BCE, Ontario Teachers' Pension Plan, and Good Governance

For those of us living below the 49th parallel, you might have not heard that the 2nd largest pension plan in Canada is looking to buy/takeover Canada's largest and oldest telecommunications company.

Ontario Teachers' Pension Plan is seeking to win over support for their plan to push for change at BCE -- or Bell Canada as it's referred to by most consumers in Canada.

To put this in perspective, imagine if CalPERS sought to step up its activist positions and philosophy and actually made a run at Verizon or AT&T. It's one thing to put out a Focus List of companies who are poorly governed. It's quite another to actually jump in the ring and actually try to more forcefully effect change.

The Wall Street Journal did cover this story last week, with the angle of how it demonstrates the lengths to which pension funds and other institutional investors will go to avoid pay - what some call egregious - "2 and 20" fees to private equity firms/hedge funds when they can employ their own professionals and get the same result. (Not clear, by the way.)

However, I enjoyed the Globe and Mail's coverage this morning of the latest developments, in which they quoted one BCE director as saying: "What Teachers is doing is disgusting.... These guys hold themselves out as paragons of governance, then they become activists who take their case to the press."

To be sure, Teachers' is shining a light -- not just in Canada, but around the world -- as a leading pension fund (easily in the same league as CalPERS, CalSTRS, and Hermes) supporting and promoting good governance. Much of this credit lies at the feet of its leader, Claude Lamoureux (and several very capable lieutenants), who has been speaking out on this topic long before it was trendy. M. Lamoureux actually helped co-found the Canadian Coalition for Good Governance several years ago, which has done great work for this cause.

What bothers me most about this BCE director's comment is that he or she equates taking a pro-governance/shareholder value creation campaign to the press (to see if other shareholders are in agreement about its principles) with poor governance. Nothing could be further from the truth. (And isn't he/she taking his/her case to the press -- anonymously, as opposed to Teachers' -- in just the same manner that he/she is criticizing?)

Canada is not used to such tactics being employed in the battle for greater shareholder value creation. Its corporate boards and corporate governance practices tend to be more insular compared to the United States and Europe.

Fight on, M. Lamoureux! We'll be watching.

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