The chief executives at most of Canada's biggest banks received handsome pay raises in 2017 after delivering a year of surging profits with relatively few hiccups.
A strong economy and a booming housing market helped propel the largest lenders to better-than-expected financial results, as rising interest rates helped widen margins, and loan losses remained low even as Canadian consumers continued to pile on more leverage. Banks routinely surpassed analysts' predictions for quarterly earnings, while CEOs beat many internal targets that decide incentive pay and were rewarded with larger bonuses in cash and stock, as outlined in the banks' latest proxy circulars.
Executives also continued to slash costs, squeezing better performance from their sprawling operations and freeing up cash to reinvest in digital initiatives that promise to transform retail banking products and back-end systems. And although several lenders faced tough questions about allegedly aggressive sales practices last spring, banks said their internal reviews had unearthed no evidence of widespread bad behaviour.
The biggest raise for a bank CEO in 2017 went to Toronto-Dominion Bank CEO Bharat Masrani. TD is the second-biggest bank by assets, and Mr. Masrani's total compensation rose $2.1-million, or 20 per cent, to $12.4-million. That figure includes salary, cash bonus, stock options and pension, after the bank set a higher target for his pay at the start of the year, and then delivered robust financial results.
National Bank of Canada CEO Louis Vachon, who has been leading a turnaround strategy at the country's sixth-largest bank, received a 15-per-cent pay hike, taking home more than $9.3-million as the bank delivered record profitability in 2017 and its share price touched new highs.
But the best-paid bank CEO was once again Dave McKay at Royal Bank of Canada, the country's largest bank by assets. Mr. McKay made nearly $13.4-million in total compensation. That represents a $1.1-million raise, up 9 per cent from 2016.
Brian Porter, the chief executive at Bank of Nova Scotia, was the next-best-paid among CEOs, receiving more than $12.8-million including an increase of $500,000 to his cash bonus, which topped $2.6-million.
The lone CEO whose pay dipped in 2017 was Bank of Montreal's Bill Downe, who retired at the end of the bank's fiscal year in October. Mr. Downe earned $10.5-million in total compensation, down about $90,000 when compared with 2016. His successor, Darryl White, earned $8.3-million in his final year as chief operating officer, before taking over as CEO on Nov. 1.
At Canadian Imperial Bank of Commerce, the country's fifth-largest bank, CEO Victor Dodig made $9.4-million, an increase of 2.7 per cent after he was given more performance-based shares and stock options.
But two new CIBC hires earned more than Mr. Dodig in 2017, thanks to one-time payments. Larry Richman, the group head of CIBC's U.S. region and CEO of CIBC Bank USA, started the year running Chicago-based PrivateBancorp Inc. But after CIBC paid US$5-billion to acquire the bank, he was awarded $10.7-million in deferred compensation as a retention payment to stay on with CIBC. Mr. Richman made $13.3-million in 2017.
The bank also hired Deepak Khandelwal as group head of client connectivity and innovation, and paid him nearly $9.9-million to make up for deferred compensation he forfeited from his previous employer, Rogers Communications Inc. He was paid a total of $12.3-million.
A few senior bank executives did take pay cuts in 2017, most notably in capital markets divisions, where results were mixed as lower volatility contributed to softer trading revenues.
Douglas McGregor, the group head of RBC Dominion Securities Inc., received $10.8-million in total compensation, down from $12-million a year earlier. His counterpart at BMO Nesbitt Burns Inc., Patrick Cronin, saw his total pay edge down to $7.5-million, from $7.6-million. And Denis Girouard, National Bank's executive vice-president of financial markets, made $6.9-million, down from $7.5-million in 2016.
A good year for Canada's big banks turned out to be a very good year for A good year for Canada's big banks turned out to be a very good year for bank executives' pay packages. Here are a few highlights:
Best-paid bank CEO, total compensation:
Dave McKay, CEO, RBC: $13,360,877
Highest base salary:
Bill Downe, CEO, BMO: $1,960,650
Largest raise (without changing jobs):
Bharat Masrani, CEO, TD: $2,093,364
Largest cash bonus:
Douglas McGregor, group head, capital markets and investor & treasury services, RBC: $3,500,000
Largest pay cut (excluding signing bonuses and retirements):
Douglas McGregor, group head, capital markets and investor & treasury services, RBC: $1,250,000
Best-paid new hire:
Larry Richman, group head, U.S. region, president and CEO, CIBC Bank USA: $13,250,466
Sources: Proxy circulars filed by Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank.