Ratio of CEO-to-worker pay fell to 43 to 1 in Canada
Staff Writer |
Top business leaders receive high levels of compensation because they are in high demand around the world and not easily replaced, finds a new study by the Fraser Institute.
Soccer player Cristiano Ronaldo earned $93 million USD, and actor Dwayne “The Rock†Johnson made $65 million USD.
By comparison, according to the Globe and Mail’s annual CEO survey in 2018 (using 2017 data), the average compensation for the top 100 CEOs in Canada was $9.6 million CDN.
When all Canadian CEOs included in the survey — not just the top 100 — are included in the analysis, the average compensation falls to $2.2 million.
And yet, every year in Canada there are calls for governments to introduce new punitive taxes and/or limitations through new regulations on what Canadian firms are allowed to pay executives.
These policies would likely damage the Canadian economy by making the country less competitive in attracting and retaining top talent.
A 2018 CCPA report found that the average compensation for the 100 highest-paid CEOs in Canada was $10.4 million, 209 times higher than the average industrial wage in Canada ($49,738).
Extending the analysis to include all CEOs in the survey reduced average compensation by 77.1% to $2.2 million; the ratio of CEO-to-worker pay fell to 43 to 1.
Quite telling, the average CEO compensation for the last grouping in the survey is $78,651, a decline of 99.2% compared to the top 100 CEOs; the ratio of CEO-to-worker compensation falls to 1.5-to-1.
Data for the-top paid global athletes, actors, and musicians shows that they follow the same pattern as CEO compensation. The reality is that there is a global phenomenon regarding the compensation of top talent across sectors.
Research tends to agree that expanding the size of the market and non-substitutability of top talent are the key explanations.
Given this global and cross-sector phenomenon, it is not clear how the punitive taxes, governance reforms, or other recommendations would actually reverse, slow, or otherwise affect CEO compensation.
It is more probable that such policies would simply encourage “superstars†to re-locate in other more hospitable jurisdictions, harming the Canadian economy and the organizations that employed such people. ■