The Canadian Coalition for Good Governance says it will aim at improving executive compensation practices in the coming year.

At its annual meeting today managing director of the CCGG David Beatty says it will be pushing for better compensation practices within the next year. These efforts will include pressing boards of directors to improve the link between pay and performance; encouraging firms to have independent compensation committees, which develop an independent view of appropriate compensation; testing pay to performance linkages; pushing firms to establish share ownership guidelines and ensure they disclose all elements of compensation.

In terms of disclosure, he suggested firms should do a better job of telling shareholders what the estimated annual cost of compensation is intended to be, and to look back at past compensation to see what the actual take was (for example, what options grants turned out to be worth).

Its other key initiatives for the coming year involve board voting policies. It wants to see firms move to a system of majority voting (which is more common in Europe) from plurality voting (the U.S. model). It wants firms to allow voting on individual directors, rather than just slates of directors; to allow votes against directors; and to publish voting results. It also plans to work with audit committees to review their engagement letters.

The CCGG’s strategies include publicizing its guidelines, working directly with companies and their executives, and participating in the public policy debate.

In the keynote address, chair of Canadian Tire Corp. Gil Bennett made several suggestions: boards need comprehensive job descriptions and a diligence policy; financial scorekeepers within a company (i.e. chief financial officers and other financial professionals) shouldn’t have their compensation tied to corporate performance so as to remove any incentives to cheat on their financial results; CFOs should report to boards rather than chief executive officers; accounting mistakes shouldn’t be allowed to be included in financials just because they don’t meet the materiality standard. He also called for the disclosure of directors’ continuing education efforts and suggested CEOs should not be directors. Finally, he expressed, boards should not give advice to management, but should be accountable for corporate performance.

At the meeting, the CCGG said its existing efforts to encourage good governance are paying off. It says, of a sample of 152 issuers, the number considered well governed has gone from 46 in 2002 to 62 in 2003, 73 in 2004, and 81 in 2005.

The CCGG is a not-for-profit corporation. It has 45 members with approximately $810 billion in total Canadian assets under management. The Coalition’s goals are to promote the best corporate governance practices in Canada and to align the interests of boards and management with those of the shareholder.