Executive & Board Share Ownership Guidelines in the Canadian Mid-Market

What are Share Ownership Guidelines?

Share ownership guidelines (SOGs) for executives encourage alignment between the interests of executives and shareholders by requiring executives to hold a meaningful equity stake in their organization. While not mandatory for Canadian companies, these guidelines are widely regarded as a hallmark of strong corporate governance.

Typically, share ownership requirements are expressed as a multiple/percentage of an executive’s annual salary. Organizations may also include additional provisions, such as a post-employment holding period or a timeframe—often three to five years from appointment—to achieve the required ownership levels. Many organizations continue to permit executives to meet these requirements using equity acquired through long-term incentive plans, ensuring alignment without imposing undue financial burden.

What is the Prevalence and Amount of Executive Share Ownership Guidelines?

Figure 1 illustrates the percentage of organizations that have implemented share ownership guidelines for their executives, based on disclosure from 200 TSX-listed companies ranked approximately 100th to 300th by market capitalization.

Executive share ownership guidelines are common among the majority of Canadian mid-market organizations, with 77.1% of companies disclosing such policies. Of these, 75.5% have guidelines that apply to both CEOs and other executives, while 1.6% have guidelines exclusively for the CEO. While share ownership requirements are slightly more prevalent and standardized at the CEO level, disclosure practices vary for other executives. Some organizations specify guidelines for certain named executive officers, while others outline frameworks applicable to broader executive tiers, such as Senior Vice Presidents or Vice Presidents. These guidelines typically remain consistent year over year, with most CEOs required to hold equity equivalent to at least three times their annual salary, and other named executives typically falling between one to three times their salary.

What is the Prevalence and Amount of Board Ownership Guidelines?

Share ownership guidelines are slightly more common for Board members, with 80% of the TSX mid-market companies analyzed disclosing minimum share ownership requirements for directors or trustees. However, the way these requirements are defined varies more significantly than for executives, as shown in Figure 2.

Most often, director/trustee share ownership guidelines are expressed as a percentage or multiple of the total annual retainer. This requirement is typically set at three times (or 300%), though limits as high as five times the retainer are not uncommon. While some organizations apply a higher requirement to the Board Chair, it is more common for all directors/trustees to be held to the same standard. Generally, directors and trustees are allowed up to five years to meet their ownership requirements.

Like executive share ownership guidelines, director/trustee policies tend to remain relatively stable year-over-year.