CSA aims for compensation clarity

The Canadian Securities Administrators (CSA) has announced new reporting standards, aimed at providing investors with a better understanding of key risks, governance matters and compensation practices of publicly listed companies.

To achieve this, the CSA is amending Form 51-102F6 Statement of Executive Compensation, effective October 31, 2011. The new version of the form will require issuers to disclose whether their board of directors adequately considered the implications of the risks associated with the company’s compensation policies and practices.

Issuers will also be required to provide better transparency on fees paid to outside compensation consultants. “Greater transparency on the compensation policies of public companies will allow investors to make better informed voting and investment decisions, and will help them determine whether management’s incentives are aligned with their interests,” said Bill Rice, chair of the CSA and chair and CEO of the Alberta Securities Commission.

The new requirements are based on the findings of the CSA’s 2009 targeted compliance review of a sample of public companies’ executive compensation disclosure. The CSA also considered a number of recent international developments in executive compensation disclosure.

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