Canada's highest-paid CEOs will earn 200 times more than the average worker in 2023, a new report says — although the gap between executives and employees narrowed slightly that year, as workers' wages rose and corporate profits fell amid a comedown from high inflation.
An annual report released by the Canadian Center for Policy Alternatives, a progressive think-tank, said chief executives were paid 210 times more than the average worker that year, and 240 times more in 2022 and 2021.
The report's authors highly credit the rise in corporate profits, helped by record-setting inflation — a claim that some executives have disputed in the past — and, by extension, higher bonuses for executives whose compensation is tied to company performance.
David Macdonald, senior economist at the Canadian Center for Policy Alternatives and co-author of the report, said the CEO-to-worker pay ratio is rising despite the recent contraction.
“The long-term trend is pretty clear,” McDonald said in an interview with CBC News. “In the 1980s, CEOs made about 50 times the average worker. In the '90s, it was 100 times. Now we're over 200 times, I think.”
As high inflation puts constraints on purchasing power, Canadian workers are demanding higher compensation to match the rising cost of living (although some industries still lag behind in wage gains, the report notes).
Those demands led to an average weekly wage increase of 6.6 percent in 2023, including overtime. Meanwhile, after-tax corporate profits fell three percent in 2023 from the previous year's high, according to Statistics Canada data The analysis was carried out earlier this year by the Center for Future Work, a non-partisan research institute.
The data shows that some workers are “making their way back,” McDonald said. “One of the reasons the gap narrowed a bit this year is because we've seen workers fighting inflation, asking for and getting pay rises.”
'More complex' than numbers: HR experts
The gap between executive and worker pay “seems huge,” said Anne Boilard, a Montreal-based human resources expert. “But you have to bear in mind that it's a global pay package, that doesn't necessarily mean it's money in their bank account.”
Boilard said it's “more complicated than what we see in the numbers,” adding that higher pay for executives doesn't mean lower pay for the average Canadian — nor is it money taken out of the government's purse or the pockets of company employees.
“After the company pays the salary and bonus, it is beneficial to return the remaining amount to the shareholders,” she said. But the amount distributed among the shareholders is not that much.
“It's better for them to have a good person who's going to increase their share price than to have a few cents more in their own package at the end of the day,” Boilard said.
The report, which analyzes the nation's 100 highest-paid chief executives, also says these individuals took home an average of $13.2 million in compensation in 2023.
Most of their pay comes from performance bonuses and share-based payments, not salaries, pensions or benefits. The average salary of the top 100 highest-paid CEOs that year was $1.3 million.
That list includes CEOs of Loblaw Companies, per Bank; Telus Chief Executive Darren Entwistle; and Tobias Lütke, CEO of Shopify. Some of the executives on the list, like Lütke, are paid in US dollars, and the report converts those figures to Canadian currency.
The highest-paid executive on the list is Patrick Dovighi, head of waste management company GFL Environmental Inc. is CEO, whose total compensation in 2023 reportedly comes to $68.4 million.
But Macdonald said changes in tax policy by the federal government have led to “a major decline in stock options as a means of payment for CEOs,” including a 2021 policy change that capped stock option payments.
“There are significant errors that have been closed over the last couple of years, and we're seeing the impact of those errors in the CEO pay data,” he said.
