Legal news and trends for Canadian in-house counsel and c-suite executives
Issue link: https://digital.canadianlawyermag.com/i/50885
RITY W WHY SHOULD RULE By Michael McKiernan hen Herb Pinder Jr. first got involved with com- pany boards more than 25 years ago, the identity of directors had more to do with the chief execu- tive officer's circle of friends than the wishes of its shareholders. "The CEO at company X would get his buddy over at company Y to come on his board and chair the compensation committee, and then the guy at company Y would return the favour," he says. "It was all very cozy, and it was nice when you got on the circuit, but it was very clubby and inappropriate, both with respect to the law, and ethi- cally." The former sports agent and lawyer is president of the Goal Group, a private equity management firm based in Saskatoon, and has been a director at a number of companies, including TSX-listed oil and gas company ARC Resources Ltd., where he currently sits on the board. Things have come a long way since those days, and Canada's corporations are all the better for it, Pinder says. Increasingly independent directors have redefined their relationship with management, wielding greater influ- ence on the running of the company. "There's a lot more sunshine on these matters, a lot more news about business, and a recognition of its importance," Pinder says. But now directors are facing an uprising of their own, from the people who elect them: shareholders. In recent years, greater shareholder engagement and the explosion in the impor- tance of institutional investors, who owe a fiduciary duty to their members, has shifted the focus again, from board-management relations to board-shareholder relationships. Investors want more rights, and shareholder democracy advocates like the Canadian Coalition for Good Governance, which was formed in 2003 to repre- sent the interests of institutional investors, are now targeting improvements to the way they elect their representatives on the board. At times, the complicated system of proxy voting for shareholders can more INHOUSE OCTOBER 2011 • 17 As shareholders demand a greater say in the voting process, the heat is being turned up for Canadian organizations to implement majority-voting policies. ROBERT CARTER