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CEO Salaries: What Canada’s top bosses earned in 2013

CEO Salaries: What Canada’s top bosses earned in 2013

Admit it. You don’t have to be a teenager to fantasize about celebrity life, and what it would be like to have the kind of money hauled in by the likes of Madonna or Beyonce.
But, given the kind of compensation packages paid out to top Canadian chief executives last year, perhaps we might be better off focusing our daydreams on the astonishing earnings of corporate CEOs.
New data released by the consulting firm Global Governance Advisors, and published by The Globe and Mail, has found that compensation packages paid to CEOs are once again trending rapidly upwards, following a setback in 2008/09.
Chief executives at the helm of the country’s 100 largest companies saw their total compensation climb by 11 per cent in 2013, which marks the fourth straight year of pay gains, The Globe reported.
Last year’s median compensation was $5.6 million, just below executive pay levels recorded in 2007 and about 115 times the average wage of ordinary working Canadians.
According to Statistics Canada, the average industrial wage jumped 3.1 per cent from March 2012 to 2013, rising to about $932 a week, or $48,480 a year, CBC News reported.
And while those are some big numbers, the more relevant ones in many respects can be found in the across the-board increases, including an 18 per cent median rise in CEO cash compensation over 2012 and equity compensation up 14 per cent.
For the top earners, the combined results are dramatic, to say the least.
Gerald W. Schwartz of Onex Corporation, for instance, raked in $87.9 million last year, in salary, bonuses and other awards, such as share units and stock options.
Meanwhile, Nadir Mohamed of Rogers Communications Inc. brought in a total of $26.8 million.
Matt Fullbrook, manager of the Clarkson Centre for Board Effectiveness at the University of Toronto’s Rotman School of Business, has been looking into executive salaries, and the main factors driving them, for years, and said the numbers in the report weren’t surprising.
The centre’s own research tracking pay and performance trends among found a strong correlation between CEO compensation and firm size. Notably, he said, “CEO pay tends to go up and, at the bigger companies, it tends to go up a little bit faster.”
At the same time, Fullbrook said increased transparency around executive salary has allowed, if not encouraged, companies to compare themselves to other firms.
Before compensation disclosure was required, CEOs didn’t necessarily know how much others in their peer group were earning. Now, “they’re asking, ‘Aren’t I worth that much?’” Fallbrook said.
Michelle de Cordova, director of corporate engagement at NEI Investments, a mutual funds company, said the renewed rise of senior executive compensation packages post-financial crisis is worrisome.
“At what point will we say it is really too much?” she asked.
De Cordova said her company supports compensation packages that are “enough to retain and motivate really talented executives,” but not out of line with what others in the company are being paid. NEI advocates companies look beyond what their peers are up to in terms of compensation, and embrace so-called “vertical” benchmarks tied to levels of pay within their own ranks or within the economy as a whole.
“If employees are getting a one-per-cent increase and they are seeing the CEO receiving significant double-digit increases, we are concerned of the impact it might have within the team,” de Cordova said.
“Perceptions of unfairness are very corrosive to people’s attitudes and performance.”
Fullbrook said companies are beginning to investigate different styles and structures to better tie executive compensation with various performance hurdles, to the benefit of shareholders. That could mean a holding period that runs past retirement to cash out on stocks and share options.
The effect of these mechanisms is not to decrease pay, Fullbrook said. However, “It’s a disincentive to pump and dump at the point of retirement.”
Paul Gryglewicz, managing partner at Global Governance Advisors, said the data showing total compensation is only part of the CEO salary story emerging in Canada.
Along with the big pay cheques, Gryglewicz said executives are increasingly required to hit performance markers that will benefit shareholders in the long run.
The new trend among a significant number of the top 100 companies is to use performance share units to ensure certain targets are met within a set period of time, or its value is forfeited.
Just how high compensation levels can rise, Gryglewicz couldn`t say.
“There is a lot of research that is still going into to help determine if it is unsustainable or not,” he said.