University of Toronto professor Jeffrey MacIntosh notes, as in the United States, pension shareholder activism got its start in Canada in the last decade and perhaps specifically with fiduciary resistance to Crownex Corporation’s 1986 plans for recapitalization. Since then, says MacIntosh, anecdotal evidence points to acceleration in the rate of high profile interventions on the same corporate governance issues receiving regular attention south-of-the-border (see America’s Shareholder Activism). For instance, there were the efforts of the Caisse de dépôt and Ontario Teachers PPB to oppose concentration of top executive powers at the Royal Bank of Canada and the National Bank of Canada in 1997. To protect its existing stock values, the Caisse again exercised its clout in 1998 regarding the terms of Loblaw’s bid to acquire the Quebec-based grocer Provigo.
Of course, such examples mask what is likely even greater incidence of formal and informal consultation and negotiation on governance concerns between pension investors and investee firm managers behind closed doors. This development, also a product of the 1980s, parallels the pronounced changes witnessed in corporate America, though it appears to have been prompted in Canada by fewer public battles. This reflects what many Canadian pension managers argue is a more typically consensual approach to resolving governance conflicts in this country. However, this may not always remain the norm. In 1998, OMERS flagged an interest in a more assertive shareholder stance, perhaps emulating some tactics utilized by CalPERS, such as publishing lists of under-performing firms. Other large public sector funds are similarly interested, citing research attesting to return maximization. Anecdotal reports also suggest more frequent participation by such funds in shareholder resolutions.
One sign of increasing activity among pension shareholders at home, and of increasing method in the process, is the crafting of corporate governance standards by the Pension Investment Association of Canada (PIAC), beginning in 1993. These standards are intended to advise members in the conduct of various shareholder initiatives, such as proxy voting, on key matters. Unique among countries where fiduciary awareness of new roles and responsibilities as significant minority owners of equity has recently come to the fore, PIAC principles are articulated under the following four topic headings:
In a 1998 report, the Standing Senate Committee on Banking, Trade and Commerce re-inforced the significance of such guidelines, informed pension trusteeship, the need for independent directors on corporate boards and improved shareholder communications, among other imperatives, in its recommendations.
Sources: The Financial Post, “OMERS mulls more aggressive investing”, March 19, 1998; PIAC, Corporate Governance Standards, 1997; Standing Senate Committee on Banking, Trade and Commerce, Proceedings, November 18 and 19, 1997 and The Governance Practices of Institutional Investors, 1998 ; CLMPC interviews, 1998