‘Say on pay’ proposal accepted by all of Canada’s ‘Big Five’ Banks | National Union of Public and General Employees

‘Say on pay’ proposal accepted by all of Canada’s ‘Big Five’ Banks

Shareholders at all of Canada's ‘Big Five’ banks have won the right to vote on top bankers' compensation, reflecting growing investor frustration with executive pay.

Ottawa (19 March 2009) – Shareholders at Canadian Imperial Bank of Commerce (CIBC), Royal Bank of Canada, Bank of Montreal and Scotia Bank passed shareholder resolutions in the last month demanding the companies give them a voice on executive pay through shareholder votes - and the banks acquiesced.

While the votes won't be binding, the hope is that the companies will work with shareholders to create pay plans that will garner wide support, avoiding the public relations black eye of a "no" vote.

  • Royal Bank received the support of 54.4% of shareholders
  • Bank of Montreal received 53.6% support
  • Scotia Bank receieved 51.6% support
  • CIBC receieved 51.9% support

Toronto-Dominion Bank became the last major bank to announce that it will give its shareholders a 'say on pay' in 2010. Like the rest of the 'Big Five' banks, TD's board recommended that shareholders vote against Meritas Mutual Funds' request for the advisory vote in its proxy materials. Unlike the other four, TD elected not to wait for shareholders to vote before adopting the resolution. As a result of this announcement, the resolution was withdrawn from TD's annual shareholder meeting scheduled for April 2.

This is the second year that the ‘say on pay’ resolutions were brought forward by Meritas Mutual Funds with support from Shareholders Association for Research and Education (SHARE), is the first of its kind in Canada. Last year, the banks had all resisted the idea recommending that shareholders vote against the resolutions. The resolutions failed to pass in 2008 but gain over one-third support at each of the bank’s annual meeting.

The CEOs of Canada's Big Five banks received more than $25-million in compensation in the past year. This average of $5-million apiece represents a big drop from 2007 compensation figures, but is still vastly more than the $40,000 average annual wage of most Canadians.

The 'say on pay' movement is quickly gaining momentum in Canada as other publicly-traded companies have also begun to voluntarily adopt a non-binding, advisory vote on executive compensation ahead of their annual meeting dates. So far this month, Sun Life Financial Inc. and TMX Group, the company that owns and operates both the Toronto and Montreal stock exchanges, have agreed to implement the ‘say on pay’ proposal filed by Meritas Mutual Funds. As a result, Meritas has withdrawn its resolution from the annual meeting of both companies.

The same ‘say on pay’ shareholder resolution has been submitted to the annual general meetings of Potash, Manulife, Power Corp and Bombardier which will take place later this spring.

“This is a quite an achievement, considering this issue was formally brought to Canadian companies just last year”, notes Peter Chapman, SHARE’s Executive Director.

Issues and Campaigns: