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The pay gap between CEOs and their workforce is widening across the globe — and Canada is no different.
Canada’s 100 highest-paid CEOs made 227x more than the average worker made in 2018, surpassing all previous records, according to a report by the Canadian Centre for Policy Alternatives (CCPA). The new figure is up from 197x the average worker pay in 2017.
“Put another way, by 10:09 a.m. on January 2, the average top CEOs will have made as much money as the average Canadian worker will make all year. That’s the earliest time on record in the 13 years we’ve been tracking these numbers,” said David Macdonald, the report’s author and senior economist at CCPA.
The report shows that the country’s 100 highest-paid CEOs on the S&P/TSX Composite index made an average of C$11.8 million in 2018 (the most recent data available), beating 2016’s record of C$10.4 million.
Between 2008-2018, top CEOs saw their pay rise by 61% — and by 18% between 2017 and 2018 alone — while average worker pay rose just 2.6% between 2017 and 2018, according to the CCPA.
“Growth in the vast gap between excessive CEO compensation and average incomes is an indicator of Canada’s income inequality juggernaut,” Macdonald said. “Wealth continues to concentrate at the very top while average incomes barely keep up with inflation.”
The report also suggests that even when organizations lose money, executive pay remains high.
The CCPA concluded that an analysis of broader top executive payrolls beyond the CEO position (the “C-suite”) reveals that in some cases, executive payrolls have become so large that they are a major factor in overall company losses.
Among the report’s findings:
- The “minimum wage” a top-100 CEO needed to make the list is C$6 million annually, twice what it would have taken a decade ago.
- 79% of the average CEO’s pay in 2018 came from bonuses related to company stock prices, though complicated formulas ensure CEOs get much of their variable pay regardless of stock performance.
- Only four women are among Canada’s richest 100 CEOs, up from three in 2017.
- Of the companies on the S&P/TSX composite that lost money, one-third reported C-site payrolls amounting to at least 40% of their losses. These numbers undercut the argument that C-suite pay is based on performance.
- Among profitable companies, 13% paid C-suite executives more than what they paid in corporate income tax overall.
“The federal government needs to reckon with the runaway C-suite compensation that is contributing to Canada’s growing income inequality gap,” Macdonald said. “Left to their own devices, it is clear what these companies prioritize: big bucks for top positions regardless of performance, leaving crumbs for the vast majority of their workforce.”
He believes the government could address what he calls “excessive CEO pay” through a review of tax loopholes, higher tax brackets for the “extremely rich” and the elimination of corporate deductions for pay over C$1 million dollars.