Over the past few years, companies have been taking a more proactive approach to shareholder engagement in light of shareholder votes on executive compensation in the US, UK and Canada. Instead of reacting to specific challenges, companies are speaking directly with shareholders to determine their concerns.
US: Companies are pushing back on investors for relying too heavily on proxy advisors and not engaging in dialogue.
UK: Companies are becoming more conservative, focusing on getting the DRR disclosure right and trying not to change plans too much. Ironically, because the appetite to change pay plans has lessened, the dialogue has decreased.
Canada: Say on pay in Canada is non-binding has not affected the prevalence of say-on-pay votes among large and midsize companies. Most major issuers in Canada understand that this is now an expected practice.
US: Many investors are required to apply a consistent voting policy, and if they veer from the policy, they have to document the reason. This handcuffs some investors.
UK: It would be good if proxy advisors had less influence, but institutional shareholders don’t have the resources to liaise effectively with all the companies that might wish to engage.
Canada: Notwithstanding an expected increase in board/shareholder dialogue, it’s hard to foresee their power diminishing in the near future.
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