Accountability and Executive Compensation
Toromont is a decentralized company. Our Board of Directors and executive leadership team set the tone through policies and corporate strategies and then grant authority with accountability for performance to our business-unit leaders.
Our leaders delegate responsibility outward so that decision-making is dispersed and employee empowerment at all levels can take hold. This system of management has been in place for decades and helps every Toromont business make decisions that are highly attuned to the needs of stakeholders in the diversified markets we serve. Alignment with our strategies, values and Code of Conduct is a precondition to the delegation of authority.
Accountability is reinforced through our executive compensation program which is designed to maximize value for our stakeholders. As noted in our Management Information Circular, our compensation strategy has four elements: i) attract, motivate and retain superior executive talent by making sure compensation is competitive, ii) motivate performance by linking incentive compensation to specific business performance goals, including key sustainability matters such as safety, iii) recognize performance and potential by maintaining a high proportion of pay at risk, and iv) encourage commitment to Toromont and link compensation with long-term shareholder interests. We include performance-based measures as part of our annual bonus incentives. One of our performance measures is related to safety targets, or TRIR. In 2022, we will introduce a long-term equity incentive plan that is tied to return on our capital employed and relative total shareholder return.
We hold an annual say on pay advisory vote to give shareholders an opportunity to express their views on our approach to executive compensation.
2021 Key Outcomes and Actions
- tied incentive compensation for senior leaders to safety outcomes
- developed a performance-based long-term incentive program for introduction in 2022
- confirmed employee adherence with our Code of Code
- paid taxes at our effective tax rate of 27.2%
- maintained targeted recruitment activities