Canadian Insights

UPDATE: Draft Legislation Released Changing Tax Treatment of Stock Options Effective January 1, 2020

On June 17, the federal government released draft legislative language to implement the proposed changes to the taxation of stock options in Canada, as introduced in the 2019 Budget in March.

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The budget proposed to eliminate the preferential tax treatment of stock options, above an annual $200,000 face value, for large, long-established, mature firms. (See Meridian’s update here for details of the original proposal.) The highlights of the implementation language include:…

Holding Steady with Say on Pay

While Say on Pay is voluntary in Canada, many S&P/TSX 60 companies held Say on Pay votes in 2016.

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In contrast to the mandatory (but non-binding) advisory votes on executive compensation (“Say on Pay” votes) in the U.S., Say on Pay remains voluntary in Canada. Close to 80% of the S&P/TSX 60 companies have a Say on Pay vote…

Choosing the Right Performance Peer Group

Why companies are using PSU plans, and how to use them effectively.

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More and more public companies are adopting performance share unit (PSU) plans as a significant component of long-term (equity) compensation for executives.[1] The most common PSU performance metric is total shareholder return (TSR – i.e., stock price growth plus dividends)…

Trends in Executive Compensation at the S&P/TSX 60

While actual senior executive pay has fallen in the past three years, actual and target pay have grown.

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This update reviews trends in executive pay at S&P/TSX 60 companies[1]. The general trend for the last three years has been for modest growth in actual and target pay, although actual senior executive pay fell slightly from 2013 to 2014.…

Horses for Courses

How compensation committees can choose the performance metrics that are right for their business.

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Incentive plans have two primary purposes: 1) To motivate behaviour and drive performance aligned with strategy and 2) To align rewards with shareholder interests. From these two simple purposes come the most difficult work of the compensation committee and an…

Compensation Challenges of a Falling Canadian Dollar

With uncertainty in the worldwide economy and commodity prices, the Canadian dollar has fallen to a six-year low versus the U.S. dollar, affecting compensation programs for a large number of Canadian companies.

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After a long period of relative stability and near parity, the Canadian dollar has fallen to about 80 cents U.S. – a six-year low. The outlook for further movement up or down, is unclear and is tied both to the…

Measurement Challenges for Pay and Performance

As they prepare for the 2015 incentive plan cycle, committees are grappling with the challenge of choosing the right performance measures and goals for annual and long-term incentive plans.

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In this update, we discuss five pitfalls for selecting performance measures and setting goals: Basing plan design purely on prevalent market practice Ignoring business imperatives and the cost of capital Relying solely on company history to set performance targets and…

Effective Governance of Executive Compensation Benchmarking

Strong Governance and Benchmarking Play an Important Role in Keeping Accountability for Executive Pay Decisions

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Benchmarking is commonly used to set and assess executive pay levels and design practices. Strong compensation governance processes and careful development and use of benchmarking data are essential for HR Committees to critically evaluate executive pay. Executive pay decisions are…