No, not everyone is equally affected by inflation… Perhaps you have recently seen the news that the income of the leaders of large American companies jumped again in 2021?
Published at 5:00 p.m.
For executives in the 100 largest corporations in the United States, the remuneration averaged $ 20 million, up 31%. It seems like a reward for remaining a course during the pandemic, but we are still trying to figure out what this astronomical increase would be justified and worthy of …
As you can imagine, this trend is contributing to the explosion of inequality that we are seeing among our southern neighbors. To demonstrate this, it is enough to look at the relationship between the remuneration of managers and workers.
This is even more shocking.
In 2020, managers earned 238 times more than the average salary of their employees. It was already unbearable, but it only got worse. A year later they were paid 254 times more!
(If in journalism it sometimes happens that an exclamation mark can be considered superfluous, here it is in its place.)
We also know that this delusional phenomenon is not limited to the United States. As proof, the recent controversy in Europe involving Carlos Tavares, CEO of Stellantis, a carmaker born of the merger of Peugeot-Citroën and Fiat-Chrysler. As we have learned, his compensation was 66 million euros in 2021, or about 90 million Canadian dollars.
Here is another one that is not worried about rising prices for lobsters and snow crabs …
As far as anyone can tell, no one in Canada has the right to be treated excessively. But this does not mean that there is no problem. Vice versa.
The latest report from the Canadian Center for Alternative Policy reports that 2020 was the “second best year in history to pay compensation, despite the COVID-19 pandemic” for the country’s 100 highest paid executives – here from abroad.
Their average reward is about 10.9 million dollars. This means that they earn 191 times more than the average worker’s salary in Canada. According to the Institute for the Management of Private and Public Organizations (IGOPP), they earned 62 times more than in 1998.
And continues to rise. Last month, we learned that the salaries of the five top executives of the National Bank in 2021 reached 36.3 million, which is 43.5% more than in the previous year. Of this amount, the share of former CEO Louis Wahon amounted to 10.7 million.
This is not an anomaly. In 2021, the CEOs of Royal Bank, Bank of Montreal and TD Bank received 16.67 million, 14.87 million and 13.49 million respectively.
Therefore, growth has accelerated almost everywhere. Faster, higher, more … indecent.
It is important to condemn it on this day of international solidarity.
IGOPP, which has published two “position papers” on this important issue in recent years, deplores the current situation. And it offers a number of ways to go to get out of this.
In particular, the Institute believes that the boards of directors should change their approach to the adoption of compensation programs for business leaders.
Because this approach, according to the Institute, is based on “empirically questionable assumptions, if not outright false.”
Including the “overestimation of the relationship between the share price and the individual efforts of managers (minimizing the role of luck in the production of high rewards).”
Here, it is important to note that over the years, these astronomical figures stem from the fact that part of the CEO’s remuneration includes various incentives that go beyond the base pay – for example, stocks and options to buy stocks.
Therefore, we sought to link the remuneration more with the company’s results and, consequently, with the creation of value for shareholders. However, this does not always depend on the effectiveness of its leaders.
Thus, the method of redistribution of corporate income for too long revealed deep inequality within companies.
They reflect in some way what many are still willing to accept as a degree of inequality in our societies. And to know that this phenomenon is gaining momentum, not decreasing, is extremely alarming.
This is a sign of a serious trend that economists Emmanuel Saez and Gabriel Zuckman have described in the United States as “the non-egalitarian and oligarchic drift that brought Donald Trump to power.”
However, over the last decade, many have sounded the alarm. For a moment, it was even believed that the Occupy Wall Street movement, sparked by a wave of outrage over the 2007-2008 financial crisis to condemn the growing share of wealth monopolized by 1% of the world’s richest people, continued to be a catalyst for change. In vain.
At a time when our elected officials are seeking to protect the purchasing power of the majority of taxpayers, the remuneration of directors of large corporations deserves urgent rethinking as never before.