Shortly before 11 a.m. today, the average top-earning CEO in Canada will have already earned — in less than one work day — what the average worker makes in an entire year, says a new study.
The Canadian Centre for Policy Alternatives report examined the 100 highest-paid CEOs at TSX-listed companies for 2016.
Turns out, those corporate executives had a stellar year. Their average annual compensation hit a record $10.4 million — that’s more than 200 times an average worker’s salary of $49,738, says the report.
It also found that top CEOs got a big pay hike. Their average compensation rose eight per cent compared to 2015, whereas an average worker’s salary rose by just 0.5 per cent.
“CEOs continue, year after year, to increase that gap between them and the average worker,” said David Macdonald, report author and senior economist with the CCPA, a think-tank that studies economic inequity issues.
“[They are] now making your average pay prior to your second cup of coffee,” he said. “In a couple years — five years, maybe — CEOs will make your pay before breakfast.”
Macdonald combined base salary plus compensation, such as pensions and the granting of company shares, to tally up CEO income totals.
He found that, on average, base pay made up only 11 per cent of a CEO’s compensation. The lion’s share came from share grants (33 per cent), bonuses (26 per cent) and stock options (15 per cent).
For 2016, Valeant Pharmaceuticals CEO Joseph Papa scored the top spot, earning more than $83 million in total compensation. Almost $56 million of that came from share grants.
Magna CEO Donald Walker came in second, earning $28.6 million, most of which ($26.4 million) was the result of share grants and bonus pay.
Macdonald says one way to help shrink the inequality gap is for the federal government to tax top earners at a higher rate.
He also wants Ottawa to close tax loopholes such as the stock option deduction, a tax perk where profits from stock options are taxed at a lower rate compared to regular income. Many rich CEOs benefit from the perk.
“I don’t think that people object to CEOs making more than average workers, but they make over 200 times more and the gap is increasing,” said Macdonald.
“That’s what gets Canadians up in arms.”