Bay Street’s $14-million man

The head of Canadian Imperial Bank of Commerce's investment and corporate banking arm took home $14-million last year, making him the highest-paid senior executive ever on Bay Street.

The Globe and Mail
February 2, 2001

Bay Street’s $14-million man
CIBC World Market's David Kassie pulls in biggest pay yet for senior executive
Karen Howlett

The head of Canadian Imperial Bank of Commerce's investment and corporate banking arm took home $14-million last year, making him the highest-paid senior executive ever on Bay Street.

David Kassie, chief executive officer of CIBC World Markets Inc., received a salary of $450,000, a cash bonus of $6.5-million and $7-million in the form of CIBC shares to be issued over the next three years, according to the bank's management proxy circular, mailed to shareholders yesterday.

"Under Mr. Kassie's leadership of CIBC World Markets, earnings more than doubled to $1.2-billion in fiscal 2000," said bank spokesman Rob McLeod. "The compensation rewards him for that very successful performance."

Mr. Kassie's compensation doubled from the $7.1-million he received in 1999. The previous record for a banker — at least for those whose stipends are publicly disclosed — was held by Mr. Kassie's boss, CIBC chairman John Hunkin.

Mr. Hunkin earned $10.3-million in salary and bonuses in 1997, when he headed World Markets.

Mr. Hunkin, who was promoted to the helm of the bank in mid-1999, was paid a total of $7.4-million last year, making him the highest-paid chairman among the five major banks that have released their proxy circulars. Toronto-Dominion Bank will mail out its proxy on Feb. 28.

The pay information in the banks' circulars highlights the vast gulf between the rewards for investment bankers in times of strong capital markets and those available not only for the executives who run a bank's more traditional businesses, but also for the chairmen.

The Big Six banks made combined profit of $9.6-billion in the fiscal year ended Oct. 31, up from $9.1-billion in 1999. In virtually every case, their investment banking arms made a big contribution to those earnings, fuelled by buoyant stock markets in the first half of last year.

CIBC, Canada's second largest bank with assets of $268-billion as of Oct. 31, saw its profit double to $2.1-billion or $4.97 a share in fiscal 2000.

Mr. Hunkin's compensation was linked to the bank's stellar performance, the circular says. His pay packet consisted of a salary of $900,000, a cash bonus of $3.5-million and $3-million in the form of CIBC shares that will vest over the next three years.

"Under John Hunkin's leadership, fiscal year 2000 was a very successful year for CIBC and its shareholders," the circular says.

The compensation numbers in CIBC's circular exclude long-term incentive awards paid to four executives, including Mr. Hunkin and Mr. Kassie, in recognition of huge gains in the bank's merchant banking portfolio last year.

In the second and third quarters last year, about one-third of CIBC's profit came from selling shares in Global Crossing Ltd., a key holding in its merchant banking portfolio.

The awards under the bank's special incentive program consist of units whose value is based on the net gains from its merchant banking investments, the circular says. These gains are ultimately converted into shares of the bank.

Mr. McLeod said it is impossible to put a dollar figure on these units because their value is linked to the ultimate performance of the merchant banking portfolio.

Any money owing under this incentive program is paid to executives upon their retirement or departure from the bank.

The compensation paid to Mr. Hunkin and Mr. Kassie also excludes stock options granted to them last year under the bank's employee stock option plan. None of the bank's top five highest-paid executives cashed in any of their options last year.


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