ONLY NAMES HAVE CHANGED
Hydro One remains the same company, Reevely says
The deal that sent Hydro One chief executive Mayo Schmidt out the door changes almost nothing about the semi-private company, other than the names on the stationery.
Schmidt, Premier Doug Ford’s scapegoat for everything that’s wrong in Ontario’s electricity system, retired this week rather than spend the summer as the premier’s punching bag. The terms of his departure are neither as good as Ford says they are, nor as bad as the opposition New Democrats say.
At the highest level, Schmidt’s exit is most definitely a win for the Progressive Conservatives.
“You can take this to the bank,” Ford said last spring. “The CEO’s gone and the board’s gone. We need to start respecting the taxpayers. The $6-million man is gone. The party’s over, it’s done. The party’s over with the taxpayers’ money.”
Schmidt is gone. The board is gone. Promise made, promise kept.
Schmidt gets no severance money, as Ford happily said when Schmidt quit Wednesday night, not a dime of the $10.7 million he’d be entitled to under his contract if the provincial government had fired the Hydro One board and installed new directors to fire the guy.
He does get a $400,000 buyout of any post-retirement claims. He also can cash out Hydro One stock he’s been given as performance bonuses, an amount that could add up to as much as $9 million. That’s what Ford’s opponents have attacked.
“Doug Ford needs to tell people what kind of backroom deal he worked out with Mayo Schmidt to get him to walk away, and if he’s going to replace the board with his own high-priced insiders,” NDP energy critic Peter Tabuns said.
The thing is, the $9 million is a payout that’s already accounted for. When Ford called Schmidt “the $6-million man,” much of the stock we’re talking about was included in the $6 million. Some of it’s from the previous year and the year before that. The $9 million isn’t new money Schmidt is being paid to go away. It’s not severance in disguise.
If Schmidt had hung on and insisted on being fired, he’d have been entitled to the $10.7 million in severance plus the $9 million in stock. That’s all explained in public Hydro One documents.
Schmidt could have done it the hard way and walked out with a much bigger payday. But he’s already a multimillionaire who made nearly as much at Saskatchewan’s Viterra (a descendant of the Saskatchewan Wheat Pool) before becoming the chief executive at Hydro One. He’s an award-winning CEO who just happened to be a convenient target for the Ford campaign — it would easily have been Ontario Power Generation’s boss Jeff Lyash (paid $1.2 million last year), if OPG sent customers bills directly — and he’ll find well-paid other work if he wants it.
More importantly, the terms of Schmidt’s departure make it clear that the Tories are supposed to stop messing with Hydro One now.
They get to appoint four new directors; the major private shareholders get to name six. Between them, they’ll choose a new chief executive.
But all the rest of the management team stays.
Paul Dobson, the new chief financial officer, becomes the fill-in chief executive. Dobson’s a new hire this year and paperwork hasn’t come out with his pay package in it, but his predecessor made $1.8 million a year in cash and stock. Dobson and the other top executives all keep their salaries and bonuses and stock packages.
The departing directors get all the payments they’re entitled to for their work so far, including in stock. The deal rolls back a $25,000 raise the current crew gave themselves, but their replacements will be paid what the current directors earned last year. That’s still $160,000 for 20 to 25 meetings a year.
Provincial officials have vowed in writing that they won’t complain about any of it. They have to stop saying anything that “defames, criticizes, ridicules, disparages or is derogatory or otherwise would reasonably be expected to be deleterious or damaging to any of the directors, officers, employees, agents and/or representatives of Hydro One,” the deal says.
The only exception is in legislative debate, which a contract couldn’t control anyway. Energy Minister Greg Rickford signed on for the government.
Investors knocked $400 million or so off Hydro One’s capitalization on the stock market, about four per cent of its worth.
In short, Hydro One is the same company it was three days ago, minus its boss. If it was, in fact, a millionaires’ scam before, that hasn’t changed. If it’s a value-creating corporation, its owners think it’s less valuable now than it was.
But the scapegoat’s gone. So there’s that.
By their nature, throne speeches are broad documents, not detailed recipe books. So it’s no surprise that the Ontario Progressive Conservative throne speech, delivered Thursday, isn’t a study in legislative minutiae.
It is, however, a clear glimpse at the world view of Premier Doug Ford’s team: “Your new government believes that no dollar is better spent than the dollar that is left in the pockets of the taxpayer.” Contrast that with the last throne speech, delivered in March on behalf of then-premier Kathleen Wynne: “We do not accept that people should fend for themselves … your government has a plan for care and opportunity.”
Wynne, at the time, was desperately fishing for votes and the Liberal throne contained a nod or promise to a wide array of demographic groups. For now, Ford rejects this approach.
For example, Thursday’s speech didn’t mention Indigenous Ontarians (a few months ago, the Liberal speech contained a lengthy tribute to them); Thursday’s speech contained no French (the Grit version offered a few de rigueur paragraphs in French — and a Frenchlanguage university); Thursday’s speech contained no specific funding pledges for young people (Wynne’s was all over tuition relief and the benefits of OHIP+). About the only definable group Team Ford has highlighted is veterans. To the PCs, broadly, an Ontarian is an Ontarian is an Ontarian. Group status doesn’t count.
Many will applaud this approach; others worry it means social-progress rollbacks. It’s too early to know: Over time, all governments tend to identify specific constituencies, for reasons both honourable and opportunistic.
So for now, let’s focus on other topics not addressed, even in general terms, in the throne speech:
Immigration. Given the fuss a scant week ago about asylum seekers, does the absence of mention mean Ford has washed his hands on this issue?
Climate change. Cap-and-trade is gone. How does Team Ford plan to help tackle one of the top issues of our time?
Hydro rates. They’re to shrink under the PCs. We breathlessly await an explanation of how.
Cannabis. Yes, the feds are the ones legalizing it — but the provinces have to make it work. Premier?
Balanced budget. The throne speech assures us a Progressive Conservative government will return Ontario to balance “on a timetable that is responsible, modest and pragmatic.” What does that mean? During this term of office? For a government that pledges fiscal responsibility, such vagueness on timetable, even in a throne speech, is a bit surprising.
Other than all that, a fine speech. Let the governing begin.
The truth is, when it comes to doing our bit internationally, the people of this country are quite content to spend less than we’re supposed to and contribute less than we’re meant to, and stay out of the world’s problems.
Sachi Kurl of the Angus Reid Institute