On July 22, 2011, the Canadian Securities Administrators (CSA) published a notice with respect to the adoption of amendments to Form 51-102F6 Statement of Executive Compensation (Form 51-102F6 Amendments). Subject to obtaining all necessary ministerial approvals, the Form 51-102F6 Amendments and certain consequential amendments to National Instrument 51-102 Continuous Disclosure Obligations and to National Instrument 58-101 Disclosure of Corporate Governance Practices will come into force on October 31, 2011, and will apply in respect of financial years ending on or after such date.

The Form 51-102F6 Amendments follow the CSA's review of the issues raised by CSA Staff Notice 51-331 Report on Staff's Review of Executive Compensation Disclosure that was published in November 2009 as well as of the amendments that CSA thought were relevant to Canadian reporting issuers in the rules amending compensation and corporate governance disclosure requirements that were adopted by the U.S. Securities and Exchange Commission in December 2009 and the Dodd-Frank Wall Street Reform and Consumer Protection Act that was passed by the United States Congress in July 2010.

This document is a summary of certain material amendments contained in the Form 51-102F6 Amendments. Readers should consult the full text of the CSA notice.

Risk Disclosure

The Form 51-102F6 Amendments require reporting issuers to disclose in their statement of executive compensation whether or not the board of directors, or a committee of the board, considered the implications of the risks associated with the issuer's compensation policies and practices. In essence, the CSA is urging issuers to examine their respective compensation policies and practices in order to avoid encouraging inappropriate risk taking by their executive officers. If the implications were considered, the issuer must disclose (i) the extent and nature of the board's or committee's role in the risk oversight, (ii) any practices the issuer uses to identify and mitigate compensation policies and practices that could encourage a named executive officer or individual at a principal business unit or division to take inappropriate or excessive risks (the new commentary contains a non-exhaustive list of examples), and (iii) 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.

Compensation Committee Disclosure

The Form 51-102F6 Amendments require reporting issuers to describe any policies and practices adopted by the board of directors to determine the compensation for the issuer's directors and executive officers. If the issuer has established a compensation committee, the issuer must (i) disclose the name of each committee member and, in respect of each member, state whether or not the member is independent or not independent, (ii) disclose whether or not a committee member has any direct experience that is relevant to his or her responsibilities in executive compensation, (iii) describe the skills and experience that enable the committee to make decisions on the suitability of the issuer's compensation policies and practices, and (iv) describe the responsibilities, powers and operation of the committee.

Compensation Consultant Disclosure

Pursuant to the Form 51-102F6 Amendments, if a compensation consultant or advisor was retained to assist the board of directors or the compensation committee in determining compensation for any of the issuer's directors or executive officers, the issuer must (i) state the name of the consultant or advisor and a summary of the mandate the consultant or advisor has been given, (ii) disclose when the consultant or advisor was originally retained, and (iii) if the consultant or advisor has provided any other services to the issuer or any of its affiliates or subsidiaries or to any of its directors or members of management, state this fact and briefly describe the nature of the work, and disclose whether the board of directors or compensation committee must pre-approve other services the consultant or advisor provides to the issuer at the request of management.

Similar to the disclosure requirements for external auditor service fees under National Instrument 52-110 Audit Committee, the issuer must also disclose, pursuant to the Form 51-102F6 Amendments, for each of the two most recently completed financial years, under the caption "Executive Compensation-Related Fees", the aggregate fees billed by each compensation consultant or advisor for services related to determining compensation for any of the issuer's directors and executive officers, and under the caption "All Other Fees", the aggregate fees billed for all other services provided by each consultant or advisor that are not reported under the first caption and include a description of the nature of the services comprising the fees disclosed under this category.

Other Material Amendments

Under the Form 51-102F6 Amendments, issuers will still be exempted from disclosing performance goals used in the determination of a named executive officer's compensation if a reasonable person would consider that disclosing them would seriously prejudice the issuer's interests. However, new Form 51-102F6 will specify that, for the purposes of this exemption, an issuer's interests are not considered to be seriously prejudiced if those goals are based on broad corporate-level financial performance metrics such as earnings per share, revenue growth, and EBITDA. An issuer that is relying on this exemption will also be required to state this fact and explain why disclosing the performance goals would seriously prejudice its interests.

The Form 51-102F6 Amendments also introduce a new requirement to disclose whether or not a named executive officer or director is permitted to purchase financial instruments that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held by the named executive officer or director.

The Form 51-102F6 Amendments also adds to the list of examples of items that will usually be significant elements of disclosure concerning compensation. These examples now include (i) whether the board of directors can exercise a discretion, either to award compensation absent attainment of the relevant performance goal or to reduce or increase the size of any award or payout, including if they exercised discretion and whether it applied to one or more named executive officers, and (ii) whether the issuer will be making any significant changes to its compensation policies and practices in the next financial year.

One last amendment that we thought was worth mentioning is the new prohibition against adding columns in the Summary Compensation Table. In its responses to comment letters, the CSA indicates that the rationale for the amendment is that the Summary Compensation Table serves as the principal disclosure vehicle for executive compensation and applies to all issuers while, on the other hand, the other prescribed tables will not necessarily apply to all issuers.