The Canadian Centre for Policy Alternatives (CCPA) has published on January 3, 2017 its annual report on CEO pay entitled “Throwing Money at the Problem – 10 Years of Executive Compensation.”
The highlights of the report are:
- Over the past 10 years, compensation for Canada’s 100 highest paid CEOs has and continually broken new highs.
- Total compensation for Canada’s 100 highest paid CEOs in 2015 hit a historic high, registering at $9.5 million—193 times the average industrial wage in Canada.
- A review of CEO compensation in Canada over time shows that the average earnings of Canada’s corporate top 100 increased by 178% between 1998 and 2015.
CCPA’s report is accompanied with recommendations including:
- Making shareholder votes on pay mandatory rather than advisory.
- Ending the special tax treatment for proceeds of stock options in the personal income tax system.
- Raising top marginal tax rates on all earners to dampen down the incentive to demand increasingly higher levels of compensation.
- Implementing a broader reform of capital gains taxation to even the tax playing
- field for all forms of income in order to dampen down enthusiasm for stock grants as a form of compensation.
- Introducing a tax penalty into the Income Tax Act so that pay in excess of a given ratio to average pay would be subject to a tax penalty.
For more information click HERE.
The Toronto Star calls on the federal government to intervene to make sure top CEOs pay their fair share in taxes. The following are excerpts from The Star’s editorial (January 3, 2017):
The Trudeau Liberals campaigned on ending, or at least reducing, this highly regressive tax break. They talked about moving toward tax fairness and making sure everyone pays their fair share.
But as Finance Minister Bill Morneau prepares his second budget, it has become clear he has backed off on that promise. He has apparently bought into the argument that curbing the tax break on stock options and grants would damage small startups and hamper innovation — the Holy Grail of Liberal economic policy.
Morneau would do better to look again and find a way to help startups get off the ground without handing hundreds of millions of dollars to well-heeled executives at big established companies that don’t need any such subsidy…
But runaway CEO pay highlights the broader and more serious issue of growing inequity in our economy, and all the social ills that come with it.
The Globe and Mail took the opposite position. In its editorial on January 3, 2017 entitled “Are CEOs paid too much? That’s not for Ottawa to decide” the Globe wrote:
The remedy for the excessive pay that sometimes results from these dubious claims should be found in the board room. They should not come from government, as the CCPA argues…
The issue is not that some people are paid more than others. The issue is that CEOs have too much influence over who sits on their companies’ boards. Compensation has consequently become an all-too-cosy arrangement, with the result that CEOs are being paid in generous stock options and share packages worth millions of dollars that make them wealthy even in a bad year.
It’s not a plot to expand income inequality; it’s just poor governance. People who run large corporations with thousands of employees deserve to make a lot of money. It’s important for a number of reasons that their pay align with their performance, obviously.