The highest paid CEOs in Canada earned the average annual salary in 10 hours

After two years of pay inflated by soaring inflation and record profits, CEOs continue to earn far more than Canadian workers, but that gap has narrowed, according to a new report from the Canadian Center for Policy Alternatives ( CCPA).

In 2023, the 100 CEO the highest paid in Canada took home $13.2 million on average, or 210 times more than the average worker. In the previous two years, this gap was greater: their average compensation was more than 240 times higher than that of employees in 2021 and 2022.

It continues to be a huge gap, but what has happened this year is that workers have seen increases in their wagesunderlines David Macdonald, author of the report and senior economist at CCPA.

Indeed, in 2023, the average compensation of employees in the country, including overtime, increased by 6.6% in one year. This is good news for workershe said.

That year, corporate profits after taxes – which totaled $577 billion – fell by 3% compared to the record levels recorded in 2022. This decline in profits is reflected in the bonuses of senior executives, underlines the economist.

When we see a small decline in profits, we see a small decline in bonuses for CEO.

Corporate profits continue to be very strong, but not as much as they were in 2021 and 2022he said.

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Impose a salary ratio?

Annie Boilard, human resources specialist, suggests implementing a maximum ratio between the highest salary and the lowest salary within a company.

For example, if the ratio is set at 60:1 and an employee in Ontario earns the minimum wage – $17.20 per hour, or $32,255 annually – the salary of the CEO must not exceed $1,935,300.

It is always possible to pay much more CEObut we will have to increase the remuneration of the lowest paid employee in the organization.

In the United States, publicly traded companies are required to report their pay ratios, but no limits have been set, she points out.

According to an analysis (New window) of the American Federation of Labor and the Congress of Industrial Organizations, the largest group of unions in the country, the CEO in the United States earned on average 268 times more than workers in 2023.

The CEO of NU Skin Enterprisesan American beauty products company, earned more than 10,000 times the median salary of its employees.

Wage gaps still remain very high for several other well-known American companies, such as Abercrombie & Fitch (6076 times), Mattel (3220 times) and Coca-Cola (1799 times).

Taxing big fortunes

David Macdonald, you CCPAwelcomes the federal government's efforts to tax the richest more. Last June, Ottawa increased the capital gains inclusion rate, which could bring in a significant amount of money from CEO canadiens.

According to the report of CCPAthe 100 highest-paid CEOs in the country own a combined $45.2 billion in stock in their respective companies. The five largest shareholders on this list alone hold almost all of this value, or 38.2 billion.

This gives us an idea of ​​the concentration of wealth in Canadaindicates the economist.

These five shareholders will therefore owe $829 million more in taxes due to this tax measure, according to the organization's estimates.

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The problem is that they are only going to pay that when they sell those shares, so if they wait for another government, which will cancel this change, maybe they will not have to pay those 800 million dollars moresays Mr. Macdonald.

The economist also notes that the proportion of remuneration of CEO top earners from stock options have fallen by half since a federal measure targeting this loophole was passed in July 2021.

He continues to call for a wealth tax, which would generate new income annually, rather than waiting for the sale of stock securities, which can take years. This proposal, put forward by the federal New Democrats, does not have significant support from other parties in the House of Commons.