Rising rates and crises hit BMO, CIBC, Scotiabank exec pay; only RBC's McKay exceeds target
In a year characterized by financial tumult, the top executives at three of Canada's largest banks, BMO, CIBC, and Scotiabank, received compensation below their target earnings for 2023, as revealed in filings.
These outcomes were influenced by a concoction of challenges including rising interest rates, a crisis among US regional banks, geopolitical uncertainties, and heightened regulatory pressures.
Of the chief executives from the four major Canadian banks that have disclosed their annual compensation, only Dave McKay of the Royal Bank of Canada earned above his target in fiscal 2023. The financial landscape for these banks was significantly shaped by external economic factors.
Darryl White of the Bank of Montreal received $11.2m in direct compensation, which includes salary, bonuses, and stock- and option-based awards, falling short of the $11.8m target set by the board.
This reduction in pay reflects the bank's failure to meet its 2023 objectives amidst increased US regional banking instability and global economic uncertainty.
Notably, BMO completed the acquisition and integration of San Francisco-based Bank of the West within the same period. White's total compensation, including pension amounts and non-cash benefits, was $12.5m, a decrease from $14.3m the previous year.
Scott Thomson, stepping into the CEO role at Scotiabank on February 1, saw his compensation prorated, with the board awarding him $7.7m in direct pay, $1m below his target.
Despite earnings falling short of expectations, Thomson embarked on a comprehensive review of the business, laying down strategic foundations for future growth. His total compensation stood at $9.4m.
Victor Dodig of CIBC was awarded $10.7m by the board, slightly below the $11m target for direct compensation, reflecting the bank's missed financial goals.
However, Dodig's total compensation saw a slight increase from the previous year, amounting to $11.2m. CIBC also announced an executive shuffle, hinting at strategic adjustments within the bank's leadership.
Conversely, Dave McKay of Royal Bank was the exception among his peers, receiving $15.2m against a target of $14m, buoyed by the bank's strategic decisions and leadership through challenging times.
McKay's overall compensation was $16.1m, with adjustments made to his short-term incentive payment due to lower financial performance relative to targets.
His leadership was instrumental in securing government approval for the acquisition of HSBC Holdings Plc’s Canadian assets, a significant move set to be finalized on March 28.
This variance in executive compensation among Canada's banking leaders underscores the broader financial and economic challenges faced throughout 2023, impacting even the top tiers of financial institution leadership.
