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'Big leavers' lever bigger pay packages

JANET MCFARLAND

From Monday's Globe and Mail

Latest comment posted at 10:33 AM EST 07/06/07

Pay packages soared last year but their golden parachutes may have proved their worth in the latest round of takeovers ...Read the full article

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  1. Lowen Wrainger from Canada writes: This all sounds like another manifestation of the Enron monster. It's just that the See E-yos have learned their legal lessons and sanitized the whole process. Skim & Scam sound pretty close.
  2. MIchelle Hruschka from Canada writes: Greed, pure and simple.
  3. Alberta Boy from Edmonchuk, Canada writes: C'mon folks, these poor guys are stuck with the same soaring fuel, rent and food costs as the rest of us. And consider the CEO of EXXON whose income will drop from a modest 50 or 60 million to 10 or 20 million when he retires. We should all be willing to pay more for gasoline so that this poor guy doesn't have to suffer such a dramatic drop in income just because he's getting old. :(
  4. Wayne Spitzer from Faywood, United States writes: The CEOs do not own the companies, nor are they entrepreneurs. They are employees. When capitalism works a company hires the best possible employee at the lowest possible salary. The CEO compensation packages are obscene and amount to little more than legalized theft. Something is obviously very wrong and in serious need of correction. Stock holders are the real owners of the companies, not the "good buddy" board of directors. Regulations should require that all CEO compensation packages be completely transparent, and approved annually by
  5. Wayne Spitzer from Faywood, United States writes: Regulations should require that all CEO compensation packages be totally transparent, and should require the annual approval by a majority vote of the stockholders. The "good buddy" board of directors system needs to be eliminated.
  6. b mac from Canada writes: The wage packets for the Rogers executive (a corp- with government privilege and government licenses) and the Shoppers executive ( a simple retail business) are way out of line, almost criminal, when you compare their wage packet to those of the Teck Cominco & Husky Oil executives who have created real wealth, not only for their shareholders but their country too. No wonder our cable and drug prices are so high in this country. I hope the CRTC takes note of what Rogers executives are skimming from their government licenses and their priviledged businesses and order a 10% reduction in cable rates..
  7. Charlene Medlicott from Canada writes: While I can appreciate a job well done , and a payment reflecting that , this is a little over the top !!! There is absolutely no way any of these people are worth this much money a year , never mind the outrageous pensions they are receiving . I am an employee of Loblaw/Westfair Foods out west and let me tell you , the day will be long and cold before I will be convinced that John Lederer deserved his $22,000,000 buyout when he got fired !! This company has many long term employees , many of whom will never see anything remotely close to these numbers , in way of salary or pension . What really bugs me is the fact that it is the people out on the sales floors and behind the cash registers who actually make many companies what they are , not the stuffed shirt in the office !! The new CEO at Loblaws got an ear full when the numbers came out on the $58,000,000 the company has paid out in the first quarter of this year . He was dumb enough to post a website address in all of his stores asking members for feedback about the company and it's way of running the operation . When that severance report hit the newspapers , I was quick to email him . I would like to know how a company can justify a gross expenditure like that , while claiming they can't afford to give raises to it's staff ! It is completely unacceptable . Salary caps need to be put in place somewhere , if not , then make sure to spread the wealth to the people who keep the businesses running , the real stars are the common employees . I am not a greedy person , but after a long and usually stressful day at a Real Canadian Superstore , I sure do think I deserve a little more than the pathetic wage they are paying ! Thanks to the UFCW 401 for ensuring we get a raise once in a while , because the company sure won't see that we do !
  8. Robert Marshall from Scarborough, Canada writes: Last I check when people get fired with cause the company doesn't have to pay the employee anything (other then accrued wages, and amounts invested if the employee invested in a company plan).

    Company's need to rethink these compensation plans as well as the courts
  9. Tom Fry from Calgary, Canada writes: Robert Marshall from Scarborough, Canada writes: "Last I check when people get fired with cause ....."

    --------------

    "Fired for cause" is a difficult thing to prove, in most cases. If the CEO has been following a strategy approved by the board, for example, it's difficult to fire him if it didn't work. No, let's rephrase that - it's easy to fire him if it doesn't work, but it's virtually impossible to argue that it was "for cause". His actions, after all, had been approved in advance by the board. If he stole money, that's "for cause". However, if he didn't exceed analysts' predictions for stock prices, that's not "for cause".
  10. larry y from United States writes: Wow... is this getting outrageous or what! Compare these numbers to the average annual wage of a Canadian or US citizen or family income. The pay levels for the CEO's have been skyrocketing. It would be interesting to see how the ratio of CEO pay to average citizen pay has been climbing. It would appear that the CEO pay model is flawed. The consultants and processes utlilized to provide comparisons between CEO pay levels are fuelling a crazy spiral upwards. You mentioned Matt Barret and his pay level versus the just departed CEO Comper and the crazy escalation. What did the average bank employee make during the tenure of these two CEO's? These guys don't do it by themselves and the escalation in the ratio of CEO to the average employee pay is outrageous and climbing. By the way why did we not see disclosure of Canada Trust pay packages for the CEO when it was taken over by TD? I heard it would have made Barrett's number look small. As I recall as a shareholder, there was a phantom stock plan that paid out multi-millions to the CEO when CT was sold. All the companies involved were public companies...TD, CT and Imasco, BAT etc. We need more disclosure onwhat is going on with these pay levels in plain english before the programs get implemented and we need annual shareholder votes on the plans. The boards are following flawed processes.
  11. David N from Toronto, Canada writes: There is a great Dilbert cartoon where Dogbert (or is it Ratbert?) is an investment banker visiting the boss at Dilbert's office. His message is "I can help you loot this place and escape!". On a more serious tone, the absurdly inflated executive compensation packages we have seen are a symptom of a generalized serious failure in corporate governance. The executive layer in this country at least is an old white boys club with many cross-directorships. A compensation committee would be inclined to give the CEOs pretty much anything they want knowing that they will receive the same treatment when its their turn to loot their own companies. You scratch my back and I'll scratch yours... all the way to the bank!
  12. nick oliver from Halifax, NS, Canada writes: why is it the only employees who get pay raises connected to the company's performance are the ones in the boardroom? if pay raises totalling millions for a handful of staff are possible, how do those people look the shop floor workers in the face and say even a pitiful 2% cost-of-living wage increase would cause the company to lose its competitive edge? laws governing the ratio from the lowest paid worker to the highest paid executive are the ONLY way to remedy this situation to the benefit of not only the workers and the shareholders (in whose interest these executives always claim to be working) but to the benefit of the wider economy in general.
  13. mitchell roy from calgary, Canada writes: All the nuts are out today. My companies will remain private, and if the this left wing populace ideas take hold then you will see more companies remain private or revert to private again. And the Canadian markets and the economy will suffery. And Canada will remain a second rate economic power.

    Mitchell
  14. Montgomery J. Klaxton from United States writes: These salaries are ridiculous, even a surgeon or hard working family physician in your country after expenses would be lucky to make 120,000-200,000 for the surgeon. There is no way that these C.E.O.'s work that much harder than a surgeon. It is crazy when the public has to pay outrageous interest rates, and extra fees, and the money ends up been given to a few managers/officers,etc...sure they deserve good salaries, $1,000,000/yr , what's wrong with that?
  15. Thumb Sucker from Toronto, Canada writes: This 'CEO' job sounds fun - where do I sign up?
  16. Robert Marshall from Canada writes: b mac from Canada writes: """It's all become a big circle jerk. CEO's get hired to be fired as the compensation is much better that way. The BOD's are all yes men that provide, in many cases, road blocks to good governence. It has really become, for all pratical purposes, a new form of organized crime. This is why countries need 95% tax rates. To keep these shysters in line.""""

    __________________________________________________

    Yes I again with you that some of the CEO's compensation packages are ridicules but I think the last thing we need to have is 95% taxes.
  17. David N from Toronto, Canada writes: Thumb Sucker from Toronto, Canada writes: This 'CEO' job sounds fun - where do I sign up?

    Well, first you have to have attended one of the right private schools where they'll give (i.e. sell) you the marks you need to get into a good university. Then your dad (a CEO at some firm) will call his pal CEO at another firm and parachute you into a well paying-job and pay for your exec MBA. Then you have to develop shark-like skills, be willing to step on anyone to get ahead and don't forget you have to learn how to take credit for anything that goes well and evade responsibility for anything that doesn't. Wait a minute... big business sounds a lot like... big government!
  18. mitchell roy from calgary, Canada writes: Moving my companies out of this back water country as soon as I can , will be the best thing for them and myself. Enjoy your Mcjobs.

    Mitchell
  19. F/A josquin from van, Canada writes: Go ahead Mitchell, you mover and shaker you.
  20. gary blades from Canada writes: The guy from Shoppers Drug mart got paid that much because he is a marketing genius. The prices at Shoppers are often 35% higher, and more, than the very same products sold at a big supermarket (some of which also dispense drugs). Yet people actually buy stuff at Shoppers rather than at the supermarket where they could save lots of money ($30 per $100 purchase). The consumer is to blame here. But in general, we need more coops where the profits are paid to the members who shop there.
  21. Ann Bishop from Regina, Canada writes: I think the sooner Mitchell Roy moves his company out of the country the better off we'll be. I would sooner have a McJob than work for a nasty piece of work like him. What's that saying that goes something like, "Me thinks though dost protest too much." I wonder if our Mitch is due for a big buy-out - maybe he's the kind of guy that is under-performing and counting on a big severance. You go, Mitch! And good riddance.
  22. Richard Hawrelak from Sarnia, Canada writes: Simple solution, by legislation. Bottom wage salary (bws) in a company = $20,000 / yr. CEO should make no more that 50 x bws = (20,000 x 50 = $1,000,000 per year). Anthing above that, by tax law, goes to charity, plain and simplle.
  23. Stan Bladams from Bedford, Canada writes: You GO David N. Hahaha. I used to think private schools provided better education and that explained the success of their graduates. Then I worked as a teacher at one for a few years and actually watched false (and higher) marks being entered into the Ontario Student Record even without the teacher's knowledge. Yup. First hand knowledge of it. And that was one of Ontario's more elite private schools. Sure helps with the old scholarships at university, admission, and so on and so forth to have those higher marks. I loved the justification from the school administrator too ("Teachers here give lower marks for higher quality work than in the public system and I have to correct for that.")......um, ya....interesting justification from a guy that hadn't really taught in the public system. And then there was the arm-twisting of the teachers to give the higher marks too (both privately and in staff meetings). All in all I bet graduates of "elite" private schools have averages 10-15% higher than is justified. Of course, those higher marks and scholarships also sure help justify Dad's (or Mom's) best friend hiring you into a high-paying job right away too. It was working at that school that made me realize that a lot of the "high flyers" in Ontario weren't actually all that smarter or more insightful than the rest of us folks, it was just their connections and a modicum of common sense. In fact, my starting position now with people in power is that they got there without hard work and brains....it was probably "gifted" to them through family connections. Personally, I'm all for a 95% tax rate at the higher tax level (which I earn a fair amount of salary in myself) because that'd reign in all of the posers that got their high salaries with connections & not ability. I bet that includes Mitchell too....you can often tell from the attitude.
  24. Stan Bladams from Bedford, Canada writes: Oh, and Mitchell.....McDonald's doesn't like the use of the word McJob and is lobbying to have it removed from the Oxford English Dictionary (which apparently they have no chance of success at). I'm just mentioning that because you might want to be careful that you don't draw the ire of a major international corporation down on you through using the term.....they might take all your hard-earned (or however you got it) money away from you through a lawsuit.
  25. gary blades from Canada writes: mitchell roy obviously cares nothing about this country or about Canadians, he cares only about Number One, like many business people in our increasing corrupt society. Capitalism is becoming synonymous with Corruption.
  26. mitchell roy from calgary, Canada writes: It comes down to ambition. I love how most on here assume that those successful in business are doing it through illegal ways. And you know what they say when some one assumes. And limiting as CEO, ect pay by legislation will not work. Communism and Socialism have are failed systems.. they don't work..deal with it. And if they did limit a CEO's pay via legislation then you will see more companies do exactly what I am doing.. they will leave.. the economy will suffer there will be no jobs.. and all you will complain about there being no jobs. I earn what I make.. I put in the hours and the work...like I said.. its comes down to ambition.. You want the money.. then you have the ambition and put in the hours.. You can not limit another person because of your lack of ambition.. it is time this country and the people .. put up... or shut up.
  27. gary blades from Canada writes: Roy, why don't you put up or shut up ? Move to China or India where workers are a dime a dozen and you don't have to care anything about them. Exploit them and throw them on the trash pile when they wear out and get some more. And every night count your big pile of profits and wallow in your money like a pig. Good riddance. Please don't let the door hit your a$$ on the way out.
  28. Stan Bladams from Bedford, Canada writes: Mitchell you are SO from Alberta....lot's of people put in very long hours, even in important jobs, with insufficient compensation...and nothing like those executives. Here's a thought just for you.....PLEASE emigrate to the US. Or convince Alberta to separate. Either would suit me just fine.....I'll be delighted to lose you. Let someone else run a business in the vacuum created by your exit who is of a less, um, offensive mindset. In case you don't know, lots of large and prosperous companies are run by fair-minded and generous people....you don't HAVE to be a pinhead. And, no-one here (I re-read to be sure) suggested that illegal things were being done to be successful in business. Immoral certainly (salaries approved by buddies and not by shareholders who OWN the company), but not illegal. If you own your own company (or companies), and from the sounds of it you do, then your compensation (how much you make as profit) directly ties into how successfully the company operates. Can you imagine the company doing poorly and you bleeding it further with a high compensation to yourself? Not if you were a wise business person. But THAT is what these CEO's are doing with massive severance packages (as well as setting a very bad example for the other workers in the company). So, what you reveal through your comments Mitchell, is a predilection to WANTING to do something like that....which should violate the very business principles you espouse, but does not....which means you're of poor moral fibre, an irresponsible citizen and company owner, and frankly we'll all be happy to be shot of you. Bonne chance...."backwaters" are far better off without ingrates.
  29. S Lucht from Canada writes: If a CEO leads a profitable company and increases value for its shareholders, then he/she is due a big payout. CEOs who are skillful enough to ensure earnings growth year after year are rare commodities, and will command high salaries and generous benefits. The salaries for pro athletes similarly reflect the relatively small pool of talent, though it's difficult to figure out what value athletes are creating (other than for team owners).

    It's perverse, though, when a CEO presides over several years of stagnation or actual losses, then walks away with bags of money. It's as though no one has to answer for poor performance--the CEO can say the board approved of the path he/she laid out for the company, the board rarely admits to having a role in anything, and the shareholders stay unhappy.
  30. Ken Lawson from Richmond, Canada writes: Guess it has more to do with the stupid shareholders and the Liberals, why after they are hired they turn out to be idoits, I think it is these dysfunctional recruiting firms in Canada. They look for idoits.
  31. Mark Treissman from kamloops, writes: Capitalism is so hard to accept. This system creates a great deal of wealth and it is the inate condition of human commercial interaction. No one person invented it and, despite many attempts at alternative systems, even Russia and China are now embracing it. Capitalism also creates inequity. This somehow seems unfair but, if those at the bottom in a capitalist system come out ahead when compared to how they would do in a planned economy, then it becomes clear that capitalism is the best option. One way to cope, I find, with this glaring inequality, is to avoid feeling a righteous envy at the good fortune of the extremely wealthy. Who cares how much they earn?! Are you happy and can you attain your potential? Thou shalt not covet...
  32. gord winters from Canada writes: Ken Lawson from Richmond, Canada writes: "idoits (twice)"

    priceless.
  33. D K from Canada writes: gary blades from Canada writes: The guy from Shoppers Drug mart got paid that much because he is a marketing genius. The prices at Shoppers are often 35% higher...

    Why I haven't shopped there in years. Good place to get ripped off
  34. Sivaram Velauthapillai from Toronto, Canada writes: CEO salaries aren't really out of whack as some imagine. However there are some CEOs who are paid way too much. A senior executive is one of the few jobs where you can actually trigger a bonus (golden parachute for example) if you get "fired" (no executive is technically fired by the way).

    In a free market, you get paid based on how much money you can make for your employer. A lot of people seem to forget that and instead think that you get paid based on how hard your job is, or how important it is to society, or some such notion. None of that is true; you get paid based on how much money you can make for your employer!

    Looking at how much a low-level employee makes relative to an executive is meaningless. They do not contribute the same amount of profit to a company...

    However there are some problems with the compensation. I think the problem lies with the board of directors, who clearly scratch each other's backs (many who sit on a board are fellow executives or people who are close friends with the executives). Shareholders somehow need to clean up the board of directors but I don't know how.

    Another problem is that executives get free ride on the back of shareholders when they are issued options. Companies should only give out stock (not options). Options reward executives for gambling (upside very large, downside is low). Gambling often ruins the long-term prospects of a company at the expense of short-term gain. Since executives already get paid large bonuses when they are "fired", they really lose nothing by gambling.
  35. Jim Quinn from Canada writes: Sivaram Velauthapillai from Toronto, Canada writes: CEO salaries aren't really out of whack as some imagine ... you get paid based on how much money you can make for your employer; lookong at how much a low-level employee makes relative to an executive is meaningless

    There is soething called the test of reason ... historically the multiples between the top and bottom were in the under 20 range if I recall correctly bur even if it was thirty things today make no sense. If the pushing pushing the broom, flipping the burgers or minding the cash register makes 30K (in most cases that's generous) then why the hell is it routine for CEO's to be taking home millions.

    It is to all intents an purposes a closed shop they move in and out and on, grabbing the platinum ring at each stop. It’s a mythical realm of robber barons, where protégés and chosen successors enter through the golden gates. Their value added is as much mythical as anything else. Sure there are some great risk takers and turnaround artists, who deserve big bucks but they are ever so few and far between and its a matter of risk-reward (perhaps a couple in a lifetime).


  36. gary blades from Canada writes: The biggest and most important "corporation" is the government itself, which has the largest number of shareholder-investors, namely all the taxpayers in the country, and yet the "CEO" and "executives" of this most important of all economic institutions, the top civil servatns, are paid pitiful salaries compared to typical corporate fatcats. How can you explain that ?
  37. mitchell roy from calgary, Canada writes: You can not limit a person pay, becuase of other peoples lack of ambition. Socialism and communism did not work, they are failed system. No one has the right to tell me what I should be paid from my company. I am the one who takes the risks, put in the hours.

    If the majority of the Canadian public, have no ambition than that is thier problem, and not those who are trying to succeed.

    Mitchell
  38. Jim Quinn from Canada writes: Sorry gary blades, I have to disagree with you.

    When you look at the whole package they do quite well. Freedom 55 can mean a fully indexed pension worth well over $100K per annum plus health and dental benefits that are of no small value.

    The amounts are not obscene, as they too often are in the private sector but they depart very very well off.

    By no streach of the imagination are they CEO's. They and their jobs have to be looked at in the context of the system - a system of massive checks and balances; a system that lives by consensus which all too often means decision making at the level of lowest common denominator; and a system that rates the job by where it sits in the heirarchy (e.g. Chief of Defence Staff is an assistant deputy minister one of perhaps a hundred or more in this town; compare that to the Treasury Board Secretariat; Finance or PCO which are filled with them ... doing what?)

    Cheers
    Jim
  39. Jim Quinn from Canada writes: Sorry I miss spoke - I should have said "accomplishing what" as opposed to "doing what"
  40. gordon davies from Victoria B.C., Canada writes: After seeing another pickpocket paycheck thought to deliver a small rant, but relented reasoning my squeak wont change things as they will always have their hands in shareholders pockets.
  41. mitchell roy from calgary, Canada writes: My last comment still stands...

    Mitchell
  42. Sivaram Velauthapillai from Toronto, Canada writes: JIM QUINN: """There is soething called the test of reason ... historically the multiples between the top and bottom were in the under 20 range if I recall correctly bur even if it was thirty things today make no sense."""

    But the situation changes over time. For instance, once upon a time, an executive of a large company may have run an operation that generated $500m in sales and had operations in 2 countries. Right now, you will find some executives who run operations that earn $10billion with operations in 100 countries. Companies are much larger now and generate a lot more profit. So wouldn't you reason that these people will get paid a lot more nowadays?

    As long as the economy (whether you look at a country or the world) keeps growing, you will have executives making more and more. The spread between the highest and lowest salary is not a good measure.

    """If the pushing pushing the broom, flipping the burgers or minding the cash register makes 30K (in most cases that's generous) then why the hell is it routine for CEO's to be taking home millions."""

    In a free market, some people will get paid less. What I will say is that people at the lowest end make even more now than they did 100 years ago. I mean, just look at a developed country like Canada vs a poor country like, say, China. I'm actually at the working class level (near the bottom) so I'm not trying to defend my high salary or anything (I make almost nothing). But from a free market point of view (which I believe in), you cannot arbitrarily say that the highest salary needs to be kept constant relative to the lowest.
  43. Sivaram Velauthapillai from Toronto, Canada writes: JIM QUINN: """Their value added is as much mythical as anything else. Sure there are some great risk takers and turnaround artists, who deserve big bucks but they are ever so few and far between and its a matter of risk-reward (perhaps a couple in a lifetime)."""

    I agree to some degree however just remember that it is the owners/shareholders who decide how much these guys get paid. Obviously the shareholders are willing to pay them high compensation. So the shareholders believe that these executives deserve their compensation. I mean, a sizeable chunk of the publicly traded corporations are owned by an average worker who obviously makes less yet I don't see them complaining (to their mutual fund manager or pension fund or institutional manager). Clearly, even these investors are supporting the compensation policies...

    Having said that, I believe that some executives are overpaid and don't deserve anywhere near what they are paid. I'm also totally against golden parachutes, poison pills that trigger insane payments based on circumstances, and am totally against awarding stock options... but my main point (i.e. executive compensation will be high) stands...
  44. Sivaram Velauthapillai from toronto, Canada writes: GOVT JOBS You can't compare salaries to the government. Most people in the upper echelons of government go there to gain POWER, not wealth. All the people near the top are powermongers who generally swap wealth for power. Even if a prime minister/president/cabinet minister/etc were paid nothing above the poverty line, you will have a ton of people lining up to get the job. Speaking as a liberal-libertarian, government has immense power over the individual that you cannot get any other way. If you don't believe anything I say, why do you think a "rational" person would give up a higher paying job to take a government position? For example, Paul Martin makes way more money as an executive than he did as the PM. Same with Stephen Harper. Guys like Dick Cheney took a massive paycut to become vice-president. Same with George Bush. Even someone like Alan Greenspan would have made way more money running his private consulting business (as he did before) than as the Federal Reserve chairperson. Why do you think Henry Paulson quit the most prestigious investment bank, Goldman Sachs, and took a low-paying job as a US trade representative? You can't compare government compensation near the top to executive compensation. Interestingly, in my opinion, you also can't compare the regular, lower-paying, government jobs. To a free-market-oriented person like me, the typical government (not the power jobs near the top) overpay relative to the private sector. So, in my seemingly convoluted view, the high govt jobs underpay in monetary terms but grant immense non-monetary power, whereas the lower paying, typical, gov jobs overpay.

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