In a stunning revelation, the Canadian Centre for Policy Alternatives (CCPA) unveiled its annual report, showcasing that Canada's top 100 CEOs set new records in compensation for the year 2022. Senior economist David Macdonald expressed his concern, noting that this year's data has reached unprecedented highs.
The report disclosed that these chief executives, predominantly men, received an average compensation of $14.9 million, a noteworthy increase from the $14.3 million average in 2021. Translated into an hourly wage, this amounts to a staggering $7,162 – a figure 246 times greater than the earnings of the average Canadian worker. Shockingly, by the second day of the new year, the average CEO has already surpassed the yearly income of the average worker.
The compensation gap further widened in 2022, with the average worker witnessing a modest 3% increase in pay while CEOs enjoyed a more substantial 4.4% rise. Meanwhile, the cost of living surged by 6.8% during the same period.
Macdonald attributed this growing divide to the correlation between corporate profits and CEO compensation. The pattern echoes the trends observed in 2021, with inflation driving profits, subsequently leading to bonuses for CEOs who reap the rewards.
The CCPA has been monitoring CEO pay for over a decade, with Macdonald recalling a time when CEOs earned about 150 times the average worker's income. However, the landscape has evolved, and today, most CEO compensation is derived from bonuses, company shares, and stock options.
Macdonald pointed out a shift in the structure of CEO compensation, with the stock-option tax deduction capped at $200,000 midway through 2021. Consequently, awarding shares has become a more significant component of CEO remuneration.
The CCPA report evaluates the pay of both current and former Canadian CEOs in 2022, including those in executive chair positions. Topping the list was executive chairman J. Patrick Doyle of Restaurant Brands International Inc., amassing an impressive $151.8 million exclusively through share and option-based awards.
Matthew Proud, CEO of Dye & Durham Ltd., claimed the second spot with $98.9 million earned solely through option-based awards. Seetarama (Swamy) Kotagiri of Magna International Inc. secured third place, accumulating $36.4 million through a combination of salary, share-based and option-based awards, and non-equity incentive plan compensation.
Despite representing various sectors, including finance, technology, energy, telecom, and health, the top earners list included only four women, mirroring the number of individuals named "Mark" and "Scott."
“This is a boys’ club,” emphasized Macdonald.
Ontario, home to nearly half of the top 100 earners, exhibited the highest disparity between CEO and worker pay. CEOs in Ontario earned 298 times more than the average worker, reaching $18.5 million.
The report advocates for the introduction of new top income tax brackets, the elimination of corporate deductibility for pay packages exceeding $1 million, the implementation of a wealth tax, and an increase in the capital gains inclusion rate.
Despite economic uncertainties in 2023, Macdonald remains skeptical that the weakening economy will directly impact CEO pay, citing historical instances where companies found alternative reasons to compensate their executives.
In conclusion, the report underscores the urgent need for a reevaluation of executive compensation structures to address the growing income gap and promote fairness within Canada's corporate landscape.
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