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TORONTO (Reuters) - Toronto-Dominion Bank said on Wednesday it will give its shareholders a say in determining pay for its top executives, becoming the last of Canada's big six banks to adopt such a measure.
Ahead of TD's annual meeting on April 2 in Saint John, New Brunswick, Canada's second-biggest bank preempted a shareholder proposal that asked for a method to be devised to allow shareholders to give feedback on compensation for the bank's executives.
The issue has already made its way through the annual meetings of other Canadian banks and all have agreed to give shareholders an advisory and nonbinding vote on executive pay packages when the program starts in 2010.
TD shareholders now will be able to participate in a nonbinding vote at next year's annual meeting too.
"The board carefully considered this issue and set out its recommendation to shareholders in TD's proxy circular," John Thompson, chairman of TD's board, said in a statement. "It's now clear from the votes held this year at the other major Canadian banks' meetings that the opinion of the investment community, while still divided, has moved in favor of an advisory vote, and so we've acted accordingly."
Multimillion-dollar pay packages for chief executives at Canada's big banks have been criticized for years by shareholder activists. Banks have defended their compensation policies, citing the need to be competitive and retain talent.
But popular anger about executive pay is less intense in Canada than in other countries. Canadian pay packages are smaller and conservative lending practices have helped the banking industry avoid the massive writedowns and losses that have driven U.S. and European banks into insolvency.
The World Economic Forum last year ranked Canada's banking system as the world's soundest.
Canadian banks recently announced that their chief executives were taking smaller compensation packages this year, giving up pay at a time of global economic recession. Some heads of Canadian banks gave back their bonuses or requested that some of their pay go to charity.
Reporting by Ka Yan Ng; Editing by Peter Galloway