In the August 2011 issue of Corporate Secretary magazine, Jay Hoffman discusses the rise of shareholder activism.
When asked about how the Canadian landscape has changed, Jay points out that hostile proxy fights for control by activist investor groups are now frequently taking the form of the groups either requisitioning a meeting to replace the board, or more often, running a dissident slate at an annual meeting by filing a dissident circular to remove all or part of a board. He goes on to advise that a business’ corporate strategy must now withstand investor scrutiny as well as scrutiny by the courts and securities regulators and there is a need for boards to understand their legal obligations in contested situations, noting that Canadian courts have recently reaffirmed that they will show deference to decisions of boards that exercise their business judgment in responding to shareholder activism.
Jay also suggests that a thorough governance audit is no longer enough and that directors need to review and assess strategic and business plans, improve executive compensation practices, review social responsibility practices, and consider adopting voluntary policies such as say on pay, majority voting and no-slate voting.
Read the article: « Canadian shareholders raise their voice«