Magna CEO Don Walker speaks during the company's Annual Shareholder Meeting in Toronto, May 8, 2014.AARON HARRIS/Reuters
Compensation fell slightly for senior executives of auto parts giant Magna International Inc. last year even though annual profit topped the $2-billion (U.S.) level, 7 per cent higher than 2014.
Don Walker, Magna's chief executive officer, received $20.8-million in salary, share-based awards, option awards and non-equity incentive plan compensation, compared with $21.2-million a year earlier.
Other senior executives experienced similar small declines, based in part on Magna's compensation scheme that includes a share of pre-tax profits before profit sharing. If pre-tax profit before profit sharing is up to $1.5-billion, the executives receive 100 per cent of the amount set aside for compensation.
But the amounts decline when pre-tax profit exceeds $1.5-billion, which it did last year. So the executives received 85 per cent of the amount set aside for profit sharing.
"The bonuses are highly variable – if Magna fails to generate a profit, no bonus will be paid," the compensation and governance committee of Magna's board of directors said in the information circular for the company's annual meeting.
"We believe this motivates executives to strive to achieve consistent profitability, as well as year over year profit growth."
But the executives also received options last month to increase the number of shares they hold in the company.
Mr. Walker received options to purchase 417,878 shares, which were assessed at a value of $2.9-million.
Magna's profit increased in 2015 as vehicle production jumped in North America to supply record demand in the Canadian and U.S. markets, while the European market, another key area for Magna, showed signs of emerging from a lengthy sales slump.