The Pipeline to the Board

More on Canada

As I noted in a previous post, the current Canadian mantra is that companies can set targets for themselves, make use of recruitment firms and then watch the marketplace for strong female candidates. In fact this is the way Harold Ballard drove the Leafs franchise into the ground....if you can remember that far back. When was the last time the leafs won the Stanley Cup..1967. 

We have learned that Senator Herieux Payette authored a Senate bill (Bill S 203) to mandate the increase of women on Crown Corp boards and other public institutions to 50%. We also learned that this was watered down to 40% (Bill S-212). It still did not realize bipartisan support and eventually died. 

This was an attempt to mirror the work that Quebec had done towards promoting gender equity... and as it happens quite successfully. 

A voluntary initiative launched in 2012 by the Catalyst Accord encouraged FP500 corporations to increase membership of women on Boards to a paltry 25% by 2017 ...so by the end of this year. 

By the end of 2013, the federal government of the day formed an advisory council to recommend strategies to business to recruit more women to corporate boards. John Manley, one of the advisory committee members called Canadian progress to gender equity on Boards "pathetic" 

He's right.

The Ontario government , in 2013 tried to engage the Ontario Securities Commission in the effort by watering things down even further , trying to mandate a comply or explain framework. 

The institutional shareholders, who hold 60% of the shares of the FP 500 through the ICGN agreed with this approach. the CCGG also agreed but suggested goals be revisited after a set time period. 
Perhaps 3 years was suggested, in much the same way the Charles Dickens character, Oliver Twist, asked his minders in a poor house for more gruel. (Please sir, might I have some more??).

To be fair, the CCGG also recommended that these same companies be required to disclose a target for broad diversity (as opposed to gender equity) and report annually on the progress towards attaining these. 

The bottom line is that not much is happening in Canada . Over the period of this debate, Canada has slipped in the global rankings from 6th place to 9th place. The number of women on corporate boards in Canada has increased from 12.4% to 13.1%. So, Canadian achievement has not progressed as quickly as have, for example, Australia (increase of 6 positions globally and 6%); Germany (an increase in 4 positions and 4%); France (an increase of 7 positions and 9%). 

Pension Boards..are they your buddies??

Don't bet on it. 

I have suggested questions for you to ask of your (government sponsored) pension board both at annual meetings and through their website. And, I have also suggested that you not be put off by the fact that these folks in their nice business suits seem to hold the bully pulpit. 

The Board is accountable to you, the pensioner, and the defacto shareholder for the fiscal management of the operation (fiduciary oversight), that strategic plan and within that,  the management of risk in the investment of your money ( a duty of care).

More specifically, the fiduciary duty is a duty of loyalty to the plan. It is the duty of the board to act honestly and in good faith with a view to the best interest of the pension plan. Remember, a board member is there not to represent the interest of any one group. So, pension boards which have , as an example, civil service and government interests, or union representatives are , de facto, acting in a conflict of interest.

It is said that a representative member 's life on the board will be either happy nor long. But the make up of the board of the NBPSSP is based on the principle of interest group representation.  

Board members also have a duty of care. That is the duty to exercise the care diligence and skill that a reasonably prudent person would exercise in comparable circumstances. 

There is a third duty, however. And it is often hidden under the duty of care.

That is the duty of skill.

I suggested this in a previous post. Board members must attend continuing education events and  these events must focus on the development of their skills as directors. But I argue that to demonstrate a requisite level of professional interest in being a director and to be truly effective and directors must  demonstrate their interest in director certification.

None of the current NBPSSP directors have any certification as directors yet this oversight can be easily addressed. If it is not being addressed, this is your first hint that the plan is not healthy. 

Take another look at the 2016 NBPSSP annual meeting presentation about the role of a director. Did the presenter address these  points?

He did not. 

This is a second hint that things are not well with the plan.

I wonder. Do NBPSSP directors really understand their duties? 

Any responsible board interested in you as the shareholder..and principal  stakeholder in its affairs,  will have a  published code of conduct. That code will outline:

• accepted behaviours
• what constitutes a conflict of interest
• how it respects confidentiality
• transparency in decision making
• communications with shareholders and stakeholders
• how the public and shareholders and stakeholders can access information. 

If this code of conduct is NOT published on the pension plan's website and in its annual report to shareholders, then you as the pensioner (or prospective pensioner) have been given 3rd hint that there is a real problem with the plan. 

Are there job descriptions for the board members and for each executive and committee position? These too need to published on the website. If these are not published and if the board chair refuses to supply these, then the chair need to be replaces...and likely the board. Or else, you will not know who is responsible for what in the achievement of pension goals. Here is 4th hint that all may not be well with the plan.

Remember, a key goal of good governance is that it brings economic stability to the entity..in this case you pension plan. Is the plan fully vested, especially in a period of a great bull run? If it is not, this a 5th hint that the plan is not healthy. 

At the heart of  good governance is the ability of the board to manage or avoid

• conflicts of interest;
• risk;
• inadequate accountability.