Disclosure rules enable compensation comparisons

As demand for capital by corporations has increased, so too has the demand for relevant information by investors to judge the value of their holdings.

Largely for this reason, Ontario’s Ministry of Finance has adopted disclosure requirements outlining compensation received by the five highest paid executives within a company. The new rules mirror a policy first used in the U.S. by the Securities and Exchange Commission in 1992.

Under the new regulations, a company must file a statement of renumeration revealing the type of compensation received by the named executive officers. Compensation includes salaries, bonuses and other annual compensation, as well as the number and value of stock options exercised. Proponents of the new regulations believe this type of information is useful to investors. In addition to allowing for year-to-year comparisons of companies, the disclosure permits comparisons between companies within an industry sector as well as comparisons between different sectors. Investors can also judge stock performance in relation to executive compensation.

Information gleaned from these comparisons can indicate differences in management style. If the top executives have a narrow range in salaries, for example, this could suggest a team-oriented management style, compared with a broader compensation range which implies an autocratically run company. The following table shows some of the information disclosed for the chairman and president of the top three gold and base metal mining companies listed on the Toronto Stock Exchange.

Compensation

Year Salary Bonus OtherV Options

($) ($) ($) (#)

P. Munk Chairman 1993 430,000 500,000 nil nil

& CEO 1992 430,000 445,000 nil nil

American 1991 400,000 300,000 nil 2,000,000

Barrick Res.

R. Smith President 1993 275,000 250,000 nil 400,000

American 1992 275,000 250,000 nil nil

Barrick Res. 1991 255,000 150,000 nil 400,000

P. Allen Chairman 1993 422,000 nil s 300,000

& CEO 1992 385,000 72,000 s 457,000

Lac 1991 327,000 70,000 s 397,000

Minerals

M. Richings President 1993 178,000 92,000 s 50,000

Lac 1992 n/a

South America 1991 n/a

J. Willson President 1993 550,000 375,000 85,672 100,000

& CEO 1992 n/a

Placer Dome 1991 n/a

M. Sopko Chairman 1993 348,800 55,000 210,000 72,000

& CEO 1992 356,600 nil 350,000 20,000

Inco 1991 240,900 nil 176,000 5,000

S. Hand President 1993 328,500 47,000 178,000 61,000

Inco 1992 323,800 nil 298,000 17,000

1991 235,000 nil 212,000 5,000

A. Powis Chairman 1993 420,000 33,750 48,665 116,500

Noranda Inc. 1992 420,000 nil s nil

1991 380,000 nil s nil

A. Balogh President 1993 300,000 43,000 25,210 96,400

Noranda 1992 262,000 76,962 s nil

Minerals 1991 252,000 29,925 s nil

N. Keevil Chairman 1993 763,100 nil s nil

President 1992 713,100 nil s 200,000

& CEO 1991 663,100 286,000 s nil

Teck Corp.

V Includes insurance premiums paid by the company and benefits received from loans during the year.

s Amount is below mandatory reporting levels.