CANADA - The Ontario Teachers' Pension Plan (OTPP) is urging boards and compensation committees not to change stock option plans and other forms of equity-based compensation in response to slumping markets.
"We believe it is important to protect shareholder value by clearly stating we are opposed to re-pricings, including accelerated grants, option exchange programs or resetting of performance targets."
Re-pricing options would allow management and employees of public companies to exercise previously-awarded stock option grants at a lower price than originally set in performance targets.
However, OTPP said shareholders would not be in a position to exercise the same rights as management and employees.
Kozun said preserving the terms of previously granted options meant the rules were the same for shareholders and option holders and ensured both groups were aligned to benefit proportionally when markets rebound in the future.
He added OTPP would carefully evaluate compensation programs approved by boards during the upcoming proxy season.
OTPP sent its updated corporate governance policies and proxy voting guidelines to the boards of large Canadian companies, as well as to the boards of large international companies in which it invests last December.
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