CIRI has urged regulators in Canada not to adopt a mandatory say-on-pay vote.
In a letter to the Ontario Securities Commission (OSC), the IR association says advisory votes on pay, which are now mandatory in the US, are too simplistic and hamper engagement between companies and their shareholders.
‘CIRI is concerned that the yes-or-no nature of a say-on-pay vote significantly reduces an issuer’s ability to understand the nature and full scope of shareholders’ concerns, many of which, while compensation-related, may also encompass other issues such as financial performance and management expertise, among others,’ comments CIRI president and chief executive Tom Enright in the letter.
‘In addition, an advisory say-on-pay vote is a relatively new issue for Canadian investors, as evidenced by the relatively small number of issuers in the TSX Composite Iindex that have adopted it. Given these factors, CIRI believes it is premature to recommend a mandatory vote at this time.’
A recent poll of a small number of CIRI members finds fewer than one in five currently gives investors a vote on executive pay, while more than half of those not offering a vote say they do not intend to do so in the near future, adds Enright.
‘Not surprisingly, respondents expressed fairly strong views that they believe an advisory say-on-pay vote should not be made mandatory for Canadian reporting issuers,’ he states.
CIRI’s letter was sent in response to an OSC staff notice covering shareholder democracy issues, and pushes the IR society’s agenda on a number of other topics, such as director elections and proxy access.
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