RBC’s CEO tops Canadian banker pay

It’s no surprise that the head of the biggest bank in the country would have the largest compensation package in the industry.

RBC’s David McKay made more than $11.6 million in 2015.

Read: CIBC’s Dodig made $8.5 million in 2015

In his first full year as President and CEO, McKay made $10,875,000 in direct compensation, 9% above his 2015 goal. That includes a base salary of $1.3 million, a bonus of $2.3 million and equity incentives worth $7.3 million. The equity was made up of 80% deferred share units and 20% stock options.

“Under Mr. McKay’s leadership, we made progress in attracting and serving the needs of personal, business and institutional clients, demonstrating the power of our diversified business model and our prudent approach to risk management,” writes RBC’s board in the bank’s management proxy circular.

Factoring in his pension, which has an annual value of $742,000, and miscellaneous other compensation, worth $38,893, his total pay and benefits were worth $11,655,893 in 2015.

And, McKay is getting a raise. For 2016, the board increased his base salary by $200,000 to $1.5 million. His total target compensation for this year is $11.25 million, up $1.25 million from 2015.

Read: TD head was paid $10.7 million last year

Wealth Management group lowers bank’s results

The bank’s net income in 2015 was $10.03 billion, up 11.4% from 2014. The growth came from the bank’s Personal and Commercial banking, Capital Markets, and Investor and Treasury Services. Overall, Wealth Management and Insurance contributed 11%, or $1.04 billion, to the company’s total earnings. Its diluted earnings per share were $6.73, and it increased its dividend by 8%.

The bank also met all of its financial objectives. Its goals were:

• Diluted EPS growth. Goal: 7%. Actual: 12.2%.
• Return on common equity. Goal: 18%. Actual: 18.6%.
• Capital ratio. Goal: strong Actual: strong (10.6%).
• Dividend payout ratio. Goal: 40% to 50%. Actual: 46%.

Wealth Management didn’t achieve its target income in 2015, notes the proxy circular. While it brought in $1.04 billion, that was 13.7% below the bank’s target of $1.2 billion. The division also earned 3.9% less than it did in 2014.

The bank says higher costs in Global Asset Management and Canadian Wealth Management and restructuring costs in the U.S. and International Wealth Management groups contributed to the lower earnings. The bank also processed fewer transactions, and paid more for credit losses.

It does note that some of these costs were offset by higher earnings from growth in average fee-based client assets.

Head of Wealth Management

Doug Guzman became RBC’s Group Head of Wealth Management and Insurance in November 2015, replacing M. George Lewis. Lewis had been head of the division since 2008. He’s still at RBC as a senior portfolio manager in Global Asset Management.

For his work as Group Head, Lewis was entitled to a $700,000 salary, a $796,000 bonus and $2.5 million in equity incentives, for a total of almost $4 million. The proxy circular notes that in 2015, 76% of his pay at-risk was deferred. Including his annual pension value of $225,000 and miscellaneous compensation of $20,942, his total compensation was $4.2 million.

Gender diversity on boards

RBC has committed to having 30% of its board members be women by 2020. Five of the 14 nominees for board positions that will be voted on at the bank’s 2016 annual general meeting are women. If they are all elected, 36% of the board would be female.

RBC doesn’t have targets for how many of its international executive officers should be women, but presently, three of eight officers are women. In Canada, RBC’s goal is to have 40% of executive roles filled by women. There are presently at 39%. Going forward, women will be appointed to 50% of executive roles.