Exec Comp & Corp. Governance

Question 1

What is corp. Governance?

Answer 1

Rules and procedures for making decisions
tools for monitoring what Co.s do
Determines the rights and responsibilities among Stakeholders
committees and requirements for publicly traded cos.

Question 2

Why is corp. gov. necessary?

Answer 2

Fraud
Incompetence
Past experiences 2001, 2008

Question 3

What are the Corp Gov bodies?

Answer 3

Canadian Securities Administrators (CSA)
Securities Exchange Commission (SEC - US)
Canadian Coalition for Good Governance (CCGG)
Institutional Shareholders Service (ISS - Global)
Provincial bodies

Question 4

What does the CSA do?

Answer 4

• Set min rules for provincial regulators
• requires public co.s to have a board level Comp Committee
• links at-risk pay to perf
  Disclosure rules:
• must list and price/value every item
• report total comp as one amount

Question 5

What does CSA require?

Answer 5

Compensation discussion and analysis section to be included in Mgment Proxy Circulars:
Plan:
- design
-objective
-elements of exec comp and explanation
- performance and metrics

Question 6

In BC since 2008, to whom does Exec Comp also apply?

Answer 6

Most publicly funded entities

CEOs and next 4 highest paid execs (over $125,000)

Question 7

What is shareholder activism?

Answer 7

Use of media by a a “body” to bring to light the true operating strategies of public companies.
Launching campaigns to get proxy votes of shareholders to vote in a more social conscious and ethical way.

Question 8

What are the principals (6) of the Canadian Coalition for Good Governance Executive Compensation?

Answer 8

1. Significant component of exec pay should be at risk - based on perf
2. Perf should be based on key business metrics
3. Execs should build own equity into the co.
4. Not excessive pension, benefits, severance and change of control entitlements
5. Comp structure should be simple and easy to understand
6. Boards and shareholders should actively engage

Question 9

What are the trends in exec Comp?

Answer 9

More at risk pay
Pay for perf
long-term incentives
Pay linked to targets