Windsor Star

OSC to get tougher on financial disclosure

Executive bonuses outstandin­g issue

- Karen Mazurkewic­h

TORONTO While companies are more compliant in disclosing executive compensati­on to investors, they are still “fuzzy” on their reasons for increasing or decreasing bonuses or pension perks, the Ontario Securities Commission said in a report Friday.

Executive bonuses have been a major bone of contention during the economic crisis as executives stockpiled millions while the stock prices of their firms plummeted. Concerns about beefy bonuses forced the Canadian securities regulator to release new compensati­on disclosure rules to force transparen­cy on the boards of directors.

The hope was that the new rules, which became effective across all jurisdicti­ons on Dec. 31, 2008, would do for executive pay what the U.S. Sarbanes-Oxley Act did for auditing firms — ensuring they would no longer give short shrift to audits to protect other lucrative lines of business.

But so far, the results appear to be mixed.

According to the OSC, 62 of the 70 companies it reviewed filed executive compensati­on disclosure documents that “ generally met the requiremen­ts” set by the Canadian Securities Administra­tors in September 2008. But the discussion­s and disclosure around the process of making executive compensati­on decisions is still rather vague.

For example, a company will discuss the awarding of a bonus but does not explain that the company granted it because performanc­e goals were met. Conversely, one company disclosed that performanc­e goals were met, but did not report whether a bonus was earned.

The issue of benchmarki­ng salaries and bonuses also needs more clarity, according to the regulators. While many companies said they are benchmarki­ng compensati­on to peer groups, they do not explain how they applied that informatio­n when making decisions about executive compensati­on within their own firm.

In addition, many companies are cherry-picking which peer group they want to benchmark.

 ?? Bloomberg files ?? The Ontario Securities Commission is cracking down on financial disclosure,
according to a report released Friday.
Bloomberg files The Ontario Securities Commission is cracking down on financial disclosure, according to a report released Friday.

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