Vancouver Province backs outrageous CEO salaries; CanWest Global boss makes 53 times the average Canadian wage; CCPA studies show huge rich/poor gap
The Vancouver Province is upset over a new report by the Canadian Centre for Policy Alternatives (CCPA) showing that Canada’s 100 best paid CEOs of public companies made an average salary of $8,528,304 in 2006, an amount more than 218 times as much as a Canadian working full-time for a full year at the average of weekly employment earnings ($38,998).
In the report, The Great CEO Pay Race: Over Before it Begins (Dec. 2007), the CCPA found that by 10:33 a.m. January 2, the CEOs will have already pocketed that average Canadian wage. And they will continue to earn the average Canadian wage every nine hours and 33 minutes for the rest of the year.
“For someone working at the minimum wage, the contrast is beyond extreme. By 1:04 p.m. New Years Day in 2006, the best-paid CEOs pocketed what took a minimum wage worker all of 2006 to earn. Every four hours and four minutes, the best-paid 100 CEOs keep pocketing the annual income of a full-time full-year mini¬mum wage worker,” the report states.
The Province editorial board seems to have taken offence to the CCPA shining a light on the dubious statistic.
In Paying top dollar for a great boss may make a lot of sense (Vancouver Province, Jan. 4, 2008) the board said, “It is tempting to regard the salaries of our premier entrepreneurs with a jaundiced eye.”
“The author of the current report, Hugh Mackenzie, asks: “Are those at the top of the income heap really worth so much?” A more pertinent question might be: “Without these guys, would any of us have a job at all?” Sure, company directors must ensure there is proper restraint, and shareholders should be vigilant. Outrageous financial rewards, paid regardless of achievement, are an affront to decency. But that does not mean we should slap some arbitrary limit on the inducements offered to our captains of industry.”
“We detect the odour of sour grapes in what the Centre for Policy Alternatives has to say,” the board said.
“Rich rewards are available to all Canadians with the vision, the talent and the courage to be great innovators. And we wouldn’t have it any other way. Would we?”
So it would seem that according to The Province those struggling at the bottom of the heap should consider themselves lucky to have a job at all. Be thankful and shut-up.
The editorial insults honest, hard working, low income Canadians everywhere when it implies that “rich awards” only come to those “with the vision, the talent and the courage to be great innovators.”
It should be noted that the editorial glossed over Mackenzie’s report and the CCPA news release ignoring a number important questions and facts put forward by the author.
Are those at the bottom really worth so little?
What are the implications of this growing gap on Canadian society? What does it mean for our belief in equality of opportunity when the rich are soaring ever further out of reach? What does it mean for social cohesion when a significant minority of Canadians enjoy benefits from their participation in our economic life that are beyond the imagination of most of the rest of us? What does it mean for the health of our political process when our governments give to those who have and take from those who have not?
“In an important study released in September 2007, Statistics Canada shows that most Canadians’ real incomes did not increase from 1992 to 2004. That story changed in the highest-income 10% of Canadians. The bottom half of the top 10% maintained its share of total income: their income grew at the same pace as the average. But in the top 5%, the share of total income increased from 21% to 25%. More than 90% of that gain actually went to the top 1% — the richest of the rich,” said Mackenzie.
“If we don’t ask the questions, we’ll never get the answers.”
Just don’t ask The Province.
The CCPA report is timely and dovetails nicely with two of its earlier studies: 20 Years Later: Has Free Trade Delivered on its Promise? (Dec. 2007) and The Rich and the Rest of Us: The Changing Face of Canada's Growing Gap (Mar. 2007).
The former was released on Dec. 28, 2007, and found that twenty years after Canada signed the Free Trade Agreement its biggest boosters have grown wealthier but promises of better jobs and rising living standards fell short.
The study takes a sample of 41 Canadian Council of Chief Executives (CCCE) member companies – the leading supporter of free trade – and finds they shrank their workforce by 19.6% while their revenues grew by 127%.
According to the study’s author, CCPA Executive Director Bruce Campbell, “the CCCE promise of better public services and social programs under free trade, governments slashed programs by 26% -- more than six times deeper than the OECD average – largely at the urging of lobby groups like the CCCE.”
Among the study’s key findings, between 1987 and 2006:
– The 41 companies’ combined revenue grew from $142 billion to $310 billion while they shrank their combined workforce by over 118,000.“There will be those among the business elite who will trumpet the free trade agreement’s success. They will link it to the current buoyant economy, with its strong currency, fiscal and trade surpluses, low unemployment and low inflation. They will gloss over the inconvenient facts presented here, and they will dismiss the cumulative interaction of policies that have produced these outcomes. They will call for still deeper integration with the United States, for NAFTA is a stage in an integration process that creates pressure for further agreements which themselves foster still deeper integration—but without any consideration for what kind of Canada is being left in its wake. The facts, however, cast strong doubt that the promise made 20 years ago—the promise of a better life for all Canadians—has been fulfilled. It was an empty promise made by a business elite that has reaped the benefits of these self-serving agreements, without really considering how the majority of Canadians would be affected,” Campbell concluded.
– The Big Three automakers shrank their Canadian workforce by over 50%--from 87,626 to 43,000. Their revenue grew by 70%, from $38.9 billion to $67.3 billion.
– Despite the massive Alberta oil boom, the three major oil companies in the sample cut their combined workforce by almost one-third, from 22,500 to 15,428. Their revenues soared from $13.7 billion to $53.4 billion--a 290% rise.
– Corporate profits are at a 40-year high, but Canadian workers’ wage share of the economy has fallen steadily.
– Only the richest 5% of income earners saw rapid growth in their inflation-adjusted incomes from 1992-2004.
The latter study was released on Mar. 1, 2007, and found that Canada’s income gap between the rich and poor is growing, largely because the lion’s share of Canada’s economic growth is going to the richest 10% of families. It’s not going to the majority, the 80% of families earning under a $100,000.
The study’s author Armine Yalnizyan, a research fellow with the CCPA, reported that:
– In 2004, the average earnings of the richest 10% of Canada’s families raising children was 82 times that earned by the poorest 10% of Canada’s families. That is approaching triple the ratio of 1976, which was around 31 times. The after-tax income gap has never been this high in at least 30 years, and it has been growing faster than ever since the late 1990s.Unfortunately, there are people like federal Conservative Finance Minister Jim Flaherty who run around the country shamelessly trying to hoodwink people into believing that Canadians everywhere are prospering when the facts clearly suggest otherwise.
– The richest 10% of Canadian families are getting richer. They enjoyed a 30% earnings increase compared to a generation ago, the only group to experience such gains. This is creating a new phenomenon in income distribution in Canada: the rich are breaking away from the rest of society, in a way we have not seen since these data began to be collected, in 1976.
– Only the richest 20% are experiencing gains from Canada’s economic growth, and most of those gains are concentrated in the top 10%. The share of income going to the bottom 80% of Canadian families is smaller today than it was a generation ago, in both earnings and after-tax terms.
On August 30, 2007, conservative think tank Canada West Foundation hosted an invitation only luncheon with Conservative Finance Minister Jim Flaherty at the Hyatt Regency Calgary.
In Alberta, B.C. pact ‘sets new standards’ (Calgary Herald, Aug. 31, 2007), Flaherty said, “The provincial economy continues to fire on all cylinders…That’s good news for Albertans and good news for all Canadians. A rising tide lifts all boats, as they say.”
If anything Flaherty’s “rising tide” has lifted the CCCE member companies boats faster and significantly higher than those of the vast majority of Canadians.
It is interesting to note that CanWest Global Communications Corp. is a member of the aforementioned business lobby group. President and Chief Executive Officer, Leonard J. Asper, is a director.
Like the CCCE, the CanWest family of conservative newspapers staunchly supports NAFTA and the dangerous BC-Alberta Trade, Investment and Labour Mobility Agreement (TILMA) with its regime of harmonization and deregulation. It also backs the Security and Prosperity Partnership of North America (SPP), which the Council of Canadians describes as “an executive-level pact between the governments and corporate sectors of Canada, the United States and Mexico, which has never been debated publicly or voted on in any of the three countries. There are over 300 initiatives in the SPP aimed at harmonizing North American policies on food, drugs, security, immigration, refugees, manufacturing, the environment and public health.”
All 10 of the Canadian representatives on the North American Competitiveness Council (NACC), an official tri-national working group of the SPP which meets behind closed doors, are members of the high-powered and influential CCCE. They were appointed by Conservative Prime Minister Stephen Harper on June 13, 2006. To date the Harper government has not provided information as to the membership requirements, the selection process, or the terms of the members he appointed to the NACC. Nor is it clear who will be paying the group’s expenses.
CanWest is no stranger to the conservative cause.
The flagship National Post has twice endorsed Conservative Party Leader Stephen Harper for Prime Minister. It endorsed Ontario Progressive Conservative Leader John Tory for premier in that province’s Oct. 10 election and were elated when the Brad Wall-led right-wing Saskatchewan Party was elected on November 7.
Leonard Asper was a director of the Calgary-based conservative think-tank Canada West Foundation (CWF) until 2001. His brother David was a director from 2002-04. This might help explain the ubiquitous presence of CWF op-eds in the StarPhoenix and Calgary Herald.
In fact, in December 2007, alone the StarPhoenix published four op-eds by the organization including two from president Roger Gibbins. The newspaper’s policy is to discourage writers from submitting more than one letter a month but the CWF appears to be exempt.
Asper is also a director of the University of Winnipeg Foundation and Business Council of Manitoba – two organizations that just so happen to be represented on the CWF board.
Additionally, CanWest chairman Derek H. Burney served as Chief of Staff to Progressive Conservative Prime Minister Brian Mulroney between March 1987 and January 1989. It was under Mulroney that the destructive Free Trade Agreement was signed.
CanWest, according to its 2006 Annual Information Form (AIF), is “the largest newspaper publisher in Canada, with 28% of paid circulation in 2006 (35% of English language paid circulation), ahead of Torstar Corporation (14%), Quebecor (21%), Power Corp. (10%), The Globe and Mail (7%), Osprey Media Income Fund (6%) and others (14%).”
“Most of our newspapers have the highest circulation among publications in their markets. The high cost associated with starting a major daily newspaper operation constitutes a barrier to entry to potential new competitors to larger daily newspapers,” the report states.
This is great for CanWest which own Vancouver’s two major daily newspapers, The Province and The Vancouver Sun, giving it a local newspaper market share of 100%.
The media giant also has 100% market share in Saskatoon and Regina where both the StarPhoenix and Leader-Post picked up The Province’s pro-CEO salary editorial.
Interestingly, the AIF goes on to note that CanWest has “a substantial amount of debt.”
As of August 31, 2006, CanWest had $2,771million in consolidated long-term debt (including the current portion) and consolidated shareholder’s equity of $1,371 million, resulting in a total debt to capitalization ratio of 67%.
“Our ability to make payments on and to refinance our debt will depend on our ability to generate cash in the future. This, to an extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control,” the report notes.
David A. Asper, Gail S. Asper and Leonard J. Asper (collectively, the “Family Members”), each of whom is an officer of the Company, each beneficially own 25,595,325 multiple voting shares of the Company, representing in aggregate all of the multiple voting shares of the Company.
“Accordingly,” the report says “the Family Members (or their representatives) exercise a controlling influence over the business and affairs of the Company and have the power to determine all matters submitted to a vote of shareholders of the Company where the multiple voting shares and subordinate voting shares vote together as a single class, including the election of directors and the approval of significant corporate transactions such as certain amendments to the articles of incorporation of the Company, the sale of all or substantially all of the Company’s assets and certain business combinations involving the Company. The interests of the Family Members may differ from the interests of the holders of subordinate voting shares. Furthermore, the controlling influence of the Family Members could have the effect of deterring or preventing a change in control of the Company that might otherwise be beneficial to the Company’s other shareholders.”
CanWest also cites world events as a cause for some of its woes: “Our revenues were negatively affected by the impact of the September 11th tragedy on advertising expenditures in 2001 and, more recently, were modestly affected by war in Iraq in early 2003. If there are further acts of terrorism or other hostilities, or if other future financial, political, economic and other uncertainties arise, this could lead to a reduction in advertising expenditures, which could materially adversely affect our business, financial condition or results of operations.”
With that in mind it’s difficult to understand why the National Post would support someone like Conservative Party Leader Stephen Harper who on March 20, 2003, stood in the House of Commons and vociferously backed the illegal U.S.-led invasion, overthrow and occupation of Iraq. Harper also supports Canada’s continued presence in Afghanistan, in a war that began in October 2001 when the U.S. illegally bombed the country into submission in a hollow attempt to capture Al-Qaeda leader Osama bin Laden. Never mind that neither country had anything to do with 9/11.
CanWest then goes on to complain about its labour force, more specifically those belonging unions:
“Approximately 42% of our employees are represented by unions and covered by collective bargaining agreements. Any strikes, lock-outs and other form of labor protests could disrupt operations and could have a material adverse effect on our business, financial conditions or results of operations.”It’s little wonder that the StarPhoenix and Leader-Post are so supportive of the Saskatchewan Party government and its recent introduction of labour legislation that is hostile toward unions.
“Approximately 49% of our Canadian publications employees are employed under a total of 41 collective bargaining agreements. Fifteen of these collective agreements expire in our fiscal 2007. In general, our collective agreements cover operations at individual publications or business locations, rather than multiple locations. We may not be able to renew these collective agreements on satisfactory terms or at all, and we may experience strikes, lockouts and other forms of labor protests in the future.”
“Any strike, lock-out, or other form of labor protest could have a material adverse effect on our business, financial condition or results from operations.”
“Newsprint expense represents one of our largest raw material expenses and, after wages and employee benefits expenses and programming acquisition costs, is our most significant operating cost.”
Through it all Leonard Asper appears to have done OK for himself. According to the company’s most recent management information circular Asper’s total annual compensation for 2007 was $2,063,745.
Although well below the average salary of Canada’s 100 best paid CEOs of public companies in 2006, Asper’s remuneration is still 53 times as much as a Canadian working full-time for a full year at the average of weekly employment earnings ($38,998).
The tide has certainly been good to Asper’s boat as well.