LAVAL, Que. – Alimentation Couche-Tard Inc. says it will allow shareholders to vote on the pay packages of the company’s top five executives, but not until next year.
Alain Bouchard, chairman and co-founder of the Quebec-based convenience-store giant, made the pledge before a shareholder withdrew a proposal to implement the so-called say-on-pay vote at the annual general meeting Thursday.
“It’s becoming almost a rule in Canada, certainly for the TSX 60,” Bouchard said later in an interview.
Chief executive Brian Hannasch added that “we have nothing to hide — so transparency today, we’re very open to it.”
The non-binding shareholder votes, which many companies already allow, came to prominence in the wake of the financial crisis with changes that required publicly traded American companies to include a resolution approving executive compensation.
Kevin Thomas, executive director at the Shareholder Association for Research and Education, said say-on-pay votes are a key accountability mechanism and called the shift toward it a “fantastic development” at Couche-Tard.
The votes can help rein in skyrocketing CEO salaries and dissuade boards from handing out no-strings-attached bonuses to top management, “where the company essentially rewards the executive just for being there,” Thomas said.
“There’s far too many practices that just like line the pockets of execs.”
Complacency toward say-on-pay stems from some “family controlled or tightly controlled companies,” he said.
“Some boards can be too captivated by their CEO, they’re charmed by them. Some might feel they might lose them,” Thomas added. “And some might feel that there’s a competitive advantage to paying their CEO more than anyone else.”
For the past decade, the shareholder association has pushed to make annual compensation votes a regulatory requirement in Canada, as it is in the United States, United Kingdom, Australia and some European countries.
Most of the companies on the S&P/TSX 60 Index have adopted the annual vote, part of the more than 180 publicly held companies across the country that have done so, according to Thomas.
Kingsdale Advisors, a shareholder services firm, charts the rising trend, noting that 157 companies had adopted the practice by 2015, up from just 28 in 2010.
The Ontario Securities Commission, which has been monitoring developments in other jurisdictions, has said it is the primary responsibility of the board and its executive compensation committee to ensure that pay practices promote long-term shareholder value.
Companies in the story: (TSX:ATD.B)
Note to readers: This is a corrected story. An earlier version erroneously referred to Kevin Thomas as Smith.