CPP bosses to receive millions in bonuses

[Visionseeker]

After presiding over a year which saw $17 billion in losses to the public pension fund:

CPP bosses to receive millions in bonuses

Nice to know that bonuses still get paid when three years of gains are wiped out.

Some will defend this troop by saying that their losses weren't as bad as the market overall and I'll agree, they were worse. First, the losses reported ignore the $7 billion in contributions the fund received during the year - so the real loss was $24 billion - almost a quarter of the fund's present worth; second, this wasn't play money that drives much of the market's activity, this was a retirement account that needs to be growth oriented without excessive risk. Falling a few percentage points below the losses of a speculating market is not what the mandate requires.

And as to this notion that the bonuses are necessary to attract the best talent, I offer you this:

If you needed an effective military, would you get it by buying the best general money could buy; or would you get it by investing in the lower ranks and draw you leadership talent from that exercise?

Man I'm sick and tired of this drawing talent argument. You don't draw talent, you draw has-beens. Talent is gathered by nurture and development and, as the investment bears fruit, all involved appreciate the results.

When did we all stop recognizing this?

Edited May 29, 2009 by Visionseeker

[August1991]

Can someone explain to me why our government supposedly has a deficit and a debt but we have a government institution (CPPIB) that invests on our behalf?

[Visionseeker]

Can someone explain to me why our government supposedly has a deficit and a debt but we have a government institution (CPPIB) that invests on our behalf?

Nice hijack. You know very well that one (public pensions) must have nothing to do with the other (public expenditures).

[Jerry J. Fortin]

This is a direct result of the efforts to privatize the pension plan. You now have yet another board of directors seeking compensation for their efforts. Of course they get paid whether we win or lose, just like all the other boards. The time has come for the government to start regulating executive compensation.

[Sir Bandelot]

Of course they get paid whether we win or lose, just like all the other boards.

Thats corporatism for you. As to the notion of drawing talent- what talent did they manage to draw? Let the evidence speak for itself.

These bonuses should only be tied to actual success, as for most people bonuses usually are. If you were't succesful, you don't get the bonus.

I saw away with these charlatans and rogues. Oops then that must include the whole government!

[madmax]

Nice hijack. You know very well that one (public pensions) must have nothing to do with the other (public expenditures).

It was a failed attempted hijack and August1991 had the answer before the question. Public Pensions have NOTHING to do with Public Expenditures.

Now, onto the real story.

Apparently the Large Salaries are not enough for these bosses and they need their entitlements.

And Mr. Harper wants them to keep those Bonuses.

See, Prime Minister Harper can be nice when he wants to be.

[madmax]

These bonuses should only be tied to actual success, as for most people bonuses usually are. If you were't succesful, you don't get the bonus.

That's silly talk.... go away.

[Topaz]

The Min. of Fin. has said over and over again that he can't stop the bonuses the directors give themselves. BUT.. I found that the CPP investment board is a CROWN corporation and its ACCOUNTABLE, but independant from the Feds. So wouldn't his mean that the minister does have some power? http://en.wikipedia.org/wiki/Canada_Pension_Plan

[Oleg Bach]

As the intergenerational rich and elite - screw up their own system - and collaspe the economy out of sheer lazyness - stupidity and greed - they call on their friends who they in part installed in government - to rob the common working person and send them money they were not capable of managing or working for - It's just the rich pulling a few strings and calling in their markers.

[Bryan]

The Min. of Fin. has said over and over again that he can't stop the bonuses the directors give themselves. BUT.. I found that the CPP investment board is a CROWN corporation and its ACCOUNTABLE, but independant from the Feds. So wouldn't his mean that the minister does have some power? http://en.wikipedia.org/wiki/Canada_Pension_Plan

I think it's the right thing to do for him to at least publicly admonish them for this, but I really don't think it's within the government's power to impose its will on the CPP. The same separation that keeps them from drawing from CPP money into general revenue (the way the Liberals did with EI), gives CPP a certain amount of autonomy. The govt can't really tell the Bank of Canada what to do either.

[Topaz]

I think it's the right thing to do for him to at least publicly admonish them for this, but I really don't think it's within the government's power to impose its will on the CPP. The same separation that keeps them from drawing from CPP money into general revenue (the way the Liberals did with EI), gives CPP a certain amount of autonomy. The govt can't really tell the Bank of Canada what to do either.

Are you aware that the Tories took the 54 Billion EI surplus, put 2 Bil in a EI for the unemployed (I bet thats gone or nearly) and took another 40 Bil towards the debt, and God knows what happened to the other 12 BIl. They are paying either the military equipment out of the general revenues or its the war itself, I can't remember exactly what O'Connor said at the time in the Commons. I'm not sure paying the debt down was a good idea cause now they will short in EI soon,and the interest on the deficit and borrowing must be awesome!

[geoffrey]

CPPIB beat their benchmark and yet they still received a paycut. Bravo to the investment management skills of these individuals and managing public perceptions. Good job. They deserved more money. Especially considering how the year ends aren't aligned with other plans and the market downturn Jan-Mar negatively affected their returns more so than private pensions with Dec 31 year ends (those losses won't show up because they've largely been recovered now). CCPIB will likely beat the benchmark as a result in 2009.

Just because the public doesn't understand how capital market performance pay is calcuated, doesn't mean that they should suffer. But they did.

[Jerry J. Fortin]

Privatizing the CPP capital was an exercise in wealth transfer, nothing less. Those funds are now invested and profits are being made. One the one hand that is good, but on the other those profits should be plowed back into the fund. There are a lot of folks involved now and they cost a lot of money.

[Sir Bandelot]

If its privatized, why can't I get out of it?

[eyeball]

This is a direct result of the efforts to privatize the pension plan. You now have yet another board of directors seeking compensation for their efforts. Of course they get paid whether we win or lose, just like all the other boards. The time has come for the government to start regulating executive compensation.

Central banks should be monitoring the rate at which income gaps grow even more closely than they do inflation.

[Visionseeker]

CPPIB beat their benchmark and yet they still received a paycut. Bravo to the investment management skills of these individuals and managing public perceptions. Good job. They deserved more money. Especially considering how the year ends aren't aligned with other plans and the market downturn Jan-Mar negatively affected their returns more so than private pensions with Dec 31 year ends (those losses won't show up because they've largely been recovered now). CCPIB will likely beat the benchmark as a result in 2009.

Just because the public doesn't understand how capital market performance pay is calcuated, doesn't mean that they should suffer. But they did.

Geoffrey, I cannot share your enthusiam.

The CPPIB's ten tear average rate of return is 4.8%. Now that might seem satisfactory on the surface, but the point behind creating the CPPIB was to increase yield so that the fund would be better positioned to withstand the baby boomer run. Surplus contributions were to be invested at rates of return exceeding secure bond markets (which averaged 3.1% over the same period). Things looked good two years ago when the annual average was 9.4%, but something went terribly wrong in the last two years.

The CPPIB team lost sight of its mandate and began to chase the market rather than buckle down existent gains. Yes, their losses were "better" than most. But they still exceeded the expectations of their mandate. They could've easily delivered a 6.8 to 7% ten year average with a proper plan. But they've never actually had a plan and so potential bonuses governed their investment moves.

The bonuses being paid are basically a reward for returning 1.7% more than the bond market would've supplied. That's pretty lame if you ask me.

[madmax]

Are you aware that the Tories took the 54 Billion EI surplus, put 2 Bil in a EI for the unemployed

No, I am aware the Liberals took 46Billion in EI surplus. The Conservatives took 8 Billion.

[madmax]

CPPIB beat their benchmark and yet they still received a paycut. Bravo to the investment management skills of these individuals and managing public perceptions. Good job. They deserved more money.

So really what you are suggesting is that these men did better then millions of people and investors with their own Private Pension Plans that lost 10s of Billions of dollars.

[Topaz]

The NDP pointed out today that the United Church did better in their investments than the directors of the CPP! The min.of Finance, finally said he sent them a letter today, even after he kept saying he had no control over them. Yeah right!

[madmax]

The NDP pointed out today that the United Church did better in their investments than the directors of the CPP! The min.of Finance, finally said he sent them a letter today, even after he kept saying he had no control over them. Yeah right!

Maybe the Church had a direct line to a better financial advisor as well as spiritual advisor.

Seriously, I think the Bonuses are a huge copout, but I see the bean counters are all running to the defense of their entitlements.

Ignore the Millions, but pay attention to the pack of gum.

[geoffrey]

The CPPIB's ten tear average rate of return is 4.8%. Now that might seem satisfactory on the surface, but the point behind creating the CPPIB was to increase yield so that the fund would be better positioned to withstand the baby boomer run. Surplus contributions were to be invested at rates of return exceeding secure bond markets (which averaged 3.1% over the same period). Things looked good two years ago when the annual average was 9.4%, but something went terribly wrong in the last two years.

Up until the CPPIB's year end, the DJIA had a negative yield over the last 10 years as a result of the crash. These guys are pretty kick ass.

If you want to compare to say the mid-term DEX (medium term corporate bonds), then ya, they are a little behind. But with their private placement work and real estate, that's not realistic.

The CPPIB team lost sight of its mandate and began to chase the market rather than buckle down existent gains. Yes, their losses were "better" than most. But they still exceeded the expectations of their mandate. They could've easily delivered a 6.8 to 7% ten year average with a proper plan. But they've never actually had a plan and so potential bonuses governed their investment moves.

So you expect them to exactly know when the market is at the top and sell everything? Wow. That's pretty high expectations. I hope all your bank funds and ETFs did that too... oh wait. They didn't! No one did! But these guys prevented losses to the extent that we've seen elsewhere. So they deserve a bonus for that.

The bonuses being paid are basically a reward for returning 1.7% more than the bond market would've supplied. That's pretty lame if you ask me.

But a much higher 10-year return than the more comparable equity indexes would have provided.

So really what you are suggesting is that these men did better then millions of people and investors with their own Private Pension Plans that lost 10s of Billions of dollars.

Yes, correct. They beat their benchmark. That means they outperformed the market. Good on them.

You can't expect superhuman abilities because these guys are government workers. They did better than most banks, investment houses, whatever. They deserve compensation for that. If the market moves 10% and they provide 6% return, that's worse than losing 10% when the market lost 20%. It's RELATIVE to the market that compensation is based.

I'd give these boys a big raise for their work.