As of Jan. 3, top CEOs earn more than average Canadian for all of 2017

CCPA report cites explosion in the compensation of senior execs in Canada, US.

Top earning CEOs have a strong opening to 2017.

TORONTO — By noon Jan. 3, Canada’s highest-paid CEOs will earn more than the average working person’s income for all of 2017.

That’s the conclusion of the Canadian Centre for Policy Alternatives, an Ottawa-based think-tank that has tracked CEO compensation in this country for a decade.

It says this year’s elite group of chief executive officers will earn the average, full-time Canadian wage by 11:47 a.m. on Jan. 3 – the second working day of 2017.

Last year, it would have taken about half an hour longer – until 12:18 p.m. on the second working day of 2016.

Hugh Mackenzie, a Toronto-based independent economist who wrote the Policy Alternatives report, says the clock analogy is a powerful way to illustrate a widening gap between what top executives get paid and what average Canadian workers earn.

“There’s clearly been an explosion in the compensation of senior executives in Canada and the United States. And that serves as a very potent symbol, I think, of the growth of income inequality,” Mackenzie said in an interview.

This year’s report, based on information released by Canadian publicly traded companies in 2016, estimates the average compensation of the Top 100 chief executives was $9.5 million in 2015 – 193 times the average annual industrial wage.

That’s up from $8.96 million in 2014 – 184 times the average annual industrial wage that year.

Mackenzie says the problem lies with the way CEOs earn this money – often with stock grants and stock options that can lead executives to make decisions that reward them in the short term rather than the company or public at large.

He suggests Ottawa should level the playing field by ending a tax break for proceeds from stock options

“The proceeds of stock options in Canada are taxed at half the rate of ordinary income,” Mackenzie says.

“The (Trudeau) government actually promised to get rid of that but then backed down in the face of opposition from the business community.”

“One of the things that I’m going to be watching with some interest is what the government does in its next budget with respect to that campaign commitment.”

Mackenzie says the trend to higher CEO compensation has been pretty consistent over the years – regardless of the broader economic downturns or shareholder attempts to get more say on executive pay.

But he admits there always seems to be at least one or two individual CEOs each year who are far ahead of the others, possibly distorting the overall averages in the Top 100.

Most of the year-over-year increase in the Policy Options report was due to just one person – Michael Pearson, formerly CEO of Valeant Pharmaceuticals – who vaulted to No. 1 with $182.9 million of compensation in 2015 from No. 15 at just under $11.35 million in 2014.

Pearson’s rise was due mostly to $179.4 million of share compensation in 2015 – a year when Laval, Que.-based Valeant was at times Canada’s most valuable company with a stock above $300 per share for a two-month stretch in the summer.

Since then, Valeant has lost more than 90% of its market value following a series of problems – including US investigations into price hikes for some of its drugs – that emerged before Pearson departed in early 2016.

Click here to download the report.

News from © Canadian Press Enterprises Inc. 2016
2 Comments » for As of Jan. 3, top CEOs earn more than average Canadian for all of 2017
  1. John Smith says:

    I agree that compensation should be altered so’s to discourage short term thinking, but as far as actual CEO pay, I don’t care. The truth is that, typically, when you take half the CEOs pay for example, and divide by the number of staff, it’s a pittance. So the whole notion that paying CEOs less will make the rest of us better off is false and misleading. Try it, search say, Gen Electric CEO pay, take off half, and divide by the number of staff worldwide. It’s like $40 a year per person! And it’s important to remember that it’s stock options. It’s not like they can cash it in! It would cause a run on the company. It’s paper money. Monopoly money.

  2. Randy says:

    Under successive Liberal government stewardship CEOs have been receiving healthy corporate welfare. CBC is a prime example of utter mismanagement yet somehow the top rungs are receiving huge bonuses and salaries. And yet they don’t compete on any level for the company to survive. Bombardier received a $1billion dollar gift from the Quebec Liberals and then laid off over 700 employees. Under Trudeau they will receive another billion dollars and an undetermined number of Canadians will again loose their jobs all while the CEOs continue to take huge bonuses and salaries thanks to the Canadian tax payers. Yep the Trudeau government is working for the middle class. No jobs being created just huge multi billion dollar debts. Corporate Canada’s CEOs don’t need to work as long as we have a Liberal cartel willing to enrich the entitlements of the elites.

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