TORONTO, Oct. 6, 2016 /CNW/ - Kingsdale Shareholder Services today released its annual 2016 Proxy Season Review, a report designed to equip public companies, boards, and advisors to face the changing expectations of shareholders, demands of activists, and policies of proxy advisors. The report provides a detailed examination of the key statistics of this past proxy season and details a number of important case studies.
"This was the year management fought back. After a record breaking year of proxy contests in 2015, management has said enough is enough in 2016 and standing up to activists," said Kingsdale CEO and Founder, Wes Hall. "While management has won more of the publicly disclosed proxy fights, we estimate this represents only about one-third of all activist activity in Canada. The fact boards are taking the initiative to engage shareholders and build relationships with them means activists are having a tougher time gaining traction with their arguments. The battleground has moved from the boardroom to the hearts and minds of an issuer's shareholders."
Kingsdale defined the most noteworthy developments of the 2016 proxy season as:
- The End of 'Activist Season'. A busy second half of 2015 and early 2016 shows activists are no longer waiting until issuers hold their regularly scheduled annual meetings to take action. In fact, if a meeting is requisitioned and is not successful an annual meeting provides a second opportunity for change. No sector is immune from activism but the Materials and Energy Sectors have proven to be most active in 2016.
- Issuers Can't Take Friendly Transactions For Granted. While board seats remain the top objective of activists, more are threatening to block or drive transactions. 2016 saw a number of friendly deals threatened in high profile 'vote no' campaigns with 26% of all proxy fights being transaction related (e.g. aimed at stopping or consummating a transaction), up from 20% in 2015.
- Say-On-Pay Challenges. While say-on-pay adoption continues, with the first vote by a TSX Venture issuer, and the average support level remaining around 92% for the last three years some companies are running into problems: This year 11 companies received less than 75% support (vs. seven in 2015 and eight in 2015), two companies failed, and Institutional Shareholder Services recommended against more companies than in previous years. Even if an issuer doesn't have a say-on-pay vote shareholders will not give a free pass on compensation concerns and compensation committee members' support levels may be affected. In response to these challenges and in an effort to focus shareholders on the long-term some issuers are considering moving to less frequent say-on-pay votes.
- Increased Shareholder Demand for Board Level Engagement. The expectations of shareholders are changing with more wanting access to independent directors to share ideas, increase their confidence in board oversight, test long-term strategy, and discuss governance concerns. Rather than sequestering themselves in the boardroom, directors are encouraged to plan and prepare to be proactive in meeting shareholders. The benefits to a board include showcasing director expertise, creating self-awareness, increasing understanding of shareholder expectations, and building trust and personal capital for a time when adversity may strike the company.
About Kingsdale Shareholder Services:
Since 2003, public companies across North America have looked to the expertise of Kingsdale Shareholder Services to help them reach out to shareholders to secure votes for annual meeting agenda items and transactions. Kingsdale has been engaged by more issuers and in more proxy contests than all other advisors in Canada combined and acted on the majority of M&A transactions each year. As Canada's preeminent shareholder services firm, Kingsdale offers an array of specialized services including: strategic and defensive advisory, proxy solicitation, shareholder identification, information agent, debt services, depositary, governance advisory and proxy analytics, asset reclamation, and corporate communications.
Please visit us at: www.kingsdaleshareholder.com
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For further information: Ian Robertson, Executive Vice President, Communication Strategy, Direct: 416.867.2333; Cell: 647.621.2646, [email protected]