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Investors have a big interest in executive compensation issues and want more companies to offer "say on pay" votes to shareholders, a Globe and Mail survey shows.
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The Globe asked readers about corporate governance issues as part of its annual Board Games report on board practices at the end of November. Our first online survey in 10 years of Board Games reports asked investors which governance issues are most important to them, and what sorts of changes they most support.
The sample size was small for our first effort, with just 107 people completing the whole poll. But the findings are nonetheless revealing, showing a strong interest in board governance in general and compensation issues in particular.
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Seventy-two per cent of respondents said they are "concerned" about corporate governance in Canada, for example, and 44 per cent said governance issues inform their investment decisions "a lot" while 31 per cent said they inform their investing "a little." Only 25 per cent said governance had no impact on their investing.
Compensation was clearly a top interest. More than three-quarters of respondents – 77 per cent – said it matters "a lot" how well companies disclose their executive compensation policies for CEOs' bonuses, while 20 per cent said it matters "a little" and just four per cent said it doesn't matter.
In a similar vein, 79 per cent of respondents said companies should give investors the right to an advisory vote on executive pay practices – a practice known as say on pay. Say on pay votes are not mandatory in Canada, but many large companies have begun voluntarily offering them to give investors a way to offer feedback on compensation practices.
The poll results suggest that interest in compensation reforms goes beyond organized advocacy groups like the Canadian Coalition for Good Governance – which has championed say on pay votes on behalf of Canada's largest institutional shareholders – and are also embraced by a wider community of investors.
The survey also shows support for a growing call toward greater diversity on boards, with 52 per cent calling board diversity "very important" and a further 33 per cent labelling it "somewhat important." Just 15 per cent said it is not important.
However, many people are not ready yet to embrace mandatory quotas to increase the number of women on boards, although such rules have been adopted in some European countries like France and Norway. The poll found just 24 per cent believe Canadian companies should have a quota for women directors, while 75 per cent said they should not.
Interestingly, women and men had fairly similar opinions on the issue of quotas. Thirty per cent of women respondents supported quotas compared to 23 per cent of men.
It's hard to know how similar questions would have been answered a year ago, but it is arguable that 24 per cent support for quotas is actually quite a high number considering how little support the idea has traditionally had in Canada's business and investment community. So many people – corporate directors, at least – have dismissed the idea in speeches, panel discussions and reports that it would have been unsurprising if the percentage were far lower.
If nothing else, the survey this year could set a base line to track public opinion on the issue in the future.
Janet McFarland