That stark comparison is just one way to measure the growing gap between the incomes of corporate leaders and those of the people on whom they depend to generate revenue. By 9:47 a.m. on January 2, 2024 (the first day of work for many in the new year), Canada’s 100 best-paid CEOs would already have made roughly $60,600 – as much as the average Canadian worker will pull in for the entire year. The findings are contained in a new report on CEO pay released this month by the Canadian Centre for Policy Alternatives (CCPA).

The report tracked 234 companies on the S&P/TSX composite index and found that the average pay for the 100 best-paid CEOs jumped to $14.9 million in 2022 (the year the report measured), which is an increase of 4.4% from the previous year. The average highest-paid CEOs in 2022 made 246 times more than the average worker, or $7,162 an hour, the CCPA reports. That’s a new record and up slightly from the previous year, when it was 243 times. In 2022, the average worker in Canada got a raise of $1,800, or 3%, which was less than half of inflation and brought their salary to $60,600.

Other stark details: only four of the 100 CEOs were women (which matched the number of CEOs with the name Mark or Scott), while inflation, which is demolishing the purchasing power of most Canadians, has been fuelling companies’ profits and subsequently the swollen compensation of CEOs  because of a shift in their pay structure. In 2022, the average Mark made $18.5 million and the average woman made $11.7 million. That translates into the top CEO who is a woman making 63 cents for every dollar that a CEO named Mark makes.

“While the wave of inflation has been crashing down hard on regular Canadians, Canada’s 100 highest-paid CEOs have been riding it to another record-smashing year,” the CCPA says. “Inflation presented a once-in-a-lifetime chance for corporate Canada to jack up prices and pad their profit margins.”

The highest-paid CEO in 2022, according to the report, was J. Patrick Doyle, the executive chairman of Restaurant Brands International Inc., which owns Tim Hortons, Burger King and Popeyes; he pulled in $151.8 million that year. Next was Matthew Proud of Dye and Durham Ltd., a legal-software and payments-technology company, at nearly $99 million, and Seetarama S. Kotagiri, of auto parts manufacturer Magna International Inc., at $36 million. The bottom of the list was also the most lucrative it has ever been, with the lowest-paid of the top 100 CEOs, Randy Smallwood, of Wheaton Precious Metals Corp., pulling in $6.7 million.

The Corporate Knights research team also tracks the ratio of CEO-to-average-worker pay as part of its annual ranking of the 50 most sustainable corporate citizens in Canada. The CEOs of the companies that made the list earned 108 times more than the average worker in 2022, up from the 74-to-1 ratio in 2021. Hydro One (27th on the list) and Transcontinental (26th), a printing company, fared the best on this key performance indicator in 2022. Hydro One’s CEO earned nearly nine times what the average worker did, while Transcontinental came in at 22 times. On the other end of the spectrum, the CEO of Gildan Activewear, which ranked 24th overall, earned 713 times the average worker’s wage. The Corporate Knights Best 50 ranking traces public and private Canadian companies as well as Crown corporations with more than $1 billion in revenues.

It’s inflation that’s been ultimately driving these bonuses, due to historic profits in the corporate sector.

 

– Canadian Centre for Policy Alternatives

Report author and economist David Macdonald notes that it’s important to understand the shifting compensation mechanisms that have fuelled the growth in CEO pay. Salaries account for an increasingly smaller share of CEO pay; the average CEO salary  has been relatively constant at around $1 million a year, rising to $1.2 million in 2022. Bonuses tied to revenue, profit and stock prices are driving CEO pay now, he writes.

“It’s inflation that’s been ultimately driving these bonuses, due to historic profits in the corporate sector, which is interesting, given CEO pay is frequently claimed to be based on merit,” the report notes. In June 2022, after the height of the pandemic, annual inflation peaked at 8.1%. While corporations contended that their costs were going up and price increases were necessary to keep their businesses afloat, the CCPA reports that companies used inflation to “drive profits and margins way outside of historical norms.” That, in turn, has helped fuel the rise in CEO compensation.

The organization suggests some ways these earnings could be redistributed: by taxing the income of the highest earners more aggressively, reducing the tax deductions that corporations can claim related to CEO pay, and introducing a wealth tax.

The post The pay gap between Canada’s CEOs and workers is widening fast appeared first on Corporate Knights.

Twenty years ago, Corporate Knights launched its quest for a more humane form of capitalism, placing people and planet ahead of profits, with the Best 50 Corporate Citizens sitting at the head of the roundtable to make business a force for good.

A lot has changed for the better in that time and a lot hasn’t.

Thankfully, the glass ceilings in Canada’s corporate boardrooms have been breached, with non-male members now making up almost a third of directors, double their one-sixth share in 2002. Based on current trends, we are on track for 40% of directors to be non-male by 2030. In order to meet the Government of Canada’s 50% challenge to reach board gender diversity by 2030, we will need to double the pace this decade at which we add non-male directors to boards.

Racial diversity on large corporate boards has also improved: 9% of members are now non-white, double the 4% level in 2011, when we first started tracking this metric. This number still needs to double for it to more fairly reflect Canada’s total population mosaic (27% of which is racially diverse including Indigenous peoples, as of the most recent census). That means adding non-white directors at an annual clip that is three times faster this decade than we did last decade.

While one workplace fatality is too many, it is encouraging that on a national level, a third less people died on the job in 2019 than was the case in 2002, when 465 people paid the ultimate price because of a workplace accident. Reducing the number of workplace deaths (now 335 per year) to zero by 2030 means getting a lot more vigilant about safety.

Over the last two decades, corporate profits have doubled, workers have been left behind and emissions have stalled, but the Best 50 firms are leading the way with 50% more gender diversity and triple the investments aligned with the clean economy.

While high profits at a firm level can indicate economic vitality, at a national level it’s usually a sign of economic rot and oligopolistic market structures (five big banks, four big grocery stores, three big telcos, one big fertilizer company serving 36 million people). In Canada’s case, sky-
high profits have been accompanied by meagre investment and poor productivity in relation to our G7 peers. Instead of making Canada wealthier, these profits have mostly been flowing to a tiny fraction of the population that owns the majority of company shares, half of whom are foreign investors.

While taxes are the price we pay for civilization, large Canadian companies are getting a better bargain than ever, paying a quarter less taxes as a percentage of their profits than they were 20 years ago.

The average CEO of a large company is making out better than ever, too, taking home $5.6 million in total compensation, or about 106 times as much as their average employee (a ratio that has grown by more than 50% since 2002). For reference, in 1977, the late management thinker Peter F. Drucker suggested the pay ratio between CEOs and employees be a maximum of 25-to-1 (later revising that to 20-to-1, saying at the time, “I have often advised managers that a 20-to-1 salary ratio is a limit beyond which they cannot go if they don’t want resentment and falling morale to hit their companies.” Getting to 20-to-1 in Canada by 2030 would mean slimming down average CEO pay to a quarter of today’s levels and boosting average worker pay by 50% over that time period (or 5% per year).

On the one measure we have put the most emphasis, greenhouse gas (GHG) emissions, there is good news and bad news. The bad news is our national emissions have barely budged since we began our mission 20 years ago (nudging up 2% from 724 million tonnes in 2002 to 738 in 2019 – the most recent base year before the COVID pandemic). But it could be a lot worse. Had emissions grown at the same clip in the past 20 years as they did in the 1990s, Canada’s GHG emissions would be over one billion tonnes today. That is some consolation, but to achieve Canada’s 2030 goal (roughly cutting emissions in half by 2030), we will need to reduce emissions 15 times faster than we are at the moment.

To sum things up, profits have surged, people have been left behind (albeit boardrooms are a little less pale and male), and we’re stuck in neutral on the planetary issue of GHG emissions.

It has never been more possible to make a radical shift.

Those are the facts we cannot ignore.

And at the same time, it has never been more possible to make a radical shift: to harness the engine of business to put our economy in service of people and the planet. It is a tall order, but there’s no reason why we could not right this ship by the end of this decade.

The solutions are on the shelf: thanks to engineers, the price of solar, wind and storage has plunged by 90% over the past 20 years, finally making it economical to end our addiction to burning fossil fuels.

As the standard bearers for sustainable capitalism, the Best 50 Corporate Citizens in Canada have a special role to set the pace. This year’s Best 50 is leading the way with 50% more gender diversity, and almost triple the rate of investment and sixfold the proportion of revenues aligned with the clean economy, as compared to the other large Canadian companies.

The pay gap between Best 50 CEOs and their average worker is less than half that of run-of-the-mill big businesses. And their carbon productivity (which measures how much revenue a company generates per tonne of emissions) is double their peers. This approach has stood the test of time, proving that better corporate citizens can beat the market year over year. The Best Corporate Citizens’ stock market performance has outperformed its peers earning  499% gross return since it was first launched in June 2002, versus 366% for S&P/TSX Composite.

The 2022 Best 50 Corporate Citizens vs. the rest*

Meet this year’s Best 50 Corporate Citizens in Canada

Corporate Knights’ 2022 ranking of the world’s 50 Best Canadian corporate citizens is based on a rigorous assessment of nearly 7,000 public companies with revenue over US$1 billion. Who made the cut in 2022?

DOWNLOAD THE COMPLETE 2022 BEST 50 EXCEL SCORECARD »

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2022 Best 50, Summer 2022Canada’s top corporate citizen of 2022 wants to become North America’s battery June 29, 2022 Hydro-Québec tops the Best 50 list again with big plans to expand its supply of hydropower in the United States Read Article

2022 Best 50, Summer 2022These are Canada’s top international corporate citizens of 2022 June 29, 2022 These 10 companies with a subsidiary in Canada are leaders in sustainability Read Article

 

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At the time, the Canadian CEO and water technology expert was 63 years old and hoping to retire to academia. Benedek took a job at Scripps Research in San Diego, where he was briefly a professor. But while at Scripps, he quickly became passionate about the next problem he wanted to tackle through the private sector: climate change.

“Governments around the world are failing to protect us from catastrophe,” he says. “And things will change, as they usually do, when the catastrophe gets unbearable.” Benedek hopes that things won’t get to that point and that his current company, Anaergia, can be part of the solution in weaning the world off fossil fuels. The corporation is one of Canada’s fastest-growing sustainable companies.

In 2007, Benedek left his academic job and founded Anaergia, which converts organic food waste into biofuels, such as renewable natural gas. This technology reduces the amount of methane, a potent greenhouse gas, being emitted into the atmosphere from landfills. The company went public last summer, and in March, Anaergia announced it planned to raise $60 million by offering 4.8 million subordinate voting shares.

A current that flows through both Benedek’s old venture and his new one is his pursuit to solve environmental problems using technology. He worried that the world would face some nasty water shortages and sought to put a dent in water pollution through ultrafiltration membranes he developed with Zenon.

Governments around the world are failing to protect us from catastrophe. And things will change, as they usually do, when the catastrophe gets unbearable.

-Andrew Benedek

Benedek came to Canada from Hungary in 1956 during the Hungarian Revolution. He became a professor at McMaster University, before fleeing academia a first time to start Zenon in 1980. During that first stint as a professor, he grew restless to make an impact on big problems.

That drive led him to found the company that topped our first list of the 50 Best Corporate Citizens 20 years ago (Zenon ranked first in 2002 and 2004). Back then we wrote, “Zenon provides one of the most basic of human needs: clean H2O, while conducting itself in the most chivalrous of fashions. Is it the Ideal Corporate Citizen? For 2002, it’s King of the Castle.”

Benedek came from a long line of shoemakers in Hungary, an occupation he was expected to fall into, but he was bound for bigger things. He hopes that his company will be part of a larger constellation of corporations that will help solve humanity’s greatest challenge.

“I get up every morning with the hope that I [can] find a new way, [and] I think about … how to get there. And then I also go back in history and I find examples where, [against] impossible odds, [problems were] resolved and humanity survived,” he says.

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In 2002, the Republicans were running Washington and gutting the Clean Air Act. In Ottawa, Prime Minister Jean Chrétien, facing his last year in office, was just starting to think environmentally. Public concern over “global warming” was boiling over – but where were the leaders?

It turns out they were all around us. In early 2002, a newborn magazine called Corporate Knights formed an advisory committee of eminent Canadians to help design the first annual ranking of Canada’s most sustainable business leaders. Our thesis: despite the braying of conservative pundits and the indifference of many businesses, “at its best, the modern corporation can be an incubator for human progress and wealth creation.” Ranking Canada’s top public companies in six categories – community, employee relations/diversity, product safety and business practices, environment, international, and corporate governance – we recognized the 50 firms that best embodied the pro-social spirit of the new millennium.

In the two decades since, making the Best 50 list has become a sought-after award for ambitious enterprises. The best employees all know they have a choice of where to work, and they’re demanding to work for companies that have purpose, equity, integrity and sustainability baked into their DNA. Our ranking universe has grown, and our methodology has gotten tighter and more complex, making this list an ever-clearer representation of the most responsible corporations in Canadian business. Most importantly, the Best 50 are firmly committed to getting better every year.

Our 20th Best 50 ranking includes a compelling cross-section of Canadian public companies, private firms, co-ops, Crown corporations and publicly owned corporations with more than $1 billion in revenue. They hail from multiple industries and from coast to coast. The list includes eight banking/investing firms, seven power generators, six power-transmission companies, five mining firms (including the Royal Canadian Mint), five transportation giants (ranging from two national railways to Montreal’s public transit system), four insurance companies and three real-estate firms. It also includes household names like Telus, Cogeco, Canadian Tire and Canada Post.

“At its best, the modern corporation can be an incubator for human progress and wealth creation.”
— Toby Heaps, co-founder, Corporate Knights, circa 2002

What really matters is their work: their new sustainability initiatives, their campaigns to improve diversity and equity, their partnerships and pilot projects, their ever-higher performance targets, their breakthroughs and their well-intentioned failures. By studying the best practices of the Best 50, we believe any organization can chart a better, cleaner future.

How does a company make the Best 50 this year? Our ever-evolving rankings reflect multiple weighted metrics, ranging from clean revenues and clean investments to the proportions of renewable energy and recycled water used by each company. Other categories include emissions, waste productivity, business-related injuries, employee turnover, the ratio of CEO compensation to average employee pay, gender and racial diversity, sustainability of suppliers, taxes paid – and even the quality of the firm’s pension fund. By far the highest-weighted category, worth 42.5% of the score, is clean revenue, which Corporate Knights defines as revenue from all goods and services that offer clear environmental benefit – and in a few cases, social benefit.

When we compare the Best 50 against all other large Canadian companies with revenues of more than $1 billion, the Best 50 outperform on proportion of clean revenue (29.3% vs. 17.4%) and clean investments as a proportion of total investments (35% vs. 25.4%). They also pay their workers better (with a CEO-to-average-worker pay ratio of 18.47 vs. 89.59) and practise more diverse leadership (with 33.6% gender-diverse boards and 11% racially diverse boards, vs. 27% and 6.7% for run-of-the-mill big business). Although there is certainly more work ahead to meet the federal government’s 50-30 Challenge, which calls on companies to ensure gender parity and at least 30% representation of other under-represented groups.

Heading the list this year – as it also did in 2018 – is electricity giant Hydro-Québec. Sharing the Top 10 laurels are Montreal-based gas distribution utility Énergir (the former Gaz-Métro); Guelph, Ontario, insurance firm The Co-operators; Canadian National; Toronto-based electronics manufacturer Celestica; Edmonton design and engineering firm Stantec; Edmonton-based energy and water distributor EPCOR Utilities; Vancouver-based, values-driven credit union Vancity; municipal electric utility Toronto Hydro; and Montreal real-estate company Ivanhoé Cambridge, which in April announced its commitment to achieve net-zero carbon emissions by 2040 for its portfolio of 800 shopping centres, office buildings, hotels and residential communities. Its roadmap sets out a 20-year plan that proves companies can think ahead more than a few years at a time.

One significant change from our very first Best 50 list: six companies on the 2021 Best 50 are headed by women CEOs, versus zero in 2002. Clearly a work in progress.

Social responsibility comes in all forms. At its best, however, it comes packaged as opportunity. Consider the iconic transportation giant Canadian National Railway. For generations, CN has confronted a huge problem: disposing of two million worn-out railway ties a year. The easy solution was to toss them into landfills, out of sight and mind. Then CN developed EcoConnexions, a program that explored new ways to reuse and recycle waste. Today, the railway shreds old wooden rail ties and ships them to a long-time customer, Montreal packaging producer Kruger, which turns the wood chips into energy in its biomass cogeneration plants.

Too often, status quo is an excuse for bad habits and a failure of imagination. As CN demonstrates in this one tiny step on its sustainability journey, a little creativity can not only reduce pollution and waste, but invent new value, build stronger partnerships and save the planet.

As the world’s fourth-largest producer of hydropower, with 61 hydroelectric generating stations, Hydro-Québec enjoys a strong head start on top spot in the Best 50. But the provincially owned utility earns its No. 1 rank on merit. It established its first environmental protection committee in 1970 and now aims to be carbon-neutral by 2030.

“2020 was a paradigm-shifting year. Our focus on sustainability has helped us deliver our best while weathering the worst.”
— Gord Johnston, CEO, Stantec

To strengthen its position in renewable energy, especially wind, solar and battery storage, Hydro-Québec last year acquired a 19.9% interest in Longueuil, Quebec–based Innergex Renewable Energy (No. 20 on this year’s Best 50). Hydro-Québec is also working with Stantec (No. 6) to measure and mitigate climate-related risks to its operations and facilities. As with CN partnering with Kruger (the parent company of Kruger Products, No. 19), these win-win deals demonstrate that as more Canadian firms develop their sustainability expertise, the benefits will flow across the business landscape.

In fact, we may have already reached the tipping point where embracing sustainability is no longer a necessary chore but a genuine business opportunity. And as Hydro-Québec CEO Sophie Brochu notes, the COVID pandemic has exposed the fragility of today’s institutions and demonstrated the importance of creativity, agility, empathy and inclusion.

Stantec CEO Gord Johnston spoke for many of his Best 50 peers when he reported that “2020 was a paradigm-shifting year. Stantec’s long-standing focus on sustainability has helped us deliver our best while weathering the worst.”

Best 50 companies are building for the future. For example, nine of this year’s firms have joined either the Science Based Targets initiative, a partnership that helps companies set emission reduction targets, or the UN’s Business Ambition for 1.5°C commitment. Stantec, Telus, Cogeco and WSP have signed on to both. This year, we’re encouraging all Best 50 companies to sign on to these initiatives as a commitment to ongoing action and an example to other Canadian companies.

We’d also like to see all Canadian banks join Vancity as signatories of the global Net-Zero Banking Alliance, the industry-led and UN-convened alliance championed by former Bank of Canada governor Mark Carney.

The road to responsibility, sustainability and national prosperity is never straight, and the journey never ends. But by sharing the best success stories, we can all get there.

Rick Spence is a business writer, speaker and consultant in Toronto specializing in entrepreneurship, innovation and growth. He’s also a senior editor at Corporate Knights.

BEST OF THE BEST 50

Highest clean revenue:
Brookfield Renewable & Innergex Renewable Energy
These two renewable energy powerhouses tied for first place on the clean revenue front, with 100% of their revenue coming from green energy. Hydro-Québec came in a close second at 99.6%.

Top board gender diversity:
Vancouver City Savings Credit Union
Vancity has joined the 50-30 Challenge, which calls on companies to ensure at least gender parity and at least 30% presence of BIPOC (Indigenous, Black and people of colour), LGBTQ2S+ and people living with disabilities on boards and senior leadership teams. Today, 7 out of 9 (77%) of its board directors are non-males.

Top board racial diversity:
Vancouver City Savings Credit Union
This diversity and inclusion leader now has a board of directors that is 44% racially diverse, with a total of 26% of its senior leaders and managers identifying as BIPOC.

Biggest carbon reducer:
Toronto Hydro
Toronto Hydro cut its carbon footprint by 44% from 2018 to 2019, or more than 16,000 tonnes of CO2e by greening facilities, reducing line losses and releases of sulphur hexafluoride, as well as solar projects.

Best CEO-to-average-worker pay ratio:
Paper Excellence
The average large Canadian company CEO makes 90 times more than their average worker. Paper Excellence (formerly Catalyst Paper) has a fairer approach: their CEO was paid roughly three times their average worker.

Highest pension contribution:
Algonquin Power
Leading companies don’t just pay their workers
well; they also help them save for retirement.
Algonquin Power paid out the most of all our Best 50 firms, which works out to roughly $17,000 per full-time employee.

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*companies assigned a tied position

For complete scores across all 24 key performance indicators, download our free Excel datasheet below. 

Download Full Best 50 Corporate Citizens Scorecard

Performance indicators

Clean Revenue: Percentage of total revenue derived from products and services that are categorized as “clean” under CK taxonomy

Clean Investment: Percentage of total investments in assets that are categorized as “clean” under
CK Clean Economy Taxonomy

Board/Executive Gender Diversity: Percentage of non-male board members and executives

Board/Executive Racial Diversity: Percentage of racially diverse board members and executives

Sustainability Pay Link: At least one senior executive’s compensation tied to sustainability-themed performance targets

Percentage Tax Paid: Taxes paid in cash, as a percentage of EBITDA (operating income for financial services)

Financial Sanctions: Total fines, penalties and settlements as a percentage of revenue

Paid Sick Leave: 10 or more paid sick-leave days per year

Pension Fund Status: A series of calculations assessing the generosity/viability of defined contribution/defined benefit plans

Energy/Carbon/Waste/Waste Productivity: $ revenue per unit (gigajoule/tonne/cubic metre/tonne of waste) of non-renewable energy consumption, direct/indirect CO2e, freshwater withdrawal, waste produced

VOC/NOx/SOx/PM Productivity: $ revenue per tonne of VOC, NOx, SOx and particulate matter emissions

CEO–Average Worker Pay: How much more CEO gets paid (expressed as multiple compared to average worker)

Supplier Score Sustainability: score of a company’s largest supplier by spend

Fatalities: Fatalities per total employee count

Injuries: Lost-time injuries per 200,000 work hours

Turnover: Number of departures divided by the average total employees

*For complete methodology, click here.

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