<?xml version="1.0" encoding="UTF-8"?><?xml-stylesheet type="text/css" href="https://igopp.org/wp-content/themes/IGOPP/rss-style.css" ?><rss version="2.0"
	xmlns:content="http://purl.org/rss/1.0/modules/content/"
	xmlns:wfw="http://wellformedweb.org/CommentAPI/"
	xmlns:dc="http://purl.org/dc/elements/1.1/"
	xmlns:atom="http://www.w3.org/2005/Atom"
	xmlns:sy="http://purl.org/rss/1.0/modules/syndication/"
	xmlns:slash="http://purl.org/rss/1.0/modules/slash/"
	>

<channel>
	<title>IGOPPExecutive compensation &#8211; IGOPP</title>
	<atom:link href="https://igopp.org/en/tag/executive-compensation-en/feed/" rel="self" type="application/rss+xml" />
	<link>https://igopp.org/en</link>
	<description></description>
	<lastBuildDate>Tue, 21 Apr 2026 14:56:08 +0000</lastBuildDate>
	<language>en-US</language>
	<sy:updatePeriod>hourly</sy:updatePeriod>
	<sy:updateFrequency>1</sy:updateFrequency>
	<generator>https://wordpress.org/?v=4.7.29</generator>
	<item>
		<title>Executive Compensation in the Age of Diverse Performance Perspectives</title>
		<link>https://igopp.org/en/executive-compensation-in-the-age-of-diverse-performance-perspectives/</link>
		<comments>https://igopp.org/en/executive-compensation-in-the-age-of-diverse-performance-perspectives/#respond</comments>
		<pubDate>Fri, 16 May 2025 14:38:54 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[Policy Papers]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Executive compensation]]></category>

		<guid isPermaLink="false">https://igopp.org/la-remuneration-des-dirigeants-a-lere-dune-conception-plurielle-de-la-performance/</guid>
		<description><![CDATA[When compared to middle-class salaries, the amounts awarded to the highest-ranking executives at Canada’s largest firms increasingly stir a sense of unfairness. Each year, public discontent rises while pamphlets circulate highlighting and denouncing the extravagance of these compensation packages. They speak of the stark injustice of such opulence for Canadian workers, highlighting the fact that, [&#8230;]]]></description>
		<content><![CDATA[When compared to middle-class salaries, the amounts awarded to the highest-ranking executives at Canada’s largest firms increasingly stir a sense of unfairness. Each year, public discontent rises while pamphlets circulate highlighting and denouncing the extravagance of these compensation packages. They speak of the stark injustice of such opulence for Canadian workers, highlighting the fact that, on average, senior executives can earn a Canadian worker’s annual salary in a matter of hours.

To what extent has senior executive compensation inflated to become such a focal point of disapproval and a symbol of the wealth gap in society? Have we lost sight of the core purpose of compensation: to attract, retain, and motivate talent?

These questions are of utmost importance. On two prior occasions in 2012  [1]and 2017 [2], the IGOPP issued policy papers addressing executive compensation. These papers identified several factors and influences that have led to the escalation of senior executive compensation, a trend we have been documenting since 1998. This policy paper [3] continues the analysis.

[1] https://igopp.org/en/pay-for-value/
[2] https://igopp.org/en/executive-compensation-cutting-the-gordian-knot/
[3] https://igopp.org/wp-content/uploads/2025/05/IGOPP_PP_RemunerationDirigeants_PP13_EN_v5.pdf]]></content>
		<wfw:commentRss>https://igopp.org/en/executive-compensation-in-the-age-of-diverse-performance-perspectives/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Damages of the short-term mindset</title>
		<link>https://igopp.org/en/damages-of-the-short-term-mindset/</link>
		<comments>https://igopp.org/en/damages-of-the-short-term-mindset/#respond</comments>
		<pubDate>Tue, 06 Aug 2019 19:24:00 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Gouvernance créatrice de valeurs]]></category>
		<category><![CDATA[Hostile takeovers]]></category>
		<category><![CDATA[Value-creating governance]]></category>

		<guid isPermaLink="false">https://igopp.org/damages-of-the-short-term-mindset/</guid>
		<description><![CDATA[In March 2014, CEOs of many Fortune 500 corporations received a letter that started with these words: “We are preoccupied&#8230; that too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks. We certainly believe that returning cash to shareholders should be part of a balanced capital strategy; however, when [&#8230;]]]></description>
		<content><![CDATA[In March 2014, CEOs of many Fortune 500 corporations received a letter that started with these words:

“We are preoccupied... that too many companies have cut capital expenditure and even increased debt to boost dividends and increase share buybacks. We certainly believe that returning cash to shareholders should be part of a balanced capital strategy; however, when done for the wrong reasons and at the expense of capital investment, it can jeopardize a company’s ability to generate sustainable long-term returns.

This was not written by a socialist economist, but by Larry Fink [1], president and CEO of BlackRock, arguably the largest investment firm in the world.

Fink is a powerful voice in the ongoing concern with the “tyranny of the short-term mindset” that, according to many commentators, plagues both Wall Street and Main Street. Another was Vanguard founder John Bogle, who said that “we have ceased to be investors and have become speculators”, and even devoted his last book to the subject (The Clash of the Cultures: Investment vs. Speculation, John Wiley &#38; Sons, 2012).

Yvan Allaire, president of the Institute for Governance of Private and Public Organizations, in Montreal, defines "short-termism" as “the conscious decision on the part of management to take measures that will have a positive effect on share price in a near future, even while knowing very well that such measures can eventually harm the long-term well-being of the corporation.”

In financial markets, the most visible form of short-termism hinges on the average time investors hold on to shares, which has shrunk from 97 months, in 1950, to 7 months in 2010. However, that shortened holding period can be overly influenced by computer trading volumes, acknowledges Allaire.

[ ... ]

“Corporations should get their capital from an IPO and then concentrate on their core business of product, market and human resources development,” says Samuelson adding that linking executive pay to the stock price causes the separation line between two very distinct markets to blur. ”Another unfortunate outcome of linking pay structure to shares is that “it tempts CEOs to sell their company, and profit from it,” Allaire notes.

Apart from severing links between executive pay and share price evolution, Samuelson and Allaire put forward two measures that could help correct short-termism. a) Before having the right to vote, an investor should hold on to his shares for at least one year. The present state of things is the equivalent of allowing tourists and temporary visitors to vote for a country’s government, highlights Allaire. b) The longer an investor holds onto his shares, the lower should the capital gains tax be.

Read more [2]

[1] https://www.reuters.com/article/us-blackrock-dividends/blackrock-ceo-to-us-companies-dont-overdo-divs-buybacks-idUSBREA2P1C820140326
[2] https://igopp.org/wp-content/uploads/2019/08/YBarcelo_Damages-of-the-short-term-mindset_Morningstar_August-2019.pdf]]></content>
		<wfw:commentRss>https://igopp.org/en/damages-of-the-short-term-mindset/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Myth of ‘superstar CEO&#8217; driving excessive pay: Report</title>
		<link>https://igopp.org/en/myth-of-superstar-ceo-driving-excessive-pay-report/</link>
		<comments>https://igopp.org/en/myth-of-superstar-ceo-driving-excessive-pay-report/#respond</comments>
		<pubDate>Wed, 23 Jan 2019 15:21:48 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[Chef de la direction]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Executive compensation]]></category>

		<guid isPermaLink="false">https://igopp.org/myth-of-superstar-ceo-driving-excessive-pay-report/</guid>
		<description><![CDATA[When it comes to compensation, the myth of the “superstar CEO” continues to drive excessive pay, as companies are desperate to attract and retain top talent — even if it doesn’t always lead to improved corporate perform23ance and they have other options. That’s according to a report out of the United Kingdom that delved into [&#8230;]]]></description>
		<content><![CDATA[When it comes to compensation, the myth of the “superstar CEO” continues to drive excessive pay, as companies are desperate to attract and retain top talent — even if it doesn’t always lead to improved corporate perform23ance and they have other options.

That’s according to a report out of the United Kingdom that delved into the weak spots of compensation committees and executive pay, along with making recommendations for improvement.

“There’s some kind of belief that if you are paying your chief executive top dollar, they must be the best. And, therefore, it sends a message out to investors that you’ve got right person for the job — even if that person doesn’t necessarily deliver,” said Charles Cotton, senior adviser for performance and reward at the Chartered Institute of Personnel and Development (CIPD) in London, U.K.

“The success of the organization seems to be attributed to achievements to one or two individuals at the top of the organization, and what we believe is that increasingly success is linked to… individuals in the whole organization — it’s a collective endeavour.”

“If you just focus all your rewards on a few people at the top, then the people in the rest of the organization after a while see this as unfair because they’re working very hard and they’re getting very moderate pay rises and bonuses whilst those at the top are getting significant pay rises and bonuses.”

There’s no doubt there’s been an inflation of compensation, especially since details of remuneration for top executives has been published annually, said Yvan Allaire, executive president of the board of the Institute for Governance of Private and Public Organizations (IGOPP) in Montreal.

“They thought it would shame people into not being so greedy — it did exactly the contrary. It gave a basis for comparison: ‘If so and so was paid so much, and that company is smaller than our company, why is he paid more than I am paid?’’’ he said.

“Of course, it’s been used by consultants as the basis to set remuneration… that’s the weak link but (companies) can’t
can get out of it because they’re afraid they will lose key people.”

[ ... ]

Most compensation committees are highly dependant on external consultants, said Allaire.

“They’re the ones running the numbers, doing the simulation, suggesting names of comparable companies. They come to the board with the thick document which has all of that… and there you are, you’re supposed to be informed enough, knowledgeable enough, experienced enough to start challenging,” he said. “People will question this and that but, in general, the dependence is pretty high.”

Read more [1]

[1] https://igopp.org/wp-content/uploads/2019/02/Canadian-HR-Reporter-Myth-of-‘superstar-CEO-driving-excessive-pay_-Report.pdf]]></content>
		<wfw:commentRss>https://igopp.org/en/myth-of-superstar-ceo-driving-excessive-pay-report/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Why Canadian CEO pay has soared over the past decade</title>
		<link>https://igopp.org/en/why-canadian-ceo-pay-has-soared-over-the-past-decade/</link>
		<comments>https://igopp.org/en/why-canadian-ceo-pay-has-soared-over-the-past-decade/#respond</comments>
		<pubDate>Thu, 21 Jun 2018 17:58:37 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Proxy Advisors]]></category>
		<category><![CDATA[Say on Pay]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=9990/</guid>
		<description><![CDATA[When shareholders of Canada’s big banks opened their proxy voting forms in early 2008, they found a striking new proposal on the ballot. Submitted by a small ethical mutual fund company, the resolution called on banks to give investors an annual vote on how executive pay was designed. Bank boards initially opposed the motion as [&#8230;]]]></description>
		<content><![CDATA[When shareholders of Canada’s big banks opened their proxy voting forms in early 2008, they found a striking new proposal on the ballot. Submitted by a small ethical mutual fund company, the resolution called on banks to give investors an annual vote on how executive pay was designed.

Bank boards initially opposed the motion as an intrusion into boards’ powers to set executive level pay. But within a year, a wave of companies bowed to pressure and agreed to introduce the votes, ushering in a decade of change in executive compensation design in Canada.

Since the financial crisis, measures have been introduced to increase transparency, better align executive returns with those enjoyed by shareholders and curb the worst excesses in chief executive pay.

[ ... ]

SHIFTING PERFORMANCE GOALS

The shift into share units over the past decade also means that compensation rewards shorter-term performance, despite frequent discussion about the importance of focusing management on longer-term, sustainable growth. Stock options are typically exercisable over 10 years, creating a long time lag between granting and cashing out, while share units typically pay out in cash at the end of three years.

Whether an unintended consequence, or simply an unavoidable trade-off, the shift into share units has reduced the definition of “long-term” compensation.

Yvan Allaire, chair of the Institute for Governance of Private and Public Organizations who wrote a recent paper on pay trends, believes share units provide a medium-term incentive at best, and a muddled short-term incentive at worst.

With most CEOs getting share unit grants each year, a portion is also vesting each year, so executives never have a single discrete three-year performance cycle. Instead, the performance goals are constantly shifting as a new target comes to fruition each year.

His proposed solution is to offer one grant of units every three years, allowing the performance goals to play out before a new incentive is added.

[ ... ]

While many shareholders urge companies to tailor compensation programs to their own unique strategies and time horizons, boards complain it is risky to deviate from the pay models favoured by the proxy advisers.

“The incredible convergence in compensation systems across companies is absolutely mind-boggling,” said Mr. Allaire.

“You read them, and it’s almost the same text from one to the other. … We’ve converged on a process which has received the blessing of proxy advisers and large investors, and boards feel safe when they apply that particular process.”

Read more [1]

[1] https://www.theglobeandmail.com/business/careers/management/executive-compensation/article-canadian-ceo-pay-an-inside-look-at-soaring-compensation/]]></content>
		<wfw:commentRss>https://igopp.org/en/why-canadian-ceo-pay-has-soared-over-the-past-decade/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Willis Towers Watson offers 2018 say-on-pay snapshot</title>
		<link>https://igopp.org/en/willis-towers-watson-offers-2018-say-on-pay-snapshot/</link>
		<comments>https://igopp.org/en/willis-towers-watson-offers-2018-say-on-pay-snapshot/#respond</comments>
		<pubDate>Fri, 18 May 2018 15:25:59 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[American governance]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Say on Pay]]></category>

		<guid isPermaLink="false">https://igopp.org/willis-towers-watson-offers-2018-say-on-pay-snapshot/</guid>
		<description><![CDATA[In this snapshot review by Willis Towers Watson of U.S. say-on-pay and other compensation-related votes, WTW found that average support for say on pay remained high at 91%.  In addition, where ISS identified “high” levels of concern leading to negative recommendations on say on pay, 84% related to pay-for-performance concerns (compared to 75% in 2017).  WTW analyzed the [&#8230;]]]></description>
		<content><![CDATA[In this snapshot review [1] by Willis Towers Watson of U.S. say-on-pay and other compensation-related votes, WTW found that average support for say on pay remained high at 91%.  In addition, where ISS identified “high” levels of concern leading to negative recommendations on say on pay, 84% related to pay-for-performance concerns (compared to 75% in 2017). 

WTW analyzed the results of annual meeting votes for 740 companies in the Russell 3000 from January 1, 2018 through May 11, 2018 and compared them against results for the full 2017 year for 2338 companies in the Russell 3000.  WTW found that the success rate for say on pay has stayed flat at 91%, with a failure rate of 2% so far in 2018, compared to 1% in 2017. According to WTW, ISS gave 10% of the say-on-pay proposals negative vote recommendations, compared to 12% in 2017; however, those recommendations appeared to have had more impact in 2018, with a difference in average support between as ISS favorable versus unfavorable recommendation at 33% in 2018 compared with only 26% in 2017.

[ ... ]

In “Should Say-on-Pay Votes Be Binding? [2]”, two executives from the Institute for Governance of Private and Public Organizations in Canada explore the unintended consequences of say on pay:

 	The post contends, consistent with the study discussed in the SideBar above, that (based on other studies) shareholder votes tend to be based on stock price performance. According to the post, if a company’s “shares do better than those of its peers, almost any compensation package will be approved. This perverse result tends to increase the pressure on management to focus on short-term stock performance, sometimes through decisions that may negatively affect future performance.” [Emphasis added.]
 	Why look to stock price performance? The authors attribute this result in part to the current complexity and sheer length of compensation disclosure, presumably one consequence of disclosure designed for say-on-pay proposals. And given that many investors hold shares in numerous companies, it may be easier for them to base their votes on stock performance rather than try to analyze complex compensation packages as detailed in lengthy proxy statement disclosures. (Of course, maybe they don’t even open their proxy envelopes!)  According to the post, “for the 50 largest (by market cap) companies on the Toronto Stock Exchange in 2015 that were also listed back in 2000, the median number of pages needed to describe their executives’ compensation rose from six in 2000 to 34 in 2015, with some compensation descriptions consuming as many as 66.”
 	Instead of checking stock prices, it’s even easier for investors to rely on the recommendations of proxy advisory firms, such as ISS and Glass Lewis (which also take into account relative stock price performance in formulating their vote recommendations). As a result, the influence of proxy advisory firms has increased substantially. According to the post, 83% of directors very much or somewhat agree that their influence has increased.
 	One consequence of the increase in influence of proxy advisory firms has been a certain similarity in executive compensation packages. The post indicates that, to win the recommendation of these firms, boards, comp committees and consultants find it “wiser and safer to toe the line and put forth pay packages that will pass muster…. The result has been a remarkable standardization of compensation, a sort of ‘copy and paste’ approach across publicly listed companies. Thus, most CEO pay packages are linked to the same metrics, whether the companies operate in manufacturing, retailing, banking, mining, energy, pharmaceuticals, or services. For the companies on the S&#38;P/TSX 60 index, the so-called long term compensation for their CEOs in 2015 was based on total shareholder return (TSR) or the earnings per share (EPS) growth in 85 percent of cases. The proxy advisory firm ISS has been promoting these measures as the best way to connect compensation to performance.”

&#160;

Read more [3]

[1] https://www.towerswatson.com/-/media/Pdf/Insights/Newsletters/Global/executive-pay-matters/2018/05/say-on-pay-update-may-15-2018-wtw.pdf?la=de-DE&#38;hash=9BBC90016D9789CC705960FA5062E7AC223E78D7
[2] http://clsbluesky.law.columbia.edu/2016/09/13/should-say-on-pay-votes-be-binding/
[3] https://cooleypubco.com/2018/05/18/2018-say-on-pay-snapshot/]]></content>
		<wfw:commentRss>https://igopp.org/en/willis-towers-watson-offers-2018-say-on-pay-snapshot/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>It&#8217;s hunting season, as activists and regulators open fire on Canada&#8217;s businesses</title>
		<link>https://igopp.org/en/activists-and-regulators-open-fire-on-canadas-businesses/</link>
		<comments>https://igopp.org/en/activists-and-regulators-open-fire-on-canadas-businesses/#respond</comments>
		<pubDate>Thu, 05 Apr 2018 18:33:55 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[Activism]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Proxy Advisors]]></category>
		<category><![CDATA[Shareholders]]></category>
		<category><![CDATA[Stakeholders]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=9681/</guid>
		<description><![CDATA[The corporate hunting season is officially underway, an annual ritual during which shareholder parties, armed with proxies and other weapons of democratic destruction, set out to bag executives and directors for failing to deliver. The list of potential corporate failings is all encompassing. Anything and everything is a target, from executive compensation to diversity policies [&#8230;]]]></description>
		<content><![CDATA[The corporate hunting season is officially underway, an annual ritual during which shareholder parties, armed with proxies and other weapons of democratic destruction, set out to bag executives and directors for failing to deliver. The list of potential corporate failings is all encompassing. Anything and everything is a target, from executive compensation to diversity policies to return on equity, from investment strategies to social responsibility and whether there are an adequate number of people of varying genders in key positions. The scene for these hunting expeditions is the corporate annual meeting.

[ ... ]

As annual general meeting season arrives, many forms of corporate shareholder activism, accompanied by increasing regulatory interventions, will be on display. Executive compensation, say on pay, gender composition of boards, majority-voting requirements, mandatory board engagement with shareholders, withholding votes for certain directors, mandated ratios of independent directors. Some of this comes from regulators, some from the proxy advisory firms whose role is increasing, apparently because institutional investors are too dumb or disinterested to undertake their own analyses and make their own decisions.

[ ... ]

Executive compensation has long been touted as a problem in need of reform, as Montreal management consultant Yvan Allaire notes elsewhere in FP Comment today [1]. Reform is one thing. But the objective of the CEO-to-worker comparisons is to spark a little Marxist unrest within the population, promote government action to further regulate and tax corporations and executives, and stimulate shareholder revolts at annual meetings.

Read more [2]

[1] https://igopp.org/en/executive-pay-time-for-change/
[2] http://business.financialpost.com/opinion/terence-corcoran-its-hunting-season-as-activists-and-regulators-open-fire-on-canadas-businesses]]></content>
		<wfw:commentRss>https://igopp.org/en/activists-and-regulators-open-fire-on-canadas-businesses/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Executive pay: time for change ?</title>
		<link>https://igopp.org/en/executive-pay-time-for-change/</link>
		<comments>https://igopp.org/en/executive-pay-time-for-change/#respond</comments>
		<pubDate>Thu, 05 Apr 2018 13:38:01 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[News Articles]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Proxy Advisors]]></category>
		<category><![CDATA[Say on Pay]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=9643/</guid>
		<description><![CDATA[A highly standardized process leads to yearly executive pay packages which combine salary, bonuses, stock options, restricted stock grants, performance share units, retirement benefits. The full assemblage will also include formal contracts covering change-of-control situations, termination conditions, etc.  Only the quanta of the compensation package vary from firm to firm. Whenever “long-term” performance objectives are [&#8230;]]]></description>
		<content><![CDATA[A highly standardized process leads to yearly executive pay packages which combine salary, bonuses, stock options, restricted stock grants, performance share units, retirement benefits. The full assemblage will also include formal contracts covering change-of-control situations, termination conditions, etc.  Only the quanta of the compensation package vary from firm to firm. Whenever “long-term” performance objectives are set to earn the variable compensation, “total shareholder return” (TSR) is the metric of choice (for 70% of TSX 60 companies in 2015).

It now takes some 34 pages on average to explain executive compensation. In 2000, it took all of 6 pages to describe executive compensation!

How much is our CEO worth? Well, let’s see what other CEOs of “comparable” companies are paid. Reasonable approach? Actually, no. Assembling a large number of companies from different industries, some US, some Canadian, and setting a particular CEO’s compensation at the median or the 75th percentile of these “comparable” companies’ CEOs is a recipe for ever-rising compensation. The unstated assumption, a dubious one, is that any of these “comparable” companies would recruit the CEO if he/she were not paid adequately.

Then this “competitively” set compensation is largely “at risk” so as to motivate the achievement of high performances. Right. Not really. Performance measures are set by management (or largely influenced by them) and include a broad interval giving access, commonly, to 75% to 150% of the bonus or performance shares (never or rarely 0%). Furthermore, shares have now largely replaced stock options. These shares have value even if the stock price goes down (which is not the case for stock options). Stock prices depend on many uncontrollable factors, which mean luck, good or bad, will play a significant role; actually, good luck pushes up the value of the package; bad luck pushes stock price down but the practice of yearly grant of stock options and shares will average out the effect of “bad luck”.

The compensation package, thus set, does not really please investors but they do not know what else could be done. Proxy advisory agencies, actually the fomenters of this standardized approach, will be favorable to the compensation levels if set according to their diktats. Say-on-pay voting will overwhelmingly support the pay package and the manner of its setting. (In 2016, only four companies of the TSX 60 received 20% or more of negative votes)

The ritualized process described here is indeed reassuring by virtue of the large number of firms abiding by it, but it fails to take into account the very particular character of each corporation, the specific nature of its industry, the time horizon of its strategy implementation, the drivers of its value-creation. It is prudent for a board to comply with the approach described above; any deviation risks incurring disfavor with proxy advisors, an influential lot in this matter.

Boards of directors of large publicly listed corporations are keenly aware of the limitations of the current standardized methods of setting executive pay. But it is very difficult and hazardous for any particular board to deviate from the standard approach. Board chairs of the TSX 60 companies should get together and agree on a different way of setting compensation. A common approach adopted by a large number of TSX 60 companies would be very effective in standing up to proxy advisors and moving forward on this seemingly intractable issue. Otherwise, this festering compensation sore will continue to erode their legitimacy and credibility with investors and the general population.

From an IGOPP policy paper Executive Compensation: Cutting the Gordian Knot published in November 2017. Available at www.igopp.org [1].

[1] https://igopp.org/en/executive-compensation-cutting-the-gordian-knot/]]></content>
		<wfw:commentRss>https://igopp.org/en/executive-pay-time-for-change/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Canada’s top CEOs will make $50K before noon on Jan. 2</title>
		<link>https://igopp.org/en/canadas-top-ceos-will-make-50k-before-noon-on-jan-2/</link>
		<comments>https://igopp.org/en/canadas-top-ceos-will-make-50k-before-noon-on-jan-2/#respond</comments>
		<pubDate>Tue, 02 Jan 2018 16:03:31 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Ethics]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Stakeholders]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=9471/</guid>
		<description><![CDATA[If they were to live on the average worker’s pay, Canada’s CEOs could stop working at around 11 a.m. on Jan. 2 and take the rest of the year off. That’s because by 10:57 a.m. on the second day of the year, their earnings will have already hit $49,738, the equivalent of the country’s average [&#8230;]]]></description>
		<content><![CDATA[If they were to live on the average worker’s pay, Canada’s CEOs could stop working at around 11 a.m. on Jan. 2 and take the rest of the year off. That’s because by 10:57 a.m. on the second day of the year, their earnings will have already hit $49,738, the equivalent of the country’s average wage, according to research by the Canadian Centre for Policy Alternatives (CPPA).

Canada’s CEO pay broke a new record in 2016, with the 100 top-paid chief executives of publicly traded companies netting $10.4 million on average, or 209 times the average income, the CPPA said in its latest annual survey of chief executives’ compensation. In 2015, the average CEO pay was $9.6 million, or 193 times more than what the average Canadian made.

[ ... ]

Looking at the median, which represents the mid-point of the pay distribution, means values won’t be skewed by a few CEOs who outearn the rest by a large margin, said Yvan Allaire, executive chair of IGOPP and author of its executive pay reports.

Indeed, the median CEO pay based on the CCPA’s ranking of the 100 best paid CEOs was $8.3 million, Allaire noted.

[ ... ]

Ottawa should eliminate that special tax treatment for shares handed out to executives as part of their pay, both the CCPA and Allaire said.

There is no reason to treat capital gains from those shares any differently than employment income, Allaire told Global News. “This looks like compensation and it should be treated like compensation,” he said.

Read more [1]

[1] https://globalnews.ca/news/3941314/canada-ceo-pay-2016-ccpa/?utm_medium=email&#38;utm_content=VvSXbO0tzX5Mz4IgxNHbIo6DWhFkE05rFyA3uRRnFbVNusuJerVIss0s6_QKQoX_]]></content>
		<wfw:commentRss>https://igopp.org/en/canadas-top-ceos-will-make-50k-before-noon-on-jan-2/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>Canada’s ‘questionable’ CEO pay system needs overhaul: Think tank</title>
		<link>https://igopp.org/en/canadas-questionable-ceo-pay-system-needs-overhaul-think-tank/</link>
		<comments>https://igopp.org/en/canadas-questionable-ceo-pay-system-needs-overhaul-think-tank/#respond</comments>
		<pubDate>Tue, 21 Nov 2017 17:45:00 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
		<category><![CDATA[IGOPP in the medias]]></category>
		<category><![CDATA[Chef de la direction]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Stakeholders]]></category>

		<guid isPermaLink="false">https://igopp.org/canadas-questionable-ceo-pay-system-needs-overhaul-think-tank/</guid>
		<description><![CDATA[Current executive compensation practices are making Canadian CEOs rich, but at the expense of a strong corporate culture and the long-term interests of shareholders, according to a new report from the Institute for Governance of Private and Public Organizations (IGOPP). “Mutual trust, loyalty, the sharing of objectives and pride in the organization, the sense of [&#8230;]]]></description>
		<content><![CDATA[Current executive compensation practices are making Canadian CEOs rich, but at the expense of a strong corporate culture and the long-term interests of shareholders, according to a new report from the Institute for Governance of Private and Public Organizations (IGOPP).

“Mutual trust, loyalty, the sharing of objectives and pride in the organization, the sense of ‘being all in the same boat’, were slowly but surely eroded, replaced by a calculative greed at the top and cynical disaffection at the bottom,” the report said.

In 2016, a typical Canadian CEO earned about $8 million in total annual compensation — with bank CEOs raking in more than $10.5 million. That’s about 140 times more than the average Canadian worker, up from about 61 times in 1998, according to the Montreal-based think tank.

The skyrocketing pay has come from a “questionable” compensation system conceived by consultants that may satisfy critical observers but does little to align the goals of the company with the interests of long-term shareholders, said Yvan Allaire, executive chair of IGOPP.

“Investors and shareholders were initially enthusiastic about forms of compensation likely to transform senior executives into fanatics of ‘shareholder value-creation,’” the report reads. “However, soon enough, the link between this ‘extravagant’ compensation and the company’s economic performance seemed very tenuous.”

Benchmarking CEO pay to a self-selected group of peer companies was supposed to make compensation practices more fair and open, but in reality it has distorted the system and led to pay packages constantly moving higher, said Allaire.

Read more [1]

[1] http://www.bnn.ca/canada-s-questionable-ceo-pay-system-needs-overhaul-argues-think-tank-1.921736?utm_medium=email&#38;utm_content=YabO8FmQ7fe0T8HauuPw4C-ff0AMFh5Kc7H34DFKcjx_kgBQAXJ4YcHx49k9syZy]]></content>
		<wfw:commentRss>https://igopp.org/en/canadas-questionable-ceo-pay-system-needs-overhaul-think-tank/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
		<item>
		<title>IGOPP Calls for Changes to CEO Compensation</title>
		<link>https://igopp.org/en/igopp-calls-for-changes-to-ceo-compensation/</link>
		<comments>https://igopp.org/en/igopp-calls-for-changes-to-ceo-compensation/#respond</comments>
		<pubDate>Tue, 21 Nov 2017 12:00:59 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[Press Releases]]></category>
		<category><![CDATA[Chief Executive Officer]]></category>
		<category><![CDATA[Executive compensation]]></category>
		<category><![CDATA[Stakeholders]]></category>

		<guid isPermaLink="false">https://igopp.org/?p=9304/</guid>
		<description><![CDATA[Today, the Institute for Governance of Private and Public Organisations (IGOPP) released its policy paper entitled Executive Compensation: Cutting the Gordian Knot.  The compensation of CEOs remains a contentious issue and, for the past twenty years, has drawn sharp and unrelenting criticism, much of it justified.  At issue has been the fact that the ratio [&#8230;]]]></description>
		<content><![CDATA[Today, the Institute for Governance of Private and Public Organisations (IGOPP) released its policy paper entitled Executive Compensation: Cutting the Gordian Knot.  The compensation of CEOs remains a contentious issue and, for the past twenty years, has drawn sharp and unrelenting criticism, much of it justified.  At issue has been the fact that the ratio of CEO compensation to the average Canadian worker has increased from 61:1 in 1998 to 140:1 in 2016 (or 184:1 for bank CEOs), with a median compensation package valued of $8.0 million ($10.5 million for bank CEOs).

IGOPP notes that most boards of directors have adopted a “standard” compensation system, based on some Generally Accepted Compensation Principles. The current system locks corporations in a mold devised by consultants, generating long descriptions and large compensations, which may satisfy critical observers, but does not achieve what compensation programs should.  This ritualized process provides reassurance by virtue of the large number of firms using it; but, as it turns out, many of the assumptions underpinning this compensation system are questionable: for instance, the use of “peer group” as a benchmark of the market value of the CEO, the misleading notion of “at risk” compensation and performance metrics linked to stock price, etc.

“The responsibility for change rests primarily on the Board,” said Dr. Yvan Allaire, Executive Chair of the Board of IGOPP. “Board Chairs and Compensation Committees must remain entirely accountable and responsible for establishing the system of executive compensation designed for their specific company and their particular industry. The goal is to design compensation programs that are fair, sensitive to stakeholder concerns and aligned with the long-term interests of the corporation.”

The policy paper, after reviewing the current state of executive compensation, makes several recommendations to Boards on changing the structure of CEO compensation packages. Furthermore, the paper stresses the need for some sort of forum where chairs of the board and chairs of compensation committees of TSX 60 companies could discuss issues of compensation and agree on some fundamental changes in the system.

The policy paper also calls on Canadian institutional investors to clarify their expectations and their understanding of what forms of compensation will, in their view, support a long-term management perspective, which is a stated goal of their investment policies.

&#160;

For any information or to request an interview: 

Majida Lamnini
Director, Strategic Initiatives, IGOPP
514.439.9301
mlamnini@igopp.org [1]

[1] https://igopp.orgmailto:mlamnini@igopp.org]]></content>
		<wfw:commentRss>https://igopp.org/en/igopp-calls-for-changes-to-ceo-compensation/feed/</wfw:commentRss>
		<slash:comments>0</slash:comments>
		</item>
	</channel>
</rss>
