Potash Corp. CEO Bill DoyleDAVID STOBBE
2010 Winnners
Vermilion Energy Inc.
It's nice to know companies benchmark their CEO pay against similar sorts of peers. But it's even better to know which peers they use. A reasonable group of similar companies? Or the highest-paying group of over-spenders they can hand pick from around the globe? No guessing with Vermilion. It not only explains the rationale for its peer group - other Canadian oil and gas trusts - but lists the 14 members of the group and summarizes their median revenue, assets and oil output, comparing the data to Vermilion's own numbers. They even compare how much each CEO can bench press and who has the biggest house. (Just kidding. They don't do that.)
Potash Corp. of Saskatchewan Inc. Sometimes boosting disclosure takes guts, like when a company decides to voluntarily report how much execs have earned from exercising stock options. That might not be so hard when the numbers are modest, but some companies - such as Potash Corp. - are known for their whopping option gains. Still, the mining company has added a chart to its proxy circular showing option payouts, even though it is no longer required disclosure in Canada. It's a service to shareholders to see how long-term compensation has worked out for executives. And it's fun to look at the numbers and wish we were Bill Doyle.
2010 Losers
Pacific Rubiales Energy Corp.
Averages are so conformist. While a typical director at a Top 100 company in Canada last year earned base cash and equity totalling $98,500, Pacific Rubiales awarded its directors more than $528,000 worth of stock options plus a $100,000 cash retainer. Total compensation for five independent directors averaged $656,318. Still, it could be worse. In 2008 the company awarded directors new options worth an average of $1-million. Hey, how come they only came second-last in the governance rankings?
Shaw Communications Inc.
New disclosure requirements from regulators finally kicked in for all companies last year, and the frequently asked question could finally be answered: How much is Jim Shaw's gold-plated-and-jewel-encrusted pension plan worth? The answer: $54-million. Yes, way. That's the cost to give the CEO a $5.4-million annual pension for the rest of his life beginning at age 65. The obligation for executive chairman JR Shaw's pension tops $33-million, while president Peter Bissonnette's pension is worth $47-million. Jim Shaw recently announced he's stepping down as CEO at age 53, so the full pension amount at age 65 may not have to be paid. Whew.
Toronto-Dominion Bank
Students of compensation, take some notes. This will be on the test. Why is it tricky to grant stock options in volatile times after markets have just cratered? Because of what happens to those low-priced options if markets bounce back. TD's board granted CEO Ed Clark 619,288 options in March, 2009 (remember, back when the market was hitting bottom?) to compensate him for giving up some pension entitlement. Fancy formulas said those options would be worth about $4.7-million over their 10-year life. But by the time the company issued its proxy 10 months later, the options were already worth $18.6-million. And there are still nine years left running on the clock. Smart trade, Mr. Clark.
Correction: Pacific Rubiales withdrew a proposal to reprice employee and director stock options in 2008 in advance of a vote of shareholders on the plan. An earlier version of this story incorrectly stated the options had been repriced. This version has been corrected.
Janet McFarland