Top-paid CEOs raked in average worker's annual salary before noon today
CEO pay now 202 times more than that of average worker, report calculates
Even in the midst of the COVID-19 pandemic, the highest-paid CEOs in Canada have already earned more in 2021 than the average Canadian worker will earn all year, according to a new report.
The eye-popping claim comes from an annual report released Monday from the Canadian Centre for Policy Alternatives, an Ottawa-based think-tank that champions labour issues and opposes inequality.
By tabulating data from companies that trade on the TSX, the group calculated that in 2019, the average total compensation for the 100 best-paid CEOs in Canada was $10.8 million. In contrast, the average annual salary for a Canadian worker that year was $53,482, according to Statistics Canada.
At those rates, a top Canadian CEO earned the entire annual salary of a typical worker at their company by 11:17 a.m. ET today.
That's actually a little over an hour later than was the case the year before, when the average CEO took in $11.8 million annually — 227 times more than the typical worker's pay packet. At that time, the richest 100 CEOs outearned their average workers a little after 10 a.m. on the first working day of the year.
The CCPA used 2019 data because full numbers for 2020 won't be available until the spring. But early estimates show that roughly half of top-paid CEOs will likely keep or even increase their compensation levels, due to the stock market boom during the pandemic.
"The pandemic has not been bad for everyone," report author David MacDonald said. "At the very top of the income spectrum, Canada's highest-paid CEOs have been sitting through it atop a golden cushion bolstered by years of out-of-control rates of executive pay."
Sky-high executive compensation levels are frequently criticized for contributing to inequality, which has been linked to a host of societal problems, but defenders of compensation practices say top executives get paid accordingly because they are top performers who add economic value for their companies, workers and shareholders.
Ian Lee, a professor of management at Carleton University in Ottawa, is in broad terms a critic of the CCPA's report because he says the group "cherry-picks" its data.
Many people, such as high-profile entertainers and athletes, earn far more than corporate executives, he says, but for the most part they are not criticized for contributing to inequality because they are recognized as being top performers in their fields. "There's no calculator to tell the true value of Justin Bieber or Beyonce or Patrick Mahomes," Lee said in an interview with CBC News on Monday, "so why is there one for a CEO?"
If fighting inequality is the goal, Lee says the better solution is to claw back higher incomes in the form of more progressive taxation, as opposed to setting an arbitrary cap on incomes in the first place.
"Are we really saying to reduce inequality we should reduce or impede value creation? Because when you cap incomes below a certain level what you are saying is we don't like the fact that some people are paid humongous amounts of money, and that's just backwards," he said.
Not just salaries
One of the issues that MacDonald takes with executive compensation is that most of it, at the high end, doesn't come in the form of salaries, which are taxed the same way everyone's are, but rather is mainly given through stock-based awards that allow the receiver to retain a lot of more of the earnings.
"It seems only fair that whether a person earns an income working or when they sell stock, the tax system should treat that individual income the same," he said in the report.
MacDonald tabulated that more than a third of the CEOs on the highest paid list work for companies that signed up for CEWS, the government's wage subsidy program that at one point picked up the tab for up to 75 per cent of a worker's salary.
CBC has reported on dozens of companies that continued to pay out generous dividends to shareholders while simultaneously receiving the wage subsidy.
MacDonald suggests that Ottawa should tweak the CEWS rules so that companies that increase payments to executives or shareholders while on it are excluded, which is what countries such as Spain and the Netherlands have done.
Based on regulatory data, the top-paid CEO of a Canadian company was Jose Cil, CEO of Restaurant Brands, which owns Tim Hortons, Burger King, Popeye's and other chains. Cil's total compensation was more than $27 million in 2019, which came mostly in the form of stocks on top of his base salary of just over $1 million.
Tim Hortons was one of 36 companies that used CEWS during the pandemic.
The report also found that there were as many people with the first name Paul as there were women on the CEO list: four of each.