Canada’s 100 highest-paid CEOs from the S&P/TSX Composite recorded their second-best year ever for compensation in 2020 despite the COVID-19 pandemic, according to a new report by the Canadian Centre for Policy Alternatives (CCPA).
The report, Another Year in Paradise: CEO Pay in 2020, shows those 100 CEOs got paid an average of $10.9 million in 2020, which is higher than their pay in 2019. They now make 191 times more than the average worker wage in Canada.
“At this rate it will take the average worker the entire year to accrue what Canada’s highest-paid CEOs will rack up just before lunch (11:54 a.m.) on January 4—the first official working day of the year,” says the report’s author, CCPA Senior Economist David Macdonald.
“2020 was a horrible year for many workers hit hard by the pandemic, but CEO pay appears to be impervious to any shock to the system.”
Variable compensation—encompassing different forms of bonuses, such as cash bonuses and stock options—now makes up 82% of total compensation for top CEOs.
“Bonus pay has been increasing in importance compared to salaries. If there is a singular reason why CEO pay is in the stratosphere, it’s because out of control bonuses are protected from going down, even in a pandemic,” Macdonald says.
Despite variable compensation being purportedly due to good performance, the report finds that among the richest 100 CEOs: 30 CEOs headed companies that received the Canada Emergency Wage Subsidy (CEWS), 14 saw their bonuses changed to protect them from the impact of COVID-19, and five experienced both.
The report recommends a range of policy solutions including:
- Capping the corporate deductibility at $1 million in total compensation per employee;
- Eliminating the capital gains inclusion rate loophole;
- Complete elimination of the stock option deduction for large companies;
- Implementing higher top marginal tax brackets;
- Introducing a wealth tax.