Canada's Top CEOs Earned an Average of $13.2 Million in 2023, Highlighting Growing Income Inequality

Canada's Top CEOs Earned an Average of $13.2 Million in 2023

The Canadian Centre for Policy Alternatives (CCPA) released a report revealing that Canada's 100 highest-paid CEOs earned an average of $13.2 million in 2023. This includes salaries, bonuses, and other forms of compensation. While this figure represents a decline from the record-breaking years of 2021 and 2022, it remains significantly higher than historical averages.

Several factors contributed to the decline in CEO pay in 2023. Lower corporate profits and increased worker wages following inflation played a significant role. The CCPA report highlights the growing disparity between CEO compensation and average worker income. In 2023, the top 100 CEOs earned 210 times more than the average Canadian worker, compared to 104 times more in 1998.

The report also delves into the composition of CEO compensation, revealing that salaries make up a decreasing proportion. Instead, most CEOs receive a significant portion of their compensation through share-based and option-based awards. The average cash bonus for these CEOs reached $2.3 million in 2023, further widening the gap between executive and worker pay.

While the report paints a picture of significant income inequality, it also acknowledges positive developments. Notably, worker wages increased substantially in 2023, catching up with inflation. Additionally, the report highlights the presence of three women among the top 100 highest-paid CEOs, who earned more on average than their male counterparts named Scott or Michael.

The CCPA advocates for policy changes to address the growing income gap. One such change implemented in 2024 increased the inclusion rate for taxing capital gains, potentially impacting future CEO compensation. Additionally, a 2021 cap on the stock option tax deduction has already reduced stock options as a form of CEO compensation.

The report challenges the notion that high CEO pay is necessary to attract top talent. It reveals that over 75% of the listed CEOs were promoted from within their companies, having worked there for an average of 21 years. This suggests that internal talent development plays a significant role in CEO selection.

The CCPA recommends a wealth tax on Canadians with a net worth exceeding $10 million, which could generate an estimated $32 billion annually. This direct approach aims to address income inequality more effectively than focusing on specific forms of compensation. The report emphasizes the need to revisit Canada's historically higher marginal tax rates for the wealthiest individuals, currently hovering around 50% compared to 70% in the postwar era.