors, a shareholder advisory firm, noted the development in its 2019 proxy season review, a wide-ranging look at shareholder activism in Canada. An activist investor is one who actively engages the board and management of a company in which they own stock to make some sort of change that they see as increasing the value of their investment.

Kingsdale says that in 2019, not a single one of the roughly 240 companies in the composite – the broadest and most-followed Canadian stock index – held their annual election of directors without a single female candidate.

That remains the case after last week’s changes to the index, and it marks a great change, as, according to the report, 44 per cent of the composite’s companies had all-male boards as recently as 2012; that level stood at 10 per cent in 2017 and 3 per cent last year. But it’s just one measure of the progress that’s been made – and still needs to be made – in Corporate Canada, gender-diversity advocates say.

“Congratulations, but really?” asks Kingsdale chief executive officer Amy Freedman, who says the progress has been made “because it’s been brought into the spotlight, aggressively, and institutional investors have made it a focus.”

“The next step will be when will all of these hit targets that are more meaningful, not only at the board level, but in management.”

Indeed, the annual Spencer Stuart analysis of the boards of Canada’s 100 largest companies found that just 30 per cent of appointments of new directors in 2018 were women, versus 40 per cent or more every year from 2014 to 2017. The proportion of all corporate directors in the study group that are women stayed at 27 per cent in 2018, after climbing for several years.

The law firm Osler, Hoskin & Harcourt LLP’s 2019 Diversity Disclosure Practices report, issued Wednesday, found that the year-over-year rate of increase in the proportion of board seats held by women is starting to slow – the gains were 2.5 per cent in 2017, 1.9 per cent in 2018 and 1.7 per cent in 2019.

Many major institutional shareholders, as well as regulators, have made board gender diversity a priority. The Canada Pension Plan Investment Board began in 2017 to withhold the votes from the nominating-committee chairs of Canadian boards if the company had no female directors. CPPIB made the policy global in the 2019 proxy season, and also began withholding votes at Canadian companies that had only one female director. CPPIB withheld votes at 35 Canadian companies in 2019 as a result.

“We are very focused on this and believe we have made an impact,” CPPIB spokesman Michel Leduc said.

Other major Canadian pension plans, such as the Ontario Teachers’ Pension Plan, Ontario Municipal Employees Retirement System, British Columbia Investment Management Corp., Public Sector Pension Investment Board and Alberta Investment Management Corp. have board-gender-diversity policies they apply to companies they invest in, Osler notes.

The Canadian Securities Administrators have done an annual review of gender diversity on boards of Canadian public companies since 2015. In the most recent review, which includes companies smaller than the ones in the S&P/TSX Composite, the CSA found the number of public companies with at least one woman on their board increased to 66 per cent in 2018, from 49 per cent in 2015.

The Kingsdale report, set to be released Thursday, also noted that activism of all stripes continues to increase in Canada, and the firm expects more campaigns in the remainder of 2019. More than halfway through 2019, there have been 25 public proxy contests launched in Canada, compared with 29 this time last year. Kingsdale says 2018 was the second-busiest year on record, and an elevated level of shareholder antagonism is the “new normal” in Canada.

In 2019, 16 out of the 25 activists were first-timers, Kingsdale says, ranging from traditional long-term investors to current and former insiders to groups of shareholders with the ability and drive to organize. Firms that would be considered traditional activist funds launched only four of the campaigns.

“It’s not so much activism, but accountability,” Ms. Freedman says. “The trend is shareholders – of any type and any size – are more willing to hold boards accountable for performance, or lack thereof. You don’t need to be Carl Icahn to decide you’re an unsatisfied shareholder.”

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