Mr. Speaker, I rise today to speak on the motion put forward by the hon. member for Winnipeg-St. James respecting the principle of public disclosure of salaries of senior executives of publicly traded private corporations and crown corporations.
Unfortunately because of time I do not think I am going to get through my whole presentation but I thank my hon. colleague for sharing the time.
The issue as it relates to provisions of the Canada Business Corporations Act rests mainly with my colleague, the Minister of Industry.
For Crown corporations the government has a more direct responsibility because of the public policy purposes these corporations serve and has a strong interest in ensuring appropriate compensation levels.
The subject of salary disclosure of executives in Canada's corporate world has always been one of great debate and great importance. Our government has traditionally attempted to balance the right of the public to access information concerning both public and private institutions against the rights of individuals to privacy.
Disclosure rules in the private sector for publicly traded corporations reflect an increasing desire on the part of investors and creditors to exercise their corporate governance rights and responsibilities in ways that ensure that compensation packages to management harmonize to the degree possible with the interests of the shareholder. Compensation should reflect corporate performance and industry standards.
Provincial securities legislation deals with disclosure rules for public companies. For example, Canadian companies which do or may file debt securities which trade under the Ontario Securities Commission jurisdiction are required to file information on executive compensation for the presidents of the companies and the four most highly compensated officers. These rules appear to be well designed to meet the needs of private investors and creditors. They provide assurance and accountability.
Disclosure of compensation for CEOs and chairpersons establish a reasonable and welcome degree of public transparency concerning corporate affairs for some of Canada's most important corporate bodies whose shares trade on the open market.
Sound corporate governance for crown corporations continue to be a matter of concern to this government. This past October the President of the Treasury Board hosted a conference of chairpersons and CEOs of crown corporations to discuss ways of improving the performance and accountability of crown corporation boards.
I think it is fair to say that all crown corporations represented displayed sensitivity to the public's changing expectations concerning the responsibilities of corporate boards. This sensitivity extends to the development of appropriate compensation policies for corporate employees.
In recent years a number of studies in the area of corporate governance, including the report prepared by Mr. Peter Dey for the Toronto Stock Exchange, have addressed the changing role of the board of directors.
Crown corporation boards face difficult challenges complicated by the need to balance the corporate agenda with the public policy agenda. They also face problems similar to those in the private sector such as ensuring open communication programs with shareholders, stakeholders and other affected parties, and that includes the taxpayers of Canada.
In the Dey report there is a particularly challenging concept of a modern business corporation put forward by the Canadian Centre for Ethics and Corporate Policy. The centre sees "the modern corporation as both an economic institution and a social institution". The role of the "economic institution" is "to conduct affairs with activities with a view to enhancing profit for the benefit of the shareholders". This of course is the traditional role.
However, I think we can go further and say that "as a social institution a corporation in the conduct of its business activities must take into account those ethical principles and considerations that are reasonably regarded as appropriate for the responsible conduct of business" in Canada. This expands the traditional view and puts the onus on boards of directors to become accountable for much more than only the bottom line on a set of financial statements.
Crown corporations by their very nature have always had to consider the public policy principles and considerations to a much greater degree of public scrutiny than private sector corporations.
Furthermore, the Treasury Board secretariat continually reviews corporate government issues as they relate to federal crown corporations. The review of annual corporate plans and budgets, including salary budgets, is one aspect of their work. In addition, much information on crown corporations is now publicly available.
Hon. members are probably aware that for crown corporations, directors, chairpersons and chief executive officers, these are appointed by order in council and have their remuneration fixed by the governor in council. Salary ranges for these appointees are in fact now very much public information. The practice has been to provide easy access to information concerning the salary range of a particular person. This protects the privacy of the individual concerned, especially with respect to exact salary, while allowing the public to have access to significant information. Similarly, the salary schedules of senior appointments to federal agencies and commissions are publicly available.
Crown corporations seeking to issue debt instruments follow rules established by respective provincial securities commissions. They too are subject to disclosure requirements as are their counterparts in the private sector.
With respect to the current public sector wage freeze, all crown corporations have been asked to follow government policy. Order in council appointments such as board chairs have had their wages frozen. Senior crown corporation officials who are not government appointees have had their compensations set by the boards of directors of their corporations. Crown corporations subject to access to information or privacy legislation can be required to provide salary ranges and discretionary benefits of a financial nature for these officials.
The Financial Administration Act requires as well that any benefits other than remuneration paid to directors, chair or chief executive officers shall be fixed by the board of directors in accordance with the regulations made under this act. The regulations require that these benefits do not exceed any industry norm.
I would like to emphasize that federal crown corporations are subject to more stringent accountability and control rules than are publicly traded corporations.
The Financial Administration Act, part X, sections 83 to 154, establishes very thorough and comprehensive reporting requirements. This law requires corporations to submit annual corporate plans and budgets to Treasury Board for approval.
Corporations must conduct internal audits as well as being audited externally. In most cases, external audits are undertaken by the Auditor General who is empowered to make special reports on the matters he believes require the attention of ministers and Parliament.
In addition, crown corporations under part X must undergo a special examination at least once every five years. These examinations are established to ensure that systems and practices respecting financial and management controls are maintained in order to provide assurance that the resources of the corporation are being managed effectively and efficiently.
How much more disclosure is reasonable for other crown corporation executives? Is there a further need to add more rules for Canada's 48 crown corporations? Should smaller corporations which do not issue debt instruments and have only a handful of employees be treated in the same manner as a larger corporation? It would be premature to go beyond what we now have in the area of salary information reporting by crown corporations. Public accountability for crown corporations is now well and adequately established under a sufficiently rigorous statutory and regulatory framework.
The corporate form together with this framework has served Canadians well. In the 1993 report to Parliament, the Auditor General of Canada stated:
In 1991, we reported that the control and accountability framework established in 1984 represented a vast improvement over the previous situation and provided for greater vigilance and stability. It has, in our view, improved the management of crown corporations as well as the receipt of essential information by Parliament on a more timely basis.
The government will continue to monitor this system to ensure its effective functioning and make whatever amendments are needed.