Hydro One and the Ontario government are at loggerheads over executive compensation, with the partially privatized utility refusing repeated requests to slash proposed pay for its CEO.
Energy Minister Greg Rickford asked Hydro One on Friday to come up with a revised executive compensation framework that sets its CEO’s salary and incentives no higher than $1.5 million after the company submitted a proposal last week with a maximum of nearly $2.8 million for the CEO.
“We’re not going to take very long to take action if we come to an understanding that this is not the position that they’re going to take,” Rickford said. “This is not a negotiation process for us. Those are numbers that we intend to hold.”
Rickford had already requested that Hydro One get back to the government by Thursday with a proposal that meets the government’s requirements, but the company released its proposed compensation framework to the public without the province’s requested cuts to executive pay.
In response to Rickford’s renewed request Friday, Hydro One said it continues to seek approval for its plan.
“Hydro One’s framework is the result of a rigorous process and balances concerns around cost management with the need to attract, retain and motivate highly-qualified leadership to Ontario’s largest electricity transmission and distribution provider with over $25 billion in assets and annual revenues of nearly $6 billion,” it said in a statement.
Under legislation the government passed last year, Ontario can issue a formal, legal directive to the utility on pay.
The government is also asking that the compensation of other executives not exceed 75 per cent of the CEO’s pay and that board member compensation not exceed $80,000.
Hydro One is proposing a target CEO compensation – including salary and bonuses – of $2,475,000 and a maximum of $2,775,000. It is proposing compensation of up to $1,856,000 for executive vice-presidents and up to $875,000 for vice-presidents. Hydro One wants to pay the board chair $169,500 and board members $140,000.
The utility notes that those amounts are already considerably lower than what it used to pay for all of those positions.
When the Progressive Conservatives came to power last spring, one of the government’s first acts was to force the resignation of former Hydro One CEO Mayo Schmidt, whom Premier Doug Ford had dubbed “the six-million-dollar man.”
Rickford said people expect the government to rein in compensation at the utility since it was a centrepiece of the Tory election campaign.
“One million dollars still means a lot to me and I think it means a lot to the people of Ontario,” he said. “It’s more than just symbolic. I think the problems that we had had at Hydro One was a culture of excessive salaries that were disproportionate to what the rest of the market was paying people for companies like Hydro One.”
After Schmidt was forced out, the utility’s entire board resigned and downgrades and lower values of Hydro One shares followed.
Last month, Hydro One and American utility Avista Corp. announced they were cancelling a planned merger, after regulators in Washington state said the deal would not sufficiently safeguard customers from the whims of the Ontario government.
Rickford disputed that dictating executive salaries amounts to interference, but NDP Leader Andrea Horwath said Ford’s “meddling” has cost Ontario money.
“I think the solution is to bring Hydro One back into public hands,” she said. “If the government wants to control Hydro One then it should be a public corporation, the way it used to be.”
The previous Liberal government began partially privatizing the utility in 2015, ultimately selling off just over half of its stake.