Catherine McCall is the chief executive of the Canadian Coalition for Good Governance, which represents institutional investors that together manage approximately $5.5-trillion in assets on behalf of pension funds, mutual fund unitholders, and other institutional and individual investors.
Canadian investors fought for more than 15 years for their rights in uncontested director elections, in which a company’s nominees for the board face no rival candidates. In cases where investors do not accept these nominees, they want to have their “against” votes be binding and free from discretionary director oversight – to ensure that, rightfully, a company’s nominees do not sail through simply because there are no challengers.
For example, management could supplement its disclosure beyond what has been provided in the proxy circular – a document that accompanies every AGM and is the primary source of issuer/shareholder communication – and engage more with shareholders. It is important to note, however, that if the threshold is met the bylaw imposes the postponement regardless of whether there is an activist campaign, stealth or otherwise, in the offing. If shareholders vote against a director in the ordinary course and not under the influence of some nefarious activist, the issuer still gets time
It’s worth pointing out that companies have the opportunity and the right to convince shareholders at length in the proxy circular of the merits of the director nominees and the rationale behind their nominations. Companies also have the right – some would say more of an obligation – to engage with shareholders on a regular basis, so that they won’t be blindsided by election results.
Companies also always have the right under existing law to postpone an AGM. But by making the postponement automatic, it reverses the onus: The directors do not have to defend the decision from criticism.