On October 31, 2011, various amendments to Form
51‐102F6 – Statement of Executive
51‐102F6") applying to financial years
ending on or after October 31, 2011, came into force. The
amendments are intended to improve the information issuers provide
investors relating to key risks, governance and compensation
matters. This article highlights three of the material amendments
to the compensation discussion and analysis disclosure required by
Form 51‐102F6 requires that an issuer disclose
performance goals or similar conditions of compensation paid to a
named executive officer (an "NEO") that
are based on objective, identifiable measures such as the
issuer's share price or earnings per share. Form
51‐102F6 exempts an issuer from disclosing this
information if such disclosure would seriously prejudice the
issuer's interests. However, the recent amendments provide that
the disclosure of goals or conditions based on broad corporatelevel
financial performance metrics such as earnings per share and
revenue growth does not constitute serious prejudice and therefore
must be disclosed by an issuer.
Further, if an issuer intends to rely on this exemption, the
issuer must explicitly state this and explain the serious prejudice
that would result from such disclosure. Consequently, the
amendments are likely to make the financial planning processes,
future expectations and compensation strategies of an issuer more
transparent, which may provide some undesirable insight to
competitors about an issuer. Form 51‐102F6 now also
requires an issuer to disclose whether its board of directors, or a
committee of the board, considered the implications of the risks
associated with its compensation policies and practices.
If so, disclosure must include (a) the extent and nature of the
board of directors' or committee's role in the risk
oversight of the issuer's compensation policies and practices;
(b) any practices the issuer uses to identify and mitigate
compensation policies and practices that could encourage an NEO or
individual at a principal business unit or division to take
inappropriate or excessive risks; and (c) any identified risks
arising from the issuer's compensation policies and practices
that are reasonably likely to have a material adverse effect on the
issuer. As a result of these new requirements, issuers should
consider implementing mechanisms to address risks associated with
their compensation policies and practices. Moreover, Form 51 102F6
now requires an issuer to disclose whether or not an NEO or
director is permitted to purchase financial instruments designed to
hedge or offset a decrease in market value of equity securities
held by or granted as compensation to the NEO or director. As a
result, issuers may wish to consider introducing policies
addressing hedging by executives and directors of the issuer's
It is recommended that issuers engage in some advanced planning
to ensure compliance with the new Form 51‐102F6
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