Executive Compensation Schemes in the Banking Industry: A Comparative Study Between a Developed Country and an Emerging Economy‪.‬

INTRODUCTION This paper examines the executive compensation schemes and practices of banks operating in Canada (a developed country) and South Africa (an emerging economy). In both countries a relatively small number of large banks dominate the national market, making the banking sector a unique research context and an interesting first step in the comparison of compensation paid in each country. Using a population of eight major publicly-traded banks in Canada and the four main banks in South Africa, we investigate the structure and level of executive compensation, defined as the sum of salary, annual bonus, the values of executive stock options and long term incentive plans (LTIPs). We discriminate between banks operating in Canada and those operating in South Africa and use contingency theory of management accounting to explain the differences.