Montreal-based Laurentian Bank of Canada advised shareholders to vote down four proposals submitted by the Mouvement d’éducation et de défense des actionnaires, which propose various environmental, social and governance changes.
The first proposal asked the company to integrate ESG criteria when evaluating the performance and pay incentives of senior managers. It argues that companies with specific ESG orientations adapt faster to changes, have better risk management and are more innovative.
Laurentian Bank of Canada's board said they have already indirectly integrated ESG criteria into senior executives' pay, which they believe promotes company growth. The board also highlighted initiatives the company has taken to promote ESG issues and practices, such as focusing on employee engagement, giving nearly C$1.2 million in donations and sponsorships, and maintaining workplaces certified by the Leadership in Energy and Environmental Design.
The second proposal asked Laurentian Bank of Canada's governing body to disclose information required by the Task Force on Climate-related Financial Disclosures, or TCFD, in its next annual report. The company's board said the framework for climate-related disclosures is only in its early development stages and that the TCFD group should provide practical guidance on how companies should overhaul their climate-related analytical practices.
The third proposal asked the company to disclose the ratio of the CEO's pay to the employee median earnings, or its equity ratio, in order to help shareholders determine whether the CEO's compensation is still reasonable and socially acceptable.
The board said it considers various factors in determining compensation, such as level of responsibilities for each position and market pay. In addition, the board said the equity ratio is inadequate in interpreting the data as it does not consider various factors such as organizational structures, the company's sector and size, and the complexity of its activities.
The last proposal asked the board to form a technologies committee to keep up with the rapid pace of technological change in the financial industry, and noted that the value of having a risk committee has already been proven. Laurentian Bank of Canada's board said having a technologies committee could undermine the implementation of projects it has undertaken to provide customers "a fully digital banking experience" and that the risk management committee is already monitoring technological developments.