Onex Corporation Chairman of the Board, President and Chief Executive Officer Gerald Schwartz speaks at the company's annual general meeting in Toronto on Thursday, May 10, 2012.Nathan Denette/The Canadian Press
Onex Corp.'s founder Gerry Schwartz earned $129.3-million (U.S.) as leader of the company in 2013, in a year where compensation for three other executives at the investment firm topped $17-million each.
Mr. Schwartz's total from 2013 amounts to the biggest compensation package in Canada's recent history, and far exceeds the largest pay package in Canada in 2012. Hunter Harrison, the turnaround leader at Canadian Pacific Railway, was the highest paid CEO that year, receiving $49.1-million including salary, options and bonuses.
Onex's 72-year-old chief executive earned just $1.3-million as his base salary, but close to $60-million in options-based awards boosted Mr. Schwartz's total. He also earned an annual incentive plan bonus of $24.4-million, worth nearly as much as his bonuses in 2012 and 2011 combined.
Additionally, Mr. Schwartz received another $28.5-million in carried interest payments, part of the compensation paid to Onex management as a share of the surplus gains from company-controlled investment funds. He also received $12.5-million from co-investments that he made alongside Onex. And dividend payments on his 20.1-million subordinated-voting Onex shares added another $3-million last year.
The combined figure is more than double the total he amassed in 2011, when he was the highest paid CEO in the country, with earnings of $64-million.
Other executives also received hefty payouts at Onex this year, including three senior managing directors: Robert Leblanc earned $23.3-million, Seth Mersky earned $17.3-million and Anthony Munk earned more than $19-million in compensation. This doesn't include the $33.2-million in cash paid to the directors in carried interest payments.
For the sake of comparison, the sum of Mr. Schwartz's 2013 compensation falls within a few million dollars of this year's Toronto Blue Jays payroll. But Mr. Schwartz's earnings beat out the $78.1-million in salary and endorsements professional golfer Tiger Woods pulled in, according to Forbes' list of highest paid athletes. It is also more than double the $61.9-million Forbes says Los Angeles Lakers star Kobe Bryant earned last year.
The last time Mr. Schwartz received stock options was approximately a decade ago, the company said in a filing, and he exercised all of them in 2013 as they were set to expire. After the Onex compensation committee determined that having not-yet-vested stock options is a key incentive to perform, it awarded him 3.95-million stock options early this year. These options vest in stages over the next five years, have a 10-year term date and can only be exercised when the stock price is 25 per cent higher than the strike price of the option.
But that's it for Mr. Schwartz for the next five years, the board said. No more options will be awarded to him in that time.
Much like Mr. Schwartz, the three managing directors also recently exercised option grants awarded to them in 2004. In 2013, they were each awarded a special grant of 850,000 options to acquire subordinate voting shares, which follow the same conditions as Mr. Schwartz's new options.
Onex pointed out that the size and nature of the compensation was not routine, and said the way equity-based compensation was awarded last year was also influenced by an "evolution in the corporation's management structure." The options that boosted the senior managing directors' compensation represents their increasing value to the firm.
Other impending changes include the proposed addition of a new board member. Onex nominated Arianna Huffington, president and editor-in-chief of The Huffington Post Media Group, to the board, saying she would contribute "a wealth of expertise, experience and valuable relationships."