Companies must show consideration of risks of policies, practices
The Canadian Securities Administrators (CSA) is implementing amendments to Form 51-102F6 Statement of Executive Compensation, which will provide investors with enhanced information on the key risks, governance matters and compensation practices of publicly listed companies.
One of the key amendments is to require public companies to disclose to investors whether their board of directors adequately considered the implications of the risks associated with the company's compensation policies and practices. Public companies will also be required to provide investors with greater details on the fees paid to outside compensation consultants, said the CSA.
"Greater transparency on the compensation policies of public companies will allow investors to make better informed voting and investment decisions, and will help them determine whether management's incentives are aligned with their interests," said Bill Rice, chair of the CSA and chair and CEO of the Alberta Securities Commission.
In developing the new requirements — which will come into effect Oct. 31, 2011 — the CSA said it considered the findings of its 2009 targeted compliance review of a sample of public companies' executive compensation disclosure. The CSA also considered a number of recent international developments in executive compensation disclosure.
The CSA, the council of the securities regulators of Canada's provinces and territories, co-ordinates and harmonizes regulation for the Canadian capital markets.