Ontario Teachers' Pension Plan, Toronto, will have a shorter fuse in taking a tougher approach this year in say-on-pay proxy voting, including voting against board members when it sees a disconnect between executive compensation and corporate performance, according to revisions to its corporate governance oversight guidelines.
Among revisions contained in its “Good Governance is Good Business: Corporate Governance Principles and Proxy Voting Guidelines, 2014,” the C$129.5 billion (US$119.3 billion) OTPP revised its voting on executive compensation policies “given that 'say-on-pay' is well established in a number of markets around the globe.”
As a result, OTPP “will now address 'say-on-pay' resolutions on a case-by-case basis and reserve the ability to vote against a 'say-on-pay' resolution in any given year,” according to its revised guidelines.
In addition, in what OTPP views as extreme cases of disengaged corporate pay policies, it would also in the same year vote against the chair or other members of the compensation committee or even the entire board of directors.
Previously, OTPP “employed a three-year process whereby in year one of a 'say-on-pay' vote we would support” the executive compensation package and follow up with the company with any concerns, the guidelines state. In the second year, “should the concerns remain unaddressed,” OTPP would vote against the say-on-pay resolution and again follow up with the company. Only in the third year, if “there was still no significant movement, we would vote against” compensation committee members or the entire board.