Key takeaways
- In Canada, geographic pay and vesting schedules are set largely by market convention. New hire equity participation is a policy decision each company makes on its own.
- Toronto pays roughly 4% above the Canadian national average and Montreal roughly 5% below, the two ends of the country's range.
- The gap between Canada's most and least expensive metros is about nine percentage points. In the United States, cost of labor ranges from 80% to 135% of the national average.
- Four-year vesting has returned to dominance at private companies, covering roughly nine in ten Canadian employees, even as public companies move toward three-year grants.
- Fewer than half of new P1 hires in Canada receive equity. At companies that limit equity to under 90% of employees, that figure is 29.3%.
Pave tracks a measure called talent alpha: the relationship between how many people work in a given market and what those people cost. Markets with a deep talent pool and below-average pay are where companies find an advantage.
We ran that analysis on Canadian metros and read it alongside Pave's Canadian vesting and new hire equity data. Together, the three point to a straightforward conclusion for venture-backed companies: two of the largest compensation levers available to them are effectively decided by market convention, and the third is not.
Ottawa and Montreal pay below the national average
Pave sets compensation for overall Canada at an index value of 100. A metro that scores 104 pays roughly 4% more than the national average for comparable roles, and a metro that scores 95 pays roughly 5% less. The chart below plots that pay differential against the number of employees Pave has in each market, which serves as a proxy for the depth of the local talent pool.
Toronto and Vancouver anchor the expensive end. Toronto is the deepest talent pool of any Canadian metro by a wide margin, and it pays about 4% above the national average. Vancouver is the second deepest and pays about 3% above.
Montreal and Ottawa sit in the opposite corner. Montreal is the third-deepest market in the country and pays about 5% below the national average. Ottawa is smaller, with pay about 3% below. Both are deep enough to staff a full function rather than one or two roles, which is what separates them from the rest of the chart.
Kitchener and Calgary represent the least attractive combination available: both pay slightly above the national average while offering small talent pools. Edmonton pays below the national average but has the smallest pool of any metro shown.
Canada's pay differences are narrow compared to the United States
The full Canadian range spans about nine percentage points, from Montreal at the low end to Toronto at the high end. That is a far tighter band than compensation leaders in the United States work with.
Hannah Wells, Vice President of Client Strategy & Consulting at White & Gale, puts the contrast bluntly. "There's anywhere from 80% of national average to 135% [in the US]—there's a big swing," she says. "It's a lot more narrow in Canada, so we often see clients targeting that higher cost of labor just so they can be competitive across the country."
That difference changes how Canadian companies structure pay. Rather than maintaining a separate salary band for each city, many of the companies Hannah advises select their highest-cost market—usually Toronto, or a blend of Toronto and Vancouver—and build one national band around it. A nine-point spread does not justify the administrative work of maintaining several geographic bands.
The practical implication is that the advantage sits in the decision about where to open an office or concentrate headcount. It does not sit in how the salary bands themselves are constructed.
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Four-year vesting is back in favor
Between 2020 and 2022, roughly one in eight Canadian employees at private companies was on a vesting schedule shorter than four years. By 2025, that share is under one in twenty. Four-year vesting now covers roughly nine in ten.
Private companies have moved in the opposite direction from public ones. Many public companies have shifted toward three-year new hire grants. Private companies consolidated around four years instead, reversing the brief experimentation with shorter schedules that appeared during the pandemic-era hiring market.
One year in the series stands out. In 2023, schedules longer than four years rose to roughly one in six employees before returning to trend the following year. The data does not explain the spike, and it has not repeated since.
For a venture-backed company, the takeaway is that vesting is not a differentiator. When roughly 90% of the market uses the same schedule, matching it is the baseline expectation, and shortening it is an expensive way to stand apart.
New hire equity participation drops sharply at the earliest levels
Location and vesting are largely dictated by market convention. New hire equity eligibility is not. It is a policy each company sets for itself, and it is the one lever here that sits entirely within a company's control.
Fewer than half of new P1 hires in Canada receive equity: 48.8%. At companies that limit equity to under 90% of their employees, that drops to 29.3%, which means roughly seven in ten of their most junior new hires receive none at all.
Participation rises quickly above P1, reaching 64.3% at P2 and 85.7% at P3, then settling into a plateau in the low 90s across P4, P5, Manager, and Director levels. At P6 it is effectively universal, at 98.8%.
The distance between the two groups makes the pattern clear. It is 19.5 percentage points at P1 and 3.1 percentage points at P6. Companies that restrict equity restrict it at the bottom of the level structure and almost nowhere else.
These Canadian figures also run below the equivalent United States benchmarks, particularly at the P1 and P2 levels, which indicates Canadian companies are more conservative about extending new hire equity to early-career employees than their US peers.
There are defensible reasons for the practice. Grants at these levels are small, attrition is higher, and every share issued is dilution. Those same small grant sizes are also what make this the least expensive lever to adjust.
Hannah points to a related problem: companies that do grant equity to early-career employees often get little credit for it, because those employees do not understand what they are holding.
"Equity education for employees is such a quick win, even if it's a 30-minute 101 on options—especially for your lower levels of employees who may not have had that at other roles and don't quite understand how it works,” Hanna said. “You can put a small amount of effort into education with a huge payoff."
She also recommends including a concrete outcome scenario in the offer itself, showing what a grant would be worth under different company outcomes.
What this means for venture-backed companies in Canada
Location offers a real advantage, but one capped at roughly nine percentage points. That makes it a factor in deciding where to build a team rather than a way to reduce compensation spend, and companies choosing a lower-cost market should still set their bands to the highest-cost market they hire in.
Vesting offers no advantage at all. Four years is the standard across Canadian private companies, matching it costs nothing in competitiveness, and departing from it costs real money.
New hire equity is where the genuine choice sits. Companies can review participation at P1 and P2 within a single quarter, and the cost of extending it is small next to the location premium the same company already pays for talent in Toronto. Pairing that change with basic equity education makes the spend visible to the employees receiving it, which is the difference between granting equity and getting credit for it.
Pave is a world-class team committed to unlocking a labor market built on trust. Our mission is to build confidence in every compensation decision.
