Thought Capital

The focus on ESG (Environmental, Social, and Governance) in corporate Canada continues to build.  Boards and management teams increasingly review strategy and risk through an ESG lens, and shareholders and stakeholders expect companies to demonstrate measurable progress against their ESG objectives.

In this first article of our ESG series, we provide our perspective on why ESG metrics should be included in executive compensation incentive design.

In response to the increasing stakeholder focus on governance practices for organizations, Hugessen’s Board Effectiveness practice conducted an inaugural review of the TSX Composite to identify corporate governance trends, particularly as they relate to Board Effectiveness and diversity. This article is intended to identify the practices and considerations that improve boards’ effectiveness. This is particularly relevant now as companies look to draft their 2023 proxy circulars. The 2022 proxy research is complimented throughout with insights from Hugessen’s November 2022 annual Director Pulse Survey.

The Fall 2022 edition of our Director Pulse Survey provides insights into how Canadian directors are seeing 2022 pay and performance decision-making, 2023 key board priorities, the impacts of inflation on compensation, the evolution of ESG in incentive plans, and a new feature on board effectiveness insights.

Institutional Shareholders Services (“ISS”) and Glass Lewis have updated their 2023 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, 2023, while those from Glass Lewis will apply to meetings held on or after January 1, 2023. This briefing provides a summary of updates on compensation-related and select governance-related topics for the Canadian market.

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.

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.

Every year, Hugessen Consulting conducts a review of the proxy circulars filed by the constituents of the S&P / TSX60 Index to report on executive compensation and governance trends. This article is the second in a three-part series summarizing our findings related to ESG metrics in executive compensation programs among these companies.

Every year, Hugessen Consulting conducts a review of the proxy circulars filed by the constituents of the S&P / TSX60 Index to report on executive compensation and governance trends. This article is the first in a three-part series summarizing our findings related to ESG metrics in executive compensation programs among these companies.

Hugessen has completed its annual review of the 2022 TSX60 proxy circulars and we are pleased to share key findings on pay levels, pay design, regulatory updates and Say-on-Pay results. In addition to delivering our TSX60 proxy takeaways, we have provided commentary on other topics including board effectiveness, how to navigate the war for talent in an inflationary environment, and the impacts of geopolitical conflicts on compensation.  

Please click above for the webinar recording, download the TSX60 slides here and the full briefing here. 

With the 2022 proxy season nearly at a close, HR and compensation committees are using the opportunity to reflect and take stock as they plan their forward agendas. Partnering with the Institute of Corporate Directors (ICD), Hugessen Consulting has reviewed executive pay disclosure among large Canadian public organizations. Join the ICD and Hugessen Consulting as we hear from a panel of experienced directors and executive compensation experts to discuss and share insights into how boards addressed pay in 2021 while informing boards and management teams about predicted executive pay trends for the following year.