And the Richer Get Richer

This morning, CBC's headline on its online news site was "Canada's top CEOs earn 200 times an average worker's salary" (CBC). It is so easy to, with some righteous anger, vent at the absurdity of someone getting paid 200 times as much as someone else. To attempt to imagine that anyone, working for any company, anywhere deserves that kind of income is to risk some immediate gagging. There will be, amongst some academics and those who write from the perspective of the far left, an immediate warning of doom and gloom, of how the economy cannot support such salaries and of how the working public will rise up and demand a fairer allocation of corporate resources. Such warnings happen every year when some media outlet announce these type of statistics. All too quickly however, the majority of people who bother to read the newspapers will move on to equally important news items such as who the blond hair tweeter from down south has decided to malign next or perhaps equally as important, who is going to win the Super Bowl.

 

On the other side of the discussion, there are those, such as the Fraser Institute who argue that such pronouncements are biased and generally speaking not completely accurate; that it is unfair to compare the salary structure of a few top paid CEOs with ordinary workers; that the majority of CEO and upper management types get paid reasonable salaries and in fact less than some government funded employees such as judges. There is also the argument in true capitalist fashion that people get paid what the market will bear, that there are numerous professionals such as actors and musicians who get paid exorbitant salaries because their services are in demand. So why shouldn't highly skilled, in demand executives get paid not just what they are worth, but what the market with bear?

 

To be clear, the Canadian Centre for Policy Alternative (the authors of the report discussed by the CBC), is a left leaning think tank that is known to be critical of much of the capitalist system and the Fraser Institute speaks from the right side of any discussion. Neither group could be assumed to be completely neutral. Each has a specific hobby horse that they ride at every opportunity. None-the-less when one considers both salary and stock options, there are some bosses who get paid a lot of money. Not only do they receive a healthy (by anyone's standards) annual wage, they also in many cases receive company stock which can be worth far more than the salary. The value of such stock options may increase or decrease depending upon the performance of the company. Some CEOs also are awarded bonuses depending upon how well the company does.

 

There is also, of course, the issue of income tax  and how much the richest people pay. It has been long argued by those critical of the system, that CEOs do not pay their fair share in income tax. It is possible, for example to avoid paying some income tax because of various tax loopholes including the one that taxes stock options at a lower percentage. However, some CEOs do pay tax. According to the Globe and Mail " The chief executive officers of Canada's 60 largest companies paid about $2.5-million each in income tax in 2010 on average total compensation of $6.2-million, according to a new study by compensation consulting firm McDowall Associates." On the other hand, stock options (an important part of the CEOs salary) - get taxed at a lower percentage. They may also have other strategies to avoid paying their full share of income tax such as banking off shore.

 

While I think it is important that society examines how we pay people and for what, I am even more interested in what the CEOs do with their money. The average salary on the top 100 CEO in 2017 was $10.4 million dollars (CBC). Even if they paid the full 44% income tax, that leaves them with over five million dollars a year to spend!! What does one do with that much money? Really - I want to understand what anyone does with five million dollars annually coming into their bank accounts - that is $96,000 dollars every week. I understand that houses are expensive as are private schools for the kids but five million, after taxes seems to me to be more than enough to buy food and pay for hydro. I suppose that flying first class (certainly from a Canadian Airport) is expensive and I would guess that those trips to some exclusive island get-a-way are costly. Minimum wages for the gardeners and the maids (to clean that big house that has more bathrooms than any family needs) would add up a bit as would all of those donations to charity but what else would you do with that money?

 Someone please tell me.