The Shareholder Association for Education and Research is calling on federal policymakers to adopt measures to protect workers’ retirement savings.
In a letter to the federal government, the Vancouver-based, responsible investment organization suggested 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.
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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,” noted the letter.
The group also called 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 stated.
For companies with large or persistent pension deficits, SHARE recommended revising corporate law 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.”
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SHARE also suggested the government 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 noted 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.”
This story originally appeared on Benefits Canada‘s companion site, Advisor.ca