Tuesday, February 15, 2011

Ontario Teachers pushes for less frequent say on pay votes

The Ontario Teachers’ Pension Plan, the largest single-profession pension plan in Canada with more than $96 billion in assets, says it does not support annual executive compensation votes.

Instead, Teachers supports such votes every three years, “in keeping with our belief that a properly constituted board, not the shareholder, is best able to address compensation matters in the normal course of fulfilling its responsibilities.”

In a public letter, Teachers says annual votes may compel boards to adjust compensation programs every year to demonstrate that they are effectively managing the compensation process.

“We believe this approach could lead to a focus on short-term objectives rather than on more stable, long-term objectives, or lead to inconsistencies in the compensation program without a clear long-term focus,” the letter states. “In our view, an advisory vote on compensation every three years would remove these biases and better facilitate the development of a compensation program focused on promoting the long-term success of the organization.”

“We believe that an advisory vote on compensation every three years is in keeping with boards designing stable compensation regimes that link compensation, strategy and long-term performance.”

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