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SEC Adopts Final Rules on Disclosure of Pay vs Performance

On August 25, 2022, the Securities and Exchange Commission (“SEC”) adopted final rules that require companies to disclose how their executives’ pay aligned with corporate performance over the five most recent fiscal years. The disclosure must be included in 2023 proxies for companies with calendar year-ends.  We note that the new rule enhances, rather than replaces, the current pay for performance disclosure.

While the SEC rule is not applicable to the majority of Canadian firms, the need for more fulsome and enhanced disclosure on the linkage between corporate performance (beyond TSR) and pay decisions for a Company’s NEOs is not an unreasonable expectation. Key highlights of the final rule are outlined in the attached PDF.

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ESG in Compensation & Takeaways from 2022 Proxy Season Part 3: How are ESG metrics incorporated?

Every year, Hugessen Consulting conducts a review of the proxy circulars filed by the constituents of the S&P / TSX60 Index to report on trends in executive compensation and related governance practices among Canada’s largest and most influential companies. This article is the third in a three-part series summarizing our findings related to environmental, social, and governance (“ESG”) metrics in executive compensation programs among these companies.