The Canadian Securities Administrators (CSA) today published proposed amendments to Form 51-102F6 Statement of Executive Compensation as well as related consequential amendments to NI 51-102 Continuous Disclosure Obligations and Forms 58-101F1 and 58-101F2 of National Instrument 58-101 Disclosure of Corporate Governance Practices. The proposed amendments will impact primarily upon the “compensation disclosure and analysis” or “CD&A” disclosure that was first introduced by the CSA effective December 31, 2008. The proposals stem from a combination of information gathered by the CSA through its targeted compliance review of executive compensation disclosure (as reported in CSA Staff Notice 51-331) and recent international developments, including new rules adopted by the Securities and Exchange Commission effective for the 2010 proxy season and those resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act that are expected to affect 2011 proxy disclosure. Some of the substantive changes proposed by the CSA include:
- where a company is relying on the exemption allowing it to withhold specific performance goals or similar conditions on the basis that disclosure would seriously prejudice its interests, requiring the company to explicitly state that it is relying on the exemption and explain why disclosure would so prejudice the company;
- requiring companies to disclose whether the board of directors considered the implications of the risks associated with the company's compensation policies and practices;
- requiring companies to disclose whether any named executive officer or director is permitted to purchase financial instruments designed to hedge their position in equities granted as compensation; and
- expanding current requirements to disclose fees paid to compensation advisors;
The CSA is accepting comments on the proposed amendments until February 17, 2011. If the proposed amendments are approved they are expected to be in effect for the 2012 proxy season, requiring companies to comply for financial years ending on or after October 31, 2011.