Canada’s Shareholder Association for Research and Education says unitholders of Chartwell Retirement Residences should vote against chairman Mike Harris over concerns about safety for the company’s customers and employees.
SHARE, which advocates for socially responsible corporate policies, has submitted a resolution on Chartwell’s annual voting form asking for a “human capital disclosure” on how Chartwell manages employees and the risks they face. In light of the COVID-19 pandemic, SHARE argues, the disclosure will help investors “assess the effectiveness of key work force policies and the robustness of its board oversight.” SHARE represents unitholder IBVM Foundation of Canada Inc. in the proposal.
This week, it filed additional materials with regulators saying it will add a recommendation that Chartwell shareholders withhold votes from Mr. Harris. “In light of significant legal, regulatory, financial and reputational risks, we are concerned that the board has not been providing sufficiently robust oversight of the company’s culture, strategy, and risk management. As the board chair, Michael D. Harris must be accountable for this state of affairs.”
Mr. Harris, the 76-year-old former premier of Ontario who oversaw the deregulation of the province’s long-term care industry, plans on leaving the board in 2022, Chartwell said in its proxy circular to shareholders filed last week. He has served as the company’s board chairman since 2003 and made $223,000 in director’s fees in 2020. Two other directors will leave in 2022 and 2023 as part of Chartwell’s board renewal plans, the company said.
In a statement to The Globe and Mail earlier this year, Chartwell spokeswoman Sharon Ranalli said “Mr. Harris’ drive and passion to provide great services and quality care to our aging population was one of the reasons he was asked to join Chartwell as chair in 2003 and [he] continues to serve in this capacity to this day.”
Chartwell has already recommended unitholders reject the human-capital proposal, saying increased disclosure in the 2021 circular – developed in response to concerns from SHARE and other unitholders – should be satisfactory. “At Chartwell, we know our biggest asset is our people and human capital management is a key priority for us.”
Chartwell paid out bonuses in 2020 at a higher level of its target goals than it did in 2019, after awarding perfect scores for employee engagement, customer satisfaction and its reputation with the public. Chartwell said 44 per cent of employees in residences and 58 per cent of employees in the corporate offices strongly agreed with the statement, “I am satisfied with Chartwell as a place to work,” up from 43 per cent and 52 per cent, respectively, in 2019.
In management’s discussion and analysis reviewing the 2020 year, Chartwell said 12 of its retirement residences and four of its long-term care homes had been declared by public-health authorities as of March 4 to be in a COVID-19 outbreak. “Despite extraordinary efforts, COVID-19 tragically claimed the lives of some of our residents. Our thoughts are with those who lost loved ones to this disease.”
About 10 per cent of Chartwell’s business comes from long-term care, with the rest from private-pay retirement housing.
The major proxy-advisory services, including Institutional Shareholder Services and Glass Lewis & Co., have not yet published their voting recommendations on the shareholder proposals and the directors’ candidacies.
Chartwell’s director election, like most, is uncontested: Unitholders will be asked to vote “for” directors or withhold their votes. In 2019, 22.3 per cent of unitholders withheld their votes for Mr. Harris, an unusually high number. Many large Canadian companies reported withheld percentages in the low single digits for all their directors.
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