This week, Bloomberg Markets magazine released its list of the 20 best-paid bank CEOs in North America. To populists' chagrin, Canada was well represented, with six of our bank heads appearing on the list, three of them in the top ten.
Given the stratospheric nature of the compensation at issue -- RBC's Gordon Nixon was paid the equivalent of US$12.6-million in 2012, for example -- it's easy to get outraged. But massive numbers shouldn't be offensive in themselves if the CEOs earning them are actually making comparatively good money for their shareholders and bringing in a comparatively solid return on investments. Viewed through that filter, Gordon Nixon's US$12.6-million does happen to be a significant overpayment. But the US$9.2-million Bank of Montreal's William Downe was paid is an underpayment given BMO's performance under his leadership. According to Bloomberg Markets' calculations, the guy's well worth it.
Before, anyone gets carried away with declaring all Canadian bank CEOs' compensation unthinkably obscene and calling for some kind of pay cap, remember that Tom Cruise makes about US$75-million a year; boxer Floyd Mayweather takes in about US$85-million. Yet we rarely complain about these astronomical incomes.
When it comes to sports and entertainment, we seem to accept that extraordinary talent, skill, looks, ability (or whatever it is we happen to admire about celeb actors and star athletes) deserves to be rewarded with as much as people are willing to pay for the privilege of enjoying it. The same should be true of our bank CEOs. Don't knock them because they get paid a lot more in a year than you and I will make in a lifetime. Knock them if -- and only if -- they haven't earned it.
