Daily News Alerts
Joe Hornyak
Former editor of Benefits and Pensions Monitor and founder of Joe Hornyak Communications
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Officers Should Own Common Shares
A Canadian Coalition for Good Governance review is recommending that boards of directors should encourage greater common share ownership amongst officers of the company. ‘Management-Shareholder Alignment: Effective Equity Ownership Policies’ makes a number of recommendations providing boards with a range of alternatives which would support this objective and strengthen management alignment with shareholder interests. To start, it suggests that share ownership requirements be established that continually build an officer’s economic interest over time. One such approach would be to shift from an ownership requirement with a defined threshold to an annual share purchase requirement. For example, CEOs and NEOs (named executive officers) would be required to annually invest a minimum of 20 per cent and 15 per cent respectively of their total direct compensation in common shares. Another avenue would be to require NEOs to either use a portion of the cash proceeds received upon vesting of any cash-settled share-based awards to purchase common shares of the company or retain a portion of shares they receive upon settlement of any share-based awards.
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Institutional Investors Consider Sustainability
Over 90 per cent of global institutional investors actively consider sustainability in their real assets investment decisions, says research from Aviva Investors. Its annual ‘Real Assets Study’ shows 93 per cent of the institutional investors surveyed actively consider ESG (environmental, social, and governance) and sustainability in their real assets investment decisions, with 17 per cent considering it a ‘critical factor.’ As well, 64 per cent plan to increase their allocations to real assets over the next two years, with 46 per cent planning to do so by up to 10 per cent. The highest allocations are by investors in North America, where almost a quarter have greater than 20 per cent of their portfolio in real assets, compared to 19 per cent of European and 17 per cent of Asia Pacific investors. The findings reveal 53 per cent of respondents allocate to real assets for the ability to provide inflation-linked income, compared with just 33 per cent three years ago.
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