Corporate Governance Changes May Impact Small Business


    Various executive compensation governance developments have occurred to date in 2015 that may be of interest to small businesses in Canada. The U.S. Securities and Exchange Commission (SEC) has adopted a proposal requiring registrants to disclose the relationship between executive compensation actually paid and the company’s financial performance in a new pay-versus-performance table with accompanying explanations. Some reporting companies, however, will be exempt, including foreign private issuers, says a Towers Watson ‘Client Advisory.’ The advisory also mentioned that the Organization for Economic Co-operation and Development (OECD) has adopted revised principles of corporate governance (initially adopted in 1999 and last updated in 2004). The principles provide guidance for policymakers through recommendations and annotations. Changes were made to items such as basis for an effective corporate governance framework, disclosure and transparency, and responsibilities of the board. Although the OECD recognizes that some principles may be more appropriate for larger companies, policymakers are encouraged to raise awareness of good corporate governance for smaller and unlisted companies also. While not likely to immediately impact Canadian companies, the principles may indicate the direction of future changes to Canadian regulation, it says.