Investor backlash to executive compensation forces companies to take second look, Canada lags behind other jurisdictions in giving investors a say in what top executives earn

Investor backlash to executive compensation forces companies to take second look, Canada lags behind other jurisdictions in giving investors a say in what top executives earn by Dan Healing, June 15, 2012, Calgary Herald
A mark of 76 per cent is a solid pass on a high school English exam but indicates something is seriously amiss when given in response to a say-on-pay vote, experts say. Calgary-based Encana Corp. won a 75.82 per cent endorsement for its executive compensation practises at its annual general meeting in April, the second-lowest mark of 16 Calgary companies that held the non-binding, advisory votes this spring. In its first vote a year ago, Encana received 91.2 per cent support. “We obviously would have preferred a higher level of shareholder support,” said Patricia MacDonald, Encana vice-president of human resources, in an e-mailed response this week. … MacDonald said Encana is taking steps to better understand investor concerns, without being specific. Non-binding votes on executive compensation have been required by authorities in the United Kingdom since 2002 and the U.S. since 2009. Netherlands public companies have been required to hold a binding vote since 2004 but no proposal was rejected until 2008, when Royal Philips Electronics was forced to draft a new plan. Canada’s first votes took place in 2010 and they are still optional. Most of the nearly 100 companies in Canada that hold say-on-pay votes will win more than 90 per cent support, said Laura O’Neill, director of law and policy for Vancouver-based SHARE, the Shareholder Association for Research and Education, which acts as a proxy adviser for large investors. “Above 20 per cent of votes against, there are very few companies and those ones should probably take a hard look at what’s going on,” she said.