A chance to trim bloated paycheques
TheStar.com – Opinion – A chance to trim bloated paycheques
February 06, 2009. Carol Goar
As president of the United States, Barack Obama earns $400,000 (U.S.) a year. That is a fraction of what most corporate executives and Wall Street financiers make.
As Prime Minister of Canada, Stephen Harper earns $310,800 a year. That is a fraction of what most business leaders and Bay Street bankers take home.
There the similarity ends.
Obama is using his moral authority to demand restraint from America’s high-flying bank executives on behalf of the many hard-working citizens who have lost their jobs, their savings and their faith in market forces.
Harper has not said a word about the multi-million-dollar pay packages of Canada’s financial titans.
In fairness, he does not have as strong a rationale as Obama does.
No Canadian bank has jeopardized the economic stability of the nation – let alone the world – with its reckless lending and investment practices.
No Canadian financial institution has needed a government bailout. Ottawa has provided a $200 billion liquidity injection to the financial sector – through loan guarantees and the removal of federally insured mortgages from the banks’ balance sheets – and it may do more, but so far there has been no cost to taxpayers.
And most of Canada’s top bankers have voluntarily reduced or relinquished their bonuses for 2008.
Clearly, an Obama-style tirade about the “shameful” behaviour of Wall Street’s tarnished heroes would be inappropriate.
But with thousands of Canadians losing their jobs, watching their savings shrink and being hammered by market forces, there is a need to talk about sharing the risks and rewards of work.
Is managing a chartered bank a bigger responsibility than leading the country?
Is buying and selling securities more important than saving lives?
Is running a major corporation worth 400 times the average wage?
Is heading an oil company more onerous than leading Canadian troops in Afghanistan?
Is it really a sacrifice when a bank president trims his pay packet from $8.75 million to $3.8 million?
The ideal person to start the conversation would be the Prime Minister. He has a mandate to speak for Canadians. He was elected to put the public interest ahead of private interests. And he has the best podium in the land.
Unfortunately, Harper would have a hard time stepping into this role.
For one thing, he’s been silent on executive compensation up to now. He raised no objection when Canada’s bank presidents were routinely pocketing $10 million a year. It would look odd – and opportunistic – for him to demand corporate restraint now.
Moreover, it would be inconsistent with his ideology and his personal conduct. He has always been a champion of free enterprise. He has no history of standing with people less fortunate than himself.
If a debate on lavish bonuses, stock options and severance payments is to begin in this country, it will be up to shareholders, pension fund managers, public figures with no corporate directorships and citizens’ groups to provide the impetus.
One of the reasons Obama is able to speak with such force and confidence on this issue is that he knows Americans are behind him. He is giving voice to a nation that doesn’t think the rules of the marketplace are fair or reasonable.
What might give Harper – or Liberal Leader Michael Ignatieff – a reason to move is public pressure. If it becomes more costly to defend the status quo than to demand change, politicians find a way to get out in front of the parade.
A recession offers a nation a chance to fix inequities and reduce excesses. Canada’s bankers have taken a welcome step. But the journey has barely begun.