Stanley Ma serves as both President of MTY Food Group and its board Chair. This type of leadership structure, with
a non-independent board chair, can weaken a corporation’s governance and harm shareholder value.
As RBC says, it’s a “matter of good governance practice that an independent director be appointed to the position of
chair of the board of directors” and an “independent chair is one of the primary mechanisms by which board
independence is maintained.”
According to the 2022 Canada Spencer Stuart Board Index (CSSBI), 64% of CSSBI 100 board chairs were
independent that year. Spencer Stuart reporting also shows that independent board chairs within the S&P 500 have
risen from 28% in 2014 to 39% in 2024.
Further, Institutional Shareholder Services (ISS) reports that a board chair “should ideally be an independent
director to help provide appropriate counterbalance to executive management.”
And reports Glass Lewis: “[Our] view is that shareholders are better served when the board is led by an independent
chair, a role which we believe is better able to oversee the executives of the Company and set a pro-shareholder
agenda without the management conflicts that exist when a CEO or other executive also serves as chair. This, in
turn, leads to a more proactive and effective board of directors.”
Indeed, having a non-independent chair concentrates too much responsibility in a single person and inhibits
independent board oversight of executives on behalf of shareholders.
That said, some companies with non-independent chairs will provide a measure of independent leadership through a
robust lead independent director role. As BlackRock says: “In the event that the board chooses...a non-independent
Chair, we support the designation of a Lead Independent Director.”
But MTY has no such role.
Moreover, according to MTY’s 2024 Information Circular, “no formal policy has been established to monitor the
effectiveness of the directors, the Board and its Audit Committee.” Rather, the board “as a whole” is responsible for
“committee and individual director effectiveness issues.”
So, under the Chairmanship of a non-independent director—and with no independent lead director—the board has
failed to adopt any formal policy to monitor the effectiveness of either individual directors or even the board as a
whole.
We believe adoption of this proposal would serve to protect shareholder interests by ensuring better independent
oversight of the Company on behalf of shareholders. Thank you