Head of Ontario lottery corporation rebuked for pay increases

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Ontario Finance Minister Charles Sousa has publicly rebuked the head of the province's lottery corporation for awarding "unacceptable" pay increases to executives.

Mr. Sousa initially expressed his concerns about double-digit bonus hikes for senior executives during a private telephone conversation on Tuesday morning with Paul Godfrey, chairman of the Ontario Lottery and Gaming Corp.

The minister told reporters later the same day that the bonuses were not in keeping with the government's efforts to curb spending and restrain wages in the public sector. In fact, he said, no executives at the OLG should be getting pay raises.

"I expressed my concern that, frankly, it's unacceptable that certain salaries have escalated," Mr. Sousa told reporters. "Compensation should be the same as the previous year."

This is the second time in recent weeks that the Ontario government has questioned Mr. Godfrey's stewardship. Premier Kathleen Wynne summoned Mr. Godfrey and CEO Rod Phillips to her office in March and forced them to drop a promise of up to $100-million a year in hosting fees for a Toronto casino.

In the latest controversy, Mr. Sousa was responding to a Globe and Mail article that revealed executive pay at the OLG has skyrocketed nearly 50 per cent over the past two years despite a salary freeze for managers in the public sector.

The government introduced public-sector restraint legislation in 2010 that froze salaries for two years for employees who do not bargain collectively. The legislation, which was extended indefinitely in last year's budget, does not prohibit bonus pay.

Mr. Godfrey was not available for comment on Tuesday. In an earlier interview, he said OLG complied with the legislation because all pay increases consisted of bonuses for executives who met their performance targets.

The Globe reviewed compensation between 2010 and 2012 for the 10 highest-paid executives at four Ontario government-owned entities that generate revenue for the province. The analysis revealed that the OLG's response to legislated restraint measures stands in stark contrast to those of the other Crown agencies, all of which reined in performance pay for executives.

The Liquor Control Board of Ontario froze executive pay across the board, the analysis shows. Pay rose 3 per cent for the 10 highest-paid executives at Hydro One over the two years and 9 per cent for the top 10 at Ontario Power Generation.

At the OLG, by comparison, total compensation for the 10 highest-paid executives jumped 49 per cent to $3.6-million in 2012 from $2.4-million in 2010, the analysis reveals.

Mr. Godfrey has told The Globe that the OLG would not be able to attract executives without paying performance bonuses.

Having some executives perform more than one role helped the OLG meet the government's budget directive and reduce the executive office "cost envelope" by 12 per cent in fiscal 2012, said spokesman Tony Bitonti. For example, Thomas Marinelli was appointed chief transformation officer and chief information officer in 2011. In 2012, his first full year in the two positions, his pay jumped 24 per cent to $562,691, including a bonus of $162,691. But the agency saved money by having Mr. Marinelli assume responsibility for more than one role, Mr. Bitonti said.

OLG's CEO, Mr. Phillips, makes far more than his counterparts in Alberta, British Columbia and Quebec, where gambling agencies all generate about $1-billion or more in revenue for government coffers. The OLG generated $1.9-billion for the government in fiscal 2012.

Mr. Phillips took home $672,989 in 2012, of which $297,989 was bonus pay. Contrast that to $339,077 for the CEO in B.C., including a $40,000 bonus in fiscal 2011, and $323,512 for the CEO in Quebec, including a $21,193 bonus in 2010.

In Alberta, where the government suspended bonus pay and froze managers' salaries in 2009, the province's gambling CEO made $264,000 in 2011-2012 and zero in performance perks. His counterparts in the Prairies took home slightly less, $225,710 in Saskatchewan and $218,586 in Manitoba.