Ontario Teachers' Pension Plan
Encyclopedia
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
.
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.
s having reported C$107.5 billion in net assets on December 31, 2010. 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.
Teacher's is a founding member of the Canadian Coalition for Good Governance and the Institute of Corporate Directors. 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.
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
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. The pension plan’s investing activities are governed by the Ontario Pension Benefits Act, 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.
, 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
.
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. However, the deal was officially cancelled on December 11, 2008.
In March 2010 OTPP announced that it was buying the British
lottery operator Camelot Group
for £389m.
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.
OTPP is part of the consortium which won a concession for High Speed 1 in 2010.
, 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 mall
s and the tobacco industry
.
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.
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.
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
province
Provinces and territories of Canada
The provinces and territories of Canada combine to make up the world's second-largest country by area. There are ten provinces and three territories...
of Ontario
Ontario
Ontario is a province of Canada, located in east-central Canada. It is Canada's most populous province and second largest in total area. It is home to the nation's most populous city, Toronto, and the nation's capital, Ottawa....
. The OTPP also invests the plan's pension fund
Pension fund
A pension fund is any plan, fund, or scheme which provides retirement income.Pension funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investors dominate. The largest 300 pension funds collectively hold...
, making it one of the largest and most powerful investment groups currently operating in Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
. The plan is a multi-employer pension plan, jointly sponsored by the Government of Ontario
Government of Ontario
The Government of Ontario refers to the provincial government of the province of Ontario, Canada. Its powers and structure are set out in the Constitution Act, 1867....
and the Ontario Teachers' Federation
Ontario Teachers' Federation
The Ontario Teacher's Federation is a professional organization representing teachers in Ontario, Canada. All teachers in publicly-funded Ontario schools are required by law to be members of the federation...
.
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
Merchant bank
A merchant bank is a financial institution which provides capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms they lend to....
). The Chair of the Board is Eileen Mercier.
Finances
The Ontario Teacher's Pension Plan is one of Canada's largest institutional investorInstitutional investor
Institutional investors are organizations which pool large sums of money and invest those sums in securities, real property and other investment assets...
s having reported C$107.5 billion in net assets on December 31, 2010. 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.
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.Teacher's is a founding member of the Canadian Coalition for Good Governance and the Institute of Corporate Directors. 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. The pension plan’s investing activities are governed by the Ontario Pension Benefits Act, 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.
Ownership
The OTPP maintains a prominent role as one of Canada's largest investors, owning investments across Canada. Through its fully owned subsidiary Cadillac FairviewCadillac Fairview
Cadillac Fairview Corporation Limited is a North American investor, owner, and manager of commercial real estate.The name "Cadillac Fairview" came into existence in 1974 as a result of the merger between Cadillac Development Corporation Ltd and Fairview Corporation...
, the OTPP owns properties including the Toronto-Dominion Centre
Toronto-Dominion Centre
The Toronto-Dominion Centre, or Centre, is a cluster of buildings in downtown Toronto, Ontario, Canada, consisting of six towers and a pavilion covered in bronze-tinted glass and black painted steel. It serves as the global headquarters of the Toronto-Dominion Bank, as well as providing office and...
, Toronto Eaton Centre
Toronto Eaton Centre
The Toronto Eaton Centre is a large shopping mall and office complex in downtown Toronto, Ontario, Canada, named after the now-defunct Eaton's department store chain that once anchored it. In terms of the number of visitors, the shopping mall is Toronto's top tourist attraction, with around one...
, and the Rideau Centre
Rideau Centre
Rideau Centre is a three-level shopping centre on Rideau Street in Downtown Ottawa, Ontario, Canada. It borders on Rideau Street , the Rideau Canal, the Mackenzie King Bridge, and Nicholas Street....
in Ottawa
Ottawa
Ottawa is the capital of Canada, the second largest city in the Province of Ontario, and the fourth largest city in the country. The city is located on the south bank of the Ottawa River in the eastern portion of Southern Ontario...
. Through its private equity investment arm, Teachers' Private Capital, the OTPP owns or has interests in companies such as Samsonite
Samsonite
The Samsonite Corporation makes luggage with its products ranging from large suitcases to small toiletries bags and briefcases. It was started in Denver, Colorado, USA in 1910 byJesse Shwayder, as the Shwayder Trunk Manufacturing Company. Shwayder named one of his initial cases "Samson", after the...
, GNC
General Nutrition Centers
General Nutrition Centers is a Pittsburgh, Pennsylvania-based American commercial enterprise focused on the retail sale of health and nutrition related products, including vitamins, supplements, minerals, herbs, sports nutrition, diet & energy products.-History:In 1935, David Shakarian opened a...
, Maple Leaf Sports & Entertainment, Parmalat Canada
Parmalat Canada
Parmalat Canada is a Toronto, Ontario based company that sells dairy products. It is owned by Parmalat SpA of Italy.The Canadian unit was established in 1997 with the purchase of Beatrice Foods Canada and Ault Foods...
, Doane Pet Care
Doane Pet Care
Doane Pet Care was a leading manufacturer of dry pet food and pet snacks and treats in the United States.-Production:DPC manufactured store brands for its retail customers and national brands for consumer pet food companies; it also produced and sells its own regional brands. Its products included...
, and Worldspan
Worldspan
Worldspan is a provider of travel technology and content and a part of the Travelport GDS business. It offers worldwide electronic distribution of travel information, Internet products and connectivity, and e-commerce capabilities for travel agencies, travel service providers and corporations...
. The OTPP posts a list of top investments annually on its website. In 2006 it acquired a 20% stake in CTVglobemedia
CTVglobemedia
CTVglobemedia , was one of Canada's largest private media companies. Its operations include newspaper publishing , television broadcasting and production , radio broadcasting , and their respective Internet properties.Originally established by BCE and the Thomson family in 2001 combining CTV Inc.,...
.
In July 2007, Teacher's led a group to take over Canadian telecommunications giant BCE Inc. (Bell Canada
Bell Canada
Bell Canada is a major Canadian telecommunications company. Including its subsidiaries such as Bell Aliant, Northwestel, Télébec, and NorthernTel, it is the incumbent local exchange carrier for telephone and DSL Internet services in most of Canada east of Manitoba and in the northern territories,...
) private. The C$35.1 billion deal (C$51.7 billion including assumed debt) would have been the biggest leveraged buyout
Leveraged buyout
A leveraged buyout occurs when an investor, typically financial sponsor, acquires a controlling interest in a company's equity and where a significant percentage of the purchase price is financed through leverage...
ever in Canadian history and potentially the largest in global history, according to Thomson Financial. However, the deal was officially cancelled on December 11, 2008.
In March 2010 OTPP announced that it was buying the British
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
lottery operator Camelot Group
Camelot Group
Camelot GroupCamelot is a private limited company, its entire share issue is owned by a single shareholder, as detailed above. are the operators of the UK National Lottery. Camelot Group was awarded the National Lottery franchise in 1993 and was re-awarded the franchise in 2001 and again in 2007...
for £389m.
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.
OTPP is part of the consortium which won a concession for High Speed 1 in 2010.
Media coverage
On the January 12, 2004 episode of Rick Mercer ReportRick Mercer Report
Rick Mercer Report is a Canadian television comedy series which airs on CBC Television...
, comedian Rick Mercer
Rick Mercer
Richard Vincent "Rick" Mercer is a Canadian comedian, television personality, political satirist, and blogger.Mercer first came to national attention in 1990, when he premiered his one man show Show Me the Button, I'll Push It, or Charles Lynch Must Die at the Great Canadian Theatre Company in...
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 mall
Shopping mall
A shopping mall, shopping centre, shopping arcade, shopping precinct or simply mall is one or more buildings forming a complex of shops representing merchandisers, with interconnecting walkways enabling visitors to easily walk from unit to unit, along with a parking area — a modern, indoor version...
s and the tobacco industry
Tobacco industry
The tobacco industry comprises those persons and companies engaged in the growth, preparation for sale, shipment, advertisement, and distribution of tobacco and tobacco-related products. It is a global industry; tobacco can grow in any warm, moist environment, which means it can be farmed on all...
.
On December 2, 2008, New York lawyer Marc Stuart Dreier
Marc Stuart Dreier
Marc Stuart Dreier , formerly an American lawyer from New York City, was sentenced to 20 years in federal prison on July 13, 2009. He is scheduled for release on October 26, 2026. He is housed at FCI Sandstone, Minnesota. He had pleaded guilty on May 11, 2009 to eight charges in the United States...
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.
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.