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.
By: Sophie Langlois
The Clarkson Centre for Board Effectiveness (CCBE) has tracked CEO pay and performance alignment for firms on the S&P/TSX Composite Index (TSX Index) since 2004. Overall, data shows that CEO pay and share performance move in the same direction in the long-term. This trend is, however, less apparent in the short-term. To better understand pay and performance alignment in the short-term, this report focuses on a crucial observation period: the 2008 financial crisis; a year where total average TSR of the TSX Index plunged to -32%.
In an era of increased shareholder scrutiny enhanced by the introduction of corporate governance practices such as, “Say on Pay,” this paper examines patterns in CEO pay and performance alignment in the short-term and whether tenure on the S&P/TSX Composite Index influences compensation behavior. For the purposes of this report, CCBE looked specifically at how TSX Index boards reacted to the 2008 financial crisis. How did long-tenured firms align their CEO pay with financial performance relative to short-tenured firms and firms with eventual-tenure?
Publication can be found here
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”.
So the CCBE Blog returns to life after a hiatus. And what have we been doing in the meantime? Preliminary research has begun into the corporate governance of small and medium-sized enterprises (SMEs), and we’ve started work on our regular TSX Composite Index as proxy season gets underway.
Along those lines, check out the Risk Metrics’ Blog’s 2008 Proxy Preview, focusing on proposals for advisory vote (“say on pay”) measures, among other considerations pertaining to executive compensation. After the CIBC Annual meeting in late February, The Financial Post on the rejection of the “say on pay” proposal, reporting that advocates still claimed victory in the fight to give investors a voice in how much executives are paid.
In Britain, the elevation of Marks & Spencer CEO to Chair makes shareholders uneasy and breaches City corporate governance codes. Study shows companies with good governance outperforming those with the worst. On the growth of the corporate governance movement, and the resulting economic boost: “‘You need some level of governance, and only then will investors come in… And when investors come in, they demand better disclosure and transparency. It feeds on itself.'” And the Wall Street fallout from Spitzer scandal.