Proposed Form 51-102F6, Statement of Executive
Compensation, is touted by the CSA as improving clarity and
context regarding corporate compensation practices.
On March 29, 2007, the CSA announced that they had begun to
accept comments on Proposed Form 51-102F6 Statement of
Executive Compensation. The changes are intended to
improve the transparency of executive compensation disclosure
and to provide greater insight into this aspect of corporate
The requirements for compensation disclosure have not
substantially changed since the current obligations were
introduced in 1994. According to the CSA, the current
disclosure requirements provide investors with fragmented
information, which makes assessing total compensation
difficult. In support of increasing the requirements of
disclosure, the CSA notes that many reporting issuers already
provide executive compensation disclosure beyond that which is
required under the current form.
In proposing Form 51-102F6, the CSA studied the new rules
recently introduced by the Securities and Exchange Commission
in the United States (the SEC). The CSA's proposed rules,
however, while similar to those of the SEC, do not adopt all of
the changes made in the United States, and in many cases
reflect standards tailored to meet the needs of Canadian
Significant Changes To Disclosure Requirements
The following is a list of significant differences between
the current disclosure form, and the proposed form:
The summary compensation table will include a new column
showing the total compensation, expressed in dollars,
provided to each named executive officer (NEO). This amount
will represent the total of the figures disclosed in the
other columns in the table. Other aspects of the table have
been revised and a narrative description of any material
factors that are necessary to understand the information in
the table must also be included.
All equity compensation in the summary compensation table
is required to be disclosed on the basis of the compensation
cost of these awards over the requisite service period (as
per the Canadian Institute of Chartered Accountants'
handbook requirements), as reflected in a company's
financial statements. This deviates from the current form,
which discloses items such as stock and options according to
the number of shares or other securities granted.
A new narrative compensation discussion and analysis
section will be required to explain the rationale for
specific compensation programs for executives. The CSA has
identified six key principles that reporting issuers must
discuss, including examples of the types of issues that could
be addressed when explaining the principles.
There is more specific disclosure of potential payments
to NEOs upon termination of their position at the company,
including more required details on retirement benefits.
The proposed executive compensation form will require
expanded disclosure of director compensation, including a
summary table and equity disclosure similar to what is
required for NEOs.
Implementation And Transition
As stated above, the proposed executive compensation form is
intended to replace the current form. The new form was
originally proposed to apply to financial years ending on or
after December 31, 2007. It was also proposed that venture
issuers that do not send a management information circular be
required to file a completed Form 51-102F6 within 140 days of
the company's financial year-end. The proposal was open for
comments until June 30, 2007 and the Notice and Request for
Comment stated that the intention was to have the proposed in
effect at the end of 2007. However, according to CSA Notice
51-325, published on August 31, 2007, given the comments
received on their original proposals, the CSA will be
publishing further proposals for comment prior to implementing
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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").
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