Tories to cap Hydro One CEO pay
Former chief Schmidt forced out after his salary became an election issue
There will be no reboot of Premier Doug Ford’s “Six Million Dollar Man” at Hydro One.
Ford’s Progressive Conservative government has ordered the partially public-owned utility to ensure the next CEO earns no more than $1.5 million a year.
The firm is still looking for a full-time chief to replace Mayo Schmidt, forced out last July after his annual salary became an election issue with the Tories deriding his $6-million pay by raising the spectre of the title character in the popular 1970s TV show about a bionic man.
After Schmidt left — with about $10.7 million in severance and stock options — Hydro One’s board proposed a cap of $2.78 million for its next CEO. But the Tories refused that. On Friday, Energy Minister Greg Rickford said the firm, which is 47 per cent owned by taxpayers, is following a directive to “Hydro One’s executive compensation levels down to acceptable levels.” “The maximum CEO compensation will now be $1.5 million annually, which is less than 25 per cent of the former CEO’s direct compensation,” Rickford said.
“This includes $500,000 in base salary, with performancebased short-term and longterm incentives making up the rest. Actual compensation could be lower than $1.5 million if targets are not met,” the minister said.
“Most significantly, performance targets will include the CEO’s contribution to reducing system costs, supporting our commitment to reduce Ontarians’ electricity rates by 12 per cent,” he said.
“Other newly appointed senior executives will be able to earn no more than 75 per cent of the CEO’s pay and the base, short-term and long-term incentive payment structure will be consistent with the CEO. Directors on the board will now earn $80,000, committee chairs will earn $85,000 and the chair of the board will earn $120,000.”
In a statement, Hydro One said its board “will now continue with its CEO selection process.”
While targeting Schmidt was politically helpful to the Tories in the June 7 election, Ford’s intervention in the company has been costly to taxpayers. Aside from the massive payout to the former CEO, the government’s actions have jolted the electricity sector.
Regulators in the U.S. scrapped a $6.7-billion deal for Hydro One to take over Arista Corp., an American energy firm, because of political meddling from Queen’s Park. That cost Hydro One more than $140 million for a “kill fee” and sparked concerns on Bay Street with bank analysts warning that a cap on the compensation could make it challenging to find a capable CEO.
Under legislation passed last summer after the Tories toppled the Liberals, who has sold off the majority share in the utility, the province retains the power to control executive salaries at Hydro One until the end of 2022.
Rickford’s boast about curbing executive pay at Hydro One is undermined by other moves made by the Tory government at the publicly traded corporation, said New Democrat MPP Catherine Fife.
“Mr. Ford’s meddling in Hydro One and then the subsequent Avista deal has cost Ontarians almost $200 million when you factor in financing and the interest,” Fife (Waterloo) said of the Avista cancellation fee and severance to Schmidt.
“It really demonstrates what kind of premier we have in the province of Ontario — someone who puts his own interests above the people and that ends up costing Ontario taxpayers and citizens more money,” she said.
“Two-hundred million dollars buys you a lot of autism therapy.”
That’s a reference to criticisms from parents of children with autism that the government spending of $321 million on treatment is nowhere near enough to meet demand.
On the executive salaries, Fife acknowledged Hydro One’s concerns about attracting a talented new CEO at the lower rate, but said Ford’s record of dealing with the company could be a bigger obstacle.
“If you’re an executive and you’re looking to get a job at an organization like Hydro One, and then you have a premier that’s willing to put you, essentially, on public trial, that doesn’t instil a lot of confidence in people who are going to be applying for those jobs.”