OPG boss walks away with $ 3M severance

[myata]

Here we go .... again (Toronto Star story). Nice exercise in accountability: $3,000,000 as a reward for improper spending. And nice lesson to the future execs in case they were wondering what this new era of accountability is all about.

Here's the real question though: do we really need these expensive execs to manage public utility? The adage goes like this: "we need to attract best and brightest from the private sector blah blah and to attract them we have to pay them exorbitant salaries and perks". One of those that sound right and make you nod in agreement, until one moment you stop and think. Do we really need them "best and brightest"? Let's compare: in private sector, one has to come with good results, year after year, to satisy shareholders; to achieve it in the competitive marketplace one has to constantly innovate, create new products while keeping costs under control. Deal with constantly changing market situation. And so on.

Now, turn to OPG: there's no shareholders to make you stand on your toes; the product is the same (was the same 50 years as now and will be the same 50 years on). No competition, either. And the market is, like, guaranteed. Better than morgage, and 100%. No wonder that "best and brightest" get bored to death with the lack of real challenge and start doing bizzare things like putting triffle private expenses on corporate account while being paid six digit salaries.

So maybe we don't need best and brightest? Lets leave them to face (and overcome) real challenges in the cuthroat marketplace. And get the reward well earned. Here, we can do with those who can simply follow well established process and keep things running. With a contract that includes responsibility for the results and obligation to follow corporate policy like everybody else. And possibility of termination with cause (and no severance).

[betsy]

It's disgusting! And to think they had the same kind of problem from the last one!

[madmax]

It's disgusting! And to think they had the same kind of problem from the last one!

Yes, Elenor Clitheroe, I believe, whom also was handsomely bought out.

It seems that the idea of Corporate Entitlement, has permeated all facits of society.

All the Nortel Guys, John Roth, etc,

Canada has failed to make executives accountable, and the US has managed to find its fair share of Canadians exploiting entitlements in the States. (world com)

Seems Conrad Black got off Lightly here,

We let off executives and we coddle them and send them off rich and happy, and they still cry foul.

North Americans have seen an ever increasing amount of corporate abuse, and I think this is reflective of their increase in power.

Nothing like some stiff jail sentences for corporate abusers to straighten things out.

[myata]

What gives me some sort of consolation is that at least, now, these kind of practices are coming into the open and causing public discussion. From here, hopefully, it's not that far to the point where the "tout me due" culture will die out even if slowly and painfully, under the light of public scrutiny.

This is btw where I think that Conservatives got the accountability thing totally wrong - accountablity can be achieved by introducing and promoting the culture of openness and transparency and not through multi-layer oversight.

[Jerry J. Fortin]

I would favour a system that compelled corporate compensation to be delivered in the same manner to all employees of the company. Legislation that compelled corporations to provide share purchase options to all employees would go a long way to reducing the common abuse of the compensation system.

[Figleaf]

I really can't figure out why Ontario Hydro has to be such a honeypot for featherbedding and self-serving.

How hard can it be to fire the board and senior officers? How hard can it be to find 9 or 10 honest, capable people to be a new Board of Directors?

[Technocrat]

I really can't figure out why Ontario Hydro has to be such a honeypot for featherbedding and self-serving.

How hard can it be to fire the board and senior officers? How hard can it be to find 9 or 10 honest, capable people to be a new Board of Directors?

I just can't figure out why in the hell anyone can justify a million and a half dollar salary for a management position. Seriously... executive wages are just rediculous... the best part is when you F^ck up royally and abuse your power you still get your golden parachute... wtf!?

If a construction worker f^cks up they are told not to report back to work. Your last paycheck will be in the mail... thanks for comin out. They don't get 2 years salary. Hell if i blatantly abused corporate policy i would expect to be out on my ass and thats it...

If you are expecting to be compensated well for your work, you should expect that high standards of workplace output are required. If you do not meet those expectations... soo sad too bad.

There is a severe double standard with regard to 'class compensation' blue collar work gets shit all. White collar gets the golden parachute... nice to see equality for all.

[madmax]

I really can't figure out why Ontario Hydro has to be such a honeypot for featherbedding and self-serving.

How hard can it be to fire the board and senior officers? How hard can it be to find 9 or 10 honest, capable people to be a new Board of Directors?

I just can't figure out why in the hell anyone can justify a million and a half dollar salary for a management position. Seriously... executive wages are just rediculous... the best part is when you F^ck up royally and abuse your power you still get your golden parachute... wtf!?

If a construction worker f^cks up they are told not to report back to work. Your last paycheck will be in the mail... thanks for comin out. They don't get 2 years salary. Hell if i blatantly abused corporate policy i would expect to be out on my ass and thats it...

If you are expecting to be compensated well for your work, you should expect that high standards of workplace output are required. If you do not meet those expectations... soo sad too bad.

There is a severe double standard with regard to 'class compensation' blue collar work gets shit all. White collar gets the golden parachute... nice to see equality for all.

Well, these White Collar Workers, or quite Frankly, these Corporate Executives, don't work for a living. The live on entitlements, and then they STEAL. What else could you call it.

Blue Collar workers, Construction workers in particular, no what kind of cut throat competitive industry they are in, and that there isn't alot of room for f(&( ups.

But when a blue collar worker is caught stealing from his coworkers, he will get dealt with. And it won't be with a parachute on the 7th storey. :-).

[geoffrey]

Well, these White Collar Workers, or quite Frankly, these Corporate Executives, don't work for a living. The live on entitlements, and then they STEAL. What else could you call it.

Ha. Ha. Ha.

Workers of the world, unite!

Don't be silly. Corporate execs are there for a reason, they've got alot of value that a blue collar worker doesn't. Otherwise, the blue collar worker would be in their chair making twice the moola.

[madmax]

Well, these White Collar Workers, or quite Frankly, these Corporate Executives, don't work for a living. The live on entitlements, and then they STEAL. What else could you call it.

Ha. Ha. Ha.

Workers of the world, unite!

Don't be silly. Corporate execs are there for a reason, they've got alot of value that a blue collar worker doesn't. Otherwise, the blue collar worker would be in their chair making twice the moola.

"Corporate execs are there for a reason"

That reason is NOT to Steal!!

You are condoning corporate crime and fraudulant activity? You don't believe crime should be punished? A list of corporate crooks, those whom have stolen from companies and gotten away Scott free or with large severance packages is OK for Canada, but not the United States, where we have seen corporate criminals brought forth to face the music. And two big highprofile names caught south are Canadians.

So if you are telling me that the Corporate Execs have alot of VALUE that the blue collar workers dont.

Well I disagree that this value should include THEFT and FRAUD, which is what you suggesting.

BTW, an MPP in Ontario makes $80,000. The Corporate Crook made $800,000+++ per year along with his 3,000,000.

The Number of Blue Collar Workers in the $80,000 is a minority, most fall below this figure.

Corporate Execs don't make double, in this case you are looking at 10 times the money, plus expenses plus buyout.

Many execs make more. There is a responsibilty when in this position. It is a position of power and trust. When the trust is broken, they should not be rewarded.

Regardless of this fact. Corporate execs need to face Jail time for crime. When one is STEALING they are not working for a living or earning it because they are execs. They are STealing, and treating this theft like an entitlement.

Workers unite my ass.

It's crime, and we are typical Canadian Suckers not to do anything about it, other then coddle them.

You wanna praise corporate execs go ahead but don't the defend ones whom steal, or your just a patsy.

[geoffrey]

You are condoning corporate crime and fraudulant activity? You don't believe crime should be punished? A list of corporate crooks, those whom have stolen from companies and gotten away Scott free or with large severance packages is OK for Canada, but not the United States, where we have seen corporate criminals brought forth to face the music. And two big highprofile names caught south are Canadians.

I'm an auditor, so no, I don't believe that. My job everyday is to setup ways to prevent people from stealing from companies. I'm not saying that this guy is entitled to steal money... I'm saying he didn't.

The expenses were business related. He just didn't follow corporate control procedures and use his own card. He didn't personally gain from the mistake, so there was no fraud. Fraud requires a previous thought out plan to misappropriate from the company. Nothing was even stolen, just put on the wrong card.

Should he be fired? Likely. That's a huge violation. But he's not a criminal by any stretch.

So if you are telling me that the Corporate Execs have alot of VALUE that the blue collar workers dont.

Well I disagree that this value should include THEFT and FRAUD, which is what you suggesting.

Corporate execs do have alot of value. They are paid to know people. You mentioned a few cases of fraud by execs... do you know how much more fraud and theft is commited by everyday employees and workers? It's a much higher ratio. Go ask a retail lost prevention expert on who the real threat is to business.

So lets say 5 big names get busted for fraud a year. Do you know how many companies there are that people aren't stealing from? Maybe less than 1% of corporate execs are active participants in fraud. Employee theft is much higher.

You make it sound like every exec is stealing, when that couldn't be further from the truth. I don't currently work in public practice as I'm doing some consulting while back in school, but my stint in a public audit situation had me involved in the audits of 6 different companies from 3 industries. Our job wasn't to detect fraud of course, but we found no evidence of material mistatement in any of their records. This may just be anecdotal evidence, but the statistics back it up.

BTW, an MPP in Ontario makes $80,000. The Corporate Crook made $800,000+++ per year along with his 3,000,000.

Some MPP's are completely worthless to the government they serve. What has your backbencher done lately? You don't do public service for the money anyways, at least your not supposed to.

$800,000 total comp is around average for someone in the industry... if you want the best you need to pay for it. A $3mil severence package for someone with that salary isn't grossly out of the ordinary either. This is all in line with what should be expected.

The Number of Blue Collar Workers in the $80,000 is a minority, most fall below this figure.

They knew the pay when they signed up for the job. Do you insist that everyone should make the same money, irrelevant of their value to the company?

Corporate Execs don't make double, in this case you are looking at 10 times the money, plus expenses plus buyout.

Many execs make more. There is a responsibilty when in this position. It is a position of power and trust. When the trust is broken, they should not be rewarded.

Here's a significant difference though, a blue collar worker can generally work at a number of places once laid off. Many union agreements have some nice perks to keep them paying the bills for a few months. CEO's aren't like that. You don't just start handing out resumes tomorrow. They could go a considerable time before their next job or never get an exec position again... just much less paying consulting work forever. They need a guarntee of their standard of living before they commit to a company, and that's what this severence is.

Regardless of this fact. Corporate execs need to face Jail time for crime. When one is STEALING they are not working for a living or earning it because they are execs. They are STealing, and treating this theft like an entitlement.

This exec wasn't stealing... he's not a criminal.

You wanna praise corporate execs go ahead but don't the defend ones whom steal, or your just a patsy.

I'm not defending ones that steal, I'm defending one that made a poor decision and never stole a dime.

EDIT: Ohh, just let me add. This company's internal audit department needs to all be fired before the CEO. The controls there just are horrendous.

[madmax]

If you are an auditor, then it was foolish of you to state that a CEO makes double the money of a blue collar worker. No he didn't use his own card. When a worker uses a swipe card to come into work, if they use another employees card, they are fired. You can say he didn't steal the money if you like, and you can say the expenses were business oriented if you like.

So, you say he didn't do anything wrong, but then you say he made a huge violation and should be fired.

Sounds like he did do something wrong.

As for blue collar fraud vs white collar fraud, give me a break. There is crime in both arenas. It is porportional.

Seems you are an apologist for Big Fat Corporate Payouts to incompetent CEOs and Corporate Criminals.

A CEO that runs a company into the ground, shouldn't be sent on his merry way with a $28million dollar severance package. A CEO that operates on insider trading, (Who doesn't), and knows that the bottom is going to fall out, and SELLS out, while all prior actions were made to drive up stocks regardless of actual company perforance, ie ENRON, WORLD COM, NORTEL, is a criminal.

I think that is clear to anyone.

You are an apologist for the needy. The poor CEO with 3 million severance, who may not be able to find a

job, because he should be fired, because he made a bad decision.

Maybe he shouldn't be a CEO.

You wanna fire more people, because the controls are lax. Go ahead. What kind of severance are you offering the auditor:-).

There isn't a union out there that has an agreement, where an employee is fired for fraud, theft, or crime gets a severance package, not for one day, let alone a few months. Once a position of trust is broken, the employee is FIRED. Adios, and if lucky, isn't charged by police. No arbitrator would ever back up the statement, you made with regards to unions. No Contract supports Crime, Fraud or Theft. A common severance package for decrease in work is 2 weeks per year. Some unions, have a top up in times of layoff where the company picks up the difference. These contracts are in the minority. But nowhere near, the situation where the exec works one year for $800,000 and then gets sacked, and receives another 4 years of pay. CEO can't find a job in four years?

You worship of corporate entitlement. Maybe you will be accepted in the club one day. But right now, you are continuing to make weak arguments, with regards to bad decisions, excessive payouts, and crime. Your defence of Crime is that others do it. I am finished commenting on this topic anymore, you can have the last word if you so choose.

With regard to the MPPs salary. I agree with you completely. Although I have heard them argue that they are CEOs of the People, because they handle Billion Dollar portfolios.

Later.

[geoffrey]

If you are an auditor, then it was foolish of you to state that a CEO makes double the money of a blue collar worker. No he didn't use his own card. When a worker uses a swipe card to come into work, if they use another employees card, they are fired. You can say he didn't steal the money if you like, and you can say the expenses were business oriented if you like.

He didn't steal the money, and the expenses were business oriented.

So, you say he didn't do anything wrong, but then you say he made a huge violation and should be fired.

Sounds like he did do something wrong.

Wrong isn't criminal.

Seems you are an apologist for Big Fat Corporate Payouts to incompetent CEOs and Corporate Criminals.

A CEO that runs a company into the ground, shouldn't be sent on his merry way with a $28million dollar severance package. A CEO that operates on insider trading, (Who doesn't), and knows that the bottom is going to fall out, and SELLS out, while all prior actions were made to drive up stocks regardless of actual company perforance, ie ENRON, WORLD COM, NORTEL, is a criminal.

Yes, and the criminals at Enron, World Com and Martha Stewart all went to jail. Except Ken Lay, who died first....

You are an apologist for the needy. The poor CEO with 3 million severance, who may not be able to find a

job, because he should be fired, because he made a bad decision.

Maybe he shouldn't be a CEO.

You'd never hire a CEO unless you had an attractive severance package negogiated in advance.

You wanna fire more people, because the controls are lax. Go ahead. What kind of severance are you offering the auditor:-).

2 weeks.

There isn't a union out there that has an agreement, where an employee is fired for fraud, theft, or crime gets a severance package, not for one day, let alone a few months. Once a position of trust is broken, the employee is FIRED. Adios, and if lucky, isn't charged by police. No arbitrator would ever back up the statement, you made with regards to unions. No Contract supports Crime, Fraud or Theft. A common severance package for decrease in work is 2 weeks per year. Some unions, have a top up in times of layoff where the company picks up the difference. These contracts are in the minority. But nowhere near, the situation where the exec works one year for $800,000 and then gets sacked, and receives another 4 years of pay. CEO can't find a job in four years?

If a CEO is charged with fraud he normally doesn't get anything. In fact, he generally has to pay the money back like many of the top execs at Enron had to. There was no crime here, the guy get's his severance.

You worship of corporate entitlement. Maybe you will be accepted in the club one day. But right now, you are continuing to make weak arguments, with regards to bad decisions, excessive payouts, and crime. Your defence of Crime is that others do it. I am finished commenting on this topic anymore, you can have the last word if you so choose.

So be it, there was no crime here. Bottom line.

With regard to the MPPs salary. I agree with you completely. Although I have heard them argue that they are CEOs of the People, because they handle Billion Dollar portfolios.

The deputy ministers are the CEO's of the department, the Ministers are generally unknowledgable figureheads that spout policy.

[myata]

As far as I can recall from the news story, the expense was reported as "personal". Which makes a huge difference (and contradicts Geoffrey's take). Did anyone follow on that?

Now, putting a personal expense on the corporate card would qualify as fraud and will get anyone but the top exec fired with cause and no severance. What's wrong with putting this same clause in the top exec's contracts.? And if no "best and brightest" can be found to do the easy job, we could do with a second rate (it shouldn't be rocket science, by business standards) as long as they held accountable and comply.

[geoffrey]

Mr. Parkinson's departure follows a damning report by Ontario's Auditor General, disclosing that an unnamed senior executive at Hydro One had billed $45,000 in travel and other business expenses to his secretary's credit card. The Globe and Mail revealed that the unnamed executive was Mr. Parkinson.

Source: http://www.theglobeandmail.com/servlet/sto...NStory/National

Having your exec assistant buy your plane tickets in a rush is not a crime.

[myata]

OK, this is the best account of expenses in question I could find (without the pain of going to the auditor report itself) and it does seem to confirm geffrey's comment that they were "business-related".

It also provides some details about Mr. Parkinson's contract. Which I find outrageous, given that it's all coming out of our pocket. I only see two alternatives to this problem:

1) Set a salary cap on what an exec could get in a publicly owned company;

2) Privatize it so that it'll be left up to the shareholders to monitor exec's behaviour;

[geoffrey]

1) Set a salary cap on what an exec could get in a publicly owned company;

By the way, for future debate reference, a publically owned company is one that is traded on exchanges. What your referring to is a Crown corporation in Canada. I just wrote a response I had to delete because I thought your statement was ridiculous... until I read the second point.

In a Crown corp... a salary cap? Perhaps. Really though, their is a Minister responsible for this agency and if people find the compensation outrageous, they should elect another party that wants to reduce Crown corp CEO salaries.

I find though if you pay second rate, you get second rate. If I'm hiring a CEO, I'd rather have a BMW than a Hyunda. 1 mil in extra compensation can have you a CEO that generates tens of millions in extra revenue. It's all a value for money situation... if you aren't getting the value you want, fire him by getting another minister in place.

2) Privatize it so that it'll be left up to the shareholders to monitor exec's behaviour;

Great idea.

[myata]

By the way, for future debate reference, a publically owned company is one that is traded on exchanges. What your referring to is a Crown corporation in Canada. I just wrote a response I had to delete because I

Thanks for clarification. Yes that's what I meant (probably "state owned" would have been a better term).

I find though if you pay second rate, you get second rate. If I'm hiring a CEO, I'd rather have a BMW than a Hyunda. 1 mil in extra compensation can have you a CEO that generates tens of millions in extra revenue. It's all a value for money situation... if you aren't getting the value you want, fire him by getting another minister in place.

And that's OK with me. They don't need to be genii in the market there everyone has no choice but to buy from them. Maybe, the mercedes people (wrongly) assume that it's their business prowess (and not monopolistic 100+1% guaranteed nature of their business) that creates those wonderful results and thus provides rationale for the outrageous perks. Seriously, where's a place for a great contribution by an ace CEO in the power generation business? Power plants are running as they did decades ago. When a new one needs to be built, it's us (the government) who pick up the cost. And the price is set by the market regulator. What exactly is the guy being paid for? To make sure gears are oiled and greased and cleaned up regularly?

[geoffrey]

Power plants are running as they did decades ago. When a new one needs to be built, it's us (the government) who pick up the cost. And the price is set by the market regulator. What exactly is the guy being paid for? To make sure gears are oiled and greased and cleaned up regularly?

The political gears, yes.

Power generation and transmission isn't as stagnant as you think. Look at this Alberta company, massive growth. http://www.altalink.ca/Default.aspx?DN=102,3,1,Documents

[madmax]

I checked out the link. Some substations and transmission lines. But on the whole this company appears very small and many of the links they had to their page didn't work.

Is Alberta's Hydro Electric Power, totally Private? Power Generation, Transmission, and Delivery?

[geoffrey]

I checked out the link. Some substations and transmission lines. But on the whole this company appears very small and many of the links they had to their page didn't work.

Is Alberta's Hydro Electric Power, totally Private? Power Generation, Transmission, and Delivery?

Not exactly small, it does control much of the distribution of electricity in the province. It's not a huge company though either. The big thing was the 500kV project, Calgary to Edmonton, a billion dollar exercise.

Anyways, yes is the short answer to your question.

Power Generation - Mostly done by TransAlta (at Genese (HUGE plant, really neat, I've toured it), Sherness and the Wabamun generators), , there are some minor others, all private. In Alberta it's really easy to use coal power, they pretty much build the plant on top of the mine and just have a steady stream. Works very well. ATCO has a role too.

Transmission - Mostly done by Altalink, a former TransAlta business unit. They control pretty much all the important transmission outside of cities. Regulated... paid by a tariff at a set rate to run the network (they own the network as well). Owned by folks in Quebec actually through SNC Lavalin.

Delivery- Epcor mostly in Edmonton and Enmax in Calgary, don't know outside of that. Highly regulated. Starting to branch out with more competition and energy contracts. I think Epcor does alot of delivery outside of urban centres too.

It's all co-ordinated by the Alberta Electric Systems Operator (AESO - http://www.aeso.ca/) and regulated by AESO to some extent and mostly by the EUB (http://www.eub.ca).

[madmax]

Not exactly small, it does control much of the distribution of electricity in the province. It's not a huge company though either. The big thing was the 500kV project, Calgary to Edmonton, a billion dollar exercise.

Thanks for covering the 3 points I asked for in clarity.

I have one more question.

The project above.

Does this company have the capital to put toward a billion dollar project, or is this done by various shareholders and private investors, or is this a government the funded project?

Thanks in advance.

[geoffrey]

Does this company have the capital to put toward a billion dollar project, or is this done by various shareholders and private investors, or is this a government the funded project?

It will be privately financed and payed for over the long term by users of the system like any major investment.

It won't be paid for by the government.

[madmax]

Does this company have the capital to put toward a billion dollar project, or is this done by various shareholders and private investors, or is this a government the funded project?

It will be privately financed and payed for over the long term by users of the system like any major investment.

I am curious to know, what the average price for hydro is in Alberta?

[Hydraboss]

My three bedroom bungalow just south of Edmonton runs 150-190/month on average. And as a further note, any new transmission lines, plants, etc are paid for on my bill. There is a spot on the bill for the payment of infrastructure, and they like to bill in advance for things they have not built yet. An example would be the additional main transmission to Ft. Mac for which the control board ok'd an increase on all bills issued in northern & central Alberta.

Generation companies in this province are legislated not to lose money. If they overspend, they get to increase rates. If they make a purchase of natural gas stock, they get to increase rates. What a deal. Competition (deregulation) in this province has been a major flop, and has cost me thousands in additional billing. Prices go up, and I can live with that. But the bill on my house used to be $43/month. Not anymore.