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
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
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(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),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); } //

Gord Nixon, CEO of Royal Bank of Canada.

Sean J. Sprague

Visit this year's Top 1000 rankings of Canada's most profitable companies and find more tables, multimedia and analysis in Report on Business's full Top 1000 section.

Canada's banks give the impression that they could almost run on auto-pilot, churning out profits no matter what the economic environment. Even as the country's economy has stuttered ahead with modest growth, Royal Bank of Canada turned in another profitable year, propelling it into the No. 1 spot in our Top 1000 list. So, should CEO Gord Nixon worry? Always.

As Canada's biggest bank, RBC usually appears high on the Top 1000. How much does that matter to you?

Story continues below advertisement

I would love to say it doesn't matter. And the reason I say that is because you can make decisions to get to the top of a list, but that doesn't necessarily mean you're doing the right thing for your shareholders or the organization. If one of the Canadian banks bought another large bank, de facto they would become larger; that doesn't mean their shares would perform better and doesn't mean their returns would be higher. I would be fine if that happened, as long as we were making the right business decisions.

As a bank CEO, what is keeping you up at night?

The easy answers are the obvious ones: the regulatory environment, the euro zone economy and housing in Canada, which gets a lot of attention. But most of those things are manageable. What really keeps me up at night is the unknown. Our industry has had so many crises over the last number of years, and in most cases they were unpredictable events, yet you still have to manage them. You can deal with economic performance of the euro zone, you can deal with the fiscal imbalances in the United States, you can deal with the slowing housing market in Canada and you can run your business accordingly. But in an industry which is so impacted by risk and risk taking, the unexpected are the things that provide the biggest challenge and what cause me the most worry.

Of the U.S. and Europe, which one concerns you more?

In the short term, Europe, for sure. Because the challenge with Europe is the structural imbalances are so severe—it's difficult for anyone to understand how Europe moves itself out of its current challenges, given the severity of the fiscal imbalances. I mean, economic growth does not solve the problems in Europe. It helps a lot, but it doesn't solve the problem. There is significant structural reform that has to take place in many European countries to ultimately deal with the problem. And the political environment, combined with the single currency challenges, makes it very difficult for policy decisions to be implemented to deal with those structural imbalances.

Some international observers suggest Canada is peaking, giving rise to the "short Canada" argument. Should we be worried?

Yes, there's a lot of questioning as to whether Canada's best days are over. I tend to be a little bit more of a defender of Canada at this point in the cycle. The first thing that I think people miss is that while we are experiencing slightly slower growth than the United States, it's off a much higher base. Canada has outperformed the U.S. since 2008. And, therefore, growing 2% off where we have come from in 2008 is better than growing at 3% off where the U.S. fell to between 2008 and 2012. So I think our base is better. I also think the structural issues in Canada are less pronounced. Our fiscal imbalances are not nearly as severe as they are in the U.S. They are important, and they are something we have to watch, particularly at the provincial level, but they are not as severe.

Story continues below advertisement

Speaking of fiscal imbalances, are bank CEOs paid too much?

Oh, boy. Well, if you were to ask me whether CEOs in general are paid too much, I would say that the answer to that is yes. Having said that, if you look at what has happened with respect to CEO compensation over the last number of years, there's been way more progress made than people think. Compensation now is performance based—how you perform relative to the metrics that are set by the institution and the board, and how you perform relative to other institutions in your peer group. In Canada, it's hard to explain the numbers to the general public. But I think the Canadian story is a pretty good one when you look at compensation relative to other institutions around the world—particularly in the U.S., where compensation levels were dramatically higher and performance has been dramatically lower.

So Canada looks good compared to what Goldman Sachs pays its executives.

Well, you know, sometimes the comment is made that, why do we have to pay bank executives on a competitive basis with what you have in the United States; they're not going to necessarily go there. I take issue with that, because I can tell you most of my top executives have been offered very big positions in the United States and elsewhere. It is a global market, a competitive market, and if you look at Canada relative to the U. S., compensation levels are significantly lower, and a lot of our top people have had lots of opportunities. Now, don't get me wrong: As I say [bank executives] are extremely well paid.

You've joked that you could write a book about what you've learned in your 13 years as Royal Bank CEO. Will you?

I'm not sure that many people would want to read it. If I had something to write that I felt was of real interest to people, then I might consider it.

Story continues below advertisement

That hasn't stopped other CEOs.

No, it hasn't.

This interview was condensed and edited.

The Top 1000 rankings in ROB Magazine and this website only provide a limited snapshot of data for the top 1000 companies in Canada. The most comprehensive database of Canadian corporate financial information is available for purchase in spreadsheet format here. This year we have improved on what we have offered in previous years in two separate packages based on whether your needs are research or sales prospecting. Find in-depth financial and contact information, total compensation for every CEO on the Top 1000 and more.

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 feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

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 letters@globeandmail.com. 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 letters@globeandmail.com. 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