OTTAWA – Canada’s 100 highest-paid CEOs had their second-best year ever in 2020, even as the COVID-19 pandemic left this country in the worst economic downturn since the Great Depression.
“Despite the pandemic being a pretty bad year for most Canadians, particularly on the unemployment front, it wasn’t really that bad for Canada’s richest CEOs,” said David Macdonald, a senior economist at the Canadian Centre for Policy Alternatives.
Macdonald authored a report released Tuesday examining how much the top 100 best-paid CEOs of publicly traded companies earned in 2020. The report said that by noon on Tuesday, the average CEO of these companies would have already earned what the average Canadian worker will make all year.
In 2020, as many Canadians had hours cut or lost their jobs completely during repeated lockdowns and forced closures, those highest-paid CEOs earned an average of $10.9 million.
That was down from the record high of $11.8 million in 2018, but an increase of $95,000 compared with 2019.
Macdonald said that CEOs receiving the second-highest pay on record is “quite an achievement” given the pandemic was damaging to many of the companies they were running.
More than 82 per cent of the average pay came through bonuses including cash or stock options, which Macdonald said companies creatively calculated to ensure poor performance during the pandemic didn’t affect CEO pay.
“This only happens in bad times,” said Macdonald. “When things go badly for the company, CEOs are protected in many cases. When things go well for the company, the sky’s the limit.”
Macdonald said CEOs often justify their bonuses with claims they are compensation for being exceptional at their jobs, but he said half the CEOs who got bonuses in 2020 worked at companies which received government aid like the Canada Emergency Wage Subsidy or only received the bonus because of an adjustment to the bonus formula.
“I think it really illustrates the bankruptcy of the idea that this is somehow based on merit,” he said.
The top-paid CEOs made 191 times more than the average worker in 2020, which was down from 202 times as much in 2019, and the lowest gap between CEOs and average workers in six years.
But that’s not, Macdonald said, because average workers got a raise. Instead, so many of the lowest paid workers were laid off for part of the year that their wages were missing entirely as the average numbers were calculated.
The report makes several recommendations for tackling excessive executive pay through a review of tax systems, including how capital gains and stock options are treated.
Macdonald also recommends the federal government create a wealth tax for the richest Canadians, as the wide gap between the average income of Canadians and the highest-paid CEOs is set to broaden further over time.
“When we’re thinking about how should we structure taxation, so that it’s based on what people can pay, a wealth tax then makes a lot more sense,” he said.
NDP Leader Jagmeet Singh campaigned last fall on a promise to create a wealth tax of one per cent on anyone with a net worth of more than $10 million, and impose a 35 per cent tax on income over $210,000.
In their first year in office, the Liberals raised the tax rate from 29 per cent to 33 per cent for people earning more than $200,000. Because of inflation, the top tax bracket now starts at $216,511.
Finance Minister Chrystia Freeland has now been tasked with establishing a minimum 15 per cent tax rule for top-bracket earners, which would include an attempt to prevent the wealthiest Canadians from reducing their tax burden through various tax planning loopholes.
She was also told in her mandate letter to fund the Canada Revenue Agency to combat tax avoidance, and raise corporate income tax for banks and insurance companies that make more than $1 billion.
Adrienne Vaupshas, a spokesperson for Freeland, said in a statement Tuesday that the government has been “consistently focused” on addressing income inequality in Canada by putting in place higher personal income taxes for the wealthiest Canadians, a tax on multinational digital giants, and limiting stock option deductions in the largest companies.
NDP finance critic Daniel Blaikie said in a statement that the Liberals have let everyday Canadians down because they have not made the ultrarich pay their fair share, such as by closing tax loopholes and tax havens.
The Tories did not immediately respond to a request for comment.
This report by The Canadian Press was first published Jan. 4, 2022.
Workers at Teck Resources’ British Columbia mine to hold ratification vote
Canadian miner Teck Resources Ltd said on Monday that a union representing 1,048 workers at its British Columbia mine has agreed to hold a ratification vote on the mediators’ recommendation.
The union will schedule a ratification vote to be concluded no later than January 24, the company said.
Last week, the company said it had received a strike notice https://reut.rs/3A7TJZQ from the union at its Highland Valley Copper Operations in British Columbia, without providing any reasons behind the potential strike.
(Reporting by Rithika Krishna in Bengaluru; Editing by Chizu Nomiyama)
Markets split on BoC decision as business survey, inflation loom – BNN
The Bank of Canada is getting a pair of key indicators this week ahead of a rate decision next Wednesday that’s virtually a coin toss, as far as markets are concerned.
First up on Monday, the central bank releases its quarterly Business Outlook Survey, which provides a snapshot of how approximately 100 corporate leaders are feeling about the economy and their own business fundamentals.
When the last survey was released in October, it showed the broadest gauge of sentiment was at the highest level in the survey’s history. That was despite worsening labour shortages and as more than half of respondents (57 per cent) said they expected labour costs to accelerate over the next year.
“[Monday’s] Business Outlook Survey might have been completed too early to catch Omicron uncertainties, so expect respondents to retain a healthy dose of optimism,” said CIBC World Markets Chief Economist Avery Shenfeld in a report to clients Friday.
“The survey could show a majority expecting inflation to run above the top end of the Bank of Canada’s one-three per cent inflation band. If not for Omicron, that would spell a rate hike in January, but the uncertainties surrounding how long this disruption will last should be enough to defer that decision.”
Meanwhile, Statistics Canada will release the consumer price index for December on Wednesday. Economists are expecting to see inflation rose 4.8 per cent year-over-year in the month; that would be the fastest rate of growth since 1991.
As of 8:30 a.m. Monday morning, market data shows investors see a 59 per cent chance of a rate hike when the Bank of Canada delivers its decision on Jan. 26.
House Price Index rose 26% in 2021, fastest pace on record – CBC News
The Canadian Real Estate Association’s House Price Index rose by 26.6 per cent in the 12 months up to December, the fastest annual pace of gain on record.
The group, which represents more than 100,000 realtors and tabulates sales data from homes that listed and sell via the Multiple Listings Service, said the supply of homes for sale at the end of the month hit an all-time low.
After pausing for a few weeks in the early days of the pandemic, Canada’s housing market has been on an absolute tear for the past two years, as feverish demand from buyers wishing to take advantage of rock-bottom interest rates has drastically outpaced the supply of homes to buy.
That imbalance is a major factor contributing to higher prices, as buyers have to pay more and more to outbid others because of the lack of alternatives.
Various experts are suggesting that parts of the country are showing signs of being in a speculative bubble, and CREA says the biggest reason for runaway price increases is that there aren’t enough homes being put up for sale.
“There are currently fewer properties listed for sale in Canada than at any point on record,” CREA’s chief economist Shaun Cathcart said. “So unfortunately, the housing affordability problem facing the country is likely to get worse before it gets better.”
High prices not denting demand
CREA says the average price of a Canadian home that sold on MLS in December went for $713,500. That’s actually down from the record high of more than $720,000 in November, but still well up on an annual basis.
High prices don’t seem to be slowing demand, however, as 2021 was the busiest year for home sales ever. Some 666,995 residential properties traded hands on MLS last year, smashing the previous annual record by 20 per cent.
TD Bank economist Rishi Sondhi said that there was a less than two-month supply of homes for sale during the month, which means at the current sales pace, all listings would be gone in less than two months. Under normal conditions, there’s a five-month supply of homes for sale, and Sondhi says that supply and demand imbalance is a major factor in eye-popping price gains.
“With interest-rate pull-forward behaviour keeping demand so strong, and supply struggling to keep up, it’s little wonder why prices are continuing their relentless upward march,” he said. “Buyers pulling forward demand ahead of looming interest rate hikes kept sales at unsustainable levels last month. How long this effect will last is uncertain, but it should eventually fade.”
Workers at Teck Resources’ British Columbia mine to hold ratification vote
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