Bank towers are shown on Bay Street in Toronto's financial district, on June 16, 2010.Adrien Veczan/The Canadian Press
The coronavirus pandemic took a bite out of meaningful pay increases owed to the chief executive officers of two major banks in 2020, as full-year profits fell short of targets set before the global health crisis began.
Royal Bank of Canada CEO Dave McKay’s total compensation fell 1.5 per cent to slightly less than $13.5-million last year. The bank’s board had raised his target pay by $750,000 in 2019, setting him up to receive a raise. But the difference was swallowed up as the bank’s profit fell amid the fallout from COVID-19.
Mr. McKay earned 3-per-cent less than his new, higher target pay. His cash bonus fell sharply in 2020 because he received no incentive pay for the bank’s financial performance after RBC missed its profit target by a wide margin. But the board decided he had exceeded his targets on other metrics, such as client satisfaction, risk management and strategy execution. The net effect was about $850,000 less bonus than his target, and $1.2-million less bonus than he made the year prior.
Had his target compensation not been raised before the pandemic, his pay would have fallen 9 per cent year over year, the bank said in a filing.
At Canadian Imperial Bank of Commerce , CEO Victor Dodig earned nearly $9.7-million in 2020, which was about $660,000 more than the year before. That was about half the increase he might have anticipated before the novel coronavirus surfaced. In 2019, CIBC’s board increased his target pay from $8.75-million to $10-million, to make it more competitive with his peer CEOs and “reflect his progression in the role.”
He was awarded 90 per cent of his total direct compensation target, after the bank missed its goal for earnings per share by 21 per cent, but achieved or beat targets on expenses and customer satisfaction.
Total 2020 compensation of $8.3-million for National Bank of Canada CEO Louis Vachon edged lower by 0.6 per cent, year over year. A decline in his cash bonus of about $220,000 was mostly offset by a rise in pension-related pay. Mr. Vachon was awarded 94 per cent of his target pay, which hasn’t changed since 2014.
All three banks noted in proxy circular documents released on Thursday that their CEOs had led the banks through an unusually challenging year, as COVID-19 wreaked havoc on economies and many of their customers.
Earlier this week, Toronto-Dominion Bank disclosed that CEO Bharat Masrani’s pay had fallen by about $2-million in 2020.
Most other senior executives at RBC, CIBC and National Bank whose pay is disclosed in the filings released Thursday made less money in 2020 than in 2019. Some CIBC executives who moved to new roles when the bank shuffled its senior ranks early last year made more.
The other exceptions are the heads of the banks’ capital markets divisions, where financial results were especially strong last year. Volatile markets generated a spike in trading fees, and companies were busy raising funds to shore up their balance sheets. RBC Capital Markets CEO Derek Neldner and National Bank’s co-heads of financial markets, Denis Girouard and Laurent Ferreira – who was recently named chief operating officer – all made more money last year. But total compensation for CIBC’s capital markets head, Harry Culham, declined modestly.
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