The Canadian coali-tion on Good Governance announced earlier this month that it will not support regulatory changes or universal backing for resolutions making advisory shareholder votes on executive compensation mandatory during this year’s AGM season. That’s in spite of growing pressure from activist shareholders demanding such votes on executive pay packages.

“It is the role of the board, and in particular the compensation committee, to establish appropriate executive compensation plans that clearly align the interests of shareholders and management,” says David Beatty, managing director of the CCGG. The coalition can provide perspective, he adds, but “it is not our role to find that balance.” CCGG expects the issue to be on the ballots of several Canadian companies, including the big banks, in the 2008 proxy season.

According to the labour-sponsored, Vancouver-based Shareholder Association for Research and Education, roughly 30% of shareholder resolutions this year and last concerned corporate executive compensation policies.

The CCGG says its decision was based on several factors, including an overall improvement in compensation disclosure practices since last year. It also cites the increasing role of independent advisors in the compensation process, the continued adoption of majority voting for director elections — allowing shareholders to express their concerns by withholding votes — and the introduction of new Canadian Securities Administrators requirements fordisclosure that will have an impact on linking pay to performance.

In the meantime, the CCGG suggests its members should monitor the performance of their portfolio companies and “be prepared to intervene when necessary.” It also warns that it may support the universal implementation of a mandatory “say on pay” advisory vote if progress slows or stops. IE