Hydro One VPs accept big cuts in salary
September 9, 2002
Three senior executives at Hydro One Inc. will each have their salary and bonuses cut by as much as $630,000 and lose up to $2.6-million each in severance under new employment contracts reached last week.
The executive vice-presidents — Rod Taylor, Malen Ng and Joan Prior — will have their salaries cut by 30 per cent and annual bonuses cut by 60 per cent and lose all long-term incentive payments under the new contracts.
The cuts end a three-month controversy over executive pay at the utility, one of the largest in North America. The turmoil has prompted the resignation of the former board of directors and the firing of the chief executive officer, Eleanor Clitheroe, who is now suing the company.
Some analysts expected Mr. Taylor, Ms. Ng and Ms. Prior to leave Hydro One because they were close to Ms. Clitheroe. She recruited all three in preparation for the utility being privatized. But the provincial government scrapped the privatization earlier this summer and it is now seeking a strategic partner.
In June, the province ordered the company's new board to reduce executive pay. The former directors had argued Hydro One's pay was in line with the private sector. An announcement of the new pay packages was made Saturday in the Ontario Gazette.
"We are delighted that we have reached an agreement with [the executives]," said Terry Young, a Hydro One spokesman.
Mr. Taylor, executive vice-president of planning and development, will have his salary reduced to $341,250 from last year's $487,500. He also received a $285,413 bonus last year, which under the new agreement would be cut to $114,166. The annual bonuses are calculated each year based on company performance.
Ms. Ng, executive vice-president of wire operations, will see her pay drop to $315,000 from $450,000. Her 2001 bonus of $280,575 would now fall to $112,230.
Ms. Prior, executive vice-president and general counsel, will see her salary fall to $315,000 from $450,000. Her bonus of $278,156 would now be $111,263.
All three will also lose long-term incentive payments that were supposed to begin next year.
Hydro One set up the incentive plan in 1999 and based payments on company performance goals achieved over three-year periods beginning in 2000. The first payments under the plan entitled Mr. Taylor, Ms. Ng and Ms. Prior to each receive between $225,000 and $312,559 in 2003.
The new compensation agreements also eliminate severance packages that were modified earlier this year when the provincial government delayed Hydro One's privatization.
Under the former severance arrangements, executives were entitled to receive three times their annual salary and bonus, plus all long-term incentive payments, if Hydro One changed control or if the province made a fundamental change in its Hydro One policies. Mr. Taylor would have received up to $2.6-million in severance, while Ms. Ng and Ms. Prior would have been entitled to a maximum of $2.5-million.
It is unclear if the three executives will receive any other allowances. Last year, Mr. Taylor received $95,472 in special allowances while Ms. Ng and Ms. Prior received $83,472 and $89,715, respectively. Those payments included $30,000 for car allowances.
Hydro One has announced that Tom Parkinson, the new chief executive officer, is being paid $400,000 in salary (Ms. Clitheroe's salary was $750,000) along with a $30,000 car allowance. It's not clear if his bonuses will be cut.
Ken Hartwick, the utility's chief financial officer, agreed to a new contract several weeks ago that will keep his salary at $369,734. He also received $263,612 in bonus and allowances last year. It's unclear if they will be cut.
The Hydro One board arrived at the new compensation by comparing executive pay at other utilities across North America. The former board based pay on compensation at other companies with similar annual revenue.
Glen Wright, Hydro One's chairman, receives $250,000 from his position as chairman of the province's Workplace Safety and Insurance Board. He said he is not receiving any added pay for his work at Hydro One. |
