Mar 08, 5: That's much lower tax than they'd pay if they were paid an equivalent salary or bonus. The technology community, biotech startups and the junior mining sector are in full cry against any change. And while every cash-starved startup dreams of being the next Google, most of them will fail to grow that large. It's the nature of entrepreneurialism that encourages innovative people to hang on with a high-risk venture, planning for the big payoff.
Granting options is one way of compensating," Thomas said. The CEO of Shopify, an up-and-coming Ottawa tech company , has told the federal government the proposal to change the rules would hurt innovation. Thomas said if the federal government insists on changes, it should consider treating large revenue-generating companies differently than small entrepreneurs.
You could differentiate between the venture capital companies who are starved for capital and talent and have that as a separate class," he said. The overwhelming majority of companies that give stock options are not junior miners or tech startups, but large, listed companies who can afford to pay their senior people in cash. And most of those who benefit are highly paid executives.
Roger Martin, former dean of the Rotman School of Management, calls the current tax break for stock options 'indefensible.
Not only are these top earners rewarded handsomely, they pay less tax on options than if they were to be paid in cash or a bonus. Roger Martin, former dean of the Rotman School of Management at the University of Toronto, calls the current system for stock-option compensation "indefensible.
We said, that's sufficiently good for the economy, that we want to reward people for doing that ,and we'll make the tax on it lower than it would otherwise be," Martin said.
This is plain and simple executive compensation. Martin has been, along with investor Warren Buffett, a prominent opponent of any kind of stock-based compensation for executives. The idea that getting stock or stock options as compensation causes CEOs to align their interests with those of the company is just plain wrong, he argues. It hasn't resulted in better returns for companies.
That may mean talking up the company in the press, making new acquisitions or using aggressive accounting to inflate expectations. I'd like to see policies that discourage it for companies. The idea caught on in the U. Martin says companies now do it because everybody does it. That won't result in a benefit to federal government coffers. Mawani estimates Ottawa and the provinces would lose as much on the company deduction as they would gain on full taxation of the stock options in the hands of executives, give or take a few dollars.
It also won't be much use to junior mining companies or tech startups, as they still won't have the cash to pass on to anyone. The timing of any changes is unclear. Pseudonyms will no longer be permitted. By submitting a comment, you accept that CBC has the right to reproduce and publish that comment in whole or in part, in any manner CBC chooses.
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