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08 November 2022 • Press Releases

Morrow Sodali


Report highlights current and emerging trends from 2022 Canadian proxy season, including key findings on shareholder activism, board and transactional fights, Say-on-Pay, ESG developments, and more

TORONTO, Canada – November 8, 2022 – Morrow Sodali (Canada) Ltd. (“Morrow Sodali”), the Canadian arm of the leading global shareholder engagement and governance consulting firm, today issued its Proxy Season Review Report. The report contains in-depth analysis of the 2022 Canadian proxy season, along with insights and assessments of trending corporate governance matters, including shareholder activism, executive compensation and Say-on-Pay, and ESG (Environmental, Social & Governance) related shareholder proposals, and is a must-read for corporate Canada.

“Our Proxy Season Review Report effectively highlights what happened in the 2022 Canadian proxy season, and what it means for you and your business,” said Dexter John, Chief Executive Officer, Canada at Morrow Sodali. “After months of research, our team of best-in-class advisors has put together a valuable resource for those in corporate Canada seeking insight into the governance issues that will impact their business tomorrow, based on identified trends of the last fiscal year.”
Of particular note, the report found that public shareholder activist campaigns continue to fall in Canada, dropping from 19 in FY21 to 8 in FY22, as activists appear to have become more prudent in selecting targets post-Covid. This selectivity, along with a greater focus on specific objectives (which are increasingly ESG-related – mirroring the U.S. experience) has led to a higher win rate amongst activists.

"This year, activist win rates have increased dramatically with activists having achieved some or all of their intended objectives in more than 85% of tracked cases. As shareholder activists become more focused, more disciplined, and more successful, there is an ever-increasing need for issuers to engage proactively and look internally and externally at their level of preparedness,” said Jackie Cheung, Managing Director, Governance and Strategy at Morrow Sodali. “Against the backdrop of ESG tailwinds where environmental and social levers are seeing a resurgence, we expect proponents will increasingly find activism as a viable pathway to achieving ESG-related demands, and issuers who are not prepared may quickly find themselves in the crosshairs of the next activist shareholder.”

“Proxy advisors are known to adopt a balanced approach by carefully reviewing the pros and cons of a proponent’s proposals through the lens of what is in the best interest of institutional shareholders whose investment horizon is typically long. Accordingly, issuers responding to ESG-focused proposals should ensure that they are especially thoughtful, as a clear articulation of how they plan to integrate these factors into their long-term business vision will be crucial,” added Morrow Sodali’s Managing Director, Head of M&A and Activism, Corporate Governance and ESG (Canada), Victor Guo. “We hope our research provides new and undiscovered perspectives, and our clients and other market participants will find our 2022 Proxy Season Review Report helpful.”

Key report findings include: 

Shareholder Activism
Canada continues to see a decline in the number of public shareholder activist campaigns, which fell from 19 in FY21 to 8 in FY22, as activists become more focused on their objectives and more prudent in selecting targets post-Covid;
With sharper focus, activist win rates have increased dramatically since FY20, and activists have achieved some or all objectives in 87.5% of tracked cases for FY22; and
Activist campaigns related to environmental and social issues are becoming more prevalent in Canada, mirroring the U.S. experience, with three such cases occurring during FY22.

Say-on-Pay votes for TSX-listed companies continue to increase slowly with 227 active votes in FY22 compared to 217 in FY21, with median support down slightly at 95.0% in FY22 compared to 95.4% in FY21; and
FY22 year-to-date has seen four companies that have failed Say-on-Pay, compared to six in FY21, which saw the highest number of failed Say-on-Pay votes in the last five years. 

Shareholder Proposals
Investors are increasingly using shareholder proposals as a tool to voice their positions on ESG topics at Canadian public companies, with focus on E&S issues now surpassing those concerning G;
Despite the number of ESG shareholder proposals received at public companies in Canada, shareholder approval rate of those proposals remains low, with only 4 ESG-related shareholder proposals out of the 113 that were voted on between January 1, 2021 and August 31, 2022 (a success rate of 3.5%), receiving requisite shareholder support; and
Institutional shareholders have increasingly been adopting their own voting guidelines when dealing with ESG issues and proposals, contributing to the increase in shareholder proposals, and requiring issuers to pay added attention and additional thought when responding to said shareholders. 

About Morrow Sodali
Morrow Sodali is a global corporate advisory firm that provides clients with comprehensive advice and services relating to corporate governance, ESG, sustainability, proxy solicitation, capital markets intelligence, shareholder and bondholder engagement, M&A, activism and contested situations.

From headquarters in New York and London and offices in global capital markets, Morrow Sodali serves over 1,000 clients in more than 80 countries, including many of the world’s largest multinational corporations. Clients include listed and private companies, mutual fund groups, stock exchanges and membership associations.

In 2022, Morrow Sodali is celebrating its 50th anniversary and also secured majority investment from TPG Growth, the middle market and growth equity platform of alternative asset firm TPG. This partnership will significantly advance the firm’s mission of providing clients worldwide with unrivaled strategic advice and comprehensive support, enabling them to maximize value and expertly manage stakeholder relations.

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