Other firms outdo ICBC for bonuses

Chad Skelton
Vancouver Sun
March 25, 2005

COMMENT: Michael Costello, president of the B.C. Transmission Corp. received a bonus of $132,000, on top of his $275,000 salary.

Outrageous! Hell, BCTC wasn't even in existence until May 2003, and BCTC hasn't done a *&^$#* thing since it was spun out of BC Hydro. By what reasoning does that entitle Costello to a bonus which is worth twice the average family income in Canada?

Likewise, BC Hydro's CEO Bob Elton was awarded a bonus of $110,000. For what? For presiding over the write down of $120 million of our money spent to no avail on the failed GSX Pipeline and failed Port Alberni Generation Project and failed Vancouver Island Generation Project and rigged Vancouver Island Call for Tenders. That's what Elton got his bonus for.

This is nothing new. They've been doing this in BC Hydro for years. For example, in 2001, as head of BC Hydro, Costello took home $466,057 in salary and bonuses. The annual announcement of obscenely large bonuses to these guys usually gets a rise out of the media, and always causes me a seasonal fit. Surely it is time to rein this excess in.

The rationale? We've got to pay talent what talent is worth. Right. Think GSX, VIGP. Get real.

Okay, now that I've got most of the rant out of my system, I'll try to be more reasonable.

BC Hydro and now, BC Transmission Corp., operate in markest that exist apart from the two organization and for which neither can claim any credit (unless we're talking about manipulated energy trades in Alberta or California - for which compelling evidence exists that Powerex has engaged but for which it denies any credit.) And both BC Hydro and BCTC are charged with operating and maintaining infrastructure, all of which was inherited, all of which has been around for a long time, and none of which present management can take credit for.

If either Elton or Costello contributed anything of significance to the operation of BC Hydro or BCTC, if they brought commanding visions to the organizations, or led the companies through perilous seas to safe harbour, then a bonus might be meaningful and appropriate. But these guys are granted bonuses by their boards if everyone comes to work in the morning, and if the generators run and the wires transmit. That should be the minimum starting point to continue earning their salaries. It should not entitle them to grossly large bonuses.

Credit for the continued operation of BC Hydro and BCTC should go to the many people who come to work every morning, and who keep the generators running and the wires transmitting. Not to Elton and Costello.

The bonuses paid to top executives at the Insurance Corp. of B.C. are small compared with bonuses paid to those who run B.C.'s two electricity utilities.

It was revealed this week that top executives at ICBC will receive bonuses ranging from $50,000 to $64,000 this year as part of $18 million in incentive pay the public insurer is giving its managers and unionized employees.

By contrast, BC Hydro president Bob Elton last year received a bonus nearly twice as large-- $110,000 -- on top of his annual salary of $295,000.

And Michael Costello, president of the B.C. Transmission Corp. -- which is responsible for managing the province's transmission infrastructure -- received a bonus of $132,000, equivalent to 48 per cent of his $275,000 salary.

Other senior executives with the two companies also enjoyed big bonuses.

Yakout Mansour, the senior vice-president of operations for BCTC, received a bonus of $92,000 in addition to his salary of $225,000.

In all, BC Hydro spent $14.8 million last year on bonuses -- $4.3 million for unionized employees, $9.5 million for middle managers and $1 million for senior executives.

"This is public money and I think taxpayers would be outraged to know people are getting 40-per-cent bonuses each year," said Sara McIntyre, B.C. director of the Canadian Taxpayers Federation.

Jenny Kwan, NDP MLA for Vancouver-Mount Pleasant, said ICBC and Hydro should be using any excess profits to reduce costs to consumers instead of rewarding top executives.

"I would expect that British Columbians want to see a rate reduction as a first priority rather than bonuses," she said.

Elisha Moreno, spokeswoman for BC Hydro, said the utility's bonuses are based on a variety of factors, including improvements in customer service and a reduction in staff injuries.

"We're still behind the industry average in terms of bonuses, compared to other employees in the Canadian utility sector," she said.

BCTC spokeswoman Moira Chicilo said the utility needs to pay generous salaries and bonuses to retain talented staff.

"We absolutely view these executives as being compensated very fairly and reasonably," Chicilo said via e-mail.

She noted that Mansour was recently hired away by a California electricity company at a base salary of $400,000 US.

Bonus policies vary widely between Crown corporations.

BC Transit doesn't pay any.

The Workers' Compensation Board of B.C. pays managers an extra 10 per cent for meeting predetermined company goals and a further 10 per cent for "exceeding those goals," said spokeswoman Donna Freeman.

cskelton@png.canwest.com

BIG BONUSES:

Many top executives at B.C.'s Crown corporations received generous annual bonuses last year.

B.C. Transmission Corp.

Michael Costello, president: $132,000

Yakout Mansour, VP operations: $92,000

Jane Peverett, chief financial officer: $64,000

Scott Wornouik, VP Strategy: $59,000

BC Hydro

Bob Elton, president: $110,000

Dawn Farrell, VP generation: $79,100

Bev Van Ruyven, VP distribution: $75,000

Teresa Conway, acting CEO of Powerex: $65,000

Tourism B.C.

Rod Harris, CEO: $57,000

Source: BC Hydro, B.C. Transmission Corporation, Tourism B.C.