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Canada's top CEOs make 159 times what average worker makes

Staff Writer |
The CEOs of Canada’s largest public companies make more than 150 times what the country’s average worker earns.

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But this figure that nonetheless pales in comparison to the closely watched ratio in the United States, according to compensation consultants at Gallagher McDowall Associates.

The consultancy is releasing new research that also suggests CEO compensation at the largest publicly listed Canadian companies — those in the S&P/TSX60 — may have “stabilized” following an increase of about 25 percent over the past six years.

The research delves into trends at the largest 120 public companies, breaking them into two groups based on size. In the group containing the bottom half of the large companies, CEO compensation “continues to rise every year,” the report says.

“Looking back over six years, we see that their cash compensation and LTI (long term incentive) awards have both increased dramatically.”

When it comes to CEO compensation compared to the pay of the typical Canadian worker, the group containing the 60 largest companies has an average CEO-to-worker ratio of 159 times, based on the 2015 average industrial wage in Canada. While this figure has been fairly stable since 2012, the ratio for companies in the bottom half has risen to 83 times from 70.1 times in 2012.

The CEO pay ratio at Canada’s largest companies is higher than in jurisdictions such as the United Kingdom, but it is lower than in the United States, where new regulations will require public companies to disclose the ratio of CEO compensation to median employee pay beginning next year.

“In the U.S. it’s well over 300 (times),” said Bob Levasseur, managing director at Gallagher McDowall. In a recent presentation, he said the ratio at companies in the S&P500 averages out at 331 times average annual worker pay in the United States.

Comparisons within companies, using actual employee salaries, are becoming more common as U.S. public companies prepare to comply with the new rules put in place by the U.S. Securities and Exchange Commission, he said.

Similar rules exist in the U.K., but Canadian regulators do not require disclosure of CEO-employee pay ratios.

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