The board of Shaw Communications Inc. voted to boost the pension payable to Jim Shaw when he retired as CEO of the company last month, bringing his pension payments to almost $500,000 monthly.
The company said Mr. Shaw's pension benefit will now be $495,833 per month, or $5.95-million annually - exceeding the $5.4-million pension paid annually to his father, JR Shaw, the company chairman.
Jim Shaw, 53, received the first payment on Dec. 1, the company said in documents it sent to shareholders.
Mr. Shaw retired last month, two months earlier than his announced retirement date of Jan. 13, shortly after he was criticized for displaying unusual behaviour at an investor luncheon. Some people who were at the Vancouver event said he appeared to be inebriated.
The change in his pension is disclosed in a footnote in Shaw's latest shareholder proxy circular. According to the circular, he was eligible to receive an annual pension of $5.27-million as of the company's fiscal year end on Aug. 31. The disclosure said he would have been eligible for a $5.8-million pension if he retired at age 65.
Instead, the board opted to pay him $5.95-million a year when he retired at age 53, more than the amount he would have been eligible to receive at the normal retirement age.
No explanation for the change is provided in the proxy circular and JR Shaw and Jim Shaw could not be reached for comment Monday.
The company said the cost of financing Jim Shaw's pension climbed by $17-million in the year ended Aug. 31, to a total of $71-million. That amount does not appear to include any cost from the changes approved by the board in November.
The executive pension plan is not pre-financed; the money is not set aside in advance and the costs are instead paid from annual cash flow as a compensation expense. However, the company reflects a portion of the cost of the plan as a liability in its financial statements.
Bradley Shaw, Jim's brother and Shaw's new chief executive officer, is eligible for a pension of $3.97-million at age 65, the proxy circular shows. His accrued pension obligation is $37.6-million.
The circular shows Jim Shaw was paid a total of $8.2-million in fiscal 2010, including a bonus of $6-million. No details were provided about any payments related to his departure in November, which was after the Aug. 31 year end.
Bradley Shaw was paid $17.3-million in 2010, with $10.4-million of the total attributed to the increase in value of his pension plan. The company said he was granted "additional credited service" in the plan last year, but no details were provided.
"When CEOs move on, it is often the case that they get a handshake that mere mortals, like me, might find to be a lottery win," said Iain Grant, of the SeaBoard Group telecom consulting firm in Montreal.
"But he did have a huge amount to do with getting Shaw to where it is today. If shareholders are upset, I'm sure we'll hear about it. But I'm sure shareholders, looking back, will find that Jim probably deserves that."
Another industry observer, speaking on condition of anonymity, said the pay packages were in keeping with Shaw's past practices. "They've consistently done this, and it's not overly surprising. But for the first time in their history they have real competition."
With files from reporter Iain Marlow.
Shaw Communications (SJR.B)
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