The chief executives of most Canadian banks saw their pay fall in 2019, a year where performance cooled after a hot 2018.
Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia and Canadian Imperial Bank of Commerce reported CEO pay below prior-year levels. At Bank of Montreal, chief executive Darryl White saw his pay increase because the bank raised his pay in recognition that it was just his second full year on the job.
While the banks reported gains in profits for the years that closed in October, 2019, their rates of growth weren’t as stellar or consistent as in the year before, particularly for the banks with U.S. operations. Instead, 2019 saw more uneven results at most of the Big Five.
The compensation figures, released in proxy circulars to shareholders in recent days, reflect decisions made by the banks’ boards of directors from late 2018. The pay packages, which range from roughly $9-million to $15-million, are composed of salaries of $1-million to $2-million, plus incentive pay that includes millions of dollars of stock awards – awards that have now fallen in value in the current financial crisis.
At RBC, CEO Dave McKay’s total pay fell to $13.69-million, from $14.49-million in 2018, largely owing to a decline in his annual cash bonus compared with 2018. RBC gave Mr. McKay a $2.61-million bonus, versus $3.18-million in 2018.
Mr. McKay’s 2019 bonus, however, was 15.9 per cent above the target RBC set – despite the bank falling nearly 6-per-cent below its internal profit targets. What Mr. McKay lost because of the profit miss was more than made up for by the RBC board’s decision that he deserved far more than the target for the portion of the bonus paid for “risk and strategic objectives.”
Four of the five named executives at RBC were paid less in 2019 than the prior year, with Douglas McGregor, chairman and CEO of the bank’s capital markets division, dropping to $9.51-million from $10.76-million. Neil McLaughlin, the group head of personal and commercial banking, saw his pay rise to $4.91-million from $4.49-million in the prior year.
Brian Porter, CEO of Bank of Nova Scotia, saw his total pay fall to $12.63-million from $13.25-million in 2018. The value of Mr. Porter’s share and option grants fell by about $500,000 from 2018, and his annual cash bonus of $2.33-million was down from $2.5-million in 2018.
ScotiaBank missed all three of its internal financial targets – earnings per share (EPS), return on equity and cost controls – and only met its goals for customer satisfaction. The “business performance factor,” a multiplier it uses to calculate incentive pay, was 85 per cent in 2019, versus 117 per cent in 2018.
At Bank of Montreal, Mr. White saw his pay increase to $10.85-million from $10.12-million in 2018. The boost came from nearly $450,000 more in stock awards and a gain of almost $400,000 in his bonus.
The past fiscal year represented Mr. White’s second full year on the job as CEO, and the bank raised its target total compensation for him to $10-million, from $8.5-million in 2018. William Downe, Mr. White’s predecessor, had target compensation of $10.5-million in 2017, his final year.
BMO said it missed its financial goals for revenue growth, return on equity, EPS growth and cost controls, but still set a “business performance factor” of 94 per cent, allowing top executives to receive nearly all their targeted performance pay.
Toronto-Dominion Bank CEO Bharat Masrani saw his total compensation fall to $12.64-million in 2019, versus $15.32-million in 2018, a year when his compensation was boosted by a special $1.9-million stock award. Three other executives – chief financial officer Riaz Ahmed, wholesale-banking head Bob Dorrance and U.S. retail head Greg Braca – saw their pay packages fall.
One of the main drivers in the pay changes was a drop in annual cash bonuses after a so-so fiscal 2019. TD said it missed its profit goal of just over $13-billion by more than $500-million.
At CIBC, CEO Victor Dodig collected $9.02-million, down from $10.05-million in 2018. His annual bonus fell $600,000, to $1.5-million, and the value of his stock awards fell by about $400,000. Three other CIBC executives who were in their positions for both 2018 and 2019 all saw pay decreases.
CIBC said it missed its internal profit target by 8 per cent, fell slightly short of its cost-cutting goals, but exceeded its customer-experience goals, so it used a business performance factor of 95 per cent in paying bonuses.
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