© Copyright 2002 Rogers Media. The following article first appeared in the April 2002 edition of BENEFITS CANADA magazine.

In an effort to remedy the situation, Canada's most renowned shareholder activist has come out with a list of 11 proposals on what institutional investors, companies and governments can do to improve governance. Lamoureux says Teachers' is developing a governance scorecard and contacting all companies listed on the Toronto Stock Exchange to encourage them to follow the principles outlined below. The pension giant also wants other pension funds and money managers to join the campaign.

Here are Lamoureux's 11 principles of good governance:

1. All fiduciaries should vote the shares they hold--and report on how they voted to those for whom they invest.

2. Corporations should be required to report the results of each shareholder vote within one day of the annual general meeting, if not the same day.

3. Governance committees should seek the active involvement of their institutional investors in recruiting independent directors.

4. All directors should invest their own money in the shares of companies they govern. Nothing aligns director and shareholder interests quite like having real money on the line.

5. The board should have regular sessions without management present.

6. Canadian regulators should work with the Canadian Institute of Chartered Accountants to promote the best accounting standards. Regulators should find independent individuals who are more than securities or financial specialists to oversee compliance. It is heartening to see an Ontario Securities Commission panel reject a penalty for insider trading negotiated by staff. We need more commonsense outrage and less clubby negotiation behind closed doors.

7. All press releases should be based on generally accepted accounting principles (GAAP) earnings or at least reconciled to GAAP earnings. The releases should also be approved by the auditor and audit committee.

8. Annual reports, quarterly reports and proxy circulars should be written in language that makes sense to ordinary investors. Claims of sophistication and complexity are not an acceptable defence for obfuscation.

9. Auditors should not be allowed to earn other fees of any kind from the companies they audit.

10. Laws should be changed to make share ownership and options tax-neutral.

11. The cost of options should be clearly charged on the profit and loss statements disclosed in the financial statements and should be deducted from income.

Positive expectations

Sixty-two per cent of respondents expect a rate of return of between 5.1% and 10% in 2002. Only 2% expect a negative return on their fund's investments.

Reports say the economy is slowly turning around. The Bank of Canada's Web site, for instance, says that Governor David Dodge told an audience in France recently that "the worst of the downturn is over. A recovery is under way." U.S. Federal Reserve chair Alan Greenspan informed the Senate Banking Committee that the American economy is also recovering from last year's recession--albeit slowly.

Another sign is the number of Canadian pension plan sponsors (62%) in this month's E-poll that say they expect their pension fund portfolio to earn a rate of return between 5.1% and 10% in 2002. Up to 11% expect a rate of return of over 10%; 25% expect a rate of return between 0% and 5%, and only 2% expect a negative rate of return.

Al Dyck is a benefits adviser and independent broker in Cranbrook, B.C. He works with several defined contribution (DC) plan sponsors and says, on average, plan members could see a rate of return of between 4% and 5%. In 2001 returns were about -4%.

Dyck says in one case he met with an employer and its pension committee and reworked the plan's portfolio. It came down to "redefining what we were trying to accomplish," he says.

One employer in Ontario who wished to remain anonymous says her pension plan expects a rate of return of between 5.1% and 10%, but adds that this may not be realistic. The plan's actuarial valuation for 2002, she says, is 6.5%.

Theron Sawaski says equities are the major class bringing returns down in his pension fund. Sawaski is manager of human resources at ATCO Structures in Calgary and adds that they're expecting a rate of return of between 5.1% and 10%.

ATCO doesn't plan to rework its portfolio, says Sawaski. Instead it will "stay the course. We weren't as highly involved in technology stocks as some other plans, so we probably fared a little bit better. It's long-term for us, it's not running with recent high returns."

Another employer who wished to remain anonymous says her plan members' investments in "dot-coms [and] Nortel Networks, didn't do well and brought returns down." She adds the company's investment manager is reworking the portfolio to decrease investments in those types of stocks.

The company has a DC plan, a group registered retirement savings plan and a non-registered savings plan. The employer says members haven't expressed too much concern. "Our education is that these are long-term investments. And yes, in the short term the funds haven't done that well, but we do a comparison for three, five and 10 years. We try to get [members] to look at a wider horizon."

The Romanow Commission has released its final report on the future of healthcare in Canada.

For Commissioner Romanow's recommendations, click here.

Click here for Senator Michael Kirby's report, "The Health of Canadians – The Federal Role: Recommendations for Reform."