Foundation certifies companies with equitable pay structures

Certification touts maximum 8:1 pay ratio between CEO, lowest-paid workers as ‘sustainable’
By Zachary Pedersen
|Canadian Payroll Reporter|Last Updated: 11/11/2013

A new Canadian foundation is hoping its certification process will narrow the wage gap between the highest- and lowest-paid employees.

The Wagemark Foundation will certify an organization, company or non-profit that maintains a pay differential between its CEO and its lowest-paid worker at or below 8:1. That means a company paying a worker $10 per hour ($20,800 per year) would compensate its CEO no more than $166,400 annually.

“We spent a lot of time trying to determine what the ratio should be,” says Peter MacLeod, executive director of the Toronto-based foundation. “We chose eight as the top-most multiple because if you look at the history of organizations — really over the past 100 years — that have used pay ratios in establishing compensation, typically those that have lasted the longest and been the most profitable and resilient had anything from a 7:1 to a 12:1 ratio.”