 |
TORONTO (May 31, 2006): Ontario Teachers’ Pension Plan (OTPP) officials today released the results of a study that concludes that CEO compensation in Canada cannot be correlated to total stock returns.
“The results of this study raise serious questions about the alignment between CEO compensation and the market performance of their companies,” stated Brian Gibson, senior vice-president, Public Equities, OTPP.
The research study comprised a sample of 65 TSX-listed companies. The companies in the sample met two major criteria: (1) they had share price data dating back to January 1, 1995 so that executive stock option grants could be valued properly and (2) they were among the largest 100 companies as of January 1, 1995 and still are active today.
The comparison itself was based on company results from 2001 – 2003, inclusive, and compensation for the years 2002- 2004, inclusive, to allow for the backward-looking element in CEO pay. The study results, including an explanation of data sources and statistical methodology, and a list of the companies, are available on our website.
In explaining the rationale for conducting the study, Mr. Gibson noted: “In recent years many boards have tried to improve the link between executive pay and company performance. We conducted the study to measure the results.” He added that, “While a few individual companies may have made good progress, in general there is no empirical evidence that compensation has become better linked to performance. On behalf of the many active and retired teachers who are shareholders in Canadian companies, we are encouraging boards to re-examine their executive compensation structures to find ways to improve the link between pay and performance.”
The Ontario Teachers’ Pension Plan is an independent corporation responsible for investing the $96 billion fund and administering the pensions of Ontario’s 163,000 elementary and secondary school teachers and 101,000 retired teachers.
Contact:
Deborah Allan
Director, Communications and Media Relations
Ontario Teachers' Pension Plan
(416) 730-5347
deborah_allan@otpp.com |
|
