CSA release notice regarding review of executive compensation disclosure
The Canadian Securities Administrators (CSA) today published a staff notice regarding its review of executive compensation disclosure subsequent to the adoption of the revised Form 51-102F6. The revised Form applies to financial years ending on or after December 31, 2008 and the notice follows a series of targeted reviews to assess compliance with the required disclosure obligations undertaken by staff of the BCSC, ASC, OSC and AMF.
While 62 of the 70 companies reviewed were considered to have generally met the requirements of Form 51-102F6, a number of disclosure issues were identified. While the notice does not purport to set out an exhaustive list of all the issues identified, it provides a summary of those issues, which in the CSA’s view are more significant, including: (i) failing to properly disclose performance goals and how they are tied to the executive’s compensation; (ii) failing to disclose benchmarks and if disclosed, failing to properly explain the benchmark’s components; (iii) a lack of explanation of how the trend in the performance graph compared to the trend in the issuer’s executive compensation over the prescribed period; (iv) improper disclosure under the summary compensation table; (v) failing to appropriately quantify the lifetime benefit under the pension plan benefit table; and (vi) failing to quantify termination and change in control benefits. Various other issues are also identified.
Further, the notice states that the CSA will continue to review executive compensation disclosure as part of their continuous review programs. In particular, the CSA state that they will focus in particular on disclosure relating to Compensation Discussion and Analysis, Summary Compensation Tables and termination and change in control benefits.
