Top Executives in Canadian Companies Must Disclose Pay

ONTARIO'S socialists have made Canada's capitalists hopping mad. The Ontario government has ruled that the top five executives of publicly traded Canadian firms will have to reveal their salaries and perks.

``Does the government want all people who earn good incomes to walk around with bodyguards?'' asks Allan Waters, chief executive officer and the largest shareholder of CHUM Limited of Toronto, which owns radio and television stations. Mr. Waters and other executives say the government's move is motivated by envy and in turn will cause envy among their employees.

``When the guy in the same industry across the street finds out what the competition is being paid, he'll be chasing his boss for a raise,'' Waters says.

The Ontario Chamber of Commerce is concerned that the new rules will encourage kidnapping of well-paid business executives. The government and shareholder-rights groups contend that it is time for more detail in corporate annual reports.

``We are responding to investors who have urged that Ontario set higher standards of disclosure,'' says Ontario Treasurer Floyd Laughren, an elected member of the New Democratic Party provincial administration.

Although the disclosure rules are being imposed by the socialist government in the province of Ontario, they will have a wide-reaching effect on companies across Canada. They affect companies whose shares trade on the Toronto Stock Exchange and companies whose stocks are traded on the over-the-counter or unlisted market in Toronto. The TSE handles more than 80 percent of equity trading in Canada, so the ruling affects almost all publicly traded Canadian companies.

``Nobody likes disclosure, it's human nature and certainly CEOs are not going to like this,'' says Edward Waitzer, the incoming chairman of the Ontario Securities Commission. ``On the other hand, a great many investors, and particularly institutional investors, are going to applaud.''

UNDER the changes to the Ontario Securities Act, public companies will have to reveal what is paid to the top five people; what directors are paid; details of loans the company makes to executives; and special pension or ``golden parachute'' arrangements. Other Canadian jurisdictions have indicated they will follow suit.

``I wouldn't anticipate we would have too much difficulty going with something quite similar,'' says Douglas Hyndman, chairman of the British Columbia Securities Commission. ``It is desirable to have uniformity in this area.'' Two of the other stock exchanges, in Alberta and Quebec, are looking at similar rules.

The current regulations only require companies to disclose the total amount paid to ``all executives who perform a policymaking function.'' It is up to each company to decide what that means.

``We're very pleased,'' says Bill Riedl, president of Fairvest Securities Corp., which has campaigned for minority shareholder rights. Mr. Riedl says he is glad to see the rule change is effective Oct. 31. ``That's the fiscal year-end for the major banks. It will be very interesting to see what some of those guys make.''

Annual reports will also have to include a performance chart giving the five-year performance of the company's shares compared with a broad index or the performance of similar firms. The rule change brings corporate disclosure in Canada into line with laws in the United States.

``It's no big change for us,'' says Howard Lichtman, vice president of Cineplex Odeon Corporation in Toronto. ``We are already listed on the New York Stock Exchange, so that information is readily available to our shareholders.''

``These are a benign form of regulations,'' says Mr. Waitzer of the OSC, adding there could be some unseen advantages for Canadian executives. ``When Canadians see how little they make compared to Americans, there could well be a case for ratcheting up Canadian paychecks.''