Here's to simpler disclosure: TSX proposes new disclosure requirements for compensation arrangements
With the goal of reflecting current compensation arrangements and simpler public disclosure, the Toronto Stock Exchange (TSX) has proposed amendments to its Company Manual related to the disclosure requirements for security based compensation arrangements, such as stock option plans or similar plans that would result in the issuance of securities from treasury (Compensation Arrangements). Through a new disclosure form, Form 15, the TSX proposes to streamline the disclosure into tabular format.
What has changed?
- Maximum number of securities issuable. Disclosure of the maximum securities available to insiders or to one person or company would no longer be required.
- Outstanding awards. The number of awards currently outstanding must still be disclosed, however, if the award includes a multiplier, the maximum payout under the multiplier must be used to calculate the number of listed securities issuable under the award.
- Burn rate. The burn rate would be disclosed as a percentage, calculated as the number of awards granted (net any cancellations) under the Compensation Arrangement, during the most recently completed fiscal year multiplied by any multiplier, if applicable, divided by the number of issued and outstanding securities as at the beginning of the most recently completed fiscal year.
- Vesting. New specific disclosure regarding default vesting provisions and whether vesting is time and/or performance based would be required.
- Price. Issuers no longer have to disclose the method for determining exercise price, purchase price or the formula for calculating market appreciation of stock appreciation rights.
- Amendments. Only amendments from the most recently completed fiscal year would need to be disclosed. Previously approved amendments to the Compensation Arrangement may be omitted.
- Copies of Compensation Arrangements. The issuer must disclose its website and post a copy of any Compensation Arrangement.
- Other Key Terms. Disclosure of other key terms is no longer required for annual meetings, but must be included in the meeting materials for meetings that approve Compensation Arrangements.
- Other items no longer required. Gone is the requirement to describe the term, entitlement on termination, assignability, amendment process, financial assistance, and entitlements previously granted but subject to security holder approval.
The proposed amendments have been published for comment until June 27, 2016. For further information, please see Amendments to Toronto Stock Exchange Company Manual (May 26, 2016).