Our Thoughts

Long-Term Incentives (LTI) serve as a critical component of annual compensation across all sectors. In order to ensure that compensation supports critical business needs and strategy, companies sometimes provide additional one-time LTI awards to address exceptional circumstances, such as major acquisitions, leadership transitions, retention or new executive hires. While special LTI awards can be valuable tools for fostering retention and driving performance during periods of change, companies should approach them with caution and recognize that they are not a substitute for well-designed, comprehensive regular LTI programs.

In today’s human resources landscape, balancing a pay for performance philosophy with the imperative to ensure equitable compensation can seem challenging. In our view, differentiating pay based on performance is a key element of fairness. With the right guardrails in place, organizations can implement a performance-based pay structure that does not conflict with internal pay equity objectives or external legislative requirements.

In June, Laulima shared a preliminary analysis of the 2024 Say on Pay (SOP) votes within the TSX60, noting an upward trend in shareholder support for executive compensation. This fall update further confirms that trend, now backed by complete vote data. Download Laulima's complimentary report on TSX60 Say-On-Pay vote results for more details.

LTI is the largest component of executive pay, with increasingly more emphasis on the use of Performance Share Units. The most prevalent combination of performance metrics is comprised of Relative TSR and absolute financial performance. Stock options continue to decline in prevalence, with companies recently eliminating or reducing the weighting on stock options. RSUs continue to make up 20-25% of total LTI. Download Laulima's complimentary report on TSX60 Long-Term Incentive Plans to learn more.

Among TSX60 companies, ESG metrics are common in short-term incentive plans, while prevalence continues to increase in long-term incentive plans on a gradual basis. Most TSX60 companies disclose gender representation across the senior management and Board of Directors levels, with disclosure for other underrepresented groups becoming more common. Download Laulima's complimentary report on TSX60 ESG and DEI to learn more.

Our pay transparency checklist below can help you forge a clear and pragmatic path for your pay transparency journey, build credibility with your leaders, and enhance employee engagement, while aligning with any applicable regulations. Download our complimentary checklist to start your journey.

Most TSX60 companies use a formulaic annual incentive plan, with financial metrics as key performance drivers. The majority of companies also integrate ESG objectives into their plans. Actual STIP payouts exceeded targets, with individual performance playing a significant role. Download Laulima's complimentary report on TSX60 Short-Term Incentive Plans to learn more.

Modest CEO salary increases, notably larger long-term incentive (LTI) awards, the majority of companies paying executives bonuses above target, and a continued trend towards greater emphasis on performance share units (PSUs). Find out more by downloading Laulima's complimentary report on TSX60 Executive Compensation Key Findings.

This year, shareholders of TSX60 issuers have once again shown overwhelming support for executive pay, with an uptick in Say on Pay approval results. Download our complementary preliminary report for more details.