All five major Canadian banks respond to shareholder pressure on executive pay

Commitments to report to shareholders as AGM proposals withdrawn

All five of Canada’s leading banks have committed to study executive pay issues following a campaign by the United Church of Canada, veteran shareholder activist Bill Davis and mutual fund group NEI Investments.

Royal Bank of Canada (RBC), Bank of Nova Scotia, Bank of Montreal, Toronto Dominion (TD), and the Canadian Imperial Bank of Commerce (CIBC) have all responded after the investors co-filed shareholder motions.

Following the commitments, the proposals for this year’s annual meeting season have been withdrawn.

The identical resolutions had called on the banks’ boards to report to shareholders on the risks of benchmarking senior executive compensation with peer companies. They also called on the companies to look at internal pay inequality.

TD Bank holds its annual general meeting in Ottawa today (April 4) at which NEI plans to make a statement on pay. The AGM will also feature shareholder resolutions on pay ratios and gender equality from shareholder group the Mouvement d’éducation et de défense des actionnaires (MÉDAC).

Another proposal from Vancity Investment Management, in its capacity as sub-advisor to the IA Clarington Inhance SRI funds, on conflict minerals disclosures has also been withdrawn. The event will also be notable as TD will for the first time be providing a written transcript as well as a webcast.The banks’ action on pay comes as a new report from sustainability consultant and the former chair of Vancity Credit Union, Coro Strandberg, has found that 57% of companies in the Toronto Stock Exchange’s blue chip TSX 60 index consider sustainability in their annual executive incentive plans.

Thirty-five percent do not while none of them pay bonuses to executives for long-term sustainability performance. The 35-page report is called Sustainable Pay: how TSX 60 companies compensate executives for sustainability performance. Eight companies set explicit, measurable sustainability performance targets: Agnico-Eagle Mines, Barrick Gold, Bombardier, Scotia Bank, Cameco, Canadian Natural Resources, IAMGold and Kinross Gold, Strandberg found.

NEI, which has C$5bn (€3.8bn) in assets under management and is 50/50 owned by cooperative groups the Provincial Credit Union Centrals and the Desjardins Group, published an analysis of executive pay called Crisis, What Crisis? last year

Scotia Bank holds its AGM in Halifax on April 9. A proposal by MÉDAC requesting the parity of women and men in senior management has been withdrawn (53% of Scotia’s executive vice presidents are women). The Bank of Montreal faces its investors the next day in Saskatoon. CIBC’s AGM is on April 25 in Ottawa. RBC held its AGM in February.