By Harinder Mahil
Canada’s top CEOs made 200 times more than the average worker in 2023, says a new report released last week by the Canadian Centre for Policy Alternatives (CCPA).
The CCPA’s report, Company Men: CEO Pay in Canada, 2023, shows that, on average, these 100 CEOs were paid 210 times more than the average worker’s wage in 2023. CEOs have always made more than the average worker, but the gap is growing.
The gap between executives and employees narrowed slightly during 2023, as workers’ wages rose, and corporate profits declined during the period of high inflation. The gap was over 240 times more in 2022 and 2021.
It’s hard to conceive of income gaps that large,” says David Macdonald, senior economist with the Canadian Centre for Policy Alternatives (CCPA) and a co-author of the report. “By the first working day of the year, January 2 at 10:54 a.m., these 100 CEOs already made, on average, $62,661. It took the average Canadian worker all year to earn that amount.”
In the 1980s, CEOs made about 50 times the average worker. In the ’90s, it was 100 times. Now, it is over 200 times.
According to the CCPA report, the average CEO earns $7,162 an hour, and the minimum CEO wage for the top 100 is $3,220 an hour.
The top 100 CEO list is almost all men—there are only three women on this list. In fact, there are more CEOs named Scott or Micheal than there are women on this list.
The mythology of CEOs’ supposed path to the top chair also doubles as justification for ever higher pay: that companies’ extreme pay packages are needed to attract top talent. However, the report says that the truth of the matter is much more mundane. Of the 100 highest-paid CEOs in Canada, 76 per cent of them weren’t parachuted directly into the CEO chair; they were promoted from within the company and had worked there for on average 21 years. In other words, they had been with the same company for, on average, half of their career.
These excessive CEO salaries are not just a symbolic issue— they contribute to rising inequality. The major reason CEO pay is growing so much more rapidly than worker pay isn’t their salary, pension or benefits—it’s their juicy bonuses. In 2023, the cash bonus was, on average, $2.3 million per CEO. This isn’t the average workers’ holiday bonus and it is double the 100 CEOs’ average salary line. In theory, bonuses are supposed to be tied to how well the company is doing. In reality, CEO bonuses rise regardless of performance.
CEO compensation does not reflect the greater productivity of executives but their ability to extract concessions from corporate boards—a power that stems from dysfunctional systems of corporate governance in Canada.
This concentration of earnings at the top leave fewer dollars for ordinary workers.
How should we deal with this situation? We must develop policies that limit CEOs’ ability to collude with corporate boards to extract excessive compensation to prevent Canada from becoming a society like the one in the US where corporations control everything. Such policies could include reinstating higher income tax rates at the very top, using tax policy to incentivize lower CEO pay, allowing shareholders to vote on CEO compensation, and using regulation to rein in the market power of the corporate sector.
Harinder Mahil is a human rights activist and is secretary of Dr. Hari Sharma Foundation.
