Skip to main content
The Globe and Mail
Support Quality Journalism
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); }

Stephen Erlichman, the head of the Canadian Coalition for Good Governance is seen in his office at Fasken Martineau in Toronto on November 25, 2011. THE CCGG is pressing for new rules on shareholder proxy voting.

JENNIFER ROBERTS/The Globe and Mail

A coalition of Canada's largest institutional shareholders is launching a new salvo at weak boardrooms across Canada, asking regulators and companies for new powers to nominate alternative corporate directors.

The Canadian Coalition for Good Governance (CCGG), which represents most of Canada's public pension funds and other major institutional investors, is calling for new rules to make it easier for major shareholders to propose new directors and have their names added to annual proxy-voting lists.

CCGG executive director Stephen Erlichman said existing legal options for adding new directors to a board are complex and often unsuccessful, so are rarely employed. But that means shareholders can only vote for the candidates put forward by the companies, leaving no real choice in the election process.

Story continues below advertisement

"There are 10 [board] openings and you're being told, 'Here are the 10 people you're voting for,'" Mr. Erlichman said in an interview. "We're saying, 'shouldn't shareholders have some kind of say in who at least some of these people are?'"

He said it may take a long time to convince legislators to change proxy-voting laws, so the CCGG also wants companies to adopt proxy-access policies on a voluntary basis in the interim.

The CCGG has launched campaigns in the past urging companies to voluntarily adopt policies that have become widespread practices – including say-on-pay advisory votes on executive pay and majority voting policies, which require directors to tender their resignations if enough shareholders withhold their support for them at annual meetings.

The coalition says it has targeted proxy access as the next frontier because the ability to have a meaningful say in the nomination process is "a fundamental tenet of shareholder democracy."

"The nominee slate tends to reflect the board's, or in some cases, still the chief executive officer's, network or relationships and perspectives," the CCGG said in a proposed proxy-access regime, released Thursday.

The CCGG's proposal recommends that shareholders who own a minimum of 3 per cent of a company's shares – or 5 per cent of the shares at smaller companies listed on the TSX Venture Exchange – should be allowed to propose director nominees equal to 20 per cent of seats on a board. Shareholders should be allowed to work together to aggregate their shares to reach the 3-per-cent threshold, the CCGG said.

Mr. Erlichman said the CCGG does not expect a new policy to be quickly embraced, noting that the coalition has faced strong opposition to the idea in panel discussions and private meetings with companies.

Story continues below advertisement

But he said companies need to understand that the idea is not as radical as they think. Some countries – including Germany and Italy – already have proxy-access rules, while more than 30 major U.S. companies – including General Electric Co., Citigroup Inc. and Bank of America – have voluntarily adopted proxy-access policies, allowing shareholders who own at least 3 per cent of the company's shares to nominate directors.

American companies have faced a spate of shareholder resolutions this year calling on them to adopt proxy access policies. The campaign has been led by New York City Comptroller Scott Stringer, who oversees five municipal public pension funds, and has been supported by other major U.S. pension funds, including the California Public Employees' Retirement System (Calpers), which is the largest U.S. pension fund. Pension fund TIAA-CREF has also sent letters to 100 companies this year urging them to adopt proxy-access policies.

The CCGG says proxy-access powers in Canada would be used infrequently in situations where shareholders are most unhappy with a board's performance. Mr. Erlichman said many major shareholders are long-term investors and index investors and cannot easily sell shares in companies when there is a problem. "They're trying to say, 'Look we're there for the long run, let's just make sure that the right people are the directors supervising the company.'"

Many U.S. companies have included an additional requirement that shareholders must have owned their shares for three years before they are allowed to propose new board nominees, ensuring the power is only used by long-term investors and is not exploited by people attempting takeovers or other strategies.

But Mr. Erlichman said the CCGG rejects including any similar ownership time requirement in Canada, saying it creates two classes of shareholders with unequal rights and makes the faulty assumption that people who are newer owners of shares aren't planning to be long-term investors.

Instead, the CCGG proposes that shareholders must declare they are not seeking control of the company when they nominate directors.

Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies