Using data from the Toronto Stock Exchange 300 companies for a
7-year period, the authors examine the role that institutional activism types and
three salient board monitoring mechanisms— CEO/board chair split, board
composition, and compensation committee independence—play in influencing CEO
contingent compensation in Canada. The authors find that the effect of
institutional activism, especially proxy based, is stronger on contingent CEO
compensation and that its effects span a longer time. As opposed to the
interactions of cumulative proxy-based activism with any of the three monitoring
mechanisms, the interactions of cumulative non-proxy-based activism with both
CEO/board chair split and compensation committee independence appear to influence
CEO contingent compensation. The study's implications are given.