Pushing to disclose the CEO to worker pay gap.
The value created by companies is increasingly accumulating at the top of organizations rather than being proportionately attributed throughout. The resulting wage inequality in Canada has been increasing for the last 20 years. We are seeing a continuously widening gap between the average Canadian worker and the wealthy, particularly when comparing to CEOs whose salaries continue to break all records, reflecting a new gilded age in Canada.
Research shows that high levels of inequality, or wage gaps, can lead to lower productivity, reduced GDP growth, and longer and more severe recessions. These risks are particularly relevant to large financial institutions, which depend on a thriving economy to drive business growth.
The CEO-to-median-worker pay ratio is a powerful metric that provides a quantifiable way to monitor this risk.
Shareholders in a company have the power to advocate for change. Shareholder engagement advocates for long-term value and encourages companies to adopt best practices that address environmental, social and governance risks.
For the last few years, Vancity Investment Management (VCIM) has filed shareholder resolutions with several of Canada’s largest banks asking them to publish their CEO to median worker pay ratios. Scotiabank, after a proposal from VCIM, acknowledged the value of the CEO wage-ratio disclosure and began publicly reporting the information in 2023.
The other large financial institutions in Canada, including the Bank of Montreal, Canadian Imperial Bank of Commerce, Royal Bank and TD Canada Trust have rejected the shareholder proposal year after year.
Vancity publishes its CEO to median worker pay ratio in the Accountability Statements, where we also disclose the CEO to lowest worker pay ratio. In 2023 these ratios were 8:1 and 14:1 respectively.
Awareness of CEO salaries compared to workers median salary in an important way for investors and employees to track trends over time, ensuring the wage gap does not continue to widen. VCIM believes the CEO to median worker pay ratio is an important metric to disclose by Canada’s largest financial institutions. Given banks’ position as strong corporate leaders in Canada, the pay ratio disclosure will benefit not only these large financial organizations but also set an example for other Canadian companies to follow.
Joe Reid, VP of Impact Investing and Wealth Management at Vancity, on BNN Bloomberg discussing some of our initiatives that focus on governance and responsible investing.
Explore our Shareholder Engagement Report for a comprehensive look at how VCIM uses the power of stakeholder engagement to encourage businesses to build a clean and fair world.
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