Advisory firms urge CI Financial shareholders to vote against company’s executive compensation practices

Kurt MacAlpine, CEO of CI Financial.Tijana Martin/The Globe and Mail

Two influential proxy advisory firms recommend to shareholders of CI Financial Corp. CIX-T to vote against the company’s compensation practices at its annual meeting next week, arguing that it has failed to address investor concerns about aligning pay with long-term executive performance .

Institutional Shareholder Services Inc. (ISS) and Glass Lewis & Co. – which advise institutional investors on how to vote for their shares – both released reports earlier this week highlighting what they said were several lingering issues. at the independent wealth manager, such as the differences in remuneration between the managing director and the other managers.

This is the second year in a row that both firms have recommended voting “no” in the company’s non-binding annual vote at its annual meeting.

CI failed to gain majority approval for CI’s 2021 shareholder compensation program, receiving only 38.1% of the votes cast. It was one of six companies listed on the Toronto Stock Exchange in 2021 to fail to gain 50% support.

The average level of support in Canadian say-on-pay votes is over 90%, according to research by compensation and governance consulting firms. ISS and Glass Lewis expect companies to go to shareholders when they fail to garner at least 80% support. In 2020, CI received 72.6% support.

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CI CEO Kurt MacAlpine recorded one of the largest total compensation increases last year for CEOs in the Canadian wealth management industry, according to a Globe study.

Mr. MacAlpine earned $10.6 million in 2021, up more than 75% from $6.01 million a year earlier. His annual cash bonus rose to $3.88 million from $1 million the previous year, while his stock awards rose to nearly $5.6 million from $4.2 million. His annual salary rose to $1,125,000, up 40.6% from $800,000 in 2020.

In 2021, both consultancies expressed concerns about the lack of performance criteria for much of CI’s variable compensation plans. In its current proxy statement, CI said it received similar feedback from its institutional shareholders, so the company began work in 2020 on a performance scorecard for Mr. MacAlpine. With the help of external consultants, he introduced it in 2021.

“We are encouraged that the vast majority of our shareholders who voted their shares prior to the release of the proxy services reports voted in favor of our revised compensation approach,” the CI spokesperson said. , Murray Oxby.

However, ISS and Glass Lewis took issue with the scorecard and other elements of the company’s compensation plans for all executives.

The two said CI still does not have performance-based long-term stock awards under compensation plans for executives other than Mr. MacAlpine. ISS says the incentive payout dashboard is based on annual performance, not long-term factors, and Glass Lewis thinks there’s too much discretion in determining bonuses.

ISS said the decision to grant Mr. MacAlpine a special grant of additional shares worth $1.7 million was based on criteria that were already recognized in its regular performance scorecard.

Meanwhile, Glass Lewis has raised concerns about CI’s internal pay inequality, noting that Mr MacAlpine, who joined the company in 2019, was paid more than four times the average compensation received by other executives including compensation is disclosed in the proxy statement.

“A high level of executive pay inequality, as in this case, can be an indicator of serious long-term problems with a company’s compensation practices and more broadly, its management and oversight at the board level. ‘administration,” the Glass Lewis report said.

Both ISS and Glass Lewis said CI Financial should have done a better job of disclosure, shareholder engagement and improving compensation plans after the failed 2021 vote.

“Given the substantial level of opposition to the company’s compensation practices, we believe that the Governance, Human Resources and Compensation Committee (GHRC) should have taken more initiative to engage its shareholders and take measures to improve the company’s compensation practices and programs,” Glass Lewis wrote in his report.

The company also recommended shareholders withhold votes for director David Miller, the former director of legal and corporate affairs at Rogers Communications Inc., who chairs CI’s compensation committee.

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