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

Abstract

Unlike in a number of other countries, the United Kingdom and the United States being two examples, SoP is not prescribed by regulation in Canada. To contribute to the debate on the relevance of a regulation adapted to the Canadian context, this article measures the impact of Say on Pay in firms listed on the Toronto Stock Exchange that voluntarily adopted this practice. Based on a sample of 45 firms, the study results show that the adoption of SoP does not improve the pay-performance relationship or lead to lower executive total compensation. These findings therefore raise questions about the effectiveness of Say on Pay as a governance tool.