Salary and bonus increases under fire

P.E.I. public accounts committee scrutinizes generous compensation increases approved for Atlantic Lottery executives

Significant increases to salaries and bonuses paid to executives of Atlantic Lottery Corporation came under fire at a meeting of the P.E.I. public accounts committee Friday.

The increases were flagged in the joint audit by the four Atlantic auditors general of Atlantic Lottery Corporation (ALC), released last October.

The auditors found large compensation increases were awarded to executives beginning in 2014-15, some to be phased in over three years. The increases in base salary ranged from 20 to 40 per cent while increases to maximum annual bonuses ranged from 50 to 220 per cent.

These increases were approved by Atlantic Lottery’s board of directors, which includes representatives from each of the four shareholder governments. However, the auditors found governments were not consulted to determine if the increases were appropriate. The auditors noted public sector salary increases over the same three-year period ranged from one- to three per cent.

The increases were based on a compensation review completed by a consultant, hired by Atlantic Lottery in 2013-14. The consultant compared compensation for executives at ALC to the national market but only used the Atlantic Canadian market when comparing salaries and benefits of non-executive employees at ALC.

Auditors could not find an acceptable rationale for this.

On Friday, MLAs on P.E.I.’s Standing Committee on Public Accounts voiced concerns over the generous salary and bonus increases approved for the ALC executives.

Liberal MLA Chris Palmer asked if the raises were prompted by an improvement in their performance. Auditor General Jane MacAdam noted the average yearover-year net profit of ALC is 1.1 per cent. She also pointed to one example highlighted in the audit report that one executive was discovered to have a special compensation package that includes no criteria of the level of bonus he or she is awarded. This executive was paid bonuses of $60,000 and $53,000 in 2013-14 and 2014-15 on top of his/her $199,800 salary.

Palmer suggested the committee should recommend ALC make bonuses contingent on performance, “as opposed to some arbitrary decision that those folks might need more money.”

Liberal MLA Bush Dumville raised concern about ALC executives earning generous bonuses and salary increases in the same year the corporation wrote off millions in losses from the failed GeoSweep game. P.E.I.’s share of those losses was $4.3 million.

“When they lost all this money and got into a couple of bad schemes, they still cashed their cheques,” Dumville said. “Nobody clawed back their bonuses.”

The committee is requesting more detailed information from Atlantic Lottery about how bonuses and salary increases are determined. The committee said it may also call CEO Brent Scrimshaw and other executives to testify.