B.C. to review Hydro bonuses
Opposition critics called them “runaway bonuses” — the $528,856 that went to senior executives after B.C. Hydro posted non-existent profits. In the legislature Tuesday, B.C. energy minis- ter Rich Coleman promised to review the bonus packages.
B.C.’S energy minister is to review bonus packages for B.C. Hydro staff after the auditor general showed that senior executives were rewarded for posting a profit that did not exist.
Rich Coleman was grilled in the legislature Tuesday by Opposition critics who portrayed his government as authorizing millions of dollars in “runaway bonuses” in a “no-executive-left-behind program” that is out of touch with taxpayers.
Coleman later told reporters he does not think he can claw back bonuses already paid to senior managers but the future structure of the executive compensation program is open to change. “That system is going to get a review,” Coleman said.
Auditor general John Doyle released a report into B.C. Hydro’s accounting practices last week, indicating that the corporation posts an annual profit where none exists by pushing billions of dollars in expenses into special future deferral accounts.
Hydro lost $249 million in 2009-10, but deferred $696 million in expenses to post a year-end net income of $447 million. Senior executives then claimed $528,856 in bonuses that were, in part, tied to financial targets like net income and return on regulatory equity.
B.C. Hydro acting chief executive officer and chief financial officer Charles Reid said the corporation’s net income is one of 18 metrics used to decide bonuses and accounts for three per cent of the weighting process in deciding what an executive receives.
“The majority of the weighting for variable pay is based on many other factors like safety, reliability of the system and customer satisfaction,” Reid said in an interview Tuesday.
Coleman also pointed to the other targets execu- tives must reach to receive additional compensation. “It’s not tied into just profitability,” he said.
But he told reporters that, in principle, he agrees that executives should not receive bonuses when a corporation loses money.
Departing Hydro CEO Dave Cobb earned $73,400 in bonuses last year, as part of a $467,641 pay and compensation package. Executive vice-president Bev Van Ruyven, who served as acting CEO as well as executive vice-president, earned $100,715 in bonuses toward a $482,125 package.
NDP leader Adrian Dix demanded that Coleman and Premier Christy Clark halt the Hydro bonuses.
“In my view, the bonus system, as presented by the government here, doesn’t make sense, it doesn’t meet the public test and the government should do away with it,” said Dix.
He pointed to the government’s quick retreat on other executive bonus programs in government agencies such as Community Living B.C. and the quasiprivate B.C. Ferries.
The government passed legislation in 2010 limiting future B.C. Ferries executive bonuses, and capping pay, after it was revealed that CEO David Hahn received more than $1 million in annual pay and bonuses.
Last month, it halted a $300,000-a-year bonus program for CLBC executives, saying it was inappropriate. CLBC is under fire over group home closures, service cutbacks and a lack of available funding to deal with a growing wait list of people with developmental disabilities.
Coleman said some sort of bonus is necessary for Hydro executives, in part because the Crown corporation is trying to retain good staff who would receive “significantly higher compensation” if they worked for a private company.