It’s not just in the U.S. that chief executive officers (CEOs) make a lot more than the average worker.
According to compensation consultants at Gallagher McDowall Associates, the CEOs of Canada’s largest public companies got paid 159 times more than the country’s average workers last year. (Source: “Top Canadian CEOs paid almost 159 times the average worker’s salary Last Year,” CBC, September 16, 2016.)
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This latest report analyzed CEO compensation at two groups of companies. The first group is the TSX 60, the 60 most valuable publicly listed companies in Canada. At these 60 companies, the typical CEO earned $7.69 million in 2015, down from $7.99 million in 2015. Based on the average industrial wage in Canada, the average CEO-to-worker compensation ratio at the largest companies was 159 times in 2015. The ratio has been relatively stable since 2012.
The study also looked at the next 60 largest companies. Their average CEO compensation was $4.06 million last year, up from $3.91 million in 2014. From 2012, the CEO-to-worker compensation ratio at these companies have risen from 70.1 times to 83 times.
According to Robert Levasseur, managing director at Gallagher McDowall, CEO compensation tend to be higher at larger companies compared to smaller ones. “The larger the company, the higher the pay,” he said. (Source: Ibid.)
Despite the huge amounts of money paid to Canada’s biggest CEOs, the amount is even bigger in U.S. Levasseur said that the CEO-to-worker compensation ratio is at more than 300 times in the U.S.
So, what would be an ideal ratio?
Well, “It’s really hard to determine what’s reasonable,” said Levasseur. “I don’t know if [athletes] Jose Bautista’s or Sidney Crosby’s compensation is reasonable, but they operate in an open market — they are getting out of the system as much as they can.”
Canada’s top CEOs also paid quite a bit in taxes. The report showed that the average CEO of the biggest 60 companies in Canada paid $3.47 million in taxes last year; that’s about 44% of their income. In comparison, the average industrial worker in the country paid roughly 16% of their income in taxes.
