Key Takeaways
- Canada’s 100 highest-paid CEOs made an average of $16.2 million in 2024, with the highest-paid CEO making $205.5 million.
- The average worker in Canada made $65,548 in 2024, with CEOs making 248 times more than the average worker.
- CEO pay has increased by 49% since 2020, while worker pay has only increased by 15% over the same period.
- The cost of living in Canada has increased significantly, with the cost of food, housing, and utilities rising by 22%, 26%, and 23% respectively since 2020.
- Corporate profits in Canada have exceeded $600 billion a year, with CEO pay comprising 84% bonuses based on corporate profits.
- A wealth tax could be implemented to address income and wealth inequality in Canada, with a suggested rate of 1% to 3% per year for those with net assets over $10 million.
Introduction to the Issue
The pay gap between CEOs and average workers in Canada has been growing steadily over the past few decades. In 2024, the average pay of the 100 highest-paid CEOs in Canada reached a new record of $16.2 million, with the highest-paid CEO making $205.5 million. This is in stark contrast to the average worker in Canada, who made $65,548 in 2024. The CEO-to-worker pay ratio has reached an all-time high of 248:1, with CEOs making 248 times more than the average worker.
The Rising Cost of Living
The cost of living in Canada has increased significantly since 2020, with the cost of food, housing, and utilities rising by 22%, 26%, and 23% respectively. This has put a squeeze on family budgets, with many Canadians struggling to make ends meet. The price of specific food items has also increased, with pasta, beef, and eggs rising by 47%, 39%, and 35% respectively. The cost of housing, including rent and home ownership, has also increased, with many Canadians finding it difficult to afford the basics.
CEO Pay and Bonuses
CEO pay in Canada is largely based on bonuses, with 84% of CEO compensation coming from bonuses in 2024. These bonuses are often tied to corporate profits, which have exceeded $600 billion a year in recent years. The bonuses are also largely one-way, with CEOs receiving significant payouts even when corporate profits are down. The form of bonuses has also changed over time, with stock options giving way to direct awards of shares. This has reduced the risk for CEOs, who no longer have to worry about buying shares at a pre-set price.
Income and Wealth Inequality
The growing pay gap between CEOs and average workers has contributed to income and wealth inequality in Canada. The wealthiest Canadians, including CEOs, have seen their incomes and wealth increase significantly in recent years, while the average worker has struggled to make ends meet. A wealth tax could be implemented to address this issue, with a suggested rate of 1% to 3% per year for those with net assets over $10 million. This could raise significant revenue, which could be used to fund public services and reduce poverty.
Solutions and Recommendations
To address the growing pay gap between CEOs and average workers, several solutions have been proposed. These include implementing a wealth tax, increasing the capital gains inclusion rate, and taxing stock options like regular income. The federal government has also proposed a millionaire’s tax, which would apply to individuals making over $1 million a year. These measures could help to reduce income and wealth inequality in Canada, and ensure that CEOs are paying their fair share of taxes.
Methodology and Data
The data used in this report was compiled from the companies’ disclosure of pay for their Named Executive Officers (NEOs) in proxy circulars or management information circulars. The report considers CEOs of the overall company, as well as CEOs of subsidiaries who are NEOs, executive chairs, and retired CEOs who are NEOs. The list does not include chief operating or chief financial officers, of which there are many who would otherwise have made the top 100 list. The dataset starts in 2008, and companies often report executive pay in U.S. dollars, which is converted into Canadian dollars at a rate of 1.3698, as per the Bank of Canada’s average annual exchange rates in 2024.