moved:
That this House support the principle of disclosing the salary ranges of all senior executives of crown corporations and publicly traded companies incorporated under federal charter.
Mr. Speaker, in this motion I am asking the House to support the principle of disclosing the salary ranges of all senior executives of crown corporations and publicly traded companies incorporated under federal charter.
I admit right off the top that I do not think this motion really goes far enough. That was suggested by the Globe and Mail newspaper which suggested that the motion include boards and commissions of the federal government.
I tried to keep the motion as simple as possible. Adding other entities, in my opinion, only complicates the issue. I wanted, in a fashion, to set the bar as low as possible so that we could get some kind of easy discussion on this matter.
I wanted to discuss this issue so that Canadians can get an idea of how members of Parliament feel about generous and sometimes extremely lucrative benefits which executives of public companies and crown corporations receive.
Why did I introduce this motion? It has not been designed to settle the impossible question of what executives are worth. I am not trying to do that in this motion. After all we live in a free market economy in which employers can pay employees whatever they feel is acceptable.
If my purpose is not to determine an executive's worth then why the motion? Consider how the public would feel if both politicians' and senators' salaries and benefits were not disclosed. People would be very unhappy. People want to know how public servants or public representatives treat themselves. Similarly, and I think in a growing fashion, people want to know how powerful, influential people in the private sector treat themselves.
Also consider the province of Ontario which under its securities act requires companies currently trading on the Toronto Stock Exchange to disclose the compensation packages of senior executives. Ontario is the only province with this requirement. The Ontario example provides a basis for us. Summaries of all companies should be required regardless of location in Canada and whether that company is publicly traded or a crown corporation; in other words, extend the Ontario example right across the country.
Ontario's securities act was implemented several years ago. It was implemented to force companies trading on the Toronto Stock Exchange to disclose the compensation packages of senior executives. As well, the Ontario legislature has given first reading to two private members' bills relating to salary disclosure.
Bill 108 would amend provincial access and privacy statutes to provide access to information relating to the salaries of public service officers and employees at the provincial and municipal levels. Bill 114, entitled an act to provide for the disclosure of executive compensation in the public sector, would require the Ontario government to report annually the salaries of the five most highly paid officials in each government ministry and crown corporation.
Perhaps through example we can more clearly understand the motivation for the introduction of disclosure regulations. Let me give some examples.
Hartland MacDougall, the former chairman of Royal Trust was handed a combined salary, bonus and severance package of $2.9 million for 1993. That came after the collapse of Royal Trust.
Marvin Marshall is CEO of Bramalea Ltd., a real estate firm. In 1993 even though Bramalea lost something like $90 million Mr. Marshall was paid almost $1 million in salary, $971,225.
Bill Stinson, CEO and chairman at Canadian Pacific, received a 31 per cent increase in salary in 1990, earning $1,181,895 despite the fact that Canadian Pacific's profits declined by 52 per cent in that same year.
Paul Stern, former CEO of Northern Telecom, left that company in 1992, receiving $164,000 for two months of employment. Stern also took with him a compensation package totalling $6 million. Also we cannot forget another $1.5 million in stock options.
When Stephen Banner joined Seagrams he received a signing bonus of 200,000 Seagram shares with a market value of $5 million as well as his salary and a bonus package worth $1.2 million. In addition Mr. Banner received a $1 million interest free loan to buy a house in Montreal and additional stock options
worth $2.1 million. As for his performance that has to be yet evaluated.
Those are examples. Some people might say those are examples of lucrative benefits. Some people might say that is an example of greed. There are cases where greed is not so apparent.
Paul Desmarais, the chairman of Power Corporation of Canada, a Montreal based firm, paid himself $1.6 million while the firm's net earnings were $201 million.
In my opinion such salaries become more than a simple matter of disclosure, but disclosure is at the heart of this issue. Executives of large firms and crown corporations are powerful people, perhaps in some instances more powerful than ministers or even the Prime Minister. In this respect there needs to be some legislation to inform Canadians how corporate moneys are dispensed with or spent.
One reason for introducing this as a motion rather than a bill is that several legislative changes would be required in order to facilitate salary disclosure. I do think though that salary disclosure means that salaries or compensation packages would be tied more closely to performance: the better the performance, the better the compensation package; lower performance, lower remuneration.
Disclosure at the federal level would require all kinds of legislative changes. For example, under the existing legislation in section 3(19)(iii) of the Privacy Act the federal government is now required to only disclose the salary ranges for senior civil servant positions. The Federal Court has interpreted salary range as meaning the exact salary amount of officials and shall remain personal information and not subject to public scrutiny. However, the Canada Business Corporations Act does permit public access to documents such as letters patent and annual returns which do not include certain information on a corporation's directors.
Federally there has been an effort to amend the Privacy Act to require the exact salary to be announced with order in council appointments. In a 1987 report the Standing Committee on Justice and the Solicitor General recommended but did not implement the amendment which would have made specific salaries of government officials mandatory.
Financial institutions are major corporations incorporated under federal charter. Several acts would have to be amended to effect this change, namely the Bank Act along with its counterparts, the Insurance Companies Act, the Trust Loan Companies Act, and the Co-operative Credit Associations Act.
The Canadian Business Corporations Act could also be amended to include an order to state executive remuneration. When filing annual returns with the Superintendent of Financial Institutions a corporation could be required to report the salaries of its senior directors. This information would be accompanied by a report of the corporation's operations and activities of its directors already provided to the superintendent in accordance with section 262 of the act and open to public scrutiny as required under section 266.
It may also be necessary to make an amendment to the definitions in the Privacy Act to clarify the intent and need for salary disclosure for the sake of public interest. The amendments mentioned here could sufficiently cover the salaries of private sector executives.
Those are some necessary legislative changes. That is down the road. Right now we are more or less talking about the principle of disclosure.
As politicians we are continually reminded of the notion that absolute power corrupts absolutely. I am not trying to imply that senior executives are morally corrupt or have ethics that are worse than any other person. I do not think they are any more greedy than anyone else, but I do think that because of their influence and power they may be in a better position to act upon the greed they may possess. I suppose we all have some greed in us.
I am saying that senior executives are so powerful that even though they are technically employees their compensation can be extreme relative to the company's economic performance. Currently some executives can virtually set their own salaries and bonus packages. I suspect there would be a considerable debate on this point, but they are very powerful, especially in their own realm within their own companies.
Senior officials are also in a position to stack or heavily influence advisory boards or shareholder boards with friends and allies. Corporations are not the most democratic institutions. One might ask at this point: Why not leave this matter to the shareholders?
I do not expect private companies to be as democratic as this old institution we call the Parliament of Canada is. Given the fact they are not that democratic I do think that shareholders need a little helping hand to open up the process and to provide better disclosure. We have to remember that shareholders in private corporations are a disparate group and are spread all over the place. It is very difficult for them to get together to make things happen.
Legislation would do executives a favour in some instances, in those cases where salary and compensation packages are reasonable relative again to company performance. They would receive strong public support and it would be good for their image. In cases where remuneration is unreasonable there would be some reason to worry and they would have to bring about some adjustment on account of adverse public opinion.
Countless times executives are quoted as saying that the government should cut back on its expenditures. What I am proposing in this motion would require that private sector executives practise what they preach. Or, if one believes that executives in private corporations already practise what they preach maybe this kind of disclosure would ensure that they would continue to practise what they preach.
During the recent recession a number of companies lost a great deal of money, yet executives of some of these companies were rewarded handsomely. In some cases executive salaries went up despite the fact that the performance of their companies went down. The greatest irony is that in many of these cases it was these individuals who made decisions which cost their firms a great deal of money, yet they were in receipt of greater rewards and greater compensation. Should we be rewarding bad decisions and bad choices? If we do that then I suppose the Conservative Party would still be ruling this country.
Crown corporations also play a significant role in the economy and should be subject to the same rules of disclosure. The fact that executives can earn more money while the companies they work for lose money suggests that executives have the power to design their own packages in secrecy, behind closed doors and out of sight of public scrutiny. The public should know how the packages of crown corporations are established.
In recent days there has been a controversy surrounding the head of CNR. We discovered that as part of his package he was in receipt of a $300,000 loan interest free, which probably makes it worth another $30,000 or $40,000. There is no need in my opinion to hide that kind of thing. If in this case the head of the CNR deserves that kind of assistance, if we want to put it that way, then it should be open and above board. He has no reason to hide it. My guess is it was made as obscure as possible because the man involved did not want that kind of information out. He probably thought it would add to his discomfort.
Disclosure is not intended to embarrass executives. It simply outlines the need for constraint. Disclosure gives us those constraints.
Initially this action may be considered intrusive. However, in the case of crown businesses they are the businesses of the government. Because they use government money they are using tax dollars. Furthermore, these businesses are important to the Canadian economy. Consider for a moment the significance of General Motors, Canadian National Railways, the Bank of Canada and the Department of Finance.
In conclusion, I wish this motion had been made votable but the powers that be decided otherwise. I wanted it to be votable because it would have given us the vehicle to express ourselves on this issue. I think Canadians want parliamentarians to express themselves on this matter.
In the remaining 40 minutes of this debate, I welcome the comments and the insights of my colleagues. If there are members who believe that executive compensation is nobody's business but their own, then let us hear about that. If in the opinion of some members disclosure is deemed to be harmful to the public interest or harmful to the private sector, I would like to hear about that too. Let the debate continue.
