Financial Post - A CEO's worth? Ask the board; Outrage over compensation misplaced
(Economics professor William Watson): One of the more disturbing developments of 2011 was that the left-leaning - well, actually, left-fallen-over - Canadian Centre for Policy Alternatives began to display something of the marketing acumen of the Fraser Institute in Michael Walker's heyday.
No doubt you saw news coverage of the CCPA's New Year's report on CEO pay. Mr. Walker popularized "Tax Freedom Day," the day of the year when Canadians stop working to pay taxes to the government and start earning for themselves. (It used to come in July but now, thanks partly to Mr. Walker, it arrives in June.)
The CCPA is now pushing what might be termed CEO Pay Liftoff Day, the day when high-paid CEOs have made more than the average Canadian will make in the year. For some CEOs, liftoff comes very early. For Frank Stronach, the country's highest-paid CEO (almost $62-million in total compensation in 2010), it came at 10:30 a.m. on Jan. 2, the first legal working day of the year.
The CCPA study quotes the University of Toronto's Roger Martin and McGill's Henry Mintzberg, the CBC's favourite business prof, as saying performance pay isn't actually good for companies. Prof. Mintzberg would abolish executive bonuses entirely, calling them "legalized corruption," and Prof. Martin would tie them to real economic variables such as revenues or profits rather than stock prices.
But if you were a major shareholder of one of these mega-corps or on its board, mightn't you think a good way to be sure you and your top executives' interests were closely aligned was to give them a piece of the firm?
