By: Obert Madondo | Analysis
You probably met Royal Bank of Canada President and CEO, Gordon Nixon, through the recent media coverage of the Temporary Foreign Workers Program scandal. He issued an “open letter to Canadians“, simultaneously apologizing and playing victim. And then, last week, the RBC informed us it’s no longer in the deplorable business of outsourcing Canadian jobs to foreign workers.
Now we know what the RBC did with part of the profits made from hiring cheap temporary foreign workers in the last couple of years. We know how the profits the RBC and other big Canadian banks made after the Harper government secretly bailed them out during the 2008-10 global financial crisis are working.
Nixon is one of three Canadian bank chiefs who rank among the 20 most overpaid bank CEOs in North America, according to the July 2013 issue of Bloomberg Markets magazine. In 2012, he received $12.6 million (U.S.) in total compensation. He’s the most overpaid Canadian CEO and ranks fourth on the list.
Also making the list are the Bank of Nova Scotia’s Richard Waugh ($11.1 million) and Toronto-Dominion Bank’s Ed Clark ($10.8 million). Richard Fairbank of Virginia-based Capital One Financial Corp (COF) was the most overpaid with $17.5 million. Goldman Sachs’s Lloyd Blankfein, who earned $26 million, is second on the list.
From Bloomberg Markets:
The pay of the 20 chiefs increased an average of 7.7 percent for 2012 compared with a year earlier, according to data compiled by Bloomberg. The tally is based on salaries, stock, bonuses and long-term incentive pay awarded to the CEOs for 2012.
“All of them are being overpaid,” says Eleanor Bloxham, CEO of Value Alliance Co., a board advisory firm in Westerville, Ohio. “The bank boards still don’t have a good handle on how they should be compensating their executives.”
Gerald McCaughey, head of Canadian Imperial Bank of Commerce, is 11th on the list with $9.3 million. Louis Vachon, head of National Bank of Canada, earned $7.2 million and is the 17th on the list. But Bloomberg Markets ranked both as “underpaid”.
The U.S. banks on the list received part of the $419 billion in bailouts after the 2008 Wall Street crash. As I blogged earlier, the Harper government has never publicly admitted to bailing out Canadian banks during crisis. It did. Secretly. According to a report by the Canadian Centre for Policy Alternatives (CCPA).
“Between October 2008 and July 2010, Canada’s largest banks relied heavily on financial aid programs provided by the Bank of Canada, the Canada Mortgage and Housing Corporation (CMHC), and the U.S. Federal Reserve—all at the same time,” the CCPA says. “Over the entire aid period, Canada’s banks reported $27 billion in total profits between them and the CEOs of each of the big banks were among the highest paid Canadian CEOs. Between 2008 and 2009, each bank CEO received an average raise in total compensation of 19%.”
- See: The Big Banks’ Big Secret: Estimating Government Support for Canadian Banks During the Financial Crisis.
Canada’s big banks received $114 billion. That’s roughly translates to $3,400 for every man, woman, and child in Canada.
This is the kind of state-sponsored corporate greed Occupy railed against in 2011. Now, do wealthy Canadians like Nixon and Canadian banks give back to ordinary Canadians who make their profits and bailouts possible? Recent stats and revelations suggest they do not.
Earlier this year, Statistics Canada revealed that Canadian money stashed in global tax havens now tops $170 Billion.
“Canadian money sent off shore also means less being invested in Canada,” says Canadians for Tax Fairness, an organization that campaigns for fair texation. ” This means the loss of billions of dollars in tax revenue for federal and provincial governments and fewer new jobs being created in Canada.”
And more income inequality in Canada.
A new Statistics Canada analysis of income trends among Canadian taxfilers from 1982 to 2010, revealed that the gap between the one per cent and the rest is widening. In 1982, the median income of the 1 per cent was $191,600, and that of the 99 per cent was $28,000. By 2010, the median income of the one per cent had risen to $283,400, and that of the 99 percent increased by only $400, to $28,400.
A recent sweeping analysis by the Organization for Economic Co-operation and Development (OECD) revealed that, in 2008, the average income of the top 10 per cent was $103,500. That’s 10 times the average of the bottom 10 per cent, whose income averaged $10,260.
According to MakePovertyHistory.ca, more than 3.5 million Canadian live in poverty. A statement released by Food Banks Canada on the eve of the Hunger Awareness Week earlier this month said one-in-five Canadians skip meals to make end meet. In fact, more than a quarter of Canadians have been worried about how they will afford to buy food for themselves and/or their families at some point during the last year.
My point is: extreme wealth and income is unethical. More so when its enabled by a government that’s become addicted advancing obscene corporate interests while impoverishing Canadians through ruthless cuts to jobs and essential services.