CEO Salaries Hit All-Time High In Canada
HALIFAX – On January 3, at 9:34 a.m., the best-paid CEOs in Canada had already made more money than the average Canadian worker will earn over the entire year.
The statistic, which comes from a new Canadian Centre For Policy Alternatives report, highlights the ballooning disparity between CEO pay and average workers’ salaries in Canada.
According to the CCPA, the average salaries of the country’s best-paid CEOs hit an all-time high last year, coming in at $14.3 million.
That number represents a 31.2 percent jump from the previous year’s average. It also smashed the old record of $11.8 million, which was set in 2018.
Meanwhile, the average Canadian worker’s salary didn’t even keep up with inflation. Last year, the average salary for a private-sector worker rose from $57,000 to $58,800. That’s a three-percent jump in a year where inflation raised the cost of living by 4.8 percent.
As the CCPA put it, the average worker took an effective two percent pay cut, once inflation is included, whereas the richest 100 CEOs got a 26 percent bump, after inflation, to their average salaries.
Put another way, the average CEO pay was 243 times the average worker pay in 2021. That continues a trend of an ever-widening ratio. In 2009, the best-paid CEOs made, on average, 155 times more than the average worker; In 1998, the ratio was 104.
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David Macdonald is a senior economist with the CCPA and the author of the new report.
He told Huddle ballooning CEO pay comes largely thanks to yearly bonuses, which are theoretically connected to performance. However, he argues that CEO performance appears to have very little to do with compensation.
“I really think the last two years exemplify everything that’s wrong with CEO pay,” Macdonald says. “Most of what’s driving CEO pay inequality with worker pay is [bonuses] because that’s mostly how CEOs are paid.”
Macdonald says most companies argue that CEO bonuses are given out based on performance. However, he likens it more to a “pay-for-luck scheme.”
“In 2020, there was a lot of bad luck. And you think that CEO salaries would have fallen, or the bonus side way would have fallen, but that really wasn’t the case,” he says.
He points out that many CEOs were bailed out by the government, or their companies simply changed how their bonuses were calculated so that they didn’t feel the full impact of declining sales and revenues.
“Then, in 2021, there’s a lot of good luck for companies,” Macdonald explains. “There was this inflationary surge brought on by the war in Ukraine that had nothing to do with Canada or Canadian CEOs, but it provided a once-in-a-lifetime opportunity for the corporate sector to raise prices, which [drove] profits to an all-time. And as profits go through the roof bonuses go through the roof.”
“So it’s not because CEOs did anything in particular, they’re just at the right place at the right time and these pay-for-luck schemes delivered in 2021 in a huge way. And that’s why we’re seeing new, all-time records in terms of CEO pay in 2021.”
Only three women among the 100 best-paid CEOs
As CEO pay grows ever higher, the number of women who hold top positions in Canadian companies remains depressingly stagnant.
This year, Macdonald says there were only three women on the list. That means there were more men named “Mark” than women among the country’s best-paid CEOs.
This is not unique.
“The number of women on this list doesn’t change. It hasn’t changed despite renewed interest over the last couple of years around gender equity. This is an old boys club and continues to be an old boys club. It’s always been an old boys club,” Macdonald says.
He points out that the number of women who graduate with “key degrees that are going to lead into the C-suite” is about the same as the number of men. The barrier many women face is that they are not promoted at the same rate as men once they leave school.
“The challenge begins almost immediately upon entry into corporate Canada in that you do see a lot fewer promotions early in a woman’s career rather than a man’s. Then you get the impact of children on a woman’s career,” Macdonald says.
“We think that the glass ceiling is on the top floor [but] it’s actually on the bottom floor.”
The best-paid Atlantic Canadian CEOs
The CCPA’s data comes from public filings and doesn’t consider private businesses (like, for example, J.D. Irving, Limited or Clearwater).
But, according to the data the organization does have, the best-paid CEO in Atlantic Canada was David Hutchens, the president and CEO of the Newfoundland-based utility Fortis Inc. In 2021, he made a total of $9,138,356.
Meanwhile, Emera president Scott Balfour brought in $8,280,544 (Emera owns and operates Nova Scotia Power). Michael Medline, the president and CEO of Sobeys owner Empire Company, made $7,491,355.
Maple Leaf Foods president and CEO Michael McCain brought home $6,932,194 in 2021.
The CCPA’s full report, including the complete list of all 100 of Canada’s best-paid CEOs, is available here.
Trevor Nichols is Huddle’s editor, based in Halifax. Send him your feedback and story ideas: [email protected].