Money As the share price falls, retiring Hydro One CEO to get millions
Hydro One Continues to Slide as the Company Faces a Lot of Uncertainty Under the New Government
Hydro One Continues to Slide as the Company Faces a Lot of Uncertainty Under the New GovernmentLoad Error
Thanks to his stock options, the ousted head ofwill walk away with close to the $10.7 million he would have received in severance — far more than a $400,000 retirement payout Premier Doug Ford touted as a victory for ratepayers.
“This deal is not a good deal for everyday people,” NDP Leader Andrea Horwath said Thursday as fallout from aat the company prompted shares in Hydro One — still owned 47 per cent by Ontario taxpayers — to fall 3.2 per cent.
Doug Ford misled voters on Hydro One
Premier Doug Ford may not have outright lied this week about the cost of fulfilling his election promise to get rid of Hydro One CEO Mayo Schmidt. But he certainly grossly misled taxpayers when he crowed that the payout to Schmidt for stepping down “was zero … absolutely zero.”In fact, Schmidt is likely to end up with an amount closer to $9 million, mostly in stock options, not the mere $400,000 that Ford claimed he received as a retirement severance payment. And that doesn’t include the $4.
Details are in the fine print of the agreement to remove chief executive officer Mayo Schmidt, whom the new premier dubbed the “six million dollar man” for his total compensation last year, and replace Hydro One’s board by August 15.
By opting for retirement after Ford vowed to fire him during the spring election campaign,, a veteran businessman, gets to keep the incentives he earned as CEO since 2015. If Schmidt resigned or was fired, his stock awards would not be as generous.
Given his six months in the job this year and an expected bonus for meeting performance targets, they are now estimated at about $9 million, up from their $7.7 million valuation at the end of 2017. Any options not exercised before he suddenly retired Wednesday have been cancelled.
Hydro One shares down after Ontario government says CEO, board out
Hydro One shares down after Ontario government says CEO, board out After sagging by almost eight per cent in early trading on the Toronto Stock Exchange, shares of the company were later down four per cent, or 81 cents, at $19.36 as of 11:42 a.m. ET.
There is also the matter of Schmidt’s annual pension, which is expected to be at least $162,729. Hydro One would not confirm a figure. Exact details on Schmidt’s incentive payouts won’t be known until a securities filing next April.
“Mr. Schmidt shall be entitled to receive all remuneration, benefits, awards and other entitlements previously granted, awarded or earned through to the retirement date,” says the agreement between Hydro One chairman David Denison and Greg Rickford, Ford’s energy minister.
Horwath said that means Ford “was not being honest with Ontarians” when he boasted “the severance was zero...absolutely zero” and mentioned only the lump-sum payout to Schmidt of $400,000 in lieu of post-retirement benefits.
“He cannot pretend that he did not know the details,” added Horwath, whose party is now the official opposition in the legislature. “Apparently, what Mr. Ford has succeeded in doing is turning the six million dollar man into a nine million dollar man.”
9,000 households without power in southeast Winnipeg
9,000 households without power in southeast WinnipegThe large outage is affecting the Windsor Park, St. Boniface and St. Vital areas of Winnipeg, the utility posted on Twitter. Crews will be repairing the downed wires on a major feeder line serving the area near Fermor Avenue and Lagimodiere Boulevard.
“They obviously cooked up a deal behind closed doors. They’ve been complicit in the deal that has been struck with Mr. Schmidt and yet they’re trying to sell it to Ontarians as if there’s nothing to see here,” the NDP leader said.
The premier did not comment Thursday but his office issued a statement saying “Ford made a promise that the former CEO of Hydro One would be gone; and yesterday he kept his promise.”
“There will be no severance that will be paid...When the minister of energy accepted the CEO of Hydro One’s resignation it was ensured that ratepayers would be protected,” Ford spokesman Simon Jeffries said in a statement.
“The deferred stock options that he earned in 2016, 2017, and 2018, which he was awarded during the tenure of the previous government, will be paid out over time. If he had continued to serve as the CEO of Hydro One his stock options would have only expanded — and under this government’s watch, that won’t happen.”
Hydro One analyst Andy Smith of investment dealer Edward Jones said the share price drop of 65 cents to $19.52 shows investors were rattled by the Ford government’s actions and what they portend for the future.
Hydro One board resigns, CEO retires
Premier Doug Ford says he has made good on a key campaign promise, announcing the immediate retirement of the CEO of Hydro One and the resignation of the utility's entire board of directors.Ford, who promised that if he was elected he would fire Hydro One CEO Mayo Schmidt, dubbing him the "Six-Million-Dollar Man" during the spring election campaign, hailed it as a "great day" for the province.
“Right now it’s uncertain and investors don’t like uncertainty,” he told the Star, noting Schmidt’s total compensation of $6.2 million last year — which became a political lightning rod in Ontario — is not out of line with pay for CEO’s of similar-sized utilities.
“They might have trouble attracting someone who’s going to work for a tenth of that, or whatever they want them to work for.”
While he wasn’t recommending clients buy the stock, arguing it was priced on the high side for its level of earnings, Smith said Hydro One has been performing nicely under Schmidt since Kathleen Wynne’s Liberal government partially privatized it three years ago.
“Hydro One has done a lot of what they said they were going to do since they became a public company. They’ve begun to cut expenses...they’ve done a lot of good work, I think.”
Both he and Horwath raised concerns about the signal the Hydro One shake-up, and plans to bar a wind farm company from suing over the Ford government’s plans to scrap its White Pines wind turbine installation in Prince Edward County, will send.
“What does that do to confidence in the government?” Smith said.
“If I was somebody wanting to invest in Ontario, I’d be thinking twice today,” Horwath told reporters after the government’s throne speech, outlining its priorities for a rare summer sitting of the legislature and beyond.
Although Ford targeted Schmidt’s compensation as chief executive at Hydro One, pay levels to his top executives will remain untouched “for greater certainty” in the coming weeks as part of the agreement but will be subject to review by the incoming 10-member board.
The new board will be in charge of selecting a replacement for Schmidt.
The deal also includes a “non-disparagement” clause, in which the government agrees not to make any statement that “defames, criticizes, ridicules, disparages or is derogatory” in regard to the directors, officers and employees of Hydro One.
Rob Ferguson is a Toronto-based reporter covering Ontario politics. Follow him on Twitter:
PCs move to take control of Hydro One exec salaries, would order end to York University strike .
Ontario's new Progressive Conservative government introduced legislation on Monday that would give it sweeping new powers over executive compensation at Hydro One. The bill, dubbed the Urgent Priorities Act, was introduced by Energy Minister Greg Rickford and would give the government authority to approve executive compensation at the utility. It would require the Hydro One board of directors to establish a new compensation framework for the CEO and board of directors in consultation with the province and the partially privatized utility's five largest shareholders.
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