Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Brian Porter, president and CEO of Scotiabank, addresses the company's annual meeting in Calgary on April 12, 2016.

Jeff McIntosh/The Canadian Press

Bank of Nova Scotia’s compensation plan for top executives is facing resistance from investors after an influential shareholder adviser flagged a perceived gap between the bank’s performance and the CEO’s pay.

Scotiabank’s advisory resolution on executive compensation, a non-binding vote commonly called “say on pay,” passed with only 60.8-per-cent support at the bank’s annual shareholder meeting Tuesday. Last year, 93.8 per cent voted in favour of the resolution.

Some institutional investors pushed back after Institutional Shareholder Services Inc. (ISS) recommended voting against the resolution. The formula ISS uses to screen company performance relative to executive pay highlighted that Scotiabank had the lowest total shareholder return of any major Canadian bank over one, three and five years, “while the CEO’s compensation was ranked near the top.”

Story continues below advertisement

Chief executive officer Brian Porter received total compensation of $12.22-million in 2020, down from $12.63-million in the previous fiscal year, as his cash bonus and the value of his stock and option awards declined. The bank fell short on all three financial metrics it uses to calculate incentive pay – in large part because of the economic upheaval caused by the pandemic – but the board decided it had exceeded its goals for customer satisfaction in confronting the crisis.

In total, Mr. Porter’s incentive pay was 12-per-cent below his target.

Scotiabank’s say-on-pay support is among the lowest any large Canadian bank has tallied since 2015, when 57 per cent of Canadian Imperial Bank of Commerce shareholders voted against its compensation plan. Earlier this month, each of Scotiabank’s four largest competitors – Royal Bank of Canada, Toronto-Dominion Bank, Bank of Montreal and CIBC – received at least 95-per-cent support for their say-on-pay resolutions. (National Bank of Canada will hold its annual shareholder meeting on April 23.)

Since ISS published its advice, Scotiabank’s board chair, Aaron Regent, and the chair of the board’s human resources committee, Scott Thomson, have met with a number of large shareholders to discuss the proxy adviser’s concerns. The bank disagreed with ISS in those meetings, emphasizing that it has taken a long-term approach to creating value for shareholders by undertaking a major transformation plan that reshaped the bank’s operations outside Canada. That strategy was backed by the board, which sets Mr. Porter’s pay.

“Scotiabank’s repositioning of its business aimed to improve its earnings quality and lower its risk profile by materially changing its geographic footprint and business mix,” Mr. Regent said in a statement. “This repositioning was intended to improve long-term returns to shareholders.”

Over three years, Scotiabank’s total shareholder return – which considers the sum total returned to investors, including dividends – was minus 7.8 per cent, whereas its five largest peers averaged minus 0.9 per cent. In 2020, as the pandemic battered the global economy, that gap was wider, with Scotiabank at minus 22.1 per cent against a group average of minus 8.2 per cent. Over those same periods, Mr. Porter’s pay ranked second or third among Big Six bank CEOs, according to ISS.

So far this fiscal year, which began Nov. 1, Scotiabank has outperformed its peers with total shareholder return of 43.8 per cent, with dividends reinvested, compared with an average of 36.9 per cent for an index of Canadian banks, according to Bloomberg data.

Story continues below advertisement

In his statement, Mr. Regent said “2020 was an exceptional year, and the Bank took a patient longer-term view in the face of the unforeseeable extenuating circumstances stemming from the COVID-19 pandemic.”

Another proxy advisory firm, Glass Lewis & Co., came to a different conclusion than that of ISS, encouraging shareholders to vote for the say-on-pay resolution. Though it acknowledged a “sustained disconnect between executive pay and performance,” Glass Lewis said Mr. Porter’s pay “is largely in line” with the median amount paid to peers and that Scotiabank executives were held to account because performance share units were paid out last year at 68 per cent of their value when they were granted.

Scotiabank’s total shareholder return lagged those of its rivals in 2020 partly because it gave up $587-million in profits when it sold a number of smaller, higher-risk businesses in countries stretching from Thailand to El Salvador. By the end of the bank’s first fiscal quarter, which ended Jan. 31, it “has managed to grow earnings sufficiently to absorb this reduction and produce year over year earnings growth,” Mr. Regent said.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies