CEO pay, firm size, and corporate performance: evidence from Canada

Executive compensation of 755 Canadian firms is examined over the period 1991-95, and evidence is obtained consistent with previous studies: CEO pay rises with firm size and compensation is tied to company performance. In addition, executives in utilities earn lower pay, and their compensation is less responsive to performance, than is true for their counterparts in other industries. Some novel findings are also documented. First, the sales elasticity of CEO compensation is greater in larger firms. Second, while CEO turnover probability is generally negatively related to the firm's stock performance, the threat of dismissal appear to be less pronounced in small firms. JEL Classification: G35, J33.