Canada’s top-paid CEOs made over 200 times more than the average worker in 2023, says a new report — yet the gap between executives and employees narrowed slightly that year, as workers’ wages rose and corporate profits declined during the comedown from high inflation.
The annual report, released by the progressive think-tank Canadian Centre for Policy Alternatives, says chief executives were paid 210 times more than the average worker that year, down from a high of over 240 times more in 2022 and 2021.
The report’s authors attribute that high to a boost 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 with the Canadian Centre for Policy Alternatives and a co-author of the report, said the CEO-to-worker pay ratio continues to grow despite the recent contraction.
“The long-term trend is pretty clear,” Macdonald 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. We’re now, I think, pretty solidly over 200 times.”
As high inflation put constraints on purchasing power, Canadian workers began demanding higher compensation to align with the rising cost of living (although some industries are still lagging on wage gains, the report notes).
Those demands led to an average weekly wage increase of 6.6 per cent in 2023, including overtime. Meanwhile, after-tax corporate profits declined by three per cent in 2023 compared with a high reached the year before, according to Statistics Canada data analyzed earlier this year by the Centre for Future Work, a non-partisan research institute.
The data shows that some workers are “clawing their way back,” Macdonald said. “One of the reasons why the gap is slightly smaller this year is we’ve seen workers fighting against inflation, asking for pay raises and getting them.”
‘More complicated’ than the numbers: HR expert
The chasm between executive and worker pay sounds “enormous,” said Annie Boilard, a human resources specialist based in Montreal. “But you have to keep in mind that this is the global remuneration package, meaning that it’s not necessarily money in their bank account.”
Boilard said that it’s “more complicated than what we just look at the numbers,” adding that high pay for executives doesn’t mean less pay for the average Canadian — nor is it money taken from the government’s purse or the pockets of company employees.
“When the company has paid the salaries and the bonuses, the money that is left over becomes benefits to be given back to the shareholders,” she said. But that money split among shareholders doesn’t amount to much.
“It’s better for them to have a good person that will increase the value of their shares than to have a few cents more at the end of the day on their own package,” Boilard said.
The report, which analyzes the country’s 100 highest-paid chief executives, also says that these individuals took home an average of $13.2 million in compensation in 2023.
The majority of their pay comes from performance bonuses and shared-based payment, not from salaries, pensions or benefits. The average salary for the top 100 highest-paid CEOs stood at $1.3 million that year.
That list includes Per Bank, the CEO of Loblaw Companies; Telus chief executive Darren Entwistle; and Tobias Lütke, the CEO of Shopify. Some executives on the list, such as Lütke, are paid in U.S. dollars, and the report converts those figures to Canadian currency.
The highest-paid executive on the list is Patrick Dovigi, the CEO of waste management company GFL Environmental Inc., whose total compensation in 2023 reportedly came to $68.4 million.
But Macdonald said the federal government’s changes to taxation policy have led to “a huge decline in stock options as a means of pay for CEOs,” including a 2021 policy change that capped stock option payments.
“There are important loopholes that have been closed over the last couple of years, and we’re seeing the impact of those loopholes in the CEO pay data,” he said.