In 1998, the best-paid CEOs earned roughly 104 times what average workers did. In 2009, as the world lurched out of an economic recession, it was 155 times. In 2022, it was pushing 250.
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.
