The 2017 government compensation disclosure data, released last week, reveals new detail on executive compensation, bonus pay and overtime costs at Nalcor Energy.
The level of pay at the corporation has been a point of contention — particularly as members of the public face multiple power rate hikes, with still no word on how the big bills to come from the Muskrat Falls hydroelectric project will be made manageable.
Nalcor Energy’s businesses are not all focused on electricity, but the majority are. It’s reflected in the latest report on employee pay, a.k.a. the “sunshine list.”
Related story:
Newfoundland and Labrador government releases ‘sunshine list’ of provincial employees earning $100K+
A caller this week to The Telegram newsroom asked, with power prices and the need to save every public dollar, why more wasn’t being said about the bonus pay and overtime at the energy corporation.
“I don’t think enough pressure is being put on the company,” she said, adding she accepts bonuses as an idea, but feels too much money is going out the door and to senior executives and upper management.
The basics
So what exactly does the annual compensation report say?
The sunshine list data includes payments to employees making $100,000 or more, and there are more people on the list this year from Nalcor Energy and its subsidiaries.
Looking at base salary alone, 373 employees made the cutoff in 2017. The corporation said it’s about 24 per cent of its full-time staff. For the year before, the same count was 346 employees, or 23 per cent of full-time staff, with the percentage provided on request.
Looking from one year to the next, the names on the list have also changed.
A total of 73 people who were on the list in 2016 didn’t reach the $100,000 threshold in 2017. Reasons included a mix of: retirement, leave, resignation, and reductions in overtime.
On the flip side, 128 new people made the newest list when they didn’t make the one before. Reasons include: step-up in a negotiated union rate, pay progressions, return from leave, retirement allowance payments and clocked overtime.
Executive compensation
Looking at the corporation’s highest earner, 2017 was the first full year for president and CEO Stan Marshall, who received $661,100 in total compensation for the calendar year. The total includes $490,700 in base pay, plus $157,500 in bonus pay and $12,900 in other compensation.
For at least some comparison, Hydro Québec’s Éric Martel is issued a base salary of $543,559 in 2017-2018, according to disclosure reports in that province. And Ontario Power Generation president and CEO Jeffrey Lyash is reported as having a total salary and bonuses of $1,554,457 for calendar year 2017 (the information is not divided out in that province’s online record).
Base pay and bonus pay for the Nalcor Energy senior executive is — not unexpectedly — greater than that of the rank and file. As for the exact degree of compensation, it is determined by the corporation’s board of directors (the members there being appointed by Cabinet, selected following recommendations from the province’s Independent Appointments Commission).
“The short-term incentives (bonus) for Nalcor executive and senior managers reflect a number of factors related to performance during the year in question, including a focus on corporate-wide targets (such as safety and financial performance) as well as divisional objectives,” a spokeswoman stated, in response to questions.
Bonuses
In all, 350 Nalcor Energy employees on the 2017 list received bonuses, ranging from $500 to Marshall’s $157,500.
The largest bonuses went to the leadership team, but there were 65 people issued $20,000 or more in bonus pay.
The same spokeswoman noted the term “bonus,” as defined for the public reporting, covers a few different things: individual performance contracts (not offered to all), lump sum cash payments (awarding exceptional performance in a year), but also vacation travel allowances, retention bonuses and Labrador allowances (sometimes called a northern allowance).
To try and be clearer on who received what, The Telegram asked for a further breakdown.
The corporation reported 81 people received a short-term performance incentive (based on reaching goals set into their contracts), while 68 people received a lump sum payment (for exceptional performance of workers at the top of their pay range). In another 210 cases, it was one or more other types of bonus payment, including payments tied to work in remote locations.
The corporation’s board of directors, specifically the board’s human resources and compensation committee, reviews the bonus pay program that is then applied by management.
The Telegram was told the review by the board ensures metrics, payment levels and outcomes are reflective of the corporation’s goals and priorities, and that the program properly recognizes management contributions.
“Nalcor competes with large-scale energy companies to attract and retain highly educated people with specialized skills sets that are critical to our business,” stated an email in response to questions.
“Nalcor’s compensation is designed to remain competitive with the Atlantic Canadian utility industry.”
Overtime
Consumer Advocate Dennis Browne, in an emailed statement, put the compensation in a different light.
“The entitlement at Nalcor and Hydro to such largesse is completely out of line given the fact that these companies are responsible for the Muskrat Falls boondoggle,” he stated.
Browne noted Nalcor Energy as a whole is not subject to PUB review, but Newfoundland and Labrador Hydro is. And he has questioned Hydro’s employee compensation at the PUB, including overtime paid to Hydro employees.
The most recent compensation report shows 15 people on the list actually made more in overtime than in salary. That’s down from 18 the year before (plus one who earned an equal amount in salary and overtime in 2016).
Hours and hours of overtime work ended up putting more than a few Hydro staff onto the sunshine list. The Telegram was told at least some of that effort is directly tied to the temporary demands involved with bringing new power assets online and getting them integrated into the existing system.
In the last round of rate hearings, Newfoundland and Labrador Hydro president Jim Haynes was asked about overtime costs, having to be recovered one way or another.
“From an overtime point of view I don’t think we have an epidemic of overtime ... We have pockets where there’s a challenge, but some- a lot of that is on the east coast. There’s a lot of construction on the go the last couple of years, particularly, and we are looking at, you know, getting that back down to an even better level,” he said.
NOTE: This is an edited version, to clarify the Independent Appointments Commission does not actually appoint to the board, but makes recommendations for the corporation's board to government. Current members were appointed after being recommended by the commission.
ashley.fitzpatrick@thetelegram.com
