By: Antonio Spizzirri
In 2009, the Clarkson Centre for Board Effectiveness (CCBE) began observing pay and performance for firms on the S&P/TSX Composite Index (TSX Index).1 CCBE has continuously tracked pay and performance data since 2004 for over 300 Canadian large public firms. For the purposes of this report, we observe 200 firms who were listed on the TSX Index in 2011 and for which 7 continuous years of pay and performance data are available. The impact of the financial crisis can be seen in our TSR observations for two years (2008-2009) of our sample. The average annual TSR in 2008 is the lowest in our observation period at -31.64% which was followed by the highest average annual TSR of 36.51% in 2009, suggesting an immediate overall rebound. However, despite the negative impact of the financial crisis, overall CEO pay and performance over the 6-year 2005-2010 period were aligned.
Publication can be found here.
Calls for Japan to shape up corporate governance processes: managers “discourage investment by failing to meet global standards” says the Asian Corporate Governance Association. Why India, with its developing corporate governance policies, is failing to establish “shareholder culture”. Hong Kong shareholder activitist quits Hong Kong stock exchange board, “accusing the bourse of deteriorating listing standards and succumbing to political influence.”
In Canada, as David Beatty winds down his term as Managing Director of the Canadian Coalition for Good Governance, he discusses findings showing that “[d]espite the belief that greed often lies behind bad governance, the companies with good, transparent boards appear to be the top performers.” An examination of the CEO pay debate: “When the U. S.-based Institute for Policy Studies calculates that chief executives in 2006 earned 364 times more money than the average worker, that is just a statistic. But when the institute points out that as recently as 1980 the multiple was just 42 times, it becomes a trend worth pondering. Is it possible business has changed so much in 30 years that the average chief executive is really worth that much more, relatively, than he or she used to be?”
Upcoming AGMs to watch in the US in regards in shareholder activism: “Will management win out? Will directors get booted? Can activists win out? One certainty: There will be blood.” More on “say-on-pay”. From Report on Business, could excecutive pay packages be fueling “high risk business practices that are toppling giants today”? In Germany, shareholders claim a “rare victory”.
Some governance issues in the news: more coverage of Marks & Spencer’s recent controversial move to combine the roles of their CEO and Chair– major shareholders are calling the change “unwelcome”. On the need for continued vigilance to ensure executive compensation is under control in Canada, particularly in light of the subprime mortgage problems in the US.