Alberta’s best-paid CEOs
The 25 best-paid CEOs in Alberta earned an average of $6.8 million in 2014
Here it is. The always popular voyeur’s paradise known as the best-paid CEOs list. It’s the fan that stokes the fire of activist shareholders and the public alike at runaway executive salaries (which, truth be told, have grown at a much greater rate than those of their subordinates).
But Michael Caputo, managing partner at Lane Caputo Compensation, cautions against jumping to too many conclusions by examining a single figure. He says there are two things to consider before hanging a well-paid CEO out to dry. First, most of the compensation for CEOs comes in the form of equity – stock options and the like, “and the overwhelming majority of that’s either worth zero or a small fraction of what it was at time of grant,” Caputo says. “Other than a brief blip in late ’09 and early ’10, the trend in share prices has, since ’08, been almost entirely downward.”
Sure, shareholders have lost a bucketful of their wealth, but it’s not like CEO Joe is walking away with $6.8 million, the argument goes. He’s taking home his $1 million salary.
Secondly, there’s a temporal disconnect between when a CEO’s compensation is set – generally the first quarter of a given year – and when you might be reading about it. This list is of compensation for 2014, so some of it would have been decided upon 20 months ago.
Still, these figures are a lot of dough, real or imagined.
For driving CP Railway’s operating ratio down to 64.7 per cent and increasing net income by 69 per cent, Hunter Harrison pullead in $17.6 million, earning him the number one position on the list. He was followed by Brad Shaw of Shaw Communications and Steve Laut of CNRL for the top three.
Hunter Harrison’s Pay Packet
- $2,421,592 Salary
- $7,289,700 Bonus
- $7,324,381 Vested shares and options
- $582,344 Other
- $17,632,169 Total
“Mr. Harrison’s employment agreement continues to provide for reasonable accommodation in the city of Calgary and states CP’s preference that he use the corporate aircraft for business and personal use in North America.”
What CP said about it
Harrison had to forego annual pension payments of $1.5 million when he left CN Railway for CP in 2012. Net of that figure, CP says his salary of US$700,000 “is significantly below his prior salary at CN, industry norms, and CP’s comparator group.”
Vested shares and options
This is where Harrisons got his equity-based compensation, “consisting of 50% of the award in regular Options and the remaining 50% of his long-term incentive award in the form of performance share units.” CP’s shares are up four per cent since January 2014.
“Although Mr. Harrison’s total compensation is much higher than his peers, the return to shareholders during his tenure is equally impressive,” the company reports. His “total compensation value is 0.31% of the total additional value created for shareholders.”