Ford government slaps $1.5M pay cap on Hydro One CEO post
|Toronto Star 21 Feb 2019 at 07:24|
The Ontario government is forcing a cap of $1.5 million in salary and incentives for the CEO position at Hydro One, blaming the partially privatized transmission utility for not taking tough enough action to trim the pay packets of executives and board members.
Energy Minister Greg Rickford announced Thursday that a directive has been issued to Hydro One under legislation the new Progressive Conservative government passed last summer giving it more control over the company, in which the province owns a 47 per cent stake.
Rickford’s move is in response to Hydro One’s proposed cap of $2.78 million for the top job as a search for a new chief executive continues, with the company’s chairman Tom Woods — appointed by the Ford government — warning that recruiting senior executives will become difficult with stringent salary caps in place.
But the new cap, which limits pay for senior executives to 75 per cent of the CEO level and caps annual payouts to directors at $80,000, will “bring Hydro One’s executive compensation in line with levels with comparable utilities,” Rickford said in a statement.
“It is clear that Hydro One’s board of directors has failed to take steps to adequately reduce compensation for both the CEO and themselves as board members.”
The company’s board — which includes four directors appointed by the province — stood firm as a showdown took shape last week, stating it needs leeway “to attract, retain and motivate highly-qualified leadership.”
Hydro One had proposed up to $1.86 million for executive vice-president and $140,000 a year for directors, with the chair getting $169,500. The chair’s stipend is now set at $120,000.
“This is a reasonable and responsible level that more closely aligns compensation with other corporations like Ontario Power Generation, which produces approximately 50 per cent of Ontario’s electricity and operates a fleet of nuclear assets,” said Rickford, repeating a promise to cut electricity prices another 12 per cent.
Woods said last week the goverment’s proposed CEO pay cap, including $500,000 and the rest in incentives, could short-circuit the hiring of a preferred candidate for the job following the government’s ouster of former boss Mayo Schmidt, whom Ford dubbed the “six million dollar man” for his annual pay packet.
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“As you know we have been in discusssion with a very talented prospective CEO, who we believe would accept the role with compensation as contemplated under the proposed framework,” Woods wrote, referring Hydro One’s proposed cap of $2.78 million.
“As we have previously advised, the entire top management team (five individuals) are under retention agreements and it appears likely that all five will depart soon after their agreements mature in the next 2.5 months.”
Critics have warned the government interference in pay levels at Hydro One, whose shares are publicly traded on the Toronto Stock Exchange, will send a chill through the business community.