Social Policy in Ontario

Riches for top CEOs come at a cost to everyone else

Posted on January 7, 2022 in Debates

Source: TheStar.com — Authors: Star Editorial Board

TheStar.com – Opinion/Editorial
Jan. 6, 2022.   By Star Editorial Board

‘It’s hard to reconcile a world in which Ontario nurses putting their lives on the line daily are limited to pay raises of one per cent a year while executives haul it home in truckloads.’

The upside of the perennial big pay days for Canada’s most richly compensated executives is that it provides recurring opportunities for economist David Macdonald to perfect his work.

Macdonald’s report for the Canadian Centre for Policy Alternatives in August last year – which outlined how dozens of CEOs had bonus provisions tweaked to ensure they took home more money in 2020 even in the face of so-called salary cuts – was titled “Boundless Bonuses.”

Very nice. But no match for Macdonald’s latest report, released this week. This one is called “Another Year in Paradise.” Which it certainly seems to have been for the country’s corporate elite.

Macdonald reports that Canada’s 100 highest paid CEOs had their second-best year ever in 2020, even as COVID-19 tossed the country into the worse economic downturn since the Great Depression.

The best-paid CEOs at publicly traded companies earned an average of $10.9 million, he said, up almost $100,000 from 2019.

Macdonald’s report seems to puncture the myth of merit as the explanation for such compensation.

“One of the issues we’ve seen with income inequality is that when the economy does poorly, it’s often just the low-wage workers that suffer,” he said. “It’s not the CEOs that suffer, and that was really highlighted by the pandemic and the data for 2020.”

The report also shreds the notion of private-sector antipathy to government spending.

Thirty of the best-paid 100 CEOs in 2020 worked at companies that received government support through such programs as the Canada Emergency Wage Subsidy.

“Many of these companies probably didn’t need the (CEWS) but if there’s federal money available, they are going to apply and they were going to take it,” he said. “That was not what this program was meant for.”

His report adds: “Some companies with the highest paid CEOs in Canada continued to pay their CEOs extraordinary amounts while receiving the CEWS.”

By year end, the federal government had paid out almost $100 billion under the program, intended to minimize job losses as COVID restrictions and lockdowns were imposed.

Just because it’s easy to mock executives for their Gordon Gecko-like ethos that “greed is good,” it doesn’t mean one shouldn’t.

After all, it’s hard to reconcile a world in which Ontario nurses putting their lives on the line daily are limited to pay raises of one per cent a year while executives haul it home in truckloads.

Macdonald’s report contains many of the sort of details that make average citizens howl.

Before noon on the first working day of the year, Canada’s 100 highest-paid CEOs made what it will likely take the average wage earner all of 2022 to earn.

The top-paid CEOs made 191 times more than the average worker.

There were more men named Michael (five) in the top 100 than there were women (four).

Macdonald says the federal government should review rules on how much executive compensation companies can deduct (the United States already caps it at $1 million per employee), capital gains and stock options, as well as instituting a wealth tax for the richest Canadians.

“Higher taxation levels can reduce inequality and help to refill government coffers following the impact of the pandemic,” the report says.

In the meantime, the government might want to have auditors investigate any misuse of federal subsidies.

All in all, “Another Year in Paradise” nicely illustrates the sentiment expressed this week by federal cabinet minister Marc Miller on another matter.

There’s plenty of shame to go around.

https://www.thestar.com/opinion/editorials/2022/01/06/riches-for-top-ceos-come-at-a-cost-to-everyone-else.html

Tags: economy, featured, ideology, standard of living, tax

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