The Canadian Coalition for Good Governance (CCGG) has released the 2022 edition of its Best Practices for Proxy Circular Disclosure.
CCGG annually compiles examples of what it considers to be excellent disclosure by Canadian issuers in the areas of corporate governance and executive compensation. The examples are accompanied by brief explanations of the policies and principles of good corporate governance, which are further detailed in CCGG’s other publications.
In its latest edition, CCGG has highlighted many of the same principles of good disclosure as were contained in its earlier editions, with the following notable updates:
- Majority voting: CCGG has noted that, as a result of the amendments to the Canada Business Corporations Act (CBCA) that came into force on August 31, 2022, it expects CBCA issuers to update their disclosure on majority voting to be aligned with that prescribed by the CBCA.
- Board composition, diversity and succession planning: In 2021, CCGG added a discussion to its guide regarding term limits, noting that while term limits and mandatory retirement ages can help promote board renewal, they cannot replace a robust annual board and individual director assessment process. In its latest publication, CCGG has enhanced its discussion regarding the importance of a thorough annual assessment not only to review the board’s overall performance, but also to assess whether individual directors are continuing to add value to the board.
- Board skills matrix: CCGG has enhanced its discussion of board skills matrices by noting as a best practice the inclusion in the issuer’s disclosure of definitions of the skills and competencies used in the matrix so readers can better understand their relevance to the business.
- Board, committee and director performance assessments: CCGG has noted as a best practice the inclusion of disclosure highlighting the practical outcomes of board assessments and explaining how the feedback from the assessments was integrated into the board’s processes and operations.
- Director continuing education: CCGG has augmented its discussion regarding director education, noting that such programs are meant to enhance the directors’ understanding of the issuer and its business and to help directors gain familiarity with key executives, as well as to address ongoing and emerging issues. CCGG has highlighted the following areas of educational content in its latest publication: diversity, greenhouse gas emissions and cybersecurity.
- Strategic planning oversight: CCGG has updated its discussion on strategic planning oversight, advising that issuers, in providing details on the board’s involvement and contributions to strategic planning, should describe any specific trends considered by the board.
- Shareholder engagement: CCGG has added a new discussion on soliciting feedback from select shareholders on key corporate governance and executive compensation practices through the use of an annual survey. The section also includes a reminder of the value of holding a say-on-pay vote as a supplement to other forms of shareholder engagement.
- Executive share ownership requirements: CCGG has noted as a best practice the disclosure of not only each named executive officer’s current shareholdings relative to the required shareholdings level, but also the makeup of those holdings as between common shares and other forms of equity awards.
