'Say on pay' gaining momentum in Canada

A growing number of Canadian businesses are giving shareholders a chance to voice their opinions on the remuneration packages of their executives.

According to the Financial Post, Canada is following other countries by making 'say on pay' policies a high-profile aspect of its corporate governance in the wake of the global economic crisis.

The newspaper notes almost 20 large companies, including the nation's major banks and communications giant BCE, have now committed to putting a say on pay vote before their shareholders.

However, questions remain over exactly how far such measures will go to make executives more accountable to investors on issues such as corporate remuneration.

The publication notes that the say on pay now afforded to shareholders remains a non-binding advisory vote.

In practice, this makes it nothing more than "an opportunity to provide feedback to the board at the annual meeting" on the compensation practices of the previous year.

Despite this, the fact that the results of the vote will force boards to engage directly with shareholders over such issues is seen as a positive development.

In the US, Democratic senator Robert Menendez recently told Reuters of his plans to offer shareholders a say on pay as part of new legislation, which would also include the right to claw-back bonuses from the executives of failing companies.