Stockholders at BlackBerry Ltd. and CI Financial Corp. have approved the companies’ approach to executive compensation in “say on pay” votes at their annual shareholder meetings, a reversal from rejections in 2022.
However, some directors at the two companies received negative feedback from shareholders when it came to their re-elections.
At BlackBerry BB-T, 81.52 per cent of shareholders on Tuesday voted “yes” in the company’s advisory vote on executive compensation. In 2022, BlackBerry received 44-per-cent support for its pay philosophy, with 56 per cent of shareholders voting against it.
At CI Financial CIX-T, 91.38 per cent of shareholders voted “yes” on pay, in line with the typical result at Canadian companies. In 2022, CI Financial received 45-per-cent support, with 55-per-cent opposition. It was the second year in a row the company had failed its say-on-pay vote.
Say-on-pay votes allow shareholders to show their approval, or lack thereof, for corporate boards’ pay policies for their companies’ top executives in a vote at annual general meetings. The votes are non-binding, but most companies try to pass with 90-per-cent support or more.
Both CI and BlackBerry faced negative recommendations in 2022 from major proxy advisers, which advise institutional investors on how to vote their shares. In 2023, both Institutional Shareholder Services and Glass Lewis & Co. Inc. recommended “yes” votes, leading to the turnaround.
At BlackBerry, the support from proxy advisers was tepid. ISS said it still had concerns about BlackBerry’s pay plans, but it said a “yes” vote “is warranted as pay and performance are reasonably aligned at this time.” Glass Lewis, meanwhile, gave BlackBerry a “D” grade in its compensation evaluation.
“Though we are wary of the disconnect between pay and performance, overall pay levels do not appear particularly egregious for the year in review,” it said.
BlackBerry has given chief executive officer John Chen two huge stock grants in his 10 years at the helm, but has paid him a fraction of that amount in other years. Mr. Chen made about US$3-million in each of the past four years, but the company valued his pay in the year ended in March, 2019, at nearly US$110-million.
Both advisers said BlackBerry had been responsive to shareholder concerns after the 2022 failure. BlackBerry changed the peer group of companies it uses to set pay; discontinued Mr. Chen’s discretion to set bonuses; and changed the terms of long-term, performance-based awards.
At CI Financial, ISS said it recommended a “cautious” favourable vote, in part because its quantitative pay-for-performance screen flagged CI’s total shareholder return as lowest versus its peers. On the flip side, CEO Kurt MacAlpine’s pay fell to $7.33-million in 2022 from $10.60-million in 2021. The company was also receptive to shareholder concerns, ISS said.
Glass Lewis said CI’s “improvements to the compensation program structure in combination with the alignment of pay with performance is noteworthy.”
CI increased its quantitative measures, emphasizing profitability, and decreased the board’s discretion in Mr. MacAlpine’s incentive-pay plan. It also revised its pay peer group.
While the news was good on say on pay, a number of directors had sizable numbers of votes withheld by shareholders. In uncontroversial elections, directors typically get 95 per cent of the votes or more, with 5 per cent or less withheld.
At BlackBerry, three directors, including Mr. Chen, had more than 20 per cent of votes withheld. Board chair and major investor, Prem Watsa of Fairfax Financial Holdings, had 18.89 per cent withheld.
ISS and Glass Lewis had recommended “for” votes for all BlackBerry directors. Michael A. Daniels, who chairs the compensation and governance committees, had 23.18 per cent withheld. Laurie Smaldone Alsup had 23.37 per cent withheld; she sits on four other public-company boards, a number many shareholders deem too many.
At CI Financial, board chair William Holland had 26.47 per cent of votes withheld after ISS recommended shareholders hold him accountable for CI Financial having less than 30-per-cent women on the board of directors.
Glass Lewis recommended shareholders withhold from Paul Perrow, the senior member of the board’s nominating committee, for the same reason; shareholders withheld 18.89 per cent of votes. (Tom Muir, the chair of the committee in 2022, did not stand for re-election for the board, having reached a term limit.)
BlackBerry spokesperson Matthew Chandler declined to comment.
CI Financial did not respond to a request for comment.
David Milstead