CEO Salaries in Canada

Sorry folks. It's been a while since my last post. I have been a little under the weather. Some time ago I read an article that has had me thinking. It was an article that discussed the difference in salary between the CEOs of top 100 companies in Canada and the average Canadian (full-time employee). I had to download the report and review it for myself. I was a little surprised at what I read.

The Report 

The report was authored by Hugh Mackenzie and it is titled Throwing Money at the Problem: 10 Years of Executive Compensation. It was released by the Canadian Centre for Policy Alternatives. The report does a good job it breaking down what makes up the salary of the CEOs. Listed below are a few highlights of the report:

- The average compensation of the top 100 CEOs in 2015 was $9.545 million
- The $9.545 million was divided into base pay ($1.1 million), bonuses ($1.8 million), grants of shares ($4.3 million), grants of stock options ($1.5 million), increased pensions earned ($316,000) and other sources ($530,000)
- The average worked earned $49,510 in 2015
- The CEOs earn the average Canadian wage by 11:47 am on January 3. 

The Details

The numbers were surprising, but digging into the details is even more surprising. I have reviewed the report in detail. There were a few things that jumped out at me. I will discuss the details below.

The increase in compensation for the CEOs far exceeds the increase of the average Canadian. It is not even close to be honest. I have summarized the data in the chart below.

Year	Average Wage	Top 100 CEO Average
2008	$42,134	$7,352,895
2015	$49,510	$9,572,762
Difference	$7,376	$2,219,867
% Increase	17.50%	30.20%

The compensation for the CEOs has grown by 30% while the average Canadian's salary has only grown by 17.5% over the same time. Not only that, there are ways to increase that difference even more. 

When we look at the break down of the CEOs compensation, we see the grant of shares, and stock options are more than 5x the base salary. The average base salary is $1.1 million and the combination of average grant of shares and stock options are $4.3 million and $1.5 million, respectively. There are more than 70 of the CEOs on this list that have options that are greater than their base salary. Why is this significant? It has to do with how these options are taxed. These items are taxed less than the base salary. This is significant enough that the Liberal Party made a campaign promise to end the special tax treatment (not supported by most CEOs). 

There were a few names on the list that surprised me. I am not sure how 2 names from Bombardier are on the list. This is the company that has asked for government funding. How can they have 2 people on this list (number 53 and 92)? There are also a few other under-performing companies that have their CEOs on this list. Bombardier just has 2.   

More Thoughts

All this data and analysis has made me think about a few things. The first is that the CEOs are not totally to blame. These are publicly traded companies. These deals were agreed to by others in these organizations. I'm also pretty sure that Canadian CEOs are not alone. I'm sure this happens elsewhere. 

The other item to consider is that a fair number of the CEOs listed depend on the average Canadian to determine if their organizations will deem them successful. The CEOs of the banks, cell phone and cable companies, grocers and energy companies are all listed. All of these companies rely on the average Canadian to spend their money on their products. I now see why some of the products and services we pay for are so expensive. 

I am writing this to inform folks about the Canadian business environment. I am not sure how many people read this article or report. I encourage people to look at the data. I want people to draw their own conclusions based on the data and not fall into an author's views. Thanks for reading.