Pay gap between CEOs and workers hits record high in Canada: report
Canada's 100 highest-paid CEOs made 227-times more than the average worker made in 2018, surpassing all previous records.
The report comes from the Canadian Centre for Policy Alternatives (CCPA), which says the number is up from 197-times 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 report author and CCPA Senior Economist David Macdonald.
The report shows the country's highest-paid 100 CEOs on the S&P/TSX Composite index made, on average, $11.8 million in 2018 (the most recent data available), beating 2016's record of $10.4 million.
Between 2008-18, top CEOs saw their pay rise by 61 per cent, and by 18 per cent between 2017 and 2018 alone, while average worker pay rose just 2.6 per cent between 2017 and 2018, says the CCPA
"Growth in the vast gap between excessive CEO compensation and average incomes is an indicator of Canada's income inequality juggernaut," adds Macdonald. "Wealth continues to concentrate at the very top while average incomes barely keep up with inflation."
The report also suggests that even when companies lose money, executive pay remains high.
The CCP 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 $6 million annually, twice what it would have taken a decade ago;
- 79 per cent 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 last year;
- Of the companies on the S&P/TSX composite that lost money, one-third reported C-suite payrolls amounting to at least 40per cent of their losses. These numbers undercut the argument that C-suite pay is based on performance;
- Among profitable companies, 13 per cent 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. 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,” Macdonald adds.
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 a million dollars.
The CCPA is an independent, non-profit charitable research institute founded in 1980.