CEO pay not tied to company performance: study

There is little connection between the salary of a chief executive officer and the performance of the companies they run, according to a study by the Ontario Teachers' Pension Plan (OTPP).

"The results of this study raise serious questions about the alignment between CEO compensation and the market performance of their companies," said Brian Gibson, senior vice-president of the plan's public equities department.

The pension fund, one of the most influential in Canada with 264,000 members and assets of $96 billion, has been lobbying to tie executive compensation to performance.

The aim of the study was to judge how well their campaign has been doing.

The study looked at a sample of 65 TSX-listed companies, comparing company performance from 2001 to 2003 with compensation for the years 2002 to 2004.

The study found that "a few individual companies may have made good progress," but that certainly wasn't true of the majority.

"In general," Gibson said, "there is no empirical evidence that compensation has become better linked to performance."

What can teachers do about it?He invited the 264,000 teachers who are enrolled in the teachers' pension fund to ask some hard questions at the next annual meeting they attend.