Thought Capital

Institutional Shareholders Services (“ISS”) and Glass Lewis have updated their 2022 voting guidelines for Canadian and US issuers. The updated guidelines from ISS will apply to shareholder meetings for publicly traded companies on or after February 1, 2022, while those from Glass Lewis will apply to meetings held on or after January 1, 2022. This briefing provides a summary of updates on compensation-related and select governance-related topics for the Canadian market.

For the 3^rd instalment in our COVID-19 Pulse Survey series, our Fall 2021 Director Pulse Survey provides insights into how Canadian directors are seeing 2021 pay and performance decision-making, 2022 priorities, and related compensation governance trends. Torys LLP has also provided their insightful perspective and commentary.

Hugessen keeps an eye on shareholders’ sentiment and growing trends, especially as it relates to executive compensation. Shareholder proposals are a good indicator of growing trends and interest amongst the community. Again, this year, among the TSX60, we witnessed an increasing number of ESG-related shareholder proposals.

Many of Canada’s largest extractive companies have set ambitious environmental goals with long-term horizons (e.g., 2040 or 2050 net zero goals). One tangible way for companies to incentivize progress and demonstrate commitment to their environmental goals is by tying executive pay to specific climate metrics.

This article provides case studies of how 3 organizations that have each made 2050 net zero commitments incorporate environmental measures into their incentive programs using various target-setting approaches.

The 2021 proxy season took place in context of an unprecedented pandemic and offered shareholders a unique opportunity to express their views on executive compensation decisions. Hugessen’s latest article highlights the trends in Canadian Say-on-Pay results in 2021, and explores the historical correlation between company performance and Say-on-Pay support.

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 year, we expanded our focus on TSX60 issuers’ use of environmental, social and governance (“ESG”) metrics in executive compensation. This article provides a summary of our findings.

On September 28th, Partner Michelle Tan presented at The Conference Board's 27th Annual Executive Compensation Conference. The session explores the challenges and impact of addressing broader stakeholder interests in incentive programs - from strategy through implementation. You can watch the presentation here.  

The 2021 proxy season made it apparent that the “Environmental” pillar of ESG continues to be top of mind for stakeholders. In particular, the laser-like focus on climate change is targeting companies from multiple angles. This piece provides an overview of recent shareholder pressures on emissions targets in the energy sector, including highlights from the 2021 US proxy season and the implications for Canadian companies and smaller producers.

The changes to stock option taxation mark an opportune time for companies to reassess and, if necessary, revise their long-term incentive plan (LTIP) strategy and design. In March, Hugessen provided an overview of the tax changes – please see Part One for a detailed overview of the upcoming changes. This was followed by a briefing outlining approaches to reassessing long-term incentive design – please see Part Two of our series.  This “Part Three” briefing looks beyond the mainstream LTIP alternatives and focuses on real long-term equity and ownership approaches. Much of the material in this briefing was covered in a paper produced for a conference hosted by Caisse de dépôt et placement du Québec in October 2015 – please see Rethinking Long Term Incentives and Ownership Guidelines.

Hugessen has completed its annual review of the 2021 TSX60 proxy circulars, and we are pleased to share key findings on pay levels, pay design, regulatory updates and Say-on-Pay results. This year’s review has provided specific thoughts and considerations around COVID-19 actions on executive pay in Canada and other emerging trends this proxy season. Please click above for the webinar recording, download the TSX60 slides here and the full briefing here.