Thought Capital

The shareholder community has turned its attention to environmental and social concerns – commonly referred to as “E&S”, or more broadly “sustainability” – so it’s little wonder the topic has made its way into boardroom discussions on a regular basis. Conversations between Hugessen and the institutional shareholder community across North America reveal a growing recognition that E&S factors represent a risk that should be managed like any other risk within a company.

On October 19, 2017, the TSX announced (relatively minor) amendments to Parts IV and VI of the TSX Company Manual

In Fall 2016, we published a review of CEO LTIP practices (reviewing 2015 pay data) among small- and mid-cap issuers on the TSX, which indicated, among other things, that stock options were the most prevalent instrument, although PSUs were increasing in prevalence. Our analysis this fall, of 2016 pay data, indicates that PSUs have now surpassed options in becoming the most prevalent LTIP instrument within the data sample. This “update” briefing provides a summary of these developments.

The need for international directors has never been greater. But to attract the best candidates—and keep the entire board happy when you do—director compensation needs to effectively address foreign exchange concerns.

As part of Hugessen’s ongoing commitment to engaging with the shareholder community, we initiated conversations with select Canadian and U.S. institutional shareholders to discuss key topics coming out of the 2017 proxy season. Our engagement included discussions with shareholder representatives from both asset managers and pension funds with assets under management aggregating CAD$3.7T. To guide the discussions, Hugessen asked shareholders their thoughts on the following topics: 1) Key areas of focus in 2017 2) One-time awards 3) Boards oversight on environmental, social and governance (“ESG”) factors 4) Long-term incentive design and linkage to share ownership guidelines (“SOG”)

There are times when paying severance to a retiring senior executive is warranted. But as a standard practice it raises questions and scrutiny. The good news: boards have options to help avoid the problem

With the evolving regulatory landscape and more clients holding their asset managers accountable for their voting records on governance, compensation and environmental, social and governance (ESG) matters, major institutional shareholders have stepped forward to play a significant leadership role in shaping the discussion on corporate governance and executive compensation matters. To get the latest perspectives on executive compensation and governance matters, Michelle Tan, Joseph Sorrentino and Steve Chan spoke with governance leaders at two major institutional shareholders: Yumi Narita, BlackRock, and Anne Sheehan and Aeisha Mastagni at CalSTRS.

Gender diversity (or lack thereof) is a hot topic in corporate Canada. For years, Canada’s largest companies have devoted time and resources to find effective ways to develop, retain, and promote female talent across all levels of their organizations. Despite these efforts, and Canada’s status as a global leader in women’s equality, the representation of women at the most senior levels of business remains far from parity.

On June 15 and 20, 2017, Hugessen hosted breakfast events in Toronto and Calgary to review executive pay trends and issues from this past proxy season. The events featured notable research findings from an analysis of the information circulars of the TSX 60 and a panel discussion to share insights and experiences from corporate directors and governance experts.

Amid a market rebound, median CEO total direct compensation ("TDC") levels among the TSX 60 decreased modestly by 2.0% year-over-year (y-o-y) to $7.4M. The decrease was slightly less when measuring the same incumbents (excludes four CEO turnovers), down 0.9%. Meanwhile, TDC growth within commodity sectors (oil & gas and mining) turned positive, after a steep decline in 2015. Interestingly, the overall pay level trend within the TSX 60 has been relatively flat over the past five years, rising less than 1% annually even when measuring the same incumbents in the role over the period.