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)
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
*Donald F. Mazankowski
*Jerry E.A. Nickerson
*James R. Nininger
R. Jeffrey Orr
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.
Tags: shareholder rights