Parsing the B.C. Executive Pay List

Tony Wanless: “Old boys blocking the progress of women in top B.C. companies? Rubbish.”

The list of B.C.’s most highly paid executives has only been out for a few days and already the sniveling and snarling is in full force.

In one of my first jobs I was paid a salary that was so far beyond pathetic, it was almost laughable – two weeks’ pay barely paid a month’s rent on a basement apartment. But I was eager to get in the industry and so agreed to it.

Eventually, however, I needed more, so I had a photographer friend stage a picture of me doing something…well, pretty reprehensible…to the product. Every three months or so, I’d toss a copy on the boss’s desk as a signal that I was working pretty hard and could probably use a little more cash. Thank God he had a sense of humor and got the point. Swearing me to secrecy, he tried as much as he could to move a bit more of his budget my way, which meant I could occasionally supplement my endless pot of stew (a real Dickensian operation, this) with something a little tastier.

I thought of this admittedly crude strategy when I saw this year’s list of B.C.’s highest paid executives, which has already started the usual complaining that these kinds of lists always generate.

People don’t like to hear that someone else is making more than they are, whether deserved or not. They presume that person must have some special favor or maybe has a stock of inflammatory pictures of their superiors tucked away in a drawer somewhere. How else would they command more money when you’re clearly superior?

And so it is with the executive salaries list. The thinking invariably goes, “What does Joe Blow do that warrants a pay packet of millions anyway? Heck, I’d do it for half that.”
 
So let’s dig into the numbers a bit more. Invariably, Joe Blow doesn’t actually earn the full millions annually. He’s usually paid a base rate of a million or so – about enough to buy a house in Vancouver – and the rest is in the form of stock options, which carry a significant amount of risk and are a form of performance-based pay in that the better the company does, the better his pay looks.
 
I’m not trying to whitewash here. Some executives do make obscene amounts of money for what can be a pretty sub-par performance. Generally, though, these looters don’t last long, because strong governing boards tend to frown on that sort of thing.
 
Also, something like 60 per cent of the executives on this year’s list work in the mining industry, which is notoriously volatile. So it’s pretty difficult to measure performance on a year-to-year basis.
 
And that brings us to the other part of the complaints department: that there are very few women at the top of these B.C. companies that pay such supposedly superlative compensation. Obviously a case of discrimination, some people believe. Another example of the old boys club blocking the advancement of women, etc.
 
Rubbish. I can’t think of too many boards – who hire top executives – who would pick a bad male executive over a superior female one just because he’s a male. Maybe in 1970, but not today, when change is instantaneous and competition is so ferocious a company has to keep on its toes constantly. Besides, most are public companies and investors aren’t going to reward a company that makes a decision as stupid as choosing a CEO by gender.
 
The main reason there are few female executives on the list is that most large mining companies in B.C. didn’t – and probably still don’t – hold much interest for women. Rather, most women opt for the professional or intellectual industries. Witness the number of female graduates from the professions at Canada’s universities.
 
But none of this matters, I suppose, because human nature is human nature. And it’s human nature to be jealous of someone else’s fortune, just as it’s human nature to take pleasure at someone else’s misfortune.