There was plenty of money in the pipeline last year for senior executives at the four largest utilities that transport oil and gas in Canada.
The CEOs of the country’s biggest pipeline companies all got raises in 2019, including higher bonuses and millions of dollars in stock-based pay.
It was also a good year for shareholders of all four companies. TC Energy Corp. stock provided a total return of about 50 per cent, while total returns from Enbridge Inc., Inter Pipeline Ltd and Pembina Pipeline Corp. shares ranged between 25 per cent and 30 per cent.
The executive pay numbers, disclosed recently to shareholders in company proxy circulars sent in advance of annual meetings, reflect decisions made before the collapse in oil prices this year sent the energy industry seeking a multibillion-dollar aid package from the federal government.
The compensation packages are heavily weighted toward company stock. At most Canadian energy companies, share prices have collapsed in recent weeks. One of the companies – Inter Pipeline – has also announced executive pay cuts.
All four companies have annual cash incentive plans that set a target bonus based on a percentage of salary, which is adjusted based on business results and individual performance. Each company paid out more than 100 per cent of its target bonuses for its top executives for 2019.
At Enbridge, CEO Al Monaco made $17.99-million in 2019, up from $13.38-million in 2018 and $11.4-million in 2017. His salary was $1.59-million, reflecting a 10-per-cent raise that Enbridge said was to bring him more closely in line with the market. His bonus of $3.69-million was up from $3.47-million the year before.
The key to Mr. Monaco’s big raise was a boost in share and option awards – $9.46-million in 2019, compared with $7.22-million the year before. The awards were valued when Enbridge stock was trading at nearly $49 per share; it closed at $40.01 Wednesday.
Enbridge also estimated that the liability for providing Mr. Monaco’s pension jumped by $3.2-million in 2019 because of his new, higher annual compensation. Enbridge now estimates the current value of his pensions at $26.2 million.
Enbridge used “distributable cash flow per share” as the one financial goal that drove the corporate performance component of its annual cash bonuses. The company determined it exceeded its goal by 2 per cent – so it arrived at a performance multiplier of 160 per cent of target bonuses.
TC Energy CEO Russell Girling made $13.44-million in 2019, up from $12.5-million in 2018. His 2019 bonus of $2.49-million increased from $2.41-million in the prior year. TC – formerly known as TransCanada – gave him share and option awards worth $8.6-million, up from $7.6-million in 2018.
The stock grants were valued when TC Energy shares traded between $52 and $57; they closed Wednesday at $64.94, making it an exception to the recent energy-stock collapse.
For its annual bonus plan, TC Energy set a variety of safety, financial and operational goals and gave itself a corporate performance factor of 1.3, essentially paying 130 per cent of the target bonus. One of the targets was reaching $4.05 in earnings per share; TC Energy said it hit an adjusted $4.31.
The company’s worst score came in “project execution,” where it said “most of our projects were delivered on-time and on-budget, but delays and cost overruns were experienced on others.”
Pembina Pipeline CEO Michael Dilger made just less than $8-million in 2019, up from $7.13 million in the previous year. His annual bonus of $1.82-million was down from $1.94-million in 2018. The company gave him $4.6-million in share and option awards, up from $3.68-million in 2018. The stock grants were valued when Pembina shares traded between $42 and $45; they closed Wednesday at $27.03.
Bonuses for all Pembina’s top-paid executives fell in 2019 compared with 2018. The company used a multiplier of 1.5 for 2019, paying out 150 per cent of the target bonuses that were based on corporate performance, which included safety, environmental and financial measures. It set a target for adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, of $2.9-billion, and topped it by coming in at $3.06-billion. In 2018, Pembina’s corporate performance multiplier was higher, at 1.69.
Inter Pipeline CEO Christian Bayle made $5.24-million, up from $3.93-million in 2018. The company raised his salary by 22 per cent to $825,000 to bring him line with the market, Inter Pipeline said. Mr. Bayle’s bonus was $975,000, up from $940,000.
The company gave him share awards of $3.2-million, up from $2.1-million in 2018. The awards were valued when Inter Pipeline shares were $21.55; they closed Wednesday at $10.00.
The company’s total performance score for annual bonuses was 1.13, or 113 per cent of the target. The company missed its goal for funds from operations, but met or exceeded all measures in project execution.
Inter Pipeline said it cut Mr. Bayle’s salary by 20 per cent on April 1 “in response to the significant decrease in global energy prices and the COVID-19 pandemic," and reduced salaries of other executives by 10 per cent.
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