Power Corp. paid Paul Desmarais Jr. and André Desmarais nearly $2.9-million apiece in 2020 as the two left their co-chief executive officer roles in a reorganization.
The figures include stock-option awards of nearly $1.7-million apiece, granted a week after they left their executive jobs in February, 2020, to remain on the company’s board as chairman and deputy chairman, respectively. The awards were part of a number of sizable option grants to executives to provide multiyear incentives, including $6-million in options for new CEO Jeffrey Orr, Power said.
Power completed a restructuring last year that saw it privatize its Power Financial Corp. subsidiary, long a separate TSX-listed company. The reorganization came after years of flat stock-price returns and shareholder discontent that saw a growing number of votes withheld from the Desmarais brothers in each year’s director elections.
In its annual proxy statement to shareholders, Power said it gave the options to the Desmarais brothers “in their former capacity as co-chief executive officers ... as it believes this appropriately recognizes [their] contributions to the reorganization and the corporation’s pursuit of its new strategy.”
The options have five-year terms, versus the 10 years for other executive options, and fully “vest,” or become usable, after four years – more quickly than other executives’ 2020 options grants. This, Power said, “allows [them] to realize the benefit of such contribution within a reasonable period of time following their retirement.”
The pay for the brothers includes $371,635 apiece in salary, $393,750 apiece in other stock awards, and more than $400,000 apiece in compensation for serving on the boards of Power Corp. and its subsidiaries.
Paul Desmarais Jr. made $8.77-million in 2019, while André Desmarais made $8.42-million.
The two brothers spent 23 years running Power Corp., acquired and then built by their father into one of Canada’s largest and most global investment companies. The Desmarais Family Residuary Trust controls about 103 million shares in Power, worth about $3.5-billion.
Mr. Orr served as CEO of the Power Financial subsidiary before rising to the parent company’s top job in February, 2020. His total pay of $13.05-million included a salary of $4.78-million and $9.10-million in share and option awards.
The total also included a negative $1.4-million calculation for pension compensation, as he agreed to cap his annual pension in retirement at $2.5-million. (The annual pension compensation figure Power and other companies report in the disclosure required by regulators isn’t cash placed in an account. It’s an estimate of how much executives’ pensions have grown – or, in rare cases, shrunk – based on their earnings or other pension-plan changes in the past year.)
Power described Mr. Orr’s grant of 1,476,976 stock options, valued at $6.06-million, as “special,” designed in part for retention and long-term alignment with shareholders, and “to reward the successful implementation of the corporation’s new corporate strategy and achievement of its long-term value creation goals following the reorganization.”
Power said it is larger than his 2021 grant, which insider-ownership records show was for 592,414 shares on March 25. Power said other changes to Mr. Orr’s compensation included a 6-per-cent salary cut to $4.5-million.
The company also gave stock-option awards to chief financial officer Gregory D. Tretiak and executive vice-president Claude Généreux of $2.03-million and $1.45-million, respectively. The awards were three times the usual size, with longer vesting schedules than normal, Power said. “There is currently no intention to grant stock options to [them] for the next two years,” Power said.
All told, Mr. Tretiak made $7.34-million, up from $6.10-million the year before, and Mr. Généreux made $7.60-million, up from $6.44-million in 2019.
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