From Say-on-Pay Failure to Shareholder Support: Lessons from Agnico Eagle

As a starting point, say-on-pay failures are relatively rare in Canada. Consecutive failures are even more unusual. When a company receives low shareholder support in back-to-back years, the issue is rarely just one compensation decision. More often, it reflects broader investor concerns about pay-for-performance alignment, discretion, governance, disclosure, or responsiveness to shareholder feedback.

Agnico Eagle Mines Limited provides a useful Canadian case study. After receiving very low support for its advisory say-on-pay vote in both 2022 and 2023, the company undertook a broad response aimed at rebuilding investor confidence. The company engaged with shareholders, identified the key areas of concern, made several compensation and governance changes, and ultimately saw its say-on-pay support rebound significantly in 2024.

What Went Wrong

Agnico Eagle’s say-on-pay support was 24.41% in 2022 and 25.16% in 2023. The company’s disclosures indicate that shareholder concerns were focused primarily on one-time bonuses paid in connection with the Kirkland Lake Gold merger, the company’s Executive Chair structure, and the amount of severance payments made to a former CEO.

These concerns reflect common themes that drive many adverse say-on-pay outcomes. Investors are more likely to support competitive executive pay when it is clearly tied to performance and supported by strong disclosure. However, they tend to scrutinize special awards, significant discretionary payments, unusual governance arrangements, and severance outcomes that appear difficult to reconcile with the shareholder experience.

How the Company Responded

Agnico Eagle’s response began with shareholder engagement. The company undertook outreach before and after its 2023 annual meeting to better understand investor concerns. Importantly, the response was not limited to additional disclosure; the company made several concrete changes to its compensation program and governance structure.

1. Agnico Eagle committed to not paying special cash bonuses or one-time cash bonuses to executives on a go-forward basis. Instead, executive cash bonuses would be determined through the company’s short-term incentive plan. This addressed the concern that certain awards were being made outside the regular performance framework.

   
   

2. The CEO transition was used as an opportunity to reset CEO compensation levels. This helped address broader shareholder concerns about pay quantum and returned executive compensation to more predictable levels.

   
   

3. It increased the performance orientation of its long-term incentive program by changing the equity mix from 50% performance share units (PSUs) and 50% restricted share units (RSUs) to 60% PSUs and 40% RSUs. In practical terms, this meant a larger portion of long-term incentive compensation was tied to performance-based vesting conditions rather than time-based vesting.

   
   

4. Agnico Eagle eliminated stock option grants for executives at the Vice-President level and above. Together with the increased PSU weighting, this moved the long-term incentive program toward a structure that may be viewed as more directly performance-based, particularly in the eyes of shareholder advisory firms such as ISS and Glass Lewis, who do not view stock options as performance pay.

   
   

5. Its short-term incentive methodology was refined so that approximately half of the Corporate Performance Score would be calculated using pre-determined and pre-disclosed formulas. This reduced discretion and improved transparency around annual incentive outcomes.

   
   

6. Agnico Eagle strengthened its recoupment policy. The company disclosed that its updated policy allows annual incentive compensation to be clawed back in certain circumstances even where a financial statement restatement is not required. This reinforced accountability and gave shareholders another signal that incentive compensation would be subject to appropriate safeguards.

Agnico Eagle also addressed broader governance concerns. The company transitioned away from an Executive Chair structure, with its former Executive Chair continuing as Chair of the Board on a non-executive basis. It also refreshed the leadership of its Compensation Committee.

The Outcome: A Significant Rebound in Shareholder Support

The results suggest that Agnico Eagle’s response was well received by shareholders. After receiving only 24.41% support in 2022 and 25.16% support in 2023, the company’s advisory vote on executive compensation passed with 96.01% support in 2024.

This marked a significant reversal from the prior two years. While no single factor can fully explain a say-on-pay outcome, the improvement followed a period in which Agnico Eagle had engaged directly with shareholders and implemented several compensation and governance changes in response to the concerns raised.

For boards, this is a critical part of the case study. Agnico Eagle did not simply wait for the issue to pass. It identified the concerns, made targeted changes, and gave shareholders a clear basis to reassess the company’s compensation approach.

Key Lessons for Canadian Boards

Agnico Eagle’s experience highlights several practical lessons for boards and compensation committees.

Conclusion

Agnico Eagle’s say-on-pay experience is a reminder that executive compensation is assessed in a broader governance context. Shareholders evaluate not only how much executives are paid, but how pay decisions are made, how they align with performance, and how the board responds when concerns are raised.

The company’s response to consecutive failed votes was notable because it addressed the issues from multiple angles: shareholder engagement, reduced use of discretion, stronger performance alignment, governance changes, and Compensation Committee accountability.

For boards and compensation committees, this case study highlights the importance of proactive compensation governance. Working with an independent executive compensation advisor can help boards assess whether compensation programs are competitive, performance-oriented, clearly disclosed, and aligned with shareholder expectations. A well-designed program cannot eliminate the risk of shareholder scrutiny, but it can help mitigate that risk by ensuring pay decisions are defensible, transparent, and connected to long-term value creation.

The lesson from Agnico Eagle is not that any single compensation change can prevent or reverse a failed vote. Rather, it is that compensation design, governance oversight, shareholder engagement, and disclosure all need to work together.