Many Canadian companies still need to improve the way they report executive pay, according to the Canadian Coalition for Good Governance.

Marks are improving, according to the Coalition’s latest annual score card on executive compensation, but many companies still have a lot of work to do to improve their disclosure of executive pay packages.

“Transparency is essential when it comes to communicating the compensation of senior executives to investors. This scorecard is not about levels of compensation, it’s about disclosing the process of how compensation is determined,” said David Beatty, managing director of the CCGG, in a release. “We have seen some improvement in disclosure, but we need to see more. Setting senior executive compensation is the toughest ongoing job a board has to do and investors want, and should know how they arrive at their judgments.”

The study was conducted by the Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto’s Rotman School of Management. It looked at the executive compensation disclosure of 208 companies, representing all the corporations in the TSX Index. Using a scoring system based upon the Coalition’s “Guidelines for Principled Executive Compensation”, the study evaluated a company’s disclosure practices using 26 separate parameters.

According to the report, 29 companies scored well, exhibiting reasonably thorough and complete compensation disclosure practices, up from 23 companies last year. On the other end of the scale, 169 companies still had substantial work to do. The Coalition says it is confident that these numbers will improve as more companies adopt better disclosure policies.

“Regulations or “Say on Pay” resolutions are not today’s answer to improving scores, constructive cooperation is,” said Beatty. “Our members are anxious to help compensation committees do their job better, improving how they establish and refine compensation packages,” said Beatty.

The Coalition has determined four areas where companies can immediately improve their performance: hiring approved ompensation consultants, providing a “one-figure” number that summarizes CEO pay, abandoning options that vest over time with no performance hurdles and clearly explaining how compensation packages are linked to performance in both the short and long term.

The CCGG has provided the full scoring to the executive compensation companies working in Canada to share with their clients, but the full scoring results will not be publicly available until one year after the final release of the CSA disclosure requirements in the second half of 2008.

As well, this year’s survey measured the market shares of various executive compensation consultants and found that two firms, Mercer and Towers Perrin dominated last year’s disclosures.