The Canadian Press

Laurentian Bank (TSX:LB) is shedding more light on the rationale behind compensation paid to top executives as the company seeks shareholder approval on the issue for the first time.

Shareholders of Canada’s seventh-largest bank will vote on executive compensation proposals at Laurentian’s annual meeting March 16.

They will be the third group of Canadian bank shareholders to get a “say on pay” of senior executives, after CIBC (TSX:CM) and Royal Bank (TSX:RY).

All of Canada’s banks have agreed to carry out non-binding votes that will guide their board of directors, who will continue to make the final decision on executive pay.

Laurentian said it has provided shareholders with more details, including graphics and compensation ratios. But the actual proposals may not differ much in the end.

“The disclosure has changed but … the basis on which we made decisions regarding the amounts of the assessment of the performance is basically the same thing,” bank vice-president Gladys Caron said in an interview.

She said the bank believes its programs have been adequate and that they were reviewed annually.

Laurentian spent nearly $152,000 last year to hire Towers Perrin to conduct a compensation study.

The shareholders will vote on a framework for the compensation of five bank executives: the CEO, the chief financial officer and three other senior executives.

In addition to a base salary, there are six other components to their compensation.

They include short-term incentives tied to yearly performance of the bank. Half the amount would be paid in cash, half converted to restricted shares.

They would also be eligible for bonuses (half of which can be converted to restricted shares), an incentive plan, stock options, pensions and benefits.

In 2009, chief executive Rejean Robitaille earned $1.94 million in total compensation, down from $2.29 million in 2008. The change was primarily caused by a large pension adjustment in 2008, offset by increases in incentives last year.

His package last year included a $550,493 base salary.

In setting the individual performance factor for Robitaille, the board’s compensation committee considered the attainment of the bank’s financial objectives, said a proxy circular.

“All of the bank’s financial objectives for the 2009 fiscal year were met or exceeded,” it stated.

For the fiscal year ended Oct. 31, 2009, Laurentian Bank earned $113.1 million in profits, or $4.23 per diluted share.

Shareholders will also vote on two proposals submitted by activist group Medac, the nomination of an auditor and the election of 13 candidates for directors.