Each year, the Canadian Centre for Policy Alternatives releases a report criticizing what it argues are “exorbitantly high” levels of executive compensation, drawing attention to income inequality across the country.
The hook to this year’s edition is that Canada’s highest-paid CEOs earned more before lunchtime on the first working day of 2017 than the average Canadian will make all year.
The disparity in Ottawa, however, is less extreme.
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To borrow the CCPA’s measurement, the top executives at publicly traded companies headquartered in the nation’s capital will have to work almost to happy hour at the end of next week before they earn the annual average salary of $53,612 for an Ottawa resident.
According to data published in OBJ’s Book of Lists, the top 25 executives in Ottawa earned an average of $1.59 million in their most recent fiscal year. (For simplicity’s sake, we’ve used today’s exchange rate for those businesspeople who are paid in U.S. dollars.)
The list is topped for the second straight year by Mitel CEO Rich McBee, who earned US$4.83 million in salary and other forms of compensation in 2015. He’s followed by Kinaxis CEO John Sicard, who took home US$3.35 million.
(The full list, in case you’re interested in reading more, can be found on pages 78-79 and contains salary information on 104 Ottawa-based executives).
Hugh Mackenzie, a Toronto-based independent economist who wrote the CCPA report, says the problem lies with the way CEOs earn their money, often with stock grants and stock options that can lead executives to make decisions that reward them in the short term rather than the company or public at large.
However, that criticism doesn’t hold weight in many corners of Ottawa.
Kinaxis, among others, says that no part of its executive compensation program is directly correlated to the company’s share price. In theory, this reduces the incentive for managers to chase quarterly earnings at the expense of long-term objectives.
Elsewhere, there are signs that corporate pay packages are aligned with the health of the company and wider industry.
Mining firm Orezone said it was reducing the salaries of two of its top executives by roughly 40 percent “until market conditions improve.” Similarly, struggling telecom company Dragonwave said last year that it was cutting the base salaries of its executives due to “financial constraints.”
The inequality criticism is harder to counter. While some executives took a pay cut last year, this group of already well-paid businesspeople arguably had a better year financially than most residents.
While this raises fresh questions about the concentration of wealth among some of the city’s top income earners, other figures suggest this issue is becoming less of a citywide concern.
The percentage of households earning $80,000 or more has declined from 53.9 per cent in 2014 to 48.7 per cent last year, according to city statistics.
While that’s failed to shrink the number of low-income households at the opposite end of the spectrum, it’s swelled the ranks of middle-income earners.