At the start of every new year in Canada, a round of news articles are published about the pay gap between the country’s richest CEOs and the average worker — informing us that a handful of executives made $60,000 by 9:43 a.m. the morning of January 3.
But do rich executives actually earn the average worker salary before lunch, or is that just what they’re paid, or rather awarded. Are journalists really saying CEOs “earned” this money?
The annual report that news outlets reference is “Breakfast of Champions” by the Canadian Centre for Policy Alternatives (CCPA), an Ottawa-based think-tank that has been tracking CEO pay in Canada for years.
However, the 2022 report doesn’t use the word “earned” a single time.
Let’s look at the past couple years.
In 2018, CTV reported “Canada's top CEOs made on average $50K by 11am, report suggests” while the CBC ran the headline “Canada's top CEOs earn 200 times an average worker's salary: report.” Since then, the last three years have all run similar headlines.
On January 2, 2020 Global News said “Top CEOs have already made average Canadian’s salary.” The CBC says that, by 10:07am, the top 100 CEOs “earned more than the average Canadian will all year.” In 2021? It took one day to earn the average worker’s full salary. CBC’s headline said they “raked in” more, and the article’s lede tells us they’ve “already earned more” than the average worker’s salary. 2022’s round of stories focused more on the obscene level of riches accumulated by Canada’s wealthiest in relation to the ongoing COVID-19 pandemic, but we’re back to form this year “By 9:43 a.m., Canada's richest CEOs have already earned the average worker's annual salary.”
Do executives really work that much harder that they should receive 243 times the wage of the average worker? Most mainstream media coverage of the report fails to interrogate this question in any meaningful way.
Earnings, of course, are a financial term, but CCPA appears to have specifically avoided using the word to describe pay for rich executives in its findings. It’s also hardly used in the organisation’s previous annual reports. In 2020, “earn” and “earning” are each used once in reference to CEOs. In 2021, “earn” or its variation appeared four times, twice in relation to highly paid CEOs. The 2022 report only references the “bottom earners.”
The four main takeaways from the CCPA’s findings call attention to the ever-widening ratio of CEO pay compared to the average Canadian worker, inflation’s role in soaring corporate profits, a need for stronger legislation on wealth and the rise in additional compensation, referring to benefits for CEOs that aren’t salary-focused. The report notes that the three most common types of this compensation are “cash bonuses, options to buy company stock at sweetheart deals, and payment directly in shares of the company.”
The report concludes the following: CEOs in Canada are paid at their highest in history. Their methods of payment are tied to financial options other than salary and they profit directly from exploiting inflation. Solutions to this, as laid out by the CCPA, include closing financial loopholes and introducing a wealth tax.
However, the way that mainstream news media covers the report lacks journalistic rigour and a critical analysis of the factors that lead to such disparity. The best of which simply downplays the connection between inflation and corporate profits outlined in the report, while the worst runs cover for this country’s wealthiest.
The CBC’s story quotes Ian Lee, an associate professor at Carleton University's Sprott School of Business. Lee’s comments serve only to add an air of critique without much substance. This direction becomes clear when Lee runs to the defence of executives claiming that being a successful CEO is "unbelievably demanding” and if these executives don’t deliver the results demanded of them “you’re out the door.”
The CCPA report directly contradicts Lee’s claim. “[W]hen CEO performance is poor and bonuses are at risk, the formulas to calculate those bonuses are often changed to ensure bonus payment, irrespective of performance.”
Besides this, the CBC piece focuses mostly on a wealth tax as a solution. Even so, it frames the proposed wealth tax as one on shaky grounds. Lee offers a warning about the dire consequences of policies intended to curb blatant profiteering.
“Yes, you can drive the taxes much higher, but then you risk causing brain drain,” Lee said, adding that the market for executive-level talent in Canada is “very, very, very small.”
That’s right, if we lower executive profits we could possibly suffer from… CEO brain drain.
We’re at risk of losing our most gifted minds that head such ethical and well-run companies as Rogers Communications, Loblaw, Enbridge, and Shopify. Oh no!
To point out the obvious: CEOs' main role is to increase corporate profits and shareholder value. Any actual production or innovation is done by hard working engineers and working class labourers, those responsible for the day-to-day work that keeps these massive companies running.
Even funnier still, the CCPA report already responded to Lee’s unfounded claim.
“The rich always threaten that they’ll move if [tax] rates increase, but they can do that already, although it’s usually a veiled threat. The combined top marginal personal income tax rate in Nunavut on employment income is almost 10 points lower than it is in Ontario, B.C., and Quebec. Despite this, we fail to see an exodus from Toronto, Montreal, and Vancouver to Canada’s largest territory.”
The CBC article does not include this passage.
Inflation is mentioned as a factor in the CTV, Toronto Star and Global News pieces on the report, however, each of them mentions it in a way that suggests it’s more of a naturally-occurring societal factor that innately drives higher corporate profits. Each of them fails to note the report’s conclusions on exactly how inflation benefits rich executives. Here’s what it says:
“In the context of rapid price inflation, we’re in one of two situations: Companies are passing along higher prices to consumers, which would lead to questions about why CEOs enjoyed huge bonuses, or companies are using pricing power to drive inflation and CEO bonuses are a direct result of the inflation they created.”
In fact, this analysis is largely inline with what we know so far. Reports show that corporate profits are not only hitting record numbers as a result of raising their prices, this also drives inflation higher. Metro, Loblaw’s and Empire have all posted record profits despite claiming they pass on higher prices to consumers. This connection is left hanging by most mainstream articles discussing CEO pay.
Did these rich executives truly earn their massive pay-offs? All signs point to no, they didn’t. Price gouging, exploitation of inflation, and a doubling-down on moves that worsen the cost-of-living crisis. All while the average Canadian worker struggles to make ends meet.
News media’s nominal value in society is to hold power to account. If that purpose was truly what mainstream media values in its reporting, we would see a much clearer picture of the way this power imbalance is reported. Instead, we see in our largest news organizations prioritize business interests, rather than the interests of working people.