April 13th, 2022:
NOTICE OF MOTION: Made April 13th to be debated April 19th at City Council:
That the Mayor, on behalf of City Council, write a letter to the Chair of the EPCOR Board requesting:
1) An executive compensation policy and salary cap to be implemented not to exceed that of the City of Edmonton for equivalent positions in senior management.
2) Compensation cap for the Board of Directors not to exceed double the rates paid by the City of Edmonton for other agencies, boards, and commissions. (C628A Honoraria and Expenses for City Agencies (Effective January 1, 2022) and C628A Procedure: Honoraria and Expenses for City Agencies)
Since raising this issue last month, (reported in the Edmonton Journal (https://edmontonjournal.com/news/local-news/epcors-excessive-executive-pay-needs-review-says-edmonton-councillor-janz) I’ve received many messages equally critical of the excessive compensation at ECPOR that doesn’t align with our values as Edmontonians.
Edmontonians own 100% of EPCOR. We are the sole shareholder so each and every single dollar that is paid to EPCOR Directors and Senior Executives are dollars that cannot be returned to the City of Edmonton to pay for much-needed public services.
The Board of Directors of ATB Financial, make significantly less than the Board of Directors of EPCOR (EPCOR Board Chair $237,000 and ATB Board Chair $73,500: https://www.atb.com/siteassets/pdf/company/governance/bod-documents/directorsattendancecompensationdisclosure.pdf
Part of the problem with the current EPCOR compensation structure is that they haven’t been benchmarking their compensation against public sector comparators, crown corporations, or against City Council. For instance:
It is worth quoting at length here from the Saskatchewan Party Minister Don Morgan (Conservatives) who capped the compensation and share their rationale which applies to EPCOR:
"We believe that Crown sector executive compensation was simply too high relative to public expectations, particularly in relation to the difficult economic times," says Don Morgan.
“We felt it was the right thing to do, to send a message to people that were supporting all the workers in the province,” he said, noting that the average Saskatchewan worker makes about $56,000, far less than the Crown executives, some of whom make well into the six figures. In 2018-19, for example, the CEO of SaskPower earned $565,291, while the CEO of SaskTel took home $538,307.
Morgan didn’t see much risk that the move to pare back bonuses will affect executive performance.
“We expect you to be there, committed to the Crown corporation you work for, committed to delivering solid service to the citizens of the province,” he said. “If you’re not up to that, then you shouldn’t be there. Now, I think the people that we have there are some of the finest, hardworking people that are there,” he added. “I don’t think it’s going to be an issue.”
March 9th/2022: I've been getting quite a few messages about expensive utility bills and what action we can take to smooth the spikes. I've been getting this question quite a lot; however, it is better directed at Premier Kenney. Your increased utility bills are the fault of Premier Kenney and the UCP energy deregulation. The UCP's decision to remove the price cap on electricity prices three years ago has had costly consequences. In 2019, the UCP government scrapped an NDP program that capped electricity prices at 6.8 cents for regulated customers.
In 2020 under power regulation, power prices in Alberta averaged $47 per megawatt-hour (MWh). In 2021, power prices in Alberta averaged $107 /MWh, but we were especially squeezed in December 2021 when Alberta power prices averaged $128 / MWh.
Take Action: Email your MLA, the opposition, and Premier and tell them to cap electricity prices.
(Correction March 9th: I made a mistake with the City Manager Compensation by year (2019 vs 2020), which I corrected below. The Edmonton City Manager's total compensation is $432,000 and $355,000 in 2020.)
Turning to Executive Compensation:
As I started researching further, one aspect that caught my eye was the excessive compensation paid to EPCOR senior executives and board members. To my knowledge, we have not had a public, critical interrogation of our city-owned utility company. I believe that the compensation for EPCOR senior executives and board members is far too generous. If you are interested, I compiled the past ten years of EPCOR Compensation from their annual information forms to share (Board Members and Senior Executives): (email [email protected])
As Peter Lougheed said, "We must think like owners." and ensure the interests of Edmontonians are protected. It is important to remember that every dollar spent on compensation is another dollar that could be returned to the City of Edmonton as a dividend, thus funding essential services and potentially reducing reliance on property taxes. During the election, I heard loud and clear from voters that housing the unhoused was much more important to them than excellent management compensation.
I believe EPCOR compensation should not exceed the compensation for City of Edmonton senior executives.
I also believe that Board compensation for EPCOR is excessive and merits review.
As with our City Manager and Executive Leadership Team, I am not opposed to paying fair compensation for senior executives who require specialized skill sets. However, I do not believe that we have an attraction and retention issue for talented leadership in Edmonton and that this lavish compensation for EPCOR executives can be justified. For comparison, you can see the salary disclosure in our audited financial statements here for the City Manager, Mayor, or City Councilors. Likewise, I support paying board members for their time, and you can see city of Edmonton's compensation here. For comparison, ATB Financial - Alberta Treasury Branch - compensates their Board Chair $72,600. The Board Chair of the University of Alberta is not compensated at all.
But isn't EPCOR a private corporation?
If EPCOR had remained a City Department, the executives would be making salaries comparable to other Edmonton senior leaders for a comparably sized operation, performing similar work and requiring similar skillsets. However, since it was "privatized," the compensation has dramatically exceeded that of the city of Edmonton appears to be five to eight times that of our City Manager.
We are lucky that Edmonton remains the sole shareholder and derives a dividend, but we must constantly scrutinize and ask, are we getting our fair share?
I would like to see a compensation policy brought forward and debated by City Council, clarifying our expectations for a future shareholder meeting. Through their Mayor and City Council, Edmontonians are the sole shareholder of EPCOR, and one of the duties of Councilors is to provide direction to EPCOR at shareholder meetings. Again, it is worth noting that every dollar EPCOR spends is a dollar that does not return to the city of Edmonton as a shareholder dividend, which helps reduce our property taxes or pay for more services.
A secondary issue is a salary compression. The more Senior Executives make, the more Associate Vice-Presidents make, and so forth through the upper echelons. The tone at the top sets the compensation for the organization and the entire city.
Some (including many who benefit from corporate culture and the revolving door between politics, lobbyists, donors, head hunters) will insist that lavish salaries are necessary for the attraction and retention of leaders. I don't see it this way, and I believe that this toxic ideology has infected many of our institutions, led to rising inequality, and led to excessive corporate greed. It is past time for a public conversation about whether we have crossed the line from fair into excessive compensation.
Comparable Executive Compensation:
Here is the City of Edmonton Financials. You can see the Edmonton City Manager line identifies total compensation of $432,000 in 2019 and $355,000 in 2020. The entire balance of the designated officers totalled $1,137,000 in 2019 and $1,087 in 2020, which covers the City Assessor, City Auditor, Chief of Police, Integrity Commissioner, and Director of Edmonton Combative Sports Commission. https://www.edmonton.ca/sites/default/files/public-files/documents/2020_Financial_Annual_Report.pdf (Page 92).
The EPCOR board does not work full-time, and, to be clear, I am not comparing them to City Councillors. I wonder if their compensation should not exceed other City of Edmonton committees such as the Police Commission? (Edmonton Police Commissioners can receive $400 per meeting).
So what? Now what?
I will raise this issue at City Hall at the appropriate time and continue to explore the levers we have as a council to get us a fair deal. Still, as a citizen, you can take action in other ways, including emailing the Mayor or your City Councillor with your feedback.
Please sign up for my newsletter below to keep in touch on this or other important city issues.
