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Manulife CEO Don Guloien’s compensation falls to $8.67M

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Manulife Financial Corp. Chief Executive Don Guloien received total compensation of $8.67 million for 2011, compared with $9.29 million in 2010.

The pay package is for a year in which the life insurer saw its profits rise to $129 million, up from a loss of nearly $1.7 billion in 2010.

The company continued to be pounded by low stock markets and interest rates. If those two factors were taken out of the mix, Manulife would have earned $1.2 billion last year.

"While Manulife fell short of its financial performance in targets in 2011, actions taken by management helped to significantly reduce the impact of market forces and effectively position the company for the future," John Cassaday, the chair of the compensation committee, and Gail Cook-Bennett, the chair of the board, wrote in the company's proxy circular.

Under Guloien's leadership, Manulife has made significant progress on its plan to reposition the business, the circular stated. "Management materially reduced risk and volatility through hedging activities, re-pricing products and strengthening our balance sheet."

The board approved a $100,000 increase in Guloien's salary for next year.

Chief Financial Officer Michael Bell, who has announced that he will be stepping down once a replacement is found so that he can rejoin his family, earned $5.1 million last year, up from $3.1 million the prior year. His family moved back to Philadelphia from Toronto in June 2011. He received $42,400 in tax consulting services and a travel allowance of $52,754 for commuting between Philadelphia and Toronto.

Manulife's board looks at both global insurers and Canadian banks when determining executive salaries. It was a mixed bag for bank CEOs, with Bank of Montreal CEO Bill Downe receiving a 12-percent pay increase to $11.4 million, while Royal Bank of Canada CEO Gord Nixon saw his total compensation fall by six percent to $11.17 million.

Guloien, 54, took over from his predecessor Dominic D'Alessandro in 2009. Roughly seven months earlier the collapse of Lehman Brothers had caused stock markets to plunge, and the large exposure that Manulife had to stock markets was exposed.

As he left, D'Alessandro decided to forgo $10 million of his pay package for that year unless Manulife's stock hit $36 a share by the end of 2011, a level he was certain it would rebound to. To hedge his bet, D'Alessandro said he would take $5 million of that $10 million if the stock reached $30 by the end of last year.

But the financial crisis took a serious toll on the company, not only because of falling stock markets, but more recently because of low interest rates. The stock was trading at $13.58 on Friday.

-With files from Grant Robertson

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