April 20, 2016 noon eastern

Stock indexes are up modestly this morning.

Canadian Western Bank is up a somewhat immodest 5.1% on top of yesterday’s gain of 6.6%. I suspect some popular analyst or other has “upgraded” the stock.

Bombardier is up 4.8% also on top pf yesterday’s gain of 5.1%. Bombardier however is now a notoriously volatile stock. It’s easier to make gains after falling to basically penny stock status. Still, the gain is welcome.

Statistics Canada reports that pipeline deliveries of crude oil and refined petroleum are up. Exports were up 8.7% to 13.6 million cubic metres, and were the largest contributor to the increase in deliveries in February versus February of last year. (This would be down substantially in dollar value however.) Clearly the Canadian industry is contribution to the over-supply situation.

Director Compensation and deferral of personal income tax

For quite a few years I have seen that directors and executives get paid in some combination of cash and options but also in more exotic things like Deferred Stock Units and various sorts of synthetic stock options. I have not previously bothered to dig into some of these things.

But yesterday I was reading how Stantec is paying its directors almost entirely in either stock (which I like to see) or deferred stock units, and the directors can choose between the two. As I understand it, the benefit to the directors of deferred stock units is that they get to defer income tax on this compensation until they retire from the Board.

I find it rather outrageous that directors can earn in this case about $200k per year and be paid in a deferred stock units and defer income taxes for many years. Most of us pay income tax as we earn income. Why should directors get this special treatment?

I intend to look into this further.

This is not specific to Stantec many or most large companies do this.

Perhaps this is just a useless distraction from the more important job of evaluating whether Stantec and others are good investments. But I find this kind of thing interesting. I question the ethics of assisting directors to defer income tax. With this behavior, is it any wonder that the average citizen views the system as rigged against them?