The death of former Shaw Communications Inc. chief executive Jim Shaw meant the company was no longer responsible for his pension – removing an $85-million liability from the company’s books.
The adjustment means the company’s plan, which still owes $429-million, is very nearly fully funded, and frees Shaw Communications from making tens of millions of cash payments in coming years.
Shaw – still controlled and run by the Shaw family – started its Supplemental Executive Retirement Plan, or SERP, in 2002 and quickly accumulated $378-million in benefits for 15 executives in just 10 years. It was closed in June, 2012, to new participants, but the members in the plan continue to accrue benefits as long as they work for the company.
Shaw founder and executive chair JR Shaw, Mr. Shaw’s father, had an accumulated benefit of nearly $95-million as of Aug. 31, the close of the company’s past fiscal year. Current CEO Bradley Shaw’s SERP was valued at nearly $62-million.
For the first 10 years of the plan, Shaw failed to set aside any money for the SERP, making it a completely unfunded obligation. The company began pumping cash into it in the 2013 fiscal year, making a $300-million-payment. By August, 2017, the plan had $419-million in assets, still about $100-million short of full funding.
Shaw’s board chose in 2010, as Mr. Shaw left the chief executive job at the age of 53, to pay him an annual pension of nearly $6-million. Mr. Shaw died in January, 2018.
In a footnote to its annual report, the company said it did a “remeasurement” to its SERP in its second fiscal quarter “to reflect the decrease in the accrued benefit obligation due to demographic experience in the quarter.”
A company spokesman did not return an e-mail requesting comment.
The disclosure is one of several relating to the company’s pay included in securities filings made in the lead-up to Shaw Communications’ shareholders’ meeting on Thursday in Calgary. JR Shaw, his son CEO Bradley Shaw and president Jay Mehr voluntarily reduced their bonuses in order to “facilitate the ability to differentiate short-term incentive plan payouts across the company.”
JR Shaw’s contract calls for a bonus, if the company meets financial targets, in an amount between 0.5 per cent and 1 per cent of the company’s “income base,” a measure of profit. Mr. Shaw’s bonus of $7.31-million, down from $9.6-million in each of the past two years, was 0.39 per cent of the income base, the company says.
Bradley Shaw and Mr. Mehr agreed to a reduction in their target bonuses, resulting in payouts of just less than $3.9-million, down from $5.57-million, for Mr. Shaw and $2.3-million, down from $3.29-million, for Mr. Mehr.