Wednesday, January 06, 2010

If you think you've had it bad the last year-you're probably right, but not if you are a member of Canada's management elite. According to a report from the Canadian Centre for Policy Alternatives this country's top ten CEOs had an average income of $7,352,895 in 2008, shortly before the recession began to "bite hard". This was 174 times the average Canadian wage. To put this in further perspective, from 1998 to 2008 the average Canadian wage packet dropped 6% when adjusted for inflation. During the same period the average compensation for top CEOs increased !!! by 70% !!!!. The Globe and Mail weighed in today with an editorial on this report. Not denying the facts of the study, as per usual, because they are pretty rock solid. What the Globe opined is that nobody should pay attention to the difference between the average wage and that of top CEOs, nor to the difference in increase versus decrease. According to the Globe the only matter of concern is that the average wage is declining, and it is all fine and good that corporate executives increase their income.

Well finagled I must say. A few little problems are, however, contained in this little excuse. one is that there just might be a connection between the two arms of this lever. It is entirely possible that corporate executive plunder is inversely correlated with employee compensation, and not just because this sort of thing is a zero sum game where money given to one class is unavailable to another. It is also more than likely that one of the things that corporate executives are rewarded for is their ability to "reduce labour costs and increase productivity". In plain language this means quite deliberately reducing the income of their employees. Quite deliberately. It is also a certain fact that this excessive executive compensation is in another zero sum game where the upper levels of management (and lower ones too to a lesser degree) bleed corporate entities at the expense of the stockholders. In a managerial society such as ours the term "stockholders" means, more often than not pension and other mutual funds held in dispersed ownership by the same employees whose wages are being reduced.

Then there is, of course, simple justice. Nobody in his right mind would try and claim that corporate executives work 174 times as long as the average Canadian does. Neither can one claim that their jobs are 174 times as disagreeable as the average job. Then we come to value. No doubt the value produced by a corporate executive may sometimes be high. Can it be, however, 174 times as valuable as that of the work of people such as nurses, firefighters, ambulance drivers, farmers, miners and to put it bluntly pretty well everyone else ? Think about it for awhile.

The following article from the National Union of Public and General Employees (NUPGE) gives a general summary of the report in question.

Canadian corporate CEOs average $7,352,895 each:
New CCPA study says top 100 Canadian CEOs pocketed 174 times each what average Canadian workers earn all year.

Ottawa (5 Jan. 2010) - Canada's highest-paid CEOs raked in an average of $7,352,895 in 2008, the latest year for which statistics are available. That's 174 times more than the average wage of the typical Canadian worker.

"To put that in perspective, Canadians will work full-time throughout the year to earn the national average of $42,305," says Hugh Mackenzie of the Canadian Centre for Policy Alternatives (CCPA), which has just released a new report on the subject.

Yet as of 1:01 p.m. on their first working day of this year (Jan. 4) the top 100 CEOs in the country had already pocketed as much as the average Canadian worker will in all of 2010.
The CCPA study says average compensation for the top CEOs has outpaced inflation by 70% between 1998 and 2008. During the same period, Canadians earning the average income lost 6% to inflation.
Here are the top 10 hogs at the corporate trough:
Thomas Glocer, Thomson Reuters Corp. - $36,595,233.
Ted Rogers, Rogers Communications Inc. - $21,484,708.
J. M. Lipton, Nova Chemicals Corp. - $19,753,245.
George Cope, BCE Inc. - $19,551,345.
Robert Brown, CAE Inc. FY end March 08 - $17,293,144.
William Doyle, Potash Corp. of Saskatchewan - $17,026,317.
Hunter Harrison, Canadian National Railway Co. - $13,350,048.
Dominic D’Alessandro, Manulife Financial Corp. - $13,251,274.
Stephen Wetmore, Bell Aliant Regional Com. Income Fund - $11,563,250.
For the entire 100 names please go to the link below and read as much as you can stand. Caution: Not for those with weak stomachs.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE
More information:Full Report: A Soft Landing - Recession and Canada's 100 Highest Paid CEOs
I've tried the link to the publication by the CCPA in the report above, and it doesn't seem to work. Here is A LINK that does work, at least for Molly. The report is actually a great report, and it deserves far more publicity than it has been given in the mainstream press. As to the "why" of the astronomical executive compensation, much of the standard justification has been dealt with in my introduction to this post. The real "why" is a totally different matter.

Where I have to part company with the CCPA is not in what they have reported. It's obviously true. Neither, unlike the Globe and Mail, do I disagree with them that this sort of inequality is a "bad thing" and totally unjustified. I do, however, have to disagree about the realism of the remedy that they, as good left wing social democrats, have proposed. The simplistic way of summed up their solution (see the report) is "tax the bastards heavily". I wish them well in this enterprise, though it makes me a bit queasy knowing that social democrats rarely find a tax that they cannot love. The CCPA is under the impression that they can find a realistic way to tax such things as "stock options" (whereby management steals from the shareholders- as I said above usually ordinary citizens with dispersed portfolios). Maybe yes. Maybe no. What they will be unable to do , however, is find some magical formula in the byzantine tax regulations that will prevent upper management from switching their compensation to non-taxable benefits. That's the way that tax law has operated in the past, and that probably the way that it will operate in the future despite the best laid schemes of social democrats.

For what it is worth Molly has her own proposals that can be summed up in the brief bon mot of "abolish management". No doubt there will be tax law changes in such a process-mostly involving exceptions for ordinary people rather than attempts to penalize the ruling class. The main steps, however, depend more upon the easing of the legal burden of the state that prevents actual democratization of the workplace. It does not depend upon the failed illusion (demonstrated by the failure of over a century of attempts to build a more egalitarian society by taxation policy that the ruling class evades) of government largess rather than citizen action. That's why I am an anarchist, what I consider a "realistic socialist" and not a left social democrat.

Just in closing, here is the press release of the CCPA about their report, something that will probably never be quoted in anything but brief excerpts in the mainstream press.
Soft landing for Canada’s CEOs:
January 4, 2010
TORONTO—Canadians may have been hit hard by a worldwide economic recession, but it appears Canada’s 100 highest paid CEOs are enjoying a soft landing.

A report on executive compensation by the Canadian Centre for Policy Alternatives (CCPA), a progressive think tank, reveals Canada’s 100 highest paid CEOs pocketed an average $7.3 million in 2008, the year recession broadsided the nation.

“Canada’s top 100 CEOs earned 174 times more than the average Canadian wage,” says economist Hugh Mackenzie, CCPA Research Associate.

“To put that in perspective, Canadians will work full-time throughout the year to earn the national average of $42,305. The top 100 CEOs pocket that amount by 1:01 p.m. on January 4 – the first working day of the year.”

Soft Landing: Recession and Canada’s 100 Highest Paid CEOs shows executive compensation remains as resilient to worldwide economic forces as ever.

“Between 1998 and 2008, Canada’s top 100 CEOs’ average compensation outpaced inflation by 70 per cent,” says Mackenzie. “In contrast, Canadians earning the average income lost six per cent to inflation over that period.”
Soft Landing: Recession and Canada’s 100 Highest Paid CEOs is available at
For more information please contact: Kerri-Anne Finn, CCPA Senior Communications Officer, at 613-563-1341 x306.
Related Reports & Studies
A Soft Landing
Recession and Canada’s 100 Highest Paid CEOs
Canadians may have been hit hard by a worldwide economic recession, but it appears Canada’s 100 highest paid CEOs are enjoying a soft landing. The total average compensation for Canada's 100 highest paid CEOs was $7,352,895 in 2008—a stark contrast from the total average Canadian income of $42,305. They pocketed what takes Canadians earning an average income an entire year to make by 1:01 pm January 4—the first working day of the year. During the worst of economic years, the...January 4, 2010 National Office
Read the full Report

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