Hydro One facing leadership uncertainty

The future of Ontario’s partially privatized utility is again uncertain after political intervention prompted the resignation of the company’s board 16 years after another mass departure.

Hydro One’s 14-member board resigned en masse last week after the sudden retirement of chief executive officer Mayo Schmidt, labelled “the six-million-dollar man’’ on the campaign trail by Premier Doug Ford for his hefty compensation.

The premier made it clear that he wanted changes, including reduced electricity rates and lower compensation for the CEO — even though 92 per cent of shareholders other than the province supported Hydro One’s executive compensation approach.

However, the move will come with costs of its own.

Political interference and a lower pay package will make it more difficult to attract a quality chief executive and directors willing to serve, said Jeremy Rosenfield of Industrial Alliance Securities.

“It’s clearly going to have to be somebody who will be able to work with the province and I believe many CEOs will not accept the level of potential political interference that would be required to take this role.’’

A Ford spokesman declined to confirm a published report that the government threatened to rip up the board’s executive employment contracts unless they negotiated their departures.

In addition to dealing with a large activist investor, the new board faces uncertainty about what the new government actually intends to do with its investment, since no strategy was outlined in the campaign, Rosenfield added.