While many workers saw their incomes devastated by the pandemic, Canadian CEOs enjoyed healthier paychecks in 2020, according to a new report from the Canadian Centre for Policy Alternatives (CCPA).
Executive pay was up 17% — an average of $171,000 per top executive — in 2020 compared to 2019, largely attributable to alterations in bonus pay structure, the report said.
“We found many executive officers in Canada actively benefited from the pandemic — either because their companies were on the right side of Covid-19 and made a profit from it or because their bonus formulas were changed,” it said.
Further, more than half (52%) of the executives who agreed to take salary cuts due to Covid-19 saw their total pay increase in 2020 anyway, thanks to bonuses.
In contrast, half of all low-wage workers (those making $17 an hour or less) lost their jobs or the majority of their hours in April and May 2020, the report said. As of June 2021, these workers still hadn’t fully recovered, it said.
Using filings from 209 publicly traded companies on the S&P/TSX composite index, the CCPA found that 49 companies changed their compensation rules to boost executive bonuses, even if their companies underperformed due to the pandemic.
The increases were largely due to bonuses given for persevering through the pandemic or for good stock market performance, or that were increased following changes to the way they were calculated.
Some companies simulated a non-pandemic 2020 based on past years’ trajectories, the report said, and awarded bonuses based on the simulated results rather than actual 2020 performance. Others awarded direct Covid-19 bonuses in the form of cash, stock or stock option awards directly tied to the pandemic.
The CEO of CI Financial Corp., for example, received a cash bonus based in part on mitigating the impact of Covid-19, according to the company’s proxy circular, excerpted in the report.
Twenty-four companies modified the formulas used to determine bonuses, such as weightings or scores within performance evaluations. These included Laurentian Bank, Power Corp. and RioCan REIT.
Finally, four companies modified the time frame or financial measures used to calculate the bonuses.
The report noted that a few companies changed their bonus calculations so as to cancel or reduce their bonuses.
For example, “The CEO of Agnico Eagle Mines Ltd. committed to a reduction in his short-term bonus, and Air Canada notoriously agreed to return its ‘Pandemic Mitigation Bonuses’ after widespread public outcry, given the federal loan support it had just received,” the report said.
However, in regards to Air Canada, the amount returned by the CEO and executive vice-presidents was only 15% of the executive bonus package for 2020, according to the report.
Earlier this year, the federal government was urged to prevent Canada’s highest paid CEOs from receiving bonuses if their companies obtained wage subsidies.