Laurel Hill Canada Releases 7th Annual Trends in Corporate Governance

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Nov 03, 2021, 10:00 ET

A new global "ESG activism" is taking root.
Shareholder activism has remained strong and was only temporarily delayed in the early stages of pandemic. Activism, in all of its expanding forms, continues to create risks and challenges for corporate Canada.
ESG continues to gain momentum, with "how" becoming the biggest question.
Executive compensation was under unprecedented scrutiny this year.
Diversity beyond gender has seen little progress to date.

NEW YORK and TORONTO, Nov. 3, 2021 /PRNewswire/ - Laurel Hill Advisory Group is pleased to share Laurel Hill's 7th annual Trends in Corporate Governance report, Canada's most comprehensive and longest-running annual guide to the trends, risks and challenges affecting the Canadian corporate governance landscape. The report focuses on shareholder activism, shareholder proposals, environmental, social and governance (ESG), executive compensation, diversity, and several other related areas. Click here to download the report. As always, Laurel Hill strives to provide boards and management teams with customized guidance and insights to prepare them for navigating the best path forward.

David Salmon, President of Laurel Hill (Canada), notes: "With the pandemic continuing into a second proxy season, corporate Canada's understanding of the effects on its respective businesses has been much clearer. For many companies, they have settled into a new equilibrium and, in some ways, we have returned to many of the pre-pandemic trends; while for others, there has been a definite change in how issuers and investors view the business. One thing is clear: ESG is pervasive on all fronts for corporate Canada."

Key highlights of the 2021 report include:

New Form of Global "ESG activism". A new form of global "ESG activism", resulting from a confluence of trends, developments and events in the last year and a half, is taking root. In Canada, shareholder proposals that focused on environmental and social concerns dominated all other proposal categories this year. The global say-on-climate campaign has seen some early successes, but some shareholders, proxy advisors, and observers have expressed reservations.
Activism Returns. Despite the many obstacles faced by activists during the early months of the pandemic, board and transactional activism levels for the 2020 year were not even dented as compared to 2019. In 2021, activists have resumed their pursuit of board change at Canada's larger companies and are enjoying record levels of success in driving up deal prices and defeating deals or proposed deals. Activism in its many forms appears poised for a strong 2022.
Sustainability and Inclusiveness. The pandemic has helped put ESG issues front and centre, especially as they relate to sustainability and inclusiveness. This increased attention places the spotlight on company boards to oversee ESG risks. While the "why" of ESG oversight has been given a significantly higher level of importance, the "how" still remains an issue for investors and boards, although progress on more uniform standards is being made.
Say-on-Pay Failures. There was a record number of say-on-pay failures in 2021, resulting from a record number of "against" vote recommendations from the major proxy advisory firms, ISS and Glass Lewis. In many of these cases, companies softened executive compensation targets or used board discretion to increase payouts in response to the impacts of the pandemic, contrary to the guidance provided by the proxy advisory firms.
Diversity. On the diversity front, we continue to see incremental progress in gender diversity at the board and executive levels. However, despite new federal regulations and other campaigns to promote other forms of diversity, the data shows that representation by groups other than women remains low.

2022 will mark Laurel Hill's 15th year of business. Laurel Hill is proud of our deep, stable and seasoned team of capital markets professionals and our reputation as a trusted advisor. We take great pride in our culture that is rooted in acting with integrity, in an unwavering focus on our clients, and in a commitment to providing unequalled strategic solutions, shareholder results, and client satisfaction. This culture drives our team and is the foundation for our track record of results.

For more information, please visit us at www.laurelhill.ca or contact us at any of the coordinates listed below.

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About Laurel Hill

Laurel Hill Advisory Group is North America's leading independent, cross-border shareholder communications and advisory firm. We provide industry-leading governance advisory, compensation advisory, strategic advisory, proxy solicitation, information agent, depositary, escrow, and asset recovery services. Our customized solutions, delivered by the industry's most experienced, multidisciplinary and collaborative team, help our clients develop and maintain market-leading governance, shareholder engagement, and activism preparedness. We are regularly engaged on the most high-profile, complex, and contentious governance, M&A, and activism situations. Our cross-border operations allow us to effectively reach shareholders regardless of their location – Canada, U.S. and globally. We deliver results.

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SOURCE Laurel Hill Advisory Group