Fans of Xavier Kataquapit’s column – Under the Northern Sky – at the back of our biweekly book might be a tad surprised by the passion he uses this week to take to task those who always jump on stories of supposedly overpaid Indian fat cats, like the recent case of Glenn Hudson, the Chief of the Peguis First Nation in Manitoba. Xavier rightly calls out those who think that qualified Native leaders don’t deserve the same levels of compensation we routinely see in non-Native leadership roles.
To be sure, Hudson’s earnings last year could appear a bit excessive. As leader of a First Nation of 7,200 people he took home $206,381 in salary, expenses and unspecified “other remuneration.” That looks like a lot, but as an engineer and as someone who last year negotiated a $190 million land-claims settlement for his people, it may be justified. That’s something for Hudson and the people of the Peguis First Nation to hash out among themselves.
But Hudson’s salary is peanuts compared to what the real fat cats are pulling in these days.
According to a study (“A Soft Landing; Recession and Canada’s 100 Highest Paid CEOs,” by Hugh Mackenzie) released last week by the Canadian Centre for Policy Alternatives, the top 100 CEOs in Canada made an average of $7,300,884 in 2008. That’s 174 times what the average working person makes in a year. Indeed, according to the “salary calculator” on the centre’s website (www.policyalternatives.ca/multimedia/ceo-salary-calculator), these folks would already have earned Glenn Hudson’s total salary by 11:36 am last Tuesday, January 12. The rest of the year is gravy, rather thick and lumpy gravy at that.
Not that these astronomical salaries are linked to performance. These masters of the universe presided over an economic meltdown over the past couple years, losing billions in market value for their companies and firing tens of thousands of workers, while their income continued to skyrocket. In fact, over the period from 1998-2008, reports the study, their income grew 70 per cent after inflation is factored in. The rest of us, meanwhile, watched as our real incomes declined 6 per cent over the same period.
The situation is even worse in the United States, where decades of anti-union laws and other political attacks on working people have helped executive salaries rise from about 30 to 40 times the average salary in the late 1970s to about 344 times the average salary in 2007.
But wait a minute, you say. What business is this of ours? This is all private corporate cash and they have the right to do whatever they want with the money as long as they pay their taxes, right? Right?
In fact, everyone who pays taxes on an average employee salary subsidizes the income of these super-rich tycoons. That’s right – the single mom struggling to raise her kid on a piddling service-industry income is paying taxes to support people like Thomas Glocer, head of media giant Thomson Reuters Corp., who “earned” $36.6 million in 2008.
That’s because average CEOs receive about a fifth of their income in the form of stock options, notes the CCPA study. When the price of shares rise above a pre-determined level, the CEO buys the stock and sells it at the market price, pocketing the difference, what’s known as a capital gain. It’s still employment income, but because of special tax treatment for capital gains – taxed at half the level working stiffs pay on their income – CEOs pocketed an average tax saving of $700,000 in 2008 on this one perk that we all gave them.
Now, $700,000, which has come out of every taxpayer’s pocket because they have to make up the difference in the government budget, is still 16 times the annual pay of the average Canadian. And if you’re looking for a reason to get angry over undeserved compensation, well, this is a pretty good one.