Canada’s highest paid CEOs outstrip average wage earners by 209%

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Pontiac Perspective by Peter Gauthier


Pontiac Perspective by Peter Gauthier

On January 1 of this year, the Canadian Centre for Policy Alternatives released its latest report on executive pay in Canada.  Its findings prove what many suspected – the rich are getting richer and the poor are getting poorer.  Using latest available data (for 2016), the Centre found that average earnings of Canada’s one hundred highest paid CEOs (Chief Executive Officer) was $10.4 million.  This is 209 times the income of the average Canadian worker ($49,738).  Further, this represents an increase of 8 percent over 2015 for the CEOs compared with a pay increase of 0.5% for the average worker.  The rich get richer and the “not rich” get poorer.
But there is more than just salary differentials.  Many of the companies that pay these CEOs have been the loudest in complaining about government legislated increases in minimum wage levels.  Further, the majority of Canada’s largest publicly traded companies record significant deficits in their employee pension plans which spells problems for future retirees of these companies.  However, these same companies managed to pay out four times as much money to shareholders (including bonuses to corporate executives) than the cost of fully funding worker pension plans.
At every Christmas party of these large corporations, the CEO thanks the employees for their work, reassures them that they are the reason for the company’s success, and the employees are the most important asset of the company.  Notwithstanding this reassurance from the CEO, most Canadians would concur that there is something askew with the compensation of CEOs when compared with the average worker.
While the salaries of CEOs get better, the financial situation for the middle classes gets grimmer.  Increases in salaries for the less rich have not kept up with inflation.  And the latest increase in interest rates set by the Bank of Canada means that one-third of all wage earners find themselves facing increased debt loads or serious cuts to their living standards.
A simple solution of increasing taxes paid by CEOs and others earning excessive salaries will not solve the problem.  As the Panama and Paradise papers have shown, the Canadian tax system has many loopholes that ensure those with enough wealth to pay tax consultants can avoid most government taxes.  Even a comprehensive review with modifications to the tax system will not affect the serious imbalance between the rich and the average wage earner.  The public and company shareholders must recognize that the current system can only end in disruption and discord.  Action must be taken to ensure executive pay is truly tied to the company’s performance and contribution to the overall social good.  Executive compensation committees must consider the needs of all the employees, and the place of the company in society now, and in the future when determining executive compensation.