The COVID-19 pandemic highlighted economic inequalities on an unprecedented scale. Nearly half of Canadian households saw their debt increase and needed to access their savings to stay afloat.
Economic inequality drives broader societal inequality and creates stratification along income lines. Wage inequality can boost debt and inflation rates, and it is associated with higher occurrences of violence, and lessened social mobility.
Wage inequality in Canada has been increasing for the last 20 years, as we see a continuously widening gap between the average Canadian and the wealthy.
The value being created by companies is increasingly accumulating at the top of organizations, which is driving economic inequality more broadly. From 2019 to 2020, average executive pay increased 17% in Canada. The average Canadian salary grew by just 4% over the same period.
Investors have the power to advocate for change within large companies. Shareholder engagement enhances long-term value and catalyzes change by encouraging companies to adopt best practices that reduce environmental, social, and governance risks, while increasing impact for people and planet.
In 2021, Vancity Investment Management (VCIM) filed shareholder resolutions with TD Canada Trust, Canadian Imperial Bank of Commerce (CIBC), the Bank of Nova Scotia (Scotiabank), Royal Bank of Canada (RBC), and Canadian Pacific Railway (CP Rail) asking them to publish their CEO to median worker pay ratios.
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 2021 these ratios were 13:1 and 23:1 respectively.
Awareness of CEO compensation relative to median salaries allows management to track trends and ensure that the wage gap is not widening. Publication of the CEO to median worker pay ratio is an important way for investors and employees to hold companies accountable.
In 2022, Scotiabank and CP Rail agreed to publish this critical information, and VCIM continues to work with CIBC, TD, and RBC to encourage disclosure.
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