Description: It probably doesn’t come as much of a surprise that CEOs are well compensated. But did you realize that shortly before noon hour on January 3, the second work day of the year, the CEOs at the top rung in Canada will have earned more than the average Canadian worker will earn for all of 2017? That’s a bit of an improvement for the CEO class who took until a little after noon on day 2 to reach the average worker’s annual pay last year. The Canadian Centre for Policy Alternatives developed the report that uses the clock analogy to show the growing income inequality in Canada.

Date: January 3, 2017

Source: theglobeandmail.com

Link: http://www.theglobeandmail.com/report-on-business/top-ceos-will-earn-more-by-today-than-average-canadian-does-in-2017-report/article33470477/

Discussion Points:

1) What do you think of this clock analogy to illustrate the point of income inequality? What are some other techniques accountants can use to make numbers more understandable?

2) The article discussed how the current Trudeau government has backed down on its intention to increase the tax rate on stock options which often form a significant portion of CEO compensation. What is the difference in tax treatment of salary versus stock options ?

3)  What are some lessons from accounting theory about constructing executive pay packages?