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Executive compensation continues to soar in Canada despite ‘say on pay’

Noel Hulsman

It is Canada's most exclusive club, made up not of the 1 per cent but of the .001 per cent. Membership is almost all men and overwhelmingly white, and the mix seldom changes. They all want to be there - in fact most insist on it — though not all are keen to see their presence publicized.  They are Canada's best-paid executives, according to the Globe and Mail's annual survey.

Topping the list is Valeant Pharmaceuticals CEO J. Michael Pearson who earned $36,318,831, or roughly $165,000 a day, for his efforts. The 53-year-old former McKinsey & Co consultant made his money the old-fashioned way in 2011. Only $1.5 million was base salary. He received a $3 million bonus, another $12 million in share-based awards, plus $6 million in option-based awards and nearly $14 million more in 'other' compensation.

Reflecting perhaps the new era of 'say on pay' shareholder activism, Pearson's take home actually took a hit last year. In 2010, he earned $36,709,986.

In fairness to Pearson, as rich as his rewards have been, he made a full $28 million less last year than Onex Corp's Gerry Schwartz and $22 million less than Magna's Frank Stronach, both perennial champs of the exec rich list.

And it almost goes without saying that Canada's pharma king would make merely a fraction of his U.S. counterpart, John Hammergren, who made US$131.2 last year leading McKesson Pharmaceuticals. Indeed, Pearson wouldn't even have cracked the top 10 list, as ranked by Forbes.

The rich list is an old boy's club

As with the Forbes line up, women are notably scarce in the Canadian list, which is confined just to the top executive of the 100 largest publicly traded companies in the country. Bell Aliant's Karen Sheriff snags the 70th spot, earning $3.5 million, $150K less than Loblaw scion Galen Weston, but $34K more than Saputo scion Lino Saputo Jr. Joining Sheriff is Nancy Southern who beat the odds by making it into the boys club not once but twice, coming in 79th for running Canadian Utilities Ltd (pay: $3.1 million) and 100th for heading up ATCO as well ($806K).

What's not reflected in the list are the gains 'say on pay' supporters insist have been achieved over the past two years.  'Say on pay' votes allow shareholders to endorse or reject the executive pay packages proposed at their company's annual general meeting. As Janet McFarland writes in today's Globe and Mail, when the initiative first surfaced in 2010, 26 companies participated. Last year, 96 companies offered the vote. The results are non-binding, but they certainly send a message.

The message may be to just pad the boss' compensation, don't send it soaring. According to the Globe survey, the median increase last year was 6 per cent, raising it to $5.2 million, while the median salary and bonus lift was just 2 per cent. Those numbers are palatable.

Less so, Astral Media's idea this spring to tip CEO Ian Greenberg $25 million for selling the company to Bell. The bonus would have been on top of the $100 million the Greenberg clan would get for their Astral shares, had the shareholders not loudly dissented.

Similarly, QLT's top brass received a sharp rebuke this week when nearly 60 per cent of shareholders voted no to the planned compensation package.

Still, it's not all tough times for Canada's corporate elite. The heads of this country's big five banks all took home more than $10 million last year, as they did the year before. And the worst paid leader in the telecom crowd, Rogers' Nadir Mohamed, made over $8 million — decent money until you realize Brad Shaw scored almost twice that for running a company a fraction of the size.

Of course, everything is relative. Few could have had a worse recent run than two that decimated RIM's share value last and came so close to running the company into the ground that they had to resign in January. Mike Lazaridis and Jim Balsillie's compensation in 2011? $5.2 million.