Key Takeaways
- The gap between average worker wages and Canada’s top-paid CEOs widened to a record in 2024, with the average compensation for the 100 best-paid CEOs hitting $16.2-million.
- The average pay for these CEOs was 248 times more than the average worker in Canada, surpassing the previous record of 246 times more in 2022.
- The highest-paid CEO in 2024 was Shopify Inc.’s Tobias Lutke, who took home $205.5-million in total compensation.
- The Canadian Centre for Policy Alternatives is pushing for higher taxes on the wealthiest, either through a millionaire’s tax or a wealth tax, to address the widening gap between the highest earners and average workers.
Introduction to the Widening Gap
The gap between average worker wages and Canada’s top-paid CEOs has reached a record high, according to a new report from the Canadian Centre for Policy Alternatives. The average compensation for the 100 best-paid CEOs hit $16.2-million in 2024, surpassing the previous record of $14.9 million in 2022. This widening gap is a result of the increasing trend of executive compensation being tied to company profit and revenue rather than base salary. As a result, the average pay for these CEOs was 248 times more than the average worker in Canada, surpassing the previous record of 246 times more in 2022.
The Impact of Corporate Profits
The record pay for CEOs is largely due to the strong corporate profits in 2024. Canadian corporate profits stood at $630-billion, well up from pre-pandemic levels of $400-million. This increase is not only due to growth in the market but also due to higher margins as companies raised prices. According to David Macdonald, senior economist at the Canadian Centre for Policy Alternatives, "Every company says, ‘We’re just covering our costs, we’re not making anything out of this,’ but that’s straight up false. Corporate Canada has enjoyed a great boom in profits as a result of inflation." This boom in profits has led to a significant increase in CEO pay, with the top 100 paid CEOs making $7,812 an hour in 2024.
The Highest-Paid CEOs
The highest-paid CEO in 2024 was Shopify Inc.’s Tobias Lutke, who took home $205.5-million in total compensation. His pay was entirely linked to stock and options awards, as his base salary is a single dollar. Other top-paid CEOs included Jay Hennick, head of Colliers International Group Inc., Patrick Dovigi of GFL Environmental Inc., and Glenn Chamandy of Gildan Activewear Inc. The top 100 paid also included five women, the highest number yet on the list. This increase in female representation is a positive trend, but the gap between the highest earners and average workers remains a significant concern.
Push for Higher Taxes
Given the widening gap between the highest earners and average workers, the Canadian Centre for Policy Alternatives is pushing for higher taxes on the wealthiest. David Macdonald argues that Canada should consider higher taxes on the richest, either through a millionaire’s tax or a wealth tax. A millionaire’s tax would mean a slightly higher tax rate on anything earned over a million dollars. Alternatively, a wealth tax of 1 per cent on anyone with $10-million in net assets, and 3 per cent on assets over $100-million, could raise more than $20-billion a year. Macdonald notes that the possible gains in terms of revenue for the federal government are tremendous, and it would target a very few number of people.
Previous Tax Reform Attempts
The most recent attempt to change taxes on high earners was made by former prime minister Justin Trudeau, who proposed to raise the share of capital gains that are taxed like regular income to two-thirds. However, this measure was met with significant pushback, especially from the tech sector, and was eventually cancelled by Prime Minister Mark Carney. A smaller, earlier measure to limit the tax benefits available to the wealthiest remains in place, but it has led to a shift toward direct share awards rather than addressing the root issue of the widening gap between the highest earners and average workers.
Conclusion
The widening gap between average worker wages and Canada’s top-paid CEOs is a significant concern that requires attention from policymakers. The Canadian Centre for Policy Alternatives’ push for higher taxes on the wealthiest is a step in the right direction. By implementing a millionaire’s tax or a wealth tax, Canada can address the issue of income inequality and ensure that the highest earners contribute their fair share to the economy. As Macdonald notes, "A wealth tax or a millionaire’s tax is a way to have folks, that have far more money than they need, help to provide the basic services that everybody else needs, while excluding the vast majority of the population."