Crown-firm execs face pay scrutiny
Feb 03 2012
B.C.'s Crown corporations need to take a hard look at curbing their executive bonus packages because angry taxpayers, facing rate hikes for services, can't stomach lucrative perks for managers, says the solicitor general.
Shirley Bond said she's made it clear to the heads of B.C.'s Crown corporations that it is time to review bonus pay and salaries for senior executives.
"British Columbians are understandably upset when they face rate increases and see significant compensation and bonuses," Bond said in a statement Thursday.
"So we delivered a clear message that all Crown corporations need to look at the issue of bonuses and executive salaries."
Bond met with 19 Crown corporation board chairs in Vancouver last week, including those of B.C. Hydro, B.C. Lottery Corp.,
B.C. Transit and the Royal B.C. Museum.
Some agencies, such as Community Living B.C., have already seen executives stripped of bonuses as part of restructuring. Others, such as the Insurance Corporation of B.C., moved quickly to comply.
ICBC has already warned drivers they can expect to pay an average of $27 more for auto insurance this year, as it raises rates to pay for rising injury claims and declining income.
The rate increases came into effect Feb. 1.
Around the same time, ICBC announced its managers won't get as much, if any, bonus pay unless the corporation hits its profit targets.
"What we've done now is created a really close tie between our overall financial performance as a company to how much we can pay out in performance pay," said ICBC spokesman Adam Grossman. "It's really, we think, a logical step. It's one other companies and industries have."
ICBC paid $17 million in performance pay to about 1,100 executives and managers in 2010.
President and CEO John Schubert earned $522,178 in total compensation in 2010, including $115,000 in "incentive" pay.
If annual profit stays above $217 million, managers will once again get their full bonuses, said Grossman. The $217 million represents 75 per cent of ICBC's profit goal for the year. The corporation's final year-end financial results will be available in March.
Executives will get part of their performance pay if profit ranges between
$35 million and $217 million, Grossman said.
If the bottom-line falls below $35 million, top executives receive no bonus, and other senior employees receive only partial bonuses, he said.
There won't be any bonuses, at any management level, if the corporation fails to post a profit, Grossman said.
ICBC is already warning that its income is down sharply. Its results for the first nine months of 2011 showed income of only
$52 million, compared with $331 million during the same period in 2010.
"Unless we had some kind of tremendous swing-around in the fourth quarter, the likelihood is we'll end the year with some kind of payout but payouts less than they have been in previous years," Grossman said.
Bond called ICBC's move "a good first step."