100 highest-paid CEOs now make 243 times more than the average employee
By 9.43am this morning, Canada’s highest-paying CEOs have already made $58,800 – the equivalent of the average worker’s yearly salary. That’s according to a new report released today by the Canadian Centre for Policy Alternatives (CCPA) – a social, economic and environmental think tank.
According to the data, the top 100 highest-paid CEOs now make 243 times more than the average employee.
“If you measure this massive pay disparity in time, less than an hour after the first working day of the year begins, Canada’s highest-paid CEOs will have already made $58,800 or what it will take the average worker the entire year to make,” says CCPA Senior Economist David Macdonald.
“That’s by 9:43 a.m. on January 3, 2023, to be precise,” says Macdonald. “You could call CEO pay the breakfast of champions.”
And it seems as if the wealth divide is growing, and growing quickly. In 2021, the highest paid Canadian CEOs took home an average of $14.3 million, according to the CCPA’s report, with bonuses making up 83% of that compensation.
“We think of inflation as bad for everyone, but for CEOs it’s the gift that keeps on giving,” says Macdonald.
“Historically high profits based on historically high inflation mean historically high bonuses for CEOs.
“When times are bad, like during the pandemic, CEO bonus formulas are altered to protect them; in good times, like 2021, the champagne never runs dry.”
Inflation worries and compensation requests
As the gap between worker and CEO pay continues to widen, HR leaders are very much stuck in the middle when it comes to balancing wages. With personal purchasing power on the downturn thanks to the rising cost of living, employees may opt to jump ship in search of more lucrative pay or perks.
And, with the ongoing talent shortage coupled with an expected hike in turnover this month, recruitment and retention are top of mind for HR.
According to Gallagher’s recent 2022 Benefits Strategy & Benchmarking Survey Report, attraction and beating turnover were cited as two of the main concerns heading into 2023.
The survey found that 80% of Canadian companies have boosted rewards to lure in talent, an increase from 63% in 2020 and 2021.
But with the main driver for turnover cited as being higher compensation, what becomes of those smaller companies that simply can’t afford to hike base salaries?
Speaking to HRD, Pedro Antunes, chief economist at The Conference Board of Canada, advised against giving mass wage hikes – instead saying that the best way to help employees beat inflation was to offer bonuses or payment packages.
“If employers are forced to increase wages because of pressures in labour markets, they counter that by increasing prices,” says Antunes.
“We end up with this wage/price vicious cycle that doesn’t help employees improve their real purchasing power.
“In the end, this can lead to even higher interest rates, adding to the risk of a recession. Instead, employers should consider one off measures, bonuses or temporary inflation-beating measures to help their staff.”