TD cut CEO Bharat Masrani’s bonus pay for 2023 by C$1 million ($741,285) “in acknowledgment of the termination of the First Horizon transaction and certain U.S. regulatory issues,” the bank said in a proxy circular Tuesday.
TD acknowledged in August that it’s cooperating with a U.S. Justice Department investigation into the bank’s compliance with anti-money laundering measures. Regulators’ scrutiny of TD’s handling of suspicious customer transactions has long been rumored to be at the root of the First Horizon deal’s demise.
Masrani isn’t the only high-ranking TD executive to see a pay cut. The bank decreased U.S. CEO Leo Salom’s compensation by 20.6% in fiscal 2023, according to the circular.
But TD is not an outlier among Canadian banks. Compensation for big-bank CEOs north of the border is trending downward in general. The chief executives of four of the nation’s five largest banks received less pay in 2023 than in the previous year.
That’s counter to momentum in the U.S., where only Bank of America’s Brian Moynihan saw a decrease in compensation among top-six bank CEOs. Even then, that contrasts with other Bank of America executives. CFO Alastair Borthwick saw a 14% boost in compensation to $12 million, according to that bank’s proxy circular. Jim DeMare, Bank of America’s global markets division, received an 11% pay boost in 2023, to $21 million.
Masrani did appear to take a page from the playbook of one U.S. bank CEO: Wells Fargo’s Charlie Scharf.
Scharf asked Wells Fargo’s human resources committee to “exercise negative discretion” and pay him less than it otherwise would have for 2023 — to reflect that “more work remains ahead” for the bank, Wells said in a January filing.
In TD’s proxy circular, the bank said Masrani “recommended, and the board accepted” his reduction.
Overall, Masrani saw an 11% decrease in his compensation for 2023 — to C$13.38 million. That’s the second-steepest reduction in pay among Canadian big-bank CEOs last year. (BMO CEO Darryl White’s compensation fell 12% to C$12.54 million.)
Masrani's C$13.38 million figure includes a C$1.55 million bonus — which, in itself, is down from C$2.69 million in 2022 — and C$10.22 million in stock and option awards, down from C$10.82 million.
Even with the reduction, Masrani ranks as Canada’s second-highest-paid big-bank CEO, behind Royal Bank of Canada’s Dave McKay, who received C$16.13 million in 2023. That’s down from C$16.36 million in 2022, but ahead of the C$14 million target the bank had set for him as the year began.
In its proxy circular, RBC cited McKay’s “leadership in steering [the bank] through a turbulent environment and making strategic investments that will strengthen our ability to generate revenue for shareholders over the long term.”
The investment, undoubtedly, is a reference to RBC’s $10.2 billion acquisition of HSBC’s Canada footprint, which received final approval in December. The turbulence, meanwhile, is the mix of higher borrowing costs, lower loan demand and increased loan-loss reserves. On top of that, Canada’s banking regulator increased required capital holdings.
The Canadian equivalent to Brian Moynihan — if only by going against the compensation trend for 2023 — is Canadian Imperial Bank of Commerce CEO Victor Dodig, who saw a 1.7% pay bump last year, to C$11.21 million. Dodig’s increase comes after CIBC cut his pay by 13.6% in 2022, according to The Globe and Mail.
White, the BMO CEO, saw his pay decrease because the bank’s earnings per share dropped 7.7% in 2023, despite targeting a 5.2% increase in earnings per share. In its circular, BMO, in part, blamed offshoots from Silicon Valley Bank.
“Through the year, greater instability in U.S. regional banking and more global economic uncertainty occurred than anticipated and BMO did not achieve its 2023 goals,” the bank said.
Scotiabank CEO Scott Thomson ranked as the lowest-paid of Canada’s big-bank CEOs, at C$9.38 million — although he served just a partial year. His predecessor, Brian Porter, received C$4.9 million for fiscal 2023. In that time, he spent three months as CEO, and three more as a strategic adviser to Thomson.
Altogether, the CEOs of the five Canadian banks made C$62.63 million in 2023 — down nearly 11% from C$70.34 million a year earlier, according to the banks’ filings.
