Executive Compensation Guide

Introduction

Navigating Canada’s complex and sometimes unintuitive rules governing equity compensation awards to employees presents challenges but also incentive design opportunities. While not exhaustive, this guide aims to canvass these rules, primarily from a Canadian federal and provincial tax perspective, but also, where illustrative, from a securities and employment law perspective.

For Canadian income tax purposes, the term “employee” also denotes directors and officers who may not otherwise be considered “employees” for securities and employment law purposes, and thus Canada generally taxes directors, officers and traditionally understood employees in the same way. As these usually represent the main recipients of equity awards, this Guide focuses on them, and any reference to “employee” in this Guide includes directors and officers. This Guide also assumes that award recipients are both tax-resident in Canada and exclusively performing the services to which the awards