Of the seven Maple Eight group of Canadian public pensions that break down their senior executive compensation policies, British Columbia Investment Management Corp. reported the highest pay increase for its CEO, with Gordon Fyfe receiving $5.04-million in the latest fiscal year.
Chief executive officers at Canada’s largest pension funds saw their pay change marginally last year even though some of their public-market investments suffered losses owing to rising inflation and higher interest rates.
The modest changes at most of the biggest pension funds are a result of compensation philosophies that emphasize long-term performance of the funds, which is typically measured over five-year horizons.
Consequently, some funds did not meet their benchmark targets for fiscal 2022 but still increased the pay of their top executives, while others reported single-digit drops in compensation.
Of the Maple Eight group of Canadian public pensions, seven break down their senior executive compensation policies in their annual reports, despite not being legally required to do so. Most disclose compensation for the CEO and three to five additional executives, while highly paid investment managers below the executive level are not included in the disclosures.
British Columbia Investment Management Corp. (BCI), with $233-billion in assets, reported the highest pay increase for its CEO, with Gordon Fyfe receiving $5.04-million in the latest fiscal year, up 23 per cent from $4.1-million a year earlier. Mr. Fyfe’s long-term incentive payment was increased to $2.14-million in 2022 from $1.43-million in 2021, and he received an annual bonus of $1.92-million, up from $1.77-million in 2021.
BCI posted returns of 3.5 per cent in the fiscal year ended March 31, beating its internal benchmark of 0.3 per cent.
BCI says it recently updated its compensation policy so executives with “excellent performance” would be around the top 25 per cent in the industry in terms of pay.
Its long-term incentive plan is based on five- and 10-year returns. The pension manager reported a 10-year annualized return of 8.5 per cent, against a benchmark of 7.2 per cent.
John Graham, the CEO of the Canada Pension Plan Investment Board (CPPIB) – the biggest fund in Canada, with $570-billion in assets – saw his total compensation increase by a modest 0.5 per cent, to $5.38-million in the fund’s last fiscal year. Of that, $670,822 was salary.
CPPIB delivered returns of 1.3 per cent in the fiscal year, which beat its internal benchmark.
CPPIB bases incentive pay on five-year returns, looking at both the absolute number and the amount by which it beat its benchmark.
CPPIB’s board further increased Mr. Graham’s incentive pay, saying the decision “reflects recognition of his high achievements.”
The Ontario Municipal Employees Retirement System, or OMERS, with $124-billion in assets, paid CEO Blake Hutcheson $5.16-million last year, up 0.4 per cent from $5.14-million in 2021. OMERS recorded returns of 4.2 per cent in 2022, below its benchmark of 7.2 per cent.
OMERS also uses five-year average performance for compensation. Mr. Hutcheson’s annual and long-term incentive pay dipped slightly to just over $4.4-million. Most of his pay raise can be attributed to an increase in his base salary, to $600,000 in 2022 from $565,000 in 2021.
Compensation for the CEOs of public pensions is unquestionably large but still less than the pay packages of their private-sector peers. The median pay package for CEOs at 100 of the largest Canadian companies listed on the Toronto Stock Exchange, reviewed by The Globe and Mail and consulting company Global Governance Advisors, was $8.6-million in 2022.
Some pension fund CEOs faced small cuts to their paycheques last year.
The Ontario Teachers’ Pension Plan, which manages $247-billion in assets, reduced CEO Jo Taylor’s total compensation by 8 per cent in 2022, to $5.16-million from $5.6-million in 2021.
Caisse de dépôt et placement du Québec, which manages $402-billion in assets, cut CEO Charles Emond’s compensation to $4.21-million, a 4.9-per-cent reduction, after recording a loss of 5.6 per cent in the fund’s latest fiscal year.
Meanwhile, executives who were new to the job saw robust paycheques in their first year of work.
The Public Sector Pension Investment Board, with $244-billion in assets under management, paid new CEO Deborah Orida $8.63-million in the latest fiscal year. She assumed leadership on Sept. 1, 2022, almost halfway through the plan’s fiscal year.
The pay package included a special incentive plan grant, valued at $4-million, that will pay out over time based on the performance of the fund; a $1.5-million “special cash grant”; and a relocation allowance of $150,000.
Alberta Investment Management Corp. (AIMCo), which manages $158-billion in assets, paid CEO Evan Siddall $4.96-million. He joined AIMCo as CEO in July, 2021, and made $1.33-million in his first, partial year of work.
The Healthcare of Ontario Pension Plan does not disclose compensation for its executives.
With files from David Milstead