Clawback Policies Gain More Ground In Canada

Despite a lack of legislative change over the past eight years, the use of "clawback" provisions—arrangements under which an employee forfeits previously awarded compensation—have become increasingly common in Canada.

Canadian public companies listed in the U.S. are subject to statutory clawbacks for certain employees. As well, certain Canadian financial institutions regulated by the Office of the Superintendent of Financial Institutions (OSFI) have adopted clawbacks as an OSFI-recommended best practice. Other Canadian public companies are not required to adopt clawbacks but are choosing to implement clawbacks through agreements with affected employees.

Our survey shows that 56 of the TSX/S&P 60 companies have clawback policies. Of these, only 24 are subject to U.S. securities laws or OSFI regulation, meaning 32 have adopted clawbacks without legal or regulatory compulsion.