Robert Lehodey and Andrew MacDougall speak to Lexpert in “Evolution, Not Revolution”

Andrew MacDougall, Robert Lehodey, QC

Mar 2013

Julius Melnitzer

Lexpert Magazine


Media hype one thing. Reality may be something else. And so it is with shareholder activism in Canada. The proxy battles surrounding CP, TELUS, Agrium, Baja Mining Corp. And other corporate icons, combined with the growing public involvement of institutional shareholders in these battles, may in their sheer media profile and intensity suggest that shareholder activism grew exponentially in Canada in 2012.


“This was an historic situation and a wake-up call for Canadian boards because it resulted in a major change to the composition of the board of a widely held Canadian corporation.” Says Andrew MacDougall in Osler, Hoskin & Harcourt LLP’s Toronto office.


“We’ve seen hints that this sort of thing might have been coming as far back as 2009 with the success of shareholder proposals requesting the adoption of say-on-pay,” MacDougall says. “but the CP situation did represent a very dramatic turn of events.”


“My perspective is that activism is on the rise, and the numbers are up a bit, but there’s not a big historical trend line,” says Robert Lehodey in Osler’s Calgary office.  “Almost 15 years ago, we acted for large institutional shareholders who prompted the sale of oil patch companies like Cabre Exploration, Maxx Petroleum, NQL Energy Services and Ranger Oil.”

The environment then, Lehodey says, was similar to the one existing today. “Those were times where opportunistic and frustrated shareholders, who can be likened to the Icahns and Pershings of today, wanted entrenched management to do something about unsatisfactory share values,” he says.


“The fundamental rules that allow activists to get information, knock on the door or requisition meetings haven’t changed much in years,” Lehodey says. “Measures like individual voting are just evolutionary developments.”


Strong institutional support for its position was certainly at the heart of Pershing’s success in the CP struggle. “It’s now evident not only that Canadian institutional shareholders will support change where a case that change is necessary exists, but that institutions are evidencing less tolerance for the status quo following a long period of low investment returns,” Macdougall says.


“What CP demonstrates is that boards need to engage more with shareholders by way of enhancing trust with their long-term investors,” MacDougall says. “That includes understanding shareholder concerns and responding to them, articulating corporate strategy and goals and testing these to ensure they comply with shareholders’ reasons for investment, and then assessing whether the company is meeting these goals and strategies.” 

To view the full article in Lexpert Digital, click here.