The biggest changes for Canada include:
- Pay for Performance Evaluation – Relative Quantitative Screening
- Now incorporates the ranking of total pay for CEO and financial performance of a company within a peer group, each measured over a three-year period within the Relative Pay & Performance test under Quantitative considerations. A detailed white paper will be provided at a later date.
- Director Overboarding Policy (effective for meetings on or after February 1, 2019 for TSX-listed companies only. Does not apply to TSX Venture)
- Withhold votes for individual director nominees including:
- Non-CEO directors serving on more than five public company boards; or
- CEOs of public companies serving on the board of more than two public companies besides their own, i.e., votes to be withheld only at their outside boards.
- Gender Diversity Policy (effective for TSX Composite Index companies starting 2018. Applies to all TSX-listed companies starting February 2019)
- Withhold votes for the Chair of the Nominating Committee where:
- The company has not disclosed a formal written gender diversity policy; and
- There are zero female directors on the board.
- Board Structure & Independence (TSX only)
- New language has been added relating to votes withheld for any Executive Director or Non-Independent, Non-Executive Director where the board:
- Is less than majority independent; or
- Lacks a separate compensation or nominating committee.
- Non-Independent Directors on Key Committees for TSX-listed companies
- Withhold votes for members of the audit, compensation, or nominating committees who:
- Are Executive Directors;
- Are Controlling Shareholders; or
- Is a Non-employee officer of the company or its affiliates and among the five most highly compensated.
- Non-Independent Directors on Key Committees for TSX Venture companies
- Withhold votes for Executive Directors, Controlling Shareholders or a Non-employee officer of the company or its affiliates who is among the five most highly compensated, on condition that they:
- Are members of the audit committee;
- Are members of the compensation committee or the nominating committee and the committee is not majority independent; or
- Are board members where the entire board fulfills the role of a compensation committee or a nominating committee and the board is not majority independent.
ISS also made certain modifications to their policy on defining Director Independence, i.e. re-classification of certain situations under different categories, Majority-Owned Company policies and Advance Notice requirements.
For more information, please refer to the link above.