On October 22, 2009, the Canadian Coalition for Good Governance (CCGG) released a draft of its much-awaited model shareholder engagement and "say-on-pay" policy, which addressed best practices for boards of directors on board engagement with shareholders, and included a model non-binding advisory shareholder resolution on executive compensation.

On January 19, 2010, the CCGG released the finalized Model Shareholder Engagement and "Say-on-Pay" Policy for Boards of Directors. The additions to the model policy are minor:

  • A recognition by the CCGG that smaller companies may not be able to adopt "say on pay" immediately because of a lack of resources, or until common industry practices have developed.
  • A recommendation by the CCGG that annual votes be used, instead of votes every few years (even with respect to issuers whose compensation plans reward performance over more than one year) in order to:
    • be consistent with other jurisdictions that have "say on pay";
    • be in alignment with the fact that compensation decisions are generally made each year; and

focus investors on executive compensation as a part of the annual proxy voting process.

As there were no substantive changes between the draft and the recently revised model policy, our prior article of December 4, 2009 continues to provide a relevant overview of the CCGG policy and implications for issuers arising from it.