Jean-Robert Sansfacon | Presidential Planet

Thursday, 05 May 2005 23:41 by: Anonymous

    Presidential Planet
    By Jean-Robert Sansfa on
    Le Devoir

    Thursday 05 May 2005

    Yesterday's publication of company presidents' remuneration provoked a great deal of emotion among ordinary folk. And for good reason, since even if we agree that these men carry heavy responsibilities, it remains difficult to justify their annual compensation in the tens of millions of dollars.

    For several years, the regulatory authorities in Ontario have compelled public companies to divulge their top managers' remuneration. On the basis of this information, The Globe and Mail has calculated total remuneration for the bosses of 198 of the 245 companies that make up the Toronto Stock Exchange's S&P/TSX Index.

    Overall, the average base salary went down 1% in 2004 to $728,000, a reasonable amount given the importance of the firms in question. However, since all these managers also have access to bonuses and stock purchase programs, their total remuneration grew spectacularly to reach an average 5.5 million dollars. Half the managers earned less than 1.8 million dollars, while the other half earned more, and sometimes much more, than this sum.

    Among the latter, some cases are particularly scandalous, like that of Robert Gratton, President de Power Financial Inc., a subsidiary of the Desmarais family holding company. In addition to his base salary of 3.5 million dollars, Mr. Gratton exercised stock options accumulated over several years that brought him 169.4 million dollars for a total of 173 million dollars!

    Bernard Isautier, of PetroKazakhstan, is in second place (93 million), followed by Gerry Schwartz, of Onex (76 million), and by Frank Stonach, of Magna International (52 million). As for the President of Alimentation Couche-Tard, Alain Bouchard, he came in 11th (with 11 million), the president of the Banque Nationale, 34th (seven million), and Pierre Karl P ladeau, 65th, with barely 3.4 million dollars....

    Faced with such a hemorrhaging of millions, we must ask what brings a Board of Directors to offer so much. Is it the fear of having to re-start the selection process in the event of a departure? Even so, isn't it exaggerated to believe Mr. X. is irreplaceable and deserves 100 million dollars a year? Even Paul Tellier, Jean Monty and John Roth have been replaced....

    International institutional investors, such as Teachers in Ontario, are pressuring companies to introduce more objectivity into the process of determining remuneration. For example, they recommend that consultants hired by the Board not belong to the same accounting firm that benefits from the juicy contracts obtained through these same managers whose worth they are called upon to evaluate.

    And then there are these options regimes that are often the object of criticism ever since the thunderous scandals of Enron, WorldCom, and other Nortels of this world.

    In fact, one of the major evils that corrode our companies is the weakness of Boards of Directors, often composed of yes men chosen by managements. This system of cronyism harms stockholders' interests.

    Another weakness is that of the public regulatory authorities, such as the Qu bec Market Authority. The bigger a company is, the closer are its ties with expert consulting firms and the political milieus, sometimes even to the point of incestuousness.

    If things have changed a little in the United States since the serious scandals that shook Wall Street, in Canada, they have not at all. Our authorities lack the power and the courage to involve themselves in the business of these big companies that have raised themselves up into a state within the state.


    Translation: t r u t h o u t French language correspondent This email address is being protected from spambots. You need JavaScript enabled to view it. .
Last modified on Monday, 21 April 2008 14:56