Ontario Teachers' Pension Plan

Ontario Teachers' Pension Plan Board
Type Private
Industry Pension fund
Founded 1989
Headquarters Flag of Canada.svg Toronto, Ontario
Key people Jim Leech CEO[1]
Eileen Mercier, Chairman[2]
Total assets increase $107.5 billion CAD (2010) [3]
Employees 800
Website www.otpp.com

The Ontario Teachers' Pension Plan (OTPP), commonly referred to as Teachers', is the organization responsible for administering pensions for public school teachers of the Canadian province of Ontario. The OTPP also invests the plan's pension fund, making it one of the largest and most powerful investment groups currently operating in Canada. The plan is a multi-employer pension plan, jointly sponsored by the Government of Ontario and the Ontario Teachers' Federation.

Contents

History

The OTPP was established on December 31, 1989. Prior to this, Ontario teacher's pensions had been sponsored solely by the Ontario government. Assets of the plan had been invested in government bonds only.

Organization

Today, the OTPP administers the pensions for some 178,000 teachers, principals, and school administrators, and pays pensions to some 117,000 retirees.

Founding President and Chief Executive Officer, Claude Lamoureux, retired on December 1, 2007 and was succeeded by Jim Leech, Senior Vice President of Private Equity (aka Teacher's Merchant Bank). The Chair of the Board is Eileen Mercier.

Finances

The Ontario Teacher's Pension Plan is one of Canada's largest institutional investors having reported C$107.5 billion in net assets on December 31, 2010.[4] It has an excellent track record for investment performance with an average annual return of 9.7% since it began investing in capital markets in 1990. It is the largest single-profession pension plan in Canada. Despite strong investment performance, the pension plan has experienced shortfalls in recent years, requiring contribution increases for working teachers. The plan reported a preliminary $17.2 billion funding shortfall as of January 1, 2011 in its most recent annual report.[5]

Corporate governance

Teacher's is a strong advocate of improved corporate governance in Canada and around the world. As a long-term institutional investor responsible for investing teacher's pension contributions, Teacher's believes that good governance standards and practices result in better long-term performance by companies, according to its website.[6]

Teacher's is a founding member of the Canadian Coalition for Good Governance[7] and the Institute of Corporate Directors.[8] It also participates in policy-making and the evolution of good corporate governance standards and practices through submissions to regulators and memberships in various global shareholder networks and forums.

An important right and responsibility of shareowners is to vote their proxies. Teacher's votes its proxies according to a set of proxy voting guidelines that are reviewed annually and available on its website. These guidelines cover issues relating to boards of directors, management and director compensation, takeover protection and shareholder rights issues. To provide transparency on its proxy voting activities, Teacher's also records and publishes its proxy voting proxy voting decisions on its website in advance of companies’ annual meetings.

Recent governance comments

Teacher's says ‘no’ to Magna-style dual share collapses
Canada hosts global corporate governance summit for first time
Voting intentions for advisory votes on compensation

Responsible investing

The Ontario Teachers’ Pension Plan is a signatory to the United Nations-backed Principles for Responsible Investment Initiative (PRI).

In general, Teacher's believes that companies that are well run, respect the environment, respect human and labour rights and operate within the law are good long-term investments.[9] The pension plan’s investing activities are governed by the Ontario Pension Benefits Act,[10] which stipulates that employees of a pension plan have a fiduciary duty to take greater care with the fund’s investments than they would with their own personal investments. All investment decision must be made in the best financial interests of the fund. Teacher's cannot select or exclude investments based solely on social or environmental factors or any other non-financial criteria. It can and does consider environmental, social and governance factors when making investment decisions, if it believes they will impact the long-term financial performance of a company.[11]

Ownership

The OTPP maintains a prominent role as one of Canada's largest investors, owning investments across Canada. Through its fully owned subsidiary Cadillac Fairview, the OTPP owns properties including the Toronto-Dominion Centre, Toronto Eaton Centre, and the Rideau Centre in Ottawa. Through its private equity investment arm, Teachers' Private Capital, the OTPP owns or has interests in companies such as Samsonite, GNC, Maple Leaf Sports & Entertainment, Parmalat Canada, Doane Pet Care, and Worldspan. The OTPP posts a list of top investments annually on its website. In 2006 it acquired a 20% stake in CTVglobemedia.[12] In July 2007, Teacher's led a group to take over Canadian telecommunications giant BCE Inc. (Bell Canada) private. The C$35.1 billion deal (C$51.7 billion including assumed debt) would have been the biggest leveraged buyout ever in Canadian history and potentially the largest in global history, according to Thomson Financial.[13] However, the deal was officially cancelled on December 11, 2008.[14]

In March 2010 OTPP announced that it was buying the British lottery operator Camelot Group for £389m.[15]

On April 5, 2010, OTPP announced that it was leading an investor group in the acquisition of Exal Group, a specialty aluminum manufacturer, for an undisclosed amount.[16]

OTPP is part of the consortium which won a concession for High Speed 1 in 2010.[17]

Media coverage

On the January 12, 2004 episode of Rick Mercer Report, comedian Rick Mercer had a short segment about the Ontario Teachers Pension Plan, in which he humorously contrasted the plan's beneficiaries (i.e. teachers) with the investments the plan had made, including shopping malls and the tobacco industry.[18]

On December 2, 2008, New York lawyer Marc Stuart Dreier was arrested at Teacher's Toronto offices and charged with impersonating, through his words and by the use of business cards, Mr. Michael Padfield, a senior lawyer with the pension plan. A secretary in the Teacher's offices had become suspicious and notified Toronto police who promptly arrested him. Dreier was attempting to close a sale of forged Teacher's promissory notes, worth $44.7 million USD, by meeting with the buyers right in the Teacher's offices.[19]

On December 4, 2008, Dreier was indicted by the United States Justice Department for successfully executing a similar corporate officer 'impersonation' routine, including bluffing his way into using the momentarily vacant CEO's office of one 'selling' firm for a meeting with the buyer, to sell forged financial instruments on at least two occasions in New York.[20]

References

  1. ^ Ontario Teachers' Pension Plan: Jim Leech
  2. ^ Ontario Teacher's Pension Plan: Eileen Mercier
  3. ^ Ontario Teacher's Pension Plan Fast Facts
  4. ^ "Fast Facts Ontario Teacher's Pension Plan Corporate Site". April-2011. http://otpp.com/wps/wcm/connect/otpp_en/Home/Investments/Fast+Facts/. Retrieved April-2011. 
  5. ^ "2010 Annual Report Ontario Teacher's Pension Plan Corporate Site". April-2011. http://www.otpp.com/wps/wcm/connect/otpp_en/Home/Annual+Reporting/Annual+Report/. Retrieved April-2011. 
  6. ^ Ontario Teachers'Pension Plan: Governance
  7. ^ Canadian Coalition for Good Governance
  8. ^ Institute of Corporate Directors
  9. ^ Otpp.com  :http://www.otpp.com/wps/wcm/connect/otpp_en/Home/Investments/Investment+Principles/
  10. ^ Ontario Pension Benefits Act: http://www.search.e-laws.gov.on.ca/en/isysquery/9c2d41b5-2a8a-444a-aa10-adbf67604ed9/4/doc/?search=browseStatutes&context=#hit1
  11. ^ Otpp.com: http://www.otpp.com/wps/wcm/connect/otpp_en/Home/Investments/Investment+Principles/What_do_we_do_to_invest_responsibly/
  12. ^ "Woodbridge and BCE Announce New Ownership Structure for Bell Globemedia" (Press release). Ontario Teacher's Pension Plan. 2 December 2005. http://www.otpp.com/web/website.nsf/web/bellglobemedia. Retrieved 2006-06-22. 
  13. ^ "Bidding for Bell Canada may not be over". USA Today. 2007-07-02. http://www.usatoday.com/money/economy/2007-07-02-1847004217_x.htm. Retrieved 2009-03-30. 
  14. ^ Kelly, Jason and Jonathan Keehner (2008-12-11). "BCE’s Buyout Collapses, Demands C$1.2 Billion Fee". Bloomberg.com. http://www.bloomberg.com/apps/news?pid=20601082&refer=Canada&sid=aP_AqrSsevUc. Retrieved 2009-03-30. 
  15. ^ BBC, 25 March 2010, National Lottery owner Camelot sold to Canada teachers
  16. ^ Teacher's buys aluminum firm Exal. CBC News, 5 April 2010.
  17. ^ "High Speed 1 concession awarded to Canadian pension consortium". Railway Gazette International. 5 November 2010. http://www.railwaygazette.com/nc/news/single-view/view/high-speed-1-concession-awarded-to-canadian-pension-consortium.html. 
  18. ^ "Ontario Teachers Know All About Synergy" (Press release). Rick Mercer Report, CBC Television. 12 January 2004. http://www.cbc.ca/mercerreport/backissues_jan12.html. Retrieved 2006-11-26. 
  19. ^ Cowan, Alison Leigh and William K. Rashbaum (2008-12-05). "Lawyer’s Arrest in Canada Has His Firm in Chaos". The New York Times. http://www.nytimes.com/2008/12/06/nyregion/06lawyer.html. Retrieved 2009-03-30. 
  20. ^ Copy of the indictment against Dreier

External links


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