It is proposed that the board of Agrium Inc. reverse its decision to provide the company’s shareholders
with an advisory vote on executive compensation every three years and instead adopt a policy that the
votes will take place annually.
There is abundant evidence that both rulemakers and shareholders believe advisory votes on executive
pay must be an annual occurrence, instead of taking place at three year intervals.
Advisory votes on executive compensation are required to take place annually at public companies
incorporated in the U.K., Australia, Sweden and Norway.[1]
In 2011, U.S. public companies with market capital of more than US$75million were required to provide
their shareholders with a vote on how often say on pay resolutions would appear on their ballots in the
future in addition to the pay vote itself. By a margin of more than four to one, the results indicate that
shareholders favour an annual say on pay at Russell 3000 companies.[2]
Of the 71 Canadian issuers included in the S&P/TSX Composite Index that have committed to holding say
on pay votes to date, only Agrium Inc. and one other issuer have indicated that they will not hold these
votes annually.
Switzerland’s experience with say on pay is very similar to Canada’s, in that a significant minority of the
largest public companies provide their shareholders with an advisory vote on executive compensation
even though the relevant regulator has not yet required that they do so. According to an August 2011
report by Ethos Foundation, 45 of the largest 100 Swiss companies have thus far implemented an annual
non-binding vote on executive pay.[3]
One reason for the overwhelming adoption of annual pay votes is that key decisions about executive
compensation are so commonly made on an annual basis. According to the Executive Compensation
section of the Agrium Inc. 2011 Management Proxy Circular, various important decisions about
executive compensation are made annually by the board’s Human Resources& Compensation
Committee. These include the review of the compensation programs of Agrium’s peer group, of
compensation mix and the appropriateness of the short, medium and long-term incentive schemes, as
well as fixing target compensation for executives and assessing company and individual performance to
determine if targets have been achieved.
Given that executive compensation policy and practice at Agrium Inc. requires assessment and decisionmaking
on an annual basis, we believe that shareholders must have an opportunity to provide their considered opinion
about those decisions every year.
[1] Mercer LLC, Say on pay - A global perspective, September 22 2011. Online at:
http://www.mercer.com/articles/say-on-pay-a-global-perspective
[2] Semler Brossy Consulting Group, LLC, 2011 Say on Pay Results: Russell 3000, June 2 2011, p. 5. Online at:
http://www.semlerbrossy.com/pages/pdf/SOP_Update.pdf
[3] Ethos Foundation, Say on Pay in Switzerland in 2011, August 30 2011. Online at:
http://www.ethosfund.ch/upload/publication/p327e_111207_Say_on_Pay_in_Switzerland.pdf