Board members to blame for Ontario salary caps?

A leading academic says the federal government should ensure directors are doing their jobs properly before implementing restrictive legislation.

Board members to blame for Ontario salary caps?
Earlier this month, Ontario introduced its controversial salary cap for top executives in the public sector but while some have been pushing the government to take action on exorbitant wages, one academic says there’s already an effective system in place.

“There is a mechanism already that exists and it’s called the board and people sitting on the board are called directors so if we aren’t happy with the work they do then the government certainly has the authority and the power to take action with the composition of boards, changing the way directors are recruited, making sure they have the appropriate expertise and the appropriate understanding of taxpayers’ interest,” says Bertrand Malsch.

Montreal-based Malsch is an associate professor and distinguished faculty fellow in accounting at the Smith School of Business at Queen’s University – he told HRM that he doubts there is a systemic salary issue in Ontario but, if there is, board members should be the first port of call.

“For me, if – and I say if – there is an issue and we want to fix the issue in a way which is efficient, we have to make sure that board members and directors are doing a proper job,” he stressed.

Malsch says Ontario’s annual Sunshine List – which names every public sector employee with a salary in excess of $100,000 – also serves as a valuable tool when it comes to policing disproportionate wages.

“Each year you have a lot of people in Ontario devoting a considerable amount of energy trying to detect anomalies and trying to see who is making more money that they should,” he told HRM.

“We can count on public surveillance and many of the scandals that have been highlighted over the past decade – and there haven’t been many – have come from the sunshine list,” he continued.

“That’s ordinary citizens or journalists questioning it, asking why one university president is making $1 million a year when every other president is making just $500,000 – it’s already relatively efficient.”

However, the acclaimed academic admits it would be hard for the government to recognize it was largely relying on public good will.

“I can see how difficult it would be for the prime minister coming in front of the parliament or in front of the public to say; ‘We’re not changing any regulations, we will just continue to count on your good will and your willingness to do this job of surveillance and we’re going to do a better job at training and hiring directors.’

“This is not very appealing politically,” he added.
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