The heightened regulatory environment of the past few years has put executive compensation under the microscope. In response, regulators in Canada and the United States have created new guidelines for disclosing executive pay packages. In its proposed guidelines issued in March 2007, the Canadian Securities Administrators (CSA) has attempted to harmonize disclosure requirements for executive compensation with those of the U.S. Securities and Exchange Commission.

The three key elements of the CSA’s proposed rules for disclosing executive compensation are as follows:

• A summary compensation table containing total compensation for the CEO, CFO and the three other most highly paid executives
• A Compensation Discussion & Analysis section, or CD&A, which would provide greater insight into the company’s compensation objectives and decisions
• More comprehensive disclosure about almost every aspect of compensation, including pension benefits, termination arrangements and options backdating

The proposed disclosure requirements are comprehensive in scope: they address everything from perquisites and personal benefits to performance targets and “pay for performance” considerations. The accompanying document, Enhanced disclosure of executive compensation, offers investors, management and boards a detailed comparison of the proposed Canadian requirements against the established U.S. requirements. In exploring these issues, it also provides executives and directors — particularly those who sit on compensation committees — the information they need to prepare for the implementation of the proposed compensation disclosure rules.

Read, Enhanced disclosure of executive compensation.