The federal government is being urged to explicitly prevent Canada’s highest-paid CEOs from getting bonuses if their companies obtained wage subsidies.
“The wage subsidy in Canada is being changed on an almost monthly basis to tweak it, to improve it, and one of those tweaks should absolutely be that going forward you cannot receive a wage subsidy and pay out big bonuses to your execs,” said David Macdonald, senior economist at the Canadian Centre for Policy Alternatives.
The comment came as the think tank issued a report Monday that said the country’s 100 highest-paid CEOs made 202 times more than the average working Canadian in 2019.
It believes that Canada should follow other developed countries like Spain and the Netherlands that explicitly prohibit bonuses and dividends if companies receive wage subsidies.
It also wants to exclude companies from substantially increasing executive salaries to prevent them from bypassing restrictions on bonuses.
The CCPA also thinks Ottawa should introduce a top marginal tax bracket to help pay for the large deficit caused by its response to Covid-19.
“These are folks that would have done really well through Covid-19 and I think it’s maybe time to ask them to pay a little higher taxes in order to cover the costs for people who have done really badly through Covid-19.”
A spokeswoman for Finance Minister Chrystia Freeland wouldn’t speculate on what actions the federal government would take.
“The Canada Emergency Wage Subsidy is designed to protect jobs,” said Kat Cuplinskas, adding that funds can only be used for employee remuneration.
The centre’s report said the average amount paid to the country’s top chief executives in 2019 was down from 2018, but still more than 200 times the average worker compensation.
The annual report said the average pay of a top-100 CEO in 2019 was $10.8 million, down from a record high of $11.8 million in 2018.
It noted the decline was largely accounted for by several CEOs receiving extremely high compensation packages in 2018, compared with 2019.
Meanwhile, the average individual income in Canada for 2019 was $53,482, up from $52,061 in 2018.
The ratio of the average top-100 CEO compared with average individual income was 202 to one for 2019 compared with 227 to one in 2018.
The report says that means by 11:17 a.m. on the first workday of the year, the average top-100 CEO made as much money as the average Canadian worker would make all year.
Although Canadian companies won’t start to disclose 2020 compensation until the spring, a strong stock market recovery should mean that half of executives will see the same or higher payouts last year because bonuses account for about 80% of compensation, Macdonald said.
“It looks like about half of these top-100 CEOs will see roughly the same or increased pay and likely half will see decreased pay in 2020 based on the stock prices,” he said in an interview.
“At the very top of the income spectrum, Canada’s highest-paid CEOs and other corporate executives have been sitting out the pandemic atop a golden cushion,” said the report.
Meanwhile, the bottom quarter of workers making under $16 an hour have not fully recovered from jobs or hours lost in April and May.
Jose Cil, CEO of Restaurant Brands International Inc., was the top earner in 2019, receiving nearly $27.5 million in compensation with about $1 million in salary.
He was followed by former Magna CEO Donald Walker at $24.2 million, Barrick Gold Corp. CEO Mark Bristow at $23 million and Bausch Health Companies Inc. CEO Joseph Papa at $22.7 million.