New study indicates that CEOs in Canada made out like bandits over the past five years. How did you fare?
The Canadian Centre for Policy Alternatives released Glory Days: CEO Pay in Canada soaring to Pre-Recession Highs
on New Year’s Day. Authored by CCPA economist Hugh Mackenzie, the report paints a pretty sweet earnings picture for the 240 CEOs of publicly traded companies.
According to data culled from the proxy circulars of the 240 companies, the average CEO received total compensation in 2013 of $9.2 million, 25 percent more than in 2008. Not the highest average on record but still very healthy. The report points out that the average CEO makes as much by the morning of the second day of the year as the average Canadian does for an entire year.
It’s not all bad news, however, for the average Joe; Statistics Canada says the industrial composite average weekly wage increased by 12 percent in the same five-year period, the first time in over 30 years that the average Canadian made some headway when it comes to pay.
But that still doesn’t change the income inequality story.
Comparing 15 years of data between 1998 and 2013, the average CEO’s pay, when adjusted for inflation, increased by 98 percent. Meanwhile, average Joe’s pay increased by just 7%.
Worse still, there are 43 CEO’s in the group of 240 that have defined benefit pension plans. Those CEO’s will each receive $1.4 million annually as part of their pension benefit at age 65 and beyond. How many of your clients will do that well in retirement?
The CCPA recommends two ideas to stem the tide on excessive pay.
First, limit how much corporations can deduct of the CEO’s pay. They’ve done that in the U.S. where a maximum of $2 million in non-performance related salaries are deductible. Unfortunately, companies got around that IRS rule by making a majority of CEO compensation performance-related through stock options and grants, which made the problem even worse. The second idea is to make the profits from stock options and grants taxable as regular income rather than capital gains. In 2013 the top 100 CEO’s benefited from the capital gains treatment to the tune of more than $500 million.
CEO’s have done well since the recession while average Canadians have done okay. Not great mind you but at least incomes are moving in the right direction.
How have advisor revenues fared in the five years since 2008? That’s something WP would really like to know. Feel free to share your percentage growth since 2008 in the comments section below.
Regardless how you feel about CEO pay, the report is a very interesting read. Click here
to download it.