June 03, 2010
TORONTO - The Ontario Teachers' Pension Plan has announced it will vote against Magna's proposed transaction to eliminate the company's multiple-voting shares.
Teachers' believes Magna International's proposal to eliminate the company's dual-class share structure is fundamentally unfair to the company's subordinate voting shareholders. It also raises larger governance questions as to whether the board of directors has fulfilled its duty, as well as the purpose and benefits to shareholders of dual-class share structures.
Directors are required to make decisions in the best interests of the Corporation. The directors of Magna appear not to have made a decision whether the arrangement is in the best interests of the Corporation. Instead they have passed the buck to the Class A shareholders and the Court. The Ontario Securities Commission and the Autorité des marches financiers have stated that, in related party transactions, directions should disclose their reasonable belief as to the desirability or fairness of the proposed transaction and make useful recommendations regarding the transaction. The Magna Special Committee and the Board have not done this. Yet they expect the Class A shareholders to make a decision as to whether this transaction is in their best interests.
"We support the principle of one share, one vote; however, we will vote against the proposed transaction and we won't support dual share collapses at any company that look like this," said Wayne Kozun, Senior Vice-President, Public Equities. Today, Teachers' published its analysis of the transaction, made available on its website.
Director, Communications and Media Relations
Ontario Teachers' Pension Plan