As banks in Canada decrease pay packages, should CEOs be worried?

By qqtqtqt etqt

Big banks throughout Canada are currently taking part in a common trend: they are making changes that affect both base salaries and agreements regarding stock options, retirement packages and severance agreements of newly appointed CEOs. The blow comes from a study from consultancy McDowall Associates. But who is this change specifically affecting and what does it mean for other banks and CEOs?

RECENT TOPIC: What can successful companies learn from these top tech startups?

What began this sudden decrease? According to the study, four of Canada’s five big banks recently had a change in CEO, therefore starting the process. Specifically, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and TD Bank each offered their new CEOs a reported 33 per cent less than those who preceded them. And at Royal Bank, the current CEO earns 13 per cent less than the person who previously held the title.

Out of the five banks, Bank of Montreal has not had a change of CEO. Bill Downe, the bank’s current chief executive offer, earns a base salary of $1.5 million, but due to other types of compensation, earns closer to $10.5 million each year.

RECENT TOPIC: Tips to get you through your first year as a business owner

While salaries for these four newly appointed CEOs may be down, a senior consultant with McDowall Associates believes that there’s no reason to panic—not yet, anyway.

Regarding the issues, Bernie Martenson said, “It’s very common for new incumbents in roles paid lower than their predecessors because in this case, they’re new in the job and they don’t have the five to 10 years experience doing it.”  Furthermore, she added, “It’s premature to say if there’s a trend or absolute change in the magnitude of pay over longer term.”

RECENT TOPIC: Lowe’s follows Canadian Tire and Wal-Mart’s trend—how many new jobs could this mean?

And while increasing analysis has recently been placed on how much a CEO earns, this drop in pay is mostly likely just going to take place for the time being. For example, RBC has reported that they do plan to phase in a higher pay scale for their new CEO. However, the remaining banks didn’t specify if they plan to follow suit or not.  

While salaries have dropped, it’s the caps on retirement packages that have really changed. As well, there seems to be a new trend where CEOs are getting fewer stock options.

RECENT TOPIC: Does your phone have the business features offered by Samsung’s Galaxy S6?

Let's Connect!


Read the latest edition of Business Review Canada!



Featured Articles

Amelia DeLuca, CSO at Delta Air Lines on Female Leadership

Driving decarbonisation at Delta Air Lines, Chief Sustainability Officer Amelia DeLuca discusses the rise of the CSO and value of more women in leadership

Liz Elting – Driving Equality & Building Billion-$ Business

Founder and CEO Liz Elting Turned Her Passion into Purpose and Created a Billion-Dollar Business While Fighting for Workplace Equality – and Winning

JPMorgan Chase: Committed to supporting the next generation

JPMorgan has unveiled a host of new and expanded philanthropic activities totalling US$3.5 million to support the development of apprenticeship programmes

How efficient digital ecosystems became business critical

Technology & AI

Mastercard: Supporting clients at a time of rapid evolution

Digital Strategy

Why Ceridian has boldly rebranded to Dayforce

Human Capital