May. 29, 2002. 01:00 AM - One Hydro boss given better deal than the other
Fat severance package puts Clitheroe on top
By John Spears
Business Reporter
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Their companies have the same owner and they're both in the electricity business, but Hydro One boss Eleanor Clitheroe bargained a sweeter deal than Ron Osborne, her counterpart at Ontario Power Generation Inc.
The eye-popping severance package available to Clitheroe, chief executive of Hydro One, is much more generous than that awarded to Ron Osborne, chief executive of OPG, according to documents filed this month.
Premier Ernie Eves has asked for a review of Clitheroe's compensation package, which has been sweetened even further during the past month.
Both Hydro One and OPG are owned 100 per cent by the province.
Hydro One, which runs Ontario's long distance electricity transmission grid plus 89 local utilities, proposes to offer shares for sale to the public. It had $374 million net profit on revenue of $3.47 billion in 2001.
OPG owns about 70 per cent of the province's electricity generating capacity, but is required to reduce its control to 35 per cent within 10 years. Its net profit was $152 million last year on revenue of $6.24 billion.
Osborne's salary and bonus is in the same league as Clitheroe's. But Clitheroe gets far more in "other" benefits, as well as a whopping severance package that can be triggered under a variety of circumstances.
On the other hand, Osborne has recently been handed $587,500 under a long-term incentive plan that's just starting to begin paying this year after a three-year qualification period.
Documents recently filed by both companies list full compensation up to the end of 2001. All figures cited below are for 2001 only, unless otherwise noted.
Osborne made more salary than Clitheroe last year, earning $825,000 to Clitheroe's $750,000.
Clitheroe pulled in a higher bonus, getting $806,250 to Osborne's $752,813.
In was in "other" compensation that Clitheroe cleaned up. She was awarded $625,930 under this category, while Osborne got a paltry $81,841. For Osborne, that figure includes "car allowances, flexible benefits payments and life insurance taxable benefits."
Clitheroe's "other" compensation included $174,644 just for a car. (Earlier documents had described the allowance as being for more than one vehicle, but the latest filing makes clear it was just one. The filing doesn't say what model she got for her money.)
Hydro One also coughed up $172,484 in vacation pay for Clitheroe, though part of that was for 2000.
The two packages diverge hugely in their severance terms.
Clitheroe's package awards her three years' pay — including bonuses and incentive payments — if she's let go other than for cause. She also has the option of triggering the termination payout herself if Hydro One's assets are sold, if there's a change of control or a "fundamental change in the policies of the province."
One further trigger has just been added: She can get the termination pay if Hydro One is turned into a not-for-profit company.
Making Hydro One a non-profit corporation has been suggested as an alternative to the current plan to sell shares to the public.
That trigger was absent when Hydro One filed the prospectus for its initial public share offering in March, but has popped up in a new securities filing this month.
Osborne's severance package is not as rich. He gets only one year's pay, including long-term incentive payouts, if he is terminated.
Osborne can trigger an enriched payout of two years' compensation if there is a fundamental change in provincial policy, or a change of control other than a public offering of shares.
A public share offering was also on the mind of chief operating officer Graham Brown when his employment contract was negotiated.
Brown can leave the company and receive a special payout if no non-government equity has been invested in OPG by the end of 2003, and there's no prospect of such investment in 2004, or if there's a change in control.
Brown's payout amounts to his choice of a year's salary and bonus (totalling $1,193,407 last year), or $1 million. He also gets relocation expenses to the U.K.
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