(Ottawa) Canada’s 100 highest-paid CEOs had their second best year in 2020, even as the COVID-19 pandemic forced the country into its worst economic downturn since the Great Depression.
“Even though the pandemic has been a pretty bad year for most Canadians, especially on the unemployment front, it hasn’t really been that bad for Canada’s richest CEOs,” said David Macdonald, economist. principal at the Canadian Center for Policy Alternatives.
Mr. Macdonald is the author of a report released Tuesday examining how much money the top 100 top-paid bosses of listed companies made in 2020. According to the report, as of noon Tuesday, the chief executive officer The average management of these companies would have already earned what the average Canadian worker will earn throughout 2022.
In 2020, as many Canadians saw hours cut or lost their jobs altogether during repeated lockdowns and forced shutdowns, the 100 highest-paid bosses of publicly listed companies earned an average of $ 10.9 million. .
This is down from 2018’s record 11.8 million, but an increase of $ 95,000 from 2019.
Macdonald said it was “quite a feat” for top bosses to have the second highest wages on record, given that the pandemic has been quite damaging to many of the companies they run.
Over 82% of average compensation came from bonuses, particularly in cash or stock options. According to Macdonald, companies had to use creativity in their calculations to ensure that poor performance during the pandemic did not affect the pay of their bosses.
“It only happens in bad times,” said Macdonald. “When the going gets tough for the business, CEOs are protected in a lot of cases. When things are going well for the business, there is no limit. ”
Mr Macdonald said CEOs often justify their bonuses by claiming that they are only paid because they are exceptional at their job, but he pointed out that half of the bosses who got bonuses in 2020 worked in companies that received government assistance such as the Canada Emergency Wage Subsidy, or received their bonus only because of an adjustment to the bonus formula.
“I think that really illustrates the bankruptcy of the idea that it is somehow based on merit,” he said.
The gap between bosses and average workers
The highest paid CEOs earned 191 times more than the average worker in 2020, which was down from the 202 multiplier for 2019. It is also the smallest gap in six years.
However, this narrowing of the gap was not attributable to wage increases for workers. In fact, explained Mr. Macdonald, if the average earnings of workers climbed in 2020, it was more because several of the lowest-paid workers were laid off, which excluded them from the picture when calculating medium.
The report makes several recommendations to tackle excessive executive compensation through a review of tax systems, including how capital gains and stock options are treated.
Mr. Macdonald also recommends that the federal government create a wealth tax for the wealthiest Canadians, since the large gap between the average income of Canadians and the highest paid CEOs is expected to widen further over time. .
“When we think about how we should structure taxation, so that it is based on what people can pay, then a wealth tax makes a lot more sense,” he said.
New Democratic Party (NDP) Leader Jagmeet Singh campaigned last fall promising to create a 1% wealth tax for anyone with net worth over $ 10million and enact a tax 35% on income over $ 210,000.
The Liberals have increased the tax rate from 29% to 33% for people earning over $ 200,000 in their first year in office. Due to inflation, the top tax bracket now starts at $ 216,511.
Finance Minister Chrystia Freeland has now been tasked with establishing a 15% minimum tax rule for wealthy Canadians, which would include an attempt to prevent them from reducing their tax burden through various tax planning loopholes .
He was also asked to invest in the Canada Revenue Agency to fight tax evasion and increase corporate income tax for banks and insurance companies that earn more than a billion dollars.
This article has been produced with the financial support of the Facebook Stock Exchanges and The Canadian Press for News.