Is CEO Pay Ratio Disclosure Coming To Canada?

INTRODUCTION

Last year, the U.S. Securities and Exchange Commission (SEC) approved a proposal that would require U.S. public companies to disclose the ratio of CEO annual compensation to median employee annual compensation. Similarly, the European Commission is proposing the adoption of rules requiring certain publicly traded companies to report CEO pay ratios.

Proposals to use and disclose vertical benchmarking metrics in the form of executive compensation ratios are, at least in part, a response to a public debate concerning growing income disparity. The United States' disparity gap ranks above the Organization for Economic Co-operation and Development (OECD) average with the average pay of American CEOs of S&P 500 companies 354 times that of the average U.S. worker in 2012. The OECD has reported that Canada's disparity gap, though less than that of the U.S., is also higher than the OECD average and growing.