Vancity Investment Management (VCIM) has vowed to attend the annual meetings of some of Canada’s largest banks to urge them to publicly disclose their CEO’s pay ratio compared to the median worker’s salary.
The move was announced in a March 31 press release, in which VCIM stated that it will be introducing shareholder proposals at the April annual meetings of Canadian Imperial Bank of Commerce (CBIC), Royal Bank of Canada (RBC), and TD Canada Trust (TD).
“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,” said Kelly Hirsch, VCIM’s head of ESG analysis.
Hirsch, who will be attending the meeting in-person to speak on the proposals, also contended, “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.”
VCIM’s proposal is a response to the growing disparity in CEO and median worker pay, the release explained, citing data from the Canadian Centre for Policy Alternatives (CCPA) which revealed that during the last decade the ratio between the two increased 155 times.
Hirsch described the widening of the disparity in this time period as “alarming” adding that “it comes from an erroneous belief by companies that labor is a cost to manage instead of a value driver.”
Unlike other markets in the U.S. and the U.K., 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,” argued Hirsch. “This is not a big ask.”