OTTAWA – Canada’s 100 highest-paid CEOs had their second best year in 2020, even though the COVID-19 pandemic has left the country in the worst economic slowdown since the Great Depression.
“While the pandemic has been a very bad year for most Canadians, particularly on the unemployment front, it has actually not been that bad for Canada’s richest CEOs,” said David MacDonald, chief economist at the Center for Canadian Policy Alternatives.
MacDonald wrote a report released Tuesday examining how much the top 100 CEOs of the 100 largest publicly traded companies had made in 2020. By Tuesday afternoon, according to the report, the average CEO of these companies had already had what the average Canadian worker would win. All year round.
In 2020, as many Canadians cut their hours or lost their jobs entirely during frequent shutdowns and shutdowns, these highest-paid CEOs earned an average of $10.9 million.
That was down from the 2018 record of $11.8 million, but an increase of $95,000 compared to 2019.
MacDonald said the CEOs with the second highest salary on record was a “great achievement” given that the pandemic was affecting many of the companies they run.
More than 82 percent of the average salary came from bonuses that include cash or stock options, which MacDonald said companies have creatively accounted for to ensure poor performance during the pandemic hasn’t affected CEO pay.
“It only happens in bad times,” MacDonald said. When things go wrong for the company, CEOs are often protected. When things are going well for the company, the sky has no limits.”
MacDonald said CEOs often justify their bonuses by claiming that they are compensation for being exceptional in their jobs, but he said that half of the CEOs who received bonuses in 2020 worked for companies that received government assistance, such as emergency payroll support in Canada, or They were rewarded. Just because of the tuning bonus formula.
“I think it really illustrates the bankruptcy of the idea that this is somehow based on merit,” he said.
The highest-paid CEOs earned 191 times more than the average worker in 2020, up from 202 times in 2019, and the lowest gap between CEOs and average workers in six years.
It’s not, MacDonald said, because ordinary workers get a bonus. Instead, so many low-wage workers were laid off for part of the year that their wages were lost completely with the numbers averaging.
The report makes several recommendations for addressing executive overpayments through a review of tax systems, including how to handle capital gains and stock options.
MacDonald also recommends that the federal government create a wealth tax for wealthy Canadians, as the large gap between average earnings of Canadians and the highest-paid CEOs will widen over time.
“When we think about how to structure taxes, so that they are based on what people can pay, a wealth tax makes more sense,” he said.
NDP leader Jagmeet Singh campaigned last fall promising a 1% wealth tax for anyone with more than $10 million and a 35% income tax, more than $210,000.
In their first year in office, the Liberals raised the tax rate from 29 percent to 33 percent for people earning more than $200,000. Due to inflation, the top tax bracket now starts at $216,511.
Finance Minister Chrystia Freeland has now been tasked with setting a minimum tax base of 15 percent for high-income earners, which will include trying to prevent wealthier Canadians from reducing the tax burden through various loopholes in tax planning.
He was also told in his authorization letter to fund the Canada Revenue Agency to combat tax evasion and increase corporate income tax for banks and insurance companies that generate more than $1 billion.
Freeland spokesman Adrian Fochas said in a statement Tuesday that the government is “continuously focused” on tackling income inequality in Canada by introducing higher personal income taxes for the richest Canadians, taxing multinational digital giants and limiting option discounts. .
NDP financial critic Daniel Blake said in a statement that the Liberals failed Canadians every day because they failed to persuade workers to pay their fair share, such as closing tax loopholes and tax havens.
The Conservative Party did not immediately respond to a request for comment.
This report was first published by The Canadian Press on January 4, 2022.