Meridian completed a review of director compensation practices at the Canadian TSX 60 companies; we found
Pay Levels
• Total pay levels in 2023 (inclusive of cash, meeting fees, committee fees and equity) increased by 7% over 2022 levels.
• Median total compensation, based on a Model Director (Chair of HR Committee and Member of Audit Committee) increased 3.8% per year over 2019-2023.
Pay Mix
• The required proportion of equity in base retainer (excluding committee fees) remained at 53% year over year:
• In the United States, the equity portion is higher, approximately 58% of the base retainer:
Equity Delivery and Share Ownership Guidelines
• In Canada, deferred share units (DSUs) continue to be the dominant form of director equity among large Canadian companies. DSUs are used by approximately 88% of the TSX 60 (and are most commonly cash-settled – not dilutive to the company).
• Common stock is the next most common form of equity delivery, and at some companies a portion of the ownership requirements must be satisfied through common shares:
• The median dollar value of share ownership requirements has increased from ~$760K to ~$800K, satisfied most commonly through common stock and full value share-equivalent grants (e.g., DSUs, RSUs).
• Ownership guidelines are most commonly valued at fair market value (e.g., as of the record date or end of fiscal year before proxy publication); a “higher of” market value or cost is used by about 20% of TSX 60 companies while valuing solely at “cost” is uncommon.
• Four TSX 60 constituents (BCE, CN Railway, Hydro One and Intact Financial) apply a post-service holding requirement, requiring directors to retain their vested equity or common shares from 3 months to 2 years after leaving the Board. These are not as common as executive post-retirement holds, as directors must redeem
DSUs by 12/31 the year following retirement.
Managing Exchange Rates
• Compensation for TSX 60 directors who reside in Canada continues to be denominated in Canadian dollars by
a majority of companies.
• For U.S.-resident directors, approximately half of companies set fees for U.S. directors in $USD.
• Based on data from this study (and not necessarily on a disclosed company policy):
― 50% denominate fees in $CAD for all directors, regardless of residence.
― 35% denominate fees in $USD for all directors, regardless of residence.
― 15% use a “residence-based approach”, paying U.S. directors the same nominal fees as Canadian directors
but denominated in USD (1 $CAD = 1 $USD approach).
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This Client Update is prepared by Meridian Compensation Partners, LLC, provides general information for reference purposes only and should not be construed as legal or accounting advice or a legal or accounting opinion on any specific fact or circumstances. The information provided herein should be reviewed with appropriate advisors concerning your own situation and issues.
Questions regarding this Client Update or executive compensation technical issues may be directed to:
Christina Medland at (416) 566-1919 or cmedland@meridiancp.com
Andrew McElheran at (647) 472-7955 or amcelheran@meridiancp.com
Andrew Stancel at (647) 382-7684 or astancel@meridiancp.com
Matt Seto at (647) 472-0795 or mseto@meridiancp.com
Andrew Conradi at (647) 472-5231 or aconradi@meridiancp.com
Rachael Lee at (647) 975-8887 or rlee@meridiancp.com
Kaylie Folias at (416) 891-8951 or kfolias@meridiancp.com
Jason Chi at (647) 248-1029 or jchi@meridiancp.com
Gabrielle Milette at (905) 242-0503 or gmilette@meridiancp.com
Wali Ahmed at (647) 208-0132 or wahmed@meridiancp.com
Steve Li at (437) 451-2710 or sli@meridiancp.com
Krunal Billimoria at (647) 267-5869 or kbillimoria@meridiancp.com