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Paul Godfrey takes questions from the media after he was dismissed from his post as Ontario Lottery and Gaming Corp. chairman, in Toronto on May 16, 2013. (Michelle Siu For The Globe and Mail)
Paul Godfrey takes questions from the media after he was dismissed from his post as Ontario Lottery and Gaming Corp. chairman, in Toronto on May 16, 2013. (Michelle Siu For The Globe and Mail)

Ex-OLG chief Godfrey maintains Toronto deserves higher cut of casino revenue Add to ...

The ousted chairman of Ontario’s lottery corporation says Toronto deserved more money to play host to a casino because “Toronto is the centre of commerce” and “supports the rest of the province.”

Plans to give the city a higher casino-hosting fee than other municipalities was one of several issues that put Ontario Lottery and Gaming Corp.’s chairman Paul Godfrey at odds with Premier Kathleen Wynne. In an interview with CBC’s Metro Morning radio show Friday, Mr. Godfrey – who was turfed Thursday by the Finance Minister – said the Premier is “very anti-casinos” and had raised concerns about municipalities being treated differently under OLG’s proposed hosting-fee formula. A new, equitable formula was released Friday, offering more money to all municipalities with casinos.

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In addition to disputes over the hosting fee and the horse-racing industry, Mr. Godfrey noted the premier had expressed frustration with OLG salary increases after The Globe and Mail reported on April 30 that executive pay had skyrocketed at the Crown agency despite a wage freeze for managers in the public sector.

Mr. Godfrey took issue with the methodology the Globe used for its data analysis, saying it was an apples-to-oranges comparison because the makeup of management had changed. For example, the OLG had an interim chief executive officer until the appointment of Rod Phillips as CEO in June, 2011.

The Globe factored this revolving door into its analysis when it reviewed compensation for the 10 highest-paid executives disclosed on the province’s annual Sunshine List between 2010 and 2012 regardless of their title.

The data analysis revealed that total compensation for the top 10 executives at the OLG jumped 49 per cent to $3.6-million in 2012 from $2.4-million in 2010. The analysis also showed that OLG’s compensation practices were out of sync with the province’s other revenue-generating Crown agencies – the Liquor Control Board of Ontario, Hydro One and Ontario Power Generation. All except the OLG reined in performance pay for executives.

Indeed, much of the pay increases at the OLG were the result of bonuses paid to employees who met their performance targets. Mr. Phillips took home $672,989 in 2012, including $297,989 in bonus pay. Not only was Mr. Phillips the province’s 12 th highest-paid public-sector employee in Ontario, he earned 73 per cent more than his predecessor. Kelly McDougald was paid $388,041 in 2008, the last time the OLG had one CEO for an entire year.

“I don’t think the 49 per cent is an accurate reflection. We’re not comparing the same people to the same people,” Mr. Godfrey told the Globe in an interview Friday. “We didn’t have a CEO in 2010. In 2012, we had not only Rod Phillips, but we had somebody who was receiving severance.”

Mr. Godfrey had not spoken publicly about the Globe article until Thursday evening, when he held a news conference to announce that he had been fired two years before his term as chairman of the OLG was set to expire. He made it clear that revelations about executive pay triggered his ouster.

Mr. Godfrey said salary increases for senior OLG executives were approved by former finance minister Dwight Duncan, former premier Dalton McGuinty and by Mr. McGuinty’s cabinet, which included Ms. Wynne.

“I’ve been involved in politics long enough to know that to ever put increases in that didn’t comply with government positions is tantamount to walking on a gang plank and sawing it off on yourself,” Mr. Godfrey told the Globe.

“The fact is that we took this to Minister Duncan, who went to the premier’s office, and I am told by him that he took it to cabinet as well.”

In an interview in April, Mr. Godfrey said the OLG had reduced compensation by requiring some executives to perform dual roles. However, the Globe analysis found that the savings were not reflected in the overall payroll costs, which totalled $950-million in the fiscal year ended March 31, 2012. The figure was unchanged from fiscal 2011, even though the agency’s head count shrank by 800 employees.

The analysis also showed that executives doing double duty were richly rewarded. Executive vice-president Thomas Marinelli, for example, held the posts of chief transformation officer as well as chief information officer in 2012 and 2011. His pay jumped 24 per cent last year to $562,691. Executive vice-president Gurpreet Dhindsa was chief financial officer and chief administrative officer during the same period. He was paid $558,089, a 16-per-cent increase.

Finance Minister Charles Sousa was not available Friday to speak about Mr. Godfrey’s ouster or OLG executive pay because of commitments in his riding, said his press secretary Susie Heath.

The entire board of directors at the OLG resigned Thursday after Mr. Godfrey was dismissed. Peter Wallace, secretary of the cabinet, has been appointed interim chairman of the OLG.

Ms. Heath said the government is moving forward with OLG’s modernization strategy, which included building more casinos in a bid to boost annual revenues by as much as $1.3-billion for the cash-strapped provincial government.

“We’re moving forward full steam ahead, continuing to implement the modernization plan,” Ms. Heath wrote in an e-mail.

She said an interim board will be appointed shortly and Mr. Phillips will be staying on as president and CEO of the OLG.

“The Minister has full confidence in Mr. Phillips’ leadership,” Ms. Heath noted.

Mr. Godfrey, however, is casting doubt on the government’s plan to expand gambling options in Ontario. He said the Premier told him she doesn’t like casinos.

Mr. Godfrey, a prominent Progressive Conservative and CEO of newspaper chain Postmedia Network Inc., defended his vision for a downtown Toronto casino and the now-nixed proposal to give the city an extra financial incentive – between $50-million and $100-million annually – if council approved a gambling resort. He believes Toronto will regret not moving forward with a casino.

“The municipalities are all treated differently. Toronto gets much more money for public transit than any other municipality,” Mr. Godfrey told CBC’s Metro Morning radio show.

“As chairman of Metropolitan Toronto, I always took the position that Toronto should be treated differently because Toronto is the centre of finance. Toronto is the centre of business. Toronto is the centre of commerce,” he added.

“Toronto needs the additional funding because Toronto supports the rest of the province.”

Follow on Twitter: @kahowlett

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