Special Report on Governance — Listed

Andrew MacDougall

May 17, 2017

Increasing board engagement and dialogue with shareholders is one key component of not only guarding against shareholder activism, but also fostering alignment between shareholders and the board, according to a Special Report on Governance in Listed. In his article “In search of alignment,” Paul Brent explores the changing nature of the board-shareholder relationship and its impact on corporate governance strategies. The article explains how a growth in dialogue has helped curb the volume of publicly reported shareholder activism. But boards can also take different approaches to dealing with shareholder demands, which was demonstrated in a recent shareholder proposal requesting that the board of directors take steps to adopt a “proxy access” by-law at the TD Bank and Royal Bank of Canada annual meetings (read more in this Osler Update). The proxy access proposal was approved at the TD Bank meeting, but was defeated at the RBC annual meeting. Osler partner Andrew MacDougall, who specializes in Corporate Governance, tells Listed that while it has “rarely been used,” the availability of proxy access in Canada is nothing new.

“The interesting thing is that we have had that remedy for a very long time in our law,” Andrew tells Listed. Andrew also says that the level of support for the proxy access proposal at both the TD Bank and RBC meetings suggests a degree of interest among shareholders that will ensure proxy access remains on the board agenda in Canada.

Shareholder activism is also a key consideration for boards in Canada. In his article “How to think like an activist” — Part 2 of Listed’s Special Report on Governance series — John Greenwood outlines the best practices for boards in guarding against shareholder activism. Thinking like an activist is crucial, according to the article, but Andrew says identifying factors that make an attractive activist target is also important.

Andrew identifies a “declining stock price” as the most obvious sign, and adds that would be closely followed by “controversial compensation arrangements, and frankly, opportunities for other means of realizing value.”

For more information on corporate governance strategies and shareholder activism, read Paul Brent’s article “In search of alignment” and John Greenwood’s article “How to think like an activist,” in Listed.