stockoption-thumb-1.png
stockoption-thumb-1.png This article is more than 7 years old

Tax loophole lets Potash CEO avoid tax on $300 million in stock options

Thanks to Canada’s loopy tax laws, a miner making $50,000 per year will pay tax on 100% of their earnings because they get paid in salary, while the CEO who runs the mine can avoid tax on half their earnings because they get paid in stock options. Meet Bill Doyle, the outgoing CEO of the Potash Corporation […]

Thanks to Canada’s loopy tax laws, a miner making $50,000 per year will pay tax on 100% of their earnings because they get paid in salary, while the CEO who runs the mine can avoid tax on half their earnings because they get paid in stock options.

Meet Bill Doyle, the outgoing CEO of the Potash Corporation of Saskatchewan Inc.

As part of his executive compensation package, Doyle will have earned $300 million in profits from stock options when he transitions to company advisor in a few months, according to the Globe and Mail. A separate investigation by the newspaper in 2010 found that Potash executives stood to make as much as $700 million from stock options at the time.

Meanwhile, in Toronto, Onex Corp. recently filed details with Canadian regulators of CEO Gerald Schwartz’s 2013 compensation package. Turns out $59.6 million of Schwartz’s $85.3 million compensation was doled out in stock options. His annual salary was $1.3 million.

“Stock options have become the single largest component of compensation among CEOs and senor executives at large public traded companies in Canada,” said University of Victoria professor of public administration Lindsay Tedd. “The income earned from stock options is granted preferential tax treatment when compared to other forms of employment remuneration.”

Using a special deduction created in 1984, if a person buys and sells shares on the same day, they only pay tax on half of their stock option earnings. Coincidentally, 90% of all stock options are bought and sold on the same day, taking full advantage of the loophole.

The flip side of the loophole? It costs Canadians $1 billion each year.

And according to the Globe’s 2013 survey of executive compensation, Canadian CEOs stand to get very rich off stock options, often the biggest chunk of their compensation package and far more lucrative than their salaries.

Does this seem fair?

Help us protect Canadians by holding the powerful accountable.

Journalism is an important public service. That’s why PressProgress is prioritizing stories aimed at keeping Canadians safe and holding the powerful accountable during the coronavirus pandemic.

Please consider supporting our award-winning non-profit news organization so we can keep making a positive impact for Canadians.

 

Support Our Journalism
PressProgress
PressProgress is an award-winning non-profit news organization focused on uncovering and unpacking the news through original investigative and explanatory journalism.

Most Shared

thumb-2021-012-02 Analysis

BC RCMP Says It Deployed Snipers and Assault Teams Against Unarmed Indigenous Land Defenders Because It Was ‘More Practicable’

Related Stories

Analysis

Amazon’s Anti-Union Tactics Around the World Show What Canadian Warehouse Workers Are Up Against

View the post
News

An Angry Mob of Anti-Vaccine Extremists Swarmed a Children’s Toy Store in the West Edmonton Mall

View the post
Analysis

New Data Shows Ontario’s Minimum Wage Leaves Workers Up To $7 Per Hour Short on Costs of Living

View the post

Explainers

Politics & strategy

Jeremy Appel

The battle of the PACs in Calgary’s municipal election

View the post
Politics & strategy

Jeremy Appel

27 Different Candidates are Vying to be Calgary’s Mayor. Here Are the Biggest Issues at Stake.

View the post
Work & rights

Shanice Regis-Wilkins

How Labour Activists Pushed For Policies That Protect Workers and the Environment This Election

View the post