Change Agent

How Michelle de Cordova is persuading banks to close the CEO pay gap

NEI Investments is putting runaway CEO salaries on corporate agendas

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NEI Investments Corporate Engagement Director Michelle De Cordova

Michelle de Cordova is concerned that runaway CEO pay is damaging company culture and morale. (Amanda Skuse)

Michelle de Cordova is corporate engagement director for NEI Investments, which pressed the Big Five Canadian banks to consider the size of their CEO pay relative to their own employee averages instead of to their CEO peers. Here’s how they did it:

“My corporate engagement team started talking to Canadian banks about 18 months ago, since they’re often innovators in corporate governance, and asked them to review the way they think about executive pay. We’d filed shareholder resolutions with the five biggest banks, asking them to study the risks of “horizontal benchmarking”—using salaries at rival companies to set compensation packages, a practice that we saw was driving salaries higher and higher, to levels that simply couldn’t be sustained. Several of them agreed right away to study the issue.

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“We eventually met with all five of the big banks, and asked them to report back to shareholders and to consider additional ways to set CEO pay levels. We encouraged them to think about vertical compensation: looking at the salaries of other employees in the company, for instance (and perhaps other measures of compensation in society), and anchoring the pay at the top in some way, so that it doesn’t continue to rise further and further away from everyone else. We’re concerned about what that does to culture and morale and to the reputation of companies in the wider society.”

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Since NEI filed its shareholder resolutions last year (which it subsequently withdrew), RBC and Scotiabank have stated that their compensation committees now look at some vertical metrics, though they haven’t disclosed further details