Canadian Compensation Crackdown: CCGG Issues Executive Pay-focused Guidebook

10 October 2025

By Jack Grogan-Fenn

The Canadian Coalition for Good Governance (CCGG) has heightened its focus on executive and director compensation with the publication of a guidebook presenting institutional investors’ perspectives on some of the region’s most important “relevant” remuneration topics.

Topics covered in the document include executive compensation structure performance metrics and targets and risk mitigation. “Compensation is perhaps the most effective tool available to a board of directors to retain, reward and incentivize senior management to create shareholder value,” the CCGG stated in the guidebook.

“Boards of directors and compensation committees are also in a better position, relative to external parties, to design compensation plans which would best retain, reward, and incentivize management teams,” it added. “Having said that, we believe boards of directors should give due consideration to the perspective of the company’s shareholders when designing compensation plans.”

Research published at the start of this year revealed that Canada’s 100 highest-paid chief executives earned an average of CA$13.2 million (U$9.5 million) in 2023, making 210 times the average worker’s pay.

The new Executive and Director Compensation Guidebook also discuss issues not previously covered by the CCGG including limiting the number of performance measures utilised in executive compensation, setting appropriate performance targets, structuring special compensation awards and suggestions for reducing risks associated with stock options.

The new recommendations on special one-off compensation awards is of particular note, with one-off awards being a common factor behind recent high dissent votes and remuneration defeats in North America. This includes Canadian-based silver metals mining company Aya Gold & Silver seeing its remuneration report voted down at its 2025 AGM in June, with the granting of retention option awards to senior management playing a key part in this defeat.

On executive compensation structure, the CCGG stated that it “believe[s] that a significant portion of executive pay should be at-risk and tied to performance”. The guidebook also suggests that boards should use stock options “with caution and with appropriate safeguards”, avoid “excessive” perquisites, benefits, and severance packages, and restrict special compensation awards to “exceptional, well-justified, and clearly articulated circumstances”.

The coalition urged that compensation “should be linked to metrics that are within management control, and which drive long-term, sustainable, shareholder value creation”. This includes encouraging boards to disclose performance metrics, targets, and outcomes clearly, set “sufficiently challenging” performance targets under variable compensation plans and to refrain from using an “excessive” number of performance metrics in the executive compensation scheme so that “senior management remains focussed on the most important business value drivers”.

The CCGG also called on boards to continue to implement policies that “minimize compensation-related risks”, including anti-hedging and anti-monetisation policies, broad clawback policies and share ownership polices which encourage executive leadership to build a meaningful common share interest over their tenures.

CCGG published its original Executive Compensation Principles in 2009 to offer enhanced guidance to boards and “promote compensation decisions that are aligned with long-term company and shareholder success”. In 2013, the coalition further refined and updated our Executive Compensation Principles document.

This recently published guidebook on executive and director compensation has been expanded to cover new topics that continue to be addressed during CCGG’s board engagement programme through which it annually engages with approximately 30 leading Canadian public companies on matters within the purview of a board of directors.

Founded in 2003, the CCGG aims to improve governance practices, including the governance of environmental and social matters at Canadian public companies, as well as supporting institutional investors in meeting their stewardship responsibilities.

Like the US market, there isn’t a national corporate governance code per se - though the Canadian Securities Administrators have issued various national instruments covering disclosure and governance matters – meaning that institutional investor guidelines maintained by the CCGG act as a sort of stand-in, similar to the policies of the Council of Institutional Investors in the US.

In 2023, the coalition criticised a proposed bylaw that would give companies the ability to automatically postpone AGMs if votes against a director cross a certain threshold, as reporte .

Minerva Analytics’ recently published Shareholder Proposal Voting Trends Report 2025 found that remuneration accounted for the lowest proportion of shareholder proposals in Canada, trailing both sustainability- and governance-related resolutions. Of the 58 remuneration-related proposals filed during the first five months of 2025, 27 sought approval of golden parachute payments and ten proposed the requiring of clawbacks, accounting for the majority of such resolutions.

There has been some focus from Canadian investors on executive compensation, however, with Vancity Investment Management filing a proposal requesting greater disclosure on the internal metrics and their influence on Executive Compensation. As reported by Minerva Analytics, Vancity looked to ensure fairer pay by assessing the pay gaps between the CEO and workers, with the proponent being concerned about the widening pay disparities.  

The topic of executive compensation gets much greater attention from both companies and investors in the neighbouring US. Research released last month found that CEO pay in the US increased in 2024 and they now earn 281 times more than the average employee. The US Securities and Exchange Commission is reportedly considering both relaxing rules on executive pay, with the commission holding a roundtable on exec compensation disclosure requirements in June.

According to Minerva Analytics data, which will appear in the Proxy Season Review 2025 set to be published later this month, the Average Company Reported Pay Ratio stands at 83 times in Europe, 78 in the UK and 286 in the US. Meanwhile, the Average Minerva Pay Multiple is 76 in Europe, 66 in the UK and 275 in the US.

To calculate the Minerva CEO Pay Multiple, we use CEO’s total remuneration awarded in the year on a fair value basis – this allows for a consistent approach to be taken across markets. Accordingly, Minerva answers the ratio between the CEO and average employee remuneration as follows: The figure we use is the “CEO Pay Multiple” included in the Pay Equity section of our remuneration reports, where disclosure permits calculation. If disclosure does not permit calculation and the company self-reports a pay ratio, then the company disclosed ratio is used. We favour our calculation over company reported ratios to ensure consistency in application across companies and markets as companies can use different methodologies. If disclosure does not permit calculation and the company has not disclosed a pay ratio, then the voting guideline is not applied.

The review noted that executive pay remains a hotly debated topic in the UK, particularly with continued discussions over the ability of UK companies to attract and retain executive talent when competing with US companies who can offer much higher packages.

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