Two influential proxy advisory firms are recommending that CI Financial Corp shareholders vote. CIX-T is against the company’s compensation practices at its annual meeting next week, arguing that it has failed to respond to investor concerns about aligning pay with executives’ long-term performance.
Founders Shareholder Services (ISS) and Glass Lewis & Company — which advise institutional investors on how to vote on their shares — two reports released earlier this week highlight many of the ongoing problems in independent wealth management, such as compensation discrepancies. between the CEO and other executives.
This is the second year in a row that the two companies have recommended a “no” vote in the company’s annual non-binding no-vote at their annual meeting.
CI failed to secure majority approval for the compensation program from CI shareholders in 2021, receiving only 38.1 percent of the votes cast. It was one of six companies listed on the Toronto Stock Exchange in 2021 that failed to gain a 50 percent boost.
The average level of support in Canadian pay-for-pay votes exceeds 90 percent, according to research by compensation and governance consulting firms. Both ISS and Glass Lewis expect companies to reach out to shareholders when they fail to secure at least 80 percent support. In 2020, CI received 72.6 percent support.
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According to Globe Research, CI CEO Kurt MacAlpine saw one of the largest jumps in total compensation last year for executives in the Canadian wealth management sector.
Mr. McAlpine made $10.6 million in 2021, up more than 75 percent from $6.01 million the previous year. His annual cash bonus jumped to $3.88 million from $1 million in the previous year, while his stake rose to nearly $5.6 million from $4.2 million. His annual salary increased to $1,125,000 – up 40.6 percent from $800,000 in 2020.
In 2021, the two consulting firms expressed concerns about the lack of performance standards for many of CI’s variable pay plans. In its current proxy circular, CI said it had received similar feedback from its institutional shareholders, so the company began work in 2020 on a scorecard for Mr. MacAlpine. With the help of outside consultants, I introduced it in 2021.
“We are encouraged by the fact that the vast majority of our shareholders who voted for their shares prior to the issuance of proxy services reports voted in favor of our modified compensation approach,” said CI spokesperson Murray Oxby.
However, ISS and Glass Lewis objected to the scorecard and with other elements of the company’s payment plans for all executives.
The two said CI still lacks long-term performance-based stock bonuses as a regular part of pay plans for executives other than Mr. McAlpine. The ISS says the incentive pay scorecard is based on annual performance, not long-term factors, and Glass Lewis believes there is a great deal of discretion in determining rewards.
The ISS said the decision to award Mr. MacAlpine a special award and an additional $1.7 million in stock was based on criteria already recognized in his regular scorecard.
Meanwhile, Glass Lewis raised concerns about CI’s internal pay inequality, noting that Mr. MacAlpine, who joined the company in 2019, received more than four times the average compensation earned by other executives revealed. for their compensation in the power of attorney circular.
“A high level of executive pay inequality, as in this case, may be indicative of serious long-term problems with the company’s compensation practices and, more broadly, its board management and oversight,” the Glass Lewis report said.
Both ISS and Glass Lewis said CI Financial should have done a better job of disclosure, shareholder participation and improving payment plans after the failed 2021 vote.
“Given the significant level of opposition to the company’s pay practices, we believe the GHRC should have taken more initiatives to engage shareholders and take steps to improve the company’s pay practices and programs,” Glass Lewis wrote in her report.
The company also recommended that shareholders withhold the votes of director David Miller, the former head of legal and corporate affairs at Rogers Communications Inc. , who chairs the CI’s Compensation Committee.
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