Despite Loss Pension Execs Earn $7 million Extra
Bonuses Draw Opposition’s Ire, Pension Board Defends Themselves
May 31, 2009
The Canada Pension Plan Investment Board (CPPIB) is an arms-length organization responsible for managing the investments of the CPP. The investment fund is worth an estimated $105.5 billion. Investment Board CEO David Denson got a $2.4 million bonus. Three senior vice presidents collected over $1 million in bonuses, despite losing $24 billion.
Opposition Reacts To Bonuses, Conservatives Defend
The announcement of bonuses was met with heated debate in the House of Commons. Both opposition parties reacted with disgust. NDP (New Democratic Party) Jack Layton said in remarks published by the Toronto Star he didn’t understand how the executives could take the bonuses considering the economic climate: “I don’t know how they can look themselves in the mirror and then accept cheques of Canadians money for millions of dollars for such a pathetic performance.”
The Liberals voiced similar sentiments. In comments published by the Globe& Mail Liberal MP (Member of Parliament) Ralph Goodale asked if the Finance Minister would ask the CPPIB to review its policy: “Will the Minister invite the Canada Pension Plan Investment Board to review their multimillion dollar bonuses in the context of a recession that’s killing the jobs of 350,000 ordinary Canadians?”
The Conservative Government’s position so far has been not to politically intervene with the CPPIB. In comments published in the Globe& Mail, Finance Minister Jim Flaherty defended that position saying: “We don’t believe in political interference with the CPP.” Provincial and Territorial finance ministers agreed with Flaherty at their recent meeting. Prime Minister Stephen Harper added that the CPPIB’s board of directors determined the bonuses.
Investment Board Reaction, Explanation
CPP Investment Board officials defended the bonuses. Board Chairman Bob Astley explained the bonus, and salary structure was based on a four-year fund average. Although the just-ended fiscal year was bad, because the previous three years were good the executives still receive the bonuses. In comments published by the Globe& Mail Astley said the bonuses accurately reflected the executive’s performances: “We believe the compensation paid to our team this year properly reflected the value created over the last four years, as well as the obvious challenges faced by the CPP fund- and all investors- in fiscal 2009.”
According to ctv.ca Astley expressed his full confidence in CPPIB CEO David Denison and his fellow executives to lead the program. He added he thought compensation offered by the board allowed them to compete with the private sector for talent.
News of the bonuses couldn’t have come at a worse time for the Conservatives. Finance Minister Jim Flaherty recently announced the federal deficit had come in at $50 billion, higher than estimated in the January budget.
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