These top CEOs pledged to take pandemic pay cuts — but a Star analysis found some ended up getting millions more

When COVID-19 first hit, it appeared we had been united in our distress.

Embattled firms introduced sweeping cuts to their workforce, bracing for loss. The nation’s unemployment charge soared, pushed by an exodus of jobs that made the 2008 recession look tame.

Whereas low-income staff had been laid off at triple the speed they had been throughout the Nice Recession, lots of Canada’s largest firms introduced pay cuts for his or her government groups — a present of solidarity in a bleak time for a lot of Canadian households.

Excessive profile CEOs opted to forego some or all of their salaries, and a few redirected them to charity.

Telus’ prime government, Darren Entwistle, donated 1 / 4 of his wage to “the Canadian well being care staff on the entrance traces, battling COVID-19.” Lululemon Athletica’s CEO, Calvin McDonald, volunteered a 20 per cent pay lower, together with others on the board. At Cenovus Power, the place the corporate introduced greater than 1,000 layoffs after merging with Husky Power, executives pledged to take wage reductions between 12 and 25 per cent.

However how a lot did these prime earners actually surrender?

To search out out, the Star examined recently-published monetary studies from a number of of Canada’s largest firms, all of which pledged to scale back government pay throughout the pandemic.

The story, amongst every of them, was the identical: executives had been showered in riches no matter firm efficiency. Normally, the losses sustained by wage reductions had been greater than made up for with different compensation — money bonuses, inventory choices and extra.

Some CEOs made tens of millions extra in 2020 than the 12 months earlier than, regardless of pledging a pay discount throughout the pandemic.

Prime executives at SNC-Lavalin, Gildan Activewear Inc., Cenovus Power and Telus had been rewarded with compensation that eclipsed their 2019 earnings and erased wage drawbacks.

“It’s clearer than ever, now, that the wage cuts had been not more than a public relations transfer,” stated Unifor president Jerry Dias, who represents unionized staff at a number of of Canada’s largest firms. “It’s nearly displaying to folks that they’re good company residents, whereas taking enormous bonuses on the expense of the employees.”

For Gildan Activewear, the troubles started in March 2020. With concert events cancelled and journey restricted, the Montreal-based clothes producer had few shops to promote their staple product — clean shirts purchased by wholesalers and used, most frequently, for band merchandise and trip swag.

Scrambling to chop prices, the corporate ordered pay reductions for senior employees and a shortened four-day work week. In an April 2020 press launch, it introduced a 50 per cent wage lower for its prime executives within the second quarter of the fiscal 12 months.

However regardless of the cuts, Gildan’s prime executives emerged from 2020 with greater earnings than earlier than.

Glenn Chamandy, CEO and co-founder of the corporate, greater than doubled his pay from 2019, company data present. He obtained bonuses amounting to just about $13.5-million and a complete compensation of $16.5-million, making him one of many nation’s highest-paid bosses.

Gildan’s CFO, Rhodri Harries, obtained a $5.7-million elevate. And Benito Massi, president of producing, earned a $3.4-million elevate, amounting to a complete of $5.4-million.

Chamandy’s bonuses had been granted “in recognition of his position in main the Firm by the COVID-19 disaster,” stated an organization spokesperson in a press release to the Star. However the firm reported a horrible 12 months total, dropping $225.3-million by 12 months finish.

The story is comparable for SNC-Lavalin, led by recently-appointed CEO Ian Edwards. In March 2020, the corporate requested staff to take a three-month pay lower as enterprise slowed. “These actions will make a significant distinction in coping with the short-term impacts on our enterprise,” Edwards instructed staff in a memo. “I hope by doing this rapidly and volunteering collectively, we’re capable of protect a stronger future collectively.”

All senior administration, together with Edwards, volunteered to take a 20 per cent wage lower. However by the 12 months’s finish, Edwards’ compensation had grown to $8.02-million, up virtually $1 million from the $7.1-million that his predecessor, Neil Bruce, had earned the 12 months earlier than. Edwards’ $200,000 wage discount was dwarfed by a $5.61-million bonus paid out in firm shares.

On common, CEO salaries comprise simply 10 per cent of their complete compensation, in accordance with the Canadian Centre for Coverage Options. Nearly all of their pay comes within the type of money bonuses and awards granted in firm shares or inventory choices, main some CEOs to forego their salaries virtually completely.

For example: Murray Edwards, the billionaire co-owner of the Calgary Flames and chairman of Canadian Pure Sources Ltd., obtained a wage of simply $1 for his position on the crude oil and pure fuel firm in 2020. Via money bonuses and shares, although, he earned $13.56-million.

David Macdonald, a senior economist with the Canadian Centre for Coverage Options, calls it the “golden cushion.” No matter wage, executives amass fortunes on bonuses alone. The pay construction is designed in order that it’s “terribly troublesome” for an government to not obtain large bonuses, he says.

“Whereas it seems good to forgo a part of your wage throughout COVID-19 from a public-relations perspective, it doesn’t affect pay,” stated Macdonald.

SNC-Lavalin, in a press release to the Star, stated its CEO’s pay improve was the results of a “rigorous benchmark examine on wage versus different comparable world organizations.” Via a course of referred to as peer benchmarking, the corporate’s board of administrators employed outdoors consultants to check SNC-Lavalin to a pool of others in the identical trade and allocate pay accordingly.

That is typical of how public firms resolve government compensation, explains Richard Leblanc, a professor of governance, regulation and ethics at York College.

The board recommends government compensation based mostly on the typical earnings of their friends, and can usually advocate above-average pay as a constructive sign to its shareholders.



“Even when efficiency goes down, CEO pay will go up, as a result of the system doesn’t account for the precise efficiency of the corporate’s CEO. It’s simply what their friends are making,” stated Leblanc.

And the board committees that study peer benchmarking research have little or no oversight, Leblanc provides. Compensation committees can evaluate their firm to others which are larger and extra advanced whereas providing their CEO comparable pay regardless.

“You’re just about assured to get greater compensation this manner,” says Macdonald. “You possibly can bankrupt the corporate and also you’ll in all probability nonetheless obtain a bonus.”

4 different oil and fuel firms the Star examined — Enbridge, Parkland Gasoline, Cenovus Power and Ensign Power Companies — all elevated bonuses for his or her CEOs regardless of the trade’s total downturn.

In a press release to the Star, a Cenovus spokesperson famous that greater than half the CEOs within the firm’s pool of peer firms obtained greater compensation than firm CEO Alex Pourbaix.

Enbridge, in a press release, famous that the corporate delivered robust monetary leads to 2020 regardless of the affect of COVID-19, and the corporate decreased prices — together with CEO Al Monaco’s pay lower — “to keep away from company-wide layoffs.”

A spokesperson for Parkland Gasoline stated the corporate’s steps to decrease prices, together with the wage lower, “delivered wonderful efficiency by probably the most difficult years.”

Ensign Power and Canadian Pure Sources didn’t reply to the Star’s requests for remark.

Some CEOs argue they deserve the elevate given the drastic scenario. Throughout most industries, firms have confronted unprecedented strain in turbulent financial circumstances.

Regardless of the pandemic, with Entwistle on the helm, Telus reported robust year-end outcomes for 2020. Working revenues totalled $4.06 billion, up from $3.86 billion, and the corporate added 253,000 new prospects within the ultimate quarter.

However even after donating 1 / 4 of his wage, Entwistle emerged from 2020 as Canada’s top-paid telecom government, incomes $16.04-million in 2020 — a 24 per cent improve from $12.92-million in 2019, firm data present.

The majority of his compensation got here within the type of inventory possibility and share awards, which elevated to $12.86-million in 2020 from $9.98-million in 2019 because of the firm’s efficiency and “Darren’s distinctive management,” a current firm report reads.

“Some CEOs are saying that, ‘even when efficiency is down, we’re nonetheless working onerous. It’s a pandemic, it’s a work-from-home surroundings and we needs to be paid what we’re value,’” stated Leblanc. “There’s fatigue, exhaustion and the challenges of managing a workforce from house. In a pandemic, the boards don’t need to underpay the CEO and doubtlessly seek for a alternative.”

However the hole between CEO pay and the typical employee’s revenue has been rising for many years. In response to a CCPA report, CEOs make greater than 200 occasions the typical Canadian revenue of $48,700. The typical CEO makes in 4 days what the typical Canadian employee makes in a single 12 months.

Lululemon Athletica, in a be aware to shareholders, estimated that CEO Calvin McDonald earned 714 occasions the quantity of the corporate’s median worker in 2020. Regardless of a wage discount on the pandemic’s outset, McDonald earned $10.59-million within the fiscal 12 months.

The compensation system is structured to exacerbate this divide, says the CCPA’s David Macdonald. With out regulatory intervention, government pay will proceed to develop — generally as a reward for lowering firm bills by measures like layoffs or pay discount.

“There’s limitless upside for CEOs, with very restricted draw back,” Macdonald stated.

Dias, whose union represents 310,000 staff in industries starting from manufacturing to forestry, says there’s no justification for raises when staff are struggling to make ends meet.

“It’s simply grasping,” he stated. “They make a lot greater than the typical worker to start with — why do they want extra?”


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