The 2015 proxy season is fast approaching, PwC and
Broadridge released a quarterly research report which reviews
proxy related data from 4,113 shareholder meetings held
between January 1 and June 30, 2014 and highlights several
themes and trends that may inform how shareholders and
companies will interact on four key issues:
Director Elections: Director elections continue to attract
widespread voting, with 93% of elections at large companies
garnering votes between 90-100%. In contrast, only 75% of voted
shares were cast in the 90-100% range for small-cap firms.
Moreover, of the 22,554 directors up for election, roughly 5%
failed to receive 70% of the shares voted. Only less than half of
that failed to get majority support.
Say on pay: The US Dodd-Frank Act of 2010 introduced a number of
requirements that have greatly increased disclosure obligations,
including 'say on pay,' which requires all public companies
to present executive compensation plans to a shareholder
vote. 'Say on pay' votes are becoming increasingly
common in Canada. Although not binding, a failure to receive
majority shareholder support is demonstrative of a lack of
confidence or inflated compensation packages, or both. In any case,
support of plans remained consistent with support in 2013, at
89%, with a slight drop in support at mid-, small-, and
micro-cap companies. Overall, notwithstanding the increasing
dialogue between directors and shareholders, the compensation
landscape has not changed.
Independent board chair: 2014 has seen a notable increase in the
number of shareholder proposals to separate the roles of CEO and
Chair of the board; there were 53 such proposals made in 2013, and
62 in 2014, with an average support of 30% of shareholder votes and
six successful proposals.
Social and environmental proposals: Proposals relating to social
and environmental issues have increased through the
2014 calendar year, but have only garnered 18% support
when put to a vote. In Canada, most provinces have adopted the
amendments to National Instrument 58-101 which provide
for new enhanced corporate disclosure of board diversity and
board renewal policies, expanding 'comply or explain'
responsibilities with respect to the representation of women on
boards. The 2015 proxy season will represent the first test of
these new obligations and activists will be watching closely.
Other notable trends that we will likely see include a
continuation of the increasing reliance on electronic delivery
of proxy materials, as well as electronic voting. In addition,
virtual shareholder meetings promise to grow due to
advances in the accessibility of conferencing technology.
Finally, institutional ownership is up to 71% (with 29% retail
ownership), reflecting an increasing reliance on investment
As we close out the fourth quarter of 2014, shareholders,
activists and companies will be watching these themes and
trends closely to understand what will likely
influence proposals and voting in 2015.
Norton Rose Fulbright Canada LLP
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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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