Proxy policy raises ire
Conspiracy theorists can have a field day with a tale that’s playing out, just as the Canadian Securities Administrators published its National Policy 25-201 Guidance for Proxy Advisory Firms. That policy, a work in progress for more than two years, was announced Thursday and is effective immediately.
Last June, John Budreski wrote to the CSA when it was seeking requests for comment on its guidance for proxy advisory firms. (In all, 58 letters were submitted.)
In his career he was the syndicate boss at Scotia Capital Inc. and chief executive of Orion Securities (now Macquarie Capital), and is now chief executive of a small mining company and a director of five public companies.
Budreski, who couldn’t be reached for comment, sent a six-page letter in his capacity “as an individual and as an active and experienced participant in Canada’s capital markets.”
It didn’t take long for Budreski to get into stride, indicating he was “vehemently opposed to your proposed policy.” And he wasn’t a fan of proxy advisory firms arguing if they are to have a role they “should meet the standards adhered to by other capital markets participants.” He listed a series of challenges the sector faced – industry regulation, professional certification, product quality, staff qualification, business concentration and conflicts of interest – and presented four recommendations.
Budreski was in the news this week, for taking the unusual step of of issuing a press release about a recommendation made by Glass Lewis & Co. (one of the two proxy advisory firms) about Alaris Royalty Corp., a company in which he is a director and is now up for re-election. Glass Lewis advised shareholders to withhold their vote for Budreski – a recommendation he disputed.
Glass Lewis takes the position that a director “who serves as the executive of any public company in addition to serving on more than three public company boards, and all other directors who serve on more than six boards typically receive withhold recommendations from Glass Lewis.” Budreski, is on five boards, was instantly drawn into the fray.
In Budreski’s view, “a shareholder’s vote to support or withhold on the nomination of a director should be based on a much more thorough and rigorous analysis than the onecriteria, simplified analysis employed by Glass Lewis.”
An Alaris director since 2008, Budreski detailed a longer list of more relevant criteria that shareholders should consider. For instance, in his time as an Alaris director he has attended 143 out of a possible 145 board and sub-committee meetings, and in his time as a director or adviser to companies, the compounded rate of return is more than 10 per cent. More importantly, in his time as a director or adviser, neither the chief executive nor the chairman (of those companies) has been contacted by Glass Lewis seeking information about his “contributions or value as a Director.”
In other words Budreski hopes shareholders at Alaris’s annual meeting next Wednesday, “look beyond the simplified and formulaic approach employed by Glass Lewis and that investors will base their determination on whether to support or withhold on a particular director on a broader and more rigorous assessment of the facts and the particular Director’s contribution to the company.”
Calls to Glass Lewis seeking a comment weren’t returned.