CIBC chief executive Gerald McCaughey received a bit of a rough ride at the chartered bank’s annual meeting Thursday, and it had little to do with 2012’s modest performance.
The head of one of Canada’s biggest financial institutions was the subject of several complaints from the floor about his compensation and that of the bank’s other four named executive officers at the sparsely attended meeting.
In a proxy circular sent out last fall, the 2012 total compensation for McCaughey was listed at almost $9.3 million, including $1.5 million in base salary, bonuses and deferred payments. The other four top management executives received an additional $16.2 million.
McCaughey’s haul actually represents a 7.7% decrease from the $10 million he received in 2011 based on the fact that the bank’s earnings growth was “below plan.”
In previously reported results, CIBC (TSX:CM) had net income of $3.3 billion in 2012, compared with $2.9 billion in 2011, although revenues were basically flat at $12.5 billion.
A proxy for the United Church criticized the pay packages, noting that the last quarter century has seen an massive escalation in compensation for top talent at large companies, and a widening of the income gap among Canadians. Another shareholder said that European countries are moving to rein in executive pay and that Canada should follow suit.
McCaughey responded briefly that the bank is in the process of reviewing their compensation procedures. A spokesman for McCaughey said he would not be available for an interview.
United Church’s chief financial officer, Erik Mathisen, said the issue of CEO compensation is not going away.
The church has been going after the chartered banks, he said, not because they are the worst offenders, but because they have in the past proven to be among the most progressive in the area of governance. They should take a leadership role in the compensation issue, he said.
Recently, the church withdrew a proposal calling for a shareholder vote on how executive salaries are determined after the banks promised to “seriously study the issue” this year.
“A bank CEO in the 1980s would have been paid 30 to 50 times what a front-line worker made, and now it’s gone up more than tenfold that,” Mathisen explained. “There’s growing sentiment around the workplace that the system is breaking down.”
On Tuesday, Barrick Gold (TSX:ABX) shareholders revolted against a US$17-million compensation packet to former Goldman Sachs president John Thornton to sign on as co-chairman of the mining company. Analysts called the non-binding 85% rejection unprecedented.
There was no such rebellion at the CIBC general meeting. The vote in favour of the executive pay levels was 96.6%, with only 3.4% voting against.