New scrutiny on director compensation

Director pay levels are rising, and shareholders and proxy advisers are taking note. But along with a few modest changes in oversight, basic good governance should be enough to keep excesses in check.

ISS & Glass Lewis Release 2018 Proxy Guideline Updates (Canada & U.S.)

Michelle Tan, John Skinner  | December 2017
Institutional Shareholders Services (“ISS”) and Glass Lewis (“GL”) recently released updates to their 2018 voting guidelines for Canada and the U.S. The updated guidelines from ISS will apply to shareholder meetings for publicly-traded companies on or after February 1, 2018, while those from Glass Lewis will apply to meetings held on or after January 1, 2018. This memo provides a summary of policy updates on compensation-related and board-related topics in both jurisdictions. Overall, the 2018 updates were less extensive than in previous years, with the Canadian updates focusing more so on board governance practices (e.g. board gender diversity, director overboarding), than compensation-related guidelines.

Environmental and Social Issues: Growing Expectations on Boards and Implications on Executive Pay

Michelle Tan  | November 2017
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.

News Flash: Amendments to TSX Disclosure Requirements

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

Update: Small- & Mid-Cap TSX LTIP Practices

Camille Jovanovic  | October 2017
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.

Foreign exchange: the director pay dilemma

Ken Hugessen, Reanna Dorscher  | September 2017
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.

Shareholder Perspectives: 2017 Proxy Season and Emerging Trends

Michelle Tan , Parvathi Subramanyam  | August 2017
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”)

The Retirement Conundrum

Ken Hugessen , Guillaume Poulin , Parvathi Subramanyam  | August 2017
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

Backstage with Institutional Shareholders: The Latest Views on Executive Compensation

Michelle Tan , Joe Sorrentino , Steve Chan  | July 2017
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.

TSX60 & Board Gender Diversity: Diversity Policies and Female Representation on the Boards of Canada’s Largest Companies

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.