* 13 big companies agree on uniform say-on-pay resolution
* Cooperation, not legislation, contrasts with U.S. trend
* Nonbinding compensation votes set for 2010
By Andrea Hopkins
TORONTO, Oct 26 Canada's largest companies,
including its big banks and insurers, have agreed to give
investors a nonbinding uniform vote on executive pay, avoiding
the legislative battle facing U.S. shareholders who are trying
to have a say on pay.
Thirteen of Canada's largest companies have agreed to allow
shareholders to vote on a common resolution on executive
compensation, and more are expected to sign up before the
annual meeting season begins in the spring, shareholder and
investor groups said on Monday.
Stephen Griggs, executive director of the Canadian
Coalition for Good Governance, which represents most of
Canada's largest institutional shareholders, said he expects
the voluntary move by the biggest companies to trickle down to
smaller publicly traded corporations.
"The goal is to have every listed company in Canada have a
say-on-pay resolution," Griggs said in an interview.
While the resolution is nonbinding, it will be identical at
each company, helping shareholders compare pay schemes.
The hot-button issue of pay and bonuses -- particularly at
Canada's big banks -- have simmered for years, but popular
anger about executive pay is less intense in Canada than in
The voluntary move by the biggest companies will allow
activist shareholders to measure the compensation plans of
each, and reject or approve each. It would then be up to the
boards of directors -- who are voted into office by
shareholders -- to decide whether to approve the pay schemes.
Griggs contrasted the growing cooperation to the uphill
battle between U.S. legislators, shareholders and companies to
control executive compensation in the United States after a
year of government bailouts and bankruptcies.
"In Canada we've been able to work cooperatively between
large shareholders and large issuers to develop a level of
engagement and a reasonable form of resolution," Griggs said.
While shareholder anger about executive pay in recent years
had prompted several companies to promise shareholder votes on
compensation beginning in 2010, the fact that the biggest
companies are voluntarily signing onto a uniform resolution for
those votes takes the pressure off forcing legislation.
In Canada, where regulations vary from province to province
and there is no federal securities regulator, legislation would
have been a piecemeal and uneven process.
While not all of the 13 companies -- which include seven of
the eight biggest seven banks and two big insurance companies
-- would confirm they will put the resolution to shareholders
in 2010, Canada's No. 2 bank, Toronto Dominion Bank (TD.TO) was
among those who said they are ready to recommend its board
adopt the resolution.
"It was a very collaborative process and we're very pleased
with how this process has gone," TD spokesman Mohammed Nakhooda
said. "The policy goes a long way to achieving consistency
among Canadian issuers who decide to adopt a say-on-pay
Socially responsible investing company Meritas Mutual Funds
said even more companies would probably sign on as the practice
"It's viewed as good governance," Meritas Chief Executive
Gary Hawton said.
Hawton stressed the resolution is not an attempt to take
power away from the boards of directors, who have expertise
about things beyond compensation. But even if votes are
nonbinding, he expects directors to take them seriously.
"If they walk away from (a 'no' vote) and say 'well, this
is nonbinding,' they risk wrath of shareholders on reelection,
and worse," Hawton said.
Following is a list of companies who have signed on to the
"say-on-pay" vote, according to shareholder group Share:
Bank of Montreal (BMO.TO)
Bank of Nova Scotia (BNS.TO)
BCE Inc (BCE.TO)
Canadian Imperial Bank of Commerce (CM.TO)
Industrial Alliance Insurance (IAG.TO)
Laurentian Bank of Canada (LB.TO)
Manulife Financial Corp (MFC.TO)
National Bank of Canada (NA.TO)
Potash Corp (POT.TO)
Royal Bank of Canada (RY.TO)
Sun Life Financial (SLF.TO)
Toronto Dominion Bank
TMX Group (X.TO)
(Reporting by Andrea Hopkins)