CEO Compensation in Canada, 1971-2008

Abstract

This paper draws from a unique database spanning over 35 years of Canadian CEOs' compensation to explore the interplay among: the information available to boards of directors of Canadian companies for making executive pay decisions, the Canadian business environment, and the compensation that Canadian CEOs received. We find a very strong correlation between Canadian CEOs' compensation and the amount of information on CEO compensation available to boards of directors. We further note that the evolution of the Canadian business environment has shaped the information produced and made available to boards of directors regarding CEO compensation.

The effects of firm size and firm performance on CEO pay in Canada: A Re‐Examination and Extension

“…Canadian research on the determinants of CEO compensation is relatively sparse, with most of the more recent research focusing on CEO compensation and firm governance and corporate social responsibility (Bodolica & Spraggon, 2009;Craighead, Magnan, & Thorne, 2004;Park, Nelson, & Torabzadeh, 2000), as well as strategy and pay structure (see for example Chourou, Abaoubb, & Saadi, 2008;Gélinas & Baillargeon, 2013). Only a few studies examine the relationship between firm size, performance, and CEO compensation (see Nulla, 2013;Singh & Agarwal, 2002).…”

“…Only a few studies examine the relationship between firm size, performance, and CEO compensation (see Nulla, 2013;Singh & Agarwal, 2002). Gélinas and Baillargeon (2013) analyzed data in the annual Canadian executive compensation survey of a large consulting firm from 1971 to 2008. They found strong relationships between Canadian CEOs' compensation and the amount of information on CEO compensation available to boards of directors.…”

“…Furthermore, executive compensation levels and structure in Canada have changed significantly in the last 20 years because of, among other things, drastic changes in the economic environment (such as the dot-com bubble and the 2008 financial crisis), increasing social and shareholder pressure, and governance requirements (Chowdbury & Wang, 2009;Gélinas & Baillargeon, 2013;Vemala, Nguyen, Nguyen, & Kommasani, 2014). For example, during the five-year period covered by Zhou (2000), only about half of the CEOs received stock options and the use of stock options was considered as a pay-forperformance tool.…”

Impact of Say on Pay on Executive Compensation of Firms Listed on the Toronto Stock Exchange

“…A sixfold increase in top executives' salaries in the US over a period of more than 20 years is linked to globalization, greater risk and firm size (Gabaix & Landier, 2008). Over a period of 35 years , the rise in executive compensation in Canada has been closely related to the amount of information made available to members of the board (Gélinas & Baillargeon, 2013). This trend intensified as of 1994, the year in which information on executive pay was made publicly available (Craighead et al, 2004).…”

“…For instance, studies have shown that executive pay levels continue to rise (Murphy, 2012;Gabaix & Landier, 2008;Gélinas & Baillargeon, 2013;Craighead, Magnan, & Thorne, 2004) and that such increases are not always performance-related (Bebchuk & Fried, 2005). At the time of the financial crisis in 2007, public opinion as a whole considered executive compensation figures to be unacceptable because they were unrelated to firms' actual performance.…”