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Kurt MacAlpine, CEO of CI Financial, in downtown Toronto on Dec. 20, 2019. MacAlpine made $7.33-million in 2022, down from $10.60-million in 2021.Tijana Martin/The Globe and Mail

CI Financial Inc. CIX-T chief executive officer Kurt MacAlpine saw his pay drop sharply last year as the company overhauled its compensation plans to head off shareholder opprobrium.

Mr. MacAlpine made $7.33-million in 2022, down from $10.60-million in 2021. A big decline in Mr. MacAlpine’s annual bonus, to $1.22-million in 2022 from $3.88-million in 2021, was the primary cause of the decrease.

CI Financial lost its shareholder advisory vote on compensation, known as “say on pay,” at its annual meetings in both 2021 and 2022 – the only Canadian company to do so. Shareholders will weigh in on the 2022 pay approach in another advisory, non-binding vote at CI’s 2023 annual meeting on June 27.

“Getting executive compensation right is fundamental to CI’s future success,” the board’s Governance, Human Resources, and Compensation Committee wrote to shareholders in CI’s proxy circular, saying the pay program “evolved significantly in 2022.”

“We are confident that CI has an industry-leading executive compensation program that places performance at its core,” the committee wrote.

CI’s shares fell 46.3 per cent, including dividends, in 2022, the worst performance of two dozen financial companies that CI itself has used to benchmark its executive compensation in recent years.

CI’s stock has languished as investors have worried about whether the company’s U.S. wealth-management business, built from scratch over the past three-plus years, will generate the profits needed to justify the cost. Recently, investors turned up their noses at a recent deal to inject $1.34-billion into the U.S. subsidiary via preferred stock that guaranteed its buyers an annual return of at least 14.5 per cent.

Changes to the executive-compensation plan in 2022 included increased quantitative measures and a decrease in discretion in Mr. MacAlpine’s incentive-pay plan. CI increased the weight of profitability and total-shareholder-return metrics in the plan formula.

CI also changed Mr. MacAlpine’s performance-share plan – a large component of compensation – to make awards based on a performance scorecard, rather than letting the board have sole discretion. The awards will vest, or become usable, based on earnings-per-share goals.

“This structure requires our CEO to earn the PSUs twice to realize any value from the award,” CI explains to shareholders.

CI made changes to the pay plans for executive officers who report to Mr. MacAlpine.

The company also tweaked its peer group, removing financial-services giants such as Charles Schwab and Morgan Stanley, so that CI compared Mr. MacAlpine’s pay with finance-industry CEOs at similarly sized companies. Among others, CI added AGF Management, Canaccord Genuity Group and Fiera Capital Corp. to the peer group.

The company’s 2022 “performance scorecard” placed 80 per cent of its weight on financial performance and 20 per cent on strategic performance.

CI used seven financial-performance metrics. While it came out ahead of target on things such as margin of EBITDA, or earnings before interest, taxes, depreciation and amortization, and flows of funds into its wealth-management business, it got zero credit for total shareholder return and change in earnings per share.

CI gave Mr. MacAlpine a perfect score on strategic performance.

Analysts downgrade CI Financial as they digest $1.34-billion deal