Canadian Bank CEO’s Amongst the Most Overpaid

2012 was a pretty nice little year for all 5 of Canada’s bank CEO’s.

| More on:

In its July issue, Bloomberg Markets magazine has published its annual assessment of who’s overpaid and underpaid in the North American banking space.

The compensation of 20 of the biggest bank CEO’s were put to the test, and Canadian banks came out on both sides of the coin.

To make their assessment, Bloomberg ranked the 20 banks on total stock performance, ROE, and total assets.  The rankings for each were then averaged.  Then, each CEO’s compensation rank was subtracted from these average rankings.  The bigger the gap, the more overpaid.

Leading the way was Capital One Financial and its CEO Rich Fairbank.  An ironic name to be sure.  Fairbank pulled down $17.5 million in 2012, even though he wasn’t paid a salary.  Note to self.  Sometimes life is all about sacrifice.

The most “overpaid” of the Canadian bank CEO’s in 2012 was the Royal Bank’s (TSX:RY) Gord Nixon who raked in $12.6 million.  Tabled below is a summary of where all of the Big 5 CEO’s ranked.

Company Name

CEO

 Rank

Compensation ($M)

Overpaid

Royal Bank

Gord Nixon

4th

$12.6

Scotiabank (TSX:BNS)

Rick Waugh

5th

$11.1

TD Bank (TSX:TD)

Ed Clark

8th

$10.8

Underpaid

BMO (TSX:BMO)

Bill Downe

1st

$9.2

CIBC (TSX:CM)

Gerry McCaughey

4th

$9.3

Source:  Bloomberg Markets

Foolish Takeaway

Whether we’re talking over- or underpaid, these are no doubt some hefty pay packages.  The position of bank CEO is incredibly difficult to place a firm value on, but clearly, the respective boards have erred on the side of generosity.  With that said, as is typically the case, these pay packages are only likely to garner significant shareholder opposition should any of these companies take a disproportionate hit at some point down the line.

Because of their heavy-weight in the S&P/TSX Composite, banks carry a significant influence over the entire Canadian market.  Not only are bank CEO pay packages going to come under fire if there is a hiccup, so too are those investors that think they’re diversified by owning a Canadian Index fund.  To combat this issue, the Motley Fool has prepared the special FREE report5 Stocks to Replace Your Canadian Index Fund”.  Download this report at no charge, by simply clicking this link now.

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

Fool contributor Iain Butler does not own any of the companies mentioned in this report.  The Motley Fool has no position in any stocks mentioned at this time

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

sad concerned deep in thought
Investing

Better Buy in February 2024: Couche-Tard Stock vs. goeasy Stock

With both Alimentation Couche-Tard and goeasy offering buying opportunities, let's assess which among the two would be an excellent buy.

Read more »

Various Canadian dollars in gray pants pocket
Dividend Stocks

Beat the TSX With This Cash-Gushing Dividend Stock

This dividend stock can easily surpass the TSX today, but even more growth is likely to get back to all-time…

Read more »

thinking
Bank Stocks

Is it Too Late to Buy Bank of Nova Scotia Stock?

Bank of Nova Scotia should be higher than it is today, and you get paid well to wait for the…

Read more »

Airport and plane
Stocks for Beginners

If You’d Invested $1,000 in Air Canada Stock in 2014, This Is How Much You Would Have Today

Not everyone has seen their shares of Air Canada (TSX:AC) stock decline. But if you were to invest today, would…

Read more »

crypto, chart, stocks
Tech Stocks

2 Artificial Intelligence (AI) Stocks That Could Go Parabolic

Palantir Technologies stock and this tiny Canadian AI stock could rally as their new platforms bring new customers in 2024.

Read more »

Plane on runway, aircraft
Dividend Stocks

Down 40% From All-time Highs, Is Cargojet Stock a Good Buy Today?

Cargojet stock trades at a significant discount to consensus price target estimates in 2023.

Read more »

Money growing in soil , Business success concept.
Dividend Stocks

2 Companies With the Firepower to Raise Their Dividends

Here are three top Canadian dividend stocks long-term investors may want to consider, based on their potential for dividend growth…

Read more »

financial freedom sign
Investing

3 Stocks That Could Help You Retire a Millionaire

Are you looking for stocks that could help you retire a millionaire? Here are three top picks!

Read more »