CEO Perquisites in Canada, 1971-2008: Certainly Not 'Pure' Managerial Excess

Abstract

This paper explores Canadian market data on CEO perquisites gathered by a large consulting firm over the period from 1971 to 2008. Perquisites are one of the least documented total compensation components in the academic literature on executive pay. Scant existing literature may be due to the relatively recent and limited corporate disclosures on CEO perquisites, as well as to the comparatively modest monetary value of perquisites relative to other total CEO compensation components. Meanwhile, CEO perquisites regularly capture the public’s imagination in the media because of some perceived excesses, such as immoderate personal use of corporate aircraft (see Rajan & Wulf, 2006). We document a significant evolution in CEO perquisites practices over the period. Consistent with a nascent body of literature, this paper supports empirically hypotheses arguing that CEO perquisites do not uniquely occur as a result of an agency problem, the main theoretical explanation for their existence as of yet, but that they can also serve a legitimate, value-creating, business purpose for the benefit of shareholders.