The 2006 Elite Canadian Directors Continue to Drive Governance Improvement. Authors: Professor Tim Rowley with David Comrie

Transcription

1 The 2006 Elite Canadian Directors Continue to Drive Governance Improvement Authors: Professor Tim Rowley with David Comrie 1

2 In 2004, CC(BE) 2 discovered a cluster of 16 directors each of whom sat on 5 or more S&P/TSX Composite Index boards we called them the Elite 16 Directors Number of Boards Companies MacNeill, Brian F. 7 DFS, PCA, SCC, T, TD, WFT, WTO Cockwell, Jack L. 6 ACM.NV.A, BPO, FL, FPS, NRD, NBD Mazankowski, Rt. Hon. D.F. 6 ACO.NV.X, GWO, IGM, POW.SV, PWF McKenna, Hon. F.J. 6 BMO, CGS, FNX, NRD, SC, ZEN O Brien, David P. 6 ECA, FHR, N, MOL.A, RY, TA Baillie, A. Charles 5 BLD, CNR, WN, IQW, T Bérard, André 5 BCE, BBD.SV.B, NRD, SAP, VAS Cleghorn, John E. 5 CP, FTT, MOL.A, NT, SNC Fortier, L. Yves 5 AL, HBC, NT, NCX, RY Godsoe, Peter C. 5 ABX, FHR, OCX.SV, RCI.NV.B, SBY Hushovd, Oyvind 5 CCO, GBU, IMN, LIM, WTO Lanthier, J. Spencer 5 EME, ITP, PS.NV.B, X, ZL Newall, J.M. Edward 5 AL, CP, MFI, NCX, RY Osborne, Ronald W. 5 FSH.SV, SHC, ST.SV.A, SLF, TS.NV.B Prichard, J. Robert S. 5 BMO, FSH.SV, WN, OCX.SV, TS.NV.B Tapp, Lawrence G. 5 ATA, CCL.NV.B, HKY, TLM, WCS.A 2

3 These 16 directors had a huge influence on Canadian Markets 0.95% of Directors 31% of Companies 50% of Composite Market Cap 16 Elite Directors sit on 68 Index boards 31% comprising $437B market capitalization 50.69% 3

4 All except Tapp and Mazankowski were interconnected. Cockwell Bérard Lanthier McKenna Prichard Osborne Mazankowski Tapp Godsoe Baillie MacNeill O Brien Cleghorn Hushovd Newall Fortier 4

5 In 2006 only 5 sit on 5 or more boards on the S&P/TSX Composite. Directors 2004 Directors on 5 or more boards Number of Boards MacNeill, Brian F. 7 Cockwell, Jack L. 6 Mazankowski, Rt. Hon. D.F. 6 McKenna, Hon. F.J. 6 O Brien, David P. 6 Baillie, A. Charles 5 Bérard, André 5 Cleghorn, John E. 5 Fortier, L. Yves 5 Godsoe, Peter C Directors Number of Boards Mazankowski, Rt. Hon. D.F. 6 Desmarais, André 5 Lanthier, J. Spencer 5 Osborne, Ronald W. 5 Prichard, J. Robert S. 5 Hushovd, Oyvind 5 Lanthier, J. Spencer 5 Newall, J.M. Edward 5 Osborne, Ronald W. 5 Prichard, J. Robert S. 5 Tapp, Lawrence G. 5 5

6 So the CC(BE) 2 re-defined the Elite as the 22 nonmanagement directors who sit on 4 or more boards. Director Number of Boards Director Number of Boards Mazankowski, Rt. Hon. D.F. 6 Lanthier, J. Spencer 5 Osborne, Ronald W. 5 Prichard, J. Robert S. 5 Beatty, David R. 4 Bolton, Hugh J. 4 Chevrier, Robert 4 Desautels, L. Denis 4 Ducros, Pierre Y. 4 Gauthier, Hon. Paule 4 Gibara, Germaine 4 Giffin, Hon. Gordon D. 4 Godsoe, Peter C. 4 Graham, Anthony R. 4 Griffiths, Anthony F. 4 Hushovd, Oyvind 4 MacNeill, Brian F. 4 McCoy, Richard H. 4 McLennan, John T. 4 O Brien, David P. 4 Phillips, Roger 4 Willson, John M. 4 6

7 As before the 2006 Elite continue to have huge influence over the S&P/TSX Composite Index. 1% of Directors 25% of Companies 63% of Market Cap 22 Elite Directors sit on 69 companies 25% comprising a $900B market capitalization 63% 7

8 The average governance scores*, of these 22 directors are well above the rest of the composite Average score of companies w/o elite directors: Beatty, David R. Giffin, Hon. Gordon D. Gauthier, Hon. Paule O'Brien, David P. Phillips, Roger Ducros, Pierre Y. MacNeill, Brian F. Willson, John M. Gibara, Germaine Hushovd, Oyvind Griffiths, Anthony F. McCoy, Richard H. Bolton, Hugh J. Chevrier, Robert Prichard, J. Robert S. McLennan, John T. Lanthier, J. Spencer Desautels, L. Denis Godsoe, Peter C. Graham, Anthony R. Osborne, Ronald Walter Mazankowski, Rt. Hon. Donald F. * based on the Clarkson Centre s Board Shareholder Confidence Index 8

9 As before, these 22 directors form a network through which information and practices can be dispersed. Mazankowski Desautels Graham Godsoe MacNeill Ducros Prichard Beatty Hushovd Bolton Phillips Lanthier Osborne Chevrier Gibara O Brien Gauthier McCoy Willson Giffin McLennan Griffiths 9

10 The New Elite continue to promote best practices examples on matters relating to independence. 100% 90% 80% 70% Elite 60% 50% 40% 30% 77% 60% 90% 84% 75% 61% 20% The Rest 10% 0% Board Independence Audit Committee Independence Compensation Committee Independence 10

11 and in board and director evaluations. 100% 90% 80% 70% 60% Elite 50% 40% 30% 20% 75% 67% 55% 53% The Rest 10% 0% Board Evaluations Director Evaluations 11

12 Elite directors sit on 15 company boards that received a share structure deduction* Company Name ACE Aviation Holdings Inc. Alliance Atlantis Communications Inc. ATCO Ltd. Bombardier Inc. Cogeco Cable Inc. Four Seasons Hotels Inc. The Jean Coutu Group (PJC) Inc. ONEX Corp. Power Corporation of Canada Rogers Communications Inc. Shaw Communications Inc. St. Lawrence Cement Group Inc. Teck Cominco Ltd. Torstar Corporation Transcontinental Inc. Director Name(s) Richard H. McCoy, John T. McLennan Anthony F. Griffiths Rt. Hon. Donald F. Mazankowski L. Denis Desautels Germaine Gibara Ronald Walter Osborne, Prichard, J. Robert S. Prichard L. Denis Desautels Peter C. Godsoe Anthony R. Graham, Rt. Hon. Donald F. Mazankowski Peter C. Godsoe Rt. Hon. Donald F. Mazankowski Germaine Gibara, Ronald Walter Osborne Hugh J. Bolton J. Spencer Lanthier, Ronald Walter Osborne, J. Robert S. Prichard Robert Chevrier * A deduction occurs when a company has a dual class share structure where equity does not equal voting power. This area can result in the largest deduction of any category in the Board Shareholder Confidence Index. 12

13 Dual class share companies did not score as highly overall as companies with a single class share structure* = 1 of 5 lowest scoring directors = 1 of 5 highest scoring directors = Share Structure deduction 13 * Scores EXCLUDE the deductions for dual class structures

14 CONCLUSIONS: 1. Elite directors do spread best practices effectively Annual Averages 78 Rest of Companies w/ Composite Elite Directors

15 CONCLUSIONS: 1. Elite directors do spread best practices effectively 2. Elite directors are less effective in dual class environments 100% 90% One Class Companies w/ Best Pra actices - Boards with Elite director( (s) only 80% 70% 60% 50% 40% 30% 20% 83.3% 46.7% 70.4% 53.3% 53.7% 33.3% Dual Class 10% 0% Comp. Committee Director Eval. CEO/Chair Split 15

16 CONCLUSIONS: 1. Elite directors do spread best practices effectively 2. Elite directors are less effective in dual class environments For further information please contact: OR 16