This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Jack Mintz, April 7, 2023
This week I happened to receive a copy of Telus’ information circular. Included with the usual financial data is a disclosure of performance pay for the top executives. For example, at-risk compensation metrics for business unit performance — 15 per cent for “culture and brand,” 35 per cent for “customers first” and 50 per cent for “profitable growth and efficiency” — are reported for each senior executive. Because 2022 was not a particularly good year the performance awards dropped in value (although executives continued to reap more risky stock awards).
Telus is not unusual in this regard. FW Cook’s survey of the top 250 corporation compensation packages reports that 83 per cent use formula-driven annual incentive plans. Of those three-quarters use profits and half use revenues as metrics. On average, almost a third of the incentive is based on individual performance, the balance on the organization’s performance.
Unlike corporate executives, politicians who make fiscal promises don’t have their pay docked for poor performance. In last year’s budget, Finance Minister Chrystia Freeland was eloquently adamant: “Let me be very clear: We are absolutely determined that our debt-to-GDP ratio must continue to decline… This is our fiscal anchor — a line we shall not cross.”
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