Chapter 5: Industrial Companies

This chapter will explore the industry’s effects on Directors’ remuneration, particularly focusing on the effect of energy, metal, mining, and health industries on CEO compensation in Canada and United States. In the beginning of this chapter, the background and the role of principal-agent problems in CEO compensation will be discussed. The core of the chapter presentation will be based on discussing the impact of primary benchmarks, variables used in CEO contract, firm size, firm performance, and CEO power (corporate governance) on CEO compensation. It will be a comparative study which includes Canadian and United States public companies traded on the Toronto Stock Exchange (TSX/S&P) and New York Stock Exchange (NYSE) indexes. The later parts of the chapter will discuss the impact of policy, design, factors, board’s role in directors’ remuneration, and accounting regulation on directors’ remuneration. This chapter will then conclude with a summary.