CCPA CEO-Pay Report: Cherry-picked data yields skewed conclusions, says the MEI

• Average senior manager to full-time worker pay ratio closer to 2.7 to

Montreal, January 2, 2025 — The recent flagship report on CEO-pay from the Canadian Centre for Policy Alternatives presents a flawed perspective through selective use of data, according to the Montreal Economic Institute.

“As with every other edition, this report makes a big splash but gives little substance to help guide good policy decisions,” says Renaud Brossard, vice president of Communications at the MEI. “By taking such a small sample, and only from the best-performing firms, the CCPA basically cherry-picks the data to suit the conclusions it wants.”

The CCPA’s report looks at the compensation of the CEOs of the top 100 companies in the country, representing a non-probabilistic sample of 0.008 per cent of Canadian companies, according to data from Industry Canada.

“The CEOs of those firms tend to employ some of the best compensated workers in the country, as they are amongst the most productive,” explains Brossard. “They are employees of telecommunications companies, big banks or the resource sector, for instance, which are all known for paying rather well.”

While little information is available regarding the compensation of employees in these top 100 firms specifically, data from Statistics Canada shows that employees of businesses that employ over 500 workers tend on average to earn 15.5 per cent more than those in firms with fewer than five workers.

According to the MEI, a more appropriate comparison would be between the average income of full-time workers and that of the average full-time senior manager.

Data from Statistics Canada shows that in 2023 (the latest year for which data is available) the average full-time senior manager earned $195,775 while the average full-time worker earned $72,758. This results in an average worker-to-senior manager pay ratio of 2.7 to one – a far cry from the 210 to one contained in the CCPA’s report.

“Unlike what the CCPA likes to trot out, there has been ample research that shows the compensation of executives such as CEOs to be largely linked to performance,” adds Brossard. “Things like stock options, for instance, gain their value purely from the performance of the company and its outlook for the coming years.”

A series of economic research papers published in the wake of the financial crisis dug into the issue of CEO-pay, and found that it varied significantly based on corporate performance and firm size.

In a 2019 paper looking specifically into the compensation of Canadian CEOs, researchers found that firm size had a strong effect on CEO compensation, and that market performance had a strong effect on performance-based components of compensation packages, such as stock options.

* * *

The MEI (formerly known as Montreal Economic Institute) is an independent public policy think tank with offices in Montreal, Calgary, and Ottawa. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

– 30 —

Interview requests
Renaud Brossard
Vice president, Communications
Cell: 514-743-2883