A recent study by the Canadian Centre for Policy Alternatives (CCPA) shows that the average income of Canada’s top 100 CEOs hit $14.9 million in 2022, 246 times higher than the average worker’s salary.

The dramatic rise in CEO pay is partly due to inflation. As inflation increased in 2021 and 2022, large companies took the opportunity to hike their prices by more than was necessary to cover their costs. This is referred to as “sellers’ inflation.” These price hikes not only fuelled further inflation, but also significantly boosted corporate profits, resulting in bigger CEO paychecks.

Critics argue the CCPA study compares apples to oranges, since CEOs are paid differently than regular workers. CEO compensation extends beyond salaries, with a significant portion coming from bonuses, stock transfers and stock options (a deal to buy company stock at a lower price in the future). Stock transfers alone made up more than 40% of the top 100 CEOs’ pay in 2022.

But workers can also receive compensation beyond their salaries, like health benefits and pensions. In addition, employers contribute to government pension plans, employment insurance and workers’ compensation plans on behalf of their employees. Looking at total compensation is therefore a good way to directly compare the pay of CEOs and average workers.

Statistics Canada tracks total compensation and provides a breakdown by income level. We can compare how much total CEO compensation has grown since 2008, when the CCPA first started tracking it, with how much total employee compensation has grown. Total compensation for the 100 best-paid CEOs increased from $7.4 million in 2008 to $14.9 million in 2022, an increase of just over 100%. On the other hand, the average worker’s total compensation only increased 40% over that period, barely above the increase in inflation as measured by the Consumer Price Index (CPI).

We can compare how compensation changed for workers with different levels of income by breaking the data down into five categories of equal size called quintiles, sorted from the 20% of workers with the lowest income to the 20% of workers with the highest income. Total compensation for workers in the bottom two income quintiles increased by less than inflation between 2008 and 2022, while total compensation for workers in the top two quintiles increased by slightly more than inflation.

While workers, like CEOs, receive various forms of compensation, the sharp increase in CEO earnings stands in stark contrast to the modest improvements for average workers and the real pay erosion experienced by the lowest-income workers due to inflation. This disparity highlights a significant concern regarding the fairness of CEO pay.