Canadian CEO pay is in line with stock performance, according to a report by the University of Toronto's Clarkson Centre for Board Effectiveness.

In a study of 52 major Canadian companies listed on the TSX 60, executive pay and stock performance moved in the same direction at 81 per cent of them over an 8-year period from 2004 to 2011.

Over the 8 years studied, the total stock returns for the TSX 60 was 91 per cent, while CEO pay rose an average of 14 per cent.

The study looked at short-term performance as well as eight-year performance, measuring alignment over four different time horizons starting in 2004, then assigning companies a score out of 24.

But the report said the the results were lower than expected, saying "the financial crisis had a much more significant impact on the shorter-term scores, resulting in the relatively low average score."

Most companies saw a score of between 10 and 15 out of 24.

The strongest correlation between pay and performance was at Loblaw, which scored 22 out of 24.

Pay not matching performance

Of the 10 companies where pay and performance did not move in the same direction, 9 saw pay decrease while the stock rose.

Only at one company —Thomson Reuters — did pay increase while the stock fell, although the report says it is an unusual case.

The entire management team received restricted stock options tied to Thomson's merger with Reuters in 2008, which the report says is a significant outlier given CEO pay in other years.

Shift in compensation

In addition to being paid more, CEOs are also being paid differently than they were in 2004.

The study found immediate cash rewards like salary and bonus fell from 51 per cent of CEO compensation to 36 per cent.

Instead, CEOs are being paid to stick around, now recieving 57 per cent of their pay in stock options, versus 43 per cent in 2004.

The report suggests that this may actually help keep the link between performance and pay closer in the future. The better the company performs, the more valuable those stock options become.