Canada: Changes to Executive Compensation Disclosure in Canada

Last Updated: December 1 2010
Article by Neill May and Jonathan Feldman


The Canadian Securities Administrators (the "CSA") have published for comment proposed amendments to the executive compensation disclosure requirements. The proposed amendments are open for comment until February 17, 2011 and are expected to be implemented for the 2012 proxy season, applicable to companies with a year end on or after October 31, 2011. Companies should be aware of these proposals and be taking steps concerning 2011 executive compensation and compensation processes to best position themselves to be able to comply with these new rules once they take effect, including by:

  • Conducting a review of past disclosure practices to determine where enhanced disclosure will be required;
  • Ensuring that compensation policies are effectively integrating risk and performance;
  • Evaluating the composition of the Compensation Committee in light of the new requirements; and
  • Reviewing the roles played by compensation consultants and determining if they are in a position of conflict.

Summary of Key Changes

Risk Management in Compensation Policies and Practices

A key element of the new proposals is the requirement to disclose the risks associated with compensation policies. The proposal is borne of concern that at some issuers compensation policies have become disconnected from long-term performance, creating risks for the issuer. Of particular concern for regulators is the misalignment of short-term compensation policies and long term performance objectives created incentives for executives inconsistent with the interests of the issuer. As a consequence the CSA, following the lead of the U.S. Securities and Exchange Commission (the "SEC"), have proposed that issuers be required to consider, analyze and disclose risks associated with their compensation policies and practices.

To address this matter, issuers may wish to consider commencing processes to assess and if necessary address the risks in its compensation policies.

Disclosure Regarding Executive Officer and Director Hedging

The CSA have also proposed to require issuers to disclose whether executives or directors are permitted to purchase financial instruments that are designed to hedge or offset a decrease in the market value of equity securities.

Composition of the Compensation Committee

In an effort to ensure the Compensation Committees members are appropriately experienced and expertised in the area of executive compensation, the CSA are proposing that companies disclose:

  • whether or not one or more of the committee members has any direct experience that is relevant to his or her responsibilities in executive compensation; and
  • the skills and experience that enable the committee to make decisions on the suitability of the company's compensation policies and practices that are consistent with a reasonable assessment of the company's risk profile.

In addition to possibly affecting the composition of compensation committees these proposed requirements may result in boards placing a greater emphasis on director education in the area of executive compensation.

Disclosure of Fees Paid to Compensation Advisors

In response to the perception that there may be a conflict of interest when compensation consultants work on projects both for the company and its board of directors, the SEC introduced new rules in 2010 requiring disclosure of the fees paid to compensation consultants and their affiliates in certain circumstances. The CSA have proposed a similar amendment to require disclosure of all fees paid to compensation advisors for each service provided.

Other Proposed Amendments

The CSA have proposed a number of additional amendments, including:

Disclosure of Performance Goals - Serious Prejudice Exemption

The current rules provide an exemption from the requirement to disclose specific performance goals or similar conditions on the basis that disclosure would "seriously prejudice the interests of the company". Reliance is often placed on this exemption to avoid disclosure of competitively or commercially sensitive performance thresholds. The CSA have proposed requiring issuers to specifically disclose reliance on the exemption and provide an explanation as to why disclosing the relevant performance goals or similar conditions would result in serious prejudice.

Summary Compensation Table (SCT) Format

Issuers are currently permitted to add tables, columns, and other information, if necessary, to the SCT to meet the objectives of executive compensation disclosure. The CSA have indicated that some companies have presented the SCT in a format different than the form requirement. As a result, the CSA have proposed to clarify that issuers may not alter the presentation of the SCT itself by adding columns or other information, but that issuers may instead choose to add other tables and other information, so long as the additional information does not detract from the SCT's form requirements.

Reconciliation to "Accounting Fair Value"

For share-based and option-based awards reported in the SCT, the current form requires issuers to reconcile any difference between the grant date fair value reported in the SCT and the accounting fair value of sharebased and option-based awards. The CSA expressed some concern that issuers have not always satisfied this requirement. As a result, the CSA have concluded that it would be useful to also disclose this information in a footnote to the SCT and have proposed to require all issuers to disclose the methodology used to calculate grant date fair value of all equity-based awards, including key assumptions and estimates used for each calculation and why the issuer chose that methodology, regardless of whether there are any differences with the accounting fair value.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.