Views on improving the integrity of global capital markets
05 May 2016

CorpGov Roundup: CSA Seeks Investor Input, Report Slams UK Firms’ Pay Practices

Canadian issuers and investors, the CSA seeks your input on its report.  What do Japanese issuers think of the country’s new stewardship code? New report highly critical of executive pay practices in UK companies. Check out what a recent US paper on compensation goals and firm performance found. This and more spanned the corpgov globe in April.


The Canadian Securities Administration (CSA) recently released its Final Report on Review of the Proxy Voting Infrastructure and Request for Comments on Proposed Meeting Vote Reconciliation Protocols. The report is the result of a long consultation process by the CSA and is recommended reading for anyone concerned with the integrity of the proxy voting process — whatever market they operate in.

The report is meant to address concerns that the proxy voting infrastructure and meeting vote reconciliation can be inaccurate, unreliable, and nontransparent. Issuers and investors have been concerned about issues of over-voting and missing votes.

The following are the next steps according to the CSA:

  • Establish a technical committee to support the implementation of improvements to meeting vote reconciliation
  • Hold one or more roundtables in third quarter 2016
  • Publish the final protocols as a CSA staff notice at the end of 2016 in time for the 2017 proxy season
  • Monitor voluntary implementation of the protocols for the 2017 proxy season and consider proposed new rules and guidance

Comments on the report are due to the CSA by 15 July.


Interested in German board news, but don’t speak or read German? No worries. An English-language version of GermanBoardNews was launched in April by the Association of Supervisory Boards in German.


A recent report by the Japanese Government Pension Investment Fund reveals the thoughts on engagement by Japanese issuers since the recent adoption of the country’s stewardship code. The survey reveals that about 260 of those in the JPX Nikkei Index 400 responded to the survey. Some of the highlights include the following:

  • Approximately 60% of companies in the Index that responded to the survey have recognized and appreciated the change of institutional investors regarding investors’ questions about business strategy and ESG issues.
  • But a number of companies pointed out undesirable changes in which investors increased formal questions and enforcement of meetings with top management to make their performance records.
  • Companies complained about one-way propositions of investors without correct understanding of circumstances surrounding companies.
  • Many companies suggested increased questions about capital policy and capital efficiency as both desirable and undesirable changes by investors.
  • Constructive dialogues and long-term investments are expected by companies because of concerns about short-termism among institutional investors.
  • Companies appreciated insightful and useful dialogues with external asset managers of active investments.
  • It will be necessary for asset managers to develop talented personnel to facilitate constructive dialogues for mid- to long-term corporate value and sustainable growth.
  • Companies expect direct dialogues with asset owners because they understand that sharing thoughts through direct communication not only with asset managers but also with asset owners is important.

United Kingdom

A recent report by the Executive Remuneration Working Group and the Investment Association was highly critical of current pay practices at UK companies. “The current approach to executive pay in UK-listed companies is not fit for purpose and has resulted in a poor alignment of interests between executives, shareholders, and the company,” said Nigel Wilson, chairman of the Executive Remuneration Working Group.

The report calls for greater transparency; clearer alignment of shareholder, company, and executive interests; more accountability on the part of remuneration committees; and greater engagement with and control by shareholders working through company boards.

United States

A recent academic paper on compensation goals and firm performance found evidence that executives manage accounting performance to achieve compensation goals. The report looked at 750 companies from 1998 to 2012 and found that this behavior is especially prevalent when compensation goals are tied to just one target, especially when this target is one that management can manipulate, such as earnings per share. The authors recommend that performance goals be ones that are less influenced by management or by accounting choices, or that multiple goals be used to award compensation.

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Image Credit: YinYang

About the Author(s)
Matt Orsagh, CFA, CIPM

Matt Orsagh, CFA, CIPM, is a senior director of capital markets policy at CFA Institute, where he focuses on corporate governance, ESG, and climate change analysis. He writes and speaks frequently on these topics on behalf of CFA Institute. His paper, Climate Change Analysis in the Investment Process was named “Best ESG Paper” by Savvy Investor in 2021.

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