The Canadian Securities Administrators (CSA) are adopting
amendments to Form 51-102F6 Statement of Executive Compensation
(Form 51-102F6) which, subject to ministerial approvals, will apply
in respect of financial years ending on or after October 31, 2011.
The amendments follow the 2009 CSA Staff Notice reporting on a
targeted compliance review of executive compensation disclosure, as
well as the adoption by the Securities and Exchange Commission of
rules amending compensation and corporate governance disclosure
requirements for U.S. companies. The changes are intended to
improve the information companies provide investors about key
risks, governance and compensation matters. The amendments range
from drafting changes to clarify existing disclosure requirements
to new substantive requirements.
OVERVIEW OF CHANGES
There are several changes to the Compensation Discussion and
Analysis (CD&A) section of Form 51-102F6:
Companies relying on the existing 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, will now be required to explicitly
state that they are relying on the exemption and explain why
disclosing the relevant performance goals or similar conditions
would seriously prejudice the company's interests.
Companies are required to disclose whether the board of
directors, or a committee of the board, considered the implications
of the risks associated with the company's compensation
policies and practices. If the implications were considered, the
company is required to include a discussion of the board's role
in the risk oversight of compensation policies and practices and
the identified risks that are reasonably likely to have a material
adverse effect on the company.
Companies are required to disclose whether any named executive
officer or director is permitted to purchase financial instruments
that are designed to hedge or offset a decrease in the market value
of equity securities granted as compensation or held, directly or
indirectly, by the named executive officer or director.
Information about compensation advisors retained by the company
will now also be disclosed in the CD&A, including a description
of the advisor's mandate and any other work performed for the
company, and a breakdown of all fees paid to compensation advisors
for each service provided.
The CSA indicated that some companies have presented the Summary
Compensation Table in a format different that that required. The
amendments have therefore clarified that a company may not alter
the presentation of the Summary Compensation Table by adding
columns or other information. Companies may choose to add another
table and other information, so long as the additional information
does not detract from the Summary Compensation Table.
In addition to the changes to Form 51-102F6, consequential
amendments have also been made to Form 58-101F1 Corporate
Governance Disclosure and Form 58-101F2 Corporate Governance
Disclosure (Venture Issuers) of National Instrument 58-101
Disclosure of Corporate Governance Practices.
The amendments to Form 51-102F6 will require most companies to
carefully review and update their executive compensation disclosure
to ensure compliance with the new requirements.
The amendments to Form 51-102F6 are available here.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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).