CEOs still made over $200 for every $1 earned by employees, says report
There has been some progress when it comes to closing the gap between what business leaders in Canada earn and what workers take home from their jobs, according to a recent report.
The gap between how much CEOs and workers earned in 2023 narrowed compared to the previous year – when the gap reached all-time highs – according to the Canadian Centre for Policy Alternatives (CCPA).
Overall, the pay gap between Canada’s 100 highest-paid CEOs made and regular workers stood at 210:1, it says.
That ratio is down from $246:$1 in 2022 and $243:$1 in 2021.
Source: Canadian Centre for Policy Alternatives
Still, the CCPA thinks the gap is too wide.
“It’s hard to conceive of income gaps that large,” said David Macdonald, senior economist. “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.”
The major reason why CEO pay is growing so much more rapidly than worker pay isn’t their salary, pension or benefits – “It’s their juicy bonuses,” says the CCPA.
Source: Canadian Centre for Policy Alternatives
“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.”
In 2024, the CBC disbursed over $18 million in bonuses to different workers – including 45 executives who took home more than $3.3 million in bonuses. On average, these executives each received over $73,000.
Meanwhile, almost 1 in 3 Canadians making $100,000 per year are living paycheque to paycheque, according to a previous report.
The CCPA also noted women’s continued lack of representation among the highest paid CEOs in the S&P/TSX Composite Index: there are only three women in the list of the 100 highest paid CEOs.
“In fact, there are more CEOs named Scott or Micheal than there are women on this list,” noted the CCPA. “Although in 2023, the women make more than the Scotts and Micheals; a minor win for gender equity.”
While the gender pay gap persists, some women in different parts of Canada’s population are experiencing it worse than others, according to a previous report from Statistics Canada (StatCan).
Still, there has been some progress when it comes to narrowing the CEO-to-worker wage gap, said CCPA.
For one thing, the 2019 federal budget introduced a cap of $200,000 a year on the stock option deduction.
“The federal government capped this so that stock options could only receive this sweetheart tax treatment on the first $200,000 of stock options. Above and beyond that cap, the 100 per cent of the profit would be on tax forms, as if the CEO was paid in stock options, which they were,” said CCPA.
Also, the 2024 federal budget increased the inclusion of capital gains to 66.6%, while the inclusion rate on salaries and wages is 100$.
“This change will affect the rare few – including company men on this highest-paid 100 CEOs list – who are making massive stock market profits every year, year after year. They won’t be able to spread a massive gain over two years because there is so much profit to take,” said CCPA.
However, the non-partisan research institute is calling on the federal government to impose “a very small annual tax on wealth” which, they said, could raise $32 billion a year to help address affordability for food and housing.
The CCPA also wants Ottawa for higher top marginal tax brackets.
“In the past, the pay gap between CEOs and the average worker was much smaller, but the fundamental tax regimes were also different. Today, the combined federal and provincial top marginal brackets, which apply to those with the highest income amount to roughly 50%, depending on the province. Alberta is slightly below that amount, but Quebec and Ontario are slightly above. Historically speaking, Canada’s marginal tax rate for the richest is low. In the post-war years, top marginal income tax brackets stood within the 70% range – not 50%.
“History is teaching us a lesson: there is room to stretch on this tax policy.”
