TSX60 Executive Compensation Trends | Mercer Canada

Median CEO Total Direct Compensation remains flat among top companies listed on TSX: Mercer

Median CEO Total Direct Compensation remains flat among top companies listed on TSX: Mercer

  • July 24, 2019
  • Canada, Toronto
  • Total compensation for all TSX60 CEOs flat year-over-year, with considerable variation by sector
  • Same incumbent CEO total compensation up by an average of 6%
  • Increased usage of Environmental, Social and Governance metrics in executive pay packets

Mercer's latest analysis of CEO compensation finds that median reported pay for top Canadian CEOs remained flat between 2017 and 2018. This analysis is based on the top 60 listed companies on the TSX in 2018 – called the TSX60.

While total reported pay for all TSX60 companies remained flat between 2017 and 2018, same incumbent CEOs saw their Total Direct Compensation (TDC) rise by an average of 6%. Long-term incentives increased by 5%, and base salaries increased by 2%. Short-Term Incentives remained static.

These numbers belie considerable variation from sector to sector. Median CEO pay rose 7% in the Energy sector and 8% in Materials, but declined 5% in Financials.

Organizations taking a broader view of performance – Our analysis found that, in determining their executive incentive plans, organizations are increasingly using a holistic view when measuring performance. Half of the TSX60 use three or more metrics when determining bonus payouts under their Short-Term Incentive Plan (STIP), with one third having made recent changes to that plan to better measure performance in today’s business landscape.

Although profitability and earnings metrics continue to be the most prevalent metrics, with earnings metrics having a weighting of just over 50% of the total bonus, thanks to growing pressure from shareholders and other stakeholders, companies are increasingly leveraging Environmental, Social and Governance (ESG) metrics as part of their executive compensation plans. Mercer conducted a spot survey in May 2019 that found that one-third of North American companies surveyed used ESG metrics, with Canadian organizations twice as likely to use them as American organizations.

Long-Term Incentives Plan increasingly including Performance Share Units – Our analysis finds that most TSX60 companies still use a combination of two vehicles – typically Stock Options and Performance Share Units – with an increase in the weighting of Performance Share Units.

“No matter what sector your company is in, getting executive compensation right is critical to ensuring the person in the driver’s seat is performing at their best,” said Luc Lapalme, Principal with Mercer.

Luc Lapalme is available to discuss these findings and related topics for a story or further background. For more information, visit https://www.mercer.ca/en/our-thinking/career/tsx60-executive-compensation.html.

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