Strategies for Executive Compensation: Design and Tax Issues for a ...

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Financial Stability Board Principles (cont’d) • OSFI best practices for Canadian financial institutions • Canadian issuers which are subject to SEC listing requirements 7 Contractual Clawbacks in Canada and the U.S. • Executive misconduct or bad behaviour • Joining a competitor • Movement to absolute liability 8 Type and Relative Prevalence of Clawbacks in the U.S. and Canada • 450 public companies surveyed by Hay Group – > 50% use clawbacks – 82% of Fortune 100 companies use clawbacks – clawbacks used in • annual incentives • stock options • RSUS 9 3
Type and Relative Prevalence of Clawbacks in the U.S. and Canada (cont’d) – less frequent in Canada except top-tier banks and insurance companies are almost 100% now – typical 2 or 3-year look back 10 Three Major Categories of Clawbacks • Bad faith (including breach of noncompete) • Fraud, negligence or intentional misconduct resulting in a financial result revision • Any restatement of financial results (growing in prevalence) 11 Three Major Categories of Clawbacks (cont’d) Paper includes 9 examples of U.S. and Canadian clawback provisions in 2011 proxies 12 4
Page 1 and 2: Strategies for Executive Compensati
Page 3 and 4: April 10, 2012 Strategies for Execu
Page 5 and 6: Incentive And Stock Compensation Ar
Page 7 and 8: Types of Private Equity Transaction
Page 9 and 10: Participation of Target/Portfolio C
Page 11 and 12: Exit Strategies and Investment Hori
Page 13 and 14: Key Design Considerations and Commo
Page 15 and 16: Stock Options - Rules for Canadian-
Page 17 and 18: Stock Options - Rules for Canadian-
Page 19 and 20: Share Purchase Loans • Management
Page 21 and 22: Cash-Based Long-Term Incentive Plan
Page 23 and 24: Cash-Based Long-Term Incentive Plan
Page 25 and 26: Non-Portfolio Company Incentives (c
Page 27 and 28: Acquirer (Buyer) Priorities in a Co
Page 29 and 30: Program Treatment - Equity Compensa
Page 31 and 32: Dollar Amount Converted to RSUs/DSU
Page 33: U.S. Statutory Clawbacks (cont’d)
Page 37 and 38: Potential Tax Relief for Later Year
Page 39 and 40: Conclusion • Clawbacks in Canada
Page 41 and 42: Long Term Incentive Plan Clawbacks:
Page 43 and 44: - 3 - are subject to recoupment. It
Page 45 and 46: - 5 - U.S., a wide range of incenti
Page 47 and 48: - 7 - review our policy to assure t
Page 49 and 50: - 9 - Cash and Earnings Bonus Unit
Page 51 and 52: - 11 - underway or contemplated at
Page 53 and 54: - 13 - operate, the terminated part
Page 55 and 56: - 15 - use of the provision where a
Page 57 and 58: - 17 - interest paid or payable the
Page 59 and 60: - 19 - right is to postpone tax pay
Page 61 and 62: - 21 - taxpayer under subsection 7(
Page 63 and 64: Bill Sutherland Bill is a Senior Co

Strategies for Executive Compensation: Design and Tax Issues for a ...

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