stockoption-thumb-1.png
stockoption-thumb-1.png This article is more than 6 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-2021-02-021 News

Doug Ford, In the Middle of a Deadly Pandemic, Calls Paid Sick Days a ‘Waste of Taxpayers Money’

Related Stories

News

Jason Kenney Quietly Cut His Energy War Room’s Funding By Two-Thirds Using a Sneaky Accounting Trick

View the post
News Brief

Authorities Dropped Criminal Probe Into Canada’s Biggest Newspapers Despite Evidence They Plotted to Shut Down Local Newspapers

View the post
News

Oil Executives Pressured Regina, Saskatchewan to Withdraw Motion Banning Public Buildings From Being Named After Oil Companies

View the post

Explainers

Politics & strategy

Tom Parkin

Why Justin Trudeau and Jagmeet Singh Are Taking Very Different Positions on Private, For-Profit Long-Term Care

View the post
Human rights & inclusion

Amira Elghawaby

Why The Full Impact of Hate Groups on Targeted Communities Is Not Captured By Hate Crime Statistics

View the post
Power and democracy

Andrea Reimer

How The COVID-19 Pandemic Revealed Canada’s Most Powerful People Have Less Power Than They Think

View the post