Onex founder and chief executive Gerald Schwartz speaks at the company's annual general meeting in Toronto in this file photo.Nathan Denette/The Canadian Press
Onex Corp. ONEX-T founder and chief executive officer Gerry Schwartz received no bonus or incentive pay in 2022 after a “disappointing year” for the company, as shareholders prepare to vote on a proposal that would put a time limit on his control of the company.
Mr. Schwartz, who has led Onex since 1987 but is tentatively planning to step down as CEO, was paid a base salary of US$1.3-million last year, according to a company filing. But his annual cash bonus – which was worth US$5-million in each of the previous two years – as well as share-based awards and options were cut to zero.
As a result, Mr. Schwartz’s direct compensation was US$1.3-million in 2022, compared with US$6.3-million in 2021 and nearly US$9.6-million in 2020. In addition to his salary, he realized US$5.7-million in gains from his participation in investments that generated carried interest and other gains, but required Mr. Schwartz to put some of his own money at risk. That brought his total earnings for the year to US$7-million.
“On balance, both the board and the Onex executive team considered 2022 a disappointing year. Accordingly, Mr. Schwartz and the committee were fully aligned that no variable cash compensation, stock options or other compensation or equity awards would be awarded to him in respect of 2022,” the company said in a filing. “Mr. Schwartz’s compensation for 2022 consisted solely of base salary of $1.3-million, which has remained unchanged since 2010.”
Mr. Schwartz’s pay package is a sharp comedown for a CEO who has routinely been among the highest-paid executives in Canada in past years. In 2013, he earned US$129.3-million as leader of Onex, which was a pioneer in private equity and has since branched out more into asset management and private credit. Share-based awards, cash bonuses and realizations from carried interest have typically accounted for the lion’s share of Mr. Schwartz’s earnings: In 2021, he reaped proceeds of US$31.6-million from carried interest programs.
Onex president Bobby Le Blanc, who is set to take over as CEO, also received no cash bonus on top of his US$1-million base salary last year, after he was paid a US$5-million bonus the year before. He did, however, receive a total of US$4.94-million in share-based pay and options, and US$2.8-million in proceeds from carried interest, and his personal performance was rated “highly positive.” Other senior figures at Onex continued to receive cash bonuses and stock awards.
Mr. Schwartz’s comparatively spartan pay package was disclosed ahead of a key shareholder vote to be held next month. Earlier this year, Mr. Schwartz, 81, planned his exit as CEO after nearly four decades at the helm, making way for Mr. Le Blanc to be his successor. He has proposed to stay on as chairman of the board, for which he would be paid an annual “chair fee” of US$1-million, according to the filing.
As a condition of ceding operational control, however, Mr. Schwartz initially proposed to extend his control of the company through multiple-voting shares he owns – which would otherwise expire with a change in leader – for another five years.
After Onex consulted with shareholders, some of whom appeared to push back on the length of the proposed extension – Canaccord Genuity Group Inc. analyst Scott Chan cited “mixed discussions” in a note to clients – Mr. Schwartz and Onex agreed to shorten the proposed sunset clause to three years.
Shareholders will vote on the proposal, which is backed by the board, at Onex’s annual meeting on May 11. If it fails to pass, Mr. Schwartz has said he intends to stay on as CEO.