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Not only are boards complicit in the executive compensation rip-off, but the government kicks in a significant share as well.
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There's been a lot of outrage over a new report that shows that Canada's wealthiest CEOs are paid 193 times more than the average Canadian. But there's an even darker side to the story. Ordinary taxpayers are subsidizing those multimillion-dollar salaries, courtesy of loopholes in our tax system.
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Like Harper's GST cuts before it, Liberal campaigning to increase taxes on stock options was designed to ride a wave of discontent. In this case, it is the stagnation of wages and promising employment while top exec comp in Canada rises pro rata with American counterparts without supporting increases in productivity.
As the old saying goes: "A buck is a buck." But at tax time, there is a different set of rules for corporate insiders using a loophole for stock option deductions. This loophole has a $1 billion annual price tag for the rest of us.
In response to the backlash surrounding RBC this week, and in particular, against RBC CEO Gordon Nixon, let's look at how CEOs are compensated. Last year, RBC posted record earnings of $7.5 Billion and CEO Nixon received a pay hike of $2.5 million with millions in stock and option-based awards, incentives, and bonuses -- for meeting or exceeding expectations set out by the board of directors. I thought that was pretty shocking until I read about other CEOs. What makes these people so valuable and worth so much to a company? Someone tell me please. The bottom line is that this type of financial abuse affects everyone.