Fox guarding the henhouse at Power Corp?

In a vote against shareholder rights, Power Corporation, a major fianncial conglomerate in Canada, is suggesting that the board of directors know more about setting compensation than shareholders do. Shareholders, no doubt, are taken to be some dumb chickens incapable of figuring out how much the people they hire should be paid:

Power Corp. of Canada's POW-T board has chosen to buck the growing trend that allows shareholders a vote on executive pay packages.

The financial services holding company says in its management proxy circular that the board is recommending shareholders vote against a resolution seeking so-called "say on pay" that would give investors a non-binding annual vote on executive compensation.

The move makes Montreal-based Power - controlled by the billionaire Desmarais family - a holdout on the issue along with Manulife Financial Corp.

Over the past few months, 10 of Canada's largest companies have agreed to allow shareholders an annual vote on compensation, including almost all of the big financial firms.

...


The Power Corp. proxy says the board believes the directors and the compensation committee are the best positioned to evaluate compensation packages.


So who exactly are the board of directors? Well, none other than backscratching insiders it seems:

(* = compensation committe)

Pierre Beaudoin
Laurent Dassault
André Desmarais, O.C (Deputy Chairman, President and Co-Chief Executive Officer of the Corporation and Co-Chairman, Power Financial Corporation)
Paul Desmarais, P.C. (Chairman of the Executive Committee of the Corporation)
Paul Desmarais, Jr. (Chairman and Co-Chief Executive Officer of the Corporation and
Co-Chairman, Power Financial Corporation)
Anthony R. Graham
Robert Gratton
*Donald F. Mazankowski
Raymond McFeetors
*Jerry E.A. Nickerson
*James R. Nininger
R. Jeffrey Orr
Robert Parizeau
Michel Plessis-Bélair
John A. Rae
Amaury de Seze
Emőke J.E. Szathmáry


Not sure how independent the board is--any board anywhere that is, for Power Corp is not alone in this--when executives and insiders are major directors. The executives built up the company and likely feel that they should dictate everything but I always ask, why take the company public then?

One of my hopes in this economic meltdown is that compensation schemes will be re-engineered to something that makes "more sense"--for the shareholders as well as society in general. The insidious board of directors and oxymoronic "independent directors" have got to go. Here's hoping we soon witness the end of the aritocracy in corporate America--and Canada.

For the record, I have nothing against Power Corporation and simply am using it as an example. There are many other companies that are far worse. The infamous AIG Financial Products subsidiary is an even worse example.

Comments

  1. Amit.dApril 15, 2009 at 5:49 PM

    I'm glad someone has the sense to post this!
     
     
    This is definately one of those "clues" that the directors are frankly just in it for themselves.
     
    Disgraceful *bleep*  
     
     
    Nice post

    ReplyDelete

Post a Comment

Popular Posts

Thoughts on the stock market - March 2020

Image
Right now, DJIA has a P/E of 16.8 and forwand P/E of 15.1, whereas S&P 500 is at 20.1 with forward P/E of 15.8. Source: WSJ market Data If you ignore interest rates and inflation expectations--both of these influence valuations but depends on your macro call-- the market is not cheap. Long-term P/E is around 15. Trailing P/E is around 20% (Dow) to 40% (S&P500) higher than average. Forward P/E is in line with long term average but that assumes a strong V recovery. Consensus forecast is for profits to drop 1.2% in 2020. In 2008, it dropped 25.4% so current forecast is a very mild recession. Covid-19 coronavirus is not going to last more than a few months but these forecasts are still too rosy in my opinion. So I wouldn't rely on forward P/E. The richly valued (mostly tech or high quality) have not fallen much but the distressed ones have. So if you want to outperform in the long run, I think one’s choice right now is to: • Wait for market to fall another, say
✖ READ MORE >>>

Warren Buffett's Evolution and his Three Investment Styles

Image
A Young Warren Buffett In a comment to one of my posts , Mark Carter, who incidentally appears to have a  good blog worth checking out , asked: "Buffett Prime is 1970's to early 1990's" Could you elaborate? I have vaguely indicated how I view Warren Buffett in the past, but I thought I would detail my view of his investing behaviour. This is more of an opinion piece and many others would disagree with me (if you do, I'm curious to hear your thoughts). I don't follow Warren Buffett as closely as many value investors so I may get some facts wrong. My view is that Warren Buffett went through three different phases, with each consisting of different investment techniques. The overall investment theory remained the same—what people call value investing—but his execution, tactics, and strategy differs across the three phases. Some people may break up his career into additional periods but my feeling is that the three I will describe essentially capt
✖ READ MORE >>>

Hugh Hendry discussion at the Alternative Investment Conference

Thanks to Value Investing World for bringing this Hugh Hendry interview to my attention. I may not agree with all the things—short-term orientation of hedge funds is actually worse IMO; the sharp pencil effect doesn't always work—but Hendry is a true contrarian and worth listening. Like Marc Faber or Jim Rogers, you also can't take everything Hugh Hendry says seriously. I had always felt Hugh Hendry was firmly in the deflation camp but I get the feeling that he is now opening up to high-inflation possibilities. Otherwise, his stance appears to be similar to past opinions.
✖ READ MORE >>>