On January 14, 2021, Laurel Hill Advisory Group (“Laurel Hill”) and Fasken hosted a webinar on ESG (environmental, social and governance) considerations of which companies should be aware for the upcoming 2021 proxy season. The webinar’s panelists were David Salmon of Laurel Hill and Emilie Bundock, Stephen Erlichman and Grant McGlaughlin of Fasken and was moderated by Gordon Raman of Fasken. Set out below are some of the comments made by the speakers on the webinar.

Background

The importance of ESG considerations in today’s corporate governance model has developed over the past 50 years.  In the early 1970’s the Milton Friedman view of corporations was the dominant business mindset.  In a forceful New York Times article he said that business leaders that “believed business is not concerned ‘merely’ with profit but also with promoting desirable ‘social’ ends …[were]… preaching pure and unadulterated socialism”.  Since that time, certainly in North America,  corporations have assumed a central role in the growth of economies.  With that central role has come the recognition that corporations play a greater role in society, as noted in 2017 by Larry Fink, the head of Blackrock.  In his annual letter to CEOs he wrote: “ To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society. Companies must benefit all of their stakeholders, including shareholders, employees, customers, and the communities in which they operate.”
Continue Reading Proxy Season Preview 2021: ESG Considerations

On January 14, 2021, the Toronto Stock Exchange (“TSX”), Laurel Hill Advisory Group (“Laurel Hill”) and Fasken hosted a conversation on important disclosure and corporate governance considerations for issuers leading into the 2021 proxy season. The panel discussed four discrete areas of recent developments in corporate governance which companies should be aware of before this upcoming 2021 proxy season:

  1. An Update from Proxy Advisory Firms
  2. An Update from the TSX
  3. Diversity Disclosure
  4. COVID-19: Lasting Repercussions

The webinar discussion featured Bill Zawada of Laurel Hill, Valérie Douville of the TSX, and Sarah Gingrich and Neil Kravitz of Fasken and was moderated by Gordon Raman of Fasken.
Continue Reading Proxy Season Preview 2021

Proxy advisory firms Institutional Shareholder Services (ISS) and Glass, Lewis & Co. (Glass Lewis) recently published updated guidelines governing shareholder meetings for the 2021 proxy season. The ISS Benchmark Policies for Canadian issuers and Glass Lewis Guidelines focused on key issues, including gender diversity, environmental and social risk oversight, board refreshment, and other corporate governance

Against the backdrop of the COVID-19 pandemic and the novel challenges with which public companies around the world have been faced, Glass Lewis & Co. (“Glass Lewis”) and Institutional Shareholder Services Inc. (“ISS”), two established proxy advisory firms, have released updates in connection with how their voting policies will be applied in the course of the 2020 proxy season. The central themes from both advisors are that the COVID-19 pandemic is creating exceptional and difficult circumstances for Boards to navigate, and that the firms will have an increased flexibility in their approach to proxy contest reviews, with an emphasis on the quality of companies’ decision-making, disclosure and reasoning in respect of any changes to governance, compensation and capital structure.


Continue Reading Proxy Voting Guidelines in the COVID-19 Context

Institutional Investor Services (“ISS”) and Glass Lewis have released their updates to proxy voting guidelines for 2020. These guidelines shape the recommendations both bodies will give in reports concerning specific issuers which are often followed by institutional investors. For issuers with an institutional investor as a majority shareholder, these guidelines can be determinative

Since it costs a lot to win, and even more to lose,

You and me bound to spend some time wondering what to choose.

Deal – The Grateful Dead

IIROC recently published guidance regarding managing conflicts of interest arising from soliciting dealer arrangements. The guidance elaborates on existing conflict of interest rules in the context of takeover bids, plans of arrangement, proxy contests and other securities transactions involving various types of solicitation fees.


Continue Reading IIROC Provides Guidance on Soliciting Dealer Arrangements

Institutional Shareholder Services (ISS) and Glass, Lewis & Co. (Glass Lewis) have both released updates to their Canadian proxy voting recommendation guidelines for the 2018 proxy season.

The following summary outlines the significant changes made by ISS (ISS Updates) and Glass Lewis  (Glass Lewis Updates) to their respective Canadian proxy advisory guidelines.

ISS

Definition of Independence.  ISS has updated its definitions relating to director independence.  Previously, ISS categorized each director as an Inside Executive Director, Affiliated Outside Director or Independent Director.  The new categories are Executive Director, Non-Independent, Non-Executive Director (including former CEOs, controlling shareholders, Non-CEO executives, relatives of executives and persons with professional/financial relationships, among other things) or Independent Director.

Board Gender Diversity.  Beginning February 2019, ISS will generally recommend withholding votes for the chair of the nominating committee, or board chair if no nominating committee chair, where a company has not disclosed a formal written gender diversity policy and has no female directors.  ISS indicates that a written policy should include measurable goals or targets and clear commitments to increasing gender diversity within a reasonable period of time.  The ISS Updates also state that boilerplate or contradictory language may result in withhold recommendations.  The ISS policy will apply to all TSX companies, except companies first listed or graduated from the TSXV within two fiscal years or companies with four or fewer directors.


Continue Reading 2018 ISS and Glass Lewis Updates

berlin-2018056_1280A recent case in Manitoba has explored certain issues relating to the use of proxies within the context of a limited partnership.  The case, 177061 Canada Ltd. et al. v. 5771723 Manitoba Ltd. et al., 2016 MBQB 40, discusses two points of interests relating to proxies in a limited partnership setting (and, by logical extension, a partnership setting): (1) whether, under Manitoba law, a unit holder in a limited partnership can give to another person an irrevocable proxy to vote, which extends beyond a single meeting or adjourned meeting, and (2) if so, whether such irrevocable proxy can be revoked.

The case concerns proxies that were created in 1998 as part of a payment for debt for various transactions between two sophisticated business parties (Lount and Shelter).  One of the parties, Lount, a respondent in this case, received two  “irrevocable voting proxies” from a company controlled by the other sophisticated party, Shelter, and from the wife of a business associate of Shelter (Sikora), each an applicant in this case, for voting rights of a limited partnership (unrelated to the transactions) which beneficially owned an apartment building in Winnipeg.

Lount proceeded to use the proxies until 2011.  An annual and special meeting of the limited partnership was scheduled for December 2013 in which significant changes to the limited partnership agreement were to be considered.


Continue Reading Use of Proxies within the Context of a Limited Partnership

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Institutional Shareholder Services (ISS) and Glass, Lewis & Co. (Glass Lewis) have both released updates to their Canadian proxy voting recommendation guidelines for the 2017 proxy season.

The following summary outlines the significant changes made by ISS (ISS Policy Updates) and Glass Lewis (Glass Lewis Guideline Updates) to their respective Canadian

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As noted in the Globe and Mail’s recent article, “In Canada’s boardrooms, activist investors are striking out” (subscription to the Globe and Mail required), Canadian listed public companies have continued to have success against activist investors. In fact, since January 1, 2015, Canadian listed issuers have a perfect record against “professional” activists in formal proxy contests, having won all six such contests to make changes to the board which were initiated by hedge funds or institutional investors. This success may be driven, at least in part, by issuers’ increased emphasis on advance preparation, including shareholder engagement. If issuers are more attuned to the views of their shareholders, it stands to reason that they will be in a better position to assess the likelihood of successfully defending against an activist in a formal proxy contest and pre-emptively settle those situations that they do not believe they can win. This explanation, while compelling, may be incomplete. With that in mind, I offer the following five observations based on a review of the public record of unsuccessful contests recently initiated by “professional” activists.


Continue Reading Canadian Issuers Continue To Have Success Against Activist Investors