Chemtrade Logistics Income 6 50 Convertible Unsecured Subordinated Debentures T.CHE.DB.E

RE:RE:Management Information Circular 2020

[Kherson]

Kherson wrote: The following post that I wrote over a year ago is the real reason that Corporate Costs have increased so much! What is sad yet again, is that Chemtrade did not tell the true story as to why their Corporate Costs are up 73% from the First Quarter of 2020! 

Kherson wrote: I just love reading these things because it gives all kinds of hints on what Management really thinks the financial outlook will be and how they can wring the maximum amount of compensation out of the Trust! Sadly, 2020 will be no different!

In 2018, we introduced an annual advisory ‘say on pay’ vote. That year we received overwhelming support, with 97.05% of the votes cast in favour of our approach to executive compensation. Last year, however, that support fell to 60.86%. Last year’s vote indicated that certain changes were necessary. As committee chair, I want to assure our unitholders that we have listened and are making changes to regain and maintain your support. These changes are outlined below. And, as always, we are committed to regularly reviewing Chemtrade’s compensation policies and program and our governance regime as we strive to continue to improve. 

Well here is one change that no one is talking about! This is the minimum threshold for distributable cash for the Annual Incentive Awards for up to 2019.

Financial (65%)  Financial performance is assessed against targets for two key metrics that are important to unitholders. Targets are set at the beginning of the year.  

 

Threshold is 80% of target. Performance below threshold receives a payout of zero. The committee did not use its discretion to adjust the financial performance factor for 2019. 

Now this is the new threshold value for 2020 and beyond which we can see has been reduced and therefore allows for Incentive Award compensation at an even lower amount below the target!

 New for 2020 The structure of the annual incentive plan was established in 2001. Since then, as a result of various acquisitions, our risk profile has changed. To provide incentives that better reflect our current business portfolio, we are widening the payout bands: • the Distributable cash threshold will be set at 65% of target, and it will be more difficult to receive payouts above target levels (see NonIFRS measures on page 61 for more information) • Business free cash will be based on separate sub-plans, taking into account our current business portfolio.  These changes will be made across the Chemtrade organization and reflect our pay for performance philosophy. 

Kherson