The Shareholder Association for Education and Research (SHARE), is calling on federal policymakers to adopt measures to protect workers’ retirement savings.
In a letter to federal officials at Innovation, Science and Economic Development Canada (ISED), the Vancouver-based, responsible investment organization calls on the government to take action to protect workers’ pensions. Among other things, it calls for amending bankruptcy law to provide courts with the power to set aside executive and director bonuses and compensation increases where a company with unfunded pension liabilities enters insolvency.
It says that courts should be able to order clawbacks “where there have been significant dividend payments, share redemptions (at minimum, repurchases from insiders) variable executive compensation and other reviewable transactions in the three to five years prior to insolvency.”
The group also calls for disclosure improvements that would promote proper pension funding. “Additional corporate disclosure […] may help to highlight pension fund solvency rates such that executives, shareholders and creditors are focused on the funding status as a potential area of concern to be remedied,” it states.
For companies with large or persistent pension deficits, SHARE says, corporate law should be revised to “restrict or reduce dividend payments, share repurchases and variable executive and director compensation until such time as the solvency funding ratio surpasses a specified threshold.”
SHARE also recommends that the ISED codify certain director duties in corporate legislation: “In particular, the requirement that directors consider the interests of a broad range of stakeholders—including the workforce, and the environment, should be clarified.”
Finally, the letter notes that many of these same issues also need to be addressed in provincial corporate law, saying, “a coordinated approach on retirement security between the federal and provincial governments would be preferable to a piecemeal approach adopted by individual jurisdictions.”