Proxy advisory firm Glass Lewis & Co.
("GL") recently released its proxy
voting policy updates for the 2014 proxy season. The new guidelines
address, among other things, corporate governance, shareholder
rights and defences and executive compensation. This update
summarizes the significant changes to the proxy voting guidelines
affecting Canadian issuers for 2014 shareholder meetings.
1.Majority Voting for Controlled Companies
GL will no longer require controlled companies (entities where
voting shares are more than 50% owned by a single individual or
entity) that are S&P/TSX Composite Index members to adopt a
majority voting policy. GL will also not make a WITHHOLD
recommendation regarding directors who are members of the corporate
governance committee of these companies.
2. Auditor Rotation
To promote auditor independence and integrity, GL's new
policy recommends voting in favour of proposals requiring auditor
rotation every five to seven years.
Shareholder Rights and Defences
1. Advance Notice Requirements
Previously, the acceptable timely notice requirement for advance
notice provisions was between 30 and 65 days before the meeting. GL
will now support advance notice provisions that require between 30
and 70 days' notice before the meeting.
2. Share Issuances
GL clarified its position on proposals to issue shares with
pre-emptive rights. GL will generally support proposals with
pre-emptive rights of up to 100% of the number of shares currently
issued, and will only support proposals to issue shares without
pre-emptive rights of up to 20% of the current issued share
1. Pay-for-Performance Analysis
GL changed its methodology for pay-for-performance analysis.
Previously, GL's quantitative analysis compared a company's
pay and performance to a peer group of similarly sized companies in
the same sector. GL will now use a pay-for-performance model that
benchmarks executives' pay and company performance against four
peer groups across seven metrics. Companies will receive a grade of
"A" to "F" based on their quantitative
pay-for-performance linkage. This letter-grade system will inform
GL's voting recommendations for say-on-pay proposals. GL will
generally recommend voting against say-on-pay proposals, and
withholding from compensation committee members of companies with a
pattern of failing GL's new pay-for-performance analysis.
2. Short-Term Incentives
GL expanded its policy on incentive-based compensation to
include short-term incentives ("STIs").
GL recommends companies which have paid STIs disclose the extent to
which an individual's performance has been achieved against
relevant targets. Similarly, where management received significant
STIs but the company's short-term performance is poor, an
explanation for paying the STI should be given. GL expects
companies to justify any non-disclosure of STIs.
The content of this article does not constitute legal advice
and should not be relied on in that way. Specific advice should be
sought about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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