Investor activist Yves Michaud fights what he sees as corporate abuses
May 19, 2012
Nicolas Van Praet, The National Post
Montreal — In a tiny basement office in a grey stone building in central Montreal, Yves Michaud’s staff members are plotting their next shareholder insurrection.
It’s annual general meeting season and Mr. Michaud and his colleagues at the Mouvement d’éducation et de défense des actionnaires (MÉDAC) have been busy doing what they’ve become known for : Getting in corporate Canada’s face with uncomfortable questions and lofty shareholder proposals in a bid for better accountability.
Earlier this week they showed up at the Power Corp. meeting wielding four investor recommendations, including one that would allow executives to exercise stock options only when their companies have achieved measurable objectives like higher earnings. Before that, they pestered Bombardier Inc., blasting the company for giving its executives pay increases while the stock languishes less than $4 per share.
At the National Bank of Canada shareholders meeting this year, Mr. Michaud, a former provincial politician and an ardent separatist who relishes language and appears to love to hear himself talk, was booed. But that’s really no surprise. This is a man who once lectured management at a Canadian Imperial Bank of Commerce AGM for more than an hour in a performance The Gazette in Montreal likened to “a Fidel Castro May Day address.” The bank’s then-chief executive Al Flood was forced to cancel his own speech to investors. Related
Lauded by some and loathed by others, MÉDAC has become over the past 15 years one of the loudest voices for corporate governance nationwide and one of the biggest critics of excessive executive pay. The group founded by Mr. Michaud is little known outside Quebec. And yet, its message has rarely echoed more loudly than now.
‘Our paid members and our board members, I think, are militants’
It was MÉDAC that won the legal right for retail investors to make proposals at AGMs. Long before Arthur Andersen LLP botched the auditing of Enron, it was MÉDAC that got Canada’s banks to disclose the consulting fees they pay to their public accountants. And say on pay, Canada’s non-binding advisory vote that gives investors in banks and other companies a voice in executive compensation? MÉDAC takes credit for that, too.
“Our paid members and our board members, I think, are militants,” says Fernand Daoust, MÉDAC’s president. “I don’t like that word. But they are people who are absolutely scandalized by the liberty that current company leaders are taking on remuneration…. There is, among retail shareholders, a profound indifference toward these things. We’re trying to wake them up.”
Canada needs more investors who stake a public position against certain corporate abuses, says Michel Nadeau, executive director of Montreal’s Institute for Governance of Private and Public Organizations. “Anything that can help, any group that can help to make the voice of the shareholder heard, whether it be institutional or retail investors, I support that.” Advertisement
Mr. Nadeau says he is disappointed that it took an American like Bill Ackman to clean house at Canadian Pacific Railway Ltd., one of Canada’s oldest companies. He says Canadian investors failed in their duty to demand that previous management boost the railway’s performance.
Some shareholders have sought private meetings with companies to make their voice heard. MÉDAC’s approach is the opposite : Buy the minimum shares required in a company to become an owner, research its perceived corporate governance weak spots, then confront the company publicly at its AGM while trying to woo as many shareholders onside as it can.
It doesn’t always work of course. The vast majority of the 58 shareholder proposals MÉDAC has made since 1997 have been voted down. Perhaps the biggest unfulfilled item on its wish list is a requirement that all companies trading on stock exchanges disclose the median salary of their employees and to hold the so-called “fairness ratio” (the ratio of the top executive’s pay to the average employee salary) to a maximum of 30.
Still, there have been successes as well. Canadian Imperial Bank of Commerce shareholders overwhelmingly backed Mr. Michaud’s 1999 proposal that its directors must hold shares in the bank equal to six times the annual fee they’re paid for their services. The argument was that by watching over shareholder interests, directors would also be protecting their own interests.
Mr. Michaud is perhaps best known for controversial comments he made about the Jewish people during a radio interview in 2000 when he was seeking to become a Parti Québécois candidate in a by-election that year. The remarks earned him official condemnation from the legislature and were said to have contributed to Lucien Bouchard’s decision to resign as premier the following year.
So how did a committed separatist with a contentious past come to command so much air time at annual meetings, given his organization has only one paid employee and annual revenue from its 1,500 members that barely tops $50,000?
In two words : personal misfortune.
The moustachioed Mr. Michaud, 82, took to defending shareholders after he lost part of his retirement savings in the 1992 near-collapse of General Trustco of Canada Inc., which was later bought by National Bank of Canada. National, and other banks, have been among his top targets ever since.
Critics of MÉDAC, who include some prominent business leaders, dismiss the group as a highly political organization driven by the bias of Mr. Michaud’s separatist convictions. Mr. Daoust is also an avowed sovereigntist, and former PQ premier Jacques Parizeau recently joined the MÉDAC board.
Opponents point to Mr. Michaud’s legal efforts to obtain the financial statements of Power Corp. newspaper unit Gesca as evidence of his crusade. Power, controlled by the pro-Canada Desmarais family, has objected.
In his September 2009 ruling on the case, Quebec Appeal Court judge Pierre Dalphond noted : “Mr. Michaud wants to show that the ‘Desmarais empire’ financially supports Gesca to promote the federalist cause, which displeases this long-time separatist.”
For his part, Mr. Michaud sounds undeterred. Though he leaves much of the actual company meeting battles these days to other MÉDAC members, he still commands the bluster of a determined activist.
Speaking in a brief interview this week, Mr. Michaud said bankers are more avaricious than ever, the financial world is full of “bandits,” and AGMs remain “parodies” of real shareholder democracy. “I’m sickened to the limit of my existence,” he said with his typical flair for the overdramatic.
Mr. Michaud said he wished there were more activists like him outside Quebec. Whether the country could handle another Yves Michaud is another question altogether.
