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Three of Canada's biggest banks will submit to shareholder demands for a say on executive compensation plans, reacting to investor anger that bank bosses are taking home millions even as profits shrink.

A majority of Canadian Imperial Bank of Commerce and Royal Bank of Canada shareholders voted at annual meetings to pass motions to have non-binding “say on pay” advisory votes on executive compensation.

National Bank of Canada announced Thursday morning that it too would hold non-binding shareholder votes on executive compensation, starting next year. National was facing a shareholder motion on the idea at its annual meeting, which is scheduled for Friday.

All Canada's big banks are facing say on pay motions put forward from shareholders. The banks opposed the motions but the tide of investor anger over multi-million-dollar pay cheques during the current downturn appears to be overwhelming.

There is growing support among major Canadian investors for say-on-pay programs at major companies, especially where compensation seems to be growing despite poor financial results, said Stephen Griggs, managing director of the Canadian Coalition for Good Governance (CCGG), which represents large institutional shareholders.

“Attitudes are change very quickly on say-on-pay,” he said in an interview.

Royal Bank and CIBC officials both said they would respect the results of the votes on the shareholder motions.

“The board will now be considering how best to give shareholders a vote on this important issue, and we commend those who brought the say on pay proposals forward,” Royal Bank chairman David O'Brien said, adding that RBC Asset Management actually voted in favour of idea.

National may have moved in anticipation that investors would demand the right to have a say on pay. With a shareholder vote on the issue looming at its annual meeting Friday, National dropped its opposition and said it would allow investors to vote on pay starting in 2010. The vote will be non-binding.

“In so doing, the bank is acknowledging the developments of the past few weeks relating to this matter and fulfilling a wish expressed by many of its shareholders,” National said in a statement.

The CCGG issued a statement early last year saying it did not support say-on-pay proposals because its members felt such votes were a “blunt instrument” to send a message to companies, and they preferred to use direct consultations with companies to communicate concerns about specific elements of compensation plans.

But things have changed over the past year, Mr. Griggs said, because members have grown frustrated that some companies have not responded despite consultations.

Mr. Griggs said one issue fanning the flames is the recent revelation that Canadian Imperial Bank of Commerce has increased the maximum possible pension that can be collected by chief executive officer Gerry McCaughey. Mr. Griggs said some of his coalition's largest members were planning to vote in favour of a say-on-pay resolution that has been submitted to CIBC for a vote at its annual meeting.

“I'm getting e-mails and phone calls from our members saying, ‘We thought we had very good engagement with them, but they didn't get it,'” he said.

Some bank CEOs, including Royal's Gordon Nixon and CIBC's Mr. McGaughey, have tried to fight anger about their compensation by giving back bonuses.

However, Louis Vachon, head of National, had come under fire because even as his bank's involvement in the asset-backed commercial paper mess hampered profit growth, he took home a bonus for last year.

National Bank said Thursday that Mr. Vachon would donate to charity $1-million he received from the bank for his personal holdings of ABCP.

National bought out the ABCP holdings of individual clients in 2007 at full face value, including paper held by bank executives. Mr. Vachon was one of those clients, and the $2.5-million he received was put in trust pending the resolution of the ABCP workout.

Now that it's done, Mr. Vachon is getting his $2.5-million back, but he decided to donate 40 per cent to charity. The percentage was chosen to match the hit that National has taken on its own ABCP holdings, said bank spokesman Denis Dubé.

With a file from reporter Tara Perkins.