The Westbury Chartwell retirement residence in Etobicoke, Ont., on March 31.Christopher Katsarov/The Globe and Mail
Executive bonuses were up in 2021 – the first full year of the pandemic – at the public companies that operate Canadian long-term care homes.
Extendicare Inc., EXE-T Sienna Senior Living Inc. SIA-T and Chartwell Retirement Residences CSH-UN-T all said their CEOs made more in 2021 than in 2020, the year their business changed markedly with the onset of the pandemic. All the companies, which also operate retirement residences, have had deaths among their long-term care residents and have seen widespread illness among their staffs during the health crisis.
Last year was better financially for Extendicare and Sienna, which both reported 30-per-cent gains in net operating income from their long-term care operations. Their profit margins also expanded.
Chartwell, however, saw its LTC profits drop 12 per cent and its margins, already smaller than those of the other two, contract. It cited higher staffing costs and insurance expenses as two of the reasons. Its revenue and margins were hurt because it did not receive reimbursement from the government for certain expenses until 2022, it said.
The three saw their shares return between 11 per cent and 18 per cent on the Toronto Stock Exchange in 2021, according to S&P Global Market Intelligence.
All the companies use formulas that rely on a mix of financial and other metrics to determine how much they’ll pay their executives as a reward for the year’s performance. The way they arrived at the performance numbers – disclosed in recently filed proxy circulars to shareholders – offers a window into how the companies graded themselves.
Extendicare, which got about 60 per cent of its $1.22-billion in revenue from long-term care, said CEO Michael Guerriere made $1.73-million in 2021, up from $1.71-million in 2020. His bonus last year was $480,000, up from $467,630 in 2020.
Mr. Guerriere was eligible for a $600,000 bonus, with half based on revenue and profit goals. Extendicare blew through those targets, which would have yielded almost $435,000 in bonus. The company’s board decided, however, to cap executive bonuses for financial goals at their target “given the extraordinary nature of the year, which included many pandemic related impacts on both revenue and costs.” The decision cut that portion of his bonus back to $300,000.
Extendicare also gave Mr. Guerriere zero for the portion of his bonus based on quality goals, which could have yielded $120,000. The company said the pandemic meant it failed to meet the goals, which related to “the success of the LTC homes in achieving an improvement in industry leading quality indicators; and the success of the home health care operation in increasing its reliability.”
Extendicare did, however, give Mr. Guerriere full bonus credit for his individual goals, including “effective management of the company’s on-going response to the COVID-19 pandemic,” which added $180,000 to his bonus cheque.
Four other Extendicare executives received bonuses of between $150,000 and $200,000 each.
At Sienna, which got almost 80 per cent of its $668-million in 2021 revenue from long-term care, CEO Nitin Jain received $1.25-million, up from $1.23-million in 2020, the year he became CEO, in June. His bonus of $583,381 was up from $336,375 in 2020.
His 2021 total pay does not include a $650,000 stock grant made this February; the company changed the timing of its long-term share-award program and made no awards during the 2021 calendar year.
Sienna said it exceeded its goals for profitability and cash flow, which make up 30 per cent – a little more than $180,000 – of the CEO’s bonus plan. Mr. Jain received perfect scores for “resident quality of life” – worth 20 per cent, or a little more than $120,000 – and “team member engagement,” worth more than $60,000. He received only half-credit for Sienna’s total shareholder return, however. All told, Sienna awarded Mr. Jain a performance score of 96.5 per cent. The score was 65 per cent in 2020.
Four other named Sienna executives received bonuses of roughly $100,000 to $150,000 for 2021.
Sienna held its annual meeting April 19 and received 97.25-per-cent shareholder approval for its approach to executive compensation in its “say on pay” vote. The other two companies will hold their meetings later this month.
Chartwell is the most valuable of the three publicly traded companies, but it relies the least on long-term care rather than retirement residential living; just a quarter of its almost $3-billion in 2021 revenue came from long-term care, and the segment provided only 9 per cent of its net operating income.
Chartwell CEO Vlad Volodarski made $2.10-million in 2021, up from $1.87-million in 2020, when he was elevated to the CEO job in March. He received stock awards valued at $875,000 in each year. His 2021 bonus of $462,000 was up from $323,967 in 2020.
Mr. Volodarski has a $700,000 target bonus. Chartwell’s scorecard gave him 66 per cent out of a possible 100 per cent on corporate goals. He received 88-per-cent credit on a cash-flow goal that made up fully half of the scorecard and therefore $350,000 of the potential bonus. But he received zero on a total shareholder return measure that made up one-fifth of the score card, or a potential $140,000.
Chartwell awarded executives just 30 per cent of the possible score for employee engagement but 90 per cent of the goal for “pandemic management” and 100 per cent for “customer satisfaction and reputation.” Each of the three measures accounted for 10 per cent of Mr. Volodarski’s bonus, or $70,000 apiece.
Three other named executives of Chartwell received bonuses of between $200,000 and $300,000 apiece, all more than in 2020.
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David Milstead