The Recession and CEO Compensation
Jan 04, 2010
ceo, compensation, ontario, salary
It seems that even a recession of unheralded scope is not enough to quell the rate at which the salaries of Canadian CEOs continue to escalate.
Although the worldwide economic meltdown of the last two years threw nations into chaos, left hundreds of thousands of Canadians out of a job, and plunged governments into overnight fiscal deficits, Canada’s CEOs continued to watch their salaries increase.
A new report by Hugh Mackenzie of the Canadian Centre for Policy Alternatives (CCPA) shows that 2008 was another great year for the highest paid Canadians. In “A Soft Landing: Recession and Canada’s 100 Highest Paid CEOs,” Mackenzie states that the total average compensation for Canada’s highest paid CEOs was $7,352,895 in 2008. This is in stark contrast from the total average Canadian income of $42,305. During one of the worst years in economic history, the average earnings of Canada’s highest paid CEOs were some 174 times greater than Canadians earning an average income.
The latest in the Growing Gap series (www.growinggap.ca), the study illustrates how the incredible increase in CEO salaries is a relatively recent phenomenon. As recently as 1995, the Globe and Mail reported that the average pay of Canada’s top 50 CEOs was $2.66 million, some 85 times the pay of the average Canadian worker. By 2008, the average pay of the highest paid 50 CEOs had skyrocketed to 243 times the pay of the average worker. Between 1998 and 2008, the highest paid 100 CEOs’ average compensation has outpaced inflation by 70 percent.
The balance of the report addresses possible solutions to the problem, from the role of boards of directors and shareholders to a governmental/regulatory approach. It seems that the easiest and most logical solution is to simply tax a portion of the excessive pay package back. Most of CEO pay comes in the form of bonuses. Perhaps these could be targeted first. Whatever the case, the public could surely benefit from increased funding for pubic services that could result from this influx of capital.
The report can be viewed here.
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I realize these CEOs, for the most part, are intelligent people who have worked hard to get where they are, but come on, 243 times what the average Canadian earns! It's hard to believe that someone could achieve such a high level of self-entitlement that they'd actually feel justified in that kind of compensation. If you haven't already, you should check out the list of the highest paid. Warning, it will get you mad. Every CEO from a major bank is there. And just think, when Shaw is nickel and diming you on your next cable/internet bill, their CEO Jim Shaw will pocket more than $8 million this year.
Jeff - 2010-01-11 09:48