Energy minister defends Hydro CEO’s pay jump
The new boss at Hydro One — a company recently on the hot seat for widespread overbilling of customers — is making triple what his predecessor earned before privatization.
Chief executive Mayo Schmidt started work Sept. 3 and by the end of the year will enjoy $1.36 million in base pay, incentives and pension value. The man he succeeded, Carmine Marcello, got $1.2 million for all of 2014. Details of what critics called an “exorbitant” pay packet — which could climb to $4 million annually — came Friday as the government issued a prospectus for investors with Hydro One preparing to sell shares on the stock market this fall.
Soaring executive salaries under the controversial privatization by Premier Kathleen Wynne will nudge electricity bills higher, opposition parties warned.
“If you’re an executive, the lottery just opened,” said New Democrat MPP Peter Tabuns, his party’s energy critic.
Energy Minister Bob Chiarelli defended the payouts, which government privatization czar Ed Clark said are in the “low to medium” range of similar companies and crucial in attracting top talent.
“Very, very specific targets have to be met and achieved for those executives to get anywhere close to their maximum,” Chiarelli told reporters, with factors including financial performance, improved customer service and workplace safety.
“I think that’s the best way to run a company.”
The government is selling up to 60 per cent of Hydro One, starting with a tranche of 15 per cent in early November, to raise an estimated $9 billion to fund transit and other infrastructure improvements and pay down debt.
Private-sector discipline and innovation will make Hydro One more profitable, making up for lost revenue that used to go fully into government coffers and will soon be shared with investors, said Clark, a former chairman of TD Bank.
But with improved results still at the promise stage, Progressive Conservative MPP Todd Smith questioned “huge” executive pay levels at Hydro One, where computer snafus led to wild overbilling of customers and money being taken from their bank accounts, raising the ire of Ontario’s former ombudsman André Marin.
Smith also took exception to Marcello, an engineer, staying on as a “special adviser” to Schmidt and the board of directors and keeping his base salary of $525,000.
“Things need to be cleaned up at Hydro One, absolutely, but you’re keeping the guy on who previously couldn’t get it done.”
The Wynne administration has been fighting a public relations battle over the Hydro One sale, with widespread opposition registering in a recent Environics poll and internal government polling.
Also Friday, Hydro One’s unsecured debt rating was downgraded one notch by Moody’s Investors Service, to A2 from A1, with a negative outlook reflecting the “high probability” of another similar downgrade following the initial public offering.