NEW YORK and TORONTO, Oct. 27, 2020 /PRNewswire/ - The Laurel Hill Advisory Group is pleased to share Laurel Hill's 6th annual Trends in Corporate Governance report. Click here to download the report. The annual report serves to highlight trends, risks and challenges across the environmental, social and governance (ESG) and activism landscape. More critically, we strive to provide boards and management teams with practical guidance and insights to help them prepare for what lies ahead, whatever that may be, and to help facilitate conversations at the board, management and stakeholder levels.
While 2020 has created unprecedented levels of disruption and uncertainty for corporate Canada, what has become increasingly clear is that now more than ever, companies need to have purpose beyond maximizing returns – "doing good" is just as important as "doing well". Good governance, acting with social purpose and stakeholder engagement have never been as important to the success of an organization as they are at this moment. Laurel Hill has spoken about the importance of these values and actions over the years, but the events of 2020 have firmly anchored them as drivers of risk management and value creation. The reality is, if you have not already built the foundation to tackle these challenges, the time is now.
Some of the highlights of this 2020 report include:
Shareholder Activism: Overall, activism has dropped off this year, given the poor optics and other challenges faced by would-be activists. The headline board and transactional activism campaigns of 2019 have largely fallen away and the number of shareholder proposals has likewise been modest. However, given Canada's propensity for activism at smaller targets, it is not that surprising to report that we are in fact on pace for higher levels of board activism in the micro- and small-cap space this year – much of it has only been pushed back into the latter half of the year. As we enter 2021, there is a lot of dry activism powder – across all forms of activism – and companies should be prepared.
Environmental, Social, and Governance: The importance of ESG has only been amplified by the events of 2020. The view that ESG will only materialize in the long-term is now clearly obsolete. To this point, those who have dedicated resources to ESG have been far better positioned to manage these challenges than their competitors and will almost certainly be stronger as we re-emerge. In fact, while these matters were once considered to be beyond the board scope, failure to tackle them is now viewed by many as a breach of fiduciary duty. As we review the importance of all matters ESG-related, the momentum, rationale and benefits only continue to gain in prominence and scope.
Executive Compensation & Say-on-Pay: In 2020, shareholders supported say-on-pay resolutions more than any time in the last ten years, while proxy advisors also made the fewest negative recommendations since such votes were introduced to Canada in 2010. Similarly, equity compensation plans at TSX Composite companies received increased shareholder support. While this is a positive development, there is a distinct possibility that circumstances have left shareholders a little more sympathetic this time around and next year they may not be as understanding.
As we enter our 14th year of business, Laurel Hill is very proud of our deep and experienced team of capital markets professionals and of our reputation as a trusted advisor. While markets fluctuate and corporate governance continues to evolve, and even our shareholder communications and advisory industry continues to see competitors come and go, Laurel Hill's focus and mission remain unchanged: To deliver unequalled strategic solutions, shareholder results and client satisfaction.
Laurel Hill welcomes your feedback and looks forward to the opportunity to speak with you as you prepare for 2021. For more information, please visit us at any of the coordinates listed below. Enjoy the report.
About Laurel Hill Laurel Hill Advisory Group is North America's leading independent, cross-border shareholder communications and advisory firm. We provide industry-leading governance, compensation, and strategic advisory services, and proxy solicitation, information agent, depositary, escrow, and asset recovery services. Our customized solutions, delivered by the industry's most experienced, multidisciplinary and collaborative team, help our clients develop and maintain market-leading governance, shareholder engagement, and activism preparedness. We are regularly engaged on the most high-profile, complex, and contentious governance, M&A, and activism situations. Our cross-border operations allow us to effectively reach shareholders regardless of their location – Canada, U.S. and globally. We deliver results.