Life at the top is something that is difficult to fathom from the bottom. While average Canadians are still struggling with the effects of the global recession, CEOs of Canada’s largest publicly traded companies are far from pinching pennies. According to a recent report by the Canadian Centre for Policy Alternatives (CCPA), Canada’s highest paid CEOs have already made far more this year than most Canadians will make in all of 2011.
In 2009, during the depths of the recession, top CEOs in Canada made an average of $6.6 million; 155 times what the average Canadian made, and 330 times what a minimum-wage “slave” earned. With the top paid exec in Canada pulling in over $24 million, the CCPA report indicates that this gap between the richest and poorest has been widening over the past 20 years.
While these numbers are fairly staggering in and of themselves, the report’s author Hugh MacKenzie believes that the true values CEOs earned is higher, with undeclared values of stock options running the true figures at double those declared. “The public will never know how much these CEOs actually got paid in 2009,” says MacKenzie.
South of the border, the trend is much the same. In 2009, America’s highest paid CEO cashed in over US$84 million, with an average somewhere in the ballpark of US$7million. Just like in Canada, some of these numbers do not include the value of stock options. And this is at a time when the U.S. has seen unemployment rise by over 50 per cent.
The benefit of these undeclared stock options held by CEOs (and any worker who is given stock options as part of a benefits package) is that, should the CEO do their job and increase the value of the company, these options then too increase in value, but their price is locked in to the price of stock at the time the options were given. For most CEOs, this would be the price of stock at the time they started their jobs, so any increase in stock value as a result of them doing their job properly is a two-fold victory on their part: the company is doing well, and as a result their pockets are being nicely lined. Sure, bottom level employees are quite often given stock options as incentives, but a pencil-pusher in accounts receivable is unlikely to hold millions of dollars in options on top of their wage.
The view from the bottom certainly isn’t pretty. While the average Joe or Jane busts their ass full time all year round, CEOs are laughing it up at the top. On top of this, average Canadians are being told to expect an increase in personal income tax in 2011, with the working poor hit hardest.
To add insult to injury, the CCPA published a report late in 2010 that showed that one-third of income growth in Canada since 1990 went to the highest earning one per cent of the population. In other words, not only have Canada’s elite been eating high on the hog, but their meals have been disproportionately super-sized.