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Changing the guard at the government-owned Alberta Investment Management Co. (AIMCo) cost the pension manager nearly $3.6-million in termination payments to five former top executives, including its departed chief executive officer.

The fund manager lost $2.1-billion on trading strategies linked to market volatility in the spring of 2020, when the early stages of the COVID-19 pandemic rocked markets. AIMCo significantly underperformed peers that year.

AIMCo subsequently recruited a new team, starting with chair Mark Wiseman, former CEO of the Canada Pension Plan Investment Board. After Mr. Wiseman arrived, AIMCo hired Evan Siddall, the former CEO of the Canada Mortgage and Housing Corp., as its new CEO.

“There’s nothing here that is not normal course under either employment law or contractual arrangements that people have,” Mr. Wiseman said in an interview Monday. “And those contracts are what one would expect to see in the public pension sector in Canada. This is pretty standard and it’s what you’d expect to see when you’re, frankly, in a change management scenario.”

Alberta pension manager AIMCo posts double-digit return

AIMCo manages $168-billion on behalf of 32 clients, including pension plans for provincial government employees and Alberta’s $19-billion Heritage Savings Trust Fund.

The plan manager said in its recent annual report for 2021 it paid $2.23-million in termination payments to former CEO Kevin Uebelein. Including salary and incentive-plan payments largely based on past performance, Mr. Uebelein made a total of $4.95-million in the 12 months ended this March 31, up from $2.74-million in the prior year.

AIMCo also paid a $340,500 severance to former chief investment officer Dale McMaster as part of $4.42-million in total compensation, including a $2.30-million long-term incentive payout based on fund performance from 2018 through 2021. He made $2.19-million in the previous year.

Executive vice-president of public equities Peter Pontikes, who left shortly after the losses were revealed in June, 2020, received $310,000 in termination pay.

Former chief client and stakeholder relations officer Mark Prefontaine, who left in November, 2021, received a $560,000 termination payment as part of $751,794 in total pay.

And former chief risk officer Andrew Tambone, who joined the fund manager in November, 2020, well after the losses, and left in December, 2021, received $150,000 as part of $805,164 in compensation.

AIMCo is in the middle of the pack, in assets under management, for the Maple Eight group of large Canadian public pensions, and its ordinary executive compensation levels are below some of its bigger peers. The fund manager restructured its compensation system in 2022, ditching its previous incentive plans in favour of programs it says better match its Canadian pension peers.

While not legally required to, most of the pension managers disclose pay for top executives much like public companies do, revealing compensation for the CEO and three to five additional executives. Highly-paid investment managers below executive level are not included in the disclosure.

Canada Pension Plan Investment Board, which manages $539-billion in assets, paid CEO John Graham $5.35-million in the year ended March 31, his first full year on the job. Four other top CPPIB executives made between $3-million and $4.1-million last year.

Caisse de dépôt et placement du Québec, with $419.8-billion in assets, paid CEO Charles Emond $4.50-million in 2021, up from $3.45-million in 2020. Four other top executives made between $2-million and $3-million in 2021.

Ontario Teachers’ Pension Plan, which manages $241.6-billion in assets, paid CEO Jo Taylor $6.91-million in 2021, up from $5.08-million in the prior year. Two other executives made between $4.5-million and $6-million in 2021.

Ottawa’s Public Service Pension Investment Board, with $230.5-billion in assets, paid CEO Neil Cunningham $4.94-million, up from $3.69-million in the prior year. British Columbia Investment Management Corp., which manages $211.1-billion in assets, paid CEO Gordon Fyfe $4.10-million, up from $3.59-million in the previous year.

Ontario Municipal Employees Retirement System, with $121-billion in assets, paid CEO Blake Hutcheson $5.14-million, up from $2.64-million in 2020, a year in which OMERS cut incentive pay to reflect an investment loss.

Healthcare of Ontario Pension Plan does not disclose compensation for its executives.

Pay for CEOs of public pensions is unquestionably large, but below compensation levels for private-sector CEOs. The median pay package for CEOs at 100 of the largest Canadian companies listed on the Toronto Stock Exchange, reviewed by The Globe and Mail and consulting company Global Governance Advisors, was $9.13-million in 2021.

The pension plans typically award some form of long-term units that track investment returns and pay more as the plan exceeds benchmark returns. The returns are usually measured over multiple years, reflecting the pensions’ long-term focus.

AIMCo’s investment misstep damaged the fund’s 2020 returns and prompted multiple changes.

After shutting down the volatility-linked investment strategies that led to the losses, AIMCo’s board commissioned an independent audit, which concluded the fund manager’s investment and risk management systems were at fault. In a report, the board said, “The breadth and depth of risk governance controls, collaboration and risk culture, while evolving and improving over the past 2-3 years, are still unsatisfactory.”

Mr. Siddall made $1.33-million for a partial year of work. AIMCo currently estimates he will make $4.57-million in payouts from 2022 through 2025 from the new incentive programs.

Editor’s note: An earlier version of this article incorrectly said Ontario Municipal Employees Retirement System had $121-million in assets. The correct figure is $121-billion.

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