Atlantic Canada’s Best Paid CEO Makes More Than $13-Million A Year
HALIFAX — In 2020, Michael Medline, the president and CEO of Sobeys parent company Empire Co., took home a total of $13,035,685. That made him the 24th best-paid executive in Canada.
The heads of a few other Atlantic Canadian companies joined Medline on the list of the country’s 100 top-paid executives.
Brian Porter, the head of Bank Of Nova Scotia, made $12,221,588 (landing him 28th on the list); Fortis CEO Barry Perry raked in $10,152,658, putting him at 42; Emera’s president and CEO, Scott Balfour, made it to 60th on the list by taking home $7,788,017.
CEOs Make 191 Times More Than Typical Workers
Salaries of the best-paid executives in the country were revealed last week in a new report from the Canadian Centre For Policy Alternatives (CCPA). The report mined data from publicly listed companies and included every method of compensation executives are entitled to: salary, bonuses, stock options, and more.
But the CCPA report reveals much more than the number of zeroes on CEO paychecks.
David Macdonald is a senior economist with the CCPA. He says every year executive compensation in Canada is drifting further from the average workers’ wages.
In the 50s and 60s, CEOs typically made about 20 times as much as their frontline employees. By the 80s, that had shot up to 40 times.
Today, the 100 best-paid Canadian executives make, on average, 191 times more than a typical Canadian worker.
Before lunch hour on the first working day of 2022, January 4, those executives had already racked up the same amount of pay the average worker will make all year.
Execs Get Bonuses Despite Bad Performance
Macdonald argues this year’s report reveals something more important than soaring CEO pay: it shows executives are earning big bucks, and even bigger bonuses, no matter how badly their companies perform.
The Covid-19 pandemic has wreaked havoc on the world economy. Many businesses, including dozens run by the high-paid CEOs on the CCPA’s list, suffered financial losses. Others scooped up big bucks from government relief programs.
However, Macdonald says he was surprised to see average executive compensation still went up— even at companies that took government help or fell into the red during the pandemic.
This happened, he says, because CEOs today typically make about 80 percent of their money from bonuses that are theoretically tied to company performance.
But as Macdonald was digging through company financials for the report, he found many companies simply changed the bonus structure of their pay to eliminate the effects of Covid-19
It meant CEOs of companies that performed badly during the pandemic still brought in very big performance-related bonuses.
“And I think this just shows the insulation of quote-unquote ‘performance pay’ from the actual performance of the company. You can either change the bad performance away by modifying formula or call the government and get them to send you a check,” Macdonald says.
“I think what the pandemic illustrates is that CEO pay is not about merit: it’s about power, or the ability of a corporate class to capture the payment mechanisms to increase their pay and insulate themselves [from bad performance],” he adds.
Focus On CEO Bonuses Warps The Economy
Macdonald says this intense focus on bonus pay for CEOs is probably harming a lot of the companies that practice it — and by extension warping the whole economy.
The more a company pegs an executive’s salary to incentive bonuses, he says, the more likely it is to prioritize short-term stock performance over long-term growth and strength.
Laying off a big portion of your workforce, or doing a heavily leveraged buyout, might temporarily boost stock prices but it will usually imperil the company in the long run.
“Everybody gets paid but the company is worse off as a result… you have a preference for short term increases in the stock value versus long term good management of the company,” Macdonald explains.
The CCPA proposes five measures it says will “bring a greater modicum of fairness to CEO pay.” They are:
- Capping the corporate deductibility at $1 million total compensation per employee;
- Eliminating the capital gains inclusion rate loophole;
- Eliminating the stock option deduction for large companies;
- Implementing higher top marginal tax brackets, and;
- Introducing a wealth tax.
For more details on these solutions, as well as the complete list of Canada’s Top 100 best-paid CEOs, check out the CCPA report here.
Trevor Nichols is the associate editor of Huddle, based in Halifax. Send him your feedback and story ideas: [email protected].