Looks as if the Ontario Teachers’ Pension Plan (Teachers’) is flexing its substantial muscle. The pension giant is standing up to both Magna International Inc. and Sprint Nextel Corp., protesting executive pay and, in the case of Magna, the directors who supported founder Frank Stronach’s buyout in 2010.
Teachers’ said that it plans to withhold votes for all directors at Magna who served on the board when the controversial decision was made to buy out Stronach’s controlling stake for US$863 million and collapse the company’s dual-class share structure.
“We continue to believe that these directors failed to satisfactorily represent the interests of the corporation and all shareholders and, as a result, have lost confidence in their ability to act in the best long-term interest of the corporation,” the pension fund said on its website.
“We continue to have serious concerns about the compensation practices—particularly with respect to Frank Stronach and the allocation of pre-tax profits to executives—which, in our view, do not align the interests of shareholders and management.”
Teachers’ will also vote against the Aurora, Ont.,-based company’s proposal on executive compensation.
In its proxy circular filed in March, Magna said former Ontario premier Mike Harris is exiting his role as chair and that two other directors, Louis Lataif and Donald Resnick, also won’t stand for re-election. Following a lawsuit from some major investors, Magna disclosed in December that Harris, Lataif and Resnick received just 38% shareholder support at last year’s annual meeting. Those three directors oversaw the controversial deal to buy out Stronach’s controlling stake in cash and shares at a premium of about 1,800%.
Sprint Nextel Corp. also fell under Teachers’ scrutiny this week, reports the Globe and Mail, with the pension plan saying that it finds some aspects of the U.S. telecommunications company’s executive compensation “inappropriate.” Teachers’ has a 4% stake in Sprint Nextel.
In January, Teachers’ sent a letter to Sprint, complaining of inconsistency between the company’s performance and executive pay but says that Sprint has failed to adequately address those concerns. Now Teachers’ has announced it is voting against the re-election of the company’s CEO and five of its board members.