Canadian executive pay reforms 'could cause economic problems'

Reform of executive pay policies in Canada may not necessarily be beneficial for the broader economy, according to a business thinktank.

Niels Veldhuis of The Fraser Institute has suggested that taking a hardline approach to curbing corporate remuneration in the nation could lead to businesses relocating to other parts of the world.

"When you call for a policy that limits chief executive officer pay, what you are doing is you're signalling that we're going to have even more regulations on how businesses operate here in Canada," he observed.

This comes in response to a recent report from the Canadian Centre for Policy Alternatives (CCPA), which showed that pay rates among the 100 highest-paid business leaders on the TSX Index rose by 27 per cent between 2009 and 2010.

However, Mr Veldhuis said this data was misleading, due to the fact that this period was marked by a market rebound from a major crash, which had a huge effect on stock value-dependent pay packages.

Other findings from the CCPA report showed that only one of the top 100 best-paid chief executives in Canada is female.