Compensating Special Committees: Factors for Consideration Deciding what, if any, additional compensation to grant to the committee chair and other directors serving on a special committee is not formulaic. A variety of factors play into that decision, which should be made by the board at the time of forming the committee and establishing its mandate. Consideration should be given to the following factors, among others: – the issuer’s broader compensation philosophy for director compensation; – the scope of the committee’s mandate; – the expected time commitments of the committee members; – the number of members on the committee; – the nature and quantum of fees paid to members of other standing and ad hoc committees of the board (whether past or current); and – market practice and trends for special committee compensation. In arriving at its decision, the board should anticipate that any remuneration paid to special committee members will likely need to be publicly disclosed in the issuer’s subsequent proxy circular, given the requirement to disclose all direct or indirect compensation paid, payable, awarded, granted, given or otherwise provided to a director in any capacity, including committee fees, under Form 51-102F6 of National Instrument 51-102 – Continuous Disclosure Obligations . Discharging Its Mandate: Best Practices for Special Committees Generally, the members of the special committee should be seen as having taken adequate steps toward discharging their duties to act on an informed basis if the committee acts without conflicts of interest, retains appropriate legal and financial advisers to assist in its investigations, takes sufficient time to address the matters before it, questions its advisers rather than passively receiving information, actively participates in the process and reports its conclusions to the full board.
Deciding what, if any, additional compensation to grant to the committee chair and other directors serving on a special committee is not an exact science. A variety of factors play into that decision, which should be made by the board at the time
of forming the committee and establishing its mandate.
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Governance Insights 2020
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