Power Corp. of Canada's board has chosen to buck the growing trend that allows shareholders a vote on executive pay packages.
The financial services holding company says in its management proxy circular that the board is recommending shareholders vote against a resolution seeking so-called "say on pay" that would give investors a non-binding annual vote on executive compensation.
The move makes Montreal-based Power - controlled by the billionaire Desmarais family - a holdout on the issue along with Manulife Financial Corp.
Over the past few months, 10 of Canada's largest companies have agreed to allow shareholders an annual vote on compensation, including almost all of the big financial firms.
Power Corp.'s annual meeting is scheduled for May 13. Companies that are part of Power Corp. subsidiary Power Financial Corp. include insurer Great-West Lifeco Inc. and mutual fund operator IGM Financial.
The Power Corp. proxy says the board believes the directors and the compensation committee are the best positioned to evaluate compensation packages.
Stephen Griggs, executive director of the Canadian Coalition for Good Governance, said in an interview yesterday that corporate boards are just coming to grips with the say on pay issue, which has been bolstered by growing shareholder dissatisfaction with excessive remuneration at companies such as U.S. giant American International Group Inc.
"This is a new issue. Boards are carefully feeling their way through it," he said.
The coalition recently reversed its opposition to say on pay and said its members back the idea of allowing an annual advisory vote by shareholders.
The Power Corp. circular also states that Paul Desmarais Jr., the chairman and co-chief executive officer, collected $5.2-million in total compensation last year, while deputy chairman, president and co-CEO André Desmarais received $5-million.
Bertrand Marotte