Canada’s top-paid 100 CEOs make an average of $9.5 million a year, according to a study by the Canadian Centre for Policy Alternatives.
That works out to 193 times the average Canadian’s wage of $49,510. Put another way, someone who makes $9.5 million will have made the average Canadian’s salary for the year by 11:47 a.m. on January 3.
“These extraordinarily high levels of compensation push people toward making decisions that will deliver a short-term benefit in a time period in which they’re able to take advantage of it, rather than making decisions that are in the long-term benefit of the corporation,” argues economist Hugh Mackenzie, who wrote the report.
“There’s a fair bit of turnover among senior executives.”
Pay for top executives, always high, has risen in recent years. Canada’s highest-paid executives saw their compensation almost double in real terms between 1998 and 2015, the CCPA study says.
It’s likely to keep growing, since there’s no real reason for it not to, Mackenzie says. Shareholder activists have tried but largely failed to trim compensation.
“Shareholder action will serve to shine a light on executive compensation practices. Whether it will actually have any impact on those practices is another question.”
“Corporate boards of directors are rife with intersecting interests – executives of one company that are on the board of another, people that are on each other’s boards.”
Only two women made the 2015 list, along with 98 men: Transalta’s Dawn L. Farrell (#74, $4,517,160) and Linamar’s Linda Hasenfratz (#8, $14,214,834). Linamar makes auto parts, and Transalta is a power generation company based in Calgary.
Among the top-paid 100 American CEOs, the average compensation is about US$30 million ($40 million), according to the AFL-CIO.
Men with English, Scottish or French surnames dominate the list.
“There are an awful lot of people whose names are Bob and Bill in that list,” Mackenzie says. “Boards of directors have a certain composition. They tend to hire people who are like themselves.”
Canada’s top-paid CEO was Valeant Pharmaceuticals’ Michael Pearson, at $182 million. Nearly all of that amount was shares. (Pearson lost some of the value of that when Valeant stock plunged in 2016. After the stocks crashed, the Globe and Mail estimated the value of Pearson’s shares as about $325 million.)
Pearson left his position in the spring of 2016 after a medical crisis.