Royal Bank of Canada | Internal pay metrics disclosure at Royal Bank of Canada

Status
AGM passed
AGM date
Previous AGM date
Proposal number
1
Resolution details
Company ticker
RY:CN
Lead filer
Vancity Investment Management
Resolution ask
Report on or disclose
ESG theme
  • Governance
ESG sub-theme
  • Remuneration or pay
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Financials
Company HQ country
Canada
Resolved clause
Resolved: Shareholders request that RBC disclose, at reasonable cost and omitting proprietary information, enhanced information on
the internal pay metrics used when setting executive target compensation, and to clarify the influence of these metrics on executive
compensation. Internal pay metrics include ratio and percentile disclosures that illustrate how compensation compares between
executives and non-executive employees. This disclosure should address:
1. An explanation of specific internal pay metrics used.
2. A discussion of how these metrics inform compensation decisions for the CEO and senior executives.
Supporting statement
Over recent decades, executive pay has far outpaced that of average workers. In 2023, for instance, CEO pay increased by 11.3% among
top U.S. companies, while median worker pay decreased by 9.3%1
. These widening pay gaps pose risks to economic stability, erode
social cohesion, deepen gender and racial inequities, and may decrease workforce satisfaction, ultimately impacting productivity and
retention2. As a large financial institution invested across economic sectors and reliant on human capital, RBC’s growth and ability to
create shareholder value depends on effectively managing these risks.
RBC’s recently launched 2023 Purpose Framework identifies ‘Growing Inequalities’ as one of three core societal challenges the company
aims to address, demonstrating that it recognizes the strategic importance of addressing these growing income and wealth inequalities.
Senior management’s focus on aligning people and investments with the organization’s highest priorities demonstrates the company
understands the value of investing in its people to strengthen human capital. Shareholders require increased disclosures on internal
pay metrics to assess whether RBC’s compensation structures support these strategies.
Given that Risk and strategic objectives, including ‘Create exceptional and engaging employee experiences’ and ‘Enable inclusive
economic growth’ are key components of executive compensation, shareholders seek further clarity on how RBC evaluates this beyond
employee surveys, recognition awards and hosting events. Expectations for transparency are growing, with initiatives like the Taskforce
for Inequality and Social-related Financial Disclosures (TIFSD) working toward frameworks that may be adopted under IFRS
Sustainability Standards3.
Increased disclosure on internal pay metrics can demonstrate RBC’s commitment to strategic priorities and readiness for emerging
regulations. While RBC discloses that the Human Resources Committee considers select vertical pay metrics when making CEO
compensation recommendations, including a comparison of total and median direct annual compensation of all employees and
changes in this ratio over time, it does not specify all factors or explain how these metrics influence target compensation.
We ask the Board to report, at a minimum, on the following:
1. Internal Pay Equity Metrics: Describe all pay metrics or ratios used to assess the pay relationship between executives
and employees.
2. Influence on Compensation Decisions: Explain how these metrics affect CEO and executive pay-setting and
performance evaluations.
This disclosure is not intended to limit executive compensation but to ensure shareholders have the information needed to assess RBC’s
management of material regulatory and financial risks. Enhanced transparency will benefit both RBC and shareholders by aligning
executive compensation with the company’s long-term organizational health and strategic vision.

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