People

The People

Governance grade: A. Constellation runs one of the cleanest compensation systems in public markets — no options, no RSUs, no PSUs, modest fixed salaries, and a hard rule that 75% of every after-tax bonus must be plowed into open-market share purchases held in escrow for four years. The single material concern is succession: founder Mark Leonard resigned as President in September 2025 and is not standing for re-election at the May 15, 2026 AGM.

1. The People Running This Company

Constellation is mid-transition. Founder Mark Leonard has stepped back, replaced by a 30-year company veteran who, like Leonard, takes no salary. The CFO is a 20-year insider just promoted to the board. The chairman is also a former insider. The continuity is intentional — there is no outside hire anywhere near the top.

Mark Miller (President & COO) — Co-founder of Trapeze Group (CSI's first acquisition in 1995). Ran Volaris Operating Group as Executive Chairman for years. Holds 254,533 CSU shares (~$478M at recent prices) plus material stakes in Topicus and Lumine. Has voluntarily waived his entire salary and bonus from January 1, 2026 — the same posture Leonard adopted in 2015. His incentive is therefore 100% the share price.

Jamal Baksh (CFO) — Joined as Controller of the Jonas Operating Group in 2003. Promoted to CFO years ago, elected to the board on May 13, 2025. Total 2025 compensation $866K (USD). Modest share stake of 1,811 CSU + 4,888 Topicus + 7,033 Lumine reflects long compounding rather than option grants.

John Billowits (Chairman) — Ran Vela Operating Group as CEO, was CSI CFO before that, joined the board in 2020 after leaving operations. Holds 35,961 CSU shares plus large Topicus and Lumine stakes. Brings deep operating familiarity but is not independent under stricter US definitions — he is a recent ex-executive, and Constellation rotates senior operators onto the board rather than recruiting outsiders.

Mark Leonard (departing) — Founder, 70 years old, has waived salary and bonus every year since 2015 (reversing a brief 2014 acceptance). Will continue as an advisor focused on the "Permanent Engaged Minority Shareholder" (PEMS) program. His 1.85% stake (~$691M) remains the largest insider position even after his board departure.

2. What They Get Paid

Constellation's pay is unusual in three ways: (1) the founder works for free, (2) the new President also works for free starting 2026, and (3) every NEO bonus must be 75% recycled into open-market share purchases held in escrow for four years. There are zero stock options and zero RSUs across the entire organization.

The dark blue band is the part of each bonus that must be used to buy CSU stock on the open market — typically the largest component of pay. McKay, Van Poelje and Bender — who run the largest operating groups — earn the most because their bonuses are mechanically tied to the ROIC and net revenue growth of their group, not to CSU's stock price. Over the last five years NEO compensation rose 39% while total shareholder return rose 106%, a sane pay-for-performance ratio.

Two further checks pass cleanly:

• No CEO megagrants. The current and former Presidents both work for $0. The next-highest paid CSI head-office executive (CFO Baksh) earned $866K — below median for a CFO at any company of this size.
• No discretionary upside. Bonuses use a formula: salary × (ROIC over a 5% risk-free hurdle) × (net revenue growth) × individual factor. The board explicitly did not exercise upward discretion in 2025.

3. Are They Aligned?

Skin-in-the-game score: 9 / 10. Constellation is the textbook case for shareholder alignment. The only reason it is not a 10 is that aggregate insider ownership is mid-single-digits, not double-digits, and the founder is now exiting the board.

Ownership map

Combined disclosed insider ownership runs ~6.5% — Leonard, Anzarouth, Miller, Salna, Symons, Bender, Baksh and a handful of operating-group leaders. That is small in percentage terms but enormous in dollar terms: Leonard alone holds ~$691M of stock, Anzarouth ~$540M, Miller ~$478M. None of these positions can be hedged or pledged under normal practice, and the four-year escrow on bonus-purchased shares enforces a holding period the average outside investor would envy.

Dilution: there is none

Constellation has issued no equity-based compensation for two decades. Share count has remained essentially flat at ~21.2M for years. Bonus shares are purchased on the open market with executives' own after-tax cash, not printed by the company. The only equity-related issuance to watch is the 2023-2040 debenture-warrant series.

Capital allocation: founder-set discipline

The bonus formula docks every operating-group manager who fails to earn the 5% risk-free hurdle on Average Invested Equity Capital — meaning a deal that destroys ROIC literally costs the manager money. This is encoded into bonuses, not left to board discretion. The same discipline drives the famous reluctance to issue equity (no dilution) and to hold cash idly (Leonard letters openly criticized this).

Related-party behavior: minor

The MIC discloses no material related-party transactions. The notable structural feature is that several directors — Miller, Billowits, Parr, Schultz, Kennedy, Pastor — sit on the boards of CSI's separately-listed subsidiaries (Topicus.com, Lumine Group, Computer Modelling Group). These are spin-outs in which CSI retains an economic interest, so the cross-board roles arguably help with oversight rather than enabling self-dealing. There is no founder transaction, no shareholder loan, and no consulting payment to any director.

Insider trading: a buy-bias by design

Per Canadian SEDI data via The Globe and Mail, recent insider activity is dominated by contract buys (the mechanical purchase obligation under the bonus plan). Bernard Anzarouth, Donna Parr, Barry Symons and Jean Soucy all bought in December 2025 / January 2026 via the forced-purchase plan. Mark Leonard's last reported sale was in March 2025, a small position trim. Aggregate insider selling reported by third-party trackers (~CAD 55M over 1 month) is mostly attributable to Leonard's pre-resignation reduction and is not a tone-from-the-top signal.

4. Board Quality

Nine seats, seven nominally independent (78%). But the substance is more nuanced: four of the seven "independent" directors have direct historical or current ties to Constellation's ecosystem.

Strengths. Lawrence Cunningham — Vice Chairman, Markel director, Weinberg Center for Corporate Governance — is one of North America's most credentialed governance directors. Kittel (CFA, CPA) chairs an audit committee that has retained KPMG since 1995. Schultz brings real software-operating experience. Director attendance is high (most directors at 10/10 meetings in 2025).

Real weaknesses. Three matter:

No written code of ethics. Constellation discloses on the standard Canadian "comply or explain" basis that it has not adopted a written code of conduct. The board mandate and employment contracts cover the gap, but most peers of similar size have a formal code.

Auditor tenure of 30 years. KPMG has been auditor since 1995. No tendering disclosed. For a serial-acquirer with hundreds of subsidiaries, long auditor tenure is more defensible than at a single-segment company, but it is a long-standing comply-or-explain item.

Heavy CSI-ecosystem overlap. Five of nine post-AGM directors are current or former CSI / subsidiary executives or have served as unpaid board observers for years (Pastor sat as an unpaid observer 2016-2020 before joining). The board can challenge management on capital allocation, but a sharp pivot on strategy would require outside voices that are not strongly represented.

5. The Verdict

Governance grade: A.

Why A, not A+. Constellation has the structural alignment any public-market investor would design from scratch — no options, no RSUs, modest fixed pay, mandatory share buying on the open market, escrowed for four years, with a five-year-old practice of the President working for $0. Aggregate insider economic exposure runs into the billions of dollars. Capital-allocation discipline is encoded into bonuses, not left to discretion. Pay scales with operating-group returns, not stock price volatility.

Strongest positives.

• President takes $0 salary (Leonard 2015-2025, Miller from 2026)
• No equity-based compensation anywhere in the company
• 75% of every after-tax bonus mandated into open-market share purchases, 4-year escrow
• Largest disclosed insider holdings worth hundreds of millions per person
• Bonus math docks managers who fail a 5% ROIC hurdle
• Director attendance high, advisory board pulls in operating-group CEOs

Real concerns.

• Mark Leonard departure removes founder tone-from-the-top — Miller is well-prepared but unproven as #1
• 30-year auditor tenure with no recent tendering disclosed
• No written code of ethics (comply-or-explain disclosure)
• 5 of 9 directors have CSI-ecosystem ties; truly independent challenge is thin
• Five-year TSR (+106%) modestly lagged S&P/TSX (+111%) — first such gap in CSU's history, raises bar for the new leadership

Most likely upgrade trigger: Mark Miller demonstrates capital-allocation continuity through 4-6 quarters (no acquisition multiple drift, organic growth rate stable, ROIC sustained), and the board appoints one or two genuinely outside directors with no CSI history.

Most likely downgrade trigger: Any of the following — (a) Miller accepting material compensation, (b) introduction of stock options or RSUs, (c) acquisitions outside the disciplined ROIC framework, (d) a related-party transaction involving the founder's PEMS advisory work.