Top CEOs leave 99% in the dust

mentalfloss

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Jun 28, 2010
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Canada's top CEOs leave the 99% 'in their gold dust'
Top 100 earners - including just one woman - made 189 times more than the average Canadian in 2010

Soaring executive compensation is playing a key role in Canada's growing income gap, a new report has found.

By noon on Tuesday, Jan. 3, the highest-paid chief executives officers in Canada will have earned as much as the average Canadian makes in an entire year, according to a new report.

The top 100 Canadian CEOs were paid an average of $8.4 million in 2010, a 27 per cent increase over the previous year, the report published Tuesday by the Canadian Centre for Policy Alternatives says.

In comparison, the average Canadian earned $44,366 that year, or 1.1 per cent more than in 2009, the report called Canada’s CEO Elite 100 notes.

“The conclusion from these data is inescapable,” says the report written by Hugh MacKenzie, an economist with the Ottawa-based non-profit research organization. “Soaring executive salaries have played a significant role in driving the growth in income inequality in Canada.”

Among the country’s highest paid CEOs, taking the top three spots, were executives at Magna International Inc., including founder Frank Stronach at $61.8 million, co-CEO Donald Walker at $16.7 million and former co-CEO Siegfried Wolf at $16.5 million.

The chief executives of the five biggest banks were among the top earners, with Richard Waugh at Bank of Nova Scotia, leading the pack at $13.7 million. He ranked sixth on the overall list.
Jim Balsillie and Mike Lazaridis, co-CEOs at beleaguered Blackberry maker Research in Motion, ranked 78th and 79th earning $5.1 million apiece.

Only one woman made the list. Nancy Southern, who heads Calgary-based Atco Ltd. and Canadian Utilities Ltd., ranked 85th with a total compensation package worth nearly $4.8 million.

Meanwhile, for average Canadians, taking into account inflation, weekly earnings are now lower than they were during the depths of the 2008/09 recession, the report says.

“Canadians are feeling the squeeze of shrinking disposable incomes, a rising cost of living and record-high household debt,” the report says.

Reality is even harsher for Canada’s minimum wage workers. If they were lucky enough to have a full-time job, they earned on average $19,798 in 2010, the report says.

“What the data say loud and clear is that Canada’s CEO Elite 100 have left the rest of us behind in their gold dust. Those with incomes in the stratosphere no longer live in the world occupied by the rest of us. They live on another planet, in a world largely created by them, that few of us would recognize if we stumbled into it,” the report says.

Until recently, income equality was improving. But since 1987, a third of all income gains went to the richest 1 per cent of Canadians, reversing a 30-year trend toward greater equality.

Canada’s highest-paid CEOs now earn 189 times the average wage, up from 105 times in 1998 and 85 times in 1995.

The report blames the cozy club that makes up Canada’s executive ranks. Many chief executives sit on each other’s boards as directors and are involved in determining each other’s pay, the report says.


“You’re on the board because your buddy, the CEO, recommended you. Are you going to say we should cut this guy’s pay in half? No,” Mackenzie said in an interview.

One of the biggest problems with executive pay is the rampant use of stock options as part of the package, the report concludes.

Ninety per cent of the top 100 CEOs have received such options, which allow them to profit from a future rise in the company’s share price under their watch.

Options result in those executives receiving potentially huge future sums, partly at other taxpayers’ expense as options are taxed more favourably than other forms of earned income, the report also notes.

The value of such options had reached $2 billion last year, or $26 million per CEO, the report says. The tax break on such options could amount to $475 million.

The report recommends eliminating the tax break for stock options. Roger Martin, Dean of the University of Toronto’s Rotman School of Management, goes a step further and says stock options should be eliminated altogether as part of executives’ compensation.

Instead, executive pay should be based on real corporate performance, such as profits and sales.

“While these proposals might seem draconian, they are absolutely necessary to save corporations from themselves,” the report says, quoting from an analysis by Martin.

Highest-paid Canadian CEOs got 27 per cent pay hike.


Canada's Top CEOs leave the 99% 'in their gold dust'
 
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wulfie68

Council Member
Mar 29, 2009
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I guess I see this a few ways:

First off, if someone wants to pay a person an exorbitant salary, why should the recipient decline it? Likewise, if a company or group of investors think someone is worth X profit, why shouldn't they have the right to pay top dollar for it? Of course the flipside of this is why do companies insist on paying huge salaries and bonuses to underperforming leaders or teams, as happens all too often.

Now from a peon's perspective, no matter how great my leader's plan may be, it still falls on its face without the underlings to implement it sucessfully, and this is where I have some issues with the compensation levels of top execs vs their employees. In the 90s I worked for a leading energy company in a jr to medium field engineering role, and I always wondered why on years when the rank and file of the company were told "commodity prices are down, our stock price isn't that strong, sorry, minimal or no bonuses/merit raises this year", the CEO, CFO, COO and the host of VPs all took home bonuses and stock options in the 6-7 figure range. Why is it that sharing the pain only goes to a certain level, and usually not to those who are steering the ship?
 

mentalfloss

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Jun 28, 2010
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Why is it that sharing the pain only goes to a certain level, and usually not to those who are steering the ship?

Whats worse, there's no pain to those steering for relieving the pain of those suffering.

A the very least, CEO salaries should be tied to profit.
 

JLM

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Nov 27, 2008
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Canada's top CEOs leave the 99% 'in their gold dust'
Top 100 earners - including just one woman - made 189 times more than the average Canadian in 2010

Soaring executive compensation is playing a key role in Canada's growing income gap, a new report has found.

http://www.thestar.com/business/art...d-canadian-ceos-got-27-per-cent-pay-hike?bn=1

When we get sufficiently concerned, we could stop buying their products! Not sure what the fallout from that could be with probably thousands of employees lining up for E.I.!
 

mentalfloss

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Jun 28, 2010
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When we get sufficiently concerned, we could stop buying their products!

The fact as pointed out by the report is that CEOs maintain their high salaries even when we do stop buying their products. In fact, even if profits dip, CEOs still give themselves raises.

With limited capital, that means those resources are shifted up and increasing the income gap.
 

JLM

Hall of Fame Member
Nov 27, 2008
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I guess I see this a few ways:

First off, if someone wants to pay a person an exorbitant salary, why should the recipient decline it? Likewise, if a company or group of investors think someone is worth X profit, why shouldn't they have the right to pay top dollar for it? Of course the flipside of this is why do companies insist on paying huge salaries and bonuses to underperforming leaders or teams, as happens all too often.

Now from a peon's perspective, no matter how great my leader's plan may be, it still falls on its face without the underlings to implement it sucessfully, and this is where I have some issues with the compensation levels of top execs vs their employees. In the 90s I worked for a leading energy company in a jr to medium field engineering role, and I always wondered why on years when the rank and file of the company were told "commodity prices are down, our stock price isn't that strong, sorry, minimal or no bonuses/merit raises this year", the CEO, CFO, COO and the host of VPs all took home bonuses and stock options in the 6-7 figure range. Why is it that sharing the pain only goes to a certain level, and usually not to those who are steering the ship?

Yep, these honchos are probably making money for the company.
 

JLM

Hall of Fame Member
Nov 27, 2008
75,301
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The fact as pointed out by the report is that CEOs maintain their high salaries even when we do stop buying their products. In fact, even if profits dip, CEOs still give themselves raises.

With limited capital, that means those resources are shifted up and increasing the income gap.

THAT can only continue for awhile! Then the sh*t hits the fan. :lol:
 

mentalfloss

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Jun 28, 2010
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A good CEO can turn a dieing company into a dynamic market force. That's why they get the big bucks.

That doesn't make sense because the big bucks would have to be given toward the company's operations, not the CEO's salary.

THAT can only continue for awhile! Then the sh*t hits the fan. :lol:

Correct.

If government does not intervene to make this game a bit fairer, most CEOs will pull out with their cash and leave the industry and no competitors with enough collateral will risk entry to that industry.

Free market capitalism could possibly fail the economy because there could be fewer competitors, or even none whatsoever. In the latter case, there are no businesses to provide a service. In the former, there may be few consumers because they have no income to pay for goods.
 
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petros

The Central Scrutinizer
Nov 21, 2008
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A good example. Lee Iacocca...went from Ford to Chrysler and pulled it from the abyss of certain failure.
 

mentalfloss

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Jun 28, 2010
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A good example. Lee Iacocca...went from Ford to Chrysler and pulled it from the abyss of certain failure.

Of course, he had the collateral, but he's just one guy that had an idea that worked.

The fewer people who have collateral, the fewer opportunities for those ideas to be put to market.
 

taxslave

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Nov 25, 2008
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If you want in on all that money go get yourself a job as CEO. Your constant complaining of what someone else makes strikes me as a bad case of Penis Envy.
 

mentalfloss

Prickly Curmudgeon Smiter
Jun 28, 2010
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If you want in on all that money go get yourself a job as CEO.

The article refers to a report about the widening income gap (which has systemic consequences). There is no mention that any one person would like to have the same pay as a CEO.

Your constant complaining of what someone else makes strikes me as a bad case of Penis Envy.

There is also no mention of genital repercussions stated in the article.
 

captain morgan

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Mar 28, 2009
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The fact as pointed out by the report is that CEOs maintain their high salaries even when we do stop buying their products. In fact, even if profits dip, CEOs still give themselves raises.

With limited capital, that means those resources are shifted up and increasing the income gap.

Any reference to equality suggests that all personnel contribute to the company's success equally.

This is simply a fallacy

If you want in on all that money go get yourself a job as CEO. Your constant complaining of what someone else makes strikes me as a bad case of Penis Envy.

This is exactly what it is....
 

coldstream

on dbl secret probation
Oct 19, 2005
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There is a solution for this.. and its one that is proven in the last period of sustained, equitably shared prosperity in the nation's history. And that is PROGRESSIVE TAXATION.. at a rate of say, 75% for incomes above say $1 million. And more important than that is what is to be taxed.. and that is CAPITAL GAINS, excepting only primary residence, at the FULL Marginal Rate.

That means you will have to establish adequate controls against the flight of income to foreign tax havens. Which means that the scourge of the productive economy, monetarism, will have to be rescinded as well.

Income polarization has become a major debilitating force in our society and the most effective way to address it, and protect society as a whole, is to re-institute true progressive taxation
 

JLM

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There is a solution for this.. and its one that is proven in the last period of sustained, equitably shared prosperity in the nation's history. And that is PROGRESSIVE TAXATION.. at a rate of say, 75% for incomes above say $1 million. And more important than that is what is to be taxed.. and that is CAPITAL GAINS, excepting only primary residence, at the FULL Marginal Rate.​



That means you will have to establish adequate controls against the flight of income to foreign tax havens. Which means that the scourge of the productive economy, monetarism, will have to be rescinded as well.​




Income polarization has become a major debilitating force in our society and the most effective way to address it, and protect society as a whole, is to re-institute true progressive taxation​

Obviously a person earning $million already pays more than his share of tax. So you are in favour of doing a double whammy on him by increasing the rate as well? :roll:
 

captain morgan

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Mar 28, 2009
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Obviously a person earning $million already pays more than his share of tax. So you are in favour of doing a double whammy on him by increasing the rate as well? :roll:

That was the basic reaction of what happened in the UK when they instituted a program of wealth confiscation... Many individuals/corporations simply moved out of the UK (or their operations) to jurisdictions that had more favorable tax systems - they still sell their products to Britain, they just don't have the HQ or manufacturing located there.
 

mentalfloss

Prickly Curmudgeon Smiter
Jun 28, 2010
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Any reference to equality suggests that all personnel contribute to the company's success equally.

This is simply a fallacy.

Aside from the fact that there is no reference to equal salary, there is also no assumption that all personnel contribute equally to a company's success.