2006 Report on Corporate Governance in Canada
2006 Governance Scores
(The 207 S&P/TSX Composite Index Listed companies scored using the Clarkson Centre metrics)
30
Number of Companies
25 20 15 25 10 5 1 0 4 2 10 6 8 11 17 20 16 12 18 21 19 17
Perfectly Awful
10 0
90
35
50
65
75
70
20
30
15
25
10
40
45
55
60
80
85
95
0
5
Scores/100
Perfect
Rotman School of Management: Clarkson Centre for Business Ethics and Board Effectiveness
Corporate Governance in Canada continues to improve to the overall benefit of Canadian capital markets…
25 Number of Companies 20 15 10 15 5 1 0
40 80 0 60 10 20 30 50 70 90 10 0
2002 S&P/TSX Composite Scores
17 16 9
19 18
21
18 19 19 7 9 2
6
6 7
2006 S&P/TSX Composite Scores
30 25 20 15 25 10 5 1 0
0 5 20 40 10 15 25 30 35 45 50 55 60 65 70 75 80 85 90 95 10 0
Scores/100
N u m b e r o f C o m p a n ie s
17 2 4 6 10 8 11
20 12 16
18
21
19 17
Scores/100
The number of companies with PERFECT SCORES has soared
The 2006 Perfect Score Club
•Agrium Inc. •Bank of Montreal •Canadian National Railway Company •Canadian Western Bank •Compton Petroleum Corporation •Encana Corporation •Finning International Inc. •Gildan Activewear Inc. •IAMGold Corporation •IPSCO Inc. •Manulife Financial Corporation •MDS Inc. •Metro Inc. •Novelis Inc. •SNC-Lavalin Group Inc. •Suncor Energy •TELUS Corporation
17 15 11
5 2
2002 2003 2004 2005 2006
The improvement in overall scores is broadly based
Number of Improved Companies
2005-2006
101 102 83 76
2004-2005
2003-2004
2002-2003
The biggest areas of improvement are related to fulsome disclosure of evaluation processes
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
2006
2005
2006
2005
63.3% 48.2%
59.4% 42.9%
Board Evaluations
Director Evaluations
There are still 42 companies that need to improve.
Companies w/ Scores Below 60
SCORE
100 90 80 70 60 50 40 30 20 10 0
92
82
82 66 42
2002
2003
2004
2005
2006
Improvement must come from these most frequently occurring deductions….
Number of Companies w/ Deduction No CEO/Chair Split Share Ownership No Director Evaluations Director Independence No Board Evaluations Compensation Committee Not Independent 84 82 76 68 106 96
The goal: a TSX with only well governed companies
2006 Governance Scores
(The 207 S&P/TSX Composite Index Listed companies scored using the Clarkson Centre metrics)
30
Number of Companies
25 20 15 25 10 5 1 0 4 2 10 6 8 11 17 20 16 12 18 21 19 17
Perfectly Awful
10 0
90
35
50
65
75
70
20
30
15
25
10
40
45
55
60
80
85
95
0
5
Scores/100
Perfect
Rotman School of Management: Clarkson Centre for Business Ethics and Board Effectiveness