While Canada continues to trudge slowly out of its economic recession, top-paid corporate executives are raking in the benefits as the country's average workers struggle, a new study published Thursday by the Canadian Center for Policy Alternatives has found.
The study, Glory Days: CEO Pay in Canada Soaring to Pre-Recession Highs (pdf), analyzed the 2013 earnings of executives of the country's 240 publicly listed corporations, and found that their average compensation that year was $9.2 million—almost as high as their $10 million average salary in pre-recession 2007.
As the study notes, it is also 195 times more than the average Canadian citizen earns in a year and 237 times more than the average Canadian woman.
As the study's author Hugh Mackenzie discovered, the country's top 100 CEOs took home $47,358—an average citizen's yearly salary—in less than half a day.
"[B]y 11:41 a.m. on January 2, 2013—the second paid day and first working day of the year—the average top CEO had earned as much money as the average Canadian worker would make all year," the study states.
And that trend has extended into the new year. "By 11:41 a.m. today, just as most Canadians are getting ready for their lunch break on the first official work day of the year, the average of the 100 highest paid CEOs will have already pocketed what it takes the average Canadian an entire year, working full-time to earn," Mackenzie said on Thursday.
What's more, the total compensation of those executives, which amounts to $921 million, surpasses the reported government budgetary deficits for that same year in every province in Canada, apart from Ontario and Quebec.
But CEO compensation benefits extend beyond salary:
As high as executive pay is today, the published compensation data don’t present the complete picture. A significant proportion of each CEO’s reported pay is an estimate of the value of stock options granted during the year; a conservative estimate that does not capture the additional benefit in the favourable income tax treatment of options. Almost half of the 100 highest paid CEOs also have stratospheric pensions waiting for them when they retire. And most also profit handsomely from the dividends paid on the shares they own in the companies they work for.
The highest individual salary recorded in the study belongs to Gerald W. Schwartz, CEO of investment firm Onex Corporation. He took home more than $87.9 million. Russell Girling, head of TransCanada, received $8.7 million. And Richard E. Waugh, CEO of the Bank of Nova Scotia, got more than $11.2 million for a partial year.
The study comes as outrage over executive compensation continues to grow in the U.S. and Canada, with numerous reports published in the past year highlighting the massive wealth gaps that persist in the face of so-called "economic recoveries."
The answer to these problems, Mackenzie says, cannot be found in board rooms.
"It is increasingly clear that shareholders, working through their corporate board of directors, are having a limited impact on decisions related to corporate compensation," Mackenzie writes. "There are good reasons why this type of voluntary restraint cannot adequately address the problem of runaway CEO pay."
The most likely solution is by raising taxes on corporate salaries and limiting what companies can deduct for tax purposes, Mackenzie concludes. "Canada would benefit from closing the tax loophole that allows executives to pay half the income tax rate on proceeds from cashing in stock options by claiming that revenue as capital gains,” he said Thursday. "The stock options held by the highest paid 100 CEOs in 2013 represent a tax break worth more than half a billion dollars."
The report concludes, "If we, as a society, have concluded that excessive pay is unacceptable, we should be able to claw back a greater portion of it."