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Canada Proxy Voting Guidelines for TSX-Listed Companies

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Canada Proxy Voting Guidelines for TSX-Listed Companies CANADA Proxy Voting Guidelines for TSX-Listed Companies Benchmark Policy Recommendations TITLE Effective for Meetings on or after February 1, 2021 Published November 19, 2020 ISS GOVERNANCE .COM © 2020 | Institutional Shareholder Services and/or its affiliates C A N A D A T S X - LISTED COMPANIES PROXY VOTING GUIDELINES TABLE OF CONTENTS COVERAGE ............................................................................................................................................................. 4 1. Routine/Miscellaneous ................................................................................................................................. 5 Audit-Related ............................................................................................................................................................ 5 Financial Statements/Director and Auditor Reports ............................................................................................ 5 Ratification of Auditors ......................................................................................................................................... 5 Other Business ...................................................................................................................................................... 5 2. Board of Directors ......................................................................................................................................... 6 Voting on Director Nominees in Uncontested Elections ........................................................................................... 6 Fundamental Principles ........................................................................................................................................ 6 TSX Listing Requirements ..................................................................................................................................... 7 Slate Ballots (Bundled Director Elections) ............................................................................................................ 7 ISS Canadian Definition of Independence............................................................................................................. 8 Board Structure and Independence.................................................................................................................... 10 Non-Independent Directors on Key Committees ............................................................................................... 10 Policy Considerations for Majority Owned Companies ...................................................................................... 11 Audit Fee Disclosure ........................................................................................................................................... 12 Excessive Non-Audit Fees ................................................................................................................................... 12 Persistent Problematic Audit Related Practices ................................................................................................. 12 Director Attendance ........................................................................................................................................... 13 Overboarded Directors ....................................................................................................................................... 14 Board Gender Diversity ....................................................................................................................................... 14 Former CEO/CFO on Audit/Compensation Committee ...................................................................................... 15 Voting on Directors for Egregious Actions .......................................................................................................... 16 Board Responsiveness ........................................................................................................................................ 16 Unilateral Adoption of an Advance Notice Provision ......................................................................................... 17 Other Board-Related Proposals ............................................................................................................................... 18 Classification/Declassification of the Board ....................................................................................................... 18 Independent Chair (Separate Chair/CEO) ........................................................................................................... 18 Majority of Independent Directors/Establishment of Committees .................................................................... 18 Majority Vote Standard for the Election of Directors ......................................................................................... 18 Proxy Access ....................................................................................................................................................... 18 Proxy Contests - Voting for Director Nominees in Contested Elections ............................................................. 19 Reimbursing Proxy Solicitation Expenses ........................................................................................................... 19 3. Shareholder Rights & Defenses ................................................................................................................... 20 Advance Notice Requirements ........................................................................................................................... 20 Exclusive Forum Proposals .................................................................................................................................. 21 Enhanced Shareholder Meeting Quorum for Contested Director Elections ...................................................... 21 Appointment of Additional Directors Between Annual Meetings ...................................................................... 22 Article/By-law Amendments ............................................................................................................................... 23 Cumulative Voting .............................................................................................................................................. 24 Confidential Voting ............................................................................................................................................. 25 Poison Pills (Shareholder Rights Plans) ............................................................................................................... 26 Reincorporation Proposals ................................................................................................................................. 28 Supermajority Vote Requirements ..................................................................................................................... 28 4. Capital/Restructuring .................................................................................................................................. 29 Mergers and Corporate Restructurings .............................................................................................................. 29 ISSGOVERNANCE.COM 2 o f 48 C A N A D A T S X - LISTED COMPANIES PROXY VOTING GUIDELINES Increases in Authorized Capital .......................................................................................................................... 29 Private Placement Issuances............................................................................................................................... 30 Blank Cheque Preferred Stock ............................................................................................................................ 31 Dual-class Stock .................................................................................................................................................. 31 Escrow Agreements ............................................................................................................................................ 31 5. Compensation ............................................................................................................................................. 32 Executive Pay Evaluation ......................................................................................................................................... 32 Advisory Vote on Executive Compensation (Say-on-Pay) Management Proposals ................................................ 32 Primary Evaluation Factors for Executive Pay ................................................................................................ 33 Voting Alternatives ......................................................................................................................................... 33 Pay for Performance Evaluation ......................................................................................................................... 33 Step I: Quantitative Screen ............................................................................................................................. 34 Step II: Qualitative Analysis ............................................................................................................................ 34 Problematic Pay Practices ..................................................................................................................................
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