Pan Am bonus called ‘a leash’ to rein in budget
Experts said sky-high payouts for running major sporting events is normal practice
A $7-million retention bonus plan for Pan Am Games’ employees was so “eye-catching” to Tourism, Culture and Sport Minister Michael Chan that he demanded an explanation when he took over the file earlier this year.
But Chan — who emphasized Friday he is watching the Games’ budget with “a hawk’s eyes” — was persuaded once it was explained to him that such incentives are standard practice for such large-scale sports events.
“It seemed high to me, these eyecatching numbers,” said the minister, who “was satisfied with the explanation” he received after assuming Pan Am responsibility in February.
“This is the price you have to pay for these people,” he said, noting the bonuses should help ensure the Games are on-budget and that key staffers stick around for the duration.
“It’s like pulling them with a leash, so they don’t run away.”
As first revealed by the Star, organizers of the 2015 sports extravaganza being held in and around Toronto will receive bonuses of up to 200 per cent of their salaries if things do not go over budget.
In the case of Toronto Organizing Committee CEO Ian Troop, whose base pay is $390,000 a year, that would mean a $780,000 windfall under a “completion incentive plan.”
The scheme sparked a furor at Queen’s Park.
“Ontarians should be outraged,” NDP MPP Catherine Fife (Kitchener-Waterloo) told reporters.
“The CEO is getting a 200 per cent bonus for completing his job and sticking around?” said an incredulous Fife, warning the event is shaping up as another Liberal boondoggle.
“We’ve seen eHealth, we’ve seen ORNGE, we’ve seen gas plants, and, now, we see a government defending an employee-retention strategy . . . for what is an ambitious public project.”
Progressive Conservative MPP Rod Jackson (Barrie) said the bonuses are “an example of the waste that’s endemic in this government.”
“I find it shocking that we continue to ramp up. We learn more and more every day about the costs that the Games are incurring over and above the stated budget,” said Jackson.
“I come from a human resources background and I can tell you I’ve never seen a completion incentive bonus — especially one that’s 200 per cent of your wages,” he said. Such payouts are not unusual for major sporting events or in corporate turnaround situations where there is a limited time to restructure a company under bankruptcy protection, said Courtney Pratt, a veteran business executive who is interim chair of the human resources committee for the Games board of direc- tors. “You have to attract the right people to organize and run it,” Pratt said on Friday. “To do that, you have to put on incentives that are standard. We haven’t crossed any lines. “This is what you have to do to attract and keep people. And keeping people is crucial. The cost of having them leave is a lot higher than having them stay . . . it’s very difficult to bring people in and up to speed.”
Troop is one of 64 Pan Am employees who could share in the $7-million bonus pot.
He and senior vice-presidents will receive 100 per cent of their base salary for sticking it out and another 100 per cent if the capital and operating budgets are met. Bonus percentages are lower for other staffers.
The event has a budget of $1.44 billion, mostly funded by all three levels of government.
Ottawa and Queen’s Park have each committed $500 million, while $288 million comes from the13 participating municipalities, including Toronto.
There are also numerous corporate sponsors, including the Toronto Star.
Revelations of the bonuses came after the Toronto Sun this week disclosed that Troop and other executives were claiming expenses such as $1.89 for a Starbucks tea and 91 cents for parking.
Afurious Premier Kathleen Wynne said Monday such expense claims by well-paid officials were “ridiculous.”
Under the formula in the Pan Am Games bonus plan, senior vice-presidents at the organizing committee could receive double their base salary or about $478,000 in bonuses — based on their median salary of $239,000 — if they stay to the end and the event meets financial targets.