Vancity Investment Management pushes Canada’s big banks to divulge their CEO-to-worker pay ratio
VCIM analyzes the dramatic gap where workers continue to lose ground as CEO pay goes through the roof
VANCOUVER, British Columbia, April 03, 2023 (GLOBE NEWSWIRE) — Territories of Musqueam, Squamish and Tsleil-Waututh Nations – Vancity Investment Management (VCIM) is using its shareholder status to attend the big banks’ annual general meetings in April and impel them to reveal publicly what they pay their CEO compared to the salary of their workers. VCIM has a record of using shareholder advocacy to push companies to address issues such as climate risks and system inequities like the growing pay gap between average workers and their CEOs.
VCIM is introducing shareholder proposals at the April AGMs of Canadian Imperial Bank of Commerce (CIBC), Royal Bank of Canada (RBC) and TD Canada Trust (TD) that call on the banks’ board of directors to publicly disclose the CEO compensation to median worker pay ratio on an annual basis. Last year, after a similar proposal at Scotiabank, the bank acknowledged the value of the disclosure and began publicly reporting the critical information.
“Publication of the CEO-to-median worker pay ratio is an important way for investors to hold companies accountable, to ensure profits are distributed across all employees,” says Kelly Hirsch, Head of ESG Analysis at VCIM, and who is attending the AGMs to speak to the proposals. “A higher pay ratio could be an indication a company suffers from a winner-take-all philosophy which drives economic inequality. Fair compensation is important for employee satisfaction, which can result in greater productivity and value creation for the company.”
Vancity, the parent company of VCIM, has been publicly reporting its CEO to worker pay ratio for several years: the current ratio of Vancity’s CEO compensation (earning just over $1 million in salary and profit share) to median annual total compensation for all employees is 14:1. For Canada’s big banks, where CEOs are among Canada’s highest paid executives, the ratio is expected to be closer to 150 times that of the average worker. This would mean that for every $150 earned by a CEO, an employee is earning $1. Scotiabank’s ratio, reported for 2022, was 143:1, or about $13 million in compensation for the CEO compared to an average annual salary of about $95,000.
The focus of VCIM’s shareholder proposition is about the growing disparity over time. During the last decade the gap for the richest CEOs to average worker increased from 155 times to setting an all-time high in 2021 of 243 times the average worker salary, according to Canadian Centre for Policy Alternatives latest report on CEO pay. CCPA CEO Pay Report
“It’s an alarming widening in a short time,” says Hirsch. “It comes from an erroneous belief by companies that labour is a cost to manage instead of a value driver. Companies do not operate in a vacuum; they rely on the value of workers and in a healthy, inclusive society a company considers how profits are managed and shared.”
VCIM is holding Canadian banks accountable because they play such an essential role in our economy and set a behavioural benchmark with influence across the entire country.
Unlike in the US and Britain, it is not mandatory in Canada for publicly listed companies to provide CEO to median worker pay ratio disclosures. “There are already well-defined frameworks for calculating this ratio,” says Hirsch. “This is not a big ask.”
About Vancity Investment Management
Vancity Investment Management (VCIM) provides management services to individuals, foundations and institutions across Canada that wish to generate wealth through sustainable, profitable, and responsible investments. Established in 1995 it was one of the first wealth management firms in Canada to provide investments that deliver competitive returns while making a positive impact on the world. VCIM is part of the Vancity Group that includes Vancity, a values-based financial co-operative serving the needs of its more than 560,000 member owners and their communities. With $34 billion in assets, plus assets under administration, Vancity is Canada’s largest community credit union. VCIM and Vancity operate primarily within the territories of the Coast Salish and Kwakwaka’wakw people in British Columbia.
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