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will rate the work of Canada’s corporate boards using a rigorous set of governance criteria designed to go far beyond minimum mandatory rules imposed by regulators.
To make room for the new criteria, which bring the total Board Games criteria to 34, The Globe reallocated points from some of the criteria in place in 2022.1. Board independenceTHREE marks if more than 50 per cent of directors are independent.For a director to qualify as independent as measured for this question, the director must have no links to the company beyond their role as a director.
ZERO marks if the company doesn’t have a diversity policy or doesn’t describe specific steps it takes to ensure gender diversity is reflected in recruitment. That means ZERO marks if a policy mentions several types of diversity without disclosing any specific measures related to improving the representation of women.
In identifying specific groups, the company may use a narrative or a board diversity matrix. The company cannot rely on shareholders looking at pictures of the directors to evaluate diversity. The company does not need to name the specific directors in each category as part of this disclosure.TWO marks if the company discloses details of a process used to consider potential board candidates who self-identify as either Indigenous, a member of a visible minority, has a disability or is LGBTQ+.
ZERO marks if there is no evaluation or there is only a vague description of how the assessment is done with no details of the process used.FOUR marks if they meet without management at every board meeting, including special meetings and not just regularly scheduled meetings.ONE mark if they meet sometimes, but not every regular board meeting.
ONE mark if the company gives a full description of education processes but leaves out some details about events and who attended. ONE mark if the company allows stock options or types of share units that have not yet been earned by directors to be counted toward share ownership requirements.TWO marks if the company discloses the total market value of each director’holdings, excluding options; the market value or number of shares held; the number or market value for each type of equity instrument held; and the number or market value of vested and unvested restricted share units or performance share units .
Note: Simply disclosing whether a director has met the requirement is not sufficient. The ownership must be presented in the same units as the requirement, allowing shareholders to better interpret each director’s investment in the company compared to the guideline. For example, if directors are required to own a certain dollar value of shares or a specific number of shares, the chart should compare the requirement to the actual ownership in those units.
ONE mark if options are included in the total but the company does not explain how they were valued, such as whether the total is based on a mathematical estimate of the future value of all outstanding options, or whether the total includes only the value of options that are currently vested and/or in the money.
ZERO marks if it provides an overall weighting for “corporate performance,” but fails to provide specific weightings for specific metrics used to measure corporate performance. Also ZERO marks if it provides no weightings.ONE mark if the company provides the specific targets for all goals in the annual bonus plan that are based on financial metrics.
high performance. Using relative performance metrics does not mean benchmarking total pay to peer group compensation levels, but measuring incentive payouts according to relative performance. For credit, relative metrics can be used to either pay current year cash bonuses and equity grants, or as performance hurdles for grants of PSUs or performance vesting options.
ZERO marks if there are no performance-based criteria attached to any stock option or share unit awards.19. Potential for zero payout ONE mark if there is a policy, but claw-backs can only be ordered if the company’s financial statements have been restated due to wrongdoing.ONE mark if the company has a holding period for shares after a CEO leaves the company to ensure there is a performance “tail” to the CEO’s work. This is an incentive to make good long-term decisions prior to departure. Minimum requirement is a one-year holding period after leaving the company.
company has more than one class of shares, dilution is measured for whichever class of shares is diluted by the outstanding options. The first issue is whether shareholders can elect the whole board, or whether some directors are appointed and their names don’t appear on the proxy ballot.TWO marks if more than one is appointed,The second issue looks at whether any party – an administrator, manager or shareholder, for example – has rights unequal to ownership.
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