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Shareholders at three of Canada's big banks, reflecting growing investor frustration with executive pay, have won the right to vote on top bankers' compensation.

Even though Canada's bank chiefs are among the only ones in the world delivering good earnings news, investors at Canadian Imperial Bank of Commerce and Royal Bank of Canada passed motions yesterday demanding the companies give them a voice on executive pay through non-binding shareholder votes - and the banks acquiesced. National Bank of Canada, facing a similar motion today at its annual meeting, pre-emptively announced that it, too, would hold votes on pay plans.

The banks had all resisted the idea of what's become known as "say on pay," recommending that shareholders vote against the motions. Many bank chiefs, including those at CIBC and RBC, also declined big bonuses to assuage upset investors.

However, it wasn't enough to stop the tide of investor anger, which is spreading beyond banks. A total of 15 major Canadian companies have received say-on-pay resolutions from shareholders this year, including household names such as BCE Inc. and Manulife Financial Corp.

The CEOs of Canada's Big Five banks received more than $25-million in compensation in the past year.

At an average of $5-million apiece, that's a big drop from 2007 but still an average paycheque that most Canadians can barely comprehend given that the average annual wage in the country is just over $40,000.

While they may not relish answering directly to shareholders, the bank bosses at least don't have the government putting caps on their pay, as the U.S. government has done at financial institutions that receive federal money. The Obama administration has proposed a $500,000 (U.S.) limit on pay.

"That's what's wanted right now, and so we're being responsive to it and I don't think we have a choice," Jean Gaulin, who chairs the board committee that sets compensation for National Bank's executives, said in an interview. "We have to look at it on a positive note and make it work as best we can."

Even so, Canada's bank executives argue they deserve to be rewarded for avoiding the blowups that have plagued the financial sector. Many foreign banks are struggling to survive, while Canadian lenders have posted comparatively good results.

Shareholder advocates lauded yesterday's moves.

"I'm happy that it happened now - it's about time that CEOs and board members realized we are living on the same planet," said Jean Legault, a spokesman for Medac, a Montreal-based group that has been lobbying for say on pay for several years.

While the votes won't be binding, the hope is that the companies will work with shareholders to create pay plans that will garner wide support, avoiding the public relations black eye of a "no" vote.

"The onus is on us to make it as effective as possible, for the board to get a good reading from the shareholders," Mr. Gaulin said.

Companies in Britain, where shareholder input on remuneration has been mandatory for public companies since 2003, have improved compensation disclosure and made better decisions to link pay and performance because they know they are facing an annual shareholder vote, said Laura O'Neill, director of policy at the Vancouver-based Shareholder Association for Research and Education, which worked on some of the shareholder resolutions.

Only about a dozen British companies have seen their compensation plans voted down in six years. Ms. O'Neill said she expects a similar trend to emerge in Canada, where investors only vote against the most egregious compensation practices.

"When companies do get into their bubble and forget to look out their windows, and make mistakes, then shareholders at least have a mechanism to rein them in quickly," she said. "The board definitely maintains its ability to make those decisions. But knowing they're facing a vote, we think they'll make better ones."

Some of Canada's most powerful investors threw their support behind the motions at CIBC and RBC, including Doug Pearce, chairman of the British Columbia Investment Management Corp., which manages $85-billion of assets for B.C. public sector pension funds.

He said yesterday that BCIMC supported the say-on-pay resolutions this year because it is a public way of communicating with companies when compensation is not appropriately linked to performance. His fund contacts companies directly to discuss compensation, but says that votes add another incentive and they aid small investors who don't have the clout to get board members on the phone.

"I think it gives a broader range of investors a voice," said Mr. Pearce, who is also chairman of the influential Canadian Coalition for Good Governance.

Still, some of those smaller investors are skeptical.

"I doubt it will make much difference," said Karl Reuschel, a Vancouver Island resident and long-time CIBC shareholder. "The bank will do what the bank will do."

While slow to come to Canada, the remuneration issue has already taken hold elsewhere. Britain and Australia now require all public companies to hold advisory votes on executive compensation. Other countries - including Sweden, Norway and the Netherlands - have gone further, giving shareholders a binding vote on pay package designs.

The idea moved to Canada last year when 11 major companies faced shareholder resolutions, but none passed. A year later, with markets in turmoil and investors angry about lost savings, the world has changed.

"I was surprised by how much we increased support this year," said Gary Hawton, CEO of Kitchener, Ont.-based Meritas Mutual Funds, which put forward motions at five banks. He said he's looking for Bank of Montreal and Bank of Nova Scotia, which are set to vote Tuesday, to fall into line.

The groundswell of support sends a signal to securities regulators that they should adopt mandatory rules requiring companies to hold votes on executive compensation, Mr. Hawton said.

"I'd hate for shareholders to have to go company by company to ask for say-on-pay votes," he said. "At some point, the onus falls on regulators to make say on pay mandatory."