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Canadian CEOs Forgo Bonuses...Happily

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Our northern neighbors get ahead of the backlash.

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The author and cartoonist Bruce McCall has said that, if Canadians' attitude toward the US could be summed up in a single phrase, that phrase would be "Oh, shut up." Americans, according to McCall, are a people carrying on a "torrid love affair" with themselves - one which is utterly anathema to "the Canadian ideal of modesty and self-restraint."

The CEOs of Canada's 3 largest banks -- the Royal Bank of Canada (RY), the Bank of Nova Scotia (BNS) and the Bank of Montreal (BMO) -- are apparently living proof of that ideal: All have voluntarily cut their own pay in response to the global economic crisis.

Rick Waugh, Scotiabank's CEO, took a 20% pay cut, and a nearly 70% reduction in bonus; Bill Downe, head of BMO, gave up some $4.1 million for the year. Meanwhile, CIBC (CM) president Gerald McCaughey recently refused a cash bonus of almost $13 million, out of consideration for both the health of his firm and in deference to "public outrage" surrounding executive compensation.

Gordon Nixon, RBC's chief executive, also turned down $5 million in 2008 -- a pay cut of approximately 50% -- after the bank's profits had fallen 17%. By contrast, Bank of America's (BAC) Ken Lewis took a 10.7% pay cut for 2008, after the bank's profits had plunged by more than 73%.

The $3.7 million Nixon was paid included a cash bonus of $2.4 million -- all of which Nixon immediately funneled back into his company, via the purchase of RBC common shares. Lewis, on the other hand, recently caused countless headlines and the spillage of a great deal of ink by buying a paltry $958,000 worth of B of A stock, thereby "putting his money where his mouth is." And though Lewis has loudly called financial-industry paychecks "egregious," he has conspicuously refused to take a pay cut himself.

As McCall drily noted, Americans are "forever busting their buttons in spasms of insufferable yahoo pride, or all too publicly agonizing over their crises."

My, but the truth hurts.
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