Governance and Voting
An Approach Built on Principles and Guidelines
Ontario Teachers’ believes that a principled approach to corporate governance should guide decisions made by the board. We have developed a comprehensive set of Corporate Governance Principles and Proxy Voting Guidelines (PDF) that build on our 4 Pillar framework, introduced below, and are based on leading practices we hold fundamental to creating good governance. You can read a summary (PDF) of how our corporate governance principles and proxy voting guidelines have evolved for 2021.
These principles and guidelines are reviewed annually by our Board’s Investment Committee. They evolve as conditions change and we may also consider individual company circumstances when applying them.
4 Pillars of Board Effectiveness – a framework for building effective boards
We have identified four essential components to creating effective corporate governance, called the 4 Pillars of Board Effectiveness. These pillars – People, Structure, Practice and Culture – are the essential components in a system of corporate governance that we believe are the necessary conditions for effective governance and boards.
Each pillar is underpinned by one or more of our corporate governance principles:
- People: Effective boards are made up of diverse individuals having the relevant experience and skills necessary to challenge management and execute their oversight duties.
- Structure: Effective boards have strong independent leadership and are of an appropriate size to manage their workloads with appropriate depth and breadth of oversight. Where board size permits, the delegation of work to committees is encouraged as an efficient use of resources.
- Practice: Effective boards establish robust assessment and recruitment practices and provide honest and constructive oversight of management.
- Culture: Effective boards have a strong culture rooted in fostering respectful relationships among the board and encouraging candour in discussions and independence of thought. Furthermore, a strong culture is also evidenced by the relationships a board cultivates with its stakeholders.
All of our corporate governance efforts are purposeful in supporting and reinforcing these 4 Pillars, with the intent to create, enhance and maintain board and governance effectiveness.
Download a one-pager on the 4 Pillars (PDF).
Why We Vote Every Share We Own
One of our most important rights as investors is the right to vote. We ensure that our votes are cast in a manner that is most consistent with our Corporate Governance Principles and Proxy Voting Guidelines (PDF) and in the best long-term economic interests of company and its shareholders.
Proxy voting is our opportunity to evaluate the quality of a board’s decision-making against our 4 Pillar framework and as a result provides a commentary as to our assessment of board effectiveness. We believe our vote is an important contributor to creating good governance and effective boards.
Learn more about our approach to proxy voting.